<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
M.A. Hanna Company and Consolidated Subsidiaries
<CAPTION>
                                                              Year Ended December 31
Dollars in thousands except per share data             1997            1996           1995
<S>                                                 <C>             <C>            <C>
Net Sales                                           $2,200,345      $2,066,248     $1,901,954

Costs and Expenses
    Cost of goods sold                               1,781,736       1,685,167      1,552,643
    Selling, general and administrative                271,894         243,505        218,823
    Interest on debt                                    23,751          20,033         26,278
    Amortization of intangibles                         14,204          14,313         13,969
    Other - net                                         (1,669)            339         (8,580)
                                                     2,089,916       1,963,357      1,803,133
Income from Continuing Operations Before
  Income Taxes and Extraordinary Charge                110,429         102,891         98,821

    Income taxes                                        45,828          43,729         42,119
Income from Continuing Operations
  Before Extraordinary Charge                           64,601          59,162         56,702

    Income from discontinued operations                      -               -         45,337

    Extraordinary charge                                     -          (5,352)             -

Net Income                                          $   64,601      $   53,810     $  102,039


Net Income Per Share
      Basic
        Continuing operations                       $     1.43      $     1.29     $     1.22
        Discontinued operations                              -               -            .97
        Extraordinary charge                                 -            (.11)             -
        Net income                                  $     1.43      $     1.18     $     2.19

      Diluted
        Continuing operations                       $     1.40      $     1.26     $     1.19
        Discontinued operations                              -               -            .95
        Extraordinary charge                                 -            (.11)             -
        Net income                                  $     1.40      $     1.15     $     2.14

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


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

<CAPTION>
                                                           Year Ended December 31
Dollars in thousands                                    1997        1996        1995

<S>                                                   <C>         <C>         <C>
Cash Provided from (Used for) Operating Activities
  Net income                                          $ 64,601    $ 53,810    $102,039
  Discontinued operations                                    -           -       4,797
  Depreciation and amortization                         52,639      50,116      47,241
  Companies carried at equity:
    Income                                              (4,546)     (6,058)     (6,459)
    Dividends received                                   5,420       7,104       8,213
  Changes in operating assets and liabilities:
    Receivables                                        (37,153)      3,743     (23,212)
    Inventories                                        (30,746)      3,197     (10,934)
    Prepaid expenses                                    (3,193)     (2,450)     (2,031)
    Trade payables and accrued expenses                 43,380      (1,978)      4,066
  Gain from sales of assets                             (6,340)          -     (84,427)
  Restructuring payments                                (8,239)    (13,157)    (17,289)
  Restructuring charges                                  6,140           -           -
  Other                                                  7,487       8,248      11,911
  Extraordinary charge                                       -       8,774           -
        Net operating activities                        89,450     111,349      33,915

Cash Provided from (Used for) Investing
  Activities
  Capital expenditures                                 (52,604)    (49,532)    (55,885)
  Acquisitions of businesses, less cash acquired       (96,512)    (58,439)          -
  Acquisition payments                                 (14,965)     (1,805)     (2,969)
  Sales of assets                                       13,048      11,928     223,500
  Investments in associated and other companies        (22,071)     (2,862)     (4,775)
  Return of cash from associated and other companies       851       8,170       1,367
  Purchase of short-term securities                          -           -     (69,703)
  Sale of short-term securities                              -           -      69,703
  Other                                                  2,468           7      (7,211)
        Net investing activities                      (169,785)    (92,533)    154,027

Cash Provided from (Used for) Financing Activities
  Cash dividends paid                                  (19,176)    (18,291)    (16,962)
  Proceeds from the sale of common stock                 4,333       8,027       1,996
  Purchase of shares for treasury                      (17,972)    (28,830)    (24,969)
  Increase in debt                                     227,523     110,872      57,458
  Reduction in debt                                    (99,161)   (172,218)   (118,622)
        Net financing activities                        95,547    (100,440)   (101,099)

  Effect of exchange rate changes on cash               (3,810)        417       1,287

Cash and Cash Equivalents
  Increase(decrease)                                    11,402     (81,207)     88,130
  Beginning of year                                     30,028     111,235      23,105

