==============================================================================
               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, 2003, 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 33-64325
                                              --------
                           REUNION INDUSTRIES, INC.
            ------------------------------------------------------
            (Exact name of Registrant as specified in its charter)
        DELAWARE                                       06-1439715
------------------------                  ------------------------------------
(State of Incorporation)                  (I.R.S. Employer Identification No.)

        11 STANWIX STREET, SUITE 1400, PITTSBURGH, PENNSYLVANIA 15236
        -------------------------------------------------------------
        (Address of principal executive offices, including zip code)

                                (412) 281-2111
             ----------------------------------------------------
             (Registrant's telephone number, including area code)

         Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class:                            COMMON STOCK, $.01 par value
Name of Each Exchange on Which Registered:      AMERICAN STOCK EXCHANGE

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
                             -----

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Act).    Yes       No   X
                                                     -----    -----

At June 30, 2003, 16,278,519 shares of common stock were issued and
outstanding.  As of June 30, 2003, the aggregate market value of the voting
stock held by non-affiliates of the registrant (computed by reference to the
average of the high and low sales prices on the American Stock Exchange) was
$1,151,414.

DOCUMENTS INCORPORATED BY REFERENCE:  Part III, Items 10 through 13 are
incorporated from the Registrant's definitive proxy statement.
==============================================================================
                           REUNION INDUSTRIES, INC.
                              TABLE OF CONTENTS
                                                                      Page No.
                                                                      --------
                                    PART I

Item 1.   Business                                                        4
Item 2.   Properties                                                     10
Item 3.   Legal Proceedings                                              11
Item 4.   Submission of Matters to a Vote of Security Holders            17

                                   PART II

Item 5.   Market for the Registrant's Common Stock and
            Related Stockholder Matters                                  18
Item 6.   Selected Financial Data                                        19
Item 7.   Management's Discussion and Analysis of
            Financial Condition and Results of Operations                21
Item 7a.  Quantitative and Qualitative Disclosures About Market Risk     43
Item 8.   Consolidated Financial Statements and Supplementary Data       44
Item 9.   Changes in and Disagreements With Accountants
            on Accounting and Financial Disclosures                      44
Item 9a.  Controls and Procedures                                        44

                                   PART III

Item 10.  Directors and Executive Officers of the Registrant             45
Item 11.  Executive Compensation                                         45
Item 12.  Security Ownership of Certain Beneficial
            Owners and Management                                        45
Item 13.  Certain Relationships and Related Transactions                 45
Item 14.  Principal Accounting Fees and Services                         45

                                   PART IV

Item 15.  Exhibits, Financial Statements Schedules,
            and Reports on Form 8-K                                      46

SIGNATURES                                                               47

                                    - 2 -

                          FORWARD LOOKING STATEMENTS

     This report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act that are intended to be covered by the safe harbors created thereby.  The
forward-looking statements contained in this report are enclosed in brackets
[] for ease of identification.  Note that all forward-looking statements
involve risks and uncertainties.  Factors which could cause the future results
and shareholder values to differ materially from those expressed in the
forward-looking statements include, but are not limited to, the strengths of
the markets which the Company serves, the Company's ability to generate
liquidity and the Company's ability to service its debts and meet financial
covenants.  Although the Company believes that the assumptions underlying the
forward-looking statements contained in this report 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.  In addition, the Company
does not intend to, and is not obligated to, update these forward-looking
statements after filing and distribution of this report, even if new
information, future events or other circumstances have made them incorrect or
misleading as of any future date.

                                    - 3 -

                                    PART I

ITEM 1.     BUSINESS

GENERAL

     Reunion Industries, Inc., a Delaware corporation ("Reunion Industries" or
"Reunion"), is the successor by merger, effective March 16, 2000, of Chatwins
Group, Inc. ("Chatwins Group") with and into Reunion Industries, Inc.  The
terms "Company" and "We" refer to Reunion after the merger.  Reunion
Industries' executive offices are located at 11 Stanwix Street, Suite 1400,
Pittsburgh, Pennsylvania 15222 and its telephone number is (412) 281-2111.

     The Company owns and operates industrial manufacturing operations that
design and manufacture engineered, high-quality products for specific customer
requirements, such as large-diameter seamless pressure vessels, hydraulic and
pneumatic cylinders, leaf springs and precision plastic components.  Until
December 2001, the Company's products also included heavy-duty cranes, bridge
structures and materials handling systems.  These businesses were sold during
2002 and are reported as discontinued operations.

     The Company's customers include original equipment manufacturers and
end-users in a variety of industries, such as transportation, power
generation, chemicals, metals, home electronics, office equipment and consumer
goods.  The Company's business units are organized into two major product
categories:

*    Metals manufactures and markets fabricated and machined industrial metal
parts and products including large-diameter seamless pressure vessels,
hydraulic and pneumatic cylinders and leaf springs.

*    Plastics manufactures precision molded plastic parts and provides
engineered plastics services.

     Metals includes two reportable segments:  Pressure vessels and springs;
and Cylinders.  Plastics is a single segment.

     Reunion Industries' Certificate of Incorporation includes certain capital
stock transfer restrictions which are designed to prevent any person or group
of persons from becoming a 5% shareholder of Reunion Industries and to prevent
an increase in the percentage stock ownership of any existing person or group
of persons that constitutes a 5% shareholder by prohibiting and voiding any
transfer or agreement to transfer stock to the extent that it would cause the
transferee to hold such a prohibited ownership percentage.  [The transfer
restrictions are intended to help assure that Reunion Industries' net
operating loss carryforwards will continue to be available to offset future
taxable income by decreasing the likelihood of an "ownership change" (measured
over a three year testing period) for federal income tax purposes.]  The
transfer restrictions do not apply to transfers approved by Reunion
Industries' Board of Directors if such approval is based on a determination
that the proposed transfer will not jeopardize the full utilization of Reunion
Industries' net operating loss carryforwards.


METALS

     Our Metals businesses include:

     CPI - CPI, founded in 1897 and 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

                                    - 4 -

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, founded in 1901 with locations in Chicago, Illinois and
Libertyville, Illinois, 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.  [We plan to
combine Hanna's Chicago operations with operations in the facility in
Libertyville as liquidity permits.]

     Steelcraft - Steelcraft, founded in 1972 and 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.

     Markets and Customers.   Metals operates in mature markets.  Except for
pressure vessels, Metals' products are sold in highly competitive markets both
in the U.S. and internationally and compete 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.  CPI is the dominant provider of pressure
vessels in the U.S.  Many of our competitors have financial and other
resources that are substantially greater than ours.  [Competitive pressures or
other factors could cause us to lose market share or erode prices which could
negatively impact the Company's results of operations.]

     Individual customers sometimes account for more than 10% of Metals'
sales.  During 2003, one customer in our cylinders product line accounted for
approximately 10% of Metals' sales.  We believe our relationship with this
customer is good.  [However, loss of this customer could negatively affect the
Company's results of operations.]

     Sales and Marketing.   Metals 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 independent distributors that specialize in metal
products.

     Raw Materials.   The major raw materials used by Metals include 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 were stable during 2003.  [Increases in the prices
of raw materials could negatively affect our operating results if they can not
be passed on to our customers.]

     Backlog.   Metals backlog, which the Company believes is firm, was $11.2
million at December 31, 2003 and $14.9 million at December 31, 2002.  As of
February 2004, Metals backlog increased to $14.4 million, or 28%, since
year-end 2003.

    Research and Development.   Our Metals research and development activities
relate to improving the quality and performance of our products.  We also
develop ways to meet the design requirements and specifications of customers

                                    - 5 -

that require customized products. To do this, there are engineering
departments at all major metals manufacturing divisions. Metals' products are
not materially dependent on any patents, licenses or trademarks.


PLASTICS

     Our Plastics businesses include two divisions: thermoplastics and
thermoset plastics.  We do business under the name ORCplastics.

     Founded in 1964 as Oneida Molded Plastics, the thermoplastics division
designs and produces injection molded parts and provides secondary services,
such as hot stamping, welding, printing, painting and assembly of such
products, and designs and builds custom molds at its tool shop in order to
produce component parts for specific customers.  The thermoplastics division's
principal products consist of specially designed and manufactured components
for office equipment; business machines; computers and peripherals;
telecommunications, packaging and industrial equipment; and recreational and
consumer products.

     Founded in 1927 as Rostone, the thermoset plastics division compounds and
molds thermoset polyester resins.  The thermoset plastics division's principal
products consist of specially designed and manufactured components for
original equipment manufacturers in the electrical, transportation, appliance
and office equipment industries.  The thermoset plastics division is also a
compounder of proprietary fiberglass reinforced materials used in a number of
customer applications.

Thermoplastics Division

     Markets and Customers.   The markets for thermoplastics' products
exceeded $25 billion annually and are very competitive.  The competitors are
international companies with multi-plant operations based in the United
States, Germany, France and Japan, and approximately 3,800 independent
companies located in the United States engaged in the custom molding business.
Most of these companies are privately owned and have sales volumes ranging
from $3 million to $7 million per year.  About one-half of the total injection
molding market is supplied by in-house molding shops.  The thermoplastics
division competes on the basis of customer service, product quality and price.

     During 2003, one customer accounted for approximately 17% of the
thermoplastics division's sales (10% of Plastics sales).  [Loss of this
customer could adversely affect our results of operations].  The
thermoplastics division is trying to diversify its customer base and has
approximately 500 customers.  ORCplastics wants more customers in the business
machines, consumer products and medical products industries.  [We believe that
growth opportunities exist in these industries.]

     Sales and Marketing.   Sales are made through an internal sales staff and
a network of independent manufacturers' representatives working from regional
offices throughout the eastern United States.  We pay commissions of between
2% and 5% percent of sales based upon volume.

     Raw Materials.   The thermoplastics division uses thermoplastic polymers
which are available from a number of suppliers.  Prices for these materials
are affected by changes in market demand.  Although many of our contracts
provide that price increases can be passed through to the customers,
[increases in the prices of raw materials could negatively affect our
operating results if they can not be passed on to our customers.]

     Research and Development.   Thermoplastics' research and development
activities relate to meeting design requirements and specifications of
customers that require customized products.  To meet these objectives, the

                                    - 6 -

division has engineering personnel at each of its manufacturing locations.
The division's business is not materially dependent on any patents, licenses
or trademarks.

Thermoset Plastics Division

     Markets and Customers.   The thermoset plastics division competes in a
market with a limited number of privately owned competitors and in-house
molders on the basis of product specifications, customer service and price.
During 2003, one customer accounted for approximately 22% of the thermoset
plastics division's sales (9% of Plastics sales).  [The loss of this customer
could adversely affect our operating results.]  The thermoset plastics
division continues to seek new customers not only in the same industries as
thermoplastic, but in other industries including automotive.

     Sales and Marketing.   Sales are made through an internal sales staff and
a network of independent representatives throughout the central United States.
We pay commissions of between 3% and 5% of sales based on volume.

     Raw Materials.   The thermoset plastics division uses styrene, polyester
resins, fiberglass and commercial phenolics, which are available from a number
of suppliers.  Prices and availability of these materials are affected by
changes in market demand.  [Increases in the prices of raw materials could
negatively affect our operating results if they can not be passed on to our
customers.]  When possible, if shortages occur, the thermoset plastics
division engineers new products to provide its customers a cost-effective
alternative to the material in short supply.

     Research and Development.   The thermoset plastics division is focused on
the development of proprietary thermoset materials under the trade name
Rosite.  This division compounds a wide range of Rosite materials to satisfy
its customers' various needs.  The thermoset plastics division also provides
services in meeting customers' design requirements and specifications of their
customized products.  Other than Rosite, the thermoset plastics division's
business is not materially dependent on any patents, licenses or trademarks.

     Backlog.   Plastics backlog, which the Company believes is firm, was $6.0
million at December 31, 2003 and $5.4 million at December 31, 2002.  As of
February 2004, Plastics backlog increased to $6.5 million, or almost 10%,
since year-end 2003.

                                    - 7 -

REPORTABLE SEGMENT DATA - Segment data for the years ended December 31, 2003,
2002 and 2001 (in thousands except for related notes):
                                                      Capital     Total
                               Net Sales  EBITDA(1)   Spending  Assets(2)
                               ---------  ---------  ---------  ---------
2003:
-----
  Metals:
Pressure vessels and springs    $ 23,531   $  3,677   $      -   $ 13,407
Cylinders                         17,891        353        101      7,877
                                --------   --------   --------   --------
  Subtotal Metals                 41,422      4,030        101     21,284
Plastics                          27,087      1,522        178     14,516
Corporate and other (3)                -     (3,440)         3     15,723
                                --------   --------   --------   --------
  Totals                        $ 68,509      2,112   $    282   $ 51,523
                                ========              ========   ========
Gain on extinguishment of debt               10,991
Depreciation (6)                             (2,582)
Interest expense                             (6,939)
                                           --------
  Income from continuing operations
    before income taxes                    $  3,582
                                           ========
2002:
-----
  Metals:
Pressure vessels and springs    $ 20,135   $  1,103   $     52   $ 13,725
Cylinders                         18,087       (286)        92      9,700
                                --------   --------   --------   --------
  Subtotal Metals                 38,222        817        144     23,425
Plastics                          32,577      1,914        126     16,536
Corporate and other (4)                -     (3,482)         2     15,357
Discontinued operations                -          -        230          -
                                --------   --------   --------   --------
  Totals                        $ 70,799       (751)  $    502   $ 55,318
                                ========              ========   ========
Depreciation (6)                             (2,762)
Interest expense                             (8,020)
                                           --------
  Loss from continuing operations
    before income taxes                    $(11,533)
                                           ========
2001:
-----
  Metals:
Pressure vessels and springs    $ 41,594   $  6,085   $    260   $ 17,936
Cylinders                         19,369     (2,182)        26      9,662
                                --------   --------   --------   --------
  Subtotal Metals                 60,963      3,903        286     27,598
Plastics                          38,532     (1,123)     1,066     18,443
Corporate and other (4)                -     (3,660)        10     14,572
Discontinued operations                -          -      1,535     23,803
                                --------   --------   --------   --------
  Totals                        $ 99,495       (880)  $  2,897   $ 84,416
                                ========              ========   ========
Write-off of impaired goodwill               (2,946)
Depreciation and amortization (5)(6)         (5,392)
Interest expense                             (7,057)
                                           --------
  Loss from continuing operations
    before income taxes                    $(16,275)
                                           ========

                                    - 8 -

(1) EBITDA is presented as it is the primary measurement used by management
    in assessing segment performance and not as an alternative measure of
    operating results or cash flow from operations as determined by accounting
    principles generally accepted in the United States, but because it is a
    widely accepted financial indicator of a company's ability to incur and
    service debt.

(2) Corporate and other assets at December 31, 2003, 2002 and 2001 includes
    $8.0 million of goodwill that relates to the Company's pressure vessel and
    springs segment.  For evaluation purposes under SFAS No. 142, this
    goodwill is included in the carrying value of pressure vessels and
    springs.

(3) Includes gains totaling $0.2 million on sales of property and equipment.

(4) Includes gain of $0.4 million on sale of equipment with no carrying value.

(5) Excludes amortization of deferred financing costs of $999,000 for the
    year ended December 31, 2001, which is included in interest expense.

(6) The Company ceased amortizing goodwill effective January 1, 2002.


Employees

     At December 31, 2003, Reunion Industries employed 545 full time
employees, of whom 248 were employed in Metals and 285 were employed in
Plastics.  There were 12 corporate employees.  The Company believes its
relations with its employees are good.  A breakdown of the Company's workforce
by location and function at December 31, 2003 is as follows.

                                                    General and
Group      Location             Manufacturing      Administrative      Total
--------   --------           -----------------   -----------------    -----
                              Union   Non-Union   Union   Non-Union
                              -----   ---------   -----   ---------
Metals:
           McKeesport, PA      85(1)       5       8(2)       15         113
           Chicago, IL                    63                  18          81
           Libertyville, IL               29                   4          33
           Miami, OK                      16                   4          20
           Beijing, China                                      1           1

Plastics:
           Oneida, NY                     60                  12          72
           Phoenix, NY                    51                   8          59
           Siler City, NC                 38                   5          43
           LaFayette, IN       94(3)       7                  10         111

Corporate:
           Pittsburgh, PA                                     12          12
                              ---        ---       -         ---       -----
  Totals                      179        269       8          89         545
                              ===        ===       =         ===       =====

(1)  United Steelworkers of America - Contract expires May 31, 2006.
(2)  United Steelworkers of America - Contract expires May 31, 2006.
(3)  International Brotherhood of Electrical Workers - Contract expires
February 26, 2006.

    The employees in Beijing, China are Chinese nationals and relate to
seamless pressure vessel sales efforts in that region.  These employees are

                                    - 9 -

not covered by a union nor are they covered by any benefit or insurance plans
sponsored by the Company.

     As of December 31, 2003, approximately 34% of the Company's workforce was
covered by collective bargaining agreements, none of which expire within one
year of December 31, 2003.

Available Information

     Reunion's website is http://www.reunionindustries.com.  Reunion makes
available free of charge, through its website, its annual, quarterly and
current reports, and any amendments to those reports, as soon as reasonably
practicable after electronically filing such reports with the Securities and
Exchange Commission.  Information contained on Reunion's website is not part
of this report.


ITEM 2.     PROPERTIES

     The Company has a total of 93.8 acres and approximately 1.3 million
square feet under roof being used for ongoing operations.  Except for CPI's
sales office in Beijing, China and the Company's corporate offices sites in
Pittsburgh, PA, which are administrative, all locations are both manufacturing
and administrative facilities:

                                 Approx.
                                 Square      Land              Expiration
Group         Location            Feet      Acres     Title       Date
--------      --------          -------     -----     -----    ----------
Metals:       McKeesport, PA    603,000      37.0     Owned         -
              Beijing, China      1,000        -      Leased    10/31/04
              Chicago, IL        85,000        -      Leased    monthly
              Libertyville, IL   56,000        -      Leased    12/31/13
              Milwaukee, WI      68,000       3.2     Owned         -
              Miami, OK          39,000      13.5     Owned         -

Plastics:     Oneida, NY         84,000       9.8     Owned         -
              Phoenix, NY        28,000        -      Leased     1/31/05
              Phoenix, NY        20,000       2.0     Owned         -
              Siler City, NC    130,000       8.3     Owned         -
              LaFayette, IN     168,000      20.0     Owned         -

Headquarters: Pittsburgh, PA      8,000        -      Leased     4/30/05

     The operations of the Company's Milwaukee, WI facility have been
relocated to its leased facility in Libertyville, IL.  [We plan to dispose of
or lease out this facility.  We also plan to combine Hanna's Chicago
operations with operations in the facility in Libertyville as liquidity
permits.]

     We also own certain oil and gas properties in Louisiana that were
retained when we disposed of our oil and gas operations in 2000.  We retained
these properties because of litigation concerning environmental matters.  [We
plan to operate the wells on the property for the net production revenues as
required by a litigation settlement agreement discussed in Item 3. Legal
Proceedings under the heading "Louisiana Environmental."]

     We also hold title to or recordable interests in federal and state leases
totaling approximately 55,000 acres near Moab, Utah, known as Ten Mile Potash.
Sylvanite, a potash mineral, is the principal mineral of interest and
occurrence in the Ten Mile Potash property.  To date, Ten Mile Potash has not

                                    - 10 -

yielded any significant revenues from mining operations or any other
significant revenues.  [We plan to pursue the sale or farm out of these
interests.]

     All of our facilities have been in operation for a sufficient period of
time to demonstrate their suitability for manufacturing and administrative
purposes.  [The production capacities of our facilities are sufficient for
future needs.]


ITEM 3. LEGAL PROCEEDINGS

     The Company is and has been involved in a number of lawsuits and
administrative proceedings, which have arisen in the ordinary course of
business of the Company and its subsidiaries.    A summary of such legal
proceedings follows.

Louisiana Environmental

     In connection with the sale of its former oil and gas operations,
pre-merger Reunion retained certain oil and gas properties in Louisiana
because of litigation concerning environmental matters.  The Company is in the
process of environmental remediation under a plan approved by the Louisiana
Department of Natural Resources Office of Conservation (LDNROC).  The Company
has recorded an accrual for its proportionate share of the remaining estimated
costs to remediate the site based on plans and estimates developed by the
environmental consultants hired by the Company.  During 1999, the Company
conducted remediation work on the property.  The Company paid $172,000 of the
total cost of $300,000.  Regulatory hearings were held in January 2000 and
2001 to consider the adequacy of the remediation conducted to date.  In August
2001, LDNROC issued its order for the Company to complete the soil remediation
under the plan approved in 1999 and to perform additional testing to determine
to what extent groundwater contamination might exist.  No remediation was
performed in 2000, 2001 or 2002 pending the decision.  However, the Company
has paid $434,000 for its share of consulting services in connection with the
hearings.  Most recently, the Company's environmental consultants filed with
the LDNROC updated amendments to the prior approved plan for sampling and
remediation.  If approved, the plan will be implemented.  At December 31,
2003, after accruing an additional $40,000 in December 2002, the balance
accrued for these remediation costs is approximately $831,000.  The Company
believes that future remediation costs will not exceed the amount accrued and
will be funded by net production revenues of the producing wells on the
property as part of the settlement agreement discussed below.

     Litigation on this matter had been stayed pending the determination by
the LDNROC as to the extent of remediation that would be required.  Such stay
was lifted and the District Court had established a jury trial for September
22, 2003 to determine the necessity for any further remediation and the extent
of damages, if any, suffered by the plaintiff owners of the property.
However, an agreement to settle the litigation between the plaintiff owners of
the property and the other involved parties, including the Company, has been
reached and finalized.  The Company's share of the settlement costs were
funded by the other defendants to the litigation.  The terms of the agreement
are that the Company must reimburse the other defendants to the litigation at
least $120,000 per year for ten years, but that such amount can be paid from
net production revenues from operation of the producing wells owned by the
Company on the property.  However, this is a non-recourse agreement such that,
should the wells be depleted before all such costs are reimbursed, the Company
is not required to fund the unreimbursed balance.  During 2003 and 2002, net
production revenues totaled $248,000 and $181,000, respectively.  Based on
past operation results of the producing well, the Company believes that future
net production revenues will be sufficient to fund the minimum required under
the settlement agreement.

                                    - 11 -

Gambonini Environmental

     On March 15, 2002, the Company received a Request for Information from
the United States Environmental Protection Agency (USEPA) regarding the
Gambonini Mine Site (Site) outside Petaluma, Marin County, California.  The
Company gathered and forwarded the information the USEPA requested.  On May
16, 2002, the Company, as the successor to Buttes Gas & Oil Company (BGO),
received from the USEPA a notice of potential liability and demand for payment
of $3,909,614.37 for reimbursement of costs related to the USEPA's removal and
environmental restoration efforts at the Site initiated in 1998 pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA).

     BGO, predecessor by merger to the Company, leased the site for mining
purposes and operated a mercury mine there from 1965 to 1970.  BGO's mining
operations were terminated in 1970.  Subsequently, under the supervision of
the environmental and planning representatives of Marin County, BGO completed
closure and environmental restoration activities at the site, including
stabilization and re-vegetation of the site.  BGO then quitclaimed the mining
lease to the Site owners, the Gambonini's, in 1973.  Because of apparent
overgrazing at the Site subsequent to BGO's restoration efforts, a storm in
1982 caused severe flooding, which resulted in the failure of a dam built to
retain mining materials.  Runoff from the flood released mining materials into
the creek below and, ultimately, into the Tomales Bay, a local recreation and
fishing area.

     In March 2003, the Company and the USEPA reached an agreement in
principle to settle the USEPA's claim for payment by the Company of $100,000
plus interest at the Superfund rate (which is currently 1.27%), payable in
three installments over a two-year period.  This amount is accrued as of
December 31, 2003 and 2002.  This settlement agreement will resolve the
USEPA's claims for reimbursement of past environmental response costs under
CERCLA, but does not resolve all possible claims the United States may have
with respect to the Gambonini mine site which could include, but not be
limited to, claims for natural resource damages.  The United States has given
no indication as to whether or not it will pursue such claims.  The Company
has agreed to toll the statute of limitations with respect to any natural
resource damages claims, if any, from August 30, 2002 to April 1, 2008.

Asbestos (Hanna)

     During 2003, Reunion Industries was named as defendant in 32 actions in
the state of Georgia and one action in the state of Alabama.  Such actions
claim that cylinders manufactured by the Hanna division of Reunion Industries
contained asbestos that caused severe illness.   Since most of the plaintiffs'
exposure occurred prior to the purchase of the assets of this business by
Reunion's predecessor in 1980, and since there is no evidence that asbestos
was used in Hanna products after 1980, the Company's position is that it has
no liability in these suits.  The plaintiffs' attorney has tentatively agreed
to dismiss Reunion from these suits, subject to his review of certain
information we have provided to him about our predecessor and if Reunion will
assist the plaintiffs in their case against the pre-1980 owner of the
business.  Reunion has agreed to and is currently providing the requested
assistance to plaintiffs' attorney.

Asbestos (ORC)

     Since July 10, 2001, various legal actions, some involving multiple
plaintiffs, alleging personal injury/wrongful death from asbestos exposure
have been filed in multiple states, including California, Oregon, Washington,
New York and Mississippi, against a large number of defendants, including
Oneida Rostone Corporation (ORC), pre-merger Reunion's Plastics subsidiary and

                                    - 12 -

the Company's Plastics segment.  In October 2001, Allen-Bradley Company, a
former owner of the Rostone business of ORC, accepted Reunion Industries'
tender of its defense and indemnification in the first such lawsuit filed,
pursuant to a contractual obligation to do so.  Subsequent to the acceptance
of the tender of defense and indemnification in the first lawsuit,
Allen-Bradley Company has accepted the Company's tender of defense and
indemnification in a total of 101 separate actions, all of which have been
defended by Allen-Bradley Company.

Wheeling-Pitt Preference Claims

     In the 2002 fourth quarter, Wheeling-Pittsburgh Steel Corporation
(debtor) filed suit against the Company in U.S. Bankruptcy Court for the
Northern District of Ohio, seeking to compel the return of certain
preferential transfers pursuant to 11 U.S.C 547.  The debtor sought a judgment
in the amount of $2,705,541.  The Company filed an answer alleging that such
payments are not avoidable because (a) the transfers were made by the Debtor
in the ordinary course of business and (b) the Company extended new value to
the Debtor after the transfers were made in an amount exceeding the original
payments.  A status conference was held before the court on April 21, 2003.
The parties agreed to stay discovery pending settlement discussions.  After
such discussions, in November 2003, the parties agreed to a settlement of
$60,000 to be paid by the Company in seven installments.  Half of the
settlement was due in December 2003 and the balance is payable in six equal
monthly payments beginning January 2004.  As of March 30, 2004, all amounts
owed by the Company under this settlement arrangement have been paid.

SFSC Litigation

     The Company has been named as a defendant in fifteen consolidated
lawsuits filed in December 2000 or early 2001 in the Superior Court for Los
Angeles County, California, three of which are purported class actions
asserted on behalf of approximately 200 payees.  The plaintiffs in these
suits, except one, are structured settlement payees to whom Stanwich Financial
Services Corp. (SFSC) is indebted.  The Company and SFSC are related parties.

     In addition to the Company, there are numerous defendants in these suits,
including SFSC, Mr. Charles E. Bradley, Sr. (Mr. Bradley), who is Chairman of
the Board, Chief Executive Officer and a director of the Company (Mr. Bradley)
and the sole shareholder of SFSC's parent, several major financial
institutions and certain others.  All of these suits arise out of the
inability of SFSC to make structured settlement payments when due.  Pursuant
to the court's order, plaintiffs in the purported class actions and plaintiffs
in the individual cases actions filed a model complaint.  Except for the class
allegations, the two model complaints are identical.  The plaintiffs seek
compensatory and punitive damages, restoration of certain alleged trust
assets, restitution and attorneys' fees and costs.

     The plaintiffs in one of the suits are former owners of a predecessor of
SFSC and current operators of a competing structured settlement business.
These plaintiffs claim that their business and reputations have been damaged
by SFSC's structured settlement defaults, seek damages for unfair competition
and purport to sue on behalf of the payees.

     The plaintiffs allege that the Company borrowed funds from SFSC and has
not repaid these loans.  The plaintiffs' theories of liability against the
Company are that it is the alter ego of SFSC and Mr. Bradley and that the
Company received fraudulent transfers of SFSC's assets.  The plaintiffs also
assert direct claims against the Company for inducing breach of contract and
aiding and abetting an alleged breach of fiduciary duty by SFSC.

                                    - 13 -

     On May 25, 2001, SFSC filed a Chapter 11 Bankruptcy Petition in the U.S.
Bankruptcy Court for the District of Connecticut.  SFSC filed an adversary
proceeding in the bankruptcy case against the plaintiffs seeking a declaration
that the structured settlement trust assets are the property of the bankruptcy
estate.  On July 16, 2001, the bankruptcy court granted a temporary
restraining order enjoining the plaintiffs from prosecuting their claims
against the Company, SFSC, Mr. Bradley and others.  As a result of this
restraining order of the bankruptcy court, the Company entered a standstill
agreement with the plaintiffs on August 22, 2001.  Pursuant to the standstill
agreement and the stipulation of the parties to the SFSC bankruptcy case, the
plaintiffs, while not agreeing to waive or release their direct claims against
the Company for damages, agreed to cease and desist the prosecution of their
claims against the Company until no earlier than sixty days following service
of written notice to the Company stating that they have elected to
unilaterally terminate the standstill.

     Plaintiffs filed second amended model complaints in the class actions and
individual cases on August 24, 2001.  The court granted plaintiffs' motion for
class certification on February 13, 2002 and certified a class consisting of
unpaid structured settlement payees. Both model complaints allege causes of
action against the Company for interference with contract and aiding and
abetting breach of fiduciary duty.  However, pursuant to the standstill
agreement, the plaintiffs are taking no action to prosecute these claims
against the Company at this time.

     Certain of the financial institution defendants have asserted
cross-complaints against the Company for implied and express indemnity and
contribution and negligence.  The Company denies the allegations of the
plaintiffs and the cross-complainant financial institutions and intends to
vigorously defend against these actions and cross-actions.

     A settlement (the "State Court Settlement") has been reached among the
plaintiffs and the following defendants (collectively, the "Financial
Institution Defendants") in the state court action: Bankers Trust Co., U.S.
Trust Co., Wells Fargo Bank, Bank of America, Bear Stearns and Settlement
Services, Inc.  Under the settlement, the Financial Institution Defendants
would pay the plaintiffs $90,630,969 and Bankers Trust would receive an
assignment of the claims of the plaintiffs and the other Financial Institution
Defendants against the Company and certain other defendants.

     In the SFSC bankruptcy, the Company and certain others have entered into
a settlement (the "Bankruptcy Settlement") with SFSC and Bankers Trust (for
itself and as expected assignee of the claims of the state court plaintiffs
and the other Financial Institution Defendants).  The Bankruptcy Settlement,
which has been approved by the Bankruptcy Court, is subject to the
satisfaction of ceratin conditions, including the order entered by the court
in the state court action approving the State Court Settlement becoming final.
Under the Bankruptcy Settlement, the Company (1) would be obligated to pay to
SFSC $4.6 million (less a setoff of approximately $310,000) by December 31,
2006, plus interest at 10% per annum from the date on which SFSC's Plan of
Reorganization becomes effective and (2) would be released from all claims
that have been made or could have been made by the plaintiffs and the
Financial Institution Defendants in the state court action and by SFSC in its
bankruptcy proceeding.  The settlement amount would not constitute a new
liability of the Company, as the settlement relates to indebtedness that is,
and has been for some time, included as a liability on the Company's balance
sheet.

Kingway Arbitration

     On September 24, 2002, we sold Kingway, our discontinued materials
handling systems operations.  Finalization of this sale was subject to a

                                    - 14 -

post-closing working capital adjustment.  This amount was in dispute between
the Company and the buyer.  The buyer alleged it was owed approximately
$905,000 based on its calculation of working capital on the closing date.
Pursuant to the asset purchase agreement, both parties agreed to submit this
dispute to a mutually agreed-upon independent accounting firm for resolution
in arbitration.  The arbitrator for the dispute determined that, of the
$905,000 working capital deficiency claimed by the buyer, $704,000 was not
valid.  The Company and the Buyer entered into a payment arrangement for a
total of $200,000 to be paid in $50,000 installments by the Company beginning
January 1, 2004.  As of March 1, 2004, the final payment of $50,000 was owed
by the Company under this arrangement.

