==============================================================================
               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, 2002, 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.   X
                             -----
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 28, 2002, 15,590,619 shares of common stock were issued and
outstanding.  As of June 28, 2002, 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
$641,864.

DOCUMENTS INCORPORATED BY REFERENCE:  Part III, Items 10 through 13 are
incorporated from the Registrant's definitive proxy statements to be filed
within 120 days after the close of Reunion Industries's fiscal year.

==============================================================================

                           REUNION INDUSTRIES, INC.
                              TABLE OF CONTENTS
                                                                      Page No.
                                                                      --------
                                    PART I

Item 1.   Business                                                        4
Item 2.   Properties                                                     12
Item 3.   Legal Proceedings                                              13
Item 4.   Submission of Matters to a Vote of Security Holders            16

                                   PART II

Item 5.   Market for the Registrant's Common Stock and
            Related Stockholder Matters                                  16
Item 6.   Selected Financial Data                                        17
Item 7.   Management's Discussion and Analysis of
            Financial Condition and Results of Operations                19
Item 7a.  Quantitative and Qualitative Disclosures About Market Risk     41
Item 8.   Consolidated Financial Statements and Supplementary Data       42
Item 9.   Changes in and Disagreements With Accountants
            on Accounting and Financial Disclosures                      42

                                   PART III

Item 10.  Directors and Executive Officers of the Registrant             42
Item 11.  Executive Compensation                                         42
Item 12.  Security Ownership of Certain Beneficial
            Owners and Management                                        43
Item 13.  Certain Relationships and Related Transactions                 43
Item 14.  Controls and Procedures                                        43

                                   PART IV

Item 15.  Exhibits, Financial Statements Schedules,
            and Reports on Form 8-K                                      44

SIGNATURES                                                               45

CERTIFICATIONS                                                        46-47



                                    - 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 which 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 complete its
restructuring plan and sell assets at acceptable prices and the Company's
ability to refinance certain of its debts.  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
term "Company" refers 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;
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
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.

                                    - 4 -

     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 2002, one customer in our cylinders product line accounted for
11% 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 2002.  [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.   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 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

                                    - 5 -

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 2002, one customer accounted for approximately 15% of the
thermoplastics division's sales (9% 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
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 2002, one customer accounted for approximately 18% of the thermoset
plastics division's sales (7% 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.

                                    - 6 -

     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.

REPORTABLE SEGMENT DATA - Segment data, including earnings before interest,
taxes, depreciation and amortization (EBITDA) for the years ended December 31,
2002, 2001 and 2000 (in thousands except for related notes):

                                                      Capital     Total
                               Net Sales  EBITDA(1)   Spending  Assets(2)
                               ---------  ---------  ---------  ---------
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                    -     (3,482)         2     14,799
Discontinued operations                -          -        230          -
                                --------   --------   --------   --------
  Totals                        $ 70,799       (751)  $    502   $ 54,760
                                ========              ========   ========
Depreciation only (5)(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                    -     (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)             (5,392)
Interest expense                             (7,057)
                                           --------
  Loss from continuing operations
    before income taxes                    $(16,275)
                                           ========

                                    - 7 -

2000:
-----
  Metals:
Pressure vessels and springs    $ 32,250   $  7,180   $    520   $ 23,103
Cylinders(3)                      30,463      7,130        130     14,152
                                --------   --------   --------   --------
  Subtotal Metals                 62,713     14,310        650     37,255
Plastics                          42,008      2,563      1,031     23,485
Corporate and other(4)                 -        865         71     24,126
Discontinued operations                -          -      2,320     31,573
                                --------   --------   --------   --------
  Totals                        $104,721     17,738   $  4,072   $116,439
                                ========              ========   ========
Depreciation and amortization(5)             (4,639)
Interest expense                             (6,972)
Equity in loss of affiliate                    (296)
                                           --------
  Income from continuing operations
    before income taxes                    $  5,831
                                           ========

(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) Headquarters assets at December 31, 2002 and 2001 includes $8.0 million
    of goodwill.  The goodwill 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 the gain of $2.4 million on sale of the land and building of
    the Company's Chicago, IL hydraulic cylinder location.

(4) Includes the gain of $4.9 million on sale of the Company's Irish
    plastics operation.

(5) Excludes amortization of deferred financing costs of $752,000,
    $999,000 and $897,000 for the years ended December 31, 2002, 2001
    and 2000, respectively, which is included in interest expense.

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


ENVIRONMENTAL REGULATION

     Various U.S. federal, state and local laws and regulations including,
without limitation, laws and regulations concerning the containment and
disposal of hazardous waste, oil field waste and other waste materials, the
use of storage tanks, the use of insecticides and fungicides and the use of
underground injection wells directly or indirectly affect the Company's
operations.  In addition, environmental laws and regulations typically impose
"strict liability" upon the Company for certain environmental damages.
Accordingly, in some situations, the Company could be liable for clean up
costs even if the situation resulted from previous conduct of the Company that
was lawful at the time or from improper conduct of, or conditions caused by,
previous property owners, lessees or other persons not associated with the
Company or events outside the control of the Company. [Such clean up costs or
costs associated with changes in environmental laws and regulations could be
substantial and could have a materially adverse effect on the Company's
consolidated financial position, results of operations or cash flows.]

                                    - 8 -

     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.

     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.

     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 $304,000 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,
2002, after accruing an additional $40,000 in December 2002, the balance
accrued for these remediation costs is approximately $1,042,000.  The Company
believes that future remediation costs will not exceed the amount accrued.

     Litigation on this matter had been stayed pending the determination by
the LDNROC as to the extent of remediation that would be required.  Most
recently, such stay was lifted and the District Court has 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.  The Company is contesting this litigation and
believes its proposed methodology is well within accepted industry practice
for remediation efforts of a similar nature.  No accrual has been made for
costs of any potential alternative clean-up methodology that might be imposed
as a result of the outcome of the litigation.

     On March 15, 2002, the Company received a Request for Information from
the United States Environmental Protection Agency (USEPA) regarding the
Gambonini Mine Site outside Petaluma, Marin County, California.  The Company
gathered and forwarded to the USEPA the information it 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 its removal and
disposal efforts initiated in 1998 pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA).

                                    - 9 -

     BGO, predecessor by merger to the Company, leased the site for mining
purposes and operated a mercury mine on this site 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 back to 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 resulting in the failure of the 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 1985, BGO, headquartered in Houston, Texas, filed Chapter 11
proceedings in bankruptcy court in the Southern District of Texas in Houston.
In December 1988, BGO confirmed its plan of reorganization which provided for,
among other things, a discharge of all claims that arose prior to the date of
confirmation of the plan.  The reorganization plan became effective in
February 1989.

     In response to the USEPA's demand, the Company filed an adversary
proceeding in bankruptcy court in the Southern District of Texas in Houston
seeking an order to enjoin the efforts of the USEPA to pursue collection of
any claims related to the site.  The USEPA responded by filing a motion to
dismiss based on several jurisdictional and substantive grounds.  A status
conference was held on August 27, 2002, at which time the judge for the
bankruptcy court in the Southern District of Texas in Houston ruled that the
court did not have jurisdiction and, at that time, the Company and the USEPA
entered into a standstill agreement through December 31, 2002, which has been
extended through May 31, 2003.

     In March 2003, the Company and the USEPA reached an agreement in
principle to settle the USEPA's demand for payment for $100,000, payable in
three installments over a two-year period.  This amount has been accrued as of
December 31, 2002.  This settlement agreement will resolve the USEPA's claims
for reimbursement of environmental response costs, 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
damage.  The United States has given no indication as to whether or not it
will pursue such claims.  However, the Company has agreed in principle to
extend the statute of limitations with respect to any such claims for a period
of five years from the date of the execution of the above discussed settlement
agreement.

Employees

     At December 31, 2002, Reunion Industries employed 649 full time
employees, of whom 282 were employed in Metals and 355 were employed in
Plastics.  There were 12 corporate employees.  The Company believes its
relations with its employees are good.

                                    - 10 -

     A breakdown of the Company's workforce by location and function at
December 31, 2002 is as follows.

                                                    General and
Group      Location             Manufacturing      Administrative      Total
--------   --------           -----------------   -----------------    -----
                              Union   Non-Union   Union   Non-Union
                              -----   ---------   -----   ---------
Metals:
           McKeesport, PA      93(1)       5       7(2)       16         121
           Chicago, IL                    68                  23          91
           Libertyville, IL               32                   5          37
           Miami, OK                      21                   5          26
           Beijing, China                                      7           7

Plastics:
           Oneida, NY                     58                  11          69
           Phoenix, NY                    73                   5          78
           Siler City, NC                 40                   4          44
           LaFayette, IN      142(3)       2                  20         164

Corporate:
           Pittsburgh, PA                                     12          12
                              ---        ---       -         ---       -----
  Totals                      235        299       7         108         649
                              ===        ===       =         ===       =====

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

     As of December 31, 2002, approximately 37% of the Company's workforce was
covered by collective bargaining agreements, none of which expire within one
year of December 31, 2002.

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.

                                    - 11 -

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 92.7 acres of idle farm land not included above which is
adjacent to a former operation we had in Boone County, IL, which we retained
when the business was sold.  [We are making efforts to dispose of this land.]

     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 sell these properties when the litigation is resolved.]

     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
yielded any significant revenues from mining operations or any other
significant revenues.  [We plan to pursue the sale or farmout 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.]

                                    - 12 -

ITEM 3. LEGAL PROCEEDINGS

     Certain litigation in which Reunion Industries is involved is described
below.

     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 is no applicable insurance coverage.

     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.

     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., Chairman of the Board, Chief
Executive Officer and a director of the Company (Mr. Bradley), 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

                                    - 13 -

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 agreed to take no further action to prosecute any claim in the
litigation against the Company, Mr. Bradley and others to recover any
structured settlement trust assets or any derivative claims or claims based on
allegations of alter ego, fraudulent transfer or conversion.  The plaintiffs
did not agree to waive or release their direct personal claims against the
Company for damages, but the plaintiffs agreed to cease and desist the
prosecution of those claims 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.

     The Company has been named in approximately 500 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
negotiated dismissal of 95 cases without any 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.  The Company intends to vigorously defend against these
lawsuits.

     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 96 separate actions, all of which are being
defended by Allen-Bradley Company.

     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

                                    - 14 -

to a commission in the amount of $155,000.  The Company has answered the
complaint, denies any liability and intends to vigorously defend against this
lawsuit.  Discovery is ongoing and a mediation is schedule for May 28, 2003
with a trail date of September 22, 2003.  No amount has been accrued for this
matter in the Company's financial statements.

     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.  Pleadings are not yet closed and discovery is just beginning.
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.

     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 seeks 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.  The parties have currently begun discovery and a status conference
is set before the court on April 21, 2003.  No trial dates have been
established.  The Company intends to vigorously defend against this lawsuit.
No amount has been accrued for this matter in the Company's financial
statements.

     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.  The Company
believes it has adequate defenses and intends to vigorously defend against
this complaint.  No amount has been accrued for this matter in the Company's
financial statements.

     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.  Pleading 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.

                                    - 15 -

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

        None in the fourth quarter of 2002.


                                   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 15, 2003, there were 1,324 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 2002 and 2001.

QUARTER ENDED                                        High          Low
-------------                                       ------        ------
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

2001
     March 31.......................................$1.850        $1.100
     June 30........................................$1.600        $0.870
     September 30...................................$1.490        $0.700
     December 31....................................$0.740        $0.210

     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                                  44,000              -
                                                    =========      =========
Weighted-average exercise price of
  outstanding options, warrants
  and rights                                            $2.94              -
                                                    =========      =========
Number of Securities remaining available
  for future issuance under equity
  compensation plans (excluding outstanding
  options, warrants and rights)                       731,100              -
                                                    =========      =========

                                    - 16 -

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,         2002      2001      2000    1999(1)   1998(1)
                              --------  --------  -------- --------  --------
EARNINGS DATA:

Net sales                     $ 70,799  $ 99,495  $104,721 $ 59,691  $ 67,388
Cost of sales                   61,843    84,457    81,485   46,353    49,560
                              --------  --------  -------- --------  --------
Gross profit                     8,956    15,038    23,236   13,338    17,828
Selling, general and
  administrative  expenses      13,256    15,718    16,388    7,864     8,660
Provision for restructuring          -     6,811         -        -         -
Other (income) expense, net       (787)    1,727    (6,251)     305       367
                              --------  --------  -------- --------  --------
Operating profit (loss)         (3,513)   (9,218)   13,099    5,169     8,801
Interest expense, net(2)         8,020     7,057     6,972    5,261     5,140
Equity in loss from  continuing
  operations  of affiliate           -         -       296      566     4,056
                              --------  --------  -------- --------  --------
Income (loss) before income
  taxes from continuing
  operations                   (11,533)  (16,275)    5,831     (658)     (395)
Provision for (benefit from)
  income taxes(3)                    -    12,678      (616)    (922)     (122)
                              --------  --------  -------- --------  --------
Income (loss) from
  continuing operations       $(11,533) $(28,953) $  6,447 $    264  $   (273)
                              ========  ========  ======== ========  ========

Income (loss) from continuing
  operations applicable to
  common stockholders(4)      $(11,533) $(28,953) $  6,352 $   (192) $   (729)
                              ========  ========  ======== ========  ========
Weighted average common shares
  outstanding(5) - basic        15,591    15,587    13,236    9,500     9,500
                              ========  ========  ======== ========  ========
Weighted average common shares
  outstanding(5) - diluted      15,591    15,612    13,306    9,500     9,500
                              ========  ========  ======== ========  ========
Income (loss) from continuing
  operations per common share
  - basic and diluted(5)      $  (0.74) $  (1.86) $   0.48 $  (0.02) $  (0.08)
                              ========  ========  ======== ========  ========

OPERATING AND OTHER DATA:

Cash flow from (used in)
  operating activities(6)     $   (979) $  5,050  $  5,507 $ (4,168) $ (3,268)
                              ========  ========  ======== ========  ========
Cash flow from (used in)
  investing activities(6)       27,931    (2,532)   27,997   34,494    (5,195)
                              ========  ========  ======== ========  ========
Cash flow from (used in)
  financing activities(6)      (27,337)   (3,863)  (31,385) (30,249)    8,070
                              ========  ========  ======== ========  ========

                                    - 17 -

Depreciation and
  amortization(7)                2,762     5,392     4,639    1,648     1,553
                              ========  ========  ======== ========  ========
Capital expenditures(8)            272     1,362     1,752    1,207     1,717
                              ========  ========  ======== ========  ========

BALANCE SHEET DATA:

Total assets                    55,318    84,416   116,439   67,681    98,329
                              ========  ========  ======== ========  ========
Debt in default                 40,049    64,389         -        -         -
                              ========  ========  ======== ========  ========
Revolving credit facility            -         -    19,367    5,834    34,005
                              ========  ========  ======== ========  ========
Total long-term debt(9)             61     3,793    50,732   49,971    50,019
                              ========  ========  ======== ========  ========
Redeemable preferred stock           -         -         -    8,938     8,482
                              ========  ========  ======== ========  ========
Stockholders' equity
  (deficit)(10)                (30,840)  (17,245)   21,559   (7,870)   (8,594)
                              ========  ========  ======== ========  ========

EBITDA(11):                   $   (751) $   (880) $ 17,738 $  6,817  $ 10,354
                              ========  ========  ======== ========  ========

(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 of the following amounts
for the following years:   2002: $752; 2001: $1,011; 2000: $897; 1999: $1,308
and 1998: $671.

