<TABLE>
                                                                              EXHIBIT 13

CONSOLIDATED STATEMENTS OF INCOME
M.A. Hanna Company and Consolidated Subsidiaries
<CAPTION>

                                                             Year Ended December 31
Dollars in thousands except per share data                 1996        1995       1994
<S>                                                     <C>         <C>         <C>
Net Sales                                               $2,066,248  $1,901,954  $1,719,356

Costs and Expenses
    Cost of goods sold                                   1,685,167   1,552,643   1,393,036
    Selling, general and administrative                    243,505     218,823     213,318
    Interest on debt                                        20,033      26,278      28,549
    Amortization of intangibles                             14,313      13,969      12,458
    Other - net                                                339      (8,580)      5,773
                                                         1,963,357   1,803,133   1,653,134
Income from Continuing Operations Before
  Income Taxes and Extraordinary Charge                    102,891      98,821      66,222

    Income taxes                                            43,729      42,119      29,218
Income from Continuing Operations
  Before Extraordinary Charge                               59,162      56,702      37,004

    Income from discontinued operations                          -      45,337       9,970

    Extraordinary charge                                    (5,352)          -      (3,680)

Net Income                                              $   53,810  $  102,039  $   43,294


Net Income Per Share
      Primary
        Continuing operations                           $     1.29  $     1.22  $      .80
        Discontinued operations                                  -         .97         .21
        Extraordinary charge                                  (.11)          -        (.08)
        Net income                                      $     1.18  $     2.19  $      .93

      Fully diluted
        Continuing operations                           $     1.26  $     1.19  $      .79
        Discontinued operations                                  -         .95         .21
        Extraordinary charge                                  (.11)          -        (.08)
        Net income                                      $     1.15  $     2.14  $      .92


See summary of accounting policies and notes to consolidated financial statements
</TABLE>



CONSOLIDATED STATEMENTS OF CASH FLOWS
M. A. Hanna Company and Consolidated Subsidiaries



<TABLE>

<CAPTION>
                                                              Year Ended December 31
Dollars in thousands                                      1996          1995          1994

<S>                                                     <C>           <C>           <C>
Cash Provided from (Used for) Operating Activities
  Net income                                            $ 53,810      $102,039      $ 43,294
  Discontinued operations                                      -         4,797        13,910
  Depreciation and amortization                           50,116        47,241        41,904
  Companies carried at equity:
    Income                                                (6,058)       (6,459)       (6,112)
    Dividends received                                     7,104         8,213         7,033
  Changes in operating assets and liabilities:
    Receivables                                            3,743       (23,212)      (40,103)
    Inventories                                            3,197       (10,934)      (31,145)
    Prepaid expenses                                      (2,450)       (2,031)          725
    Trade payables and accrued expenses                   (1,978)        4,066        74,895
  Gain from sales of assets                                    -       (84,427)            -
  Restructuring payments                                 (13,157)      (17,289)      (10,540)
  Other                                                    8,248        11,911        12,664
  Extraordinary charge                                     8,774             -         6,034
        Net operating activities                         111,349        33,915       112,559

Cash Provided from (Used for) Investing
  Activities
  Capital expenditures                                   (49,532)      (55,885)      (46,982)
  Acquisitions of businesses, less cash acquired         (58,439)            -       (53,331)
  Acquisition payments                                    (1,805)       (2,969)       (4,106)
  Sales of assets                                         11,928       223,500        13,874
  Investments in associated and other companies           (2,862)       (4,775)            -
  Return of cash from associated and other companies       8,170         1,367         8,805
  Purchase of short-term securities                            -       (69,703)            -
  Sale of short-term securities                                -        69,703         5,061
  Other                                                        7        (7,211)          445
        Net investing activities                         (92,533)      154,027       (76,234)

Cash Provided from (Used for) Financing
  Activities
  Cash dividends paid                                    (18,291)      (16,962)      (15,688)
  Proceeds from the sale of common stock                   8,027         1,996        14,165
  Purchase of shares for treasury                        (28,830)      (24,969)       (1,472)
  Increase in debt                                       110,872        57,458       131,649
  Reduction in debt                                     (172,218)     (118,622)     (179,879)
        Net financing activities                        (100,440)     (101,099)      (51,225)

  Effect of exchange rate changes on cash                    417         1,287           360

Cash and Cash Equivalents
  Increase(decrease)                                     (81,207)       88,130       (14,540)
  Beginning of year                                      111,235        23,105        37,645

  End of year                                           $ 30,028      $111,235      $ 23,105

Cash Paid During Year
  Interest                                              $ 22,938      $ 26,724      $ 30,114
  Income taxes                                            31,731        85,830        19,927




See summary of accounting policies and notes to consolidated financial statements

</TABLE>



CONSOLIDATED BALANCE SHEETS
M. A. Hanna Company and Consolidated Subsidiaries


<TABLE>

<CAPTION>
                                                                       December 31
Dollars in thousands                                                1996         1995

<S>                                                              <C>          <C>
Assets
  Current Assets
    Cash and cash equivalents                                    $   30,028   $  111,235

    Receivables
      Trade (less allowance of $7,572 in 1996
        and $11,034 in 1995)                                        284,132      258,274
      Other                                                           9,493        9,742
                                                                    293,625      268,016
    Inventories
      Finished products                                             134,655      126,411
      Raw materials and supplies                                     44,509       40,390
                                                                    179,164      166,801

    Prepaid expenses                                                  7,679        5,693
    Deferred income taxes                                            23,043       22,867
        Total current assets                                        533,539      574,612

  Property, Plant and Equipment
    Land                                                             18,040       14,655
    Buildings                                                       108,322       95,941
    Machinery and equipment                                         326,306      282,718
                                                                    452,668      393,314
    Less allowances for depreciation                                198,261      166,293
                                                                    254,407      227,021
  Other Assets
    Goodwill and other intangibles                                  355,538      321,778
    Investments and other assets                                     70,678       73,067
    Deferred income taxes                                            36,617       35,118
                                                                    462,833      429,963

        Total assets                                             $1,250,779   $1,231,596

Liabilities and Stockholders' Equity
  Current Liabilities
    Notes payable to banks                                       $    2,304   $    1,328
    Trade payables and accrued expenses                             348,608      333,176
    Current portion of long-term debt                                 1,027          747
          Total current liabilities                                 351,939      335,251

  Other Liabilities                                                 182,852      179,580

  Long-Term Debt
    Senior notes                                                    124,960      227,270
    Other                                                            82,745        4,717
                                                                    207,705      231,987
  Stockholders' Equity
    Preferred stock, without par value:
      authorized 5,000,000 shares:
      issued and outstanding 0 shares in 1996 and 1995
    Common stock, par value $1.00 per share:
      authorized 100,000,000 shares (50,000,000 shares in 1995);
     issued 65,261,907 shares in 1996 and 43,274,273
      shares in 1995                                                 65,262       43,274
    Capital surplus                                                 329,543      324,273
    Retained earnings                                               417,228      381,709
    Associates ownership trust (5,997,347
      shares in 1996 and 4,301,006 shares in 1995)                 (134,704)    (121,363)
    Cost of treasury stock (14,272,092 shares
      in 1996 and 8,631,355 shares in 1995)                        (165,675)    (137,181)
    Minimum pension liability adjustment                             (5,018)      (7,522)
    Accumulated translation adjustment                                1,647        1,588
           Total stockholders' equity                               508,283      484,778

           Total liabilities and stockholders' equity            $1,250,779   $1,231,596




See summary of accounting policies and notes to consolidated financial statements
</TABLE>

<TABLE>

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
M. A. Hanna Company and Consolidated Subsidiaries