LTV Preference Claims

     In connection with the Chapter 11 bankruptcies of LTV Steel Company, Inc.
(LTV), et al, pending in the United States Bankruptcy Court for the Northern
District of Ohio, Youngstown Division, LTV has filed a complaint for avoidance
and recovery of preferential transfers against Alliance Machine Division, a
former division of the Company.  Pursuant to an adversary proceeding filed in
the LTV Case on December 17, 2002, LTV seeks recovery of $385,000 in alleged
preferential transfers, together with costs and attorney's fees.  Counsel for
Reunion has recently engaged in settlement negotiations with LTV and we have
reached an agreement in principle to settle the action for a one-time payment
of $1,000 and a waiver by Reunion of an administrative counterclaim.  LTV is
currently drafting the settlement agreement for review by our counsel.  No
amount has been accrued for this matter in the Company's financial statements.

U.S. Customs Service

     In June 1993, the U.S. Customs Service (Customs) made a demand on
Chatwins Group's former industrial rubber distribution division for $612,948
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
Chatwins Group'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 and reiterating that demand in October 1997.
Chatwins Group restated its position and continues to decline payment of the
claim.  Should the claim not be resolved, Customs threatens suit in the
International Courts 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 has been no activity related to this matter since 1997.

Shareholder Suit

     In December 1999, a stockholder of Reunion filed a purported class-action
lawsuit in Delaware Chancery Court alleging, among other things, that
Reunion's public stockholders would be unfairly diluted in the merger with
Chatwins Group.  The lawsuit sought to prevent completion of the merger and,
the merger having been completed, seeks rescission of the merger or awarding
of damages.  The lawsuit remains in the initial stages of discovery.  Reunion
intends to vigorously contest the suit.

Asbestos (Alliance)

     The Company has been named in approximately 1,250 separate asbestos suits
filed since January 1, 2001 by three plaintiffs' law firms in Wayne County,
Michigan.  The claims allege that cranes from the Company's crane
manufacturing location in Alliance, OH were present in various parts of
McLouth and Great Lakes Steel Mills in Wayne County, Michigan and that those
cranes contained asbestos to which plaintiffs were exposed over a 40 year
span.  Counsel for the Company has filed an answer to each complaint denying

                                    - 15 -

liability by the Company and asserting all alternative defenses permitted
under the Court's Case Management Order.  Counsel for the Company has
successfully resolved 401 cases with little or no cost to the Company.  The
Company denies that it manufactured any products containing asbestos or
otherwise knew or should have known that any component part manufacturers
provided products containing asbestos.  It has been further denied that the
Company was otherwise advised by component part manufacturers that component
parts could be hazardous, or otherwise constitute a health risk.  The Company
intends to vigorously defend against these lawsuits.

Putman Properties

     In the 2002 fourth quarter, in the Court of Common Pleas of Stark County,
Ohio, Putman Properties, Inc. filed a complaint against the Company asserting
breach of an exclusive listing contract in connection with the sale of certain
property ancillary to the divestiture of the Company's Alliance Machine
division in Alliance, Ohio.  The plaintiff is a broker who claims entitlement
to a commission in the amount of $230,000.  The Company has answered the
complaint, denies any liability and intends to vigorously defend against this
lawsuit.  No amount has been accrued for this matter in the Company's
financial statements.

Suit Against Paquet and Paquet Counterclaim

     In the 2002 fourth quarter, the Company filed suit in the District Court
for New Jersey against Paquet, a general contractor doing business in the
state of New Jersey.  The Company contends that it is owed approximately $1.5
million in overdue payments and backcharges related to the supply of
structural steel for the construction of a bridge in New Jersey.  The
defendant has asserted a counterclaim against the Company in the amount of
$2.5 million.  Discovery is in process.  The Company intends to vigorously
pursue its suit against the defendant and defend against its counterclaim.  No
amount has been accrued for this matter in the Company's financial statements.

Dick Corporation

     In the 2002 fourth quarter, Dick Corporation (Dick) filed an action
against the Company in the Court of Common Pleas of Allegheny County, PA.
Dick alleges that the Company breached a contract to supply it with structural
steel for use in a construction project for the PA Department of
Transportation.  Dick seeks damages of approximately $351,000, representing
the extra costs allegedly incurred by Dick for Dick to secure structural steel
from another vendor.  The Company has filed an answer to Dick's complaint in
which it denies any liability.  Pleadings are closed and discovery has begun.
The Company believes it has meritorious defenses against Dick's suit and
intends to vigorously defend against it.  No amount has been accrued for this
matter in the Company's financial statements.

Rostone Environmental

     In February 1996, Reunion was informed by a contracted environmental
services consulting firm that soil and ground water contamination exists at
its Lafayette, Indiana site.  Since then, the Company has expended $419,275 of
remediation costs.  The Company estimates completion of this remediation
effort to be $15,000.

NAPTech Suit

     On or about March 16, 2004, Shaw NAPTech, Inc. ("NAPTech"), as successor
by merger to NAPTech, Inc. and NAPTech PS Corporation, filed a suit against
the Company in state court in Baton Rouge, Louisiana, to collect payment on a
subordinated note issued to NAPTech and assumed by the Company in a January

                                    - 16 -

2001 acquisition.  NAPTech claims the amounts due under this note are
$3,145,403 in principal plus $1,207,875 in unpaid interest through November
30, 2003 plus interest at 15% per annum on the unpaid principal thereafter.
Such amounts are consistent with amounts recorded as payable to NAPTech by the
Company in the accompanying consolidated balance sheet.  The Company is
investigating what defenses, if any, it may have in regards to this suit.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None in the fourth quarter of 2003.

                                    - 17 -

                                   PART II

ITEM 5.     MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
                STOCKHOLDER  MATTERS

     Reunion Industries' common stock is traded on the American Stock
Exchange.  As of March 1, 2004, there were 1,175 holders of record of Reunion
Industries' common stock with an aggregate of 16,278,519 shares outstanding.
The table below reflects the high and low sales prices for the quarterly
periods for 2003 and 2002.

QUARTER ENDED                                        High          Low
-------------                                       ------        ------
2003
     March 31.......................................$0.200        $0.110
     June 30........................................$0.350        $0.150
     September 30...................................$0.500        $0.170
     December 31....................................$0.890        $0.180

2002
     March 31.......................................$0.844        $0.281
     June 30........................................$0.594        $0.109
     September 30...................................$0.450        $0.109
     December 31....................................$0.320        $0.100

     No cash dividends have been declared or paid during the past three years.
Cash dividends are limited by the availability of funds, including limitations
contained in our lending agreements.  [We do not anticipate paying cash
dividends on our common stock in the foreseeable future.]

Equity Compensation Plan Information
                                                  Equity Compensation Plans
                                                 ---------------------------
                                                 Approved by    Not Approved
                                                 Security        by Security
                                                 Holders             Holders
                                                 ------------   ------------
Number of Securities to be issued upon
  exercise of outstanding options,
  warrants and rights                                 614,000              -
                                                    =========      =========
Weighted-average exercise price of
  outstanding options, warrants
  and rights                                            $0.51              -
                                                    =========      =========
Number of Securities remaining available
  for future issuance under equity
  compensation plans (excluding outstanding
  options, warrants and rights)                       161,100              -
                                                    =========      =========

                                    - 18 -

ITEM 6. SELECTED FINANCIAL DATA

     All data is reported in thousands, except for per-share data.  The data
is derived from the consolidated financial statements presented in Item 15
which also should be read.  Effective January 1, 2002, we ceased amortizing
goodwill.

Year Ended December 31,         2003      2002      2001     2000     1999(1)
                              --------  --------  --------  -------- --------
EARNINGS DATA:
Net sales                     $ 68,509  $ 70,799  $ 99,495  $104,721 $ 59,691
Cost of sales                   58,178    61,843    84,457    81,485   46,353
                              --------  --------  --------  -------- --------
Gross profit                    10,331     8,956    15,038    23,236   13,338
Selling, general and
  administrative  expenses      10,969    13,256    15,718    16,388    7,864
Gain on extinguishment of debt (10,991)        -         -         -        -
Provision for restructuring          -         -     6,811         -        -
Other (income) expense, net       (168)     (787)    1,727    (6,251)     305
                              --------  --------  --------  -------- --------
Operating profit (loss)         10,521    (3,513)   (9,218)   13,099    5,169
Interest expense, net(2)         6,939     8,020     7,057     6,972    5,261
Equity in loss from  continuing
  operations  of affiliate           -         -         -       296      566
                              --------  --------  --------  -------- --------
Income (loss) before income
  taxes from continuing
  operations                     3,582   (11,533)  (16,275)    5,831     (658)
Provision for (benefit from)
  income taxes                       -         -    12,678      (616)    (922)
                              --------  --------  --------  -------- --------
Income (loss) from
  continuing operations       $  3,582  $(11,533) $(28,953) $  6,447 $    264
                              ========  ========  ========  ======== ========
Income (loss) from continuing
  operations applicable to
  common stockholders(3)      $  3,582  $(11,533) $(28,953) $  6,352 $   (192)
                              ========  ========  ========  ======== ========
Weighted average common shares
  outstanding(4) - basic        16,279    15,591    15,587    13,236    9,500
                              ========  ========  ========  ======== ========
Weighted average common shares
  outstanding(4) - diluted      16,654    15,591    15,612    13,306    9,500
                              ========  ========  ========  ======== ========
Income (loss) from continuing
  operations per common share
  - basic and diluted(4)      $   0.22  $  (0.74) $  (1.86) $   0.48 $  (0.02)
                              ========  ========  ========  ======== ========

OPERATING AND OTHER DATA:

Cash flow from (used in)
  operating activities(5)     $ (2,665) $   (979) $  5,050  $  5,507 $ (4,168)
                              ========  ========  ========  ======== ========
Cash flow from (used in)
  investing activities(5)          173    27,931    (2,532)   27,997   34,494
                              ========  ========  ========  ======== ========
Cash flow from (used in)
  financing activities(5)        2,440   (27,337)   (3,863)  (31,385) (30,249)
                              ========  ========  ========  ======== ========
Depreciation and
  amortization(6)                2,582     2,762     5,392     4,639    1,648
                              ========  ========  ========  ======== ========

                                    - 19 -

Capital expenditures(7)            282       272     1,362     1,752    1,207
                              ========  ========  ========  ======== ========

BALANCE SHEET DATA:
Total assets                    51,523    55,318    84,416   116,439   67,681
                              ========  ========  ========  ======== ========
Debt in default                      -    40,049    64,389         -        -
                              ========  ========  ========  ======== ========
Revolving credit facility        9,214         -         -    19,367    5,834
                              ========  ========  ========  ======== ========
Long-term debt(8)               31,915        61     3,793    50,732   49,971
                              ========  ========  ========  ======== ========
Redeemable preferred stock           -         -         -         -    8,938
                              ========  ========  ========  ======== ========
Stockholders' equity
  (deficit)                    (27,755)  (30,840)  (17,245)   21,559   (7,870)
                              ========  ========  ========  ======== ========
EBITDA(9):                    $  2,112  $   (751) $   (880) $ 17,738 $  6,817
                              ========  ========  ========  ======== ========

(1)   Represents historical financial data of Chatwins Group as Chatwins Group
was considered the acquirer in the merger.  The Company has restated such
financial data for the classifications of its bridges and cranes and materials
handling systems segments as discontinued operations.

(2)   Includes amortization of debt issuance expenses and estimated warrant
value in 2003 of the following amounts for the following years:   2003: $97;
2002: $752; 2001: $1,011; 2000: $897 and 1999: $1,308.

(3)   In determining income (loss) from continuing operations applicable to
common stock, income from continuing operations is reduced by accretions of
dividends on preferred stock of $95 in 2000 and $456 in 1999.

(4)   Weighted average shares outstanding for the year ended December 31, 1999
was restated to give retroactive effect to the recapitalization of Chatwins
Group in connection with the merger.

(5)   Not restated for discontinued operations.

(6)   Excludes amortization of debt issuance expenses and depreciation and
amortization related to discontinued operations.  See note (2) above.

(7)   Excludes capital expenditures of discontinued operations.

(8)   Excludes borrowings under revolving credit facilities and includes
current maturities of 13% senior notes for 1999 through 2000.

(9)   EBITDA is calculated as follows:

                                2003      2002      2001     2000     1999(1)
                              --------  --------  -------- --------  --------
Income (loss) from continuing
  operations before taxes     $  3,582  $(11,533) $(16,275) $  5,831 $   (658)
Interest expense, net(2)         6,939     8,020     7,057     6,972    5,261
Depreciation and
  amortization(6)                2,582     2,762     5,392     4,639    1,648
Gain on extinguishment of debt (10,991)
Write-off of impaired goodwill       -         -     2,946         -        -
Equity loss from continuing
  operations of affiliate            -         -         -       296      566
                              --------  --------  --------  -------- --------
     EBITDA                   $  2,112  $   (751) $   (880) $ 17,738 $  6,817
                              ========  ========  ========  ======== ========

                                    - 20 -

     EBITDA is presented in the Selected Historical Financial Data, not as an
alternative measure of operating results or cash flow from operations as
determined by accounting principles generally accepted in the United States,
but because it is a widely accepted financial indicator of a company's ability
to incur and service debt and due to the close relationship it bears to
Reunion's financial covenants in its borrowing agreements.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS

     The following discussion and analysis is provided to assist readers in
understanding the Company's financial performance during the periods presented
and significant trends which may impact the future performance of the Company.
It should be read in conjunction with the consolidated financial statements
and accompanying notes included elsewhere in this Form 10-K.

GENERAL

     The Company owns and operates industrial manufacturing operations that
design and manufacture engineered, high-quality products for specific customer
requirements, such as large-diameter seamless pressure vessels, hydraulic and
pneumatic cylinders, leaf springs and precision plastic components.  Until
December 2001, the Company's products also included heavy-duty cranes, bridge
structures and materials handling systems.  These businesses were sold during
2002 and are reported as discontinued operations.

     The Company's customers include original equipment manufacturers and
end-users in a variety of industries, such as transportation, power
generation, chemicals, metals, home electronics, office equipment and consumer
goods.  The Company's business units are organized into two major product
categories:

*    Metals manufactures and markets fabricated and machined industrial metal
parts and products including large-diameter seamless pressure vessels,
hydraulic and pneumatic cylinders and leaf springs.

*    Plastics manufactures precision molded plastic parts and provides
engineered plastics services.

     Metals' includes two reportable segments:  Pressure vessels and springs;
Cylinders.  Plastics is a single segment.


RECENT EVENTS

Refinancing

     On December 3, 2003, the Company announced that it was successful in
refinancing its bank loan facilities and restructuring its 13% senior notes.
On that date, the Company entered into a new $25.0 million revolving and term
loan bank credit facility with Congress Financial Corporation (Congress) that
replaced its then existing revolving and term loan facility with Bank of
America (BOA).  At the same time, the Company also entered into $5.2 million
of new loan facilities with two private capital funds through a $4.2 million
secured term loan and a $1.0 million increase in a then existing subordinated
note payable.  Proceeds from these refinancing activities totaled $13.0
million, including $4.6 million under the revolving credit facility, $3.2
million under the term loan facility and $5.2 million of financing from the
private capital funds.  At the time of the refinancing, the Company's
indebtedness to BOA totaled $11.7 million, including $10.8 million of

                                    - 21 -

revolving credit debt and a term loan of $0.9 million.  Proceeds from the
refinancing were used to repay our then existing BOA facilities, fund $0.7
million of consent fees payable to our 13% senior noteholders and pay $0.6
million of transaction related fees and expense to our new lenders.  All
defaults that existed under the BOA facilities at the time of the refinancing
were removed as the result of the full repayment of amounts then outstanding.

Congress Financial Corporation Revolving and Term Loan Credit Facility

     On December 3, 2003, the Company entered into a new revolving and term
loan bank credit facility with Congress Financial Corporation.  This credit
facility consists of revolving credit, term loan and letter of credit
accommodations up to a maximum credit of $25.0 million.  At December 31, 2003,
the Company had outstanding borrowings under this facility totaling $12.4
million, including $9.2 million of revolving credit and a term loan of $3.2
million.  The $3.2 million term loan amortizes to the revolving credit
availability at a rate of $53,000 per month beginning on January 31, 2004
until fully paid. This facility has a three-year initial term and
automatically renews for additional one-year increments unless either party
gives the other notice of termination at least 90 days prior to the beginning
of the next one-year term.

     Interest on loans outstanding under the Congress facility is payable
monthly at a variable rate tied to the prime rate publicly announced from time
to time by Wachovia Bank, National Association, plus 2.50%.  The facility also
provides for a default interest rate of the prime rate plus 4.50%.

     The Congress facility is collateralized by a continuing security interest
and lien on substantially all of the current and after-acquired assets of
Reunion including, without limitation, all accounts receivable, inventory,
real property, equipment, chattel paper, documents, instruments, deposit
accounts, contract rights and general intangibles.

     The Congress facility requires Reunion to comply with financial covenants
and other covenants, including a minimum amount of earnings before interest,
taxes, depreciation and amortization (EBITDA) and a minimum fixed charge
coverage ratio.  The minimum EBITDA covenant began in 2004 and requires the
Company to maintain minimum monthly amounts of EBITDA ranging from $450,000 in
January 2004 to $600,000 in December 2004 with $50,000 to $100,000 increments
or decrements occurring during the year.  There are also minimum monthly
EBITDA amounts required during 2005 and 2006.  Through February 2004, the
Company achieved the minimum monthly EBITDA required for compliance with this
covenant.  The minimum fixed charge coverage ratio covenant requires the
Company to maintain a minimum fixed charge coverage ratio to be tested as of
the last day of each fiscal quarter beginning with the quarter ended March 31,
2004, for the year-to-date period starting on January 1, 2004.  For quarters
ended on and after December 31, 2004, the components of the calculation are on
a rolling, twelve-month basis.  The ratio is defined as EBITDA divided by
fixed charges (defined as interest expense, capital expenditures, regularly
scheduled or required principal payments on debt and taxes paid).  For the
ratio calculation period ended March 31, 2004 and for each year-to-date period
during 2004 ended on quarters thereafter, the required minimum fixed charge
coverage ratio is 0.65:1, 0.77:1, 0.77:1 and 0.80:1, respectively.  There are
also minimum fixed charge coverage ratio amounts required during 2005 and
2006.  [Management believes, based on forecast data available as of mid-March
2004, that the Company will be in compliance with the minimum fixed charge
coverage ratio covenant for the period ended March 31, 2004.]

     In addition, the facilities contain various other affirmative and
negative covenants.  As of the date of this report, the Company was in
compliance with all other covenants.  The facilities require Reunion to pay

                                    - 22 -

the reasonable expenses incurred by Congress in connection with the
facilities.  Available borrowings under the revolving credit portion are based
upon a percentage of eligible receivables and inventories.

Private Capital Fund Financing

     On August 11, 2003, Reunion borrowed $2.5 million from a private capital
fund by executing a senior subordinated secured promissory note payable in the
amount of and with cash proceeds of $2.5 million.  The note bears interest at
10% per annum, such interest being payable on the last day of every month in
arrears commencing on August 31, 2003.  The principal amount of $2.5 million
was due on August 11, 2005 with voluntary prepayments permitted but was
extended to December 5, 2006 as discussed below.  The note is secured by a
majority of the assets of Reunion, provided that such security interest is
subordinate to the security interest of Congress.  In addition to its
subordinated security interest, the fund received a warrant to purchase
625,000 shares of the Company's common stock and registration rights with
respect to the warrant and shares issuable thereto at a price of $0.01 per
share.  The cash proceeds were used for working capital and other general
corporate purposes.

     In connection with the refinancing on December 3, 2003, this same private
capital fund amended and restated its senior subordinated secured promissory
note to provide an additional $1.0 million of financing to the Company at the
same interest rate but changed the maturity date from August 11, 2005 to
December 5, 2006.  No additional warrants were issued.

     In connection with the refinancing on December 3, 2003, a separate
private capital fund provided the Company with a $4.2 million loan evidenced
by a senior subordinated secured promissory note payable with net cash
proceeds of $4.0 million after fees and expenses.  The note bears interest at
a rate of the greater of 12%, or the prime rate as published in the Wall
Street Journal plus 8%.  Interest is payable on the first day of every month
commencing on January 1, 2004.  The principal amount of $4.2 million is due on
December 1, 2006.  Prepayments in whole or in part are permitted without
penalty commencing in May 2004.  The note is secured by mortgage liens and/or
deed of trust security interests totaling $4.2 million encumbering all
premises owned by the Company.  In addition to its security interest, the fund
received a warrant to purchase 500,000 shares of the Company's common stock
and registration rights with respect to the warrant and shares issuable
thereto at a price of $0.50 per share.

13% Senior Notes

     We had a total of $24.855 million of 13% senior notes outstanding.  The
senior notes required semi-annual interest payments every November 1st and May
1st and sinking fund payments of $12.5 million on May 1, 2002 and $12.355
million on May 1, 2003.  Since November 1, 2001, we were unable to make the
required semi-annual interest payments or the sinking fund payments due May 1,
2002 and 2003.  As a result, an event of default, as defined in the indenture
governing the 13% senior notes, had existed since December 1, 2001 as we were
not able to make the November 1, 2001 semi-annual interest payment within the
30-day cure period provided for in the indenture.

     In November 2003, we solicited the consent of our noteholders to certain
provisions and waivers of the indenture governing the 13% senior notes in an
effort to facilitate the refinancing.  The significant provisions of the
solicitation requested that the noteholders consent to permanently waive all
then existing defaults under the indenture, cancel all accrued and unpaid
interest, cancel 12% of the principal amount of senior notes and extend the
maturity of the notes to December 2006.  In order for the consent to be
effective, we needed noteholders comprising at least 90% of the principal

                                    - 23 -

amount of outstanding senior notes to consent.  As of December 1, 2003, the
end of the consent period, $23,250,700 of the $24,855,000 principal amount of
senior notes, or 93.55%, had consented.

     In exchange for their consent, each consenting noteholder received a
consent fee of $27.625, warrants to purchase 76.18 shares of the Company's
common stock at $0.01 per share for each $1,000 of principal amount of notes
owned and a junior priority lien on the Company's assets.  In the refinancing
that took place on December 3, we placed in escrow with the trustee of the
senior notes, $686,619 for payment of consent fees, of which $642,301 has been
or will be disbursed to consenting senior noteholders.  Warrants to purchase
the Company's common stock totaling 1,771,217 have been reserved for future
issuance to consenting noteholders.  Effective with having obtained the
consents of holders of at least 90% of the principal amount of outstanding
senior notes, all previously existing defaults under the indenture for the 13%
senior notes have been permanently waived.


RESULTS OF OPERATIONS

Year Ended December 31, 2003 Compared to
  Year Ended December 31, 2002

Continuing Operations

     Net sales, gross margins and EBITDA percentages for 2003 and 2002 are as
follows:

                       Net Sales        Gross Margin       EBITDA
                 --------------------  --------------  --------------
                    2003       2002     2003    2002    2003    2002
                 ---------  ---------  ------  ------  ------  ------
Pressure vessels
  and springs    $  23,531  $  20,135   21.0%   14.9%   15.6%    5.5%
Cylinders           17,891     18,087   13.6%   10.8%    0.2%   (1.6%)
Plastics            27,087     32,577   10.9%   12.3%    5.6%    5.9%
                 ---------  ---------  ------  ------  ------  ------
  Totals         $  68,509  $  70,799   15.1%   12.6%    8.1%    3.9%
                 =========  =========  ======  ======  ======  ======

     Pressure vessels and springs sales were up in 2003 compared to 2002.
This increase is due to this segment's return to almost normal production and
shipment levels during the first half of 2003 compared to management's
decision to shut-down our pressure vessels facility for the first two months
of 2002 with a limited production schedule.  We made this decision in 2002 to
reduce spending due to our liquidity problems and to lessen the strain on this
segment's raw material vendors.  This segment's backlog has increased 46%
since year-end 2003 through February 2004, including a 55% increase in the
pressure vessels product line.  Based on an increased level of customer
inquiries and quote activity, [the Company believes this increase in order
levels will be sustained into the second quarter of 2004.]

     Cylinder sales were flat for 2003 compared to 2002 due to weak fourth
quarter 2003 shipments caused by temporary customer facility shutdowns and a
resulting decrease in order levels.  This segment's backlog has increase 10%
since year-end 2003 through February 2004.  However, this segment continues to
be affected by softness in its markets, [a trend which may continue during
2004.]

     The decrease in Plastics revenues in 2003 compared to 2002 began in the
second quarter of 2003 and is the result of several reasons including our
reduced ability to access raw materials, which was affected by tight

                                    - 24 -

liquidity, and a continued lag in certain customers' decisions on newly quoted
programs, which are intended to replace finished programs, caused by the
uncertainty surrounding our current financial condition.  This segment's
backlog has increased almost 10% since year-end 2003 through February 2004 due
to the start of a few new customer programs.  However, [this segment may
continue to be affected by an overall lag in new program starts.]

     The increase in gross margin as a percentage of sales in the pressure
vessel and springs segment in 2003 compared to 2002 is primarily due to
increased sales and to management's decision to shut-down our pressure vessels
facility for the first two months of 2002 as discussed above, resulting in a
reduction in production activity for the second quarter 2002 causing
underabsorption of overheads and a lower gross margin as a percentage of sales
than would normally be expected.  The increase in gross margin as a percentage
of sales at cylinders is the result of actions to reduce costs through
workforce reductions taken in the 2002 third quarter to better match
production resources with volume levels.  Although the same actions to reduce
costs were also taken at plastics, the benefits were more than offset by the
decreased volume level and the resulting effect of fixed costs on gross
margin.

     Management evaluates the Company's segments based on EBITDA, a measure of
cash generation, which is presented, not as an alternative measure of
operating results or cash flow from operations as determined by accounting
principles generally accepted in the United States, but because it is a widely
accepted financial indicator of a company's ability to incur and service debt
and due to the close relationship it bears to Reunion's financial covenants in
its borrowing agreements.  EBITDA and EBITDA as a percentage of sales
increased during 2003 compared to 2002 primarily due to the same factors
affecting gross profit margin discussed above and our continued focus on
reducing selling, general and administrative costs in Plastics.  A
reconciliation of EBITDA to operating income (loss) in 2003 and 2002 by
segment and corporate and other is as follows (000's):

                               Operating
                                  Profit    Deprec-   Amortiz-
                                   (Loss)    iation      ation     EBITDA
                               ---------  ---------  ---------  ---------
2003:
-----
Pressure vessels and springs    $  2,986   $    691   $      -   $  3,677
Cylinders                            107        246          -        353
Plastics                             (73)     1,595          -      1,522
Corporate and other(1)(2)         (3,490)        50          -     (3,440)
                                --------   --------   --------   --------
  Totals                        $   (470)  $  2,582   $      -   $  2,112
                                ========   ========   ========   ========
2002:
-----
Pressure vessels and springs    $    366   $    737   $      -   $  1,103
Cylinders                           (609)       323          -       (286)
Plastics                             279      1,635          -      1,914
Corporate and other(3)            (3,549)        67          -     (3,482)
                                --------   --------   --------   --------
  Totals                        $ (3,513)  $  2,762   $      -   $   (751)
                                ========   ========   ========   ========

(1) - Includes gains totaling $226,000 on sales of property and equipment.

(2) - Excludes gain on debt extinguishment of $10,991,000.  See "Gain on Debt
Extinguishment" below.

(3) - Include gain of $375,000 on sale of equipment.

                                    - 25 -

Selling, General and Administrative

     Selling, general and administrative (SGA) expenses for 2003 were $11.0
million, compared to $13.3 million for 2002.  This decrease in SGA is due to
2002 including approximately $1.0 million of incremental legal, audit and
consultant costs related to the default on our bank financing that did not
recur in 2003.  The remaining decrease is related to cost cutting measures
taken during 2002, including trimming the executive payroll and reductions in
administrative positions.  SGA as a percentage of sales decreased to 16.0% for
2003 compared to 18.7% in 2002.  Despite the decrease in sales, SGA as a
percentage of sales was lower in 2003 compared to 2002 due to lower
incremental bank-induced costs and previously described cost-cutting measures.

Gain on Debt Extinguishment

     In November 2003, we solicited the consent of our noteholders to certain
provisions and waivers of the indenture governing the 13% senior notes in an
effort to facilitate the refinancing.  The significant provisions of the
solicitation requested that the noteholders consent to waive all then existing
defaults under the indenture, cancel all accrued and unpaid interest, cancel
12% of the principal amount of senior notes and extend the maturity of the
notes to December 2006.  In order for the consent to be effective, we needed
noteholders comprising at least 90% of the principal amount of outstanding
senior notes to consent.  As of December 1, 2003, the end of the consent
period, $23,250,700 of the $24,855,000 principal amount of senior notes, or
93.55%, had consented.  Accordingly, 12% of the $23,250,700 principal amount
of senior notes of noteholders that had consented to the various provisions
and waivers, or $2.8 million, was extinguished pursuant to the provisions of
the consent.

     As of December 1, 2003, accrued and unpaid interest related to the 13%
senior notes totaled $8.8 million, of which $8.2 million related to the
$23,250,700 principal amount of senior notes of noteholders that had consented
to the various provisions and waivers.  Such interest was extinguished
pursuant to the provisions of the consent.  The remaining $0.6 million of
accrued and unpaid interest is included in accrued interest in the
accompanying consolidated balance sheet as of December 31, 2003.

     [The Company is currently investigating other recapitalization scenarios
that include, among other things, the use of additional private capital fund
financing to repurchase at discounts with waivers of all accrued and unpaid
interest some portion or all of our senior and unsecured suboridinated notes
payable.]  The Company believes that, as the result of recent events related
to our refinancing and senior notes and, in view of our continuing efforts to
investigate other recapitalization scenarios, resulting gains from such
activities do not meet the criteria pursuant to APB Opinion No. 30, "Reporting
the Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions" for classification as extraordinary.

                                    - 26 -

Other Income

     Other income for 2003 was $168,000, compared to other income of $0.8
million for 2002.  The components are as follows:

                                                 2003      2002     Change
                                               --------  --------  --------
Gain on sale of property                       $   (138) $      -  $   (138)
Reduction of the lease termination reserve         (117)        -      (117)
Gain on sale of equipment                           (88)     (375)      287
Provision for bad debt                              130         -       130
Write-off of assets                                 117         -       117
Other income, net                                   (72)     (412)      340
                                               --------  --------  --------
Total other income, net                        $   (168) $   (787) $    619
                                               ========  ========  ========

     Other income in 2003 includes gains on sales of idle farmland in Boone
County, IL of $138,000 and excess manufacturing equipment of $88,000.  We also
adjusted the lease termination reserve, resulting in a reduction of $117,000.
The lease termination reserve was reduced as the result of the execution of a
sublease agreement with another party resulting in a new estimate of future
lease termination costs.  We also provided for a bad debt from a customer in
plastics that declared bankruptcy and wrote-off assets of an inactive
subsidiary deemed to have no value.   In January 2002, we sold equipment that
had no book value.  The decrease in the remaining other income is primarily
due to higher levels of sales of scrap and miscellaneous parts in 2002 due to
cleaning out idled facilities.

Interest Expense

     Interest expense for 2003 was $6.9 million compared to $8.0 million for
2002.  For 2002, a total of $2.5 million of interest expense has been
allocated to or actually incurred in discontinued operations.  On a combined
basis interest expense was $10.5 million in 2002.  Average debt during 2003
was significantly less than 2002 levels due to pay-downs with proceeds from
asset sales in June 2002 and September 2002.  Also, in 2002 compared to 2003,
the Company was paying a higher default rate on the BOA revolving credit and
term loan facilities and we paid $1,675,000 in amendment and overadvance fees
to BOA in 2002.  These decreases from 2002 were partially offset by more than
$800,000 in fees and costs charged to interest expense incurred during our
continuing refinancing efforts during 2003 with other lenders.

Income Taxes

     There was no tax provision from continuing operations in 2003 or 2002.
The Company has net operating loss carryforwards for Federal tax return
reporting purposes totaling $115.2 million at December 31, 2003, $53.1 million
of which expire by the end of 2004.  [The Company may be able to utilize its
loss carryforwards against possible increased future profitability.]  However,
management has determined to fully reserve for the total amount of net
deferred tax assets as of December 31, 2003 [and to continue to do so during
2004 until management can conclude that it is more likely than not that some
or all of our loss carryforwards can be utilized.]

Discontinued Operations

     There was a loss from discontinued operations for 2003 of $0.9 million
compared to a loss from discontinued operations of $1.3 million in 2002.  The
loss from discontinued operations of $0.9 million in 2003 relates to an
evaluation of legacy healthcare costs, which increased substantially in the
third quarter of 2003.  The adjustment in 2003 is to recognize these

                                    - 27 -

unanticipated healthcare costs, totaling $0.7 million, which significantly
exceeded the accrual for such costs established at year-end 2002.  [Such costs
should decrease significantly in 2004 as the healthcare coverage benefit
period for the former employees of our discontinued bridges and cranes
operation provided by law in the Consolidated Omnibus Budget Reconciliation
Act of 1985 ended at year-end 2003.]  The remaining $0.2 million loss from
discontinued operations in 2003 represents legacy legal costs relating to
litigation surrounding our discontinued bridges and cranes operations.  The
loss from discontinued operations in 2002 relates to a $3.1 million gain on
disposal of the discontinued materials handling systems operations in
September 2002 partially offset by a loss from its discontinued operations of
$0.5 million, which includes allocated interest expense of $2.0 million, and a
loss on disposal of the discontinued bridges and cranes operations of $3.9
million, which includes allocated interest expense of $0.5 million.