(3)   In 1998, Chatwins Group had a net refund of $139.  In 1999, Chatwins
Group paid $279.  In 2000, Reunion paid $322.  In 2001, Reunion had a net
refund of $119.  In 2002, Reunion had a net refund of $326.

(4)   In determining income (loss) from continuing operations applicable to
common stock, income from continuing operations is reduced by accretions of
dividends on preferred stock of $95 in 2000 and $456 in each of 1999 and 1998.

(5)   Weighted average shares outstanding for the years ended December 31,
1999 and 1998 have been restated to give retroactive effect to the
recapitalization of Chatwins Group in connection with the merger.

(6)   Not restated for discontinued operations.

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

(8)   Excludes capital expenditures of discontinued operations.

(9)   Excludes borrowings under revolving credit facilities and includes
current maturities of 13% senior notes for 1998 through 2000.

(10)  Stockholders' equity has been reduced by accretions for redemption value
of and dividends on redeemable preferred stock of $15.0 million through
December 31, 2000.

                                    - 18 -

(11)  EBITDA is calculated as follows:

                                2002      2001      2000    1999(1)   1998(1)
                              --------  --------  -------- --------  --------
Income (loss) from continuing
  operations before taxes     $(11,533) $(16,275) $  5,831 $   (658) $   (395)
Interest expense, net(2)         8,020     7,057     6,972    5,261     5,140
Depreciation and
  amortization(7)                2,762     5,392     4,639    1,648     1,553
Write-off of impaired goodwill       -     2,946         -        -         -
Equity loss from continuing
  operations of affiliate            -         -       296      566     4,056
                              --------  --------  -------- --------  --------
     EBITDA                   $   (751) $   (880) $ 17,738 $  6,817  $ 10,354
                              ========  ========  ======== ========  ========

     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.

                                    - 19 -

RECENT EVENTS

     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, eliminate Plastics' corporate headquarters and
address 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
                                                    ========         ========

     During 2002, the Company has made significant progress towards completion
of the plan.  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.  Future proceeds from the note receivable are
contingent upon the operating results of the combined operations of the
buyer's material handling businesses.  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 is subject to a post-closing working capital
adjustment.  This amount is in dispute between the Company and the buyer.  The
buyer alleges it is owed approximately $900,000 based on its calculation of
working capital on the closing date.  Although we have accrued an approximate
mid-point estimate of $265,000 related to this post-closing adjustment, based
on our review of their calculation we have determined that we are owed an
additional $280,000.  Pursuant to the asset purchase agreement, both parties
have agreed to submit this dispute to a mutually agreed-upon independent
accounting firm for resolution in arbitration.

     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.

                                    - 20 -

     During the first quarter of 2002, NPSAC, the Company's former pressure
vessel operations in Clearfield, Utah, was relocated to and combined with the
pressure vessel operations in McKeesport, PA.  The cylinder operations in
Milwaukee, WI have been relocated to our leased facility in Libertyville, IL.
The land and building in Milwaukee, WI is being prepared for sale.  We have
been preparing to move the cylinder operations in Chicago, IL to the
Libertyville facility.  We closed the Plastics' corporate headquarters in
Charlotte, NC and all administrative and managerial positions were eliminated.
Plastics' corporate responsibilities have been returned to our manufacturing
and administrative operations in Oneida, NY.

     We reevaluated the shut-down of our Plastics operation in Siler City, NC
and have determined to maintain our presence in the southern U.S. and service
the customers of the Siler City, NC location.

     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 2002 cash activity of our 2001 restructuring charge (in thousands):

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

     Of the remaining lease termination costs, $761 relates to idle
manufacturing facilities in Milwaukee, Wisconsin and Clearfield, Utah.  The
remainder relates to lease commitments under idle machinery in the Plastics
Group.


RESULTS OF OPERATIONS

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%
                 =========  =========  ======  ======  ======  ======

                                    - 21 -

     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.
Although not a certainty, [this segment's sales should recover to near normal
operating levels in 2003].

     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.  Although not a certainty, [management believes this trend will
bottom-out and reverse during 2003.]

     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.  Although not a certainty, [management believes this
trend will bottom-out and reverse during 2003.]

     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):

                                    - 22 -

                               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               (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               (5,429)        71      1,698     (3,660)
Goodwill impairment               (2,946)         -      2,946          -
                                --------   --------   --------   --------
  Totals                        $ (9,218)  $  3,384   $  4,954   $   (880)
                                ========   ========   ========   ========

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
absorb costs.  SGA expenses as a percentage of sales increased to 18.7% for
2002 compared to 15.8% in 2001.  Although 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, SGA as a percentage of sales should decrease in 2003 with [the volume
increases anticipated by management].

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

                                    - 23 -

     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
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 expects that the
materials handling systems business will 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 an other 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.

                                    - 24 -

Year Ended December 31, 2001 Compared to
  Year Ended December 31, 2000

Continuing Operations

Metals

     Metals net sales, gross margins and EBITDA percentages for 2001 and 2000
are as follows.  Pressure vessels and spring sales and margins for 2000 are
pro forma as though the acquisition of NPSAC occurred at the beginning of
2000.  Cylinders EBITDA percentage for 2000 excludes a $2.4 million gain on
sale of its Chicago, IL property.

                       Net Sales        Gross Margin       EBITDA
                 --------------------  --------------  --------------
                    2001       2000     2001    2000    2001    2000
                 ---------  ---------  ------  ------  ------  ------
Pressure vessels
  and springs    $  41,594  $  35,806   23.3%   29.3%   14.6%   22.1%
Cylinders           19,369     30,463    5.0%   24.4%  (11.3%)  15.4%
                 ---------  ---------  ------  ------  ------  ------
  Metals totals  $  60,963  $  66,269   17.5%   27.1%    6.4%   17.9%
                 =========  =========  ======  ======  ======  ======

     The increase in pressure vessel sales in 2001 compared to 2000 was due to
a strong order levels in that product line towards the end of 2000, the
backlog for which at the end of 2000 was $8.6 million higher than at the end
of 1999, and the recognition of $2.8 million of revenues on a large NASA
contract shipped in the first quarter of 2001.  Gross margin has been affected
by a change in product mix towards lower margin domestic products, an increase
in unfavorable variances in the fourth quarter of 2001 due to decrease in
production activity as the result of lower order levels towards the end of
2001 and provisions for obsolete and slow-moving inventories of $1.3 million
in the fourth quarter of 2001.  Also, sales of leaf springs in 2001 continued
to be impacted by the economic downturn as consumers decreased spending on
recreational items, particularly in the marine market.  [Management
anticipates that these trends will continue into 2002].  Sales of cylinders
continues to be affected by a downturn in this market, [a trend which the
Company believes will continue into 2002.]  Gross margin has been affected
accordingly as the decreased volume has significantly impact this segment's
ability to absorb costs.  Gross margin has also been impacted by provisions
for obsolete and slow-moving inventories of $0.9 million in the fourth quarter
of 2001.

Plastics

     Plastics sales for 2001 totaled $38.5 million, compared to $42.0 million
in 2000.  Year-to-date 2000 Plastics sales included $5.0 million from its
former Irish plastics subsidiary which the Company sold in the 2000 third
quarter but excluded $11.3 million of sales from the pre-March 16, 2000 merger
period.  On a proforma basis assuming these events occurred at the beginning
of 2000, Plastics 2000 sales would have been $48.3 million, indicating a $9.8
million decrease year-to-year.  This decrease in revenues is the continuation
during 2001 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.  [Management is seeking to expand Plastics' product offerings in
the business machines, consumer products and medical products industries to
mitigate this trend.  However, if not successful, this trend in Plastics
revenue could continue into 2002.]

                                    - 25 -

     Plastics gross profit for 2001 was $4.4 million, or 11.4%, compared to
$6.3 million, or 15.0%, for 2000.  On a proforma basis for the events
described above Plastics 2000 gross profit and margin would be $7.4 million,
or 15.3%.  The decrease in gross profit and margin is directly related to the
decreasing trend in sales, resulting in inefficiencies and the inability to
absorb fixed overheads.  [Depending on future sales volumes, the declining
trend in gross margin could continue.]  Plastics EBITDA for 2001 was a
negative $1.1 million, or negative 2.9%, compared to $2.6 million, or 6.1%,
for 2000.  On a proforma basis for the events described above, Plastics EBITDA
and percentage would be $2.7 million, or 5.6%.  EBITDA was impacted by the
same factors as gross profit and margin.

     Management evaluates the Company's segments based on EBITDA, a measure of
cash generation, and 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 decreased
significantly  in 2001 compared to 2000 primarily due to the same factors
affecting gross profit and margin discussed above.  A reconciliation of EBITDA
to operating losses in 2002 and 2001 by segment and corporate and other is a s
follows (000's):

                               Operating    Deprec-   Amortiz-
                                    Loss     iation      ation     EBITDA
                               ---------  ---------  ---------  ---------
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               (5,429)        71      1,698     (3,660)
Goodwill impairment               (2,946)         -      2,946          -
                                --------   --------   --------   --------
  Totals                        $ (9,218)  $  3,384   $  4,954   $   (880)
                                ========   ========   ========   ========
2000:
-----
Pressure vessels and springs    $  6,321   $    750   $    109   $  7,180
Cylinders                          3,957        507        225      4,689
Plastics                             503      2,060          -      2,563
Gain on sale of property           2,441          -                 2,441
Gain on sale of business           4,933          -          -      4,933
Corporate and other               (5,056)        69        919     (4,068)
                                --------   --------   --------   --------
  Totals                        $ 13,099   $  3,386   $  1,253   $ 17,738
                                ========   ========   ========   ========

Selling, General and Administrative

     Selling, general and administrative (SGA) expenses for 2001 were $15.7
million, compared to $16.4 million for 2000.  Had the merger, the acquisition
of NPSAC and the sale of the Company's Irish plastics business occurred at the
beginning of 2000, SGA for 2000 would have been $17.7 million, indicating a
pro forma decrease of $2.0 million.  This decrease in SGA is directly related
to the decreasing trend in sales, resulting in lower commissions expense, and
cost cutting measures taken during June 2001, which included personnel
reductions in sales and administration.  The cost of these reductions was
inconsequential as the Company paid no severance packages and retained no
post-severance obligations related to these reductions.  [Management estimates
the savings from these reductions to be approximately $1.0 million annually.]

                                    - 26 -

However, the benefits of these cost cutting measures are being offset by the
continuation of the negative trend in sales and the resulting effect on the
Company's ability to absorb costs.  SGA expenses as a percentage of sales
increased to 15.8% for 2001 compared to 15.4% on a proforma basis in 2000.
SGA as a percentage of sales was higher in 2001 compared to 2000 due to the
faster rate at which volume has decreased compared to decreases in relatively
fixed administrative costs.

Provision for Restructuring

     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.  Components of
the fourth quarter 2001 charge for restructuring are as follows:

                                                Metals   Plastics   Totals
                                               --------  --------  --------
Asset impairments                              $    613  $  2,060  $  2,673
Goodwill impairment                                   -     2,946     2,946
Lease termination costs                             927       245     1,172
Employee separations                                 20         -        20
                                               --------  --------  --------
Total charges                                  $  1,560  $  5,251  $  6,811
                                               ========  ========  ========

Other (Income) Expense

     Other expense for 2001 was $1.7 million, compared to other income of $6.3
million for 2000.  The components are as follows:

                                                 2001      2000     Change
                                               --------  --------  --------
Goodwill and other intangibles amortization    $  2,008  $  1,253  $    755
Gain on sale of equipment                          (375)        -      (375)
Gain on sale of Irish plastics business               -    (4,933)    4,933
Gain on sale of Chicago, IL property                  -    (2,441)    2,441
Other (income) expense, net                          94      (130)      224
                                               --------  --------  --------
Total other (income) expense, net              $  1,727  $ (6,251) $  7,978
                                               ========  ========  ========

     The increase in goodwill and other intangibles amortization is primarily
due to the fact that 2001 includes a full year of goodwill amortization
related to the merger, Kingway acquisition and NPSAC acquisition compared to
the approximate nine-and-one-half month post-merger and Kingway acquisition
period in 2000 and no goodwill amortization related to the NPSAC goodwill.
Except for goodwill amortization and the gains as described above, there were
no individually significant or offsetting items in either 2001 or 2000.

Interest Expense

     Interest expense, net, for 2001 and 2000 was $7.1 million.  Although
level from year-to-year, interest expense decreased due to the lower level of
debt of the Company as the result of a decrease in overadvance fees in 2001
compared to overadvance fees paid in the first half of 2000 before the Company
significantly reduced debt levels in the second half of 2000 through asset
sales, the $29.5 million of cash proceeds generated through asset sales and
used to reduce debt during the second half of 2000 and the lower interest

                                    - 27 -

rates on the Company's Bank of America facilities due to the many rate
reductions by the Federal Reserve after June 2000.  The decreases were offset
by an increase due to the debt assumed in the NPSAC acquisition, an increase
in amortization of deferred financing fees and an increase in interest rates
in November 2001 on the Company's Bank of America facilities to a default rate
as specified in the BOA Financing and Security Agreement.  [Interest expense
for 2002 may decrease compared to 2001 depending on the amount of proceeds and
timing of asset dispositions in 2002 as part of the Company's corporate-wide
restructuring plan.]

     For 2001 and 2000, a total of $3.1 million and $4.4 million,
respectively, of interest expense has been allocated to or actually incurred
in discontinued operations.  Interest expense is allocated to discontinued
operations on the basis of the percentage of total average assets of
discontinued operations to gross total assets.

Equity Results

     Equity in loss of continuing operations of affiliate in 2000 represents
Chatwins Group's pre-merger share of Reunion's loss from continuing operations
in that period.

Income Taxes

     There was a tax provision from continuing operations of $12.7 million for
2001 compared to a tax benefit of $0.6 million for 2000.  The Company has net
operating loss carryforwards for Federal tax return reporting purposes
totaling $124.1 million at December 31, 2001, $79.2 million of which expire by
2004.  [The Company may be able to utilize its loss carryforwards against
possible increased profitability as the result of the Company's corporate-wide
restructuring plan.  However, until the amount of proceeds from and timing of
asset dispositions as part of such plan are known], management has determined
to fully reserve for the total amount of net deferred tax assets as of
December 31, 2001.  The tax benefit from continuing operations in 2000 was the
result of a decrease in the valuation allowance against the deferred tax
assets related to the Company's net operating loss carryforwards established
at the merger date due a change in the then current estimates of future
taxable income.

Discontinued 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 expects that the
materials handling systems business will 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.

     There was income from discontinued operations during 2000 of $0.55
million.  The income from discontinued operations was comprised of a loss from
discontinued bridges and cranes operations ($7.2 million), income from

                                    - 28 -

discontinued materials handling systems operations ($6.4 million), a loss from
discontinued wine grape agricultural operations ($0.6 million), the gain from
the sale of such operations ($2.3 million with $-0- tax effect as the
valuation allowance against the deferred tax assets related to the Company's
net operating loss carryforwards was reduced for the tax effect of such gain),
a reduction in the gain on disposal of the discontinued grating business of
the former Chatwins Group ($0.8 million) and a reduction in the provision for
estimated expenses of the discontinued grating business ($0.5 million).