  End of year                                         $ 41,430    $ 30,028    $111,235

Cash Paid During Year
  Interest                                            $ 22,836    $ 22,938    $ 26,724
  Income taxes                                          36,992      31,731      85,830



See summary of accounting policies and notes to consolidated financial statements

</TABLE>

<TABLE>
CONSOLIDATED BALANCE SHEETS
M. A. Hanna Company and Consolidated Subsidiaries



<CAPTION>
                                                                      December 31
Dollars in thousands                                             1997             1996

<S>                                                            <C>             <C>
Assets
  Current Assets
    Cash and cash equivalents                                  $   41,430      $   30,028

    Receivables
      Trade (less allowance of $8,649 in 1997
        and $7,572 in 1996)                                       322,975         284,132
      Other                                                         9,372           9,493
                                                                  332,347         293,625
    Inventories
      Finished products                                           161,731         134,655
      Raw materials and supplies                                   65,430          44,509
                                                                  227,161         179,164

    Prepaid expenses                                               10,976           7,679
    Deferred income taxes                                          31,005          23,043
        Total current assets                                      642,919         533,539

  Property, Plant and Equipment
    Land                                                           19,285          18,040
    Buildings                                                     118,413         108,322
    Machinery and equipment                                       385,571         326,306
                                                                  523,269         452,668
    Less accumulated depreciation                                 234,956         198,261
                                                                  288,313         254,407
  Other Assets
    Goodwill and other intangibles                                420,696         355,538
    Investments and other assets                                   87,608          70,678
    Deferred income taxes                                          29,469          36,617
                                                                  537,773         462,833

        Total assets                                           $1,469,005      $1,250,779

Liabilities and Stockholders' Equity
  Current Liabilities
    Notes payable to banks                                     $    2,919      $    2,304
    Trade payables and accrued expenses                           393,925         348,608
    Current portion of long-term debt                               2,149           1,027
          Total current liabilities                               398,993         351,939

  Other Liabilities                                               205,480         182,852

  Long-Term Debt
    Senior notes                                                  124,960         124,960
    Medium-term notes                                             120,000          20,000
    Other                                                          80,267          62,745
                                                                  325,227         207,705
  Stockholders' Equity
    Preferred stock, without par value:
      authorized 5,000,000 shares:
      issued and outstanding 0 shares in 1997 and 1996                  -               -
    Common stock, par value $1.00 per share:
      authorized 100,000,000 shares; issued 65,749,570 shares
      in 1997 and 65,261,907 shares in 1996                        65,750          65,262
    Capital surplus                                               358,145         329,543
    Retained earnings                                             462,653         417,228
    Associates ownership trust (5,545,273
      shares in 1997 and 5,997,347 shares in 1996)               (144,213)       (134,704)
    Cost of treasury stock (15,272,602 shares
      in 1997 and 14,272,092 shares in 1996)                     (191,066)       (165,675)
    Minimum pension liability adjustment                                -          (5,018)
    Accumulated translation adjustment                            (11,964)          1,647
           Total stockholders' equity                             539,305         508,283

           Total liabilities and stockholders' equity          $1,469,005      $1,250,779


See summary of accounting policies and notes to consolidated financial statements

</TABLE>

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

<TABLE>

Dollars in thousands except per share data
<CAPTION>
                                                                                                           Minimum
                                                                                     Associates            Pension
                                              Preferred Common   Capital   Retained  Ownership  Treasury  Liability
                                               Stock    Stock    Surplus   Earnings    Trust     Stock    Adjustment
<S>                                            <C>     <C>      <C>       <C>        <C>        <C>        <C>
Balance January 1, 1995                        $   -   $43,015  $299,725  $296,632   $(111,471) $(103,731) $(7,262)
    Net income                                                             102,039
    Cash dividends - $.367 per share                                       (16,962)
    Exercise of stock options                              228     4,678                           (1,483)
    Purchase of shares for treasury                                                               (24,969)
    Sale of common stock (30,502 shares)                    31       755
    Transfer of shares (241,520)                                                         8,039     (8,039)
    Payment of incentive compensation awards
        and associate benefits                                       595                   589      1,041
    Adjustment to market value                                    18,520               (18,520)
    Minimum pension adjustment                                                                                (260)
    Translation adjustment