Year Ended December 31, 2002 Compared to
  Year Ended December 31, 2001

Continuing Operations

     Net sales, gross margins and EBITDA percentages for 2002 and 2001 are as
follows.

                       Net Sales        Gross Margin       EBITDA
                 --------------------  --------------  --------------
                    2002       2001     2002    2001    2002    2001
                 ---------  ---------  ------  ------  ------  ------
Pressure vessels
  and springs    $  20,135  $  41,594   14.9%   23.3%    5.5%   14.6%
Cylinders           18,087     19,369   10.8%    5.0%   (1.6%) (11.3%)
Plastics            32,577     38,532   12.3%   11.4%    5.9%   (2.9%)
                 ---------  ---------  ------  ------  ------  ------
  Totals         $  70,799  $  99,495   12.6%   15.1%    3.9%    2.8%
                 =========  =========  ======  ======  ======  ======

     Pressure vessels and springs sales were down significantly in 2002
compared to 2001.  This decrease is due primarily to management's decision to
shut-down our pressure vessels facility during the first quarter of 2002 and
also in July 2002.  We made these decisions to reduce spending due to our
liquidity problems and to lessen the strain on this segment's raw material
vendors.  The decrease was also caused by the fact that the first quarter of
2001 included the recognition of $2.8 million of revenues on a large NASA
contract manufactured in 2000 but shipped in the first quarter of 2001.  We
have made significant progress in correcting vendor-related issues with cash
proceeds from asset sales resulting in greater raw material availability.

     Sales of cylinders in 2002 was affected by the temporary manufacturing
disruption caused by the relocation of our former Milwaukee, WI cylinder
operations to Libertyville, IL and continues to be affected by a softness in
this market.

     The decrease in Plastics revenues is the continuation of a downward trend
which began in 1999 and resulted from several factors, including certain
customers relocating manufacturing operations to Mexico and Asia, reduced
customer orders for continuing programs, end of product cycles and delays in
new program starts, which affected all Plastics facilities.  Plastics also
lost a top ten customer in the second half of 2001 to competitive bidding on
the internet.  Management is seeking to expand Plastics' product offerings in
the business machines, consumer products and medical products industries to
mitigate this trend.

                                    - 28 -

     Gross margins in 2001 were negatively affected by inventory charges of
$1.3 million at pressure vessels and springs, $0.9 million at cylinders and
$350,000 at Plastics.  Excluding these charges, the decreases in gross margins
across all segments is related to volume declines resulting in a decrease in
production activity and our inability to absorb costs.  We have responded to
these conditions by completing our plan to restructure, including disposing of
assets, combining certain operations and eliminating various administrative
and management positions.  The benefits of these actions have only been
partially realized to date.

     Management evaluates the Company's segments based on EBITDA, a measure of
cash generation, which is presented, not as an alternative measure of
operating results or cash flow from operations as determined by accounting
principles generally accepted in the United States, but because it is a widely
accepted financial indicator of a company's ability to incur and service debt
and due to the close relationship it bears to Reunion's financial covenants in
its borrowing agreements.  EBITDA and EBITDA as a percentage of sales in 2001
were negatively affected by charges totaling $2.2 million at pressure vessels
and springs, $1.5 million at cylinders and $2.7 million at Plastics.
Excluding these charges, EBITDA and EBITDA as a percentage of sales decreased
during 2002 compared to 2001 primarily due to the same factors affecting gross
profit margin discussed above.  Total EBITDA as a percentage of sales in 2002
and 2001 exclude corporate and other EBITDA of negative $3.2 million and $3.7
million, respectively.  A reconciliation of EBITDA to operating losses in 2002
and 2001 by segment and corporate and other is as follows (000's):

                               Operating    Deprec-   Amortiz-
                                    Loss     iation      ation     EBITDA
                               ---------  ---------  ---------  ---------
2002:
-----
Pressure vessels and springs    $    366   $    737   $      -   $  1,103
Cylinders                           (609)       323          -       (286)
Plastics                             279      1,635          -      1,914
Corporate and other(1)            (3,549)        67          -     (3,482)
                                --------   --------   --------   --------
  Totals                        $ (3,513)  $  2,762   $      -   $   (751)
                                ========   ========   ========   ========
2001:
-----
Pressure vessels and springs    $  5,056   $    918   $    111   $  6,085
Cylinders                         (2,798)       417        199     (2,182)
Plastics                          (3,101)     1,978          -     (1,123)
Corporate and other(1)            (5,429)        71      1,698     (3,660)
Goodwill impairment               (2,946)         -      2,946          -
                                --------   --------   --------   --------
  Totals                        $ (9,218)  $  3,384   $  4,954   $   (880)
                                ========   ========   ========   ========

(1) - Include gain of $375,000 on sale of equipment.

Selling, General and Administrative

     Selling, general and administrative (SGA) expenses for 2002 were $13.3
million, compared to $15.7 million for 2001.  This decrease in SGA is directly
related to the decreasing trend in sales, resulting in lower commissions
expense, cost cutting measures taken during June 2001 and progress made on the
restructuring, both of which included personnel reductions in sales and
administration.  Management estimates the savings from these reductions to be
approximately $2.0 million annually.  However, the benefits of these cost
cutting measures are being more than offset by the continuation of the
negative trend in sales and the resulting effect on the Company's ability to

                                    - 29 -

absorb costs.  SGA expenses as a percentage of sales increased to 18.7% for
2002 compared to 15.8% in 2001.  SGA as a percentage of sales was higher in
2002 compared to 2001, which was due to the faster rate at which volume
decreased compared to decreases in relatively fixed administrative costs.

Other (Income) Expense

     Other income for 2002 was $0.8 million, compared to other expense of $1.7
million for 2001.  The components are as follows:
                                                 2002      2001     Change
                                               --------  --------  --------
Amortization of goodwill and other intangibles $      -  $  2,008  $ (2,008)
Gain on sale of equipment with zero book value     (375)     (375)        -
Other (income) expense, net                        (412)       94      (506)
                                               --------  --------  --------
Total other (income) expense, net              $   (787) $  1,727  $ (2,514)
                                               ========  ========  ========

     We stopped amortizing goodwill effective January 1, 2002.  In both
December 2001 and January 2002, we sold two items of equipment at $375,000
neither of which had book value.  The increase in the remaining other income
is primarily due to higher levels of sales of scrap and miscellaneous parts
due to cleaning out idled facilities.  There were no significant offsetting
items netted into other (income) expense, net, in either period.

Interest Expense

     Interest expense, net, for 2002 was almost $8.0 million compared to $7.1
million for 2001.  For 2002 and 2001, a total of $2.5 million and $3.1
million, respectively, of interest expense has been allocated to or actually
incurred in discontinued operations.  On a combined basis, interest expense
was $10.5 million in 2002 compared to $10.4 million in 2001.  Although our
debt has decreased by $24.4 million using cash from asset sales, and prime
lending rates have decreased from the end of 2001 levels to the end of 2002
levels, the effect on interest expense resulting from these decreases was more
than offset by the increased default rate being paid on the BOA revolving
credit and term loan facilities and $1.675 million in overadvance fees paid in
2002.

Income Taxes

     There was no tax provision from continuing operations in 2002 compared to
a tax provision of $12.7 million for 2001.  The Company has net operating loss
carryforwards for Federal tax return reporting purposes totaling $124.1
million at December 31, 2002, $79.2 million of which expire by 2004.  In 2001
and 2002 and continuing until and if the Company returns to profitability and
it is more likely than not that the Company will realize some benefit from its
loss carryforwards, management has determined to fully reserve for the total
amount of net deferred tax assets as of December 31, 2002 and 2001.

Discontinued Operations

     There was a loss from discontinued operations for 2002 of $1.3 million
compared to a loss from discontinued operations of $9.2 million in 2001.  The
loss from discontinued operations in 2002 relates to a $3.1 million gain on
disposal of the discontinued materials handling systems operations in
September 2002 partially offset by a loss from its discontinued operations of
$0.5 million, which includes allocated interest expense of $2.0 million, and a
loss on disposal of the discontinued bridges and cranes operations of $3.9
million, which includes allocated interest expense of $0.5 million.  The loss
on disposal of the discontinued bridges and cranes operations differed from

                                    - 30 -

the 2001 due to adjustments of the carrying values to net realizable value,
primarily machinery and equipment and receivables, of assets retained from the
sale of the discontinued bridges and cranes operations.

     There was a loss from discontinued operations for 2001 of $9.2 million.
The Company recorded a fourth quarter 2001 charge for estimated loss on
disposal of discontinued operations ($6.4 million) related to estimated
phase-out period operating losses, lease termination costs and asset
writedowns of the discontinued bridges and cranes business as management
expected that the materials handling systems business would be sold at a price
exceeding its carrying value.

     There was a loss from discontinued bridges and cranes operations during
2001 ($5.3 million) and income from discontinued materials handling systems
operations ($3.0 million).  Management adjusted the reserve for estimated
expenses related to Chatwins Group's former grating business ($0.3 million)
due to an increase in estimated future operating lease commitments.  There was
a loss from discontinued agricultural operations ($135,000) during 2001.

     For 2001, discontinued operations includes a total of $3.1 million of
interest expense.  Interest expense is allocated to discontinued operations on
the basis of the percentage of total average assets of discontinued operations
to gross total assets for the period presented.

Other Comprehensive Loss

     There was another comprehensive loss in 2002 of $0.9 million compared to
$1.1 million in 2001.  Both other comprehensive losses relate to additional
minimum pension liabilities recorded as the result of the decline in the fair
market value of the assets of the Company's two defined benefit pension plans.


LIQUIDITY AND CAPITAL RESOURCES

General

     The Company manages its liquidity as a consolidated enterprise.  The
operating groups of the Company carry minimal cash balances.  Cash generated
from group 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 group operating activities generally is provided from funds
available under the same revolving credit arrangements.

Recent Events

Refinancing

     On December 3, 2003, the Company announced that it was successful in
refinancing its bank loan facilities and restructuring its 13% senior notes.
On that date, the Company entered into a new $25.0 million revolving and term
loan bank credit facility with Congress Financial Corporation (Congress) that
replaced its then existing revolving and term loan facility with Bank of
America (BOA).  At the same time, the Company also entered into $5.2 million
of new loan facilities with two private capital funds through a $4.2 million
secured term loan and a $1.0 million increase in a then existing subordinated
note payable.  Proceeds from these refinancing activities totaled $13.0
million, including $4.6 million under the revolving credit facility, $3.2
million under the term loan facility and $5.2 million of financing from the
private capital funds.  At the time of the refinancing, the Company's
indebtedness to BOA totaled $11.7 million, including $10.8 million of
revolving credit debt and a term loan of $0.9 million.  Proceeds from the

                                    - 31 -

refinancing were used to repay our then existing BOA facilities, fund $0.7
million of consent fees payable to our 13% senior noteholders and pay $0.6
million of transaction related fees and expense to our new lenders.  All
defaults that existed under the BOA facilities at the time of the refinancing
were removed as the result of the full repayment of amounts then outstanding.

Congress Financial Corporation Revolving and Term Loan Credit Facility

     On December 3, 2003, the Company entered into a new revolving and term
loan bank credit facility with Congress Financial Corporation.  This credit
facility consists of revolving credit, term loan and letter of credit
accommodations up to a maximum credit of $25.0 million.  At December 31, 2003,
the Company had outstanding borrowings under this facility totaling $12.4
million, including $9.2 million of revolving credit and a term loan of $3.2
million.  The $3.2 million term loan amortizes to the revolving credit
availability at a rate of $53,000 per month beginning on January 31, 2004
until fully paid. This facility has a three-year initial term and
automatically renews for additional one-year increments unless either party
gives the other notice of termination at least 90 days prior to the beginning
of the next one-year term.

     Interest on loans outstanding under the Congress facility is payable
monthly at a variable rate tied to the prime rate publicly announced from time
to time by Wachovia Bank, National Association, plus 2.50%.  The facility also
provides for a default interest rate of the prime rate plus 4.50%.

     The Congress facility is collateralized by a continuing security interest
and lien on substantially all of the current and after-acquired assets of
Reunion including, without limitation, all accounts receivable, inventory,
real property, equipment, chattel paper, documents, instruments, deposit
accounts, contract rights and general intangibles.

     The Congress facility requires Reunion to comply with financial covenants
and other covenants, including a minimum amount of earnings before interest,
taxes, depreciation and amortization (EBITDA) and a minimum fixed charge
coverage ratio.  The minimum EBITDA covenant began in 2004 and requires the
Company to maintain minimum monthly amounts of EBITDA ranging from $450,000 in
January 2004 to $600,000 in December 2004 with $50,000 to $100,000 increments
or decrements occurring during the year.  There are also minimum monthly
EBITDA amounts required during 2005 and 2006.  Through February 2004, the
Company achieved the minimum monthly EBITDA required for compliance with this
covenant.  The minimum fixed charge coverage ratio covenant requires the
Company to maintain a minimum fixed charge coverage ratio to be tested as of
the last day of each fiscal quarter beginning with the quarter ended March 31,
2004, for the year-to-date period starting on January 1, 2004.  For quarters
ended on and after December 31, 2004, the components of the calculation are on
a rolling, twelve-month basis.  The ratio is defined as EBITDA divided by
fixed charges (defined as interest expense, capital expenditures, regularly
scheduled or required principal payments on debt and taxes paid).  For the
ratio calculation period ended March 31, 2004 and for each year-to-date period
during 2004 ended on quarters thereafter, the required minimum fixed charge
coverage ratio is 0.65:1, 0.77:1, 0.77:1 and 0.80:1, respectively.  There are
also minimum fixed charge coverage ratio amounts required during 2005 and
2006.  [Management believes, based on forecast data available as of mid-March
2004, that the Company will be in compliance with the minimum fixed charge
coverage ratio covenant for the period ended March 31, 2004.]

     In addition, the facilities contain various other affirmative and
negative covenants.  As of the date of this report, the Company was in

                                    - 32 -

compliance with all other covenants.  The facilities require Reunion to pay
the reasonable expenses incurred by Congress in connection with the
facilities.  Available borrowings under the revolving credit portion are based
upon a percentage of eligible receivables and inventories.

Private Capital Fund Financing

     On August 11, 2003, Reunion borrowed $2.5 million from a private capital
fund by executing a senior subordinated secured promissory note payable in the
amount of and with cash proceeds of $2.5 million.  The note bears interest at
10% per annum, such interest being payable on the last day of every month in
arrears commencing on August 31, 2003.  The principal amount of $2.5 million
was due on August 11, 2005 with voluntary prepayments permitted but was
extended to December 5, 2006 as discussed below.  The note is secured by a
majority of the assets of Reunion, provided that such security interest is
subordinate to the security interest of Congress.  In addition to its
subordinated security interest, the fund received a warrant to purchase
625,000 shares of the Company's common stock and registration rights with
respect to the warrant and shares issuable thereto at a price of $0.01 per
share.  The cash proceeds were used for working capital and other general
corporate purposes.

     In connection with the refinancing on December 3, 2003, this same private
capital fund amended and restated its senior subordinated secured promissory
note to provide an additional $1.0 million of financing to the Company at the
same interest rate but changed the maturity date from August 11, 2005 to
December 5, 2006.  No additional warrants were issued.

     In connection with the refinancing on December 3, 2003, a separate
private capital fund provided the Company with a $4.2 million loan evidenced
by a senior subordinated secured promissory note payable with net cash
proceeds of $4.0 million after fees and expenses.  The note bears interest at
a rate of the greater of 12%, or the prime rate as published in the Wall
Street Journal plus 8%.  Interest is payable on the first day of every month
commencing on January 1, 2004.  The principal amount of $4.2 million is due on
December 1, 2006.  Prepayments in whole or in part are permitted without
penalty commencing in May 2004.  The note is secured by mortgage liens and/or
deed of trust security interests totaling $4.2 million encumbering all
premises owned by the Company.  In addition to its security interest, the fund
received a warrant to purchase 500,000 shares of the Company's common stock
and registration rights with respect to the warrant and shares issuable
thereto at a price of $0.50 per share.

13% Senior Notes

     We had a total of $24.855 million of 13% senior notes outstanding.  The
senior notes required semi-annual interest payments every November 1st and May
1st and sinking fund payments of $12.5 million on May 1, 2002 and $12.355
million on May 1, 2003.  Since November 1, 2001, we were unable to make the
required semi-annual interest payments or the sinking fund payments due May 1,
2002 and 2003.  As a result, an event of default, as defined in the indenture
governing the 13% senior notes, had existed since December 1, 2001 as we were
not able to make the November 1, 2001 semi-annual interest payment within the
30-day cure period provided for in the indenture.

     In November 2003, we solicited the consent of our noteholders to certain
provisions and waivers of the indenture governing the 13% senior notes in an
effort to facilitate the refinancing.  The significant provisions of the
solicitation requested that the noteholders consent to permanently waive all
then existing defaults under the indenture, cancel all accrued and unpaid
interest, cancel 12% of the principal amount of senior notes and extend the
maturity of the notes to December 2006.  In order for the consent to be

                                    - 33 -

effective, we needed noteholders comprising at least 90% of the principal
amount of outstanding senior notes to consent.  As of December 1, 2003, the
end of the consent period, $23,250,700 of the $24,855,000 principal amount of
senior notes, or 93.55%, had consented.

     In exchange for their consent, each consenting noteholder received a
consent fee of $27.625, warrants to purchase 76.18 shares of the Company's
common stock at $0.01 per share for each $1,000 of principal amount of notes
owned and a junior priority lien on the Company's assets.  In the refinancing
that took place on December 3, we placed in escrow with the trustee of the
senior notes, $686,619 for payment of consent fees, of which $642,301 has been
or will be disbursed to consenting senior noteholders.  Warrants to purchase
the Company's common stock totaling 1,771,217 have been reserved for future
issuance to consenting noteholders.  Effective with having obtained the
consents of holders of at least 90% of the principal amount of outstanding
senior notes, all previously existing defaults under the indenture for the 13%
senior notes have been permanently waived.

Summary of 2003 Activities

     Cash and cash equivalents totaled $0.8 million at both December 31, 2003
and 2002. For 2003, $2.7 million of cash used by operating activities was
provided by $0.2 million of investing activities and almost $2.5 million of
financing.

Operating Activities

     Cash used by operating activities of $2.7 million in 2003 was the result
of interest payments and operating losses, excluding non-cash items of income
and expense, exceeding cash provided by a decrease in net working capital.

Investing Activities

     The Company sold idle property and equipment, generating $0.5 million in
cash proceeds.  Capital expenditures were $0.2 million.

Financing Activities

     The Company made repayments of debt totaling $4.0 million, which included
$3.4 million in full repayment of the BOA term loan A, $0.5 million on a note
payable to the Shaw Group, former owner of Naptech Pressure Systems acquired
by Reunion in January 2001, and other debt repayments totaling $94,000 on
capital lease obligations and other debt.  Revolving credit facility
borrowings decreased $2.6 million during the year and we paid $2.2 million in
financing costs and fees.  These financing activities were funded by $11.4
million in new debt, including the $3.2 million Congress term loan, a total of
$7.7 million of subordinated financing provided by two private capital funds
and $0.5 million provided by Mr. Bradley to fund the Shaw Group payment
discussed above.

                                    - 34 -

CONTRACTUAL OBLIGATIONS

     The following represents a tabular summarization of the Company's
contractual obligations at December 31, 2003 (in thousands):

                                         Less
                                         Than     1 to 3    4 to 5     After
Description                    Total    1 Year     Years     Years    5 Years
--------------------------   --------  --------  --------  --------  --------
Congress term loan           $  3,175  $    636  $  1,272  $  1,267  $      -
Note payable                    4,200               4,200                   -
Note payable                    3,500               3,500                   -
13% senior notes               22,065         -    22,065         -         -
Notes payable                   4,161     4,161         -         -         -
Notes payable - related
  parties                       5,115     5,115         -         -         -
Capital lease obligations
  and SBA loans                    56        47         9         -         -
Noncancellable operating
  lease commitments            11,820     2,129     2,462     1,687     5,542
                             --------  --------  --------  --------  --------
Total contractual
  obligations                $ 54,092  $ 12,088  $ 33,508  $  2,954  $  5,542
                             ========  ========  ========  ========  ========

     The above table shows the contractual aggregate maturities of debt,
excluding $9.2 million of revolving credit facility borrowings, and
commitments under noncancellable operating leases.  As of December 31, 2003,
holders of $1.6 million of principal amount of 13% senior notes had not yet
consented to the provisions and waivers in the November 2003 solicitation.
However, since the Company succeeded in obtaining the consent of holders of
more than 90% of the principal amount of senior notes, and since such holders
have directed the trustee to refrain from exercising any remedies in respect
of past, present or future defaults, the $1.6 million principal amount of
senior notes held by non-consenting holders  is classified as being due in
December 2006.  The notes payable totaling $7.7 million and the 13% senior
notes shown as contractual obligations in the 1 to 3 years category are due at
various times during December 2006.  Notes payable and notes payable - related
parties, although contractually due either currently or during 2004, may not
be paid due to restrictions imposed by the Congress loan and security
agreement.


CRITICAL ACCOUNTING POLICIES

Use of Estimates

     The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States.
When more than one accounting principle, or method of its application, is
generally accepted, management selects the principle or method that is
appropriate in the Company's specific circumstances.  Application of the
accounting principles requires the Company's management to make estimates
about the future resolution of existing uncertainties and that affect the
reported amounts of assets, liabilities, revenues, expenses which in the
normal course of business are subsequently adjusted to actual results.  Actual
results could differ from such estimates.  In preparing these financial
statements, management has made its best estimates and judgments of the
amounts and disclosures included in the consolidated financial statements
giving due regard to materiality.

                                    - 35 -

Revenue Recognition, Accounts Receivable and Allowance for Doubtful Accounts

     Sales are recorded when title and risks of ownership transfer to the
buyer.  Shipping and handling fees charged to customers are recorded as
revenues and the related costs are recorded as cost of sales.

     The Company markets its products to a diverse customer base in the United
States and in other countries.  Credit is extended after a credit review by
management, which is based on a customer's ability to perform its obligations.
Such reviews are regularly updated.  The allowance for doubtful accounts is
based upon agings of customer balances and specific account reviews by
management.  Reunion Industries has no concentration of credit risks and
generally does not require collateral or other security from its customers.

     Accounts receivable are presented net of a reserve for doubtful accounts
of $300,000 at December 31, 2003 and $485,000 at December 31, 2002, which
represented 5.3% and 2.6%, respectively, of gross trade receivables (excluding
other non-trade receivables).

Inventories and Inventory Reserves

     At December 31, 2003, inventories are stated at the lower of cost or
market, at costs that approximate the first-in, first-out method of inventory
valuation.  During the third quarter of 2003, for those locations of the
Company that had been using the last-in, first-out method of inventory
valuation, we changed the method of valuing inventory to the first-in,
first-out method.  The effect on the results of operations for the year ended
December 31, 2003 was inconsequential.  Approximately 62% of total inventories
at December 31, 2002 had been valued using the last-in, first-out method.
Work-in-process and finished goods include material costs, labor costs and
manufacturing overhead.  Reserves for excess, slow-moving and obsolete
inventories are based on reviews of inventory usage reports for items more
than one year old.  The Company evaluates its inventories on a quarterly basis
to identify excess, slow-moving and obsolete inventories and assess reserve
adequacy.  When this evaluation indicates such inventories exist, the reserve
is increased by a charge to operations or such inventories are written off.

Goodwill and Impairment

     The excess of the purchase consideration over the fair value of the net
assets of acquired businesses is considered to be goodwill and, until December
31, 2001, was being amortized over 15 years using the straight-line method.

     The Company reviews goodwill when events or changes in circumstances
indicate that the carrying amount of goodwill may not be recoverable.  We also
review goodwill as required by SFAS No. 142, "Goodwill and Other Intangible
Assets", which requires that goodwill be tested annually using a two-step
process.  The first is to identify any potential impairment by comparing the
carrying value of reporting units to their fair value.  If a potential
impairment is identified, the second step is to compare the implied fair value
of goodwill with its carrying amount to measure the impairment loss.
Reporting unit fair value is estimated using the income approach, which
assumes that the value of a reporting unit can be computed as the present
value of the assumed future returns of an enterprise discounted at a rate of
return that reflects the risk of an investment.  A significant increase in the
rate at which the assumed future returns are discounted could result in an
unexpected impairment charge to goodwill, which could have a negative impact
on our operating results.

     At December 31, 2003, the Company had $11.0 million of goodwill on its
consolidated balance sheet.  Of the $11.0 million of goodwill, $9.5 million

                                    - 36 -

relates to the pressure vessels and springs segment and $1.5 million relates
to the cylinders segment.  We have completed all transitional and annual
impairment tests necessary to date and concluded that our goodwill is not
impaired.

Pensions

     The Company accounts for its defined benefit pension plans in accordance
with SFAS No. 87, "Employers' Accounting for Pensions" which requires that
amounts recognized in the consolidated financial statements be determined on
an actuarial basis.  The Company makes contributions to the defined benefit
plans based on the minimum funding requirements of the Employee Retirement
Income Security Act of 1974.

     The Company uses the fair value of plan assets to determine the expected
and actual returns on plan assets.  The difference between the expected return
and actual return is deferred.  During the second half of 2001 and the year
2002, the fair value of assets in both of the Company's defined benefit
pension plans decreased for various reasons, including a downturn in the
overall economy and unusual world events.  During 2003, the fair value of
assets increased but was mostly offset by an increase in the benefit
obligation.  The Company has recorded additional minimum pension liabilities
in excess of amounts previously accrued totaling $2.0 million, which is
classified as accumulated comprehensive loss within stockholders' deficit at
both December 31, 2003 and 2002.  Although management believes the long-term
rates of return used to calculate the expected returns on plan assets are
reasonable, a trend of actual returns being less than expected returns has
developed such that future pension costs may continue to increase.

     In determining the discount rates to be used at the end of each year to
determine plan liabilities, the Company looks at rates of return on
high-quality, fixed-income investments that receive one of the two highest
ratings given by a recognized ratings agency.  Changes in discount rates over
the last three years have not materially affected pension costs and the net
effect of changes in the discount rate, as well as the net effect of other
changes in actuarial assumptions and experience, have been deferred as allowed
by SFAS 87.

     [The Company currently expects consolidated pension costs in 2004 will
approximate 2003.]

Other Postretirement Benefits

     The Company provides health benefits for certain retired employees at the
Company's pressure vessel operations and Plastics and of its Corporate
Executive Payroll.  These plans are not funded.  Other postretirement benefit
costs and the benefit obligation are actuarially determined based on discount
rates and expected trends in healthcare costs.  Recent experience has been
less favorable during 2003 than the actuarial assumptions resulting in a
deferral of costs.  As a result, [the Company currently expects consolidated
other postretirement benefit costs for 2004 to increase from 2003.]

Stock-Based Compensation

     The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" and related interpretations in
accounting for stock options and awards.  Accordingly, no compensation costs
for stock options is included in operating results since all awards were made
at exercise prices at or above their fair value on the dates of grants.

                                    - 37 -

     In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure, amending FASB Statement
No. 123, Accounting for Stock Based Compensation."  This statement amends SFAS
No. 123 to provide alternative methods of transition for an entity that
voluntarily changes to the fair value based method of accounting for
stock-based employee compensation.  It also amends the disclosure provisions
of SFAS No. 123 to require prominent disclosure about the effects on operating
results of an entity's accounting policy decisions with respect to stock-based
employee compensation.  SFAS No. 148 also amends APB 28, "Interim Financial
Reporting" to require disclosure about those effects in interim financial
information.  We adopted the disclosure provisions for the year ended December
31, 2002.  The following table illustrates the effect on results of operations
if the Company had applied the fair value recognition provisions of SFAS No.
123.
                                                   Year Ended December 31,
                                                   2003      2002      2001
                                                 --------  --------  --------
Net (loss) income as reported                    $  2,640  $(12,859) $(38,128)
Add:     Stock-based employee compensation
         expense included in reported results           -         -         -
Deduct:  Total stock-based employee compensation
         determined under fair value method for
         stock options, net of tax                      -         -      (246)
                                                 --------  --------  --------
Pro forma income (loss) applicable to
  common stockholders                            $  2,640  $(12,859) $(38,374)
                                                 ========  ========  ========

Basic (loss) earnings per share, as reported     $   0.16  $  (0.82) $  (2.45)
                                                 ========  ========  ========
Basic (loss) earnings per share, pro forma       $   0.16  $  (0.82) $  (2.46)
                                                 ========  ========  ========
Diluted (loss) earnings per share, as reported   $   0.16  $  (0.82) $  (2.45)
                                                 ========  ========  ========
Diluted (loss) earnings per share, pro forma     $   0.16  $  (0.82) $  (2.46)
                                                 ========  ========  ========

Environmental Contingencies

     When it is probable that a liability has been incurred or an asset has
been impaired, a loss is recognized assuming the amount of the loss can be
reasonably estimated.  Except as described in the following paragraphs, the
Company believes it is currently in material compliance with existing
environmental protection laws and regulations and is not involved in any
significant remediation activities or administrative or judicial proceedings
arising under federal, state or local environmental protection laws and
regulations.  In addition to management personnel who are responsible for
monitoring environmental compliance and arranging for remedial actions that
may be required, the Company has also employed outside consultants from time
to time to advise and assist the Company's environmental compliance efforts.
Except as described in the following paragraphs, the Company has not recorded
any accruals for environmental costs.

Louisiana Environmental

     In connection with the sale of its former oil and gas operations,
pre-merger Reunion retained certain oil and gas properties in Louisiana
because of litigation concerning environmental matters.  The Company is in the
process of environmental remediation under a plan approved by the Louisiana
Department of Natural Resources Office of Conservation (LDNROC).  The Company
has recorded an accrual for its proportionate share of the remaining estimated

                                    - 38 -

costs to remediate the site based on plans and estimates developed by the
environmental consultants hired by the Company.  During 1999, the Company
conducted remediation work on the property.  The Company paid $172,000 of the
total cost of $300,000.  Regulatory hearings were held in January 2000 and
2001 to consider the adequacy of the remediation conducted to date.  In August
2001, LDNROC issued its order for the Company to complete the soil remediation
under the plan approved in 1999 and to perform additional testing to determine
to what extent groundwater contamination might exist.  No remediation was
performed in 2000, 2001 or 2002 pending the decision.  However, the Company
has paid $434,000 for its share of consulting services in connection with the
hearings.  Most recently, the Company's environmental consultants filed with
the LDNROC updated amendments to the prior approved plan for sampling and
remediation.  If approved, the plan will be implemented.  At December 31,
2003, after accruing an additional $40,000 in December 2002, the balance
accrued for these remediation costs is approximately $831,000.  The Company
believes that future remediation costs will not exceed the amount accrued and
will be funded by net production revenues of the producing wells on the
property as part of the settlement agreement discussed below.

     Litigation on this matter had been stayed pending the determination by
the LDNROC as to the extent of remediation that would be required.  Such stay
was lifted and the District Court had established a jury trial for September
22, 2003 to determine the necessity for any further remediation and the extent
of damages, if any, suffered by the plaintiff owners of the property.
However, an agreement to settle the litigation between the plaintiff owners of
the property and the other involved parties, including the Company, has been
reached and finalized.  The Company's share of the settlement costs were
funded by the other defendants to the litigation.  The terms of the agreement
are that the Company must reimburse the other defendants to the litigation at
least $120,000 per year for ten years, but that such amount can be paid from
net production revenues from operation of the producing wells owned by the
Company on the property.  However, this is a non-recourse agreement such that,
should the wells be depleted before all such costs are reimbursed, the Company
is not required to fund the unreimbursed balance.  During 2003 and 2002, net
production revenues totaled $248,000 and $181,000, respectively.  Based on
past operation results of the producing well, the Company believes that future
net production revenues will be sufficient to fund the minimum required under
the settlement agreement.

Gambonini Environmental

     On March 15, 2002, the Company received a Request for Information from
the United States Environmental Protection Agency (USEPA) regarding the
Gambonini Mine Site (Site) outside Petaluma, Marin County, California.  The
Company gathered and forwarded the information the USEPA requested.  On May
16, 2002, the Company, as the successor to Buttes Gas & Oil Company (BGO),
received from the USEPA a notice of potential liability and demand for payment
of $3,909,614.37 for reimbursement of costs related to the USEPA's removal and
environmental restoration efforts at the Site initiated in 1998 pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA).