<CAPTION>
Dollars in thousands except per share data
                                                                                                                        Associates
                                                 Preferred           Common            Capital           Retained       Ownership
                                                   Stock             Stock             Surplus           Earnings         Trust
<S>                                              <C>                 <C>               <C>               <C>            <C>
Balance January 1, 1994                          $     -             $28,606           $299,389          $269,026       $(115,214)
    Net income                                                                                             43,294
    Cash dividends - $.34 per share                                                                       (15,688)
    Exercise of stock options                                             61              1,335
    Purchase of shares for treasury
    Sale of common stock (25,383 shares)                                  25                706
    Payment of incentive compensation awards
        and associate benefits                                                            3,115                            13,246
    Three-for-two common stock split                                  14,323            (14,323)
    Adjustment to market value                                                            9,503                           (9,503)
    Minimum pension adjustment
    Translation adjustment

Balance December 31, 1994                              -              43,015            299,725           296,632        (111,471)
    Net income                                                                                            102,039
    Cash dividends - $.367 per share                                                                      (16,962)
    Exercise of stock options                                            228              4,678
    Purchase of shares for treasury
    Sale of common stock (30,502 shares)                                  31                755
    Payment of incentive compensation awards
        and associate benefits                                                              595                            8,628
    Adjustment to market value                                                           18,520                          (18,520)
    Minimum pension adjustment
    Translation adjustment

Balance December 31, 1995                              -              43,274            324,273           381,709       (121,363)
    Net income                                                                                             53,810
    Cash dividends - $.402 per share                                                                      (18,291)
    Exercise of stock options                                            309              4,532
    Purchase of shares for treasury
    Sale of common stock (193,058 shares)                                 42              2,005                            4,041
    Payment of incentive compensation awards
        and associate benefits                                                              866                            2,122
    Three-for-two common stock split                                  21,637            (21,637)
    Adjustment to market value                                                           19,504                          (19,504)
    Minimum pension adjustment
    Translation adjustment

Balance December 31, 1996                        $     -             $65,262           $329,543          $417,228      $(134,704)


                                                                 Minimum
                                                                 Pension     Accumulated      Total
                                                  Treasury      Liability    Translation   Stockholders'
                                                    Stock       Adjustment    Adjustment      Equity
<S>                                              <C>             <C>           <C>           <C>
Balance January 1, 1994                          $(102,794)      $(8,577)      $(4,980)      $365,456
    Net income                                                                                 43,294
    Cash dividends - $.34 per share                                                           (15,688)
    Exercise of stock options                          (38)                                     1,358
    Purchase of shares for treasury                 (1,472)                                    (1,472)
    Sale of common stock (25,383 shares)                                                          731
    Payment of incentive compensation awards
        and associate benefits                         573                                     16,934
    Three-for-two common stock split                                                                -
    Adjustment to market value                                                                      -
    Minimum pension adjustment                                     1,315                        1,315
    Translation adjustment                                                       2,984          2,984

Balance December 31, 1994                         (103,731)       (7,262)       (1,996)       414,912
    Net income                                                                                102,039
    Cash dividends - $.367 per share                                                          (16,962)
    Exercise of stock options                       (1,483)                                     3,423
    Purchase of shares for treasury                (33,008)                                   (33,008)
    Sale of common stock (30,502 shares)                                                          786
    Payment of incentive compensation awards
        and associate benefits                       1,041                                     10,264
    Adjustment to market value                                                                      -
    Minimum pension adjustment                                      (260)                        (260)
    Translation adjustment                                                       3,584          3,584

Balance December 31, 1995                         (137,181)       (7,522)        1,588        484,778
    Net income                                                                                 53,810
    Cash dividends - $.402 per share                                                          (18,291)
    Exercise of stock options                         (817)                                     3,286
    Purchase of shares for treasury                (28,830)                                   (28,830)
    Sale of common stock (193,058 shares)                                                       6,088
    Payment of incentive compensation awards
        and associate benefits                       1,153                                      4,879
    Three-for-two common stock split                                                                -
    Adjustment to market value                                                                      -
    Minimum pension adjustment                                     2,504                        2,504
    Translation adjustment                                                          59             59

Balance December 31, 1996                        $(165,675)      $(5,018)       $1,647       $508,283




See summary of accounting policies and notes to consolidated financial statements
</TABLE>



SUMMARY OF ACCOUNTING POLICIES
Dollars in thousands except per share data


PRINCIPLES OF CONSOLIDATION

Majority-owned   subsidiaries  are   consolidated   in   the
financial   statements  and  all  significant   intercompany
accounts and transactions have been eliminated.

Investments  in  less  than  majority-owned  companies   are
carried  at  cost  adjusted for undistributed  earnings  and
losses since acquisition, or at cost.

REVENUE RECOGNITION

Revenues  are  recognized when a product  is  shipped  or  a
service is performed.

NET INCOME PER SHARE

Primary  net  income per share is computed by  dividing  net
income  by  the  average number of shares  of  common  stock
outstanding during the year.  Shares of common stock held by
the   Associates  Ownership  Trust  (AOT)  enter  into   the
determination  of  the average number of shares  outstanding
when   the  shares  are  released  from  the  AOT  to   fund
obligations under certain associate compensation and benefit
plans.  The effect of assuming the exercise of stock options
(common stock equivalents) was not significant.

For fully-diluted net income per share, the number of shares
used  for primary net income per share are increased by  the
common stock equivalents which would arise from the exercise
of  stock  options.   Weighted  average  shares  outstanding
(fully diluted) for the years ended December 31, 1996,  1995
and  1994,  restated  for the June 1996 three-for-two  stock
split,   were   46,936,313,   47,542,571   and   47,197,076,
respectively.

CASH EQUIVALENTS AND SHORT-TERM SECURITIES

Cash  equivalents  are  highly liquid  investments  with  an
original  purchased maturity of three months or less.   Both
cash  equivalents and short-term securities  are  stated  at
cost, which approximates fair value.

CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the  Company
to  credit  risk are trade accounts receivable  and  foreign
exchange  contracts.   Concentration  of  credit  risk  with
respect to trade accounts receivable is limited due  to  the
large  number of customers comprising the Company's customer
base  and  their break down among many different  industries
and  geographical  locations.  The  Company  is  exposed  to
credit  risk  with respect to foreign exchange contracts  in
the  event of nonperformance by the counterparties to  these
financial    instruments,   which   are   major    financial
institutions.   Management believes the  risk  of  incurring
material losses related to this credit risk is remote.

INVENTORIES

Inventories  are  stated at the lower  of  cost  or  market.
Domestic  inventories of $124,551 are valued principally  by
the  last-in, first-out (LIFO) cost method.  Inventories  of
international subsidiaries are valued by the first-in, first-
out  (FIFO)  method.  The excess of current cost  over  LIFO
cost  was  $11,690  at  December 31,  1996  and  $13,469  at
December 31, 1995.

PROPERTY, PLANT AND EQUIPMENT

Property,   plant   and  equipment  are  stated   at   cost.
Depreciation  is  computed principally by the  straight-line
method.  Estimated asset lives are:

      Building and improvements    20 - 40 years
      Machinery and equipment       5 - 10 years

Property items retired or otherwise disposed of are  removed
from  the  property and related allowance  for  depreciation
accounts, and any gain or loss is included in operations.

GOODWILL AND INTANGIBLES

Goodwill  is being amortized over 40 years by the  straight-
line  method. Other intangibles, net, of $16,007 and $21,174
at  December  31,  1996  and 1995, respectively,  are  being
amortized  on  a  straight-line basis over 4  to  40  years.
Accumulated amortization at December 31, 1996 and  1995  was
$99,505 and $85,845, respectively.