Balance December 31, 1995                          -    43,274   324,273   381,709    (121,363)  (137,181)  (7,522)
    Net income                                                              53,810
    Cash dividends - $.402 per share                                       (18,291)
    Exercise of stock options                              309     4,532                             (817)
    Purchase of shares for treasury                                                               (28,830)
    Sale of common stock (193,058 shares)                   42     2,005                 4,041
    Payment of incentive compensation awards
        and associate benefits                                       866                 2,122      1,153
    Three-for-two common stock split                    21,637   (21,637)
    Adjustment to market value                                    19,504               (19,504)
    Minimum pension adjustment                                                                               2,504
    Translation adjustment

Balance December 31, 1996                          -    65,262   329,543   417,228    (134,704)  (165,675)  (5,018)
    Net income                                                              64,601
    Cash dividends - $.4275 per share                                      (19,176)
    Exercise of stock options                              449     7,047                           (3,069)
    Purchase of shares for treasury                                                               (17,972)
    Sale of common stock (49,356 shares)                    39       976                   220
    Transfer of shares (300,000 shares)                                                  6,166     (6,166)
    Payment of incentive compensation awards
        and associate benefits                                     1,779                 2,905      1,816
    Adjustment to market value                                    18,800               (18,800)
    Minimum pension adjustment                                                                               5,018
    Translation adjustment

Balance December 31, 1997                      $   -   $65,750  $358,145  $462,653   $(144,213) $(191,066)  $    -

                                               Accumulated      Total
                                               Translation   Stockholders'
                                               Adjustment       Equity
<S>                                             <C>            <C>
Balance January 1, 1995                         $(1,996)       $414,912
    Net income                                                  102,039
    Cash dividends - $.367 per share                            (16,962)
    Exercise of stock options                                     3,423
    Purchase of shares for treasury                             (24,969)
    Sale of common stock (30,502 shares)                            786
    Transfer of shares (241,520)                                      -
    Payment of incentive compensation awards
        and associate benefits                                    2,225
    Adjustment to market value                                        -
    Minimum pension adjustment                                     (260)
    Translation adjustment                        3,584           3,584

Balance December 31, 1995                         1,588         484,778
    Net income                                                   53,810
    Cash dividends - $.402 per share                            (18,291)
    Exercise of stock options                                     4,024
    Purchase of shares for treasury                             (28,830)
    Sale of common stock (193,058 shares)                         6,088
    Payment of incentive compensation awards
        and associate benefits                                    4,141
    Three-for-two common stock split                                  -
    Adjustment to market value                                        -
    Minimum pension adjustment                                    2,504
    Translation adjustment                           59              59

Balance December 31, 1996                         1,647         508,283
    Net income                                                   64,601
    Cash dividends - $.4275 per share                           (19,176)
    Exercise of stock options                                     4,427
    Purchase of shares for treasury                             (17,972)
    Sale of common stock (49,356 shares)                          1,235
    Transfer of shares (300,000 shares)                               -
    Payment of incentive compensation awards
        and associate benefits                                    6,500
    Adjustment to market value                                        -
    Minimum pension adjustment                                    5,018
    Translation adjustment                      (13,611)        (13,611)

Balance December 31, 1997                      $(11,964)       $539,305



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


SUMMARY OF ACCOUNTING POLICIES
M.A. Hanna Company and Consolidated Subsidiaries
Dollars in thousands except per share data


PRINCIPLES OF CONSOLIDATION

The  consolidated financial statements include the  accounts
of  M.A.  Hanna Company and all majority-owned subsidiaries.
Investments  in  less  than  majority-owned  companies   are
carried  at  cost  adjusted for undistributed  earnings  and
losses  since  acquisition, or  at  cost.   All  significant
intercompany accounts and transactions have been eliminated.