     BGO, predecessor by merger to the Company, leased the site for mining
purposes and operated a mercury mine there from 1965 to 1970.  BGO's mining
operations were terminated in 1970.  Subsequently, under the supervision of
the environmental and planning representatives of Marin County, BGO completed
closure and environmental restoration activities at the site, including
stabilization and re-vegetation of the site.  BGO then quitclaimed the mining
lease to the Site owners, the Gambonini's, in 1973.  Because of apparent

                                    - 39 -

overgrazing at the Site subsequent to BGO's restoration efforts, a storm in
1982 caused severe flooding, which resulted in the failure of a dam built to
retain mining materials.  Runoff from the flood released mining materials into
the creek below and, ultimately, into the Tomales Bay, a local recreation and
fishing area.

     In March 2003, the Company and the USEPA reached an agreement in
principle to settle the USEPA's claim for payment by the Company of $100,000
plus interest at the Superfund rate (which is currently 1.27%), payable in
three installments over a two-year period.  This amount is accrued as of
December 31, 2003 and 2002.  This settlement agreement will resolve the
USEPA's claims for reimbursement of past environmental response costs under
CERCLA, but does not resolve all possible claims the United States may have
with respect to the Gambonini mine site which could include, but not be
limited to, claims for natural resource damages.  The United States has given
no indication as to whether or not it will pursue such claims.  The Company
has agreed to toll the statute of limitations with respect to any natural
resource damages claims, if any, from August 30, 2002 to April 1, 2008.

Rostone Environmental

     In February 1996, Reunion was informed by a contracted environmental
services consulting firm that soil and ground water contamination exists at
its Lafayette, Indiana site.  Since then, the Company has expended $419,275 of
remediation costs.  The Company estimates completion of this remediation
effort to be $15,000.


FACTORS THAT COULD AFFECT FUTURE RESULTS

Reunion's vendors may restrict credit terms

     We have corrected many vendor-related problems with liquidity generated
from the refinancing and from asset sales during 2002.  However, another
period of tight liquidity could result in key vendors restricting or
eliminating the extension of credit terms to us.  If this would happen, our
ability to obtain raw materials would be strained significantly and our
ability to manufacture products would be reduced.

Reunion's bank financing is subject to financial covenants

     We have removed all defaults on our bank financing and senior notes.
However, our new bank financing is subject to monthly financial and other
covenants.  If our operations do not improve during 2004, we may fail to meet
one or more financial or other covenants.  If this would happen, we would be
in default on our bank obligations and, subject to the terms of the loan and
security agreement, all of our bank loans would be due and payable. Although
it may be possible to negotiate waivers of defaults, no assurances can be
given that we would be able to do so.

Reunion is exposed to the risks of litigation and environmental matters

     We have made significant progress in settling major exposures to
litigation and environmental claims during 2003.  However, we are still
exposed to certain undecided litigation and environmental matters.  An adverse
outcome in one or more of these matters could have a significant negative
effect on our financial position and results of operations.

Reunion operates in highly competitive mature, niche markets

     Our products are sold in highly competitive mature, niche markets and we
compete with companies of varying size, including divisions and subsidiaries

                                    - 40 -

of larger companies that have financial resources that exceed ours.  This
combination of competitive and financial pressures could cause us to lose
market share or erode prices, which could negatively impact our financial
position and results of operations.

Reunion's past performance could impact future prospects

     Our past performance has been poor.  Because of this, potential or
current customers may decide not to do business with us.  If this were to
happen, our sales may not increase or may decline.  If sales do not increase
or we experience a further decline in sales, our ability to cover costs would
be further reduced, which could negatively impact our financial position and
results of operations.

Reunion is a going concern

     The financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.  At December 31, 2003, the
Company has a deficiency in working capital of $4.0 million net of related
party obligations, a loss from continuing operations of $7.4 million before
gain on debt extinguishment, and a deficiency in assets of $27.8 million.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern.  The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classifications of liabilities
that may result from the outcome of this uncertainty.

     We successfully refinanced our bank debt, extinguished a significant
portion of our obligations under the senior notes and removed all previously
existing defaults on our debt.  These steps were taken to improve liquidity
and defer the principal maturities on a significant portion of our debt.  The
Company is investigating other recapitalization scenarios in an effort to
provide additional liquidity and extinguishments or deferrals of debt
obligations.  Although we believe we can accomplish these plans, no assurances
exist that we will.  Failure to accomplish these plans could have an adverse
impact on the Company's liquidity, financial position and future operations.


RECENT ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 143, "Accounting for Asset Retirement Obligations."  This statement
requires recognition of a liability for any legal obligations associated with
the retirement of a tangible long-lived asset.  Any such liability will be
recorded at fair value when incurred and generally results in an increase to
the carrying amount of the related long-lived asset.  The Company adopted SFAS
No. 143 in the first quarter of 2003.  In doing so, the Company evaluated its
operating leases for property and equipment and environmental review reports
for owned property and concluded that the Company has no legal obligations for
retirement of tangible long-lived assets.  Therefore, no amount has been
accrued in the financial statements at and for the period ended December 31,
2003 related to the adoption of SFAS No. 143.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections."  This statement eliminates the automatic
classification of gain or loss on extinguishment of debt as an extraordinary
item of income and requires that such gain or loss be evaluated for
extraordinary classification under the criteria of Accounting Principles Board
No. 30 "Reporting Results of Operations."  This statement also requires

                                    - 41 -

sales-leaseback accounting for certain lease modifications that have economic
effects that are similar to sales-leaseback transactions, and makes various
other technical corrections to existing pronouncements.  This statement was
effective for us for the year ending December 31, 2003.

     In November 2003, we solicited the consent of our noteholders to certain
provisions and waivers of the indenture governing the 13% senior notes in an
effort to facilitate the refinancing.  The significant provisions of the
solicitation requested that the noteholders consent to waive all then existing
defaults under the indenture, cancel all accrued and unpaid interest, cancel
12% of the principal amount of senior notes and extend the maturity of the
notes to December 2006.  In order for the consent to be effective, we needed
noteholders comprising at least 90% of the principal amount of outstanding
senior notes to consent.  As of December 1, 2003, the end of the consent
period, $23,250,700 of the $24,855,000 principal amount of senior notes, or
93.55%, had consented.  Accordingly, 12% of the $23,250,700 principal amount
of senior notes of noteholders that had consented to the various provisions
and waivers, or $2.8 million, was extinguished pursuant to the provisions of
the consent.

     As of December 1, 2003, accrued and unpaid interest related to the 13%
senior notes totaled $8.8 million, of which $8.2 million related to the
$23,250,700 principal amount of senior notes of noteholders that had consented
to the various provisions and waivers.  Such interest was permanently
extinguished pursuant to the provisions of the consent.  The remaining $0.6
million of accrued and unpaid interest is included in accrued interest in the
accompanying consolidated balance sheet as of December 31, 2003.

     [The Company is currently investigating other recapitalization scenarios
that include, among other things, the use of additional private capital fund
financing to repurchase at discounts with waivers of all accrued and unpaid
interest some portion or all of our senior and unsecured suboridinate notes
payable.]  The Company believes that, as the result of recent events related
to our refinancing and senior notes and, in view of our continuing efforts to
investigate other recapitalization scenarios, resulting gains from such
activities do not meet the criteria pursuant to APB Opinion No. 30, "Reporting
the Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions" for classification as extraordinary.

     In November 2002, the FASB issued FASB Interpretation (FIN) No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others."  FIN 45 requires that a
liability be recorded in the guarantor's balance sheet upon issuance of a
guarantee.  In addition, FIN 45 requires disclosures about the guarantees that
an entity has issued, including a rollforward of the entity's product warranty
liabilities.  Our financing agreements prohibit us from guaranteeing, either
directly or otherwise, the indebtedness of others.  We complied with the
warranty rollforward provisions of FIN 45.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation, Transition and Disclosure."  SFAS No. 148 provides
alternative methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee compensation.  SFAS No.
148 also requires that disclosures of the pro forma effect of using the fair
value method of accounting for stock-based employee compensation be displayed
more prominently and in tabular format.  Additionally, SFAS No. 148 requires
disclosure of the pro forma effect in interim financial statements.  The
transition and annual disclosure requirements are effective for our 2003
fiscal year.  The Company accounts for compensatory stock options using APB
Opinion No. 25, "Accounting for Stock Issued to Employees."  The Company

                                 - 42 -

adopted the disclosure provisions of SFAS No. 148 in its 2003 first quarter,
as required.

     In January 2003, the FASB issued FIN 46, "Consolidation of Variable
Interest Entities." This Interpretation clarifies the application of
Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
certain entities in which equity investors do not have the characteristics of
a controlling financial interest or do not have sufficient equity at risk for
the entity to finance its activities without additional subordinated financial
support from other parties.  FIN 46 applies to variable interest entities
created after January 31, 2003, and is effective as of July 31, 2003 for
variable interest entities created prior to February 1, 2003.  Reunion does
not have variable interest entities and, therefore, FIN 46 had no effect on
our results of operation or financial position.

     In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133
on Derivative Instruments and Hedging Activities."  This statement amends SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," for
implementation issues related to the definition of a derivative and other FASB
projects related to financial instruments.  SFAS No. 149 requires that
contracts with comparable characteristics be accounted for in a similar
fashion.  SFAS No. 149 applies prospectively to contracts entered into or
modified after June 30, 2003 and for hedging relationships designated after
June 30, 2003.  The adoption of SFAS No. 149 did not have a material effect on
our results of operation or financial position.

     In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity."
This statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. SFAS No. 150 requires that financial instruments within the scope of
SFAS No. 150 be classified as a liability or an asset.  SFAS No. 150 is
effective for all financial instruments entered into after May 31, 2003 and
otherwise, the beginning of the first interim period after June 15, 2003.  The
adoption of SFAS No. 150 did not have to a material effect on our results of
operation or financial position.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     In the operation of its business, Reunion Industries has market risk
exposure to foreign currency exchange rates, raw material prices and interest
rates.  Each of these risks and Reunion Industries' strategies to manage the
exposure is discussed below.

     Reunion Industries manufactures its products in the United States and
sells its products in the United States and in foreign countries.  The
countries to which the Company exports its products vary from year to year.
International sales in 2003 and 2002 were in four areas:  the Far East;
Mexico; Western Europe; and Canada.  The majority of international sales in
2003 and 2002 relate to pressure vessel sales to customers in Taiwan and the
People's Republic of China.  Of Reunion's $68.5 million of consolidated net
sales for 2003, $7.5 million were export sales, of which $6.0 million related
to pressure vessel sales and $1.2 million related to Plastics.  The remainder
related to cylinder sales in Canada.  Of the $6.0 million of foreign pressure
vessel sales, approximately $4.9 million was in the Far East (principally
China and Taiwan) and $0.6 million was in Western Europe.  The remainder was
in Canada.  Plastics export sales included $0.5 million in Mexico with the
remainder in Europe and Canada.  Of Reunion's $70.8 million of consolidated
net sales for 2002, $9.6 million were export sales, of which $7.7 million
related to pressure vessel sales and $1.6 million related to Plastics.  The
remainder related to cylinder sales, primarily, in Canada.  Of the $7.7

                                   - 43 -

million of foreign pressure vessel sales, approximately $6.7 million was in
the Far East (principally China and Taiwan) and $0.7 million was in Western
Europe.  The remainder were in the Middle East and Canada.  Plastics export
sales included $0.8 million in Mexico with the remainder in Europe and Canada.

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

     The major raw materials used by Metals include welded and seamless steel
tubing and pipe, steel alloy bars, steel plates, brass tubing and bars and
aluminum extrusions.  The major raw material used by Plastics is thermoplastic
polymers.  These materials are available from a number of suppliers.  [Prices
for these materials are affected by changes in market demand, and there can be
no assurances that prices for these and other raw materials will not increase
in the future.]  [Reunion Industries' contracts with its Plastics customers
generally provide that such price increases can be passed through to its
customers.]  A 1.00% change in raw material prices would affect results of
operations by approximately $400,000.

      Reunion Industries' operating results are subject to risk from interest
rate fluctuations on debt that carries variable interest rates.  The variable
rate debt was approximately $17.6 million at December 31, 2003, which is
representative of balances outstanding during the year.  A 1.00% change in
interest rates would affect results of operations by approximately $180,000.


ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Reunion's consolidated financial statements are set forth beginning at
Page F-1.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
              ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.


ITEM 9A. CONTROLS AND PROCEDURES

        As required by Rule 13a-15(b), Reunion's management, including the
Chief Executive Officer and Chief Financial Officer, conducted an evaluation
as of the end of the period covered by this report, of the effectiveness of
Reunion's disclosure controls and procedures as defined in Exchange Act Rule
13a-15(e).  Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that Reunion's disclosure controls and procedures
were effective as of the end of the period covered by this report. As required
by Rule 13a-15(d), Reunion's management, including the Chief Executive Officer
and Chief Financial Officer, also conducted an evaluation of Reunion's
internal control over financial reporting to determine whether any changes
occurred during the fourth fiscal quarter that have materially affected, or
are reasonably likely to materially affect, Reunion's internal control over
financial reporting.  Based on that evaluation, there has been no such change
during the fourth fiscal quarter.

      It should be noted that any system of controls, however well designed
and operated, can provide only reasonable, and not absolute, assurance that
the objectives of the system will be met. In addition, the design of any
control system is based in part upon certain assumptions about the likelihood
of future events.

                                    - 44 -

                                   PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information under the captions "Proposal, Election of Directors" and
"Management Information; Executive Officers" is incorporated herein by
reference from the Company's Definitive Proxy Statement relating to its 2004
annual meeting of stockholders.


ITEM 11. EXECUTIVE COMPENSATION

     The information under the captions "Management Information" and
"Proposal; Election of Directors; Director Compensation" is incorporated
herein by reference from the Company's Definitive Proxy Statement relating to
its 2004 annual meeting of stockholders.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
              AND MANAGEMENT

     The information under the caption "Ownership Information" is incorporated
herein by reference from the Company's Definitive Proxy Statement relating to
its 2004 annual meeting of stockholders.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information under the caption "Ownership Information; Certain
Relationships and Related Transactions" is incorporated herein by reference
from the Company's Definitive Proxy Statement relating to its 2004 annual
meeting of stockholders.


ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

     The information under the caption "Fees Paid to Mahoney Cohen & Company,
CPA, P.C. and Ernst & Young LLP" is incorporated herein by reference from the
Company's Definitive Proxy Statement relating to its 2004 annual meeting of
stockholders.

                                    - 45 -

                                   PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a) Documents included in this report:

The following consolidated financial statements and financial statement
schedules of Reunion Industries, Inc. and its subsidiaries are included in
Part II, Item 8:

1.   Financial Statements (Pages F-1 through F-50)

     Report of Management
     Report of Independent Registered Public Accounting Firm - Mahoney
       Cohen & Company, CPA, P.C.
     Report of Independent Auditors - Ernst & Young LLP
     Consolidated Balance Sheets - December 31, 2003 and 2002
     Consolidated Statements of Income (Loss) and Comprehensive
       Income (Loss) - Years Ended December 31, 2003, 2002 and 2001
     Consolidated Statements of Cash Flows - Years Ended December 31, 2003,
       2002 and 2001
     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
Reunion Industries' financial statements and related notes.

3.   Exhibits

     See pages E-1 to E-5 for a listing of exhibits filed with this report or
incorporated by reference herein.

     (b)   Current Reports on Form 8-K

     The Company filed a Current Report on Form 8-K dated and filed on October
29, 2003 under Items 4 and 7 to announce a change in certifying accountants
and to file the predecessor auditor's letter to the United States Securities
and Exchange Commission pursuant to Item 304(a)(3) of Regulation S-K as an
exhibit.

                                    - 46 -

                               SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

Date: March 30, 2004                REUNION INDUSTRIES, INC.
      --------------
                                     By: /s/ Charles E. Bradley, Sr.
                                        ----------------------------
                                             Charles E. Bradley, Sr.
                                     Chairman 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 30th day of March, 2004.

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

/s/ Kimball J. Bradley                President, Chief Operating Officer
---------------------------           and Director
    Kimball J. Bradley

/s/ Joseph C. Lawyer                  Vice Chairman and Director
---------------------------
    Joseph C. Lawyer

/s/ John M. Froehlich                 Executive Vice President, Chief
---------------------------           Financial Officer, Treasurer and
    John M. Froehlich                 Assistant Secretary (chief financial
                                      and accounting officer)

/s/ Thomas N. Amonett                 Director
---------------------------
    Thomas N. Amonett

/s/ Thomas L. Cassidy                 Director
---------------------------
    Thomas L. Cassidy

/s/ David E. Jackson                  Director
---------------------------
    David E. Jackson

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

                                     - 47 -

                         REUNION INDUSTRIES, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                              Page
------------------------------------------                              ----

Report of Management....................................................F-2
Report of Independent Registered Public Accounting Firm - Mahoney
  Cohen & Company, CPA, P.C.............................................F-3
Report of Independent Auditors - Ernst & Young LLP......................F-4
Consolidated Balance Sheet..............................................F-5
Consolidated Statement of Income (Loss) and
  Comprehensive Income (Loss)...........................................F-6
Consolidated Statement of Cash Flows....................................F-8
Notes to Consolidated Financial Statements..............................F-9

                                   - F-1 -

                             Report of Management

     Management is responsible for the preparation and integrity of the
consolidated financial statements appearing in this Annual Report on Form
10-K.  The financial statements were prepared in conformity with accounting
principles generally accepted in the United States of America appropriate
under the circumstances and, accordingly, include some amounts based on
management's best judgments and estimates.  Financial information in this
Annual Report on Form 10-K is consistent with that in the financial
statements.

      Management is responsible for maintaining a system of internal business
controls and procedures to provide reasonable assurance, at an appropriate
cost/benefit relationship, that assets are safeguarded and that transactions
are authorized, recorded and reported properly.  The internal control system
is augmented by appropriate reviews by management, written policies and
guidelines, careful selection and training of qualified personnel and a
written code of business ethics applicable to all employees of Reunion and its
subsidiaries.  Management believes that Reunion's internal controls provide
reasonable assurance that assets are safeguarded against material loss from
unauthorized use or disposition and that the financial records are reliable
for preparing financial statements and other data and maintaining
accountability for assets.

      The Audit Committee of the Board of Directors, composed solely of
Directors who are not employees or officers of Reunion, meets on a regular
periodic basis with the independent auditors and management to discuss
internal business controls, auditing and financial reporting matters.  The
Committee reviews with the independent auditors the scope and results of the
audit effort.  The Committee also meets with the independent auditors without
management present to ensure that the independent auditors have free access to
the Audit Committee.

      The independent auditors, Mahoney Cohen & Company, CPA, P.C., are
engaged to audit the consolidated financial statements of Reunion and to
conduct such tests and related procedures as they deem necessary in accordance
with auditing standards generally accepted in the United States.  The opinion
of the independent auditors, based upon their audits of the consolidated
financial statements, is contained in this Annual Report on Form 10-K.

/s/ Charles E. Bradley, Sr.              /s/ John M. Froehlich
----------------------------------       ----------------------------------
Charles E. Bradley, Sr.                  John M. Froehlich
Chairman and Chief Executive Officer     Executive Vice President and
                                         Chief Financial Officer

                                   - F-2 -

           Report of Independent Registered Public Accounting Firm



Board of Directors and Stockholders
Reunion Industries, Inc.

We have audited the accompanying consolidated balance sheet of Reunion
Industries, Inc. as of December 31, 2003, and the related consolidated
statements of operations and comprehensive income and cash flows for the year
then ended.  Our audit also included the financial statement schedule listed
in the Index at Item 15.  These financial statements and schedule are the
responsibility of the Company's management.  Our responsibility is to express
an opinion on these financial statements and schedule based on our audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States of America.  Those standards 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.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Reunion Industries, Inc. at December 31, 2003, and the consolidated results
of their operations and their cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States
of America.  Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects, the information set forth
therein.

The accompanying financial statements have been prepared assuming that Reunion
Industries, Inc. will continue as a going concern.  As more fully described in
Note 1, at December 31, 2003, the Company has a deficiency in working capital
of $4.0 million net of related party obligations, a loss from continuing
operations of $7.4 million before gain on debt extinguishment, and a
deficiency in assets of $27.8 million.  These conditions raise substantial
doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1.
The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the outcome
of this uncertainty.


                      /s/ Mahoney Cohen & Company, CPA, P.C.


New York, New York
March 19, 2004

                                   - F-3 -

                        Report of Independent Auditors

Board of Directors and Stockholders
Reunion Industries, Inc.

We have audited the accompanying consolidated balance sheet of Reunion
Industries, Inc. as of December 31, 2002, and the related consolidated
statements of income (loss) and comprehensive income (loss) and cash flows for
each of the two years in the period ended December 31, 2002.  Our audits also
included the financial statement schedule listed in the Index at Item 15(a)
for the years ended December 31, 2002 and 2001.  These financial statements
and schedule are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States.  Those standards 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. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation.  We believe that our audits provide
a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Reunion Industries, Inc. at December 31, 2002, and the consolidated results
of their operations and their cash flows for each of the two years in the
period ended December 31, 2002, in conformity with accounting principles
generally accepted in the United States.  Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects, the information set forth therein.

The accompanying financial statements have been prepared assuming that Reunion
Industries, Inc. will continue as a going concern.  As more fully described in
Note 1, at December 31, 2002, the Company is in default on $40.0 million of
debt, has a deficiency in working capital of $57.8 million, a loss from
continuing operations of $11.5 million, and a deficiency in assets of $30.8
million.  These conditions raise substantial doubt about the Company's ability
to continue as a going concern.  Management's plans in regard to these matters
are also described in Note 1.  The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.

As discussed in Note 1 to the Consolidated Financial Statements, the Company
adopted Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" in 2002.


                            /s/ Ernst & Young LLP


Pittsburgh, Pennsylvania
March 14, 2003

                                   - F-4 -

                            REUNION INDUSTRIES, INC.
                          CONSOLIDATED BALANCE SHEETS
                                (in thousands)

                                           At December 31,     At December 31,
                                                     2003                2002
                                           --------------      --------------
     ASSETS:
Cash and cash equivalents                        $    755            $    807
Receivables, net                                   10,031              12,269
Advances to employees                                  56                 113
Inventories, net                                    8,207               7,895
Other current assets                                1,427               1,913
                                                 --------            --------
     Total current assets                          20,476              22,997

Property, plant and equipment, net                 14,197              16,716
Due from related parties                            1,405               1,496
Goodwill, net                                      11,007              11,007
Other assets, net                                   4,438               3,102
                                                 --------            --------
Total assets                                     $ 51,523            $ 55,318
                                                 ========            ========
     LIABILITIES AND STOCKHOLDERS' DEFICIT:
Debt in default                                  $      -            $ 40,049
Current maturities of debt                            683                  89
Trade payables                                      9,463              10,961
Accrued salaries and benefits                       1,985               2,247
Accrued interest                                    2,119               6,748
Accrued environmental reserves                        832               1,168
Reserve for restructuring                             474                 861
Due to related party                                3,276               2,422
Other current liabilities                           4,682               6,975
Notes payable                                       4,161               4,661
Notes payable - related parties                     5,115               4,615
                                                 --------            --------
     Total current liabilities                     32,790              80,796

Long-term debt                                     41,129                  61
Other liabilities                                   5,359               5,301
                                                 --------            --------
     Total liabilities                             79,278              86,158
                                                 --------            --------
Commitments and contingent liabilities                  -                   -
     Stockholders' deficit:
Common stock ($.01 par value, 20,000,000 shares
  authorized, 16,278,519 shares issued
  and outstanding)                                    163                 163
Capital in excess of par value                     25,609              25,195
Accumulated other comprehensive loss               (1,979)             (2,010)
Accumulated deficit                               (51,548)            (54,188)
                                                 --------            --------
Stockholders' deficit                             (27,755)            (30,840)
                                                 --------            --------
Total liabilities and stockholders' deficit      $ 51,523            $ 55,318
                                                 ========            ========

         See accompanying notes to consolidated financial statements.

                                   - F-5 -

                           REUNION INDUSTRIES, INC.
   CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
                 (in thousands, except per share information)

                                                  Year Ended December 31,
                                                  2003       2002       2001
                                              --------   --------   --------
     Sales:
Metals                                        $ 41,422   $ 38,222   $ 60,963
Plastics                                        27,087     32,577     38,532
                                              --------   --------   --------
  Total sales                                   68,509     70,799     99,495
                                              --------   --------   --------
     Cost of Sales:
Metals                                          34,049     33,266     50,300
Plastics                                        24,129     28,577     34,157
                                              --------   --------   --------
  Total cost of sales                           58,178     61,843     84,457
                                              --------   --------   --------
  Gross profit                                  10,331      8,956     15,038
Selling, general & administrative               10,969     13,256     15,718
Gain on debt extinguishment                    (10,991)         -          -
Provision for restructuring                          -          -      6,811
Other (income) expense, net                       (168)      (787)     1,727
                                              --------   --------   --------
  Operating profit (loss)                       10,521     (3,513)    (9,218)
Interest expense, net                            6,939      8,020      7,057
                                              --------   --------   --------
Income (loss) from continuing operations
  before income taxes                            3,582    (11,533)   (16,275)
Provision for income taxes                           -          -     12,678
                                              --------   --------   --------
Income (loss) from continuing operations         3,582    (11,533)   (28,953)
                                              --------   --------   --------
  Discontinued operations, net of tax:
Loss on disposal of discontinued bridges
  and cranes operations, less applicable
  income taxes of $-0- and $-0-, respectively     (942)    (3,913)         -
Estimated loss on disposal of discontinued
  bridges and cranes operations including
  provision of $1,633 for operating losses
  during phase-out period, less applicable
  income taxes of $-0-                               -          -     (6,399)
Loss from discontinued bridges and cranes
  operations, less applicable income
  taxes of $-0-                                      -          -     (5,294)
Income (loss) from discontinued materials
  handling operations, less applicable
  income taxes of $-0- and $-0-, respectively        -       (537)     2,973
Gain on disposal of discontinued materials
  handling systems operations, less
  applicable income taxes of $-0-                    -      3,124          -
Loss from discontinued agricultural
  operations, less applicable income
  taxes of $-0-                                      -          -       (135)
Provision for estimated expenses of
  Discontinued Klemp (domestic), less
  applicable income taxes of $-0-                    -          -       (320)
                                              --------   --------   --------
Loss from discontinued operations                 (942)    (1,326)    (9,175)
                                              --------   --------   --------

                                   - F-6 -

                           REUNION INDUSTRIES, INC.
   CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
           (continued)(in thousands, except per share information)

                                                   Year Ended December 31,
                                                  2003       2002       2001
                                              --------   --------   --------
Net income (loss)                                2,640    (12,859)   (38,128)

  Other comprehensive income (loss),
    net of $-0- tax:
Reduction in (additional) pension
  liability in excess of unrecognized
  prior service cost                                31       (874)    (1,136)
                                              --------   --------   --------
Comprehensive income (loss)                   $  2,671   $(13,733)  $(39,264)
                                              ========   ========   ========
Earnings (loss) applicable to common
  stockholders                                $  2,640   $(12,859)  $(38,128)
                                              ========   ========   ========
Earnings (loss) per common share
  - basic and diluted:
Continuing operations                         $   0.22   $  (0.74)  $  (1.86)
Discontinued operations                          (0.06)     (0.08)     (0.59)
                                              --------   --------   --------
Income (loss) per common share
  - basic and diluted                         $   0.16   $  (0.82)  $  (2.45)
                                              ========   ========   ========
Weighted average shares outstanding - basic     16,279     15,591     15,587
                                              ========   ========   ========
Weighted average shares outstanding - diluted   16,654     15,591     15,612
                                              ========   ========   ========

         See accompanying notes to consolidated financial statements.

                                   - F-7 -

                           REUNION INDUSTRIES, INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (in thousands)

                                                  Year Ended December 31,
                                                  2003       2002       2001
                                              --------   --------   --------
  Cash flow from operating activities:
Net income (loss)                             $  2,640   $(12,859)  $(38,128)
Adjustments to reconcile net (loss) income to
  net cash from operating activities:
  Depreciation                                   2,582      2,762      4,865
  Amortization of intangibles                        -          -      2,354
  Amortization of deferred financing fees           71        754      1,011
  Amortization of estimated warrant value           16          -          -
  Gain on extinguishment of debt               (10,991)         -          -
  Gain on sale of property and equipment          (226)      (375)      (375)
  Provision for bad debt                           130          -          -
  Write-off of impaired assets                     117          -          -
  Deferred tax provision (benefit)                   -          -     12,678
  Provision for restructuring                        -          -      6,811
  Provision for estimated loss on disposal of
    discontinued bridges and cranes operations       -          -      6,399
  Provision for inventories                          -          -      2,485
  Provision (credit) for estimated expenses of
    Discontinued Klemp (domestic)                    -          -        320
  Payments of expenses of discontinued
    operations                                       -          -       (445)
  Changes in assets and liabilities:
    Decrease in receivables                      2,165      6,431      2,357
    Decrease (increase) in inventories            (312)     1,366      6,443
    (Increase) decrease in other current assets    486       (662)       656
    Increase (decrease) in trade payables
      and other current liabilities               (150)     3,585     (2,784)
    Net change in other assets and liabilities     807     (1,981)       403
                                              --------   --------   --------
Cash (used) provided by operating activities    (2,665)      (979)     5,050
                                              --------   --------   --------
  Cash flow from investing activities:
Proceeds from sale of discontinued materials
  handling systems operations                        -     25,000          -
Proceeds from sale of assets of discontinued
  bridges and cranes operations                      -      3,058          -
Proceeds from sale of property                     455        375        375
Acquisition of NPSAC common stock                               -        (10)
Capital expenditures                              (282)      (502)    (2,897)
                                              --------   --------   --------
Cash provided (used) by investing activities       173     27,931     (2,532)
                                              --------   --------   --------
  Cash flow from financing activities:
Proceeds from issuance of debt                  11,375          -        534
Repayments of debt                              (4,001)   (13,740)    (5,312)
Repayments of debt of discontinued operations        -          -       (680)
Revolving credit facilities borrowings          67,105    116,157    170,795
Revolving credit facilities repayments         (69,678)  (126,845)  (167,687)
Payments of deferred financing costs            (2,161)         -       (162)
Net decrease in outstanding checks                (200)    (2,909)    (1,351)
                                              --------   --------   --------
Cash provided (used) by financing activities     2,440    (27,337)    (3,863)
                                              --------   --------   --------

                                   - F-8 -

                           REUNION INDUSTRIES, INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (continued)(in thousands)

                                                  Year Ended December 31,
                                                  2003       2002       2001
                                              --------   --------   --------
Net decrease in cash and cash equivalents          (52)      (385)    (1,345)
Less:Change in cash of discontinued operations       -        506        217
Cash and cash equivalents, beginning of year       807        686      1,814
                                              --------   --------   --------
Cash and cash equivalents, end of year        $    755   $    807   $    686
                                              ========   ========   ========
  Supplemental cash flow information:
Interest paid                                 $  2,304   $  4,619   $  6,208
                                              ========   ========   ========
Income taxes paid (refunded)                  $      5   $   (326)  $   (119)
                                              ========   ========   ========

          See accompanying notes to consolidated financial statements.

                                   - F-8A -

                           REUNION INDUSTRIES, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:   ACCOUNTING POLICIES

Nature of Business

     The Company owns and operates industrial manufacturing operations that
design and manufacture engineered, high-quality products for specific customer
requirements, such as large-diameter seamless pressure vessels, hydraulic and
pneumatic cylinders, leaf springs and precision plastic components.  Until
December 2001, the Company's products also included heavy-duty cranes, bridge
structures and materials handling systems.  These businesses were sold during
2002 and are reported as discontinued operations.

Going Concern

     The financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.  At December 31, 2003, the
Company has a deficiency in working capital of $4.0 million net of related
party obligations, a loss from continuing operations of $7.4 million before
gain on debt extinguishment, and a deficiency in assets of $27.8 million.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern.  The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classifications of liabilities
that may result from the outcome of this uncertainty.

     We successfully refinanced our bank debt, extinguished a significant
portion of our obligations under the senior notes and removed all previously
existing defaults on our debt.  These steps were taken to improve liquidity
and defer the principal maturities on a significant portion of our debt.  The
Company is investigating other recapitalization scenarios in an effort to
provide additional liquidity and extinguishments or deferrals of debt
obligations.  Although we believe we can accomplish these plans, no assurances
exist that we will.  Failure to accomplish these plans could have an adverse
impact on the Company's liquidity, financial position and future operations.

Principles of Consolidation

     The consolidated financial statements include the accounts of Reunion
Industries and its subsidiaries.  All significant intercompany transactions
and balances have been eliminated.

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

Use of Estimates

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates that affect the reported amounts of assets, liabilities, revenues,
expenses, and disclosures of contingencies during the reporting period.
Actual results could differ from management's estimates.