     The reduction in the gain on disposal is the result of the final outcome
of the arbitration with Alabama Metal Industries Corporation (AMICO), the
purchaser of the Company's discontinued grating business, regarding the final
purchase price adjustment resulting from a disagreement between the Company
and AMICO in the preparation of the closing date balance sheet.  In
calculating the gain on disposal in September 1999, the Company provided $0.5
million for future estimated purchase price adjustments.  In November 2000,
the arbiter for the dispute returned a final purchase price adjustment,
including interest, of $1.3 million, a difference of $0.8 million.  The
Company paid AMICO $1.3 million in November 2000 from proceeds available under
its revolving credit facility.

     For 2001 and 2000, discontinued operations includes a total of $3.1
million and $4.4 million, respectively, 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.

Extraordinary Items

     The losses from extraordinary items in 2000 of $1.9 million, net of $-0-
taxes, represent the pre-merger write-offs of deferred financing costs at both
Chatwins Group and pre-merger Reunion and fees related to the early repayment
of the Company's term loan B with BOA in August 2000 with the proceeds from
the sale of the Company's Irish plastics business.

Other Comprehensive Loss

     There was an other comprehensive loss in 2001 of $1.1 million.  The other
comprehensive loss relates 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

     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

                                    - 29 -

operations into one facility, eliminate Plastics' corporate headquarters and
address 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
                                                    ========         ========

     During 2002, the Company has made significant progress towards completion
of the plan.  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.  Future proceeds from the note receivable are
contingent upon the operating results of the combined operations of the
buyer's material handling businesses.  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 is subject to a post-closing working capital
adjustment.  This amount is in dispute between the Company and the buyer.  The
buyer alleges it is owed approximately $900,000 based on its calculation of
working capital on the closing date.  Although we have accrued an approximate
mid-point estimate of $265,000 related to this post-closing adjustment, based
on our review of their calculation we have determined that we are owed an
additional $280,000.  Pursuant to the asset purchase agreement, both parties
have agreed to submit this dispute to a mutually agreed-upon independent
accounting firm for resolution in arbitration.

     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.

     During the first quarter of 2002, NPSAC, the Company's former pressure
vessel operations in Clearfield, Utah, was relocated to and combined with the
pressure vessel operations in McKeesport, PA.  The cylinder operations in
Milwaukee, WI have been relocated to our leased facility in Libertyville, IL.

                                    - 30 -

The land and building in Milwaukee, WI is being prepared for sale.  We have
been preparing to move the cylinder operations in Chicago, IL to the
Libertyville facility.  We closed the Plastics' corporate headquarters in
Charlotte, NC and all administrative and managerial positions were eliminated.
Plastics' corporate responsibilities have been returned to our manufacturing
and administrative operations in Oneida, NY.

     We reevaluated the shut-down of our Plastics operation in Siler City, NC
and have determined to maintain our presence in the southern U.S. and service
the customers of the Siler City, NC location.

     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 2002 cash activity of our 2001 restructuring charge (in thousands):

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

     Of the remaining lease termination costs, $761 relates to idle
manufacturing facilities in Milwaukee, Wisconsin and Clearfield, Utah.  The
remainder relates to lease commitments under idle machinery in the Plastics
Group.

13% Senior Notes

     The Company has not been able to pay its $1.616 million semi-annual
interest payment since November 1, 2001 or its $12.5 million May 2002 sinking
fund payment due to lack of funds, resulting in a default under the senior
note indenture.  As a result, our senior note obligation of $24.9 million is
classified as debt in default on the consolidated balance sheet at December
31, 2002 and is currently subject to various remedies including, but not
limited to, acceleration of all amounts outstanding.  The senior notes are
subordinated to the Bank of America revolving and term loan credit facilities.
We have been pursuing a refinancing of our bank debt with various lenders.  If
successful, [we will seek to defer principal maturities and interest payments
under our senior note obligations].

Bank of America Revolving and Term Loan Credit Facilities

     Reunion entered into senior secured credit facilities with Bank of
America and other lenders when we merged in 2000.  These credit facilities
consisted of a $39.0 million revolving credit facility, a $25.8 million term
loan A facility amortizing in 84 monthly principal payments, a $5.0 million
term loan B facility amortizing in 36 monthly principal payments, and $2.7
million of available borrowing capacity under a capital expenditures facility
which amortizes in 60 monthly principal payments when borrowed.  Since
entering into these facilities, we borrowed $1.2 million under the capital
expenditures facility and have repaid all of the term loan B, all amounts
outstanding under the capital expenditure facility and $22.4 million of the
term loan A.  Proceeds for these repayments have come primarily from asset
sales.

                                    - 31 -

     Interest on the Bank of America facilities is tied to their prime rate,
as defined in the financing agreements, and are the prime rate plus 0.50% for
the revolving credit facility and the prime rate plus 0.75% for the term loan
A facility.  During 2002, we paid default rates of interest of the prime rate
plus 4% through September 2002 and then prime plus 2.75% on the revolving
credit facility and prime plus 3% on the term loan A thereafter.

     Since entering into the BOA facilities, we have incurred significant
incremental costs related to our bank financing.  These costs total $4.3
million, including $2.6 million paid to BOA relating to amendment and
overadvance fees and approximately $0.6 million in default interest.  The
additional incremental costs included legal fees, audit and consultant fees
and reappraisal costs.  Of the $4.3 million in incremental costs, $3.3 million
was incurred in 2002, $0.2 million in 2001 and $0.8 million in 2000.  These
costs have negatively affected our liquidity.

     The Bank of America credit facilities are collateralized by a first
priority lien on substantially all of the current and after-acquired assets of
Reunion including, without limitation, all accounts receivable, inventory,
property, plant and equipment, chattel paper, documents, instruments, deposit
accounts, contract rights and general intangibles.

     The facilities require Reunion to comply with financial covenants,
including fixed charge coverage and leverage tests, and other covenants.  The
fixed charge coverage covenant requires the Company to maintain a minimum
fixed charge coverage ratio to be tested as of the last day of each fiscal
quarter.  The components of the calculation are on a rolling twelve-month
basis.  The ratio is defined as EBITDA (adjusted to exclude non-financed
capital expenditures and income taxes paid) divided by fixed charges (defined
as scheduled or required principal and interest payments on debt).  The
leverage test is defined as the ratio of funded debt to EBITDA.  Funded debt
is defined as all secured and unsecured long-term debt, including current
maturities.  See "Covenant Compliance" below.

     In addition, the facilities contain various affirmative and negative
covenants, including limitations on stockholder and related party
distributions.  The Company was in compliance with all such non-financial
covenants.  The facilities require Reunion to pay the reasonable expenses
incurred by the lenders in connection with the  facilities.  Available
borrowings under the Bank of America revolving credit facility are based upon
a percentage of eligible receivables and inventories.

Covenant Compliance

     For the quarter ended March 31, 2001 and for each fiscal quarter
thereafter in 2001, the Bank of America (BOA) Financing and Security Agreement
required the Company to maintain a minimum fixed charge coverage ratio of
1.25:1 and maximum funded debt to EBITDA ratios of 3.75:1, 3.50:1, 3.25:1 and
3.00:1.

     In April 2001, the Company entered into a letter agreement with Bank of
America whereby, as long as the Company maintained both a fixed charge
coverage ratio of at least 1.00:1 and had a funded debt to EBITDA ratio of no
more than 4.50:1 as of the September 30, 2001 and December 31, 2001
calculation dates, and as long as the Company was in compliance on all other
covenants, the Bank of America would not accelerate any of its loans.

     Due to the rate and level of the downturns in our markets in 2001, we
took cost cutting measures and implemented capital expenditure restrictions
during the third and fourth quarters of 2001 but which were not enough to

                                    - 32 -

achieve ratio compliance.  For the quarter ended September 30, 2001, the
Company's fixed charge coverage ratio was 0.79:1 and the funded debt to EBITDA
ratio was 5.61:1 resulting in a default under the BOA Financing and Security
Agreement.  Operating results during 2002 were not sufficient to achieve
covenant compliance.

     Our BOA credit facilities totaling $15.2 million are classified as debt
in default on the consolidated balance sheet at December 31, 2002 and
currently subject to various remedies including, but not limited to,
acceleration of all amounts outstanding and liquidation of loan collateral.

Summary of 2002 Activities

     Cash and cash equivalents totaled $0.8 million at December 31, 2002,
compared to $1.2 million (including $0.5 million classified within
discontinued operations) at December 31, 2001, a decrease of $0.4 million.
This decrease resulted from $27.9 million of cash provided by investing
activities being more than offset by $1.0 million of cash being used by
operating activities and $27.3 million of cash used in financing activities.

Operating Activities

     Cash used by operating activities of $1.0 million in 2002 was the result
of a decrease in net working capital, as lower volume levels led to cash
generation from reductions in receivables and inventories and as tighter
liquidity resulted in a slowdown in payments to vendors, being more than
offset by losses.

Investing Activities

     The Company disposed of its discontinued bridges and cranes and material
handling systems operations for total cash proceeds of $28.1 million and sold
machinery and equipment with no book value during 2002, generating $0.4
million in cash proceeds.  Capital expenditures were $0.5 million.

Financing Activities

     The Company made scheduled repayments of debt totaling $3.8 million,
which included $3.7 million on term loan A and $103,000 on the capital
expenditures facility.  We made another $9.0 million of term loan A repayments
and fully repaid the capital expenditures facility for $0.9 million.
Revolving credit facility borrowings decreased $10.7 million during the year.
These debt reductions were funded primarily from cash proceeds from asset
sales.  Other debt repayments totaling $87,000 represent payments on capital
lease obligations and other debt.

                                    - 33 -

CONTRACTUAL OBLIGATIONS

     The following represents a tabular summarization of the Company's
contractual obligations at December 31, 2002 (in thousands):

                                         Less
                                         Than     1 to 3    4 to 5     After
Description                    Total    1 Year     Years     Years    5 Years
--------------------------   --------  --------  --------  --------  --------
Debt in default              $ 40,049  $ 40,049  $      -  $      -  $      -
Notes payable                   4,661     4,661         -         -         -
Notes payable - related
  parties                       4,615     4,615         -         -         -
Capital lease obligations
  and SBA loans                   149        89        57         3         -
Noncancellable operating
  lease commitments            14,070     2,628     3,313     1,754     6,375
                             --------  --------  --------  --------  --------
Total contractual
  obligations                $ 63,544  $ 52,042  $  3,370  $  1,757  $  6,375
                             ========  ========  ========  ========  ========

     The above table shows the contractual aggregate maturities of debt in
default.  Due to its default status, all such debt and the revolving credit
facility of $11.8 million is classified as current in the accompanying
consolidated balance sheet at December 31, 2002.  Notes payable and notes
payable - related parties, although contractually due, may not be paid due to
restrictions imposed by the BOA financing 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.

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.

                                    - 34 -

     Accounts receivable are presented net of a reserve for doubtful accounts
of $300,000 at December 31, 2002 and $212,000 at December 31, 2001, which
represented 2.6% and 1.7%, respectively, of gross trade receivables (excluding
other non-trade receivables).

Inventories and Inventory Reserves

     Inventories are stated at the lower of cost or market, at costs which
approximate the last-in, first-out method of inventory valuation for
approximately 62% and 64% of total inventories at December 31, 2002 and 2001,
respectively.  The remainder are at costs which approximate the first-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 riskiness 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, 2002, the Company had $11.0 million of goodwill on its
consolidated balance sheet.  Of the $11.0 million of goodwill, $9.5 million
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

                                    - 35 -

pension plans decreased for various reasons, including a downturn in the
overall economy and unusual world events.  This decrease in asset values
resulted in the Company recording additional minimum pension liabilities in
excess of amounts previously accrued totalling $2.0 million, which is
classified as accumulated comprehensive loss within stockholders' deficit at
December 31, 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 will likely 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 for 2003 to
increase from 2002.]

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 2002 than the actuarial assumptions resulting in a
deferral of costs.  As a result, [the Company currently expects consolidated
other postretirement benefit costs for 2003 to increase from 2002.]

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.

     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 amend 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.

                                    - 36 -

     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,
                                                   2002      2001      2000
                                                 --------  --------  --------
Net (loss) income as reported                    $(12,859) $(38,128) $  5,140
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)     (390)
Deduct:  Preferred dividend accretions                                    (95)
                                                 --------  --------  --------
Pro forma income (loss) applicable to
  common stockholders                            $(12,859) $(38,374) $  4,655
                                                 ========  ========  ========

Basic (loss) earnings per share, as reported     $  (0.82) $  (2.45) $   0.38
                                                 ========  ========  ========
Basic (loss) earnings per share, pro forma       $  (0.82) $  (2.46) $   0.35
                                                 ========  ========  ========
Diluted (loss) earnings per share, as reported   $  (0.82) $  (2.45) $   0.38
                                                 ========  ========  ========
Diluted (loss) earnings per share, pro forma     $  (0.82) $  (2.46) $   0.35
                                                 ========  ========  ========

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.

     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.

     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,

                                    - 37 -

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 $304,000 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,
2002, after accruing an additional $40,000 in December 2002, the balance
accrued for these remediation costs is approximately $1,042,000.  The Company
believes that future remediation costs will not exceed the amount accrued.

     Litigation on this matter had been stayed pending the determination by
the LDNROC as to the extent of remediation that would be required.  Most
recently, such stay was lifted and the District Court has 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.  The Company is contesting this litigation and
believes its proposed methodology is well within accepted industry practice
for remediation efforts of a similar nature.  No accrual has been made for
costs of any potential alternative clean-up methodology that might be imposed
as a result of the outcome of the litigation.

     On March 15, 2002, the Company received a Request for Information from
the United States Environmental Protection Agency (USEPA) regarding the
Gambonini Mine Site outside Petaluma, Marin County, California.  The Company
gathered and forwarded to the USEPA the information it 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 its removal and
disposal efforts 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 on this site 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 back to 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 resulting in the failure of the 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 1985, BGO, headquartered in Houston, Texas, filed Chapter 11
proceedings in bankruptcy court in the Southern District of Texas in Houston.
In December 1988, BGO confirmed its plan of reorganization which provided for,
among other things, a discharge of all claims that arose prior to the date of
confirmation of the plan.  The reorganization plan became effective in
February 1989.

     In response to the USEPA's demand, the Company filed an adversary
proceeding in bankruptcy court in the Southern District of Texas in Houston
seeking an order to enjoin the efforts of the USEPA to pursue collection of
any claims related to the site.  The USEPA responded by filing a motion to
dismiss based on several jurisdictional and substantive grounds.  A status
conference was held on August 27, 2002, at which time the judge for the
bankruptcy court in the Southern District of Texas in Houston ruled that the
court did not have jurisdiction and, at that time, the Company and the USEPA
entered into a standstill agreement through December 31, 2002 which has been
extended through May 31, 2003.

                                    - 38 -

     In March 2003, the Company and the USEPA reached an agreement in
principle to settle the USEPA's demand for payment for $100,000, payable in
three installments over a two-year period.  This amount has been accrued as of
December 31, 2002.  This settlement agreement will resolve the USEPA's claims
for reimbursement of environmental response costs, 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
damage.  The United States has given no indication as to whether or not it
will pursue such claims.  However, the Company has agreed in principle to
extend the statute of limitations with respect to any such claims for a period
of five years from the date of the execution of the above discussed settlement
agreement.