REVENUE RECOGNITION

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

NET INCOME PER SHARE

In  February 1997, the Financial Accounting Standards  Board
issued  Statement No. 128 "Earnings Per Share."  The Company
adopted  this standard in 1997.  All per share amounts  have
been  restated in accordance with the standard resulting  in
no changes to previously reported earnings per share.

Basic  earnings per share is computed by dividing net income
by  the  weighted 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.   Basic weighted average shares outstanding  for  the
years   ended  December  31,  1997,  1996  and   1995   were
45,167,937, 45,789,136 and 46,511,966, respectively.

For  diluted  earnings per share, the number of shares  used
for  basic  earnings per share are increased by  the  common
stock  equivalents which would arise from  the  exercise  of
stock   options.    Weighted  average   shares   outstanding
(diluted)  for the years ended December 31, 1997,  1996  and
1995,   were   46,271,857,   46,823,501,   and   47,412,297,
respectively.

CASH EQUIVALENTS

Cash  equivalents  are  highly liquid  investments  with  an
original  purchased maturity of three months or less.   Cash
equivalents  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 distribution among many different industries
and  geographic 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 $164,848 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 $8,794 and $11,690 at December 31, 1997 and  1996,
respectively.

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
      Computer software and hardware           5 years

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

GOODWILL AND OTHER INTANGIBLES

Goodwill  is  amortized  over 40 years  on  a  straight-line
basis.  Other  intangibles, net, of $10,675 and  $16,007  at
December 31, 1997 and 1996, respectively, are amortized on a
straight-line  basis  over  4  to  40  years.    Accumulated
amortization at December 31, 1997 and 1996 was $111,747  and
$99,505, 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  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 the financial  reporting  and  tax
basis  of assets and liabilities and are measured using  the
enacted tax rate and laws that are currently in effect.

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 TRANSLATION

Assets  and  liabilities  of  international  affiliates  are
translated  at  the exchange rates as of the  balance  sheet
date.   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.

DERIVATIVE FINANCIAL INSTRUMENTS

The   Company   limits  its  use  of  derivative   financial
instruments  to forward exchange contracts to hedge  foreign
currency  receivables,  payables  and  intercompany  lending
transactions.    Gains  and  losses  on   foreign   currency
transaction hedges are recognized in other income or expense
and  offset  the foreign exchange gains and  losses  on  the
underlying transactions.

PENDING ACCOUNTING CHANGES

In  June  1997,  the  Financial Accounting  Standards  Board
issued  Statement  No. 130 "Reporting Comprehensive  Income"
and  Statement  No. 131 "Disclosures about Segments  of   an
Enterprise   and  Related  Information."   The  Company   is
analyzing the impact of Statements No. 130 and No. 131 and  will
adopt these standards in 1998.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
M. A. Hanna Company and Consolidated Subsidiaries
Dollars in thousands except per share data

ACQUISITIONS

In   February   1997,  the  Company  purchased  Enviro   Care
Compounds, a producer of halogen-free flame retardant plastic
compounds based in Norway; in May 1997, the Company purchased
the  former Sadolin Masterbatch, a plastic color and additive
concentrate business based in Denmark; and in September 1997,
the  Company acquired the manufacturing business  of  Harwick
Chemical  Manufacturing Corporation, a supplier  of  chemical
dispersions, specialty colorants and other specialty products
for   the   rubber  industry,  and  specialty  color  pigment
dispersions   and   dry   colorants  for   plastics.    These
acquisitions were accounted for using the purchase method  of
accounting.  In  November 1997, the Company  formed  a  joint
venture  alliance  with  Techmer  PM  to  produce  color  and
additive  concentrates for the film and fiber  markets.   The
Company contributed cash and the assets of its fiber colorant
business  for a 51% interest in the joint venture.   Had  the
acquisitions and the formation of the joint venture been made
at  the  beginning  of 1996, reported pro  forma  results  of
operations   for  1997  and  1996  would  not  be  materially
different.

On  January 8, 1998 the Company announced that it had entered
into an agreement to acquire Melos Carl Bosch GmbH & Co.  The
acquisition  is  subject  to  governmental  approval  and  is
anticipated  to  close at the end of February  1998.   Melos,
which  is  based  in Germany, produces rubber,  thermoplastic
elastomer and plastic compounds.