Cash and Cash Equivalents

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

                                   - F-9 -

Accounts Receivable and Allowance for Doubtful Accounts

     Accounts receivable are net of $485,000 and $300,000 in allowance for
doubtful accounts at December 31, 2003 and 2002, respectively.  Credit is
extended after a credit review by management that is based on a customer's
ability to perform its obligations.  Such reviews are regularly updated.  The
allowance for doubtful accounts is based upon agings of customer balances and
specific account reviews by management.  The Company has no concentration of
credit risks and generally does not require collateral or other security from
its customers.

Inventories and Reserves for Obsolescence

     At December 31, 2003, inventories are stated at the lower of cost or
market, at costs that approximate the first-in, first-out method of inventory
valuation.  During the third quarter of 2003, for those locations of the
Company that had been using the last-in, first-out method of inventory
valuation, we changed the method of valuing inventory to the first-in,
first-out method.  Approximately 62% of total inventories at December 31, 2002
had been valued using the last-in, first-out method.  Work-in-process and
finished goods include material costs, labor costs and manufacturing overhead.
Reserves for excess, slow-moving and obsolete inventories are based on reviews
of inventory usage reports for items more than one year old.

Property, Plant and Equipment

     Property, plant and equipment is recorded at cost, including costs as
determined by the allocation of the purchase price in business acquisitions
accounted for using the purchase method, 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 operations when incurred.  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.

Goodwill

     The Company has recorded goodwill totaling $11.0 million at December 31,
2003, of which $9.5 million relates to our pressure vessel and springs segment
and $1.5 million relates to our cylinders segment.  Effective January 1, 2002,
we adopted Statement of Financial Accounting Standards (SFAS) No. 142,
"Goodwill and Other Intangible Assets" and we ceased amortizing goodwill.  We
completed internal impairment tests of goodwill as of January 1, 2002 and
engaged an independent valuation consultant to confirm our conclusions.  We
completed additional impairment tests of goodwill as of January 1, 2003 and
2004.  We concluded that our goodwill is not impaired.  Had we stopped
amortizing goodwill at the beginning of 2001, the effect would have been
decreases in our net loss and loss per share of $1,903,000 and $0.13,
respectively.

Long-Lived Assets and Impairment

     The Company reviews long-lived assets for impairment whenever
circumstances indicate that the carrying amount of the asset may not be
recoverable, and recognizes an impairment loss when the undiscounted future
cash flows expected to be generated by the asset are less than the carrying
amount of the asset.  Long-lived assets held for sale, other than assets to be
disposed of in connection with disposal of a discontinued business segment,
are reported at the lower of carrying amount or fair value less cost to sell.

                                   - F-10 -

Revenue Recognition

     Sales are recorded when shipped and title and risks of ownership transfer
to the buyer.  Shipping and handling fees charged to customers are recorded as
revenues and the related costs are recorded as cost of sales.

Environmental Policies

     Environmental expenditures that relate to current operations are either
expensed or capitalized depending on the nature of the expenditure.
Expenditures relating to conditions caused by past operations that do not
contribute to current or future revenue generation are expensed.  Liabilities
are recorded when environmental assessments and/or remediation actions are
probable, and the costs can be reasonably estimated.

Income Taxes

     The Company provides deferred income taxes for all temporary differences
between financial and income tax reporting using the liability method.
Deferred taxes are determined based on the estimated future tax effect of
differences between the financial statement and tax bases of assets and
liabilities given the provisions of enacted tax laws.  A valuation allowance
is recorded for net deferred tax assets if it is more likely than not that
such assets will not be realized.  The Company has significant net operating
loss and investment tax credit carryforwards for tax purposes, portions of
which may expire unutilized.

Earnings Per Share

    Basic earnings per share is computed based on the weighted average number
of common shares outstanding during the period.  Diluted earnings per share
gives effect to all dilutive potential common shares outstanding during this
period.  Potential common shares include shares issuable upon exercise of the
Company's stock options.

     Potential common shares relating to warrants and options to purchase
common stock aggregating 374,988 is included in the weighted average number of
shares for the year ended December 31, 2003.  There were no potential common
shares in 2002.  Potential common shares relating to options to purchase
common stock aggregating 25,809 is included in the weighted average number of
shares for the years ended December 31, 2001.

Recent Accounting Pronouncements

     In November 2002, the FASB issued FASB Interpretation (FIN) No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others."  FIN 45 requires that a
liability be recorded in the guarantor's balance sheet upon issuance of a
guarantee.  In addition, FIN 45 requires disclosures about the guarantees that
an entity has issued, including a rollforward of the entity's product warranty
liabilities.  Our financing agreements prohibit us from guaranteeing, either
directly or otherwise, the indebtedness of others.  We complied with the
warranty rollforward provisions of FIN 45.

     In January 2003, the FASB issued FIN 46, "Consolidation of Variable
Interest Entities." This Interpretation clarifies the application of
Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
certain entities in which equity investors do not have the characteristics of
a controlling financial interest or do not have sufficient equity at risk for
the entity to finance its activities without additional subordinated financial
support from other parties.  FIN 46 applies to variable interest entities
created after January 31, 2003, and is effective as of July 31, 2003 for

                                   - F-11 -

variable interest entities created prior to February 1, 2003.  Reunion does
not have variable interest entities and, therefore, FIN 46 had no effect on
our results of operation or financial position.

     In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133
on Derivative Instruments and Hedging Activities."  This statement amends SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," for
implementation issues related to the definition of a derivative and other FASB
projects related to financial instruments.  SFAS No. 149 requires that
contracts with comparable characteristics be accounted for in a similar
fashion.  SFAS No. 149 applies prospectively to contracts entered into or
modified after June 30, 2003 and for hedging relationships designated after
June 30, 2003.  The adoption of SFAS No. 149 did not have a material effect on
our results of operation or financial position.

     In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity."
This statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. SFAS No. 150 requires that financial instruments within the scope of
SFAS No. 150 be classified as a liability or an asset.  SFAS No. 150 is
effective for all financial instruments entered into after May 31, 2003 and
otherwise, the beginning of the first interim period after June 15, 2003.  The
adoption of SFAS No. 150 did not have to a material effect on our results of
operation or financial position.

Reclassifications

     Certain reclassifications of prior year amounts may have been made to
conform to 2003 classifications.


NOTE 2:   RECENT EVENTS AND RESTRUCTURING

RECENT EVENTS

Refinancing

     On December 3, 2003, the Company announced that it was successful in
refinancing its bank loan facilities and restructuring its 13% senior notes.
On that date, the Company entered into a new $25.0 million revolving and term
loan bank credit facility with Congress Financial Corporation (Congress) that
replaced its then existing revolving and term loan facility with Bank of
America (BOA).  At the same time, the Company also entered into $5.2 million
of new loan facilities with two private capital funds through a $4.2 million
secured term loan and a $1.0 million increase in a then existing subordinated
note payable.  Proceeds from these refinancing activities totaled $13.0
million, including $4.6 million under the revolving credit facility, $3.2
million under the term loan facility and $5.2 million of financing from the
private capital funds.  At the time of the refinancing, the Company's
indebtedness to BOA totaled $11.7 million, including $10.8 million of
revolving credit debt and a term loan of $0.9 million.  Proceeds from the
refinancing were used to repay our then existing BOA facilities, fund $0.7
million of consent fees payable to our 13% senior noteholders and pay $0.6
million of transaction related fees and expense to our new lenders.  All
defaults that existed under the BOA facilities at the time of the refinancing
were removed as the result of the full repayment of amounts then outstanding.

Congress Financial Corporation Revolving and Term Loan Credit Facility

     On December 3, 2003, the Company entered into a new revolving and term
loan bank credit facility with Congress Financial Corporation.  This credit
facility consists of revolving credit, term loan and letter of credit

                                   - F-12 -

accommodations up to a maximum credit of $25.0 million.  At December 31, 2003,
the Company had outstanding borrowings under this facility totaling $12.4
million, including $9.2 million of revolving credit and a term loan of $3.2
million.  The $3.2 million term loan amortizes to the revolving credit
availability at a rate of $53,000 per month beginning on January 31, 2004
until fully paid. This facility has a three-year initial term and
automatically renews for additional one-year increments unless either party
gives the other notice of termination at least 90 days prior to the beginning
of the next one-year term.

     Interest on loans outstanding under the Congress facility is payable
monthly at a variable rate tied to the prime rate publicly announced from time
to time by Wachovia Bank, National Association, plus 2.50%.  The facility also
provides for a default interest rate of the prime rate plus 4.50%.

     The Congress facility is collateralized by a continuing security interest
and lien on substantially all of the current and after-acquired assets of
Reunion including, without limitation, all accounts receivable, inventory,
real property, equipment, chattel paper, documents, instruments, deposit
accounts, contract rights and general intangibles.

     The Congress facility requires Reunion to comply with financial covenants
and other covenants, including a minimum amount of earnings before interest,
taxes, depreciation and amortization (EBITDA) and a minimum fixed charge
coverage ratio.  The minimum EBITDA covenant began in 2004 and requires the
Company to maintain minimum monthly amounts of EBITDA ranging from $450,000 in
January 2004 to $600,000 in December 2004 with $50,000 to $100,000 increments
or decrements occurring during the year.  There are also minimum monthly
EBITDA amounts required during 2005 and 2006.  Through February 2004, the
Company achieved the minimum monthly EBITDA required for compliance with this
covenant.  The minimum fixed charge coverage ratio covenant requires the
Company to maintain a minimum fixed charge coverage ratio to be tested as of
the last day of each fiscal quarter beginning with the quarter ended March 31,
2004, for the year-to-date period starting on January 1, 2004.  For quarters
ended on and after December 31, 2004, the components of the calculation are on
a rolling, twelve-month basis.  The ratio is defined as EBITDA divided by
fixed charges (defined as interest expense, capital expenditures, regularly
scheduled or required principal payments on debt and taxes paid).  For the
ratio calculation period ended March 31, 2004 and for each year-to-date period
during 2004 ended on quarters thereafter, the required minimum fixed charge
coverage ratio is 0.65:1, 0.77:1, 0.77:1 and 0.80:1, respectively.  There are
also minimum fixed charge coverage ratio amounts required during 2005 and
2006.

Private Capital Fund Financing

     On August 11, 2003, Reunion borrowed $2.5 million from a private capital
fund by executing a senior subordinated secured promissory note payable in the
amount of and with cash proceeds of $2.5 million.  The note bears interest at
10% per annum, such interest being payable on the last day of every month in
arrears commencing on August 31, 2003.  The principal amount of $2.5 million
was due on August 11, 2005 with voluntary prepayments permitted but was
extended to December 5, 2006 as discussed below.  The note is secured by a
majority of the assets of Reunion, provided that such security interest is
subordinate to the security interest of Congress.  The cash proceeds were used
for working capital and other general corporate purposes.  In addition to its
subordinated security interest, the fund received a warrant to purchase
625,000 shares of the Company's common stock and registration rights with
respect to the warrant and shares issuable thereto at a price of $0.01 per
share.  The value of the warrants was estimated to be $90,000 at the time of
their issuance using the Black-Scholes pricing model.  This amount was
recorded as an original issue discount with an increase to paid-in capital and
is being amortized to interest expense using the effective interest method of

                                    - F-13 -

amortization.

     In connection with the refinancing on December 3, 2003, this same private
capital fund amended and restated its senior subordinated secured promissory
note to provide an additional $1.0 million of financing to the Company at the
same interest rate but changed the maturity date from August 11, 2005 to
December 5, 2006.  No additional warrants were issued.

     In connection with the refinancing on December 3, 2003, a separate
private capital fund provided the Company with a $4.2 million loan evidenced
by a senior subordinated secured promissory note payable with net cash
proceeds of $4.0 million after fees and expenses.  The note bears interest at
a rate of the greater of 12%, or the prime rate as published in the Wall
Street Journal plus 8%.  Interest is payable on the first day of every month
commencing on January 1, 2004.  The principal amount of $4.2 million is due on
December 1, 2006.  Prepayments in whole or in part are permitted without
penalty commencing in May 2004.  The note is secured by mortgage liens and/or
deed of trust security interests totaling $4.2 million encumbering all
premises owned by the Company.  In addition to its security interest, the fund
received a warrant to purchase 500,000 shares of the Company's common stock
and registration rights with respect to the warrant and shares issuable
thereto at a price of $0.50 per share.  The warrants were estimated to have no
value at the time of their issuance using the Black-Scholes pricing model.

13% Senior Notes

     We had a total of $24.855 million of 13% senior notes outstanding.  The
senior notes required semi-annual interest payments every November 1st and May
1st and sinking fund payments of $12.5 million on May 1, 2002 and $12.355
million on May 1, 2003.  Since November 1, 2001, we were unable to make the
required semi-annual interest payments or the sinking fund payments due May 1,
2002 and 2003.  As a result, an event of default, as defined in the indenture
governing the 13% senior notes, had existed since December 1, 2001 as we were
not able to make the November 1, 2001 semi-annual interest payment within the
30-day cure period provided for in the indenture.

     In November 2003, we solicited the consent of our noteholders to certain
provisions and waivers of the indenture governing the 13% senior notes in an
effort to facilitate the refinancing.  The significant provisions of the
solicitation requested that the noteholders consent to permanently waive all
then existing defaults under the indenture, cancel all accrued and unpaid
interest, cancel 12% of the principal amount of senior notes and extend the
maturity of the notes to December 2006.  In order for the consent to be
effective, we needed noteholders comprising at least 90% of the principal
amount of outstanding senior notes to consent.  As of December 1, 2003, the
end of the consent period, $23,250,700 of the $24,855,000 principal amount of
senior notes, or 93.55%, had consented.

     In exchange for their consent, each consenting noteholder received a
consent fee of $27.625, warrants to purchase 76.18 shares of the Company's
common stock at $0.01 per share for each $1,000 of principal amount of notes
owned and a junior priority lien on the Company's assets.  In the refinancing
that took place on December 3, we placed in escrow with the trustee of the
senior notes, $686,619 for payment of consent fees, of which $642,301 has been
or will be disbursed to consenting senior noteholders.  Warrants to purchase
the Company's common stock totaling 1,771,217 have been reserved for future
issuance to consenting noteholders.  The value of the warrants was estimated
to be $324,000 at the time of their issuance using the Black-Scholes pricing
model.  This amount was recorded as an original issue discount with an
increase to paid-in capital and is being amortized to interest expense using
the effective interest method of amortization.  Effective with having obtained
the consents of holders of at least 90% of the principal amount of outstanding

                                   - F-14 -

senior notes, all previously existing defaults under the indenture for the 13%
senior notes have been permanently waived.

RESTRUCTURING

     In the fourth quarter of 2001, we developed and adopted a restructure
plan for our continuing businesses and certain other businesses were
identified for disposal.  Elements of the plan included consolidation of our
pressure vessel operations into one facility, consolidation of our cylinder
operations into one facility, elimination of Plastics' corporate headquarters
and evaluation of certain asset impairments.  We also planned to sell our
bridges and cranes and material handling systems operations, which we then
accounted for as discontinued operations.

     The plan was approved by the Company's board of directors in December
2001.  The Company recorded a fourth quarter 2001 charge for restructuring
costs, including facility shut-down costs, lease termination costs and asset
writedowns, including impaired goodwill related to Plastics, and a charge for
estimated loss on disposal of discontinued operations (related solely to
Alliance Machine) including phase-out period operating losses, lease
termination costs and asset writedowns.  The charges are identified below:

                                                                 Discontinued
                                               Restructuring       Operations
                                               -------------    -------------
Asset impairments                                   $  2,673         $  3,771
Goodwill impairment - Plastics                         2,946                -
Lease termination costs                                1,172              995
Reserve for operating losses during phase-out              -            1,633
Employee separations                                      20                -
                                                    --------         --------
Total charges                                       $  6,811         $  6,399
                                                    ========         ========

     We completed the plan by the end of 2002 except for the consolidation or
our cylinder operations into one facility, which does not affect the
restructuring charges recorded.  The cash components of the charge were
comprised of reserves for lease termination costs and employee separations.
We did not accrue for any additional employee separations related to the
restructuring, although such separations totaled approximately 200 employees
as of December 31, 2002.  The termination costs were recorded upon
notification to the employees, which occurred in the same period as the
terminations.  The following represents a summary of 2003 and 2002 activity of
our 2001 restructuring charge (in thousands):
                                        At       Cash    Reserve      At
2003 Reserve Activity                12/31/02  Activity  Adjmt.    12/31/03
-----------------------------------  --------  --------  --------  --------
Lease termination costs              $    861  $   (270) $   (117) $    474
                                     ========  ========  ========  ========

                                        At       Cash    Reserve      At
2002 Reserve Activity                12/31/01  Activity  Adjmt.    12/31/02
-----------------------------------  --------  --------  --------  --------
Lease termination costs              $  1,172  $   (311) $      -  $    861
Employee separations                       20       (20)        -         -
                                     --------  --------  --------  --------
                                     $  1,192  $   (331) $      -  $    861
                                     ========  ========  ========  ========

     The lease termination reserve was reduced in 2003 as the result of the
execution of a sublease agreement with another party for our Clearfield, Utah
facility resulting in a new estimate of future lease termination costs.  Of
the remaining lease termination costs, $283,000 relates to unused

                                   - F-15 -

manufacturing facilities in Milwaukee, Wisconsin and the remainder in
Clearfield, Utah.


NOTE 3:   INVENTORIES

Inventories are comprised of the following (in thousands):

                                                        At December 31,
                                                   2003                2002
                                                 --------            --------
Raw material                                     $  3,206            $  2,820
Work-in-process                                     2,077               2,301
Finished goods                                      2,924               2,801
                                                 --------            --------
  Gross inventories                                 8,207               7,922
Less:   LIFO adjustment                                 -                 (27)
                                                 --------            --------
  Inventories                                    $  8,207            $  7,895
                                                 ========            ========

     In the third quarter of 2003, for those locations of the company that had
been using the last-in, first-out method of inventory valuation, we changed
the method of valuing inventory to the first-in, first-out method.  The effect
on operations for the year ended December 31, 2003 was inconsequential.


NOTE 4:   PROPERTY, PLANT AND EQUIPMENT

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

                                                        At December 31,
                                                   2003                2002
                                                 --------            --------
Land                                             $  1,402            $  1,569
Buildings and improvements                          9,080               9,033
Machinery and equipment                            19,681              19,725
Computer systems                                    2,672               2,627
Furniture and fixtures                                674                 678
Construction-in-progress                              321                 190
                                                 --------            --------
  Property, plant and equipment                    33,830              33,822
Less:   Accumulated depreciation                  (19,633)            (17,106)
                                                 --------            --------
  Property, plant and equipment, net             $ 14,197            $ 16,716
                                                 ========            ========


NOTE 5:   OTHER ASSETS

Other assets are comprised of the following (in thousands):

                                                        At December 31,
                                                   2003                2002
                                                 --------            --------
Deferred financing costs (net of accumulated
  amortization of $0 and $3,308)                 $  2,161            $     71
Noncurrent deferred tax assets                          -                 558
Other                                               2,277               2,473
                                                 --------            --------
  Total other assets                             $  4,438            $  3,102
                                                 ========            ========

                                   - F-16 -


     The Company refinanced its bank debt in 2003 and solicited the consent of
its senior noteholders to certain provisions and waivers of defaults under the
indenture governing the 13% senior notes.  The Company paid or accrued $2.2
million of financing related costs, which have been deferred and are being
amortized over a three-year period using the effective interest method of
amortization.

     The remainder of other assets is composed primarily of the cash surrender
value of life insurance policies of approximately $2.3 million on key
employees of the Company.  Portions of cash surrender values of these policies
totaling $1.75 million secure borrowings under the Congress revolving credit
loan.


NOTE 6:   OTHER CURRENT LIABILITIES

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

                                                        At December 31,
                                                   2003                2002
                                                 --------            --------
Accrued liabilities of discontinued operations   $  1,328            $  2,500
Accrued health self-insurance liability               754               1,170
Current deferred tax liabilities                        -                 558
Other                                               2,600               2,747
                                                 --------            --------
  Total other current liabilities                $  4,682            $  6,975
                                                 ========            ========

     Accrued liabilities of discontinued operations primarily represents the
remaining estimated liabilities of our discontinued bridges and cranes and
material handling systems operations and includes $0.6 million of trade
payables, $0.3 million of future lease commitments and $0.3 million of
employee-related legacy costs such as deferred and workers compensation costs.
This accrual also includes an estimated post-closing working capital
adjustment related to the sale of the material handling systems operations of
$135,000 and $265,000 at December 31, 2003 and 2002, respectively. The
decrease from December 31, 2002 represents payments of such liabilities.


NOTE 7:   LONG-TERM DEBT AND DEBT IN DEFAULT

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

                                                        At December 31,
                                                   2003                2002
                                                 --------            --------
Congress revolving credit facility               $  9,214            $      -
Congress term loan facility                         3,175                   -
Note payable due December 1, 2006                   4,200                   -
Note payable due December 5, 2006 (net of
  warrant value of $83)                             3,417                   -
13% senior notes (net of warrant value of $315)    21,750                   -
Notes payable                                       4,161               4,661
Notes payable - related parties                     5,115               4,615
Capital leases and other                               56                 150
                                                 --------            --------
  Total long-term debt                             51,088               9,426
Classified as current                              (9,959)             (9,365)
                                                 --------            --------
  Long-term debt                                 $ 41,129            $     61
                                                 ========            ========

                                   - F-17 -

Debt in default consisted of the following (in thousands):

                                                         At December 31, 2002
                                                         --------------------
BOA revolving credit facility                                        $ 11,787
BOA term loan A due March 16, 2007                                      3,407
13% senior notes                                                       24,855
                                                                     --------
  Total debt in default                                              $ 40,049
                                                                     ========

Refinancing

     On December 3, 2003, the Company announced that it was successful in
refinancing its bank loan facilities and restructuring its 13% senior notes.
On that date, the Company entered into a new $25.0 million revolving and term
loan bank credit facility with Congress Financial Corporation (Congress) that
replaced its then existing revolving and term loan facility with Bank of
America (BOA).  At the same time, the Company also entered into $5.2 million
of new loan facilities with two private capital funds through a $4.2 million
secured term loan and a $1.0 million increase in a then existing subordinated
note payable.  Proceeds from these refinancing activities totaled $13.0
million, including $4.6 million under the revolving credit facility, $3.2
million under the term loan facility and $5.2 million of financing from the
private capital funds.  At the time of the refinancing, the Company's
indebtedness to BOA totaled $11.7 million, including $10.8 million of
revolving credit debt and a term loan of $0.9 million.  Proceeds from the
refinancing were used to repay our then existing BOA facilities, fund $0.7
million of consent fees payable to our 13% senior noteholders and pay $0.6
million of transaction related fees and expense to our new lenders.  All
defaults that existed under the BOA facilities at the time of the refinancing
were removed as the result of the full repayment of amounts then outstanding.

Congress Financial Corporation Revolving and Term Loan Credit Facility

     On December 3, 2003, the Company entered into a new revolving and term
loan bank credit facility with Congress Financial Corporation.  This credit
facility consists of revolving credit, term loan and letter of credit
accommodations up to a maximum credit of $25.0 million.  At December 31, 2003,
the Company had outstanding borrowings under this facility totaling $12.4
million, including $9.2 million of revolving credit and a term loan of $3.2
million.  The $3.2 million term loan amortizes to the revolving credit
availability at a rate of $53,000 per month beginning on January 31, 2004
until fully paid. This facility has a three-year initial term and
automatically renews for additional one-year increments unless either party
gives the other notice of termination at least 90 days prior to the beginning
of the next one-year term.

     Interest on loans outstanding under the Congress facility is payable
monthly at a variable rate tied to the prime rate publicly announced from time
to time by Wachovia Bank, National Association, plus 2.50%.  The facility also
provides for a default interest rate of the prime rate plus 4.50%.

     The Congress facility is collateralized by a continuing security interest
and lien on substantially all of the current and after-acquired assets of
Reunion including, without limitation, all accounts receivable, inventory,
real property, equipment, chattel paper, documents, instruments, deposit
accounts, contract rights and general intangibles.

     The Congress facility requires Reunion to comply with financial covenants
and other covenants, including a minimum amount of earnings before interest,
taxes, depreciation and amortization (EBITDA) and a minimum fixed charge
coverage ratio.  The minimum EBITDA covenant began in 2004 and requires the

                                   - F-18 -

Company to maintain minimum monthly amounts of EBITDA ranging from $450,000 in
January 2004 to $600,000 in December 2004 with $50,000 to $100,000 increments
or decrements occurring during the year.  There are also minimum monthly
EBITDA amounts required during 2005 and 2006.  Through February 2004, the
Company achieved the minimum monthly EBITDA required for compliance with this
covenant.  The minimum fixed charge coverage ratio covenant requires the
Company to maintain a minimum fixed charge coverage ratio to be tested as of
the last day of each fiscal quarter beginning with the quarter ended March 31,
2004, for the year-to-date period starting on January 1, 2004.  For quarters
ended on and after December 31, 2004, the components of the calculation are on
a rolling, twelve-month basis.  The ratio is defined as EBITDA divided by
fixed charges (defined as interest expense, capital expenditures, regularly
scheduled or required principal payments on debt and taxes paid).  For the
ratio calculation period ended March 31, 2004 and for each year-to-date period
during 2004 ended on quarters thereafter, the required minimum fixed charge
coverage ratio is 0.65:1, 0.77:1, 0.77:1 and 0.80:1, respectively.  There are
also minimum fixed charge coverage ratio amounts required during 2005 and
2006.

Private Capital Fund Financing

     On August 11, 2003, Reunion borrowed $2.5 million from a private capital
fund by executing a senior subordinated secured promissory note payable in the
amount of and with cash proceeds of $2.5 million.  The note bears interest at
10% per annum, such interest being payable on the last day of every month in
arrears commencing on August 31, 2003.  The principal amount of $2.5 million
was due on August 11, 2005 with voluntary prepayments permitted but was
extended to December 5, 2006 as discussed below.  The note is secured by a
majority of the assets of Reunion, provided that such security interest is
subordinate to the security interest of Congress.  In addition to its
subordinated security interest, the fund received a warrant to purchase
625,000 shares of the Company's common stock and registration rights with
respect to the warrant and shares issuable thereto at a price of $0.01 per
share.  The value of the warrants was estimated to be $90,000 at the time of
their issuance using the Black-Scholes pricing model.  This amount was
recorded as an original issue discount with an increase to paid-in capital and
is being amortized to interest expense using the effective interest method of
amortization.  The cash proceeds were used for working capital and other
general corporate purposes.

     In connection with the refinancing on December 3, 2003, this same private
capital fund amended and restated its senior subordinated secured promissory
note to provide an additional $1.0 million of financing to the Company at the
same interest rate but changed the maturity date from August 11, 2005 to
December 5, 2006.  No additional warrants were issued.

     In connection with the refinancing on December 3, 2003, a separate
private capital fund provided the Company with a $4.2 million loan evidenced
by a senior subordinated secured promissory note payable with net cash
proceeds of $4.0 million after fees and expenses.  The note bears interest at
a rate of the greater of 12%, or the prime rate as published in the Wall
Street Journal plus 8%.  Interest is payable on the first day of every month
commencing on January 1, 2004.  The principal amount of $4.2 million is due on
December 1, 2006.  Prepayments in whole or in part are permitted without
penalty commencing in May 2004.  The note is secured by mortgage liens and/or
deed of trust security interests totaling $4.2 million encumbering all
premises owned by the Company.  In addition to its security interest, the fund
received a warrant to purchase 500,000 shares of the Company's common stock
and registration rights with respect to the warrant and shares issuable
thereto at a price of $0.50 per share.  The warrants were estimated to have no
value at the time of their issuance using the Black-Scholes pricing model.

                                   - F-19 -

13% Senior Notes

     We had a total of $24.855 million of 13% senior notes outstanding.  The
senior notes required semi-annual interest payments every November 1st and May
1st and sinking fund payments of $12.5 million on May 1, 2002 and $12.355
million on May 1, 2003.  Since November 1, 2001, we were unable to make the
required semi-annual interest payments or the sinking fund payments due May 1,
2002 and 2003.  As a result, an event of default, as defined in the indenture
governing the 13% senior notes, had existed since December 1, 2001 as we were
not able to make the November 1, 2001 semi-annual interest payment within the
30-day cure period provided for in the indenture.

     In November 2003, we solicited the consent of our noteholders to certain
provisions and waivers of the indenture governing the 13% senior notes in an
effort to facilitate the refinancing.  The significant provisions of the
solicitation requested that the noteholders consent to permanently waive all
then existing defaults under the indenture, cancel all accrued and unpaid
interest, cancel 12% of the principal amount of senior notes and extend the
maturity of the notes to December 2006.  In order for the consent to be
effective, we needed noteholders comprising at least 90% of the principal
amount of outstanding senior notes to consent.  As of December 1, 2003, the
end of the consent period, $23,250,700 of the $24,855,000 principal amount of
senior notes, or 93.55%, had consented.  Accordingly, 12% of the $23,250,700
principal amount of senior notes of noteholders that had consented to the
various provisions and waivers, or $2.8 million, was extinguished pursuant to
the provisions of the consent.

     As of December 1, 2003, accrued and unpaid interest related to the 13%
senior notes totaled $8.8 million, of which $8.2 million related to the
$23,250,700 principal amount of senior notes of noteholders that had consented
to the various provisions and waivers.  Such interest was extinguished
pursuant to the provisions of the consent.  The remaining $0.6 million of
accrued and unpaid interest is included in accrued interest in the
accompanying consolidated balance sheet as of December 31, 2003.

     The Company believes that, as the result of recent events related to our
refinancing and senior notes and, in view of our continuing efforts to
investigate other recapitalization scenarios, resulting gains from such
activities do not meet the criteria for classification as extraordinary.

     In exchange for their consent, each consenting noteholder received a
consent fee of $27.625, warrants to purchase 76.18 shares of the Company's
common stock at $0.01 per share for each $1,000 of principal amount of notes
owned and a junior priority lien on the Company's assets.  In the refinancing
that took place on December 3, we placed in escrow with the trustee of the
senior notes, $686,619 for payment of consent fees, of which $642,301 has been
or will be disbursed to consenting senior noteholders.  Warrants to purchase
the Company's common stock totaling 1,771,217 have been reserved for future
issuance to consenting noteholders.  The value of the warrants was estimated
to be $324,000 at the time of their issuance using the Black-Scholes pricing
model.  This amount was recorded as an original issue discount with an
increase to paid-in capital and is being amortized to interest expense using
the effective interest method of amortization.  Effective with having obtained
the consents of holders of at least 90% of the principal amount of outstanding
senior notes, all previously existing defaults under the indenture for the 13%
senior notes have been permanently waived.

Notes Payable

     Notes payable consists of a $1,017,000 note payable related to the
Rostone operation in Plastics and a $3,144,000 15% note payable assumed by
Reunion with the NPSAC acquisition.

                                   - F-20 -

     To facilitate the refinancing, in November 2003, Reunion and the holder
of the $1,017,000 note payable entered into a replacement promissory note
payable with an annual interest rate of the prime rate, as published by Bank
One, National Association, plus 8% with a maturity date of December 8, 2004.
We made $74,180 and $111,882 of interest payments during 2003 and 2002,
respectively, on this note payable.

     With the acquisition of NPSAC, Reunion assumed a note payable of $4.9
million.  Terms of this note payable include quarterly principal payments of
$0.6 million for eight quarters that began on February 28, 2001 and quarterly
interest payments at 15% per annum on the unpaid principal.  Reunion made the
first two principal payments plus accrued interest from funds available under
its revolving credit facility.  No further payments were made until January
2003, when the Company made a $500,000 payment from funds provided by Mr.
Bradley.  The note payable is unsecured.

Notes Payable - Related Parties

     Notes payable to related parties includes notes payable to SFSC, either
directly or through assignment, totaling $4,615,000 with interest at 10% per
annum on $100,000, at 11% per annum on $1,017,000, at 15% per annum on
$500,000 and at 18% per annum on $2,998,000.  Although classified as current,
these related party notes payable are subject to a settlement as described in
Note 14 under the heading "SFSC Corporate Litigation."  Additionally, these
notes are subordinated to the Congress revolving and term loan facilities
except that regularly scheduled payments of interest may be made when due as
long as the Company has the required excess availability under its revolving
credit facility and no default exists under the Congress facilities.  No
payments of interest were made during 2003 or 2002 under any of these notes.

     Notes payable to related parties also includes a note payable due October
31, 2004 to Mr. Bradley of $500,000 with interest at 10% per annum.  Funds
from the note payable were used to partially pay another subordinated note
payable.  The note is subordinated to the Congress revolving and term loan
facilities.  No payments of interest were made during 2003.

Other Long-Term Debt

     Other long-term debt, including $47,000 classified as current, includes
$23,000 of capital leases and a $33,000 small business loan related to
Plastics.  The capital leases are collateralized by the financed equipment.
Maturities of capital leases and the small business loan are:  2004 - $47,000
and 2005 - $9,000.