The  carrying  value  of goodwill and other  intangibles  is
evaluated if circumstances indicate a possible impairment in
value.   If  undiscounted  cash  flows  over  the  remaining
amortization  period  indicate  that  goodwill   and   other
intangibles  may not be recoverable, the carrying  value  of
goodwill  and  other  intangibles will  be  reduced  by  the
estimated shortfall of cash flows on a discounted basis.

INCOME TAXES

Deferred tax liabilities and assets are determined based  on
the differences between financial reporting and tax basis of
assets  and  liabilities and are measured using the  enacted
tax   rate  and  laws  that  will  be  in  effect  when  the
differences are expected to reverse.

USE OF ESTIMATES

The  preparation of financial statements in conformity  with
generally accepted accounting principles requires management
to  make  estimates and assumptions that affect the reported
amounts   of  assets  and  liabilities  and  disclosure   of
contingent  assets  and  liabilities  at  the  date  of  the
reported  financial statements and the reported  amounts  of
revenues  and expenses during the reporting period.   Actual
results could differ from those estimates.

FOREIGN CURRENCY TRANSLATIONS

Assets  and  liabilities  of  international  affiliates  are
translated  at current exchange rates.  Related  translation
adjustments  are  reported as a component  of  stockholders'
equity.  Revenues and expenses are translated at the average
rates in effect during the period.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
M. A. Hanna Company and Consolidated Subsidiaries


ACQUISITIONS

In   January  1996,  the  Company  announced  the  successful
completion of its tender offer for the outstanding  stock  of
CIMCO,  Inc.,  a  producer  of  thermoplastic  compounds  and
plastic  components.  Consistent  with  its  strategy  as  an
intermediary between the polymer producer and the end product
manufacturer,  the  Company  announced  that  it  would  sell
CIMCO's plastic components business.  Accordingly, the assets
of  the  plastic  components business were  recorded  at  net
realizable  value and future operating losses  were  recorded
within  the  purchase price accounting.   The  sale  of  the
plastic  components business was consummated in  June  1996.
In  March  1996,  the  Company acquired Victor  International
Plastics Limited, a leading producer of color masterbatch  in
the  United  Kingdom.  In addition, the Company acquired  the
United States based custom rubber mixing operations of  Chase
Elastomer   in   November  1996.   These  acquisitions   were
accounted  for using the purchase method of accounting.   Had
the acquisitions been made at the beginning of 1995, reported
pro  forma results of operations for 1996 and 1995 would  not
be materially different.

DISCONTINUED OPERATIONS

In  December 1994, the Company adopted a plan to sell its Day
International  printing and textile business.   The  business
consists of the manufacturing of printing blankets and  other
consumable  supplies  for  the  printing  industry  and   the
manufacturing  of  engineered  consumable  supplies  for  the
textile  industry.  In April 1995, the Company  announced  it
had  entered  into  an  agreement to  sell  the  business  to
American   Industrial  Partners  Capital  Fund.    The   sale
consummated  on  June 6, 1995 with the Company  realizing  an
after-tax gain of $40,254.

Summary  operating results of this discontinued business  are
as follows:

                                            1995      1994

Net sales                                  $55,454  $120,083
Income from operations
  before income taxes                      $ 9,075  $ 18,891
Income taxes                                 3,992     7,806
                                             5,083    11,085
Gain(loss) net of income taxes
  on sale                                   40,254    (1,115)
                                           $45,337  $  9,970

INCOME TAXES


Income  taxes  from  continuing  operations  consist  of  the
following:

                                  1996       1995     1994
Current:
   Federal                       $24,613   $26,311  $20,740
   State                           4,022     4,541    4,664
   Foreign                         8,505     6,311    4,809
                                  37,140    37,163   30,213
Deferred:
   Federal                         4,055     3,704      110
   State                             759       497   (1,023)
   Foreign                         1,775       755      (82)
                                   6,589     4,956     (995)
                                 $43,729   $42,119  $29,218



The  provision  for income taxes from continuing  operations
differs  from   the  amount computed by  applying  the  U.S.
statutory federal income tax rate as follows:
<TABLE>
<CAPTION>
                                       1996             1995             1994
                                  Amount  Percent  Amount Percent   Amount  Percent

<S>                               <C>       <C>    <C>      <C>     <C>       <C>
Provision at statutory tax rate   $36,012   35.0%  $34,587  35.0%   $23,178   35.0%
State income taxes                  3,108    3.0     3,274   3.3      2,367    3.6
Goodwill amortization               2,811    2.7     2,613   2.6      2,784    4.2
Utilization of capital loss
   and  tax credit carryforwards        -      -         -     -     (1,820)  (2.7)
Other - net                         1,798    1.8     1,645   1.7      2,709    4.0
                                  $43,729   42.5%  $42,119  42.6%   $29,218   44.1%
</TABLE>

Deferred  income taxes reflect the net effects of  temporary
differences  between  the carrying  amounts  of  assets  and
liabilities for financial reporting purposes and the amounts
used  for income tax purposes.  The Company has not provided
deferred  taxes  on undistributed earnings of  international
subsidiaries  and  joint  ventures  as  these  earnings  are
considered   indefinitely  reinvested.   The   Company   may
consider repatriating these earnings, if at some future time
the distribution results in no incremental tax cost.

Significant components of the Company's deferred tax  assets
(liabilities) are as follows:

                                                1996     1995


Basis differences from purchase accounting    $(5,481) $(9,359)
Property, plant and equipment                 (13,769) (14,186)
Other postretirement benefits                  32,956   32,640
Associate benefits                             17,121   21,152
Restructuring and plant closedown costs         4,611    4,483
Environmental costs                             7,079    6,816
Inventory and receivable allowances             3,830    6,256
Other                                          13,313   10,183
                                              $59,660  $57,985


Income  from  continuing  operations  before  income   taxes
includes  $26,980, $17,577 and $12,624 in  1996,  1995,  and
1994, respectively, from international operations.

LONG-TERM DEBT

Long-term debt at December 31 consists of the following:

                                           1996      1995

9% Senior notes due 1998                $ 37,185  $109,245
9.375% Senior notes due 2003              87,775   118,025
6.875% Medium-term notes due 2004         20,000         -
Bank borrowings                           55,148         -
Other                                      8,624     5,464
                                         208,732   232,734
Less current portion                       1,027       747
                                        $207,705  $231,987



Annual  maturities of long-term debt for the next five  years
are: 1997--$1,027; 1998--$40,481; 1999--$694; 2000--$707  and
2001--$721.

In   June  1996,  the  Company  filed  a  shelf  registration
statement with the Securities and Exchange Commission to sell
up  to $300 million of debt securities.  On December 6, 1996,
the  Company issued $20 million of notes due in December 2004
at a rate of 6.875%.  Interest is paid semi-annually.

Subsequent to December 31, 1996, the Company entered  into  a
new  revolving  credit agreement with a  group  of  financial
institutions replacing an existing facility which would  have
expired  in  June  1998.   The  new  agreement  provides  for
borrowings  up  to  $200 million through  January  2002  with
interest rates determined at the time of the borrowing  based
on  a  choice of formulas specified in the agreement.   There
were  no  borrowings under these agreements at  December  31,
1996  and  1995.   At  December 31, 1996,   the  Company  had
$55,148 of borrowings from uncommitted bank lines at interest
rates  ranging  from  5.70% to 7.70% and a  weighted  average
interest rate of 6.49%.

Other  debt at December 31, 1996 and 1995 consists  primarily
of  mortgages,  industrial revenue bonds, and  notes.   These
obligations mature in various installments through  September
2005  and are at interest rates ranging from 3.50% to  9.50%.
The  Company also had $2,304 and $1,328 of outstanding  notes
payable  to  banks at December 31, 1996 and 1995 at  weighted
average interest rates of 9.75% and 8.37%, respectively.