In  January 1996, the Company acquired 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 as
part  of  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 1996, reported
pro  forma results of operations for 1997 and 1996 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.

Income  from discontinued operations in 1995 included  income
from  operations of $5,083 (net of tax of $3,992) and a  gain
on the sale of $40,254.

INCOME TAXES

Income  taxes  from  continuing  operations  consist  of  the
following:

                                  1997       1996     1995


Current:
   Federal                       $26,693   $24,613  $26,311
   State                           5,663     4,022    4,541
   Foreign                         8,675     8,505    6,311
                                  41,031    37,140   37,163
Deferred:
   Federal                         2,297     4,055    3,704
   State                               8       759      497
   Foreign                         2,492     1,775      755
                                   4,797     6,589    4,956
                                 $45,828   $43,729  $42,119



The  provision  for  income taxes differs  from  the  amount
computed  by applying the U.S. statutory federal income  tax
rate as follows:
<TABLE>
<CAPTION>
                                       1997             1996            1995
                                  Amount  Percent  Amount  Percent Amount  Percent
<S>                               <C>      <C>     <C>      <C>    <C>      <C>
Provision at statutory tax rate   $38,650  35.0%   $36,012  35.0%  $34,587  35.0%
State income taxes                  3,686   3.3      3,108   3.0     3,274   3.3
Goodwill amortization               2,869   2.6      2,811   2.7     2,613   2.6
Other - net                           623    .6      1,798   1.8     1,645   1.7
                                  $45,828  41.5%   $43,729  42.5%  $42,119  42.6%
</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:

                                                1997    1996


Basis differences from purchase accounting     $(7,471) $(5,481)
Property, plant and equipment                  (12,490) (13,769)
Other postretirement benefits                   32,948   32,956
Associate benefits                              18,012   17,121
Restructuring and plant closedown costs          4,926    4,611
Environmental costs                              6,869    7,079
Inventory and receivable allowances              4,082    3,830
Other                                            7,816    8,937
                                               $54,692  $55,284


Income  from  continuing  operations  before  income   taxes
includes  $35,343, $26,980, and $17,577 in  1997,  1996  and
1995, respectively, from international operations.

LONG-TERM DEBT

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

                                           1997      1996


9% Senior notes due 1998                $ 37,185  $ 37,185
9.375% Senior notes due 2003              87,775    87,775
Medium-term notes                        120,000    20,000
Bank borrowings                           77,197    55,148
Other                                      5,219     8,624
                                         327,376   208,732
Less current portion                       2,149     1,027
                                        $325,227  $207,705



Annual  maturities of long-term debt for the next five  years
are:  1998--$39,334; 1999--$521; 2000--$462;  2001--$476  and
2002--$491.

In   June  1996,  the  Company  filed  a  shelf  registration
statement  with  the  Securities and Exchange  Commission  to
issue up to $300 million of debt securities.  During 1997 and
1996,  the  Company  issued  $100 million  and  $20  million,
respectively, of medium-term notes.  These medium-term  notes
are  due  between  2004 and 2009 and bear interest  at  rates
ranging  from 6.74% to 7.16%.  Interest on the notes is  paid
semi-annually.  The weighted average interest rate  of  these
notes is 6.93%.

In  1997,  the  Company entered into a new  revolving  credit
agreement with a group of financial institutions replacing an
existing facility.  The agreement provides for borrowings  up
to  $200  million  through January 2003 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 either agreement at December  31,  1997  or
1996.   At  December 31, 1997,  the Company  had  $77,197  of
borrowings  from  uncommitted bank lines  at  interest  rates
ranging  from 5.98% to 7.10% and a weighted average  interest
rate of 6.39%.

Other  debt at December 31, 1997 and 1996 consists  primarily
of  mortgages,  industrial revenue bonds  and  notes.   These
obligations mature in various installments through  2012  and
are at interest rates ranging from 3.50% to 7.00%.

The  Company also had $2,919 and $2,304 of outstanding  notes
payable  to  banks at December 31, 1997 and 1996 at  weighted
average interest rates of 8.62% and 9.75%, respectively.