NOTE 8:   STOCKHOLDERS' DEFICIT

     The Company's Certificate of Incorporation authorizes the issuance of
20,000,000 shares of common stock, par value $.01 per share, and 10,000,000
shares of "blank check" preferred stock, par value $.01 per share, and
includes certain capital stock transfer restrictions which are designed to
prevent any person or group of persons from becoming a 5% shareholder of the
Company and to prevent an increase in the percentage stock ownership of any
existing person or group of persons that constitutes a 5% shareholder by
prohibiting and voiding any transfer or agreement to transfer stock to the
extent that it would cause the transferee to hold such a prohibited ownership
percentage. The Transfer Restrictions are intended to help assure that the
Company's substantial net operating loss carryforwards will continue to be
available to offset future taxable income by decreasing the likelihood of an
"ownership change" for federal income tax purposes.

     No dividends have been declared or paid during the year with respect to
the common stock of the Company.  Cash dividends are limited by the
availability of funds and by restrictions in the Company's debt agreements.

                                   - F-21 -

     The following represents stockholders' equity (deficit) activity for each
year in the 3-year period ended December 31, 2003 (in thousands):

                                                   2003      2002      2001
                                                 --------  --------  --------
  Par value of common stock, January 1           $    163  $    156  $    152
Options exercise                                        -         7         -
Contingent share issuance                               -         -         4
                                                 --------  --------  --------
  Par value of common stock, December 31         $    163  $    163  $    156
                                                 ========  ========  ========
  Capital in excess of par value, January 1      $ 25,195  $ 25,064  $ 24,608
Warrant issuances                                     414         -         -
Options exercise                                        -       131         6
Contingent share issuance                               -         -       450
                                                 --------  --------  --------
  Capital in excess of par value, December 31    $ 25,609  $ 25,195  $ 25,064
                                                 ========  ========  ========
  Accumulated other comprehensive
    loss, January 1                              $ (2,010) $ (1,136) $      -
Additional pension liability in excess of
  unrecognized prior service cost                      31      (874)   (1,136)
                                                 --------  --------  --------
  Accumulated other comprehensive
    loss, December 31                            $ (1,979) $ (2,010) $ (1,136)
                                                 ========  ========  ========
  Accumulated deficit, January 1                 $(54,188) $(41,329) $ (3,201)
Net income (loss)                                   2,640   (12,859)  (38,128)
                                                 --------  --------  --------
  Accumulated deficit, December 31               $(51,548) $(54,188) $(41,329)
                                                 ========  ========  ========
  Total stockholders' equity
    (deficit), January 1                         $(30,840) $(17,245) $ 21,559
Warrant issuances                                     414         -         -
Options exercise                                        -       138         6
Contingent share issuance                               -         -       454
Other comprehensive income (loss)                      31      (874)   (1,136)
Net income (loss)                                   2,640   (12,859)  (38,128)
                                                 --------  --------  --------
  Total stockholders' deficit,
    December 31                                  $(27,755) $(30,840) $(17,245)
                                                 ========  ========  ========

     On August 11, 2003, Reunion borrowed $2.5 million from a private capital
fund.  In addition to its subordinated security interest, the fund received a
warrant to purchase 625,000 shares of the Company's common stock and
registration rights with respect to the warrant and shares issuable thereto at
a price of $0.01 per share.  The value of the warrants was estimated to be
$90,000 at the time of their issuance using the Black-Scholes pricing model.
This amount was recorded as an original issue discount with an increase to
paid-in capital and is being amortized to interest expense using the effective
interest method of amortization.  In November 2003, we solicited the consent
of our noteholders to certain provisions and waivers of the indenture
governing the 13% senior notes.  In exchange for their consent and in addition
to a consent fee, consenting noteholders received warrants to purchase 76.18
shares of the Company's common stock at $0.01 per share per $1,000 of
principal amount of notes.  Warrants to purchase the Company's common stock
totaling 1,771,217 have been reserved for future issuance to consenting
noteholders.  The value of the warrants was estimated to be $324,000 at the
time of their issuance using the Black-Scholes pricing model.  This amount was
recorded as an original issue discount with an increase to paid-in capital and
is being amortized to interest expense using the effective interest method of
amortization.

                                   - F-22 -

     The following represents common stock activity for the 3-year period
ended December 31, 2003(in thousands of shares):
                                                   Year Ended December 31,
                                                   2003      2002      2001
                                                 --------  --------  --------
  Outstanding common stock, January 1              16,278    15,591    15,236
Options exercise                                        -       687         6
Contingent share issuance                               -         -       349
                                                 --------  --------  --------
  Outstanding common stock, December 31            16,278    16,278    15,591
                                                 ========  ========  ========

     In the merger, Reunion issued 9,500,000 shares of common stock to holders
of Chatwins Group's common stock.  The merger agreement also provided that up
to an additional 500,000 shares of Reunion common stock would be issued to
former Chatwins Group common stockholders, contingent on the former Chatwins
Group businesses and the acquired Kingway business achieving specified
performance levels in 2000.  A determination of the number of shares to be
issued was made by the board of directors at its meeting held on May 15, 2001.
Such additional shares totaled 348,995 and were issued on May 29, 2001.  The
closing price of Reunion's common stock on that date was $1.30 per share.  The
issuance of the additional shares was recorded as a merger purchase price
adjustment to goodwill.  Because this goodwill was related to the operating
performance of Kingway, we wrote-down goodwill by $436,000, net of accumulated
amortization through December 31, 2001, upon the sale of Kingway in 2002.


NOTE 9:   STOCK OPTIONS

     At December 31, 2003, the Company has three stock option plans.  They are
described below.  The Company accounts for its plans using APB Opinion 25 and
related interpretations.  Stock options are granted at exercise prices equal
to or above the then current market price, so no compensation expense has been
recognized for the Company's stock option plans.  At December 31, 2003,
161,100 shares of common stock were reserved for issuance under these plans.

The Repricing

     At its meeting on June 12, 2002, the Board directed the Company's
management to take action to improve the value of outstanding stock options as
an incentive to the Company's employees that then held stock options.  At its
meeting on September 26, 2002, the Company's management presented its plan to
the Board to offer to holders of the Company's stock options the opportunity
to reprice their stock options to an amount closer to recent trade amounts.

     Elements of the repricing, if elected, included: (i) repricing of all
options held to $0.20 (twenty cents) per share, the closing price on the AMEX
of the Company's common stock on June 11, 2002, the day before the Board
directed management to take action, (ii) a no-exercise period through and
including December 12, 2002, (iii) automatic vesting of all repriced options
on December 13, 2002, and (iv) the opportunity to exercise all or any portion
of the repriced options at $0.20 per share through and including December 31,
2002.  At the close of business on December 31, 2002, all repriced but
unexercised options were forfeited.

     At the time of the repricing offer on September 30, 2002, there were
911,450 outstanding stock options held by directors, executive management and
other Company employees (including two former employees that retained their
stock options).  Certain non-director employees were offered the opportunity
to offset amounts accrued for their prior years' bonuses against the exercise
price of their options.  Mr. Bradley offset amounts owed to him under the SPI
Consulting Agreement against the $25,000 exercise price of his options.
Results of the repricing offer by group are as follows:

                                   - F-23 -

                                                Non-
                                              Director     Other
                                   Directors  Executive  Employees   Total
                                   ---------  ---------  ---------  ---------
  Options on September 30, 2002      495,000    158,000    258,450    911,450
Elected to reprice - cash purchase  (227,000)   (30,000)   (96,400)  (353,400)
Elected to reprice - accrual offset (125,000)  (128,000)   (81,500)  (334,500)
Elected to reprice - forfeited       (99,000)         -    (80,550)  (179,550)
                                   ---------  ---------  ---------  ---------
  Options on December 31, 2002        44,000          -          -     44,000
                                   =========  =========  =========  =========

     One director holding 44,000 stock options did not reprice.  Results of
the repricing offer by plan are as follows:

                                      1998       1993       1992
                                      Plan       Plan       Plan      Total
                                   ---------  ---------  ---------  ---------
  Options on September 30, 2002      675,617    196,833     39,000    911,450
Elected to reprice - cash purchase  (278,567)   (74,833)         -   (353,400)
Elected to reprice - accrual offset (195,500)  (100,000)   (39,000)  (334,500)
Elected to reprice - forfeited      (157,550)   (22,000)         -   (179,550)
                                   ---------  ---------  ---------  ---------
  Options on December 31, 2002        44,000          -          -     44,000
                                   =========  =========  =========  =========

1992 Option Plan

     Effective July 1, 1992, the Board of Directors and stockholders of the
Company approved the adoption of the 1992 Nonqualified Stock Option Plan (the
"1992 Option Plan").  The 1992 Option Plan, as amended, authorized the grant
of options and sale of 250,000 shares of common stock of the Company to key
employees, directors and consultants.  In 1992, the Company granted a total of
211,000 options to its then four members of the Board of Directors and a
consultant to the Board.  By the end of1995, these options had been exercised.
The Company granted the remaining 39,000 options to Mr. Bradley in March and
June of 2000.  Mr. Bradley exercised these options in the previously discussed
repricing.  No options remain available for issuance under the 1992 Option
Plan.

1993 Option Plan

     Effective September 28, 1993, the Board of Directors and stockholders of
the Company approved the adoption of the 1993 Incentive Stock Option Plan (the
"1993 Option Plan") for the granting of options or awards covering up to
250,000 shares of the Company's common stock to officers and other key
employees.  Under the terms of the 1993 Option Plan, the Compensation
Committee of the Board of Directors is authorized to grant (i) stock options
(nonqualified or incentive), (ii) restricted stock awards, (iii) phantom stock
options, (iv) stock bonuses and (v) cash bonuses in connection with grants of
restricted stock or stock bonuses.  At December 31, 2003, 50,500 options are
available for issuance under the 1993 Option Plan.

1998 Option Plan

     On August 4, 1998, the Company's stockholders ratified the adoption by
the Board of Directors, on June 1, 1998, of the 1998 Stock Option Plan (the
1998 Option Plan).  The Compensation Committee of the Board of Directors is
authorized to grant incentive options and nonqualified options covering up to
600,000 shares of the Company's common stock to officers and other key
employees.  At the Company's annual meeting of stockholders in May 2001, the
Company's stockholders approved a proposal to reserve an additional 600,000
shares of the Company's common stock for issuance under the 1998 Plan.

                                   - F-24 -

     At its meeting on June 26, 2003, the Board of Directors approved the
issuance of a total of 170,000 options to two directors and one non-director
executive of the Company.  The per-share closing price on the AMEX of the
Company's common stock on June 25, 2003 was $0.25.  Kimball Bradley received
100,000 options at an exercise price of $0.275 per share of Company common
stock.  These options have a 5-year term and vest in one-third increments on
the first, second and third anniversaries of their issuance.  Mr. David E.
Jackson, director, received 20,000 options and a non-director executive
received 50,000 options at an exercise price of $0.25 per share.  These
options have a 10-year term and vest in one-third increments on the first,
second and third anniversaries of their issuance.  By written unanimous
consent in lieu of a meeting dated December 1, 2003, the Board of Directors
approved the issuance of a total of 400,000 options to two directors of the
Company.  The per-share closing price on the AMEX of the Company's common
stock on November 30, 2003 was $0.32.  Kimball Bradley received 300,000
options and Mr. Bradley received 100,000 options at an exercise price of
$0.352 per share of Company common stock.  These options have a 5-year term
and vest in one-third increments on the first, second and third anniversaries
of their issuance.

     At December 31, 2003, 110,600 options are available for issuance under
the 1998 Option Plan.  A summary of the status of the Company's stock options
and warrants as of December 31, 2003, 2002 and 2001 and changes during the
year is presented below:

                           2003               2002                2001
                    ------------------  ------------------  ------------------
                              Weighted            Weighted            Weighted
                               Average             Average             Average
                              Exercise            Exercise            Exercise
Fixed Options       Shares       Price  Shares       Price  Shares       Price
-------------       --------- --------  --------- --------  --------- --------
Outstanding at
  beginning of year    44,000    $2.94  1,089,000    $2.57    868,000    $2.91
Granted               570,000     0.33          -        -    323,500     1.47
Exercised                   -        -   (687,900)    0.20     (6,000)    1.00
Forfeited/expired           -        -   (357,100)    0.20    (96,500)    2.01
                    ---------           ---------           ---------
Outstanding at
  end of year         614,000     0.51     44,000     2.94  1,089,000     2.57
                    =========           =========           =========
Options exercisable
  at end of year       40,667     3.06     37,333     3.21    572,867     3.20
                    =========           =========           =========

  Weighted-average fair value of options granted:
Exercise price equal
  to market price
  on grant date     $    0.25           $       -           $    1.27
                    =========           =========           =========
Exercise price greater
  than market price
  on grant date     $    0.34           $       -           $    1.04
                    =========           =========           =========

                                   - F-25 -

     The following table summarizes information about stock options and
warrants outstanding at December 31, 2003:

                    Remaining           Number              Number
Exercise            Contractual         Outstanding         Exercisable
Price               Life                at 12/31/03         at 12/31/03
---------           -----------         -----------         -----------
$0.2500              9.50 years              70,000                   -
$0.2750              4.50 years             100,000                   -
$0.3520              5.00 years             400,000                   -
$1.0000              6.50 years               9,000               9,000
$1.4500              7.50 years              10,000               6,667
$3.0000              6.25 years              10,000              10,000
$5.0625              4.00 years              15,000              15,000
                                          ---------           ---------
                                            614,000              40,667
                                          =========           =========

     Had we used FASB Statement 123 to account for our stock options, our
operating results would differ from our reported results as indicated below:

                          As Reported                     Pro forma
                  ----------------------------   ----------------------------
                    2003      2002      2001       2003      2002      2001
                  --------  --------  --------   --------  --------  --------
Income (loss)
  applicable to
  common stock    $  2,640  $(12,859) $(38,128)  $  2,640  $(12,859) $(38,374)
                  ========  ========  ========   ========  ========  ========
Basic income
  (loss) per
  common share    $   0.16  $  (0.82) $  (2.45)  $   0.16  $  (0.82) $  (2.46)
                  ========  ========  ========   ========  ========  ========
Diluted income
  (loss) per
  common share    $   0.16  $  (0.82) $  (2.45)  $   0.16  $  (0.82) $  (2.46)
                  ========  ========  ========   ========  ========  ========

     The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions for 2001: dividend yield of 0 percent; expected
volatility of 86%; risk-free interest rates of 3.4% to 5.8% and expected life
of ten years.  Expected volatility was estimated based on historical stock
prices and is not an indicator of future stock prices.


NOTE 10:   EMPLOYEE BENEFIT PLANS

     The Company sponsors defined benefit plans and other postretirement
benefit plans for certain employees in Metals and Plastics and employees of
its Corporate Executive Payroll (as defined in the plan document).

Metals

     Metals Pension Plan:  Reunion sponsors a defined benefit pension plan
which covers substantially all of its employees at its McKeesport, PA pressure
vessel manufacturing location.  This plan is the defined benefit plan from
former Chatwins Group.  Benefits under this plan are based solely on
continuous years of service and are not affected by changes in compensation
rates.

                                   - F-26 -

     The Company's funding policy with respect to this plan 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.

     Metals and Corporate Executive Payroll Other Postretirement Plan:
Reunion maintains various postretirement healthcare and life insurance benefit
plans for certain active and retired employees.  Covered active and retired
employees include those of the Company's McKeesport, PA pressure vessel
manufacturing location, pursuant to a November 1997 plan amendment which
became effective January 1, 1998 and employees of Reunion's Corporate
Executive Payroll.

     Eligible active and retired employees of the one Metals operating
division for which postretirement benefits are provided include both union and
nonunion employees.  Healthcare benefits for both union and nonunion retirees
are 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
employees of Reunion's Corporate Executive Payroll are paid for by Reunion 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 employees of Reunion's Corporate Payroll are paid
for by Reunion 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 Reunion equal benefits paid.

     The following table sets forth the changes in the benefit obligations and
plan assets for the years ended December 31, 2003 and 2002 and the funded
status at December 31, 2003 and 2002 of the Metals pension plan and the Metals
and Corporate Executive Payroll other postretirement benefits plans (in
thousands).  The accrued benefit cost is included in other liabilities in the
accompanying consolidated balance sheet:

                                   - F-27 -

                                      Pension           Other Postretirement
                               --------------------     --------------------
                                 2003        2002         2003        2002
                               --------    --------     --------    --------
  Change in benefit obligation:
Benefit obligation, beginning  $  3,192    $  2,657     $  1,714    $  1,563
Service cost                        140         141           75          61
Interest cost                       207         177          104          96
Plan amendment                        -          70            -           -
Actuarial loss (gain)               177         278          397         377
Benefits paid                      (138)       (131)        (325)       (383)
                               --------    --------     --------    --------
Benefit obligation, ending     $  3,578    $  3,192     $  1,965    $  1,714
                               ========    ========     ========    ========
  Change in plan assets:
Fair value, beginning          $  1,959    $  2,097     $      -    $      -
Actual return                       168         (63)           -           -
Company contribution                212          56          325         383
Benefits paid                      (138)       (131)        (325)       (383)
                               --------    --------     --------    --------
Fair value, ending             $  2,201    $  1,959     $      -    $      -
                               ========    ========     ========    ========
  Funded status:
Net obligation, ending         $  1,377    $  1,233     $  1,965    $  1,714
  Unrecognized costs:
Additional minimum pension
  Liability                       1,244       1,119            -           -
Prior service costs                (179)       (200)           5           6
Net loss                         (1,065)       (919)        (554)       (182)
Transition obligation                 -           -         (392)       (440)
                               --------    --------     --------    --------
Accrued benefit costs          $  1,377    $  1,233     $  1,024    $  1,098
                               ========    ========     ========    ========

     In addition to accrued benefit costs, amounts recognized in the
consolidated balance sheet include an intangible asset of $179,000 and
$200,000 and other comprehensive losses of $1,004,000 and $914,000 at December
31, 2003 and 2002, respectively.

     Net periodic pension and other postretirement benefits costs for the
following years for Metals pension and Metals and Corporate Executive Payroll
other postretirement benefits plans ended December 31 are as follows (in
thousands):

                                     Pension           Other Postretirement
                              ----------------------  ----------------------
                               2003    2002    2001    2003    2002    2001
                              ------  ------  ------  ------  ------  ------
Benefits earned during year   $  140  $  141  $  123  $   75  $   61  $   44
Interest cost                    207     178     161     104      96      87
Early retirement incentive         -       -       -       -       -       -
  Amortization of:
Prior service cost                20      15      11      (1)      -       -
Unrecognized net loss (gain)      46      11       -      24     (10)    (44)
Unrecognized net obligation        -      12      12      49      50      48
Expected return on plan assets  (183)   (184)   (202)      -       -       -
                              ------  ------  ------  ------  ------  ------
Defined benefit pension and
  total other postretirement
  benefits costs              $  230  $  173  $  105  $  251  $  197  $  135
                              ======  ======  ======  ======  ======  ======

                                   - F-28 -

     Assumptions used to develop Metals pension cost and projected benefit
obligation for the defined benefit pension plan for the following years ended
December 31 are as follows:
                                                   2003      2002      2001
                                                 --------  --------  --------
Discount rate                                       6.25%     6.75%     7.00%
                                                 ========  ========  ========
Expected rate of return on plan assets              7.75%     7.75%     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:
                                                   2003      2002      2001
                                                 --------  --------  --------
Discount rate                                       6.25%     6.75%     7.00%
                                                 ========  ========  ========
Healthcare cost trend rate (USX eligible)            2.0%      3.0%      3.0%
                                                 ========  ========  ========
Healthcare cost trend rate (All others)              7.0%      7.0%      7.0%
                                                 ========  ========  ========
Rate of compensation increase                        2.0%      2.0%      2.0%
                                                 ========  ========  ========

     USX administers the postretirement healthcare plans for the eligible
employees of the McKeesport, PA location previously owned by USX and bills
Reunion for its share of the postretirement costs related to Reunion's
retirees covered by the plans.  During 1997, Chatwins Group's actuary reviewed
several years of rates charged to Chatwins Group 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%.  Such rate was reduced to
2% in 2003 after further review.  For all others, the 7.0% is a
weighted-average based on an assumed rate of increase in per capita healthcare
costs of 10% for 2004 with a gradual decrease to 5% and remaining at that
level thereafter.  A one percentage point increase in the assumed healthcare
cost trend rate would increase the benefit obligation at December 31, 2003 by
approximately $253,000, increase net periodic cost by approximately $50,000
and increase the total of the service and interest cost components by
approximately $31,000.  Conversely, a one percentage point decrease in the
assumed healthcare cost trend rate would result in approximate decreases in
each by $205,000, $39,000 and $26,000, respectively.

Plastics

     Plastics Pension Plan:  Reunion sponsors a defined benefit pension plan
which covered substantially all of its employees at its New York facilities.
Effective June 15, 1999, benefits were frozen.

     Plastics Other Postretirement Plan:  Reunion maintains a postretirement
healthcare plan for certain salaried and union retirees and their dependents.
Covered employees are eligible to participate in the medical benefit plan if,
at the time they retire, they have at least 10 years of service and have
attained 62 years of age.  This plan is contributory via employee
contributions, deductibles and co-payments and are subject to certain annual,
lifetime and benefit-specific maximum amounts.

     The following table sets forth the changes in the benefit obligations and
plan assets for the years ended December 31, 2003 and 2002 and the funded
status at December 31, 2003 and 2002 for Plastics pension and other
postretirement benefits plans (in thousands).  The accrued benefit cost is
included in other liabilities in the accompanying consolidated balance sheet:

                                   - F-29 -

                                      Pension           Other Postretirement
                               --------------------     --------------------
                                 2003        2002         2003        2002
                               --------    --------     --------    --------
  Change in benefit obligation:
Benefit obligation, beginning  $  3,376    $  3,135     $  1,833    $  1,453
Service cost                          -           -           54          42
Interest cost                       220         213          119          97
Plan amendment                        -           -            -         (68)
Actuarial loss (gain)               255         142          514         499
Benefits paid                      (140)       (114)        (125)       (190)
                               --------    --------     --------    --------
Benefit obligation, ending     $  3,711    $  3,376     $  2,395    $  1,833
                               ========    ========     ========    ========
  Change in plan assets:
Fair value, beginning          $  1,906    $  1,901     $      -    $      -
Actual return                       437        (112)           -           -
Company contribution                261         231          125         190
Benefits paid                      (140)       (114)        (125)       (190)
                               --------    --------     --------    --------
Fair value, ending             $  2,464    $  1,906     $      -    $      -
                               ========    ========     ========    ========
  Funded status:
Net obligation, ending         $  1,247    $  1,470     $  2,395    $  1,833
  Unrecognized costs:
Additional minimum pension
  Liability                       1,470       1,543            -           -
Net loss                         (1,470)     (1,543)        (831)       (333)
                               --------    --------     --------    --------
Accrued benefit costs          $  1,247    $  1,470     $  1,564    $  1,500
                               ========    ========     ========    ========

     In addition to accrued benefit costs, amounts recognized in the
consolidated balance sheet include other comprehensive losses of $975,000 and
$1,096,000 at December 31, 2003 and 2002, respectively.

     Net periodic pension and other postretirement benefits costs for the
following years for Plastics pension and other postretirement benefits plan
ended December 31 are as follows (in thousands):

                                     Pension           Other Postretirement
                              ----------------------  ----------------------
                               2003    2002    2001    2003    2002    2001
                              ------  ------  ------  ------  ------  ------
Benefits earned during year   $    -  $    -  $    -  $   54  $   42  $   53
Interest cost                    220     213     204     119      97     107
Unrecognized net loss (gain)      64      33       -      16       -       -
Expected return on plan assets  (173)   (196)   (222)      -       -       -
                              ------  ------  ------  ------  ------  ------
Defined benefit pension and
  total other postretirement
  benefits costs (income)     $  111  $   50  $  (18) $  189  $  139  $  160
                              ======  ======  ======  ======  ======  ======

     Assumptions used to develop the pension cost and projected benefit
obligation for the defined benefit pension plan for the following years ended
December 31, 2003, 2002 and 2001 are as follows:
                                                   2003      2002      2001
                                                 --------  --------  --------
Discount rate                                       6.25%     6.75%     7.00%
                                                 ========  ========  ========
Expected rate of return on plan assets              7.75%     7.75%     9.00%
                                                 ========  ========  ========

                                   - F-30 -

     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:
                                                   2003      2002      2001
                                                 --------  --------  --------
Discount rate                                       6.25%     6.75%     7.00%
                                                 ========  ========  ========
Healthcare cost trend rate                          7.00%     6.75%     7.00%
                                                 ========  ========  ========

     For measurement purposes, an assumed rate of increase in per capita
healthcare costs of 10% was used for 2004 with a gradual decrease to 5% and
remaining at that level thereafter.  A one percentage point increase in the
assumed healthcare cost trend rate would increase the benefit obligation at
December 31, 2003 by approximately $190,000, increase net periodic cost by
approximately $17,000 and increase the total of the service and interest cost
components by approximately $17,000.  Conversely, a one percentage point
decrease in the assumed healthcare cost trend rate would result in approximate
decreases in each by $172,000, $15,000 and $15,000, respectively.

Other Employee Benefit Plans

     The Company also sponsors qualified contributory 401(k) plans covering
substantially all employees and a money purchase defined contribution plan for
Corporate Executive Payroll and certain other salaried employees.  For those
employees electing to participate in the 401(k) plans, employees can
contribute up to an annually determined maximum amount permitted by law and
the Company makes matching contributions up to specified limits.  For those
eligible for the money purchase defined contribution plan, until December 31,
2001, the Company contributes 5% of the employee's base salary to savings
funds designated by the employee.  Effective December 31, 2002, the Company
suspended its matching contributions to the 401(k) plans.  Effective December
31, 2001, the Company terminated the money purchase defined contribution plan
and the majority of its assets were distributed to participating employees
during the first quarter of 2002.  During 2002 and 2001, the Company's expense
to these deferred compensation plans totaled $299,000 and $1,016,000,
respectively.

     The Company does not provide any other postemployment benefits to former
or inactive employees except for unemployment compensation benefits required
by law.


NOTE 11:   EARNINGS PER COMMON SHARE

     The computations of basic and diluted earnings per common share (EPS) for
the years ended December 31, 2003, 2002 and 2001 are as follows (in thousands,
except share and per share amounts):
                                                Income    Shares     EPS
                                               --------  --------  -------
     Year ended December 31, 2003:
Income available to common stockholders,
  weighted average shares outstanding
  and basic EPS                                $  2,640    16,279  $  0.16
                                                                   =======
Dilutive effect of stock options and warrants                 375
                                               --------  --------
Income available to common stockholders,
  shares outstanding and diluted EPS           $  2,640    16,654  $  0.16
                                               ========  ========  =======

                                   - F-31 -

     Year ended December 31, 2002:
Loss applicable to common stockholders,
  weighted average shares outstanding
  and basic EPS                                $(12,859)   15,591  $ (0.82)
                                                                   =======
Dilutive effect of stock options                                -
                                               --------  --------
Loss applicable to common stockholders,
  shares outstanding and diluted EPS           $(12,859)   15,591  $ (0.82)
                                               ========  ========  =======
     Year ended December 31, 2001:
Loss applicable to common stockholders,
  weighted average shares outstanding
  and basic EPS                                $(38,128)   15,587  $ (2.45)
                                                                   =======
Dilutive effect of stock options                               25
                                               --------  --------
Loss applicable to common stockholders,
  shares outstanding and diluted EPS           $(38,128)   15,612  $ (2.45)
                                               ========  ========  =======

     At December 31, 2003, the Company's stock options outstanding totaled
614,000.  Such options included a dilutive component of 112 shares.  At
December 31, 2003, outstanding warrants to purchase the Company's common
totaled 2,896,238.  Such warrants included a dilutive component of 374,876
shares.  At December 31, 2002 the Company's stock options outstanding totaled
44,000 and were not dilutive.  At December 31, 2001, the Company's stock
options outstanding totaled 1,089,000.  Such options included a dilutive
component of 25,809 shares.


NOTE 12:   INCOME TAXES

     The tax provision for continuing operations is comprised of the following
amounts (in thousands):

                                                   Year Ended December 31,
                                                   2003      2002      2001
                                                 --------  --------  --------
  Current:
Federal                                          $      -  $      -  $      -
State and local                                         -         -         -
                                                 --------  --------  --------
  Total                                                 -         -         -
                                                 --------  --------  --------
  Deferred:
Federal                                                 -         -    12,678
State and local                                         -         -         -
                                                 --------  --------  --------
  Total                                                 -         -    12,678
                                                 --------  --------  --------
  Total tax provision                            $      -  $      -  $ 12,678
                                                 ========  ========  ========

     The Company's effective income tax rate from continuing operations,
reflected in the accompanying consolidated statement of income, differs from
the statutory rate due to the following (in thousands):

                                   - F-32 -

                                                   Year Ended December 31,
                                                   2003      2002      2001
                                                 --------  --------  --------
Computed amount at statutory rate (34%)          $    897  $ (3,921) $ (5,533)
Net change in valuation allowance                  (2,335)   (3,069)   11,653
Section 108 cancellation of indebtedness
  income exclusion                                 (3,737)        -         -
Section 108 reduction of loss carryforwards
  from cancellation of indebtedness
  income exclusion                                  3,737         -         -
State and local income taxes                            -         -    (1,072)
Goodwill amortization                                (140)     (140)      116
Foreign sales exclusions                              (57)      (56)      (71)
Expiration of loss carryforwards                    1,396     7,330     9,488
Tax attributes of acquired company                      -         -    (1,140)
Federal return to prior year's
  provision adjustments                               142      (193)     (773)
Non-deductible expenses                                78        84        81
Other - net                                            19       (35)      (71)
                                                 --------  --------  --------
  Total tax provision from continuing operations $      -  $      -  $ 12,678
                                                 ========  ========  ========

     Components of consolidated income taxes consist of the following (in
thousands):

                                                   Year Ended December 31,
                                                   2003      2002      2001
                                                 --------  --------  --------
Income (loss) from continuing operations         $      -  $      -  $ 12,678
Loss from discontinued operations                       -         -         -
                                                 --------  --------  --------
  Total consolidated tax provision               $      -  $      -  $ 12,678
                                                 ========  ========  ========

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

                                                        At December 31,
                                                   2003                2002
                                                 --------            --------
Depreciation                                     $   (340)           $    (62)
Historical goodwill                                   (53)                  -
Inventory basis differences                             -                (664)
Other                                                (176)               (182)
                                                 --------            --------
  Deferred tax liabilities                           (569)               (908)
                                                 --------            --------
Loss carryforwards (NOLs)                          39,161              40,695
Book reserves                                       2,933               3,728
Deferred compensation                                 521                 631
Tax credit carryforwards                              851                 851
Historical goodwill                                     -                 278
Unicap adjustments                                    156                 127
Other                                               1,567               1,553
                                                 --------            --------
  Deferred tax assets                              45,189              47,863
Less: Valuation allowance                         (44,620)            (46,955)
                                                 --------            --------
  Deferred tax assets, net                            569                 908
                                                 --------            --------
  Deferred taxes, net                            $      -            $      -
                                                 ========            ========

                                   - F-33 -

     At December 31, 2003, Reunion had net operating loss carryforwards for
Federal tax return reporting purposes of approximately $115.2 million, of
which $53.1 million will expire by the end of 2004.  Management has concluded
that it is more likely than not that the Company's loss carryforwards will
expire unutilized and has determined to continue to fully reserve for the
total amount of net deferred tax assets as of December 31, 2003.

     The current and noncurrent classifications of the deferred tax balances
are as follows (in thousands):
                                                        At December 31,
                                                   2003                2002
                                                 --------            --------
  Current:
Deferred tax assets                              $  2,173            $  2,837
Deferred tax liabilities                              (34)               (702)
Less:   Valuation allowance                        (2,056)             (2,693)
                                                 --------            --------
  Current deferred, net asset (liability)              83                (558)
                                                 --------            --------
  Noncurrent:
Deferred tax assets                                43,016              45,026
Deferred tax liabilities                             (535)               (206)
Less:   Valuation allowance                       (42,564)            (44,262)
                                                 --------            --------
  Noncurrent deferred, net (liability) asset          (83)                558
                                                 --------            --------
  Deferred taxes, net                            $      -            $      -
                                                 ========            ========

     No U.S. federal or state corporate income tax return examinations are
currently in process.  The Company believes adequate provisions for income
taxes have been recorded for all years.


NOTE 13:   RELATED PARTIES, TRANSACTIONS AND BALANCES

Related Parties

     Reunion Industries, Inc. - Reunion is a publicly traded Delaware
corporation headquartered in Pittsburgh, Pennsylvania.  Charles E. Bradley,
Sr. (Mr. Bradley) is chairman of the board and Chief Executive Officer of
Reunion.  Kimball Bradley is President, Chief Operating Officer, a director of
Reunion and son of Mr. Bradley.