FACTORS THAT COULD AFFECT FUTURE RESULTS

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.  The negative working capital
position of $57,799,000, the defaults of the BOA Financing and Security
Agreement and the 13% senior notes, and the lack of borrowing capacity under
its revolving credit facility indicate that [the Company may not be able to
continue as a going concern for a reasonable period of time.]  The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.

Reunion's vendors may restrict credit terms

     We have corrected many vendor-related problems with liquidity generated
from asset sales.  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 may not be able to consummate a planned refinancing

     We have made significant progress recently on a planned refinancing of
our BOA term and revolving credit obligations.  However, it is not a certainty
that this planned refinancing will happen.  If we are unable to refinance our
BOA credit facilities, they may move to take advantage of all remedies
available to them including, but not limited to, acceleration of all amount
currently due and a liquidation of their collateral.

Reunion's senior noteholders may accelerate

     Although our senior note obligations are in default, the senior
noteholders have stood still as we continue to work through the refinancing of
our BOA credit facilities.  However, it is not a certainty that they will
continue to stand still and they may move to take advantage of all remedies
available to them including, but not limited to, acceleration of all amount
currently due.

                                    - 39 -

Reunion's current bank lender may require us to pay exorbitant fees and cause
us to incur significant incremental costs again

     Since entering into the BOA facilities, we have incurred significant
incremental costs related to our bank financing.  These costs total $4.3
million, including $2.6 million paid to BOA relating to amendment and
overadvance fees and approximately $0.6 million in default interest.  The
additional incremental costs included legal fees, audit and consultant fees
and reappraisal costs.  These costs have negatively affected our liquidity.
If we do not refinance our BOA credit facilities, they could continue to
strain our liquidity with incremental fees and costs.


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.  This statement will be
effective for us for the year ending December 31, 2003.  The adoption of this
statement is not expected to have a material effect on our results of
operations or financial position.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets."  This statement supersedes SFAS
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" but retains many of its fundamental provisions.
SFAS 144 also supersedes certain provisions of Accounting Principles Board
Opinion No. 30, "Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and Transactions"
but retains its provision to separately report discontinued operations and
extends that reporting to a component of an entity, as defined therein, that
either has been disposed of or is classified as held for sale, thus broadening
the presentation of discontinued operations to include more disposal
transactions.  Effective January 1, 2002, the Company adopted this statement
with no effect on financial position or results of operations.  However,
certain amounts related to our discontinued operations as of December 31, 2001
have been reclassified in the condensed consolidated balance sheet to conform
to the presentation requirements of SFAS 144.

     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 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 will
be effective for us for the year ending December 31, 2003.  We are attempting
to buy back the senior notes at a discount.  If successful, the adoption of
this statement could have a material effect on our results of operations or
financial position.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities."  This statement addresses
accounting for and reporting of costs associated with exit or disposal
activities and nullifies EITF Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)."  This statement
requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred.  Whereas, EITF 94-3

                                    - 40 -

requires an estimated liability to be recognized for exit or disposal
activities at the date an entity commits to an exit plan.  This statement will
be effective for exit or disposal activities that are initiated after December
31, 2002, with earlier application encouraged.  We adopted a restructuring
plan in the fourth quarter of 2001 pursuant to the guidance of EITF 94-3.
Should we engage in any future exit, disposal or restructuring activities, the
guidance set forth in SFAS 146 will be followed.

     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 expands the disclosure
requirements related to guarantees and requires that a liability be recorded
in the guarantor's balance sheet upon issuance of  guarantees.  The initial
recognition and measurement provisions will be applied on a prospective basis
to guarantees issued after December 31, 2002.  The disclosure provisions are
effective for financial statement periods ending after December 31, 2002.
Because our financing agreements prohibit us from guaranteeing, either
directly or otherwise, the indebtedness of others, the adoption of FIN 45 is
not expected to have a significant impact on our financial position or results
of operations.

     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.  We will
adopt the disclosure provisions of SFAS No. 148.  The interim disclosure
requirements are effective for our 2003 first quarter.  We do not expect the
adoption of SFAS No. 148 to have an effect on our results of operations 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 2002 and 2001 were in four areas:  the Far East;
Mexico; Western Europe; and Canada.  The majority of international sales in
2002 and 2001 relate to pressure vessel sales to customers in Taiwan and the
People's Republic of China.  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 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.  Of Reunion's
$99.5 million of consolidated net sales for 2001, $16.7 million were export
sales, of which $12.6 million related to pressure vessel sales and $3.7
million related to Plastics.  The remainder related to cylinder sales in
Canada.  Of the $12.6 million of foreign pressure vessel sales, approximately
$9.0 million was in the Far East (principally China and Taiwan) and $2.6
million was in Western Europe.  The remainder were in the Middle East and
Canada.  Plastics export sales included $2.6 million in Mexico with the
remainder in Europe and Canada.

                                    - 41 -

     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 $500,000.

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 $15.2 million at December 31, 2002, which is
representative of balances outstanding during the year.  A 1.00% change in
interest rates would affect results of operations by approximately $150,000.


ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Reunion Industries' 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.


                                   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 2003
annual meeting of stockholders to be filed with the commission pursuant to
Regulation 14A under the Securities Exchange Act of 1934 within 120 days after
the close of the Registrant's fiscal year.


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 2003 annual meeting of stockholders to be filed with the commission
pursuant to Regulation 14A under the Securities Exchange Act of 1934 within
120 days after the close of the Registrant's fiscal year.

                                    - 42 -

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 2003 annual meeting of stockholders to be filed with the commission
pursuant to Regulation 14A under the Securities Exchange Act of 1934 within
120 days after the close of the Registrant's fiscal year.


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 2003 annual
meeting of stockholders to be filed with the commission pursuant to Regulation
14A under the Securities Exchange Act of 1934 within 120 days after the close
of the Registrant's fiscal year.

ITEM 14. CONTROLS AND PROCEDURES

     Based on their evaluation as of a date within 90 days of the filing date
of this Annual Report on Form 10-K, Reunion's principal executive officer and
principal financial officer have concluded that Reunion's disclosure controls
and procedures as defined in Rules 13a-14(c) and 15d-14(c) under the
Securities Exchange Act of 1934 (Exchange Act) are effective to ensure that
information required to be disclosed by Reunion in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms.

     There were no significant changes in reunion's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation and up to the filing date of the Annual Report on
Form 10-K.  There were no significant deficiencies or material weaknesses, and
therefore there were no corrective actions taken.

     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 are met.  In addition, the design of any control
system is based in part upon certain assumptions about the likelihood of
future events.  Because of these and other inherent limitations of control
systems, there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions, regardless of how
remote.

                                    - 43 -

                                   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-46)

     Report of Independent Public Accountants - Ernst & Young LLP
     Report of Independent Public Accountants - PricewaterhouseCoopers LLP
     Statement of Management Responsibility
     Consolidated Balance Sheets - December 31, 2002 and 2001
     Consolidated Statements of Income (Loss) and Comprehensive
       Income (Loss) - Years Ended December 31, 2002, 2001 and 2000
     Consolidated Statements of Cash Flows - Years Ended December 31, 2002,
       2001 and 2000
     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

     On March 31, 2003, the Company filed a Current Report on Form 8-K dated
March 31, 2003 to publicly announce the date, time and place of its 2003
annual meeting of stockholders and the date of record for stockholders that
will be permitted to vote at the annual meeting.

                                    - 44 -

                                 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 31, 2003                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 31st day of March, 2003.

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/ W. R. Clerihue                    Director
---------------------------
    W. R. Clerihue

/s/ Franklin Myers                    Director
---------------------------
    Franklin Myers

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

                                    - 45 -

                                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 annual 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 annual report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this annual 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 annual
    report;

4.  The registrant's other certifying officers and I are responsible for
    establishing and maintaining disclosure controls and procedures (as
    defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
    we have:

    a)  designed such disclosure controls and procedures 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 annual report
        is being prepared;

    b)  evaluated the effectiveness of the registrant's disclosure controls
        and procedures as of a date within 90 days prior to the filing date
        of this annual report (the "Evaluation Date"); and

    c)  presented in this annual report our conclusions about the
        effectiveness of the disclosure controls and procedures based
        on our evaluation as of the Evaluation Date;

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

    a)  all significant deficiencies in the design or operation of internal
        controls which could adversely affect the registrant's ability to
        record, process, summarize and report financial data and have
        identified for the registrant's auditors any material weaknesses
        in internal controls; and

    b)  any fraud, whether or not material, that involves management or
        other employees who have a significant role in the registrant's
        internal controls; and

6.  The registrant's other certifying officers and I have indicated in this
    annual report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies and
    material weaknesses.

Date: March 31, 2003             By /s/ Charles E. Bradley, Sr.
      --------------                ------------------------------
                                        Charles E. Bradley, Sr.
                                     Chairman and Chief Executive
                                 Officer (principal executive officer)

                                    - 46 -

                                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 annual 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 annual report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this annual 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 annual
    report;

4.  The registrant's other certifying officers and I are responsible for
    establishing and maintaining disclosure controls and procedures (as
    defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
    we have:

    a)  designed such disclosure controls and procedures 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 annual report
        is being prepared;

    b)  evaluated the effectiveness of the registrant's disclosure controls
        and procedures as of a date within 90 days prior to the filing date
        of this annual report (the "Evaluation Date"); and

    c)  presented in this annual report our conclusions about the
        effectiveness of the disclosure controls and procedures based
        on our evaluation as of the Evaluation Date;

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

    a)  all significant deficiencies in the design or operation of internal
        controls which could adversely affect the registrant's ability to
        record, process, summarize and report financial data and have
        identified for the registrant's auditors any material weaknesses
        in internal controls; and

    b)  any fraud, whether or not material, that involves management or
        other employees who have a significant role in the registrant's
        internal controls; and

6.  The registrant's other certifying officers and I have indicated in this
    annual report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies and
    material weaknesses.

Date: March 31, 2003             By /s/ John M. Froehlich
      --------------                ------------------------------
                                        John M. Froehlich
                                     Chief Financial Officer
                                  (principal financial officer)

                                    - 47 -

                           REUNION INDUSTRIES, INC.

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

Report of Independent Auditors - Ernst & Young LLP......................F-2
Report of Independent Accountants - PricewaterhouseCoopers LLP..........F-3
Statement of Management Responsibility..................................F-4
Consolidated Balance Sheet..............................................F-5
Consolidated Statement of Income (Loss) and
  Comprehensive Income (Loss)...........................................F-6
Consolidated Statement of Cash Flows....................................F-7
Notes to Consolidated Financial Statements..............................F-10

                                   - F-1 -

                       REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Reunion Industries, Inc.

We have audited the accompanying consolidated balance sheets of Reunion
Industries, Inc. as of December 31, 2002 and 2001, and the related
consolidated statements of income (loss) and comprehensive income (loss) and
cash flows for the years then ended. Our audits also included the financial
statement schedule listed in the Index at Item 15(a). 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 2001, and the
consolidated results of their operations and their cash flows for the years
then ended, 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-2 -

                      Report of Independent Accountants


To the Board of Directors
and Stockholders of
Reunion Industries, Inc.

     In our opinion, the consolidated statements of income (loss) and
comprehensive income (loss) and of cash flows for each of the year ended
December 31, 2000 presents fairly, in all material respects, the results of
operations and cash flows of Reunion Industries, Inc. and its subsidiaries for
the year ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion. We have not audited the consolidated financial statements of
Reunion Industries, Inc. for any period subsequent to December 31, 2000.

     Reunion merged with Chatwins Group, Inc. (Chatwins), an affiliate company
on March 16, 2000.  Chatwins was considered the acquiring company for
financial reporting purpose.  Effective with the merger, the combined company
retained the name Reunion Industries, Inc.

                        /s/ PRICEWATERHOUSECOOPERS LLP

Pittsburgh, Pennsylvania
April 18, 2001

                                   - F-3 -

                    Statement of Management Responsibility

     Management is responsible for the preparation, integrity and objectivity
of the consolidated financial statements included in Reunion's 2002 Annual
Report on Form 10-K.  The financial statements have been prepared in
conformity with accounting principles generally accepted in the United States
and, accordingly, include some amounts based on management's best judgments
and estimates.

     Management maintains an effective system of internal control that is
designed to provide reasonable assurance that assets are safeguarded and
transactions are properly recorded and executed in accordance with
management's authorization.  The system is regularly monitored by direct
management review.  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
basis with the independent accountants and management to discuss internal
business controls, auditing and financial reporting matters.  The Committee
reviews with the independent accountants the scope and results of the audit
effort.  The Committee also meets with the independent accountants without
management present to ensure that the independent accountants have free access
to the Committee.

     The independent accountants, Ernst & Young LLP, 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 generally
accepted auditing standards.  The opinion of the independent accountants,
based on 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 of the Board and              Executive Vice President and
    Chief Executive Officer                Chief Financial Officer

                                   - F-4 -

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

                                           At December 31,     At December 31,
                                                     2002                2001
                                           --------------      --------------
     ASSETS:
Cash and cash equivalents                        $    807            $    686
Receivables, net                                   12,269              12,347
Advances to employees                                 113                 213
Inventories, net                                    7,895              10,814
Other current assets                                1,913               1,219
Net assets of discontinued operations, current          -               5,162
                                                 --------            --------
     Total current assets                          22,997              30,441

Property, plant and equipment, net                 16,716              19,134
Due from related parties                            1,496               1,488
Goodwill, net                                      11,007              11,443
Other assets, net                                   3,102               3,269
Net assets of discontinued operations,
  non-current                                           -              18,641
                                                 --------            --------
Total assets                                     $ 55,318            $ 84,416
                                                 ========            ========
     LIABILITIES AND STOCKHOLDERS' DEFICIT:
Debt in default                                  $ 40,049            $ 64,389
Current maturities of debt                             89                  87
Trade payables                                     10,961              11,211
Accrued salaries and benefits                       2,247               2,544
Accrued interest                                    6,748               2,747
Accrued environmental reserves                      1,168               1,076
Reserve for restructuring                             861               1,192
Due to related party                                2,422               1,302
Other current liabilities                           6,975               3,102
Notes payable                                       4,661               1,017
Notes payable - related parties                     4,615               4,615
                                                 --------            --------
     Total current liabilities                     80,796              93,282

Long-term debt                                         61               3,793
Other liabilities                                   5,301               4,586
                                                 --------            --------
     Total liabilities                             86,158             101,661
                                                 --------            --------
Commitments and contingent liabilities                  -                   -
     Stockholders' deficit:
Common stock ($.01 par value, 20,000,000 shares
  authorized, 16,278,519 and 15,590,619 shares
  issued and outstanding, respectively)               163                 156
Capital in excess of par value                     25,195              25,064
Accumulated other comprehensive loss               (2,010)             (1,136)
Accumulated deficit                               (54,188)            (41,329)
                                                 --------            --------
Stockholders' deficit                             (30,840)            (17,245)
                                                 --------            --------
Total liabilities and stockholders' deficit      $ 55,318            $ 84,416
                                                 ========            ========