In  1996,  1995  and 1994, the Company repurchased  $102,310,
$8,500  and $64,230, respectively, principal amount of Senior
Notes  in  the  open  market, resulting in  an  extraordinary
charge  of  $8,774  in 1996 and $6,034 in  1994  ($5,352  and
$3,680 after tax, respectively).

The  Senior Note agreements contain certain restrictions  and
conditions among which are limitations on cash dividends  and
other   payments.   Under  the  most  restrictive  of   these
agreements,  approximately $199,049 of retained earnings  was
free of such limitations at December 31, 1996.

STOCKHOLDERS' EQUITY

In  June 1996, the Company issued 21,636,612 shares of common
stock  to effect a three-for-two stock split.  The par  value
($1 per share) of the additional shares issued was charged to
capital  surplus.  All share and per share amounts have  been
retroactively restated for the three-for-two stock  split  in
1996.

The  Associates  Ownership  Trust (AOT)  acquired  shares  of
common  stock from the Company in 1991 for a promissory  note
in the amount of $100,049.  The shares acquired are to fund a
portion  of  the Company's obligations under certain  of  its
associate compensation and associate benefit plans for the 15-
year  term  of  the  AOT.  Such shares are adjusted  at  each
balance  sheet date to their respective market value with  an
offsetting adjustment to capital surplus.

Under  the  Company's Stock Purchase Rights Plan  each  Right
entitles  the holder of common stock to buy from the  Company
one one-hundredth of a share of Cumulative Series A Preferred
Stock, without par value for $95, subject to adjustment.  The
Rights become exercisable if certain triggering events occur,
including  the  acquisition of 15% or more of  the  Company's
common  stock.  The Company is entitled to redeem the  Rights
at $.01 per Right at any time until ten days after any person
or  group has acquired 20% of the Company's common stock  and
in  certain circumstances thereafter.  If a party owning  20%
or more of the Company's common stock merges with the Company
or  engages  in certain other transactions with the  Company,
each  Right,  other  than the Rights held  by  the  acquiring
party,  entitles  the  holder  to  purchase  that  number  of
additional common shares having a market value of  two  times
the  exercise  price  of the Right.   The  Rights  expire  on
December 16, 2001.

The Company's 1988 Long-Term Incentive Plan provides for the
granting of options, including options to nonassociate
directors, up to 4,942,913 shares.  The exercise price of
each option equals the market price of the Company's stock on
the date of grant; options have a life of ten years.  Options
vest according to a graded vesting schedule of one-third one
year from the date of grant, one-third two years from the
date of grant and one-third three years from the date of
grant.

The Company applies the intrinsic value based method of
accounting prescribed by APB Opinion No. 25 for this plan.
Accordingly, no compensation expense has been recognized for
its fixed stock option plan as options are granted at fair
market value.  Had compensation expense for the Company's
stock based compensation plan been determined based on the
fair value at the grant dates for awards under that plan
consistent with the method of FAS No. 123, the Company's 1996
net income, primary earnings per share and fully diluted
earnings per share amounts would have been reduced to
$53,065, $1.16 and $1.13, respectively. The effect on 1995
net income and earnings per share amounts was not material.

The imputed 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 used
for grants in 1996 and 1995, respectively:  dividend yield of
2.08% and 2.56%; expected volatility of 22.6% and 27.4%; risk-
free interest rate of 6.25% for all years and expected life
of ten years for all years.

The following table summarizes the changes in the outstanding
options for the three years ended December 31, 1996:
<TABLE>
<CAPTION>
                               1996                       1995                      1994
                                     Weighted                  Weighted                  Weighted
                                      Average                   Average                   Average
                          Shares   Exercise Price   Shares   Exercise Price    Shares   Exercise Price
<S>                      <C>           <C>         <C>           <C>         <C>            <C>
Outstanding at
  beginning of year      2,821,484     $12.39      2,762,360     $11.05      2,369,471      $10.04
Granted                    456,521      21.15        422,198      17.33        514,370       14.97
Exercised                 (309,131)      8.39       (342,416)      7.60       (115,980)       7.61
Canceled or expired        (17,640)     15.49        (20,658)     14.23         (5,501)      13.39
Outstanding at
  end of year            2,951,234      14.14      2,821,484      12.39      2,762,360       11.05

Options exercisable
  at end of year         1,862,317                 1,713,188                 1,648,689
Weighted-average
  fair value of
  options granted during
  the year                   $7.54                     $6.82
</TABLE>



The following table summarizes information about options
outstanding at December 31, 1996:
<TABLE>
<CAPTION>
                                   Options Outstanding                        Options Exercisable
                                     Weighted Average      Weighted                      Weighted
      Range of            Options       Remaining          Average         Options        Average
  Exercise Prices       Outstanding  Contractual Life   Exercise Price   Exercisable   Exercise Price
<S>                      <C>            <C>                <C>            <C>              <C>
$ 5.963 to $ 8.500         367,256      1.8 years          $ 7.70           367,256        $ 7.70
  9.778 to  13.667       1,233,663      4.7 years           12.07         1,106,420         11.89
 14.750 to  16.945         485,807      7.0 years           14.92           244,328         14.94
 17.333 to  23.083         864,508      9.4 years           19.38           144,313         17.35
                         2,951,234                                        1,862,317


At December 31, 1996, 589,111 shares were available for grants.
</TABLE>

BUSINESS SEGMENTS

The  Company  operates  principally in  the  formulated  polymers
industry  which  consists  of  two major  segments  -  processing
and  distribution.   Processing  includes  production  of  custom
plastic  and  rubber  compounds and custom  formulated  colorants
for     the    plastics    industry.     Distribution    includes
distributors   of   thermoplastic  and   thermoset   resins   and
fiberglass  materials  and  distributors  of  engineered  plastic
shapes. Sales are  made  through  the Company's organization,
distributors  and representatives.

Other   operations  include  the  Company's  diversified  polymer
products  business,  its  marine  and  insurance  operations  and
management  fees.  The Company was the Managing  Agent  for  Iron
Ore  Company  of Canada (IOC) through December 1996  and  through
May  1995  owned  approximately 8% of IOC's  common  stock.   The
sale  of  the Company's investment in IOC resulted in  a  pre-tax
gain  of  $9,334  in  1995.  IOC incurred management  expense  of
$3,061  in  1996 ($3,162 in 1995 and $3,064 in 1994)  payable  to
the  Company  and  commission expense of $6,035 in  1996  ($5,169
in  1995  and  $4,302  in 1994) payable to  50%  owned  companies
carried at equity.

Net   sales,   operating  profit  and  identifiable   assets   by
geographic area are as follows:


                              1996          1995           1994
Net sales
 Domestic                  $1,637,252     $1,579,424     $1,475,277
 International
  Europe                      234,263        187,790        130,461
  Other                       194,733        134,740        113,618
                           $2,066,248     $1,901,954     $1,719,356

Operating profit
 Domestic                  $  116,091     $  112,919     $  104,484
 International
  Europe                       16,154         13,982         10,565
  Other                        15,450         10,274          6,764
                           $  147,695     $  137,175     $  121,813


Identifiable assets
 Domestic                  $  950,441     $  991,667     $  868,201
 International
  Europe                      201,364        175,767        180,842
  Other                        98,974         64,162         62,902
 Discontinued operations            -              -        103,215
                           $1,250,779     $1,231,596     $1,215,160

<TABLE>
<CAPTION>

                                                       Depreciation
                                           Operating        and         Capital      Identifiable
                            Net Sales       Profit     Amortization  Expenditures       Assets