     Stanwich Partners, Inc. - Stanwich Partners, Inc. (SPI) is engaged in
consulting services in the field of financial planning and reporting.  Mr.
Bradley is the President of SPI.

     Stanwich Financial Services Corp. - SFSC is a privately held corporation
in the structured settlement business.  SFSC is owned 100% by Mr. Bradley.
The Company has been named as a defendant in several lawsuits filed against
SFSC.  See note 14.

     NPS Acquisition Corp. - NPS Acquisition Corp. (NPSAC) was formed by Mr.
Bradley to acquire and hold NAPTech Pressure Systems (NAPTech).  NAPTech was
based in Clearfield, Utah and manufactures seamless steel pressure vessels, an
existing Metals product line.  In January 2001, NPSAC was purchased by the
Company.  See note 3.

                                   - F-34 -

     CPS Leasing, Inc. - CPS Leasing, Inc. (CPSL) is a subsidiary of Consumer
Portfolio Services, Inc. (CPS).  Mr. Bradley and Mr. Poole are stockholders of
CPS.  Mr. Poole is a director of CPS and Mr. Bradley was a director until July
2001.  Charles E. Bradley Jr., Mr. Bradley's son, is President of CPS.  CPSL
is primarily engaged in machinery and equipment lease financing.

Transactions and Balances

SPI Consulting Agreement

     Reunion maintained a consulting agreement with SPI under which $300,000
was recorded as expense during the year ended December 31, 2001.  The
agreement was terminated effective September 30, 2002.  During 2002, $225,000
was expensed related to this agreement.  The Company made advances during 2002
totaling $127,795 to SPI related to this agreement, including $25,000 relating
to stock options exercised by Mr. Bradley.  At December 31, 2003 and 2002,
$117,205 was owed to SPI under this agreement and is classified as due to
related parties in the accompanying consolidated balance sheet.

SFSC Notes Payable

     The Company assumed three notes payable to SFSC related to acquisitions
in 2000 and 2001.  At December 31, 2003 and 2002, their balances of
$2,998,000, $500,000 and $100,000 are included in notes payable - related
parties in the accompanying consolidated balance sheet.  During 2003 and 2002,
no interest was paid to SFSC related to these notes payable.  At December 31,
2003 and 2002, accrued and unpaid interest due to SFSC related to these notes
payable of $1,844,283 and $1,219,572, respectively, is included in due to
related parties in the accompanying consolidated balance sheet.  These notes
payable are included in the conditional SFSC bankruptcy settlement described
in Note 14 under the heading "SFSC Litigation."

SFSC Note Receivable

     In August 1999, pre-merger Reunion loaned $310,000 to SFSC.  The loan was
scheduled to be repaid in December 1999 with interest at 15%.  In December
1999, the Company agreed to extend the maturity to March 2000 and loaned an
additional $40,000 to SFSC also with interest at 15%, which was repaid in
March 2000.  The remaining balance including accrued and unpaid interest due
from SFSC at December 31, 2003 and 2002 is $465,000 and is included in due
from related parties in the accompanying consolidated balance sheet.  This
note receivable is included in the conditional SFSC bankruptcy settlement
described in Note 14 under the heading "SFSC Litigation."

CPS Leasing, Inc.

     Reunion entered into various operating lease agreements with CPSL.
During 2003 and 2002, lease payments totaling $336,000 and $580,000,
respectively, were paid to or accrued for CPSL. At December 31, 2003, the
Company has future minimum rental commitments under noncancellable operating
leases with CPSL totaling $1,460,000.

SFSC Collateral Fees

     To close on the BOA refinancing in March 2000, SFSC provided side
collateral in the form of CPS debt and common stock to support the borrowings.
Under this arrangement, SFSC was to receive a 5% collateral fee for as long as
the collateral was in place.  Such collateral remained in place until the
Congress refinancing in December 2003.  However, in January 2003, Mr. Bradley
agreed to absorb this collateral fee expense to SFSC on a going forward basis
with no further obligation to the Company.  In each of 2002 and 2001, the
Company recorded interest expense of $283,000 related to this arrangement.  No

                                   - F-35 -

payments have been made under this arrangement during 2003 or 2002.  During
2001, the Company made a $100,000 payment related to this arrangement.  At
December 31, 2003 and 2002, $690,041 is included in due to related party in
the accompanying consolidated balance sheet.  These collateral fees are
included in the conditional SFSC bankruptcy settlement described in Note 14
under the heading "SFSC Litigation."

     In March 2000, SFSC pledged a $5.0 million note from CPS to secure the
obligations of NPSAC to the former owners of the business.  NPSAC agreed to
pay SFSC a 2% credit support fee for this pledge.  The Company assumed this
credit support obligation in the acquisition of NPSAC.  No payments have been
made under this arrangement during 2003 or 2002.  At December 31, 2003 and
2002, accrued and unpaid fees totaling $293,943 and $226,990, respectively,
were due to SFSC under this credit support obligation and included in due to
related parties in the accompanying consolidated balance sheet.

Cash Surrender Value of Life Insurance Policies

     The Company pays the premiums on life insurance policies covering Mr.
Bradley, Mr. Joseph C. Lawyer (Mr. Lawyer), the Company's vice chairman and a
director, and Mr. Poole.  Pursuant to these arrangements, the Company will be
reimbursed for the premiums it pays for such policies from either the death
benefit of the policy or their cash surrender value.  The covered individuals
have agreed with the Company that if the policy proceeds are insufficient to
reimburse the Company for the full amount of the premiums paid, they will
cover the shortfall.  As of December 31, 2003 and 2002, premiums paid by the
Company in excess of the cash surrender values of the policies totaled
$940,000 and $1,031,000, respectively, and are included in due from related
parties in the accompanying consolidated balance sheets.

Mr. Bradley Notes Payable

     At the time of the merger, the Company assumed a note payable to Mr.
Bradley related to pre-merger Reunion's plastics business.  At December 31,
2002 and 2001, the balance of $1,017,000 is included in notes payable -
related parties in the accompanying consolidated balance sheet.  No interest
was paid in 2003 or 2002.  During 2001, $55,000 was paid to SFSC related to
this note payable.  At December 31, 2003 and 2002, accrued and unpaid interest
due related to this note payable of $280,166 and $168,283, respectively, is
included in due to related parties in the accompanying consolidated balance
sheet.  The note payable and any accrued and unpaid interest have been
assigned to SFSC.  This note payable is included in the conditional SFSC
bankruptcy settlement described in Note 14 under the heading "SFSC
Litigation."

     In January 2003, Mr. Bradley made a $500,000 payment on behalf of the
Company to the Shaw Group, former owner of Naptech Pressure Systems and holder
of a $3,644,000 15% note payable assumed by Reunion in the NPSAC acquisition
in January 2001.  In exchange for the payment, the Company issued a $500,000
10% note payable to Mr. Bradley.  The note payable and any accrued but unpaid
interest is due on October 31, 2004.  At December 31, 2003, accrued and unpaid
interest related to this note totaled $50,000 and is included in due to
related parties in the accompanying consolidated balance sheet.  Mr. Bradley's
rights under this note are subordinate to the Company's indebtedness to
Congress.

Mr. Bradley Guarantees

     To facilitate the closing of the refinancing of the Company's bank debt
with Congress in December 2003, Mr. Bradley provided a personal guarantee of
$1.5 million of the revolving credit portion of the new facilities.  In
exchange for his guarantee, the Board of Directors approved a 2% guarantee fee

                                   - F-36 -

to be paid to Mr. Bradley during the time period such guarantee is in place.
Amounts payable under this arrangement are being offset against an employee
advance previously received by Mr. Bradley and owed to the Company.  Such
advance totaled $58,000 at the time of the refinancing and, through December
31, 2003, $2,384 of guarantee fees had been offset against such advance.  See
"Employee Advances" below.

     At the time of the NPSAC acquisition by the Company, NPSAC was indebted
to Mr. Bradley in connection with an agreement whereby Mr. Bradley guaranteed
certain obligations of NPSAC to its former owners.  At December 31, 2001, the
Company owed Mr. Bradley a total of $90,000 related to this agreement.  During
2002, Mr. Bradley assigned his right to this guarantee fee plus interest at
approximately 11%, totaling $100,000, to two employees of the Company in
repayment of loans totaling $100,000 made to Mr. Bradley by these employees.
These employees also had received a total of $100,000 in advances from the
Company during 2001.  See "Employee Advances" below.

Kimball Bradley Guarantees

     To facilitate obtaining new financing with two private investment funds
and the closing of the refinancing of the Company's bank debt with Congress in
December 2003, Kimball Bradley provided personal guarantees totaling $9.2
million, including guarantees of two notes payable totaling $7.7 million and
$1.5 of the revolving credit portion of the new Congress facilities.  In
exchange for his guarantees, the Board of Directors approved 2% guarantee fees
to be paid to Kimball Bradley during the time period such guarantees are in
place.  Amounts payable under these arrangements are being offset against an
employee advance previously received by Kimball Bradley and owed to the
Company.  Such advance totaled $55,000 at the time of the refinancing.  In
addition, Kimball Bradley owed the Company $19,000 for the December 2002
exercise of 95,000 options which had been repriced to $0.20.  Through December
31, 2003, guarantee fees totaling $74,963 had been incurred by the Company, of
which $74,000 was offset against amounts due from Kimball Bradley.  The
remaining $963 is included in due to related parties at December 31, 2003 in
the accompanying consolidated balance sheet.  See "Employee Advances" below.

Employee Advances

     At December 31, 2002, the Company had non-interest bearing advances due
from two employees totaling $113,000.  The highest balance during 2003 was
$113,000.  The highest balance during 2002 was $213,000.  During 2002, two
employees with advances totaling $100,000 repaid their advances by waiving
their rights to the guarantee fee plus interest they received from Mr.
Bradley.  See "Mr. Bradley Guarantees" and "Kimball Bradley Guarantees" above.


NOTE 14:   COMMITMENTS AND CONTINGENCIES

     The Company is and has been involved in a number of lawsuits and
administrative proceedings, which have arisen in the ordinary course of
business of the Company and its subsidiaries.    A summary of such legal
proceedings follows.

Louisiana Environmental

     In connection with the sale of its former oil and gas operations,
pre-merger Reunion retained certain oil and gas properties in Louisiana
because of litigation concerning environmental matters.  The Company is in the
process of environmental remediation under a plan approved by the Louisiana
Department of Natural Resources Office of Conservation (LDNROC).  The Company
has recorded an accrual for its proportionate share of the remaining estimated
costs to remediate the site based on plans and estimates developed by the

                                   - F-37 -

environmental consultants hired by the Company.  During 1999, the Company
conducted remediation work on the property.  The Company paid $172,000 of the
total cost of $300,000.  Regulatory hearings were held in January 2000 and
2001 to consider the adequacy of the remediation conducted to date.  In August
2001, LDNROC issued its order for the Company to complete the soil remediation
under the plan approved in 1999 and to perform additional testing to determine
to what extent groundwater contamination might exist.  No remediation was
performed in 2000, 2001 or 2002 pending the decision.  However, the Company
has paid $434,000 for its share of consulting services in connection with the
hearings.  Most recently, the Company's environmental consultants filed with
the LDNROC updated amendments to the prior approved plan for sampling and
remediation.  If approved, the plan will be implemented.  At December 31,
2003, after accruing an additional $40,000 in December 2002, the balance
accrued for these remediation costs is approximately $831,000.  The Company
believes that future remediation costs will not exceed the amount accrued and
will be funded by net production revenues of the producing wells on the
property as part of the settlement agreement discussed below.

     Litigation on this matter had been stayed pending the determination by
the LDNROC as to the extent of remediation that would be required.  Such stay
was lifted and the District Court had established a jury trial for September
22, 2003 to determine the necessity for any further remediation and the extent
of damages, if any, suffered by the plaintiff owners of the property.
However, an agreement to settle the litigation between the plaintiff owners of
the property and the other involved parties, including the Company, has been
reached and finalized.  The Company's share of the settlement costs were
funded by the other defendants to the litigation.  The terms of the agreement
are that the Company must reimburse the other defendants to the litigation at
least $120,000 per year for ten years, but that such amount can be paid from
net production revenues from operation of the producing wells owned by the
Company on the property.  However, this is a non-recourse agreement such that,
should the wells be depleted before all such costs are reimbursed, the Company
is not required to fund the unreimbursed balance.  During 2003 and 2002, net
production revenues totaled $248,000 and $181,000, respectively.  Based on
past operation results of the producing well, the Company believes that future
net production revenues will be sufficient to fund the minimum required under
the settlement agreement.

Gambonini Environmental

     On March 15, 2002, the Company received a Request for Information from
the United States Environmental Protection Agency (USEPA) regarding the
Gambonini Mine Site (Site) outside Petaluma, Marin County, California.  The
Company gathered and forwarded the information the USEPA requested.  On May
16, 2002, the Company, as the successor to Buttes Gas & Oil Company (BGO),
received from the USEPA a notice of potential liability and demand for payment
of $3,909,614.37 for reimbursement of costs related to the USEPA's removal and
environmental restoration efforts at the Site initiated in 1998 pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA).

     BGO, predecessor by merger to the Company, leased the site for mining
purposes and operated a mercury mine there from 1965 to 1970.  BGO's mining
operations were terminated in 1970.  Subsequently, under the supervision of
the environmental and planning representatives of Marin County, BGO completed
closure and environmental restoration activities at the site, including
stabilization and re-vegetation of the site.  BGO then quitclaimed the mining
lease to the Site owners, the Gambonini's, in 1973.  Because of apparent
overgrazing at the Site subsequent to BGO's restoration efforts, a storm in
1982 caused severe flooding, which resulted in the failure of a dam built to
retain mining materials.  Runoff from the flood released mining materials into

                                   - F-38 -

the creek below and, ultimately, into the Tomales Bay, a local recreation and
fishing area.

     In March 2003, the Company and the USEPA reached an agreement in
principle to settle the USEPA's claim for payment by the Company of $100,000
plus interest at the Superfund rate (which is currently 1.27%), payable in
three installments over a two-year period.  This amount is accrued as of
December 31, 2003 and 2002.  This settlement agreement will resolve the
USEPA's claims for reimbursement of past environmental response costs under
CERCLA, but does not resolve all possible claims the United States may have
with respect to the Gambonini mine site which could include, but not be
limited to, claims for natural resource damages.  The United States has given
no indication as to whether or not it will pursue such claims.  The Company
has agreed to toll the statute of limitations with respect to any natural
resource damages claims, if any, from August 30, 2002 to April 1, 2008.

Asbestos (Hanna)

     During 2003, Reunion Industries was named as defendant in 32 actions in
the state of Georgia and one action in the state of Alabama.  Such actions
claim that cylinders manufactured by the Hanna division of Reunion Industries
contained asbestos that caused severe illness.   Since most of the plaintiffs'
exposure occurred prior to the purchase of the assets of this business by
Reunion's predecessor in 1980, and since there is no evidence that asbestos
was used in Hanna products after 1980, the Company's position is that it has
no liability in these suits.  The plaintiffs' attorney has tentatively agreed
to dismiss Reunion from these suits, subject to his review of certain
information we have provided to him about our predecessor and if Reunion will
assist the plaintiffs in their case against the pre-1980 owner of the
business.  Reunion has agreed to and is currently providing the requested
assistance to plaintiffs' attorney.

Asbestos (ORC)

     Since July 10, 2001, various legal actions, some involving multiple
plaintiffs, alleging personal injury/wrongful death from asbestos exposure
have been filed in multiple states, including California, Oregon, Washington,
New York and Mississippi, against a large number of defendants, including
Oneida Rostone Corporation (ORC), pre-merger Reunion's Plastics subsidiary and
the Company's Plastics segment.  In October 2001, Allen-Bradley Company, a
former owner of the Rostone business of ORC, accepted Reunion Industries'
tender of its defense and indemnification in the first such lawsuit filed,
pursuant to a contractual obligation to do so.  Subsequent to the acceptance
of the tender of defense and indemnification in the first lawsuit,
Allen-Bradley Company has accepted the Company's tender of defense and
indemnification in a total of 101 separate actions, all of which have been
defended by Allen-Bradley Company.

Wheeling-Pitt Preference Claims

     In the 2002 fourth quarter, Wheeling-Pittsburgh Steel Corporation
(debtor) filed suit against the Company in U.S. Bankruptcy Court for the
Northern District of Ohio, seeking to compel the return of certain
preferential transfers pursuant to 11 U.S.C 547.  The debtor sought a judgment
in the amount of $2,705,541.  The Company filed an answer alleging that such
payments are not avoidable because (a) the transfers were made by the Debtor
in the ordinary course of business and (b) the Company extended new value to
the Debtor after the transfers were made in an amount exceeding the original
payments.  A status conference was held before the court on April 21, 2003.
The parties agreed to stay discovery pending settlement discussions.  After
such discussions, in November 2003, the parties agreed to a settlement of
$60,000 to be paid by the Company in seven installments.  Half of the

                                   - F-39 -

settlement was due in December 2003 and the balance is payable in six equal
monthly payments beginning January 2004.  As of March 30, 2004, all amounts
owed by the Company under this settlement arrangement have been paid.

SFSC Litigation

     The Company has been named as a defendant in fifteen consolidated
lawsuits filed in December 2000 or early 2001 in the Superior Court for Los
Angeles County, California, three of which are purported class actions
asserted on behalf of approximately 200 payees.  The plaintiffs in these
suits, except one, are structured settlement payees to whom Stanwich Financial
Services Corp. (SFSC) is indebted.  The Company and SFSC are related parties.

     In addition to the Company, there are numerous defendants in these suits,
including SFSC, Mr. Charles E. Bradley, Sr. (Mr. Bradley), who is Chairman of
the Board, Chief Executive Officer and a director of the Company (Mr. Bradley)
and the sole shareholder of SFSC's parent, several major financial
institutions and certain others.  All of these suits arise out of the
inability of SFSC to make structured settlement payments when due.  Pursuant
to the court's order, plaintiffs in the purported class actions and plaintiffs
in the individual cases actions filed a model complaint.  Except for the class
allegations, the two model complaints are identical.  The plaintiffs seek
compensatory and punitive damages, restoration of certain alleged trust
assets, restitution and attorneys' fees and costs.

     The plaintiffs in one of the suits are former owners of a predecessor of
SFSC and current operators of a competing structured settlement business.
These plaintiffs claim that their business and reputations have been damaged
by SFSC's structured settlement defaults, seek damages for unfair competition
and purport to sue on behalf of the payees.

     The plaintiffs allege that the Company borrowed funds from SFSC and has
not repaid these loans.  The plaintiffs' theories of liability against the
Company are that it is the alter ego of SFSC and Mr. Bradley and that the
Company received fraudulent transfers of SFSC's assets.  The plaintiffs also
assert direct claims against the Company for inducing breach of contract and
aiding and abetting an alleged breach of fiduciary duty by SFSC.

     On May 25, 2001, SFSC filed a Chapter 11 Bankruptcy Petition in the U.S.
Bankruptcy Court for the District of Connecticut.  SFSC filed an adversary
proceeding in the bankruptcy case against the plaintiffs seeking a declaration
that the structured settlement trust assets are the property of the bankruptcy
estate.  On July 16, 2001, the bankruptcy court granted a temporary
restraining order enjoining the plaintiffs from prosecuting their claims
against the Company, SFSC, Mr. Bradley and others.  As a result of this
restraining order of the bankruptcy court, the Company entered a standstill
agreement with the plaintiffs on August 22, 2001.  Pursuant to the standstill
agreement and the stipulation of the parties to the SFSC bankruptcy case, the
plaintiffs, while not agreeing to waive or release their direct claims against
the Company for damages, agreed to cease and desist the prosecution of their
claims against the Company until no earlier than sixty days following service
of written notice to the Company stating that they have elected to
unilaterally terminate the standstill.

     Plaintiffs filed second amended model complaints in the class actions and
individual cases on August 24, 2001.  The court granted plaintiffs' motion for
class certification on February 13, 2002 and certified a class consisting of
unpaid structured settlement payees. Both model complaints allege causes of
action against the Company for interference with contract and aiding and
abetting breach of fiduciary duty.  However, pursuant to the standstill
agreement, the plaintiffs are taking no action to prosecute these claims
against the Company at this time.

                                   - F-40 -

     Certain of the financial institution defendants have asserted
cross-complaints against the Company for implied and express indemnity and
contribution and negligence.  The Company denies the allegations of the
plaintiffs and the cross-complainant financial institutions and intends to
vigorously defend against these actions and cross-actions.

     A settlement (the "State Court Settlement") has been reached among the
plaintiffs and the following defendants (collectively, the "Financial
Institution Defendants") in the state court action: Bankers Trust Co., U.S.
Trust Co., Wells Fargo Bank, Bank of America, Bear Stearns and Settlement
Services, Inc.  Under the settlement, the Financial Institution Defendants
would pay the plaintiffs $90,630,969 and Bankers Trust would receive an
assignment of the claims of the plaintiffs and the other Financial Institution
Defendants against the Company and certain other defendants.

     In the SFSC bankruptcy, the Company and certain others have entered into
a settlement (the "Bankruptcy Settlement") with SFSC and Bankers Trust (for
itself and as expected assignee of the claims of the state court plaintiffs
and the other Financial Institution Defendants).  The Bankruptcy Settlement,
which has been approved by the Bankruptcy Court, is subject to the
satisfaction of ceratin conditions, including the order entered by the court
in the state court action approving the State Court Settlement becoming final.
Under the Bankruptcy Settlement, the Company (1) would be obligated to pay to
SFSC $4.6 million (less a setoff of approximately $310,000) by December 31,
2006, plus interest at 10% per annum from the date on which SFSC's Plan of
Reorganization becomes effective and (2) would be released from all claims
that have been made or could have been made by the plaintiffs and the
Financial Institution Defendants in the state court action and by SFSC in its
bankruptcy proceeding.  The settlement amount would not constitute a new
liability of the Company, as the settlement relates to indebtedness that is,
and has been for some time, included as a liability on the Company's balance
sheet.

Kingway Arbitration

     On September 24, 2002, we sold Kingway, our discontinued materials
handling systems operations.  Finalization of this sale was subject to a
post-closing working capital adjustment.  This amount was in dispute between
the Company and the buyer.  The buyer alleged it was owed approximately
$905,000 based on its calculation of working capital on the closing date.
Pursuant to the asset purchase agreement, both parties agreed to submit this
dispute to a mutually agreed-upon independent accounting firm for resolution
in arbitration.  The arbitrator for the dispute determined that, of the
$905,000 working capital deficiency claimed by the buyer, $704,000 was not
valid.  The Company and the Buyer entered into a payment arrangement for a
total of $200,000 to be paid in $50,000 installments by the Company beginning
January 1, 2004.  As of March 1, 2004, the final payment of $50,000 was owed
by the Company under this arrangement.

LTV Preference Claims

     In connection with the Chapter 11 bankruptcies of LTV Steel Company, Inc.
(LTV), et al, pending in the United States Bankruptcy Court for the Northern
District of Ohio, Youngstown Division, LTV has filed a complaint for avoidance
and recovery of preferential transfers against Alliance Machine Division, a
former division of the Company.  Pursuant to an adversary proceeding filed in
the LTV Case on December 17, 2002, LTV seeks recovery of $385,000 in alleged
preferential transfers, together with costs and attorney's fees.  Counsel for
Reunion has recently engaged in settlement negotiations with LTV and we have
reached an agreement in principle to settle the action for a one-time payment
of $1,000 and a waiver by Reunion of an administrative counterclaim.  LTV is

                                   - F-41 -

currently drafting the settlement agreement for review by our counsel.  No
amount has been accrued for this matter in the Company's financial statements.

U.S. Customs Service

     In June 1993, the U.S. Customs Service (Customs) made a demand on
Chatwins Group's former industrial rubber distribution division for $612,948
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
Chatwins Group'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 and reiterating that demand in October 1997.
Chatwins Group restated its position and continues to decline payment of the
claim.  Should the claim not be resolved, Customs threatens suit in the
International Courts 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 has been no activity related to this matter since 1997.

Shareholder Suit

     In December 1999, a stockholder of Reunion filed a purported class-action
lawsuit in Delaware Chancery Court alleging, among other things, that
Reunion's public stockholders would be unfairly diluted in the merger with
Chatwins Group.  The lawsuit sought to prevent completion of the merger and,
the merger having been completed, seeks rescission of the merger or awarding
of damages.  The lawsuit remains in the initial stages of discovery.  Reunion
intends to vigorously contest the suit.

Asbestos (Alliance)

     The Company has been named in approximately 1,250 separate asbestos suits
filed since January 1, 2001 by three plaintiffs' law firms in Wayne County,
Michigan.  The claims allege that cranes from the Company's crane
manufacturing location in Alliance, OH were present in various parts of
McLouth and Great Lakes Steel Mills in Wayne County, Michigan and that those
cranes contained asbestos to which plaintiffs were exposed over a 40 year
span.  Counsel for the Company has filed an answer to each complaint denying
liability by the Company and asserting all alternative defenses permitted
under the Court's Case Management Order.  Counsel for the Company has
successfully resolved 401 cases with little or no cost to the Company.  The
Company denies that it manufactured any products containing asbestos or
otherwise knew or should have known that any component part manufacturers
provided products containing asbestos.  It has been further denied that the
Company was otherwise advised by component part manufacturers that component
parts could be hazardous, or otherwise constitute a health risk.  The Company
intends to vigorously defend against these lawsuits.

Putman Properties

     In the 2002 fourth quarter, in the Court of Common Pleas of Stark County,
Ohio, Putman Properties, Inc. filed a complaint against the Company asserting
breach of an exclusive listing contract in connection with the sale of certain
property ancillary to the divestiture of the Company's Alliance Machine
division in Alliance, Ohio.  The plaintiff is a broker who claims entitlement
to a commission in the amount of $230,000.  The Company has answered the
complaint, denies any liability and intends to vigorously defend against this
lawsuit.  No amount has been accrued for this matter in the Company's
financial statements.

                                   - F-42 -

Suit Against Paquet and Paquet Counterclaim

     In the 2002 fourth quarter, the Company filed suit in the District Court
for New Jersey against Paquet, a general contractor doing business in the
state of New Jersey.  The Company contends that it is owed approximately $1.5
million in overdue payments and backcharges related to the supply of
structural steel for the construction of a bridge in New Jersey.  The
defendant has asserted a counterclaim against the Company in the amount of
$2.5 million.  Discovery is in process.  The Company intends to vigorously
pursue its suit against the defendant and defend against its counterclaim.  No
amount has been accrued for this matter in the Company's financial statements.

Dick Corporation

     In the 2002 fourth quarter, Dick Corporation (Dick) filed an action
against the Company in the Court of Common Pleas of Allegheny County, PA.
Dick alleges that the Company breached a contract to supply it with structural
steel for use in a construction project for the PA Department of
Transportation.  Dick seeks damages of approximately $351,000, representing
the extra costs allegedly incurred by Dick for Dick to secure structural steel
from another vendor.  The Company has filed an answer to Dick's complaint in
which it denies any liability.  Pleadings are closed and discovery has begun.
The Company believes it has meritorious defenses against Dick's suit and
intends to vigorously defend against it.  No amount has been accrued for this
matter in the Company's financial statements.

Rostone Environmental

     In February 1996, Reunion was informed by a contracted environmental
services consulting firm that soil and ground water contamination exists at
its Lafayette, Indiana site.  Since then, the Company has expended $419,275 of
remediation costs.  The Company estimates completion of this remediation
effort to be $15,000.

NAPTech Suit

     On or about March 16, 2004, Shaw NAPTech, Inc. ("NAPTech"), as successor
by merger to NAPTech, Inc. and NAPTech PS Corporation, filed a suit against
the Company in state court in Baton Rouge, Louisiana, to collect payment on a
subordinated note issued to NAPTech and assumed by the Company in a January
2001 acquisition.  NAPTech claims the amounts due under this note are
$3,145,403 in principal plus $1,207,875 in unpaid interest through November
30, 2003 plus interest at 15% per annum on the unpaid principal thereafter.
Such amounts are consistent with amounts recorded as payable to NAPTech by the
Company in the accompanying consolidated balance sheet.  The Company is
investigating what defenses, if any, it may have in regards to this suit.

                                   - F-43 -

Product Warranties

     The Company provides for warranty claims at its cylinders segment.
Amounts accrued are estimates of future claims based on historical claims
experience or a management estimate related to a specifically identified
issue.  The Company reevaluates its product warranty reserve quarterly and
adjusts it based on changes in historical experience and identification of new
or resolution of prior specifically identified issues. A tabular
reconciliation of the product warranty reserve follows (in 000's):

     Description                                      2003      2002
     ---------------------------------------------  --------  --------
       Beginning balance                            $    379  $     56
     Add: Provision for estimated future claims           83       457
     Deduct: Cost of claims                             (251)     (134)
                                                    --------  --------
       Ending balance                               $    211  $    379
                                                    ========  ========

Operating leases

     Minimum rental commitments under all noncancellable operating leases in
effect at December 31, 2003, were as follows (in thousands):

                            Year ended December 31,
 Total      2004      2005      2006      2007      2008      After 2008
-------    ------    ------    ------    ------    ------     ----------
$11,820    $2,129    $1,494    $  968    $  845    $  842       $5,542
=======    ======    ======    ======    ======    ======       ======

     Operating lease rental expense related to continuing operations for the
years ended December 31, 2003, 2002 and 2001, amounted to $2,885,000,
$2,354,000 and $3,181,000, respectively.


NOTE 15:   FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:

     Cash and cash equivalents, accounts receivable and accounts payable -
The carrying amounts approximate fair value because of the short maturities of
these instruments.

     Debt - $17.6 million of the Company's debt has variable rates of interest
and $33.5 million bears interest at fixed rates.  Management estimates the
carrying value of variable-rate debt to approximate its fair value as its
stated rate of interest changes with changes in market rates of interest.  Of
the $33.5 million of fixed-rate debt, $21.8 million represents the 13% senior
note obligation.  Based on recent trades of the Company's senior notes,
management estimates its fair value to be approximately $14.9 million.  The
remaining fixed-rate debt of approximately $11.7 million includes $8.3 million
of related party and other notes payable for which markets or comparable
instruments do not exist.  This debt bears interest at rates ranging between
10% and 18% and its fair value is not readily determinable.  The remaining
fixed-rate debt also includes a $3.5 million recently negotiated notes payable
for which its carrying value approximates fair value.

                                   - F-44 -

NOTE 16:   DISCONTINUED OPERATIONS

     In December 2001, the Company classified and began accounting for its
bridges and cranes and materials handling systems businesses as discontinued
operations in accordance with Accounting Principles Board Opinion No. 30,
"Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions" (APB 30).

     On September 24, 2002, we sold Kingway, our discontinued materials
handling systems operations, for cash proceeds of $25.0 million and a $7.0
million note receivable in amounts of up to $2.333 million in each of 2003,
2004 and 2005.  Future proceeds under the note receivable are contingent upon
the combined operations of the buyer's material handling businesses exceeding
certain specified amounts such that EBITDA in excess of $10.0 million in 2003,
$12.0 million in 2004 and $14.0 million in 2005 are to be paid to the Company.
In 2003, the EBITDA of the buyer's material handling businesses did not exceed
$10.0 million.  The net cash proceeds of $24.12 million after
transaction-related expenses were used to reduce borrowings under our BOA
revolving credit facility of $15.96 million, term loan A facility of $7.11
million and pay overadvance fees of $1.05 million.  We realized a net gain of
$3.1 million, classified within discontinued operations, on this transaction.
Finalization of this sale was subject to a post-closing working capital
adjustment.  The buyer alleged it was owed approximately $905,000 based on its
calculation of working capital on the closing date.  Pursuant to the asset
purchase agreement, we submitted this dispute to a mutually agreed-upon
independent accounting firm for resolution in arbitration.  The arbitrator for
the dispute determined that, of the $905,000 working capital deficiency
claimed by the buyer, $704,000 was not valid.  The Company and the Buyer
entered into a payment arrangement for a total of $200,000 to be paid in
$50,000 installments by the Company, which began in December 2003.

     On June 30, 2002, we sold the inventory and substantially all of the
property, plant and equipment of Alliance, our discontinued bridges and cranes
operations, for cash proceeds of $3.058 million and the assumption by the
buyer of $242,000 of accrued liabilities.  We retained all receivables, trade
payables and certain other liabilities of this discontinued operation.  The
net cash proceeds of $3.058 million were used to reduce borrowings under our
BOA revolving credit facility ($322,000), term loan A facility ($1.87 million)
and capital expenditure facility ($866,000).  We realized a loss of $3.9
million, classified within discontinued operations, on this transaction.  The
loss on disposal of the discontinued bridges and cranes operations differed
from the 2001 due to adjustments of the carrying values to net realizable
value, primarily machinery and equipment and receivables, of assets retained
from the sale of the discontinued bridges and cranes operations.