         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,
                                                  2002       2001       2000
                                              --------   --------   --------
     Sales:
Metals                                        $ 38,222   $ 60,963   $ 62,713
Plastics                                        32,577     38,532     42,008
                                              --------   --------   --------
  Total sales                                   70,799     99,495    104,721
                                              --------   --------   --------
     Cost of Sales:
Metals                                          33,266     50,300     45,772
Plastics                                        28,577     34,157     35,713
                                              --------   --------   --------
  Total cost of sales                           61,843     84,457     81,485
                                              --------   --------   --------
  Gross profit                                   8,956     15,038     23,236
Selling, general & administrative               13,256     15,718     16,388
Provision for restructuring                          -      6,811          -
Other (income) expense, net                       (787)     1,727     (6,251)
                                              --------   --------   --------
  Operating profit (loss)                       (3,513)    (9,218)    13,099
Interest expense, net                            8,020      7,057      6,972
Equity in loss from continuing operations
  of affiliate                                       -          -        296
                                              --------   --------   --------
Income (loss) from continuing operations
  before income taxes                          (11,533)   (16,275)     5,831
Provision for (benefit from) income taxes            -     12,678       (616)
                                              --------   --------   --------
Income (loss) from continuing operations       (11,533)   (28,953)     6,447
                                              --------   --------   --------
  Discontinued operations, net of tax:
Loss on disposal of discontinued bridges
  and cranes operations, less applicable
  income taxes of $-0-                          (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, net of applicable income tax
  benefits $-0- and $-0-, respectively               -     (5,294)    (7,229)
Income (loss) from discontinued materials
  handling operations, less applicable
  income taxes of $-0- in all periods             (537)     2,973      6,427
Gain on disposal of discontinued materials
  handling systems operations, less
  applicable income taxes of $-0-                3,124          -          -
Gain on disposal of discontinued agricultural
  operations, less applicable income
  taxes of $-0-                                      -          -      2,286
Loss from discontinued agricultural
  operations, less applicable income
  taxes of $-0- and $-0-, respectively               -       (135)      (639)
Loss on disposal of Discontinued Klemp
  (domestic), less applicable income
  taxes of $-0-                                      -          -       (830)
Provision for estimated (expenses) credit of
  Discontinued Klemp (domestic), less
  applicable income taxes (benefit) of $-0-
  and $-0-, respectively                             -       (320)       530
                                              --------   --------   --------

                                   - 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,
                                                  2002       2001       2000
                                              --------   --------   --------
Income (loss) from discontinued operations      (1,326)    (9,175)       545
                                              --------   --------   --------
Income (loss) before extraordinary items       (12,859)   (38,128)     6,992
                                              --------   --------   --------
  Extraordinary items, net of tax:
Write-off of deferred financing costs (merger)       -          -     (1,501)
Write-off of deferred financing costs
  (extinguishment of debt)                           -          -        (80)
Equity in loss of extraordinary item
  of affiliate                                       -          -       (271)
                                              --------   --------   --------
  Loss from extraordinary items                      -          -     (1,852)
                                              --------   --------   --------
Net income (loss)                              (12,859)   (38,128)     5,140

  Other comprehensive loss, net of $-0- tax:
Additional pension liability in excess of
  unrecognized prior service cost                 (874)    (1,136)         -
                                              --------   --------   --------
Comprehensive income (loss)                   $(13,733)  $(39,264)  $  5,140
                                              ========   ========   ========
Earnings (loss) applicable to common
  stockholders                                $(12,859)  $(38,128)  $  5,045
                                              ========   ========   ========
Earnings (loss) per common share
  - basic and diluted:
Continuing operations                         $  (0.74)  $  (1.86)  $   0.48
Discontinued operations                          (0.08)     (0.59)      0.04
Extraordinary items                                  -          -      (0.14)
                                              --------   --------   --------
Income (loss) per common share
  - basic and diluted                         $  (0.82)  $  (2.45)  $   0.38
                                              ========   ========   ========
Weighted average shares outstanding - basic     15,591     15,587     13,236
                                              ========   ========   ========
Weighted average shares outstanding - diluted   15,591     15,612     13,306
                                              ========   ========   ========

         See accompanying notes to consolidated financial statements.

                                   - F-7 -

                           REUNION INDUSTRIES, INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)
                                                  Year Ended December 31,
                                                  2002       2001       2000
                                              --------   --------   --------
  Cash flow from operating activities:
Net (loss) income                             $(12,859)  $(38,128)  $  5,140
Adjustments to reconcile net (loss) income to
  net cash from operating activities:
  Depreciation                                   2,762      4,865      5,276
  Amortization of intangibles                        -      2,354      1,403
  Amortization of deferred financing fees          754      1,011        897
  Write-off of deferred financing fees               -          -      1,635
  Deferred tax provision (benefit)                   -     12,678       (898)
  Equity in net loss of affiliate                    -          -        567
  Gain on sale of Irish plastics subsidiary          -          -     (4,933)
  Gain on sale of discontinued agricultural
    operations                                       -          -     (2,286)
  Gain on sale of property                        (375)      (375)    (2,441)
  Gain (loss) on sale of Discontinued Klemp          -          -        830
  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       (530)
  Payments of expenses of discontinued
    operations                                       -       (445)    (2,219)
  Changes in assets and liabilities:
    Decrease in receivables                      6,431      2,357      4,509
    Decrease (increase) in inventories           1,366      6,443     (1,299)
    (Increase) decrease in other current assets   (662)       656        803
    Increase (decrease) in trade payables
      and other current liabilities              3,585     (2,784)       462
    (Increase) decrease in due from
      related parties                               (8)     2,462        784
    Net change in other assets and liabilities  (1,973)    (2,059)    (2,193)
                                              --------   --------   --------
Cash (used) provided by operating activities      (979)     5,050      5,507
                                              --------   --------   --------
  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                     375        375      3,013
Proceeds from sale of Irish plastics subsidiary      -          -      9,990
Proceeds from sale of discontinued
  agricultural operations                            -          -     16,500
Cash acquired in merger                              -          -      2,666
Acquisition of NPSAC common stock                    -        (10)         -
Acquisition of Kingway common stock                  -          -       (100)
Capital expenditures                              (502)    (2,897)    (4,072)
                                              --------   --------   --------
Cash provided (used) by investing activities    27,931     (2,532)    27,997
                                              --------   --------   --------

                                   - F-8 -

                           REUNION INDUSTRIES, INC.
               CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
                                (in thousands)
                                                  Year Ended December 31,
                                                  2002       2001       2000
                                              --------   --------   --------
  Cash flow from financing activities:
Proceeds from issuance of debt                       -        534     31,498
Repayments of debt                             (13,740)    (5,312)   (72,323)
Repayments of debt of discontinued operations        -       (680)         -
Repayments to related parties                        -          -     (1,076)
Revolving credit facilities borrowings         116,157    170,795    184,443
Revolving credit facilities repayments        (126,845)  (167,687)  (170,910)
Payments of deferred financing costs                 -       (162)    (1,404)
Net decrease in outstanding checks              (2,909)    (1,351)    (1,613)
                                              --------   --------   --------
Cash used by financing activities              (27,337)    (3,863)   (31,385)
                                              --------   --------   --------
Net (decrease) increase in cash and
  cash equivalents                                (385)    (1,345)     2,119
Less:Change in cash of discontinued operations     506        217       (447)
Cash and cash equivalents, beginning of year       686      1,814        142
                                              --------   --------   --------
Cash and cash equivalents, end of year        $    807   $    686   $  1,814
                                              ========   ========   ========

  Supplemental cash flow information:
Interest paid                                 $  4,619   $  6,208   $  9,716
                                              ========   ========   ========
Income taxes paid (refunded)                  $   (326)  $   (119)  $    322
                                              ========   ========   ========

          See accompanying notes to consolidated financial statements.

                                   - F-9 -

                           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 Company has not been able to pay its $1.616 million semi-annual
interest payment since November 1, 2001 or its $12.5 million May 2002 sinking
fund payment on its senior notes due to lack of funds, resulting in a default
under the senior note indenture.  We are also in default under the Bank of
America (BOA or Bank of America) Financing and Security Agreement which, among
other things, requires the Company to meet certain financial covenants and
ratios, including minimum EBITDA, a minimum fixed charge coverage ratio and a
maximum funded debt to EBITDA ratio.  The Company has not been in compliance
with these financial covenants since the third quarter of 2001.  As a result,
$40.0 million of debt was classified as debt in default on the consolidated
balance sheet at December 31, 2002 and is currently subject to various
remedies including, but not limited to, acceleration of all amounts
outstanding.  The Company is projecting that it will not be in compliance with
the covenants of its BOA Financing and Security Agreement or its 13% senior
notes over the next twelve months. The Company has generated a net loss of
$12,859,000 during the year ended December 31, 2002.

     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.  The negative working capital
position of $57,799,000, the defaults of the BOA Financing and Security
Agreement and the 13% senior notes, and the lack of borrowing capacity under
the revolving credit facility indicate that we may not be able to continue as
a going concern for a reasonable period of time.  The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

       We have been pursuing a refinancing of our bank debt with various
lenders.  If successful, we will seek to defer principal maturities and
interest payments under our senior note 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.

                                   - F-10 -

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.

Accounts Receivable and Allowance for Doubtful Accounts

     Accounts receivable are net of $300,000 and $212,000 in allowance for
doubtful accounts at December 31, 2002 and 2001, respectively.  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.  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

     Inventories are stated at the lower of cost or market, at costs which
approximate the "last-in, first-out" (LIFO) method of inventory valuation for
approximately 62% and 64% of total inventories at December 31, 2002 and 2001,
respectively.  The remainder are at costs which approximate the "first-in,
first-out" (FIFO) 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,
2002, 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.  We
concluded that our goodwill is not impaired.  Had we stopped amortizing

                                   - F-11 -

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.  Had we
stopped amortizing goodwill at the beginning of 2000, the effect would have
been increases in our net income and earnings per share of $719,000 and $0.05,
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.

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.

     There were no potential common shares relating to options to purchase
common stock in 2002.  Potential common shares relating to options to purchase
common stock aggregating 25,809 and 69,682 are included in the weighted
average number of shares for the years ended December 31, 2001 and 2000,
respectively.

                                   - F-12 -

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.  This statement will be
effective for us for the year ending December 31, 2003.  The adoption of this
statement is not expected to have a material effect on our results of
operations or financial position.

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets."  This statement supersedes SFAS
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" but retains many of its fundamental provisions.
SFAS 144 also supersedes certain provisions of Accounting Principles Board
Opinion No. 30, "Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and Transactions"
but retains its provision to separately report discontinued operations and
extends that reporting to a component of an entity, as defined therein, that
either has been disposed of or is classified as held for sale, thus broadening
the presentation of discontinued operations to include more disposal
transactions.  Effective January 1, 2002, the Company adopted this statement
with no effect on financial position or results of operations.  However,
certain amounts related to our discontinued operations as of December 31, 2001
have been reclassified in the condensed consolidated balance sheet to conform
to the presentation requirements of SFAS 144.

     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 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 will
be effective for us for the year ending December 31, 2003.  We are attempting
to buy back the senior notes at a discount.  If successful, the adoption of
this statement could have a material effect on our results of operations or
financial position.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities."  This statement addresses
accounting for and reporting of costs associated with exit or disposal
activities and nullifies EITF Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)."  This statement
requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred.  Whereas, EITF 94-3
requires an estimated liability to be recognized for exit or disposal
activities at the date an entity commits to an exit plan.  This statement will
be effective for exit or disposal activities that are initiated after December
31, 2002, with earlier application encouraged.  We adopted a restructuring
plan in the fourth quarter of 2001 pursuant to the guidance of EITF 94-3.
Should we engage in any future exit, disposal or restructuring activities, the
guidance set forth in SFAS 146 will be followed.

                                   - F-13 -

     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.  As required, we will
comply 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 interim disclosure requirements are effective for our 2003
first quarter.  We do not expect the adoption of SFAS No. 148 to have an
effect on our results of operations or financial position.

Reclassifications

     Certain reclassifications of prior year amounts have been made to conform
to 2002 classifications.


NOTE 2:   RESTRUCTURING CHARGE AND OTHER ACTIONS

     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
                                                    ========         ========

                                   - F-14 -

     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 2002 cash activity of our
2001 restructuring charge (in thousands):

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

     Of the remaining lease termination costs, $761,000 relates to idle
manufacturing facilities in Milwaukee, Wisconsin and Clearfield, Utah.  The
remainder relates to lease commitments under idle machinery in the Plastics
Group.


NOTE 3:   ACQUISITION

     On January 17, 2001, the Company acquired NPS Acquisition Corp. (NPSAC)
(f/k/a Naptech Pressure Systems) from Charles E. Bradley, Sr. (Mr. Bradley),
the Company's chairman of the board and chief executive officer.  NPSAC was
based in Clearfield, Utah and manufactured seamless steel pressure vessels.
In the first quarter of 2002, its operations were relocated and combined with
the Company's pressure vessel manufacturing operations in McKeesport,
Pennsylvania.

     The purchase price was $10,000 plus the non-cash assumption of $10.3
million of NPSAC's liabilities, including a 15% per annum $6.9 million note
payable to Shaw Group, the former owner of Naptech Pressure Systems and $0.6
million of notes payable to Stanwich Financial Services Corp., a related
party.  At the same time we acquired NPSAC, we paid Shaw Group $2.0 million of
the note payable in cash from funds available under our revolving credit
facility with Bank of America (BOA).  The remainder of $4.9 million included
quarterly principal payments of $0.6 million for eight quarters which began on
February 28, 2001.  We made the first two payments from funds available under
its revolving credit facility.  The remaining payments have not been made due
to lack of liquidity and use of funds available under the revolving credit
facility for other purposes.  The note is unsecured and subordinated to the
BOA term loan and revolving credit facilities.

     The estimated fair value of assets acquired included approximately $1.4
million of cash, receivables, inventories and other current assets,
approximately $0.3 million of fixed assets and $1.3 million of deferred tax
assets which are fully reserved by a valuation allowance.  The purchase price
in excess of net assets acquired of $8.6 million was recorded as goodwill and,
until December 31, 2001, was being amortized over 15 years.  NPSAC's fully-
reserved deferred tax assets are comprised primarily of net operating losses.

                                    - F-15 -

NOTE 4:   INVENTORIES

Inventories are comprised of the following (in thousands):

                                                        At December 31,
                                                   2002                2001
                                                 --------            --------
Raw material                                     $  2,820            $  5,012
Work-in-process                                     2,301               2,329
Finished goods                                      2,801               3,342
                                                 --------            --------
  Gross inventories                                 7,922              10,683
Less:   LIFO adjustment                               (27)                131
                                                 --------            --------
  Inventories                                    $  7,895            $ 10,814
                                                 ========            ========


NOTE 5:   PROPERTY, PLANT AND EQUIPMENT

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

                                                        At December 31,
                                                   2002                2001
                                                 --------            --------
Land                                             $  1,569            $  1,569
Buildings and improvements                          9,033               9,014
Machinery and equipment                            19,725              21,421
Computer systems                                    2,627               2,909
Furniture and fixtures                                678                 768
Construction-in-progress                              190                 116
                                                 --------            --------
  Property, plant and equipment                    33,822              35,797
Less:   Accumulated depreciation                  (17,106)            (16,663)
                                                 --------            --------
  Property, plant and equipment, net             $ 16,716            $ 19,134
                                                 ========            ========


NOTE 6:   DEBT IN DEFAULT, NOTES PAYABLE AND LONG-TERM DEBT

     The Company is in default on its 13% senior notes and its Bank of America
(BOA) revolving and term loan credit facilities.