<S>                         <C>            <C>            <C>           <C>           <C>
1996
Processing                  $1,129,962     $ 96,691       $42,660       $42,778       $  758,314
Distribution                   926,230       40,497         5,909         6,140          360,564
Other                           32,473       10,507           746           157            7,926
Intersegment activity          (22,417)           -             -             -                -
Corporate                            -      (24,771)          801           457          123,975
                            $2,066,248     $122,924       $50,116       $49,532       $1,250,779


1995
Processing                  $1,023,672     $ 92,404       $39,745       $49,542       $  656,655
Distribution                   862,077       35,509         5,991         3,804          354,599
Other                           33,421        9,262           890           250           16,323
Intersegment activity          (17,216)           -             -             -                -
Corporate                            -      (12,076)(1)       615           760          204,019
Discontinued operations              -            -             -         1,529                -
                            $1,901,954     $125,099       $47,241       $55,885       $1,231,596


1994
Processing                  $  942,999     $ 88,175       $34,254       $36,193       $  615,715
Distribution                   766,711       24,086         6,368         3,363          345,929
Other                           32,129        9,552           823             -           16,751
Intersegment activity          (22,483)           -             -             -                -
Corporate                            -      (27,042)          459         3,862          133,550
Discontinued operations              -            -             -         3,564          103,215
                            $1,719,356     $ 94,771       $41,904       $46,982       $1,215,160



(1)    Includes $9,334 gain from sale of assets.

</TABLE>


PENSION AND OTHER POSTRETIREMENT BENEFITS

The   Company  has  noncontributory  defined  benefit  plans
covering certain of its associates which comply with federal
funding  requirements.  Benefits for these plans  are  based
primarily  on  years of service and qualifying  compensation
during  the final years of employment.  Plan assets  include
marketable  equity  securities  (including  stock   of   the
Company), money market funds and fixed income securities.

The  Company  also sponsors defined contribution  plans  for
certain   of  its  associates,  which  provide  for  Company
contributions of a specified percentage of each  associate's
total compensation.

A  summary  of  the components of net pension cost  for  the
defined benefit plans and the total contributions charged to
expense for the defined contribution plans follows:

                                   1996      1995      1994
Defined benefit plans
  Service cost                    $  430    $  306    $  743
  Interest cost on projected
    benefit obligation             5,911     6,161     5,838
  Return on plan assets           (6,933)   (6,215)   (5,073)
  Net amortization and deferral    1,735     1,869       930
  Net pension cost                 1,143     2,121     2,438
Defined contribution plans         5,213     5,006     3,785
                                  $6,356    $7,127    $6,223



The   Company  has  recorded  a  minimum  pension  liability
representing   the   excess  of  the   accumulated   benefit
obligation  over the fair value of plan assets  and  accrued
pension  liabilities.   The liability  has  been  offset  by
intangible  assets  to  the extent  possible.   Because  the
intangible  assets recognized may not exceed the  amount  of
unrecognized    prior   service   cost   plus   unrecognized
obligations  at transition that remain at December  31  each
year,  the balance of the liability at the end of  1996  and
1995  is  reported as a separate reduction of  stockholders'
equity, net of applicable deferred income taxes.

The  following  table sets forth the funded  status  of  the
Company's defined benefit plans:
<TABLE>
<CAPTION>
                                               Accumulated Benefits     Assets Exceed
                                                  Exceed Assets      Accumulated Benefits
                                                  1996      1995        1996     1995
<S>                                              <C>      <C>         <C>      <C>
Actuarial present value of benefit obligations:
  Accumulated benefit obligations
    including vested benefits of
    $75,799 in 1996 and $80,996 in 1995          $46,155  $48,369     $31,540  $34,442

Projected benefit obligation                     $47,494  $49,617     $31,873  $34,966
Plan assets at fair value                         44,455   37,804      42,251   41,198
Projected benefits in excess of
  (less than) plan assets                          3,039   11,813     (10,378)  (6,232)

Consisting of:
   Unrecognized net transition obligation            797      994         150      143
   Unrecognized net actuarial (gains) or losses   10,244   14,507      (5,861)  (3,411)
   Adjustment to recognize minimum liability       9,870   14,334           -       -
   Accrued(prepaid) pension cost
     recognized in balance sheet                 $ 1,868  $10,646     $(4,667) $(2,964)

</TABLE>

The  projected  benefit obligation was determined  using  an
assumed  discount  rate  of 7.75% (7.25%  in  1995)  and  an
assumed  long-term rate of increase in compensation  of  5%.
The assumed long-term rate of return on plan assets is 8.5%.
The  1996 change in the discount rate caused the accumulated
benefit obligation to decrease approximately $3,605.

In  addition  to  providing pension  benefits,  the  Company
provides  certain  contributory and  noncontributory  health
care   and  life  insurance  benefits  for  certain  retired
associates.   Certain associates of the Company  may  become
eligible  for  these postretirement benefits if  they  reach
retirement age while working for the Company.

The  status  of the Company's plans, which are unfunded,  at
December 31, 1996 and 1995 is as follows:

                                                1996       1995
Accumulated postretirement benefit obligation
  Retirees                                     $49,128   $53,924
  Fully eligible active plan participants        4,931     4,421
  Other active plan participants                 9,425    10,528
                                                63,484    68,873
  Unrecognized actuarial gain                   21,019    14,819
  Accrued postretirement benefit obligation    $84,503   $83,692



Net   periodic  postretirement  benefit  cost  includes  the
following components:

                                              1996     1995   1994


Service cost                                 $1,060   $  915  $1,069
Interest cost                                 4,863    5,196   5,605
Amortization of unrecognized actuarial gain    (425)    (799)      -
Net periodic postretirement benefit cost     $5,498   $5,312  $6,674


The  weighted-average assumed rate of increase  in  the  per
capita  cost  of  covered benefits (i.e., health  care  cost
trend rate) is assumed to be 9.0% at December 31, 1996  and
11.5% at December 31, 1995 and decreasing gradually to 5.25%
in  2005 (5.25% in 2009 in 1995) and remaining at that level
thereafter.  A one percentage point increase in the  assumed
health  care  cost  trend  rate  would  have  increased  the
accumulated  benefit obligation by $9,377  at  December  31,
1996 and the aggregate service and interest costs components
of  net  periodic postretirement benefit costs for  1996  by
$1,076.

A  discount  rate  of  7.75% (7.25% in  1995)  was  used  in
determining the accumulated benefit obligation.  The  change
in  the actuarial assumptions caused the accumulated benefit
obligation to decrease approximately $5,900.

FINANCIAL INSTRUMENTS

The  Company conducts business in various foreign currencies.
As  a  result,  it is subject to transaction  exposures  that
arise  from foreign exchange movements between the date  that
the foreign currency transaction is recorded and the date  it
is  consummated.   These foreign exchange  contracts  do  not
subject  the  Company's results to risk due to exchange  rate
movements   because  gains  and  losses  on  these  contracts
generally   offset  gains  or  losses  on  the   assets   and
liabilities  being  hedged.  The  Company  has  a  policy  of
entering  into  firm  intercompany lending  transactions  and
hedging   the  foreign  exchange  exposure  through   foreign
exchange contracts.  The Company has entered into such cross-
currency foreign exchange contracts with maturities of up  to
three  years  to protect the Company from the risk  that  the
future intercompany cash flows will be adversely affected  by
changes  in  exchange  rates.   Gains  and  losses  on  these
positions  are  deferred and included in  the  basis  of  the
transaction when it is completed.  The Company does not  hold
or issue financial instruments for trading purposes.