     Summarized results of discontinued operations for the years ended
December 31, 2003 and 2002 follow (in thousands):

                                                   2003                2002
                                                 --------            --------
Net sales                                        $      -            $ 33,423
Income (loss) before taxes                           (942)             (1,326)

     The loss from discontinued operations of $0.9 million in 2003 relates to
an evaluation of legacy healthcare costs, which increased substantially in the
third quarter of 2003.  The adjustment in 2003 is to recognize these
unanticipated healthcare costs, totaling $0.7 million, which significantly
exceeded the accrual for such costs established at year-end 2002.  The
remaining $0.2 million loss from discontinued operations in 2003 represents
legacy legal costs relating to litigation surrounding our discontinued bridges
and cranes operations.

                                   - F-45 -

     Interest expense is allocated to discontinued operations on the basis of
the percentage of total average assets of discontinued operations to gross
total assets for the period presented.  The above results of discontinued
operations include actual and allocated interest expense totaling $2.5 million
for the year ended December 31, 2002.


NOTE 17:   SEGMENT DISCLOSURES AND RELATED INFORMATION

     The Company owns and operates industrial manufacturing operations that
design and manufacture engineered, high-quality products for specific customer
requirements, such as large-diameter seamless pressure vessels, hydraulic and
pneumatic cylinders, leaf springs and precision plastic components.

     The Company's customers include original equipment manufacturers and
end-users in a variety of industries, such as transportation, power
generation, chemicals, metals, home electronics, office equipment and consumer
goods.  The Company's business units are organized into two major product
categories:

*    Metals manufactures and markets a broad range of fabricated and machined
industrial metal parts and products including large-diameter seamless pressure
vessels, hydraulic and pneumatic cylinders and leaf springs.

*    Plastics manufactures precision molded plastic parts and provides
engineered plastics services.

     Metals includes two reportable segments:  Pressure vessels and springs;
and Cylinders.  Plastics is a single segment.

     Reunion manufactures products in the United States.  Of Reunion's $68.5
million of consolidated net sales for 2003, $7.5 million were export sales, of
which $6.0 million related to pressure vessel sales and $1.2 million related
to Plastics.  The remainder related to cylinder sales in Canada.  Of the $6.0
million of foreign pressure vessel sales, approximately $4.9 million was in
the Far East (principally China and Taiwan) and $0.6 million was in Western
Europe.  The remainder was in Canada.  Plastics export sales included $0.5
million in Mexico with the remainder in Europe and Canada.  During 2003, no
one customer accounted for more than 10.0% of the net sales of Reunion.
Segment data, including earnings before interest, taxes, depreciation and
amortization (EBITDA) (in thousands except for related notes):

                                   - F-46 -

                                                      Capital     Total
                               Net Sales  EBITDA(1)   Spending  Assets(2)
                               ---------  ---------  ---------  ---------
2003:
-----
  Metals:
Pressure vessels and springs    $ 23,531   $  3,677   $      -   $ 13,407
Cylinders                         17,891        353        101      7,877
                                --------   --------   --------   --------
  Subtotal Metals                 41,422      4,030        101     21,284
Plastics                          27,087      1,522        178     14,516
Corporate and other (3)                -     (3,440)         3     15,723
                                --------   --------   --------   --------
  Totals                        $ 68,509      2,112   $    282   $ 51,523
                                ========              ========   ========
Gain on extinguishment of debt               10,991
Depreciation (6)                             (2,582)
Interest expense                             (6,939)
                                           --------
  Income from continuing operations
    before income taxes                    $  3,582
                                           ========
2002:
-----
  Metals:
Pressure vessels and springs    $ 20,135   $  1,103   $     52   $ 13,725
Cylinders                         18,087       (286)        92      9,700
                                --------   --------   --------   --------
  Subtotal Metals                 38,222        817        144     23,425
Plastics                          32,577      1,914        126     16,536
Corporate and other (4)                -     (3,482)         2     15,357
Discontinued operations                -          -        230          -
                                --------   --------   --------   --------
  Totals                        $ 70,799       (751)  $    502   $ 55,318
                                ========              ========   ========
Depreciation only (6)                        (2,762)
Interest expense                             (8,020)
                                           --------
  Loss from continuing operations
    before income taxes                    $(11,533)
                                           ========
2001:
-----
  Metals:
Pressure vessels and springs    $ 41,594   $  6,085   $    260   $ 17,936
Cylinders                         19,369     (2,182)        26      9,662
                                --------   --------   --------   --------
  Subtotal Metals                 60,963      3,903        286     27,598
Plastics                          38,532     (1,123)     1,066     18,443
Corporate and other (4)                -     (3,660)        10     14,572
Discontinued operations                -          -      1,535     23,803
                                --------   --------   --------   --------
  Totals                        $ 99,495       (880)  $  2,897   $ 84,416
                                ========              ========   ========
Write-off of impaired goodwill               (2,946)
Depreciation and amortization (5)(6)         (5,392)
Interest expense                             (7,057)
                                           --------
  Loss from continuing operations
    before income taxes                    $(16,275)
                                           ========

                                   - F-48 -

(1) EBITDA is presented as it is the primary measurement used by management
    in assessing segment performance and not as an alternative measure of
    operating results or cash flow from operations as determined by accounting
    principles generally accepted in the United States, but because it is a
    widely accepted financial indicator of a company's ability to incur and
    service debt.

(2) Corporate and other assets at December 31, 2003, 2002 and 2001 includes
    $8.0 million of goodwill that relates to the Company's pressure vessel and
    springs segment.  For evaluation purposes under SFAS No. 142, this
    goodwill is included in the carrying value of pressure vessels and
    springs.

(3) Includes gains totaling $0.2 million on sales of property and equipment.

(4) Includes gain of $0.4 million on sale of equipment with no carrying value.


(5) Excludes amortization of deferred financing costs of $999,000 for the
    year ended December 31, 2001, which is included in interest expense.

(6) The Company ceased amortizing goodwill effective January 1, 2002.

                                   - F-49 -

NOTE 18:   QUARTERLY DATA (unaudited)

     Results by quarter for 2003 and 2002 follow:

                                                 2003 Quarter Ended
                                       --------------------------------------
                                       March 31   June 30   Sept 30   Dec 31
                                       --------  --------  --------  --------
Operating revenue                      $ 21,263  $ 18,076  $ 14,707  $ 14,463
Operating costs and expenses             19,845    17,488    14,431    13,376
                                       --------  --------  --------  --------
  Operating income (loss)              $  1,418  $    588  $    276  $  1,087
                                       ========  ========  ========  ========
Income (loss) from continuing
  operations                           $    (91) $ (1,324) $ (1,461) $  6,458
Income (loss) from discontinued
  operations                                  -         -      (592)     (350)
                                       --------  --------  --------  --------
  Net income (loss)                    $    (91) $ (1,324) $ (2,053) $  6,108
                                       ========  ========  ========  ========
  Income (loss) from continuing
    operations per common share:
Basic                                  $  (0.01) $  (0.08) $  (0.09) $   0.40
                                       ========  ========  ========  ========
Diluted                                $  (0.01) $  (0.08) $  (0.09) $   0.37
                                       ========  ========  ========  ========
Significant item included in results
  of continuing operations which might
  affect comparability:
Gain on extinguishment of debt         $      -  $      -  $      -  $ 10,991
                                       ========  ========  ========  ========

                                                 2002 Quarter Ended
                                       --------------------------------------
                                       March 31   June 30   Sept 30   Dec 31
                                       --------  --------  --------  --------
Operating revenue                      $ 14,844  $ 21,457  $ 15,528  $ 18,970
Operating costs and expenses             17,050    21,460    17,701    18,101
                                       --------  --------  --------  --------
  Operating income (loss)              $ (2,206) $     (3) $ (2,173) $    869
                                       ========  ========  ========  ========

Loss from continuing operations        $ (4,284) $ (1,827) $ (4,324) $ (1,098)
Income (loss) from discontinued
  operations                                  -    (2,272)    2,492    (1,546)
                                       --------  --------  --------  --------
  Net loss                             $ (4,284) $ (4,099) $ (1,832) $ (2,644)
                                       ========  ========  ========  ========
  Income (loss) from continuing
    operations per common share:
Basic                                  $  (0.27) $  (0.12) $  (0.28) $  (0.07)
                                       ========  ========  ========  ========
Diluted                                $  (0.27) $  (0.12) $  (0.28) $  (0.07)
                                       ========  ========  ========  ========

                                   - F-50 -

                           REUNION INDUSTRIES, INC.
                      VALUATION AND QUALIFYING ACCOUNTS
                                 SCHEDULE II
                            (dollars in thousands)

                                  Charged to
                      Beginning   Costs and                           Ending
Year ended:           Balance     Expenses     Other     Deductions   Balance
-----------           ---------   ----------  -------    ----------   -------
    December 31, 2003:
Allowance for doubtful
  accounts             $   300     $   205    $     -      $   20(1)  $   485
Inventory obsolescence
  reserve                1,056         147       (166)        477(2)      560
Deferred tax valuation
  allowance             46,955           -          -       2,335      44,620
Reserve for
  restructuring            861           -       (117)        270         474

    December 31, 2002:
Allowance for doubtful
  accounts             $   212     $   198    $    50 (4) $   160(1)  $   300
Inventory obsolescence
  reserve                1,504         285          -         733(2)    1,056
Deferred tax valuation
  allowance             50,475           -          -       3,520      46,955
Reserve for
  restructuring          1,192           -          -         331         861

    December 31, 2001:
Allowance for doubtful
  accounts             $   554     $   168    $  (226)(3) $   284(1)  $   212
Inventory obsolescence
  reserve                  887       1,113       (275)(3)     221(2)    1,504
Deferred tax valuation
  allowance             35,734      14,741          -           -      50,475
Reserve for
  restructuring              -       1,192          -           -       1,192
_________________________
(1)  Uncollectible accounts written off, net of recoveries.
(2)  Inventory written off.
(3)  Reduction to beginning balance due to businesses classified as
     discontinued operations during 2001.
(4)  Transferred from accrued liabilities.

                                   - S-1 -

                                EXHIBIT INDEX

2.1     Merger Agreement by and between Reunion Resources Company and
        Reunion Industries, Inc.  Incorporated by reference to Exhibit 2.1 to
        Registration Statement on Form S-4 filed on March 4, 1996
        (File No. 33-64325).

2.2     Amended and Restated Merger Agreement, dated as of July 28, 1999,
        between Reunion Industries, Inc. and Chatwins Group, Inc.
        Incorporated by reference to Exhibit 2.2 to Registration Statement
        on Form S-4 filed on September 28, 1999 (File No. 333-84321).

3.1     Certificate of Incorporation of Reunion Industries, Inc.  Incorporated
        by reference to Exhibit 3.1 to Registration Statement on Form S-4
        filed on March 4, 1996 (File No. 33-64325).

3.2     Bylaws of Reunion Industries, Inc. Incorporated by reference to
        Exhibit 3.2 to Registration Statement on Form S-4 filed on
        March 4, 1996 (File No. 33-64325).

3.3     Not used.

3.4     Not used.

4.1     Specimen Stock Certificate evidencing the Common Stock, par value $.01
        per share, of Reunion Industries, Inc.  Incorporated by reference to
        Exhibit 4.1 to Registration Statement on Form S-4 filed on
        March 4, 1996 (File No. 33-64325).

4.2     Not used.

4.3     Not used.

10.1*   Buttes Gas & Oil Co. 1992 Nonqualified Stock Option Plan.
        Incorporated by reference to Exhibit 10.35 to the Company's Annual
        Report on Form 10-K for the year ended December 31, 1992 (File
        No. 001-07726).

10.2*   Form of Stock Option Agreement for options issued pursuant to the 1992
        Nonqualified Stock Option Plan.  Incorporated by reference to Exhibit
        10.36 to the Company's Annual Report on Form 10-K for the year ended
        December 31, 1992 (File No. 001-07726).

10.3*   Reunion Resources Company 1993 Incentive Stock Plan.  Incorporated by
        reference to Exhibit 10.34 to the Company's Annual Report on Form 10-K
        for the year ended December 31, 1993 (File No. 001-07726).

10.4*   Form of Stock Option Agreement for options issued pursuant to the 1993
        Incentive Stock Plan.  Incorporated by reference to Exhibit 10.35 to
        the Company's Annual Report on Form 10-K for the year ended December
        31, 1993 (File No. 001-07726).

10.5*   The 1998 Stock Option Plan of Reunion Industries, Inc.  Incorporated
        by reference to Exhibit 2.2 to Registration Statement on Form S-4
        filed on June 26, 1998 (File No. 333-56153).

                                   - E-1 -

10.6*   Form of Stock Option Agreement for options issued pursuant to the 1998
        Stock Option Plan of Reunion Industries, Inc.  Incorporated by
        reference to Exhibit 10.7 to Reunion Industries' Annual Report on
        Form 10-K for the year ended December 31, 1998 (File No. 33-64325).

10.7 -
10.12   Not used.

10.13   Asset Purchase Agreement between Oneida Rostone Corp., Quality Molded
        Products, Inc. and Don A. Owen, dated November 18, 1996.  Incorporated
        by reference to Exhibit 2.1 to the Company's Current Report on
        Form 8-K dated November 18, 1996 (File No. 33-64325).

10.14   Asset Purchase Agreement, dated September 30, 1999, by and between
        Chatwins Group, Inc. and Alabama Metal Industries Corporation
        Incorporated by reference to exhibit 10.5 to Registration Statement
        on Form S-4 filed on November 12, 1999 (File No. 333-84321).

10.15   Amended and Restated Financing and Security Agreement by and among
        Reunion Industries, Inc. as Borrower and Bank of America, National
        Association, as Agent and Bank of America, National Association and
        others as Formula Lenders and Bank of America, National Association
        and others as Term Loan B Lenders dated as of March 16, 2000.
        Incorporated by reference to exhibit 10.15 in the Company's
        Annual Report on Form 10-K for the year ended December 31, 1999
        (File No. 33-64325).

10.16   Indenture, dated as of May 1, 1993, by and between Chatwins Group,
        Inc. and The First National Bank of Boston, as trustee.  Incorporated
        by reference to Exhibit 4.4 to Chatwins Group, Inc.'s Registration
        Statement on Form S-1 filed on July 30, 1993 (File No. 33-63274).

10.17   First Supplemental Indenture and Wavier of Covenants of Indenture
        between The First National Bank of Boston, as trustee, and Chatwins
        Group, Inc.  Incorporated by reference to Exhibit 4.32 to Chatwins
        Group, Inc.'s Current Report on Form 8-K dated June 30, 1995 and filed
        with the Commission on July 3, 1995 (File No. 33-63274).

10.18   Second Supplemental Indenture between The First National Bank
        of Boston, as trustee, and Chatwins Group, Inc.  Incorporated
        by reference to Exhibit 4.33 to Chatwins Group, Inc.'s Current
        Report on Form 8-K dated June 30, 1995 and filed with the Commission
        July 3, 1995 (File No. 33-63274).

10.19   Third Supplemental Indenture, dated as of May 28, 1999, between
        Chatwins Group, Inc. and  State Street Bank and Trust company,
        as successor Trustee to The First National Bank of Boston.
        Incorporated by reference to exhibit 10.19 in the Company's
        Annual Report on Form 10-K for the year ended December 31, 1999
        (File No. 33-64325).

10.20   Fourth Supplemental Indenture, dated as of March 8, 2000, between
        Chatwins Group, Inc. and State Street Bank and Trust Company, as
        successor Trustee to The First National Bank of Boston.
        Incorporated by reference to exhibit 10.20 in the Company's
        Annual Report on Form 10-K for the year ended December 31, 1999
        (File No. 33-64325).

                                   - E-2 -

10.21   Fifth Supplemental Indenture, dated as of March 16, 2000, between
        Chatwins Group, Inc., Reunion Industries, Inc. and State Street
        Bank and Trust Company, as successor Trustee to The First National
        Bank of Boston.  Incorporated by reference to exhibit 10.21 in
        the Company's Annual Report on Form 10-K for the year ended
        December 31, 1999 (File No. 33-64325).

10.22   Share Purchase Agreement dated August 4, 2000 among the Registrant,
        RII Investment Corp., Enterprise Ireland, Paul Walsh, Donal Lawlor,
        Brendan Murtagh and Tintarent Limited.  Incorporated by reference
        to exhibit 10.22 in the Company's Current Report on Form 8-K dated
        August 31, 2000 (File No. 33-64325).

10.23   Deed of Indemnity dated August 4, 2000 between RII Investment Corp.
        and Tintarent Limited.  Incorporated by reference to exhibit 10.23
        in the Company's Current Report on Form 8-K dated August 31, 2000
        (File No. 33-64325).

10.24   Deed of Guarantee dated August 4, 2000 between the Registrant and
        Tintarent Limited.  Incorporated by reference to exhibit 10.24
        in the Company's Current Report on Form 8-K dated August 31, 2000
        (File No. 33-64325).

10.25   Disclosure Letter dated August 4, 2000 between the RII Investment
        Corp. and Tintarent Limited.  Incorporated by reference to exhibit
        10.25 in the Company's Current Report on Form 8-K dated August
        31, 2000 (File No. 33-64325).

10.26   Real Estate Purchase Agreement dated May 5, 2000 between Juliana
        Vineyards and Triad Napa LLC.  Incorporated by reference to exhibit
        10.26 in the Company's Current Report on Form 8-K dated October 27,
        2000 (File No. 33-64325).

10.27   First Amendment to Real Estate Purchase Agreement dated August 12,
        2000 between Juliana Vineyards and Triad Napa LLC.  Incorporated by
        reference to exhibit 10.27 in the Company's Current Report on
        Form 8-K dated October 27, 2000 (File No. 33-64325).

10.28   Agent Side Letter Agreement dated May 1, 2000 between Reunion
        Industries, Inc. and Bank of America, National Association.
        Incorporated by reference to exhibit 10.28 in the Company's
        Annual Report on Form 10-K for the year ended December 31, 2000
        (File No. 33-64325).

10.29   Agent Side Letter Agreement dated June 6, 2000 between Reunion
        Industries, Inc. and Bank of America, National Association.
        Incorporated by reference to exhibit 10.29 in the Company's
        Annual Report on Form 10-K for the year ended December 31, 2000
        (File No. 33-64325).

10.30   Amendment No. 1 to Amended and Restated Financing and Security
        Agreement dated June 26, 2000 between Reunion Industries, Inc.,
        Bank of America, National Association, Congress Financial Corporation
        and Contrarian Funds, LLC.  Incorporated by reference to exhibit
        10.30 in the Company's Annual Report on Form 10-K for the year
        ended December 31, 2000 (File No. 33-64325).

                                   - E-3 -

10.31   Amendment No. 2 to Amended and Restated Financing and Security
        Agreement dated July 31, 2000 between Reunion Industries, Inc.,
        Bank of America, National Association, Congress Financial Corporation
        and Contrarian Funds, LLC.  Incorporated by reference to exhibit
        10.31 in the Company's Annual Report on Form 10-K for the year
        ended December 31, 2000 (File No. 33-64325).

10.32   Amendment No. 3 to Amended and Restated Financing and Security
        Agreement dated December 12, 2000 between Reunion Industries, Inc.,
        Bank of America, National Association, Congress Financial Corporation
        and Citizens Business Credit Company.  Incorporated by reference to
        exhibit 10.32 in the Company's Annual Report on Form 10-K for the
        year ended December 31, 2000 (File No. 33-64325).

10.33   Amendment No. 4 to Amended and Restated Financing and Security
        Agreement dated January 19, 2001 between Reunion Industries, Inc.,
        Bank of America, National Association, Congress Financial Corporation
        and Citizens Business Credit Company.  Incorporated by reference to
        exhibit 10.33 in the Company's Annual Report on Form 10-K for the
        year ended December 31, 2000 (File No. 33-64325).

10.34   Merger Agreement dated as of March 30, 1999 among Reunion
        Industries, Inc., Stanwich Acquisition Corp., Kimball J. Bradley,
        Richard L. Evans, Charles E. Bradley, Sr. and Stanwich Financial
        Services Corp.  Incorporated by reference to exhibit 10.34 in
        the Company's Annual Report on Form 10-K for the year ended
        December 31, 2000 (File No. 33-64325).

10.35   Merger Agreement dated as of March 30, 1999 among Reunion
        Industries, Inc.,  NPS Acquisition Corp. and Charles E.
        Bradley, Sr.  Incorporated by reference to exhibit 10.35 in
        the Company's Annual Report on Form 10-K for the year ended
        December 31, 2000 (File No. 33-64325).

10.36   Forebearance Agreement dated as of January 16, 2001 among NAPTech,
        Inc.; NAPTech PS Corporation, Reunion Industries, Inc., Stanwich
        Financial Services Corp. and Charles E. Bradley.  Incorporated by
        reference to exhibit 10.36 in the Company's Annual Report on
        Form 10-K for the year ended December 31, 2000 (File No. 33-64325).

10.37   Reaffirmation of Merger Agreement dated as of December 5, 2000
        among Reunion Industries, Inc., NPS Acquisition Corp. and
        Charles E. Bradley.  Incorporated by reference to exhibit
        10.37 in the Company's Annual Report on Form 10-K for the year
        ended December 31, 2000 (File No. 33-64325).

10.38   Subordinated Promissory Note payable by Reunion Industries, Inc.
        pay to the order of NAPTECH, Inc. and NAPTECH PS Corporation in
        the amount of $4,860,535.  Incorporated by reference to exhibit
        10.38 in the Company's Annual Report on Form 10-K for the year
        ended December 31, 2000 (File No. 33-64325).

10.39   Side Letter Agreement dated April 17, 2001 between Reunion
        Industries, Inc., Bank of America, National Association,
        Congress Financial Corporation and Citizens Business Credit
        Company.  Incorporated by reference to exhibit 10.39 in
        the Company's Annual Report on Form 10-K for the year
        ended December 31, 2000 (File No. 33-64325).

                                   - E-4 -

10.40   Side Letter Agreement dated November 28, 2001 between Reunion
        Industries, Inc. and Bank of America, National Association.
        Incorporated by reference to exhibit 10.40 in
        the Company's Annual Report on Form 10-K for the year
        ended December 31, 2001 (File No. 33-64325).

10.41   Side Letter Agreement dated December 7, 2001 between Reunion
        Industries, Inc. and Bank of America, National Association.
        Incorporated by reference to exhibit 10.41 in
        the Company's Annual Report on Form 10-K for the year
        ended December 31, 2001 (File No. 33-64325).

10.42   Side Letter Agreement dated January 22, 2002 between Reunion
        Industries, Inc. and Bank of America, National Association.
        Incorporated by reference to exhibit 10.42 in
        the Company's Annual Report on Form 10-K for the year
        ended December 31, 2001 (File No. 33-64325).

10.43   Side Letter Agreement dated February 1, 2002 between Reunion
        Industries, Inc. and Bank of America, National Association.
        Incorporated by reference to exhibit 10.43 in
        the Company's Annual Report on Form 10-K for the year
        ended December 31, 2001 (File No. 33-64325).

10.44   Side Letter Agreement dated March 1, 2002 between Reunion
        Industries, Inc. and Bank of America, National Association.
        Incorporated by reference to exhibit 10.44 in
        the Company's Annual Report on Form 10-K for the year
        ended December 31, 2001 (File No. 33-64325).

10.45   Side Letter Agreement dated April 1, 2002 between Reunion
        Industries, Inc. and Bank of America, National Association.
        Incorporated by reference to exhibit 10.45 in
        the Company's Annual Report on Form 10-K for the year
        ended December 31, 2001 (File No. 33-64325).

21.1    List of subsidiaries and jurisdictions of organization.(1)

23.1    Consent of Independent Public Accountants - Mahoney Cohen & Company,
        CPA, P.C.(1)

23.2    Consent of Independent Public Accountants - Ernst & Young LLP(1)

31.1    Certification of Chief Executive Officer pursuant to Section 302
        of the Sarbanes-Oxley Act of 2002.(1)

31.2    Certification of Chief Financial Officer pursuant to Section 302
        of the Sarbanes-Oxley Act of 2002.(1)

32.1    Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to
        Section 906 of the Sarbanes-Oxley Act of 2002.(1)

32.2    Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to
        Section 906 of the Sarbanes-Oxley Act of 2002.(1)

(1) -   Filed herewith.

*   -   Compensatory plan or arrangement.

                                   - E-5 -

                                                            EXHIBIT 21.1

                           REUNION INDUSTRIES, INC.
                     SUBSIDIARIES AS OF DECEMBER 31, 2003

Company                                       Incorporated        Parent
-------                                       ------------        ------
1  Reunion Industries, Inc.                   Delaware
2  Buttes Drilling-C Company                  Texas                  1
3  Reunion Titan, Inc.                        Texas                  2
4  Reunion Potash Company                     Delaware               1
5  Shanghai Klemp Metals Products Company     Peoples Republic
                                                of China             1 (65.0%)

Inactive Companies
------------------
6  Ocean Phoenix Transport, Inc.              District of Columbia   1
7  Reunion Sub I, Inc.                        Delaware               1
8  Reunion Sub II, Inc.                       Delaware               1
9  Reunion Sub III, Inc.                      Delaware               1
10 Asie-Dolphin Drilling SDN BHD              Malaysia               2 (49%)
11 Buttes Gas & Oil do Brasil, Ltda.          Brazil                 1 (49%)
12 Dolphin Titan do Brazil Servicos
     de Perfuracoes, Ltd.                     Brazil                 2
13 Monaco Corporation                         British Virgin Is.     2
14 Ocean Phoenix Holdings, N. V.              Netherlands Antilles   1
15 Progress Drilling International, Inc.      Panama                 2
16 Progress Perfuracoes do Brasil, Ltd.       Brazil                15

                                   - E-6 -

                                                          EXHIBIT 23.1

                       Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-37702) pertaining to the 1998 Stock Option Plan, the
Registration Statement (Form S-8 No. 333-62074) pertaining to the 1998 Stock
Option Plan, the Registration Statement (Form S-8 No. 33-77232) pertaining to
the 1993 Stock Option Plan, the Registration Statement (Form S-3 No. 33-77566)
pertaining to the registration of 248,500 shares of common stock, the
Registration Statement (Form S-3 No. 333-37368) pertaining to the registration
of 8,269,479 shares of common stock and the Registration Statement (Form S-3
No. 333-41842) pertaining to the registration of 3,245,515 shares of common
stock of Reunion Industries, Inc. of our report dated March 19, 2004, with
respect to the consolidated financial statements and schedule of Reunion
Industries, Inc. included in the Annual Report (Form 10-K) for the year ended
December 31, 2003.


                    /s/ Mahoney Cohen & Company, CPA, P.C.


New York, New York
March 30, 2004

                                   - E-7 -

                                                          EXHIBIT 23.2

                       Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-37702) pertaining to the 1998 Stock Option Plan, the
Registration Statement (Form S-8 No. 333-62074) pertaining to the 1998 Stock
Option Plan, the Registration Statement (Form S-8 No. 33-77232) pertaining to
the 1993 Stock Option Plan, the Registration Statement (Form S-3 No. 33-77566)
pertaining to the registration of 248,500 shares of common stock, the
Registration Statement (Form S-3 No. 333-37368) pertaining to the registration
of 8,269,479 shares of common stock and the Registration Statement (Form S-3
No. 333-41842) pertaining to the registration of 3,245,515 shares of common
stock of Reunion Industries, Inc. of our report dated March 14, 2003, with
respect to the consolidated financial statements and schedule of Reunion
Industries, Inc. included in the Annual Report (Form 10-K) for the year ended
December 31, 2003.


                            /s/ Ernst & Young LLP


Pittsburgh, Pennsylvania
March 26, 2004

                                   - E-8 -

                                                            EXHIBIT 31.1
                                  CERTIFICATION

I, Charles E. Bradley, Sr., certify that:

1. I have reviewed this annual report on Form 10-K of Reunion Industries,
   Inc.;

2. Based on my knowledge, this report does not contain any untrue statement
   of a material fact or omit to state a material fact necessary to make the
   statements made, in light of the circumstances under which such statements
   were made, not misleading with respect to the period covered by this
   report;

3. Based on my knowledge, the financial statements, and other financial
   information included in this report, fairly present in all material
   respects the financial condition, results of operations and cash flows
   of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such
   disclosure controls and procedures to be designed under our supervision,
   to ensure that material information relating to the registrant,
   including its consolidated subsidiaries, is made known to us by
   others within those entities, particularly during the period in which
   this report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and
   procedures and presented in this report our conclusions about the
   effectiveness of the disclosure controls and procedures, as of the end
   of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal control
   over financial reporting that occurred during the registrant's most
   recent fiscal quarter (the registrant's fourth fiscal quarter in the
   case of an annual report) that has materially affected, or is reasonably
   likely to materially affect, the registrant's internal control over
   financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on
   our most recent evaluation of internal control over financial reporting,
   to the registrant's auditors and the audit committee of the registrant's
   board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or
   operation of internal control over financial reporting which are
   reasonably likely to adversely affect the registrant's ability to
   record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other
   employees who have a significant role in the registrant's internal
   control over financial reporting.


Date:  March 30, 2004

/s/ Charles E. Bradley, Sr.
-------------------------------------
    Chief Executive Officer

                                   - E-9 -

                                                            EXHIBIT 31.2
                                  CERTIFICATION

I, John M. Froehlich, certify that:

1. I have reviewed this annual report on Form 10-K of Reunion Industries,
   Inc.;

2. Based on my knowledge, this report does not contain any untrue statement
   of a material fact or omit to state a material fact necessary to make the
   statements made, in light of the circumstances under which such statements
   were made, not misleading with respect to the period covered by this
   report;

3. Based on my knowledge, the financial statements, and other financial
   information included in this report, fairly present in all material
   respects the financial condition, results of operations and cash flows
   of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
   establishing and maintaining disclosure controls and procedures (as defined
   in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such
   disclosure controls and procedures to be designed under our supervision,
   to ensure that material information relating to the registrant,
   including its consolidated subsidiaries, is made known to us by
   others within those entities, particularly during the period in which
   this report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and
   procedures and presented in this report our conclusions about the
   effectiveness of the disclosure controls and procedures, as of the end
   of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant's internal control
   over financial reporting that occurred during the registrant's most
   recent fiscal quarter (the registrant's fourth fiscal quarter in the
   case of an annual report) that has materially affected, or is reasonably
   likely to materially affect, the registrant's internal control over
   financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on
   our most recent evaluation of internal control over financial reporting,
   to the registrant's auditors and the audit committee of the registrant's
   board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or
   operation of internal control over financial reporting which are
   reasonably likely to adversely affect the registrant's ability to
   record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other
   employees who have a significant role in the registrant's internal
   control over financial reporting.


Date:  March 30, 2004

/s/ John M. Froehlich
-------------------------------------
    Chief Financial Officer

                                   - E-10 -

                                                            EXHIBIT 32.1

                             REUNION INDUSTRIES, INC.
                  SARBANES-OXLEY ACT SECTION 906 CERTIFICATION

In connection with this annual report on Form 10-K of Reunion Industries, Inc.
for the fiscal year ended December 31, 2003, I, Charles E. Bradley, Sr., Chief
Executive Officer of Reunion Industries, Inc., hereby certify pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 Of the Sarbanes-Oxley
Act of 2002, that:

1. this Form 10-K for the fiscal year ended December 31, 2003 fully complies
   with the requirements of section 13(a) or 15(d) of the Securities Exchange
   Act of 1934; and

2. the information contained in this Form 10-K for the fiscal year ended
   December 31, 2003 fairly presents, in all material respects, the financial
   condition and results of operations of Reunion Industries, Inc. for the
   periods presented therein.


Date: March 30, 2004

/s/ Charles E. Bradley, Sr.
---------------------------
Chief Executive Officer

                                   - E-11 -

                                                            EXHIBIT 32.2

                             REUNION INDUSTRIES, INC.
                  SARBANES-OXLEY ACT SECTION 906 CERTIFICATION

In connection with this annual report on Form 10-K of Reunion Industries, Inc.
for the fiscal year ended December 31, 2003, I, John M. Froehlich, Chief
Financial Officer of Reunion Industries, Inc., hereby certify pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 Of the Sarbanes-Oxley
Act of 2002, that:

1. this Form 10-K for the fiscal year ended December 31, 2003 fully complies
   with the requirements of section 13(a) or 15(d) of the Securities Exchange
   Act of 1934; and

2. the information contained in this Form 10-K for the fiscal year ended
   December 31, 2003 fairly presents, in all material respects, the financial
   condition and results of operations of Reunion Industries, Inc. for the
   periods presented therein.


Date: March 30, 2004

/s/ John M. Froehlich
---------------------------
Chief Financial Officer

                                   - E-12 -