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

                                                        At December 31,
                                                   2002                2001
                                                 --------            --------
13% senior notes (net of discount of $2 in 2001) $ 24,855            $ 24,853
BOA revolving credit facility                      11,787              22,475
BOA term loan A due March 16, 2007                  3,407              16,071
BOA capital expenditure facility                        -                 990
                                                 --------            --------
  Total debt in default                          $ 40,049            $ 64,389
                                                 ========            ========

     All debt in default is either currently due or contractually matures in
2003.

                                   - F-16 -

13% Senior Notes

     The Company has not been able to pay its $1.616 million semi-annual
interest payment since November 1, 2001 or its $12.5 million May 2002 sinking
fund payment due to lack of funds, resulting in a default under the senior
note indenture.  As a result, our senior note obligation of $24.9 million is
classified as debt in default on the consolidated balance sheet at December
31, 2002 and is currently subject to various remedies including, but not
limited to, acceleration of all amounts outstanding.  The senior notes are
subordinated to the Bank of America revolving and term loan credit facilities.


Bank of America Revolving and Term Loan Credit Facilities

     Reunion entered into senior secured credit facilities with Bank of
America and other lenders when we merged in 2000.  These credit facilities
consisted of a $39.0 million revolving credit facility, a $25.8 million term
loan A facility amortizing in 84 monthly principal payments, a $5.0 million
term loan B facility amortizing in 36 monthly principal payments, and $2.7
million of available borrowing capacity under a capital expenditures facility
which amortizes in 60 monthly principal payments when borrowed.  Since
entering into these facilities, we borrowed $1.2 million under the capital
expenditures facility and have repaid all of the term loan B, all amounts
outstanding under the capital expenditure facility and $22.4 million of the
term loan A.  Proceeds for these repayments have come primarily from asset
sales.

     Interest on the Bank of America facilities is tied to their prime rate,
as defined in the financing agreements, and are the prime rate plus 0.50% for
the revolving credit facility and the prime rate plus 0.75% for the term loan
A facility.  During 2002, we paid default rates of interest of the prime rate
plus 4% through September 2002 and then prime plus 2.75% on the revolving
credit facility and prime plus 3% on the term loan A thereafter.  The weighted
average interest rate for 2002 under the revolving credit facility and term
loan A were 8.25% and 8.33%, respectively.

     Since entering into the BOA facilities, we have incurred significant
incremental costs related to our bank financing.  These costs total $4.3
million, including $2.6 million paid to BOA relating to amendment and
overadvance fees and approximately $0.6 million in default interest.  The
additional incremental costs included legal fees, audit and consultant fees
and reappraisal costs.  Of the $4.3 million in incremental costs, $3.3 million
was incurred in 2002, $0.2 million in 2001 and $0.8 million in 2000.  These
costs have negatively affected our liquidity.

     The Bank of America credit facilities are collateralized by a first
priority lien on substantially all of the current and after-acquired assets of
Reunion including, without limitation, all accounts receivable, inventory,
property, plant and equipment, chattel paper, documents, instruments, deposit
accounts, contract rights and general intangibles.

     The facilities require Reunion to comply with financial covenants,
including fixed charge coverage and leverage tests, and other covenants.  The
fixed charge coverage covenant requires the Company to maintain a minimum
fixed charge coverage ratio to be tested as of the last day of each fiscal
quarter.  The components of the calculation are on a rolling twelve-month
basis.  The ratio is defined as EBITDA (adjusted to exclude non-financed
capital expenditures and income taxes paid) divided by fixed charges (defined
as scheduled or required principal and interest payments on debt).  The
leverage test is defined as the ratio of funded debt to EBITDA.  Funded debt
is defined as all secured and unsecured long-term debt, including current
maturities.  See "Covenant Compliance" below.

                                   - F-17 -

     In addition, the facilities contain various affirmative and negative
covenants, including limitations on stockholder and related party
distributions.  The Company was in compliance with all such non-financial
covenants.  The facilities require Reunion to pay the reasonable expenses
incurred by the lenders in connection with the  facilities.  Available
borrowings under the Bank of America revolving credit facility are based upon
a percentage of eligible receivables and inventories.

Covenant Compliance

     For the quarter ended March 31, 2001 and for each fiscal quarter
thereafter in 2001, the Bank of America (BOA) Financing and Security Agreement
required the Company to maintain a minimum fixed charge coverage ratio of
1.25:1 and maximum funded debt to EBITDA ratios of 3.75:1, 3.50:1, 3.25:1 and
3.00:1.

     In April 2001, the Company entered into a letter agreement with Bank of
America whereby, as long as the Company maintained both a fixed charge
coverage ratio of at least 1.00:1 and had a funded debt to EBITDA ratio of no
more than 4.50:1 as of the September 30, 2001 and December 31, 2001
calculation dates, and as long as the Company was in compliance on all other
covenants, the Bank of America would not accelerate any of its loans.

     Due to the rate and level of the downturns in our markets in 2001, we
took cost cutting measures and implemented capital expenditure restrictions
during the third and fourth quarters of 2001 but these were not enough to
achieve ratio compliance.  For the quarter ended September 30, 2001, the
Company's fixed charge coverage ratio was 0.79:1 and the funded debt to EBITDA
ratio was 5.61:1 resulting in a default under the BOA Financing and Security
Agreement.  Operating results during 2002 were not sufficient to achieve
covenant compliance.

Notes Payable

     Notes payable consists of a $1,017,000 11% note payable related to the
Rostone operation in Plastics recorded on corporate and other's books and a
$3,644,000 15% note payable assumed by Reunion with the NPSAC acquisition.
Payment of the principal portion of the $1,017,000 note payable, although
currently due, is unlikely during 2003.  We made $111,882 of interest payments
during 2002 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 which 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.  The Company has been unable to fund the
remaining payments under this note due to lack of liquidity and insufficient
funds available under its revolving credit facility.  The note payable is
unsecured and subordinated to the BOA term loan and revolving credit
facilities.

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,
related party notes payable are subordinated to the Bank of America revolving
and term loan facilities except that regularly scheduled payments of interest
may be made when due as long as no default exists under the BOA facilities
(see note 13).

                                   - F-18 -

Other Long-Term Debt

     Other long-term debt, including $89,000 classified as current, includes
$77,000 of capital leases and a $73,000 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:  2003 - $89,000;
2004 - $58,000 and 2005 - $3,000.


NOTE 7:   OTHER CURRENT LIABILITIES

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

                                                        At December 31,
                                                   2002                2001
                                                 --------            --------
Accrued liabilities of discontinued operations   $  2,500            $      -
Accrued health self-insurance liability             1,170                 814
Current deferred tax liabilities                      558                 414
Other                                               2,747               1,874
                                                 --------            --------
  Total other current liabilities                $  6,975            $  3,102
                                                 ========            ========

     Accrued liabilities of discontinued operations primarily represents the
remaining estimated liabilities of our discontinued bridges and cranes and
material handling systems operations and includes $0.8 million of trade
payables, $0.5 million of future lease commitments and $0.9 million of
employee-related legacy costs such as deferred and workers compensation and
accrued healthcare costs.  This accrual also includes an estimated post-
closing working capital adjustment related to the sale of the material
handling systems operations.


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-19 -

     The following represents stockholders' equity (deficit) activity for each
year in the 3-year period ended December 31, 2002 (in thousands):
                                                   2002      2001      2000
                                                 --------  --------  --------
  Par value of common stock, January 1           $    156  $    152  $      3
Options exercise                                        7         -         -
Contingent share issuance                               -         4         -
Merger and acquisition activity                         -         -       117
Preferred stock exchange                                -         -        32
                                                 --------  --------  --------
  Par value of common stock, December 31         $    163  $    156  $    152
                                                 ========  ========  ========
  Treasury stock (41,109 shares carried
    at cost), January 1                          $      -  $      -  $   (500)
Merger and acquisition activity                         -         -       500
                                                 --------  --------  --------
  Treasury stock, December 31                    $      -  $      -  $      -
                                                 ========  ========  ========
  Capital in excess of par value, January 1      $ 25,064  $ 24,608  $    873
Options exercise                                      131         6         -
Contingent share issuance                               -       450         -
Merger and acquisition activity                         -         -     8,015
Preferred stock exchange                                -         -    15,720
Warrant exercises                                       -         -         -
                                                 --------  --------  --------
  Capital in excess of par value, December 31    $ 25,195  $ 25,064  $ 24,608
                                                 ========  ========  ========
  Accumulated other comprehensive
    loss, January 1                              $ (1,136) $      -  $      -
Additional pension liability in excess of
  unrecognized prior service cost                    (874)   (1,136)        -
                                                 --------  --------  --------
  Accumulated other comprehensive
    loss, December 31                            $ (2,010) $ (1,136) $      -
                                                 ========  ========  ========
  Accumulated deficit, January 1                 $(41,329) $ (3,201) $ (8,246)
Net income (loss)                                 (12,859)  (38,128)    5,140
Preferred stock accretions                              -         -       (95)
                                                 --------  --------  --------
  Accumulated deficit, December 31               $(54,188) $(41,329) $ (3,201)
                                                 ========  ========  ========
  Total stockholders' equity
    (deficit), January 1                         $(17,245) $ 21,559  $ (7,870)
Options exercise                                      138         6         -
Contingent share issuance                               -       454         -
Merger and acquisition activity                         -         -     8,632
Preferred stock exchange                                -         -    15,752
Other comprehensive loss                             (874)   (1,136)        -
Net income (loss)                                 (12,859)  (38,128)    5,140
Preferred stock accretions                              -         -       (95)
Warrant exercises                                       -         -         -
                                                 --------  --------  --------
  Total stockholders' equity (deficit),
    December 31                                  $(30,840) $(17,245) $ 21,559
                                                 ========  ========  ========

                                    - F-20 -

     The following represents common stock activity for the 3-year period
ended December 31, 2002 (in thousands of shares):
                                                   Year Ended December 31,
                                                   2002      2001      2000
                                                 --------  --------  --------
  Outstanding common stock, January 1              15,591    15,236     3,940
Options exercise                                      687         6         -
Contingent share issuance                               -       349         -
Cancellation of Chatwins Group shares in merger         -         -    (1,450)
Reunion shares issued in merger                         -         -     9,500
Preferred stock exchange                                -         -     3,246
                                                 --------  --------  --------
  Outstanding common stock, December 31            16,278    15,591    15,236
                                                 ========  ========  ========

     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 if the former Chatwins Group
businesses and the acquired Kingway business achieved 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 September
2002.

     On June 14, 2000, the Company's Board of Directors approved the exchange
of its Series A and Series B preferred stocks for 3,245,515 shares of the
Company's common stock at an exchange price of $5.00 per share.  The Series A
and Series B preferred stocks were issued in connection with the March 16,
2000 merger with Chatwins Group and acquisition of Kingway, and had an
aggregate liquidation value of $16.2 million.  The closing market price of
Reunion's common stock was $1.00 on that date.


NOTE 9:   STOCK OPTIONS

     At December 31, 2002, 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, 2002,
775,100 shares of common stock were reserved for issuance under these plans.
During 2002, the Company offered to repriced all outstanding stock options.

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.

                                   - F-21 -

     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:

                                                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 of 1995, 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, 2002, 50,500 options are
available for issuance under the 1993 Option Plan.

                                   - F-22 -

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 Stock Option
Plan.  At December 31, 2002, 680,600 options are available for issuance under
the 1993 Option Plan.

     A summary of the status of the Company's stock options and warrants as of
December 31, 2002 and 2001 and changes during the year is presented below:

                           2002               2001                2000
                    ------------------  ------------------  ------------------
                              Weighted            Weighted            Weighted
                               Average             Average             Average
                              Exercise            Exercise            Exercise
Fixed Options       Shares       Price  Shares       Price  Shares       Price
-------------       --------- --------  --------- --------  --------- --------
Outstanding at
  beginning of year 1,089,000    $2.57    868,000    $2.91    210,000    $5.71
Granted                     -        -    323,500     1.47    660,000     2.01
Exercised            (687,900)    0.20     (6,000)    1.00          -        -
Forfeited/expired    (357,100)    0.20    (96,500)    2.01     (2,000)    3.00
                    ---------           ---------           ---------
Outstanding at
  end of year          44,000     2.94  1,089,000     2.57    868,000     2.91
                    =========           =========           =========
Options exercisable
  at end of year            -        -    572,867     3.20    395,733     3.53
                    =========           =========           =========

  Weighted-average fair value of options granted:
Exercise price equal
  to market price
  on grant date     $       -           $    1.27           $    1.62
                    =========           =========           =========
Exercise price greater
  than market price
  on grant date     $       -           $    1.04           $    1.70
                    =========           =========           =========

     The following table summarizes information about stock options and
warrants outstanding at December 31, 2002:

                    Remaining           Number              Number
Exercise            Contractual         Outstanding         Exercisable
Price               Life                at 12/31/02         at 12/31/02
---------           -----------         -----------         -----------
$1.0000              7.50 years               9,000                   -
$1.4500              8.50 years              10,000                   -
$3.0000              7.25 years              10,000                   -
$5.0625              5.00 years              15,000                   -
                                          ---------           ---------
                                             44,000                   -
                                          =========           =========

                                   - F-23 -

     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
                  ----------------------------   ----------------------------
                    2002      2001      2000       2002      2001      2000
                  --------  --------  --------   --------  --------  --------
Loss applicable to
  common stock    $(12,859) $(38,128) $  5,045   $(12,859) $(38,374) $  4,655
                  ========  ========  ========   ========  ========  ========
Basic loss per
  common share    $  (0.82) $  (2.45) $   0.38   $  (0.82) $  (2.46) $   0.35
                  ========  ========  ========   ========  ========  ========
Diluted loss per
  common share    $  (0.82) $  (2.45) $   0.38   $  (0.82) $  (2.46) $   0.35
                  ========  ========  ========   ========  ========  ========

     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.

     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.  In a September 2000 amendment, certain employees of the
Company's crane and bridge manufacturing location in Alliance, OH who had
attained age 60 and had at least 10 years of service were offered a voluntary
early retirement incentive program whereby the Company will provide healthcare
coverage at no cost to the employee for the employee and eligible dependents
until the employee reaches age 65.  In the fourth quarter of 2000, the Company
recorded a charge of $169,000 representing the estimated cost of providing
coverage to those employees accepting the offer before December 31, 2000.

                                   - F-24 -

     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.