The  table  below  summarizes  by  currency  the  contractual
amounts  of  the  Company's  foreign  exchange  contracts  at
December  31, 1996.  Foreign currency amounts are  translated
at exchange rates as of December 31, 1996.  The "Buy" amounts
represent  the  U.S.  dollar  equivalent  of  commitments  to
purchase foreign currencies, and the "Sell" amounts represent
the  U.S.  dollar equivalent of commitments to  sell  foreign
currencies.
                                     Buy         Sell
      Currency
       German deutschmark          $     -      $44,312
       French franc                      -       10,646
       Australian dollar             3,833            -
       Belgian franc                 3,370            -
       British pound sterling            -        2,907
       Other                         2,902          993
                                   $10,105      $58,858

The  following  methods  and assumptions  were  used  by  the
Company  in  estimating fair value disclosures for  financial
instruments:

Cash,  Cash  Equivalents  and  Short-Term  Securities:    The
carrying  amounts  reported in the balance sheet  approximate
fair value.

Long  and  Short-Term  Debt:   The  carrying  amount  of  the
Company's short-term borrowings approximates fair value.  The
fair  value of the Company's Senior and Medium-term Notes  is
based  on quoted market prices.  The carrying amount  of  the
Company's  borrowings under its variable interest rate  long-
term   revolving   credit  agreements  and  other   long-term
borrowings approximates fair value.

Foreign  Exchange  Contracts:  The fair value  of  short-term
foreign  exchange  contracts is based on  exchange  rates  at
December  31,  1996.   The fair value  of  long-term  foreign
exchange contracts is based on quoted market prices.

The  carrying  amounts  and  fair  values  of  the  Company's
financial  instruments at December 31, 1996 and 1995  are  as
follows:

                                   1996               1995
                            Carrying   Fair    Carrying   Fair
                             Amount    Value    Amount    Value

Cash and cash equivalents    $30,028  $30,028  $111,235  $111,235
Notes payable to banks         2,304    2,304     1,328     1,328
Long-term debt
  9% Senior Notes             37,185   38,784   109,245   117,471
  9.375% Senior Notes         87,775   98,958   118,025   138,951
  6.875% Medium-Term Notes    20,000   19,762         -         -
  Bank borrowings             55,148   55,148         -         -
  Other                        8,624    8,624     5,464     5,464
Foreign exchange contracts         -    1,025         -    (2,372)



LEASE COMMITMENTS

Rental   expense   under  operating   leases   for   certain
manufacturing    facilities,   warehouses,    transportation
equipment  and  data  processing and  office  equipment  was
$18,646  in  1996,  $17,843 in 1995  and  $16,890  in  1994.
Certain  of the Company's leases have options to renew,  and
there are no significant contingent rentals.

At  December 31, 1996, future minimum lease commitments  for
noncancelable operating leases are $13,644 in 1997,  $10,629
in  1998, $8,227 in 1999, $5,573 in 2000, $4,559 in 2001 and
$13,525 thereafter.

CONTINGENCIES

Claims  have   been   made  against   a  subsidiary  of   the
Company  for the costs of environmental remediation  measures
taken or to be taken in connection with operations that  have
been sold or closed.  These include the clean-up of Superfund
sites  and participation with other companies in the clean-up
of hazardous waste disposal sites, several of which have been
designated as Superfund sites.  Reserves for such liabilities
have  been established and no insurance recoveries have  been
anticipated  in  the  determination  of  the  reserves.    In
management's  opinion,  the  aforementioned  claims  will  be
resolved  without  material adverse effect on  the  financial
position, results of operations or cash flows of the Company.

LITIGATION

The  Company is engaged in legal proceedings arising  in  the
ordinary  course of business.  The Company believes that  the
ultimate  outcome of these proceedings will not have material
adverse  impact on the Company's financial position,  results
of operations or cash flows.

OTHER - NET

Other - net includes the following:

                                  1996       1995     1994


Interest and dividends          $(1,578)  $(4,809)  $(3,025)
Gain on sale of assets                -    (9,334)        -
Expenses of closed facilities     4,160     4,854     5,930
Restructuring costs                   -         -       865
Other                            (2,243)      709     2,003
                                $   339   $(8,580)  $ 5,773


DETAIL OF CURRENT AND OTHER LIABILITIES

Trade payables and accrued expenses and other liabilities  at
December  31 are comprised of the following items.  Associate
benefit accruals include employee health, life and disability
insurance, profit sharing and incentive compensation, pension
expense, workers' compensation costs and vacation pay.

                                           1996     1995
Trade payables and accrued expenses:
    Trade payables                       $217,142  $188,265
    Salaries and wages                     14,760    16,288
    Associate benefits                     37,510    35,124
    Restructuring and acquisition costs    11,803    13,540
    Other postretirement benefits           4,970     4,532

Other liabilities:
    Plant closedown costs                  12,933    11,864
    Environmental costs                    16,097    14,217
    Associate benefits                     28,036    32,891
    Other postretirement benefits          79,533    79,160


SUPPLEMENTAL CASH FLOW DATA

The following is a summary of noncash investing and financing
activities.

                                     1996      1995       1994
Acquisition of businesses
    Assets acquired                $130,712             $70,456
    Liabilities assumed              68,574              13,752
    Cash paid                        62,138              56,704
    Less cash acquired                3,699               3,373
                                   $ 58,439             $53,331

Debt of companies acquired         $ 19,106             $ 4,692

Payment of incentive compensation
  awards with treasury stock       $  2,019   $ 1,636   $   990

Payment of stock options exercised
  with shares of common stock      $    817   $ 1,483   $    38

Release of common stock held by
  Associates Ownership Trust       $  2,122   $ 8,628   $13,246

Transfer of common stock released
  from Associates Ownership Trust
    to treasury stock                         $(8,039)


Quarterly Financial and Stock Price Data
M.A. Hanna Company and Consolidated Subsidiaries

<TABLE>
Summarized unaudited quarterly financial and stock price data for 1996 and 1995 are as follows:


<CAPTION>
                                              First       Second        Third       Fourth
                                             Quarter      Quarter      Quarter      Quarter
<S>                                          <C>          <C>          <C>          <C>
1996
Net sales                                    $497,451     $537,348     $531,928     $499,521
Gross margin                                   91,456       98,595       95,777       95,253
Income
    Continuing operations                      13,353       15,658       15,442       14,709
    Extraordinary charge                       (1,575)      (3,777)           -            -
          Net income                           11,778       11,881       15,442       14,709
Income per common share (fully diluted)
    Continuing operations                         .28          .33          .33          .32
    Extraordinary charge                         (.03)        (.08)           -            -
          Net income                              .25          .25          .33          .32
    Price range
          High                                  23.58        24.08        22.88        23.13
          Low                                   17.75        20.13        18.38        20.75
    Cash dividends paid                          .097          .10          .10         .105

1995
Net sales                                    $492,772     $483,295     $464,078     $461,809
Gross margin                                   90,504       90,077       85,032       83,698
Income
    Continuing operations                      12,014       19,360       13,311       12,017
    Discontinued operations                     2,931       42,406            -            -
          Net income                           14,945       61,766       13,311       12,017
Income per common share (fully diluted)
    Continuing operations                         .25          .41          .28          .26
    Discontinued operations                       .06          .89            -            -
          Net income                              .31         1.30          .28          .26
    Price range
          High                                  17.25        18.33        20.00        18.67
          Low                                   15.33        16.00        17.17        15.67
    Cash dividends paid                           .09          .09          .09         .097



Income per share calculations for each of the quarters are based on the weighted average number
of shares outstanding for each quarter, and the sum of the quarters may not necessarily be equal
to the full year income per share amount.
</TABLE>



SELECTED FINANCIAL DATA
M. A. Hanna Company and Consolidated Subsidiaries
<TABLE>
<CAPTION>


                                                          1996        1995         1994         1993           1992         1991
<S>                                                  <C>          <C>          <C>          <C>          <C>           <C>
Summary of Operations
Net sales                                            $ 2,066,248  $ 1,901,954  $ 1,719,356  $ 1,412,071  $ 1,188,541   $ 1,006,638
Cost of goods sold                                     1,685,167    1,552,643    1,393,036    1,146,191      961,925       797,892
Selling, general and administrative                      243,505      218,823      213,318      179,228      152,366       147,998
Amortization of intangibles                               14,313       13,969       12,458       12,006       11,069        10,146
Interest on debt                                          20,033       26,278       28,549       32,258       32,509        23,221
Income(loss) from continuing operations before
    income taxes, extraordinary charge and cumulative
    effect of changes in accounting principles           102,891        98,821      66,222       37,654       27,005       (16,195)
Income taxes                                              43,729        42,119      29,218       16,357        8,819         8,225
Income(loss) from continuing operations before
    extraordinary charge and cumulative effect
    of changes in accounting principles                   59,162       56,702       37,004       21,297       18,186       (24,420)
Net income                                                53,810      102,039       43,294        2,018       19,025         1,875
Per share of common stock
    Income(loss) from continuing operations                 1.29         1.22          .80          .46          .42          (.48)
    Net income                                              1.18         2.19          .93          .05          .44           .01
    Dividends paid                                           .40          .37          .34          .32          .29           .28
Cash dividends paid on
    Common stock                                          18,291       16,962       15,688       14,003       12,630        15,267
    Preferred stock                                            -            -            -            -            -         1,031


Balance Sheet
Current assets                                       $   533,539  $   574,612  $   565,615  $   405,782  $   416,739   $   275,060
Current liabilities                                      351,939      335,251      337,491      259,680      229,327       195,610

Working capital                                          181,600      239,361      228,124      146,102      187,412        79,450
Property, plant and equipment - net                      254,407      227,021      204,135      184,296      195,117       184,877
Other assets                                             462,833      429,963      445,410      438,628      440,873       443,702
Net long-term assets of discontinued operations                -            -            -       94,904       99,836       121,374
Other liabilities                                       (182,852)    (179,580)    (173,888)    (176,422)    (174,558)     (118,082)
Long-term debt                                          (207,705)    (231,987)    (288,869)    (322,052)    (350,737)     (330,863)

Total stockholders' equity                           $   508,283  $   484,778  $   414,912  $   365,456  $   397,943   $   380,458
Shares of common stock outstanding                    50,989,815   51,964,377   53,541,141   53,417,283   52,650,162    51,367,613
Average fully diluted shares outstanding              46,936,313   47,542,571   47,197,076   46,757,985   44,494,047    54,479,369
Book value per share of common stock                 $      9.97  $      9.33  $      7.75  $      6.84  $      7.56   $      7.41


                                                           1990          1989          1988
<S>                                                    <C>           <C>           <C>
Summary of Operations
Net sales                                              $   960,228   $   918,276   $   797,563
Cost of goods sold                                         749,071       718,636       614,465
Selling, general and administrative                        137,674       135,741       128,573
Amortization of intangibles                                  9,704         8,886         6,456
Interest on debt                                            18,301        21,128        23,622
Income(loss) from continuing operations before
    income taxes, extraordinary charge and cumulative
    effect of changes in accounting principles              44,023        44,797        28,554
Income taxes                                                12,830         7,608         4,107
Income(loss) from continuing operations before
    extraordinary charge and cumulative effect
    of changes in accounting principles                     31,193        37,189        24,447
Net income                                                  55,871        86,920        83,223
Per share of common stock
    Income(loss) from continuing operations                    .50           .61           .33
    Net income                                                 .90          1.49          1.55
    Dividends paid                                             .25           .20           .15
Cash dividends paid on
    Common stock                                            15,175        11,812         7,169
    Preferred stock                                              -         2,125         8,501


Balance Sheet
Current assets                                         $   276,711   $   264,772   $   240,029
Current liabilities                                        181,471       167,272       166,185

Working capital                                             95,240        97,500        73,844
Property, plant and equipment - net                        183,536       173,477       154,477
Other assets                                               458,394       444,479       406,426
Net long-term assets of discontinued operations            129,869       137,304       141,552
Other liabilities                                         (161,674)     (175,310)     (169,470)
Long-term debt                                            (137,691)     (134,834)     (137,725)

Total stockholders' equity                             $   567,674   $   542,616   $   469,104
Shares of common stock outstanding                      59,906,358    62,524,211    48,496,907
Average fully diluted shares outstanding                63,121,700    63,498,519    62,772,741
Book value per share of common stock                   $      9.47   $      8.68   $      7.61


Shareowner Information
M.A. Hanna Company common stock is listed on the New York and Chicago stock exchanges under the symbol MAH.
At December 31, 1996, the number of shareowners of record of the Company's common stock was 4,484.

</TABLE>



MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION
AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

Revenues in 1996 exceeded $2 billion and established  a  new
record  for your Company.  The revenue increase of  8.6%  in
1996  was  leveraged into a 16.0% increase in earnings  from
continuing  operations.   Significant  strategic  objectives
were  also reached in 1996.  Your Company consummated  three
acquisitions  which  expanded  its  product  portfolio   and
increased its international presence.  Your Company opened a
new  rubber  compounding facility and  currently  has  three
additional  facilities  under  construction  -  a   domestic
colorant  facility  and  two  facilities  in  China  -   one
dedicated   to  colorants  and  one  dedicated  to   plastic
compounding.

1996 Compared with 1995

Net  sales  were a record $2,066.2 million, an  increase  of
8.6% over  1995.  Sales from processing businesses increased
from $1,023.7 million in 1995 to $1.130.0 million in 1996 or
an  increase of 10.4%.  Excluding acquisitions,  sales  from
processing businesses were $1,015.0 million, down  .8%  from
1995   due   to  lower  volumes,  particularly   in   rubber
compounding  which experienced a decline in  spot  tire  and
toll  compounding.  Distribution revenues increased 7.4%  to
$926.2 million in 1996 compared with $862.1 million in  1995
based  on  higher volumes, partially offset by lower pricing.
Sales  from  other  operations  were  comparable  with  1995
levels.   Included in other operations are $4.9  million  in
revenues  from the management of Iron Ore Company of  Canada
and  our  ownership interest in a related sales agency.   No
revenues will be earned in 1997 from these activities due to
the  expiration of our management contract and the  sale  of
our ownership interest in the sales agency, which will close
in the first half of 1997.

Cost  of  goods  sold increased $132.5 million  to  $1,685.2
million  in 1996 corresponding with the increase  in  sales.
Gross  margins  in both years were 18.4%.   Impacting  gross
margins was a reduction in LIFO reserves of $1.8 million  in
1996  compared with a LIFO charge of $3.3 million  in  1995.
In  addition, acquisitions in 1996 had a negative impact  on
gross margins of .5% points.

Selling, general and administrative expenses increased $24.7
million  in  1996  to  $243.5  million.   The  increase   is
attributable to the higher level of sales, acquisitions made
in  1996, increased costs associated with the development of
HannaLinkTM, the  Company's information system,  and  higher
costs  associated with the Company's incentive  compensation
programs.  Selling, general and administrative expenses as a
percentage  of sales were 11.8% in 1996 compared with  11.5%
in 1995.

Interest  on debt decreased from $26.3 million  in  1995  to
$20.0  million  in  1996  due to  lower  average  borrowings
outstanding.   During 1996, the Company  repurchased  $102.3
million of its Senior Notes in the open market, resulting in
an extraordinary charge of $8.8 million ($5.4 million after-
tax).   Funds  to repurchase the Senior Notes were  obtained
from  existing  cash  flows  as  well  as  borrowings  under
uncommitted  bank  lines,  which  carry  a  lower  rate   of
interest.