                                   - F-25 -

     The following table sets forth the changes in the benefit obligations and
plan assets for the years ended December 31, 2002 and 2001 and the funded
status at December 31, 2002 and 2001 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:

                                      Pension           Other Postretirement
                               --------------------     --------------------
                                 2002        2001         2002        2001
                               --------    --------     --------    --------
  Change in benefit obligation:
Benefit obligation, beginning  $  2,657    $  2,365     $  1,563    $  1,085
Service cost                        141         123           61          44
Interest cost                       177         161           96          87
Plan amendment                       70          56            -          71
Actuarial loss (gain)               278          76          377         525
Benefits paid                      (131)       (124)        (383)       (249)
                               --------    --------     --------    --------
Benefit obligation, ending     $  3,192    $  2,657     $  1,714    $  1,563
                               ========    ========     ========    ========
  Change in plan assets:
Fair value, beginning          $  2,097    $  2,367     $      -    $      -
Actual return                       (63)       (368)           -           -
Company contribution                 56         222          383         249
Benefits paid                      (131)       (124)        (383)       (249)
                               --------    --------     --------    --------
Fair value, ending             $  1,959    $  2,097     $      -    $      -
                               ========    ========     ========    ========
  Funded status:
Net obligation (asset), ending $  1,233    $    560     $  1,714    $  1,563
  Unrecognized costs:
Additional minimum pension
  liability                       1,119         519            -           -
Prior service costs                (200)       (145)           6           6
Net (loss) gain                    (919)       (405)        (182)        205
Transition obligation                 -         (12)        (440)       (489)
                               --------    --------     --------    --------
Accrued benefit cost           $  1,233    $    517     $  1,098    $  1,285
                               ========    ========     ========    ========

     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
                              ----------------------  ----------------------
                               2002    2001    2000    2002    2001    2000
                              ------  ------  ------  ------  ------  ------
Benefits earned during year   $  141  $  123  $  106  $   61  $   44  $   36
Interest cost                    178     161     148      96      87      75
Early retirement incentive         -       -       -       -       -     169
  Amortization of:
Prior service cost                15      11       8       -       -       -
Unrecognized net loss (gain)      11       -       -     (10)    (44)    (48)
Unrecognized net obligation       12      12      12      50      48      48
Expected return on plan assets  (184)   (202)   (161)      -       -       -
                              ------  ------  ------  ------  ------  ------
Defined benefit pension and
  total other postretirement
  benefits costs              $  173  $  105  $  113  $  197  $  135  $  280
                              ======  ======  ======  ======  ======  ======

                                   - F-26 -

     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:

                                                   2002      2001      2000
                                                 --------  --------  --------
Discount rate                                       6.75%     7.00%     7.25%
                                                 ========  ========  ========
Expected rate of return on plan assets              7.75%     8.25%     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:

                                                   2002      2001      2000
                                                 --------  --------  --------
Discount rate                                       6.75%     7.00%     7.75%
                                                 ========  ========  ========
Healthcare cost trend rate                           3.0%      3.0%      3.0%
                                                 ========  ========  ========
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%.  A one percentage point
increase in the assumed healthcare cost trend rate would increase the benefit
obligation at December 31, 2002 by approximately $193,000, increase net
periodic cost by approximately $41,000 and increase the total of the service
and interest cost components by approximately $24,000.  Conversely, a one
percentage point decrease in the assumed healthcare cost trend rate would
result in approximate decreases in each by $164,000, $33,000 and $19,000,
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, all benefits under this plan were frozen and the
remaining employees became eligible to participate in the 401(k) defined
contribution plan.

     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.

                                   - F-27 -

     The following table sets forth the changes in the benefit obligations and
plan assets for the years ended December 31, 2002 and 2001 and the funded
status at December 31, 2002 and 2001 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:
                                      Pension           Other Postretirement
                               --------------------     --------------------
                                 2002        2001         2002        2001
                               --------    --------     --------    --------
  Change in benefit obligation:
Benefit obligation, beginning  $  3,135    $  2,731     $  1,453    $  1,499
Service cost                          -           -           42          53
Interest cost                       213         204           97         107
Plan amendment                        -           -          (68)        (68)
Actuarial loss (gain)               142         300          499         (44)
Benefits paid                      (114)       (100)        (190)        (94)
                               --------    --------     --------    --------
Benefit obligation, ending     $  3,376    $  3,135     $  1,833    $  1,453
                               ========    ========     ========    ========
  Change in plan assets:
Fair value, beginning          $  1,901    $  2,423     $      -    $      -
Actual return                      (112)       (608)           -           -
Company contribution                231         186          190          94
Benefits paid                      (114)       (100)        (190)        (94)
                               --------    --------     --------    --------
Fair value, ending             $  1,906    $  1,901     $      -    $      -
                               ========    ========     ========    ========
  Funded status:
Net obligation, ending         $  1,470    $  1,234     $  1,833    $  1,453
  Unrecognized costs:
Additional minimum liability      1,543       1,126            -           -
Net (loss) gain                  (1,543)     (1,126)        (333)         97
                               --------    --------     --------    --------
Accrued benefit cost           $  1,470    $  1,234     $  1,500    $  1,550
                               ========    ========     ========    ========

     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
                              ----------------------  ----------------------
                               2002    2001    2000    2002    2001    2000
                              ------  ------  ------  ------  ------  ------
Benefits earned during year   $    -  $    -  $    -  $   42  $   53  $   50
Interest cost                    213     204     194      98     107     101
Unrecognized net loss (gain)      33       -       -       -       -       -
Expected return on plan assets  (196)   (222)   (206)      -       -       -
                              ------  ------  ------  ------  ------  ------
Defined benefit pension and
  total other postretirement
  benefits costs (income)     $   50  $  (18) $  (12) $  140  $  160  $  151
                              ======  ======  ======  ======  ======  ======

     Assumptions used to develop the pension cost and projected benefit
obligation for the defined benefit pension plan for the following years ended
December 31, 2002, 2001 and 2000 are as follows:

                                                   2002      2001      2000
                                                 --------  --------  --------
Discount rate                                       6.75%     7.00%     7.75%
                                                 ========  ========  ========
Expected rate of return on plan assets              7.75%     9.00%     9.00%
                                                 ========  ========  ========

                                   - F-28 -

     For the calculation of the net periodic pension costs to be recorded in
2002, the expected rate of return on plan assets was reduced to 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:

                                                   2002      2001      2000
                                                 --------  --------  --------
Discount rate                                       6.75%     7.00%     7.75%
                                                 ========  ========  ========
Healthcare cost trend rate                          6.75%     7.00%     8.45%
                                                 ========  ========  ========

     A one percentage point increase in the assumed healthcare cost trend rate
would increase the benefit obligation at December 31, 2002 by approximately
$158,000, increase net periodic cost by approximately $14,000 and increase the
total of the service and interest cost components by approximately $14,000.
Conversely, a one percentage point decrease in the assumed healthcare cost
trend rate would result in approximate decreases in each by $142,000, $12,000
and $12,000, 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, 2001 and 2000, the Company's
expense to these deferred compensation plans totaled $299,000, $1,016,000 and
$1,215,000, respectively.

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

                                   - F-29 -

NOTE 11:   EARNINGS PER COMMON SHARE

     The computations of basic and diluted earnings per common share (EPS) for
the years ended December 31, 2002, 2001 and 2000 are as follows (in thousands,
except share and per share amounts):
                                                Income    Shares     EPS
                                               --------  --------  -------
     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)
                                               ========  ========  =======
     Year ended December 31, 2000:
Net income                                     $  5,140
Less:   Preferred stock dividend accretions         (95)
                                               --------
Income available to common stockholders,
  weighted average shares outstanding
  and basic EPS                                   5,045    13,236  $  0.38
                                                                   =======
Dilutive effect of stock options                               70
                                               --------  --------
Income available to common stockholders,
  shares outstanding and diluted EPS           $  5,045    13,306  $  0.38
                                               ========  ========  =======

     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.  At December 31, 2000, the Company's stock options
outstanding totaled 868,000.  Such options included a dilutive component of
69,682 shares.

                                   - F-30 -

NOTE 12:   INCOME TAXES

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

                                                   Year Ended December 31,
                                                   2002      2001      2000
                                                 --------  --------  --------
  Current:
Federal                                          $      -  $      -  $    176
State and local                                         -         -       106
                                                 --------  --------  --------
  Total                                                 -         -       282
                                                 --------  --------  --------
  Deferred:
Federal                                                 -    12,678      (898)
State and local                                         -         -         -
                                                 --------  --------  --------
  Total                                                 -    12,678      (898)
                                                 --------  --------  --------
  Total tax provision (benefit)                  $      -  $ 12,678  $   (616)
                                                 ========  ========  ========

     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):

                                                   Year Ended December 31,
                                                   2002      2001      2000
                                                 --------  --------  --------
Computed amount at statutory rate (34%)          $ (3,921) $ (5,533) $  1,983
Net change in valuation allowance                  (3,069)   11,653    (2,857)
State and local income taxes                            -    (1,072)      106
Goodwill amortization                                (140)      116        69
Foreign sales exclusions                              (56)      (71)      (13)
Expiration of loss carryforwards                    7,330     9,488        83
Tax attributes of acquired company                      -    (1,140)       60
Federal return to prior year's
  provision adjustments                              (193)     (773)        -
Non-deductible expenses                                84        81        72
Other - net                                           (35)      (71)     (119)
                                                 --------  --------  --------
  Total tax provision (benefit) from
    continuing operations                        $      -  $ 12,678  $   (616)
                                                 ========  ========  ========

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

                                                   Year Ended December 31,
                                                   2002      2001      2000
                                                 --------  --------  --------
Income (loss) from continuing operations         $      -  $ 12,678  $   (616)
Equity income (loss) from discontinued
  operations of affiliate                               -         -         -
Income (loss) from discontinued operations              -         -         -
Change in accounting principle                          -         -         -
Extraordinary items                                     -         -         -
                                                 --------  --------  --------
  Total consolidated tax provision (benefit)     $      -  $ 12,678  $   (616)
                                                 ========  ========  ========

                                   - F-31 -

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

                                                        At December 31,
                                                   2002                2001
                                                 --------            --------
Depreciation                                     $    (62)           $   (621)
Historical goodwill                                     -                 (94)
Inventory basis differences                          (664)               (664)
Other                                                (182)               (352)
                                                 --------            --------
  Deferred tax liabilities                           (908)             (1,731)
                                                 --------            --------
Loss carryforwards (NOLs)                          40,695              42,202
Book reserves                                       3,728               6,537
Deferred compensation                                 631                 431
Tax credit carryforwards                              851                 997
Historical goodwill                                   278                   -
Unicap adjustments                                    127                 286
Other                                               1,553               1,753
                                                 --------            --------
  Deferred tax assets                              47,863              52,206
Less: Valuation allowance                         (46,955)            (50,475)
                                                 --------            --------
  Deferred tax assets, net                            908               1,731
                                                 --------            --------
  Deferred taxes, net                            $      -            $      -
                                                 ========            ========

     At December 31, 2002, Reunion had net operating loss carryforwards for
Federal tax return reporting purposes of approximately $119.9 million, of
which $57.2 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, 2002.

     The current and noncurrent classifications of the deferred tax balances
are as follows (in thousands):
                                                        At December 31,
                                                   2002                2001
                                                 --------            --------
  Current:
Deferred tax assets                              $  2,837            $ 10,798
Deferred tax liabilities                             (702)               (862)
Less:   Valuation allowance                        (2,693)            (10,350)
                                                 --------            --------
  Current deferred taxes, net liability              (558)               (414)
                                                 --------            --------
  Noncurrent:
Deferred tax assets                                45,026              41,409
Deferred tax liabilities                             (206)               (870)
Less:   Valuation allowance                       (44,262)            (40,125)
                                                 --------            --------
  Noncurrent deferred taxes, net asset                558                 414
                                                 --------            --------
  Deferred taxes, net                            $      -            $      -
                                                 ========            ========

                                   - F-32 -

     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 which is 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.

     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 each of the years ended December 31, 2001 and
2000, respectively.  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, 2002, $117,205 was owed to SPI under this agreement
and is classified as due to related parties in the accompanying consolidated
balance sheet.  No amounts were owed under this agreement as of December 31,
2001.

SFSC Notes Payable

     The Company assumed three notes payable to SFSC related to acquisitions
in 2000 and 2001.  At December 31, 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 2002 and 2001, no interest
was paid to SFSC related to these notes payable.  At December 31, 2002 and
2001, accrued and unpaid interest due to SFSC related to these notes payable
of $1,219,572 and $594,861, respectively, is included in due to related
parties in the accompanying consolidated balance sheet.

                                   - F-33 -

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, 2002 and 2001 is $465,000 and $419,000, respectively, and
is included in due from related parties in the accompanying consolidated
balance sheet.

CPS Leasing, Inc.

     Reunion entered into various operating lease agreements with CPSL.
During 2002, 2001 and 2000, lease payments totaling $580,000, $803,000 and
$866,000, respectively, were paid to CPSL.  At December 31, 2002, the Company
has future minimum rental commitments under noncancellable operating leases
with CPSL totaling $2,144,000.

SFSC Collateral Fees

     To close on the BOA refinancing, SFSC provided side collateral in the
form of CPS debt and common stock to support the borrowings.  Under this
arrangement, SFSC is to receive a 5% collateral fee for as long as the
collateral is in place.  Such collateral remains in place.  During 2002, 2001
and 2000, the Company recorded interest expense of $283,000, $283,000 and
$224,000, respectively, related to this arrangement.  No payments were made
under this arrangement during 2002.  During 2001, the Company made a $100,000
payment related to this arrangement.  At December 31, 2002 and 2001, $690,000
and $407,000, respectively, is included in due to related party in the
accompanying consolidated balance sheet.

     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.  During 2002 and 2001,
no amounts under this credit support obligation were paid to SFSC by the
Company.  At December 31, 2002 and 2001, accrued and unpaid fees totalling
$227,000 and $154,000, 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, 2002 and 2001, premiums paid by the
Company in excess of the cash surrender values of the policies totaled
$1,031,000 and $1,069,000, respectively, and are included in due from related
parties in the accompanying consolidated balance sheets.

                                   - F-34 -

Mr. Bradley Note 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 2002.  During 2001, $55,000 was paid to SFSC related to this note
payable.  At December 31, 2002 and 2001, accrued and unpaid interest due
related to this notes payable of $168,000 and $56,000, 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.

Mr. Bradley Guarantee

     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, a
total of $90,000 is included in due to related parties in the accompanying
consolidated balance sheet 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.

Employee Advances

     At December 31, 2002 and 2001, the Company had non-interest bearing
advances due from five employees totaling $113,000 and $213,000, respectively.
The highest balance during 2001 was $233,000.  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 Guarantee" above.


NOTE 14:   COMMITMENTS AND CONTINGENCIES

Legal Proceedings

     The Company and its subsidiaries are defendants in a number of lawsuits
and administrative proceedings, which have arisen in the ordinary course of
business of the Company and its subsidiaries.  The Company believes that any
material liability which can result from any of such lawsuits or proceedings
has been properly reserved for in the Company's consolidated financial
statements or is covered by indemnification in favor of the Company or its
subsidiaries, and therefore the outcome of these lawsuits or proceedings will
not have a material adverse effect on the Company's consolidated financial
position, results of operations or cash flows.

     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 is no applicable insurance coverage.

                                   - F-35 -

     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.

     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., Chairman of the Board, Chief
Executive Officer and a director of the Company (Mr. Bradley), 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 agreed to take no further action to prosecute any claim in the
litigation against the Company, Mr. Bradley and others to recover any
structured settlement trust assets or any derivative claims or claims based on
allegations of alter ego, fraudulent transfer or conversion.  The plaintiffs
did not agree to waive or release their direct personal claims against the
Company for damages, but the plaintiffs agreed to cease and desist the
prosecution of those claims until no earlier than sixty days following service
of written notice to the Company stating that they have elected to
unilaterally terminate the standstill.

                                   - F-36 -

     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.

     The Company has been named in approximately 500 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
negotiated dismissal of 95 cases without any 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.  The Company intends to vigorously defend against these
lawsuits.

     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 96 separate actions, all of which are being
defended by Allen-Bradley Company.