Other  income  in 1995 includes a gain of $9.3 million  from
the  sale  of the Company's remaining interest  in  IOC  and
higher  levels of interest income due to the funds  invested
from the sale of IOC and Day International.

1995 Compared with 1994

Sales  from  processing businesses increased  $80.7  million
from 1994 levels due to acquisitions consummated in 1994 and
higher  pricing  partially offset  by  lower  unit  volumes.
Distribution sales increased $95.4 million to $862.1 million
in  1995  due  to  higher pricing and higher  unit  volumes.
Sales  from   other  operations were  comparable  with  1994
levels.

Cost  of goods sold increased from $1,393.0 million in  1994
to  $1,552.6  million  in 1995 due to  higher  raw  material
costs,  partially  offset  by  lower  unit  volumes.   Gross
margins   were  18.4%  in  1995  and  19.0%  in  1994.   The
deterioration in gross margin is due in part to the  mix  of
sales   between  processing  and  distribution   businesses.
Distribution  businesses, which carry a lower gross  margin,
had   a  higher  overall  growth  rate  in  sales  than  the
processing  businesses.  In addition, although  the  Company
was  able to pass through most raw material price increases,
it  was not able to maintain the comparable historical gross
margin relationship.

Selling,   general  and  administrative   expenses,   as   a
percentage of sales, were 11.5% in 1995 compared with  12.4%
in   1994.    Selling,  general  and  administrative   costs
increased 2.6% or  $5.5 million from 1994 levels  due  to  a
higher level of sales and acquisitions consummated in  1994,
partially  offset  by  lower  costs  associated   with   the
Company's incentive compensation programs.

Other - net in 1995 includes a gain of $9.3 million from the
sale  of the Company's remaining interest in IOC and  higher
levels of interest income due to the funds invested from the
sale  of  IOC  and Day International.  Other - net  in  1994
includes a $2.6 million charge related to the relocation  of
the Company's technical center and costs associated with the
combination of the Company's resin distribution businesses.

Interest on debt decreased $2.3 million to $26.3 million  in
1995.  During 1994, the Company repurchased $64.2 million of
its  Senior  Notes in the open market.   An additional  $8.5
million of its Senior Notes were repurchased in 1995 and the
financing  for  the  1994 acquisition of  Th.  Bergmann  was
repaid in 1995.

The Company's effective tax rate was 42.6% in 1995 and 44.1%
in 1994.  The tax rate in 1995 was favorably impacted by 1.6%
points due to the relationship of the  level of nondeductible
goodwill to pre-tax income.

In December 1994, the Company adopted a plan to sell its Day
International printing and textile business and, accordingly,
the operating results of that business were reclassified  as
discontinued  operations.  The sale of the Day business  was
consummated in June 1995 with the Company recognizing a gain
of $40.3 million.

LIQUIDITY AND SOURCES OF CAPITAL

Operating activities generated cash flows of $111.3  million
in  1996.   Working capital provided $2.5  million  in  1996
reflecting   higher  inventory  turns   and   days   payable
outstanding,   partially  offset   by   higher   day   sales
outstanding.   Payments  of  obligations  related  to  prior
restructurings used $13.2 million.  Excluding  the  payments
on   the  restructuring  obligations,  operating  activities
provided  $124.5 million, more than two times earnings  from
continuing   operations   of  $59.2   million.    Investment
activities used $92.5 million and include $49.5 million  for
capital  expenditures  and $58.4 million  for  acquisitions,
partially  offset  by $11.5 million from  the  sale  of  the
molding  operations of CIMCO which were  acquired  in  1996.
Financing  activities utilized $100.4  million  and  include
$18.3  million  for the payment of dividends, $28.8  million
for the purchase of shares for treasury which represents 1.4
million  shares, and $61.3 million in the net  reduction  of
debt,  partially  offset by $8.0 million from  the  sale  of
common  stock.  During 1996, the Company repurchased  $102.3
million  of its Senior Notes in the open market.   Funds  to
repurchase the Senior Notes were obtained from existing cash
flows  and  borrowings under uncommitted bank  lines,  which
carry a lower rate of interest.

During   1996,   the  Company  filed  a  shelf  registration
statement  with the Securities and Exchange  Commission  to
sell  up  to  $300  million  in  debt  securities.   It   is
anticipated  that the net proceeds from the  sale  would  be
used  for  general corporate purposes, which  could  include
repayment  of  indebtedness,  repurchase  of  common  stock,
working  capital, capital expenditures or acquisitions.   At
December  31,  1996 the Company had issued  $20  million  of
medium-term notes.

Subsequent  to  December 31, 1996, the Company entered  into
a new revolving  credit  facility, replacing  an  existing
credit facility  that  would have expired in June  1998.   The
new facility  provides  for borrowings up to  $200  million
and expires  in  January  2002.   The  agreement  provides for
interest  rates  to be determined at the time  of  borrowing
based on a choice of formulas specified in the agreement.

The  current  ratio was 1.5:1 at December 31, 1996  compared
with 1.7:1 at December 31, 1995.  Debt to total capital  was
29.0% at December 31, 1996 and 32.4% at December 31, 1995.

The  Company  believes that its existing cash  balances,  its
ability  to  generate  cash flows  from  operations  and  the
availability  of funds under existing credit facilities  will
be   sufficient  to fund  the  cost  of  acquisitions, to meet
anticipated   capital   expenditure programs,   payment  of
obligations from   prior  restructurings,  dividends  and  other
planned financial commitments in 1997 and throughout the terms of
the existing credit facilities.

ENVIRONMENTAL MATTERS

The  Company  is  subject to various  laws  and  regulations
concerning environmental matters.  The Company is  committed
to a long-term environmental protection program that reduces
releases of hazardous materials into the environment as well
as  to  the remediation of identified existing environmental
concerns.

Claims  have  been made against a subsidiary of the  Company
for costs of environmental remediation measures taken or  to
be  taken in connection with operations that have been  sold
or  closed.   These include the clean-up of Superfund  sites
and  participation with other companies in the  clean-up  of
hazardous  waste disposal sites, several of which have  been
designated   as   Superfund  sites.    Reserves   for   such
liabilities   have   been  established  and   no   insurance
recoveries  have  been anticipated in the  determination  of
reserves.   While  it  is  not  possible  to  predict   with
certainty,   management  believes  that  the  aforementioned
claims  will be resolved without material adverse effect  on
the  financial position, liquidity or results of  operations
of the Company.

OUTLOOK

Any  forward  looking  statements included  in  this  annual
report are based on current expectations.  Any statements in
this  annual  report that are not historical in  nature  are
forward  looking  statements.   Actual  results  may  differ
materially  depending on the business conditions and  growth
in  the  plastics and rubber industries and general economy,
foreign,  political and economic developments,  availability
and pricing of raw materials, changes in product mix, shifts
in market demand and changes in prevailing interest rates.


On behalf of M.A. Hanna Management,

/s/ Michael S. Duffey
Michael S. Duffey
Vice President and Chief Financial Officer







Report of Independent Accountants




To the Board of Directors and Stockholders of M.A. Hanna Company


In our opinion, the accompanying consolidated balance sheets and
the related consolidated statements of income, of stockholders'
equity and of cash flows present fairly, in all material
respects, the financial position of M.A. Hanna Company and its
subsidiaries at December 31, 1996 and 1995, and the results of
their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.  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 generally accepted
auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation.  We
believe that our audits provide a reasonable basis for the
opinion expressed above.  The consolidated financial statements
of M.A. Hanna Company for the year ended December 31, 1994 were
audited by other independent auditors whose report dated January
31, 1995 expressed an unqualified opinion on those statements.



/s/ Price Waterhouse LLP
Cleveland, Ohio
January 29, 1997