     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 $155,000.  The Company has answered the
complaint, denies any liability and intends to vigorously defend against this
lawsuit.  Discovery is ongoing and a mediation is schedule for May 28, 2003
with a trail date of September 22, 2003.  No amount has been accrued for this
matter in the Company's financial statements.

     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.  Pleadings are not yet closed and discovery is just beginning.
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.

                                   - F-37 -

     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 seeks 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.  The parties have currently begun discovery and a status conference
is set before the court on April 21, 2003.  No trial dates have been
established.  The Company intends to vigorously defend against this lawsuit.
No amount has been accrued for this matter in the Company's financial
statements.

     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.  The Company
believes it has adequate defenses and intends to vigorously defend against
this complaint.  No amount has been accrued for this matter in the Company's
financial statements.

     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.  Pleading 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.

Environmental Compliance

     Various U.S. federal, state and local laws and regulations including,
without limitation, laws and regulations concerning the containment and
disposal of hazardous waste, oil field waste and other waste materials, the
use of storage tanks, the use of insecticides and fungicides and the use of
underground injection wells directly or indirectly affect the Company's
operations.  In addition, environmental laws and regulations typically impose
"strict liability" upon the Company for certain environmental damages.
Accordingly, in some situations, the Company could be liable for clean up
costs even if the situation resulted from previous conduct of the Company that
was lawful at the time or from improper conduct of, or conditions caused by,
previous property owners, lessees or other persons not associated with the
Company or events outside the control of the Company. Such clean up costs or
costs associated with changes in environmental laws and regulations could be
substantial and could have a materially adverse effect on the Company's
consolidated financial position, results of operations or cash flows.

                                   - F-38 -

     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.

     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.

     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 $304,000 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,
2002, after accruing an additional $40,000 in December 2002, the balance
accrued for these remediation costs is approximately $1,042,000.  The Company
believes that future remediation costs will not exceed the amount accrued.

     Litigation on this matter had been stayed pending the determination by
the LDNROC as to the extent of remediation that would be required.  Most
recently, such stay was lifted and the District Court has 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.  The Company is contesting this litigation and
believes its proposed methodology is well within accepted industry practice
for remediation efforts of a similar nature.  No accrual has been made for
costs of any potential alternative clean-up methodology that might be imposed
as a result of the outcome of the litigation.

     On March 15, 2002, the Company received a Request for Information from
the United States Environmental Protection Agency (USEPA) regarding the
Gambonini Mine Site outside Petaluma, Marin County, California.  The Company
gathered and forwarded to the USEPA the information it 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 its removal and
disposal efforts initiated in 1998 pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA).

                                   - F-39 -

     BGO, predecessor by merger to the Company, leased the site for mining
purposes and operated a mercury mine on this site 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 back to 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 resulting in the failure of the 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 1985, BGO, headquartered in Houston, Texas, filed Chapter 11
proceedings in bankruptcy court in the Southern District of Texas in Houston.
In December 1988, BGO confirmed its plan of reorganization which provided for,
among other things, a discharge of all claims that arose prior to the date of
confirmation of the plan.  The reorganization plan became effective in
February 1989.

     In response to the USEPA's demand, the Company filed an adversary
proceeding in bankruptcy court in the Southern District of Texas in Houston
seeking an order to enjoin the efforts of the USEPA to pursue collection of
any claims related to the site.  The USEPA responded by filing a motion to
dismiss based on several jurisdictional and substantive grounds.  A status
conference was held on August 27, 2002, at which time the judge for the
bankruptcy court in the Southern District of Texas in Houston ruled that the
court did not have jurisdiction and, at that time, the Company and the USEPA
entered into a standstill agreement through December 31, 2002 which has been
extended through May 31, 2003.

     In March 2003, the Company and the USEPA reached an agreement in
principle to settle the USEPA's demand for payment for $100,000, payable in
three installments over a two-year period.  This amount has been accrued as of
December 31, 2002.  This settlement agreement will resolve the USEPA's claims
for reimbursement of environmental response costs, 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
damage.  The United States has given no indication as to whether or not it
will pursue such claims.  However, the Company has agreed in principle to
extend the statute of limitations with respect to any such claims for a period
of five years from the date of the execution of the above discussed settlement
agreement.

Sale of Kingway

  On September 24, 2002, we sold Kingway, our discontinued materials handling
systems operations.  Finalization of this sale is subject to a post-closing
working capital adjustment.  This amount is in dispute between the Company and
the buyer.  The buyer alleges it is owed approximately $900,000 based on its
calculation of working capital on the closing date.  Although we have accrued
an approximate mid-point estimate of $265,000 related to this post-closing
adjustment, based on our review of their calculation we have determined that
we are owed an additional $280,000.  Pursuant to the asset purchase agreement,
both parties have agreed to submit this dispute to a mutually agreed-upon
independent accounting firm for resolution in arbitration.  The actual outcome
could differ from our estimate.

                                   - F-40 -

Operating leases

     Minimum rental commitments under all noncancellable operating leases in
effect at December 31, 2002, were as follows (in thousands):

                            Year ended December 31,
 Total      2003      2004      2005      2006      2007      After 2007
-------    ------    ------    ------    ------    ------     ----------
$14,070    $2,628    $1,849    $1,464    $  920    $  834       $6,375
=======    ======    ======    ======    ======    ======       ======

     Operating lease rental expense related to continuing operations for the
years ended December 31, 2002, 2001 and 2000, amounted to $2,354,000,
$3,181,000 and $2,482,000, 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 - $15.2 million of the Company's debt has variable rates of interest
and $34.3 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 $34.3 million of fixed-rate debt, $24.9 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 $14.0 million.  The
remaining fixed-rate debt of approximately $9.4 million is substantially
comprised of related party notes payable for which markets or comparable
instruments do not exist.  This debt bears interest at rates ranging between
11% and 18% and its fair value is not readily determinable.


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.  Future proceeds from the note receivable are
contingent upon the operating results of the combined operations of the
buyer's material handling businesses.  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 is subject to a post-closing working capital
adjustment.  This amount is in dispute between the Company and the buyer.  The
buyer alleges it is owed approximately $900,000 based on its calculation of
working capital on the closing date.  Although we have accrued an approximate
mid-point estimate of $265,000 related to this post-closing adjustment, based
on our review of their calculation we have determined that we are owed an
additional $280,000.  Pursuant to the asset purchase agreement, both parties
have agreed to submit this dispute to a mutually agreed-upon independent
accounting firm for resolution in arbitration.

                                   - F-41 -

     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.

     At December 31, 2001, the assets and liabilities of discontinued
operations are comprised of the assets and liabilities of the discontinued
bridges and cranes and material handling systems businesses and the remaining
reserve for expenses of the discontinued grating business sold in 1999.  At
December 31, 2001, the assets and liabilities of discontinued operations
follows (in thousands):

          NET ASSETS, CURRENT:
     Cash and cash equivalents                                $    506
     Receivables, net                                           14,463
     Inventories, net                                            2,093
     Other current assets                                          249
                                                              --------
     Total current assets                                       17,311
                                                              --------
     Current maturities of debt                                      -
     Trade payables                                              7,182
     Other current liabilities                                   2,014
     Reserve for operating losses during phase-out               2,628
     Reserve for estimated expenses                                325
                                                              --------
     Total liabilities                                          12,149
                                                              --------
     Net assets of discontinued operations, current           $  5,162
                                                              ========
          NET ASSETS, NON-CURRENT:
     Property, plant and equipment, net                       $  6,985
     Goodwill, net                                              11,628
     Other assets, net                                              28
                                                              --------
     Net assets of discontinued operations, non-current       $ 18,641
                                                              ========

     Summarized results of discontinued operations for the years ended
December 31, 2002 and 2001 follow (in thousands):

                                                   2002                2001
                                                 --------            --------
Net sales                                        $ 33,423            $ 64,979
Income (loss) before taxes                         (1,326)             (8,720)

                                   - F-42 -

     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
and $3.1 million for the years ended December 31, 2002 and 2001, respectively.


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;
Cylinders.  Plastics is a single segment.

     Reunion manufactures products in the United States.  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 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.  During 2002, no one customer accounted for more than 10.0%
of the net sales of Reunion.

                                   - F-43 -

     Segment data, including earnings before interest, taxes, depreciation and
amortization (EBITDA) for the years ended December 31, 2002, 2001 and 2000 (in
thousands except for related notes):
                                                      Capital     Total
                               Net Sales  EBITDA(1)   Spending  Assets(2)
                               ---------  ---------  ---------  ---------
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                    -     (3,482)         2     14,799
Discontinued operations                -          -        230          -
                                --------   --------   --------   --------
  Totals                        $ 70,799       (751)  $    502   $ 54,760
                                ========              ========   ========
Depreciation only (5)(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                    -     (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)             (5,392)
Interest expense                             (7,057)
                                           --------
  Loss from continuing operations
    before income taxes                    $(16,275)
                                           ========
2000:
-----
  Metals:
Pressure vessels and springs    $ 32,250   $  7,180   $    520   $ 23,103
Cylinders(3)                      30,463      7,130        130     14,152
                                --------   --------   --------   --------
  Subtotal Metals                 62,713     14,310        650     37,255
Plastics                          42,008      2,563      1,031     23,485
Corporate and other(4)                 -        865         71     24,126
Discontinued operations                -          -      2,320     31,573
                                --------   --------   --------   --------
  Totals                        $104,721     17,738   $  4,072   $116,439
                                ========              ========   ========
Depreciation and amortization(5)             (4,639)
Interest expense                             (6,972)
Equity in loss of affiliate                    (296)
                                           --------
  Income from continuing operations
    before income taxes                    $  5,831
                                           ========

                                   - F-44 -

(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) Headquarters assets at December 31, 2002 and 2001 includes $8.0 million
    of goodwill.  The goodwill 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 the gain of $2.4 million on sale of the land and building of
    the Company's Chicago, IL hydraulic cylinder location.

(4) Includes the gain of $4.9 million on sale of the Company's Irish
    plastics operation.

(5) Excludes amortization of deferred financing costs of $752,000,
    $999,000 and $897,000 for the years ended December 31, 2002, 2001
    and 2000, respectively, which is included in interest expense.

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

                                   - F-45 -

NOTE 18:   QUARTERLY DATA (unaudited)

     Results by quarter for 2002 and 2001 follow:

                                                 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)
                                       ========  ========  ========  ========

                                                 2001 Quarter Ended
                                       --------------------------------------
                                       March 31   June 30   Sept 30   Dec 31
                                       --------  --------  --------  --------
Operating revenue                      $ 32,472  $ 26,318  $ 21,658  $ 19,047
Operating costs and expenses             29,968    26,030    22,545    30,170
                                       --------  --------  --------  --------
  Operating income (loss)              $  2,504  $    288  $   (887) $(11,123)
                                       ========  ========  ========  ========
Income (loss) from continuing
  operations                           $    511  $ (1,037) $ (1,069) $(27,358)
Income (loss) from discontinued
  operations                                250       537    (1,651)   (8,311)
                                       --------  --------  --------  --------
  Net income (loss)                    $    761  $   (500) $ (2,720) $(35,669)
                                       ========  ========  ========  ========
  Income (loss) from continuing
    operations per common share:
Basic                                  $   0.03  $  (0.07) $  (0.07) $  (1.76)
                                       ========  ========  ========  ========
Diluted                                $   0.03  $  (0.07) $  (0.07) $  (1.76)
                                       ========  ========  ========  ========
Significant items included in results
  of continuing operations which might
  affect comparability are as follows:
Provision for restructuring            $      -  $      -  $      -  $  6,811
Provision for inventories                     -         -         -     2,485
Provision for valuation allowance on
  deferred tax assets                         -         -         -    12,678
Amortization of goodwill                    492       515       501       500
                                       ========  ========  ========  ========

                                   - F-46 -

                      Report of Independent Accountants

To the Board of Directors of
Reunion Industries, Inc.

     Our audits of the consolidated financial statements referred to in our
report dated April 18, 2001, appearing in this Annual Report on Form 10-K of
Reunion Industries, Inc. also included an audit of the financial statement
schedule listed in Item 15(a)(2) of this Form 10-K.  In our opinion, this
financial statement schedule presents fairly, in all material respects, the
information set forth therein when read in connection with the related
consolidated financial statements.

                        /s/ PRICEWATERHOUSECOOPERS LLP

Pittsburgh, Pennsylvania
April 18, 2001

                           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, 2002:
Allowance for doubtful
  accounts             $   212     $   198    $    50 (7) $   160(3)  $   300
Inventory obsolescence
  reserve                1,504         285          -         733(4)    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)(6) $   284(3)  $   212
Inventory obsolescence
  reserve                  887       1,113       (275)(6)     221(4)    1,504
Deferred tax valuation
  allowance             35,734      14,741          -           -      50,475
Reserve for
  restructuring              -       1,192          -           -       1,192

    December 31, 2000:
Allowance for doubtful
  accounts             $   196     $   251    $   396(1)  $   289(3)  $   554
Inventory obsolescence
  reserve                  395         362        375(1)      245(4)      887
Deferred tax valuation
  allowance                  -           -     38,933(2)    3,199(5)   35,734
_________________________
(1)  Acquired in the merger (Reunion with Chatwins Group) and
     acquisition (Kingway).
(2)  Represents valuation allowance acquired in the merger of $65,413
     less post-merger expirations of NOL's of $26,480.
(3)  Uncollectible accounts written off, net of recoveries.
(4)  Inventory written off.
(5)  NOL's utilized post-merger net of benefit.
(6)  Reduction to beginning balance due to businesses classified as
     discontinued operations during 2001.
(7)  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).

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).

                                   - E-1 -

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).

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).

                                   - E-2 -

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).

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).

                                   - E-3 -

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).

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).

                                   - E-4 -

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 - Ernst & Young LLP(1)

23.2    Consent of Independent Public Accountants - PricewaterhouseCoopers
        LLP(1)

99.1    Certification of Chief Executive Officer and Chief Financial
        Officer 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, 2002

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

*  The Company has no control over the operations of this subsidiary.

                                   - 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
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, 2002.

                            /s/ Ernst & Young LLP

Pittsburgh, Pennsylvania
March 31, 2003

                                   - E-7 -

                                                          EXHIBIT 23.2

                      CONSENT OF INDEPENDENT ACCOUNTANTS

     We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (Nos. 333-37702) of Reunion Industries, Inc. of our
reports, dated April 18, 2001, relating to the financial statements and
financial statement schedule which appear in this Annual Report on Form 10-K.

                        /s/ PRICEWATERHOUSECOOPERS LLP

Pittsburgh, Pennsylvania
March 31, 2003

                                   - E-8 -

                                                          EXHIBIT 99.1

                                CERTIFICATION

In connection with the Annual Report of Reunion Industries, Inc. on Form 10-K
for the period ending December 31, 2002 (the Report), as filed with the
Securities and Exchange Commission on the date hereof, the undersigned certify
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  The Report 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 the Report fairly presents, in all
     material respects, the financial condition and results of operations
     of Reunion Industries, Inc.


Date: March 31, 2003             By /s/ Charles E. Bradley, Sr.
      --------------                ------------------------------
                                        Charles E. Bradley, Sr.
                                     Chairman and Chief Executive
                                 Officer (principal executive officer)



Date: March 31, 2003             By /s/ John M. Froehlich
      --------------                ------------------------------
                                        John M. Froehlich
                                     Chief Financial Officer
                                  (principal financial officer)

                                   - E-9 -