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

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 $239,020 of retained earnings  was
free of such limitations at December 31, 1997.

STOCKHOLDERS' EQUITY

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 released
from  the  AOT  on an annual basis 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  and  to meet annual principal payments  on  the
promissory note.  Shares remaining in the AOT 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 6,426,038 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 net
income, basic earnings per share and diluted earnings per
share amounts would have been restated as follows for 1997
and 1996.  The effect on 1995 net income and earnings per
share amounts was not material.


Proforma                                  1997        1996


Net income                               $62,392     $53,065
Basic earnings per share                    1.38        1.16
Diluted earnings per share                  1.35        1.13


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 1997, 1996 and 1995, respectively:   dividend
yield  of  2.00%,  2.08%  and 2.56%; expected  volatility  of
25.0%, 22.6% and 27.4%; risk-free interest rate of 5.75%  for
1997  and 6.25% for 1996 and 1995 and expected life of  eight
years for 1997 and ten years for 1996 and 1995.

The following table summarizes the changes in the outstanding
options for the three years ended December 31, 1997:

<TABLE>
<CAPTION>
                               1997                      1996                       1995
                                     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     2,951,234     $14.14       2,821,484     $12.39      2,762,360    $11.05
Granted                   470,026      23.92         456,521      21.15        422,198     17.33
Exercised                (446,958)     10.31        (309,131)      8.39       (342,416)     7.60
Canceled or expired       (68,778)     18.01         (17,640)     15.49        (20,658)    14.23
Outstanding at
  end of year           2,905,524      16.21       2,951,234      14.14      2,821,484     12.39

Options exercisable
  at end of year        2,177,233                  1,862,317                 1,713,188
Weighted-average
  fair value of
  options granted during
  the year                  $7.96                      $7.54                     $6.82

</TABLE>

<TABLE>
The following table summarizes information about options
outstanding at December 31, 1997:
<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>
$ 7.40 to  12.99        759,125       2.7 years           $10.46          759,125        $10.46
 13.00 to  17.99      1,264,976       6.2 years            15.14        1,114,793         14.99
 18.00 to  26.81        881,423       9.2 years            22.70          303,315         21.35
                      2,905,524                                         2,177,233
</TABLE>
At  December  31, 1997, 1,562,401 shares were  available  for
grants.

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 compounds, rubber compounds and additives, and custom
formulated colorants and additives 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.   Through
May  1995, the Company 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.  In February 1997,  the
Company  sold its remaining interest in the Iron Ore  Company
of  Canada sales agency resulting in pre-tax gain of  $3,250.
IOC  incurred management expense of $3,061 and $3,162 in 1996
and 1995, respectively  payable to the Company and commission
expense  of $6,035 and $5,169 in 1996 and 1995, respectively,
payable  to  companies in which M.A. Hanna had a  50%  equity
interest.

In  the  fourth quarter of 1997, the Company sold its  equity
interest  in  Hollinger Hanna, a management service  company,
resulting in a pre-tax gain of $3,090.

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

                             1997          1996        1995


Net sales
  Domestic                 $1,722,373     $1,637,252   $1,579,424
  International
    Europe                    251,720        234,263      187,790
    Asia/Pacific              154,897        137,407       83,104
    Other                      71,355         57,326       51,636
                           $2,200,345     $2,066,248   $1,901,954

Operating profit
  Domestic                $   121,606(1)  $  116,091   $  112,919
  International
    Europe                     21,203         16,154       13,982
    Asia/Pacific               11,510         10,056        5,100
    Other                       6,841          5,394        5,174
  Corporate                   (26,980)       (24,771)     (12,076)(2)
                           $  134,180     $  122,924   $  125,099


Identifiable assets
  Domestic                 $1,149,431     $  950,441   $  991,667
  International
    Europe                    201,290        201,364      175,767
    Asia/Pacific               84,527         73,199       40,407
    Other                      33,757         25,775       23,755
                           $1,469,005     $1,250,779   $1,231,596



(1)  Includes $6,340 gain from sale of assets and $6,140
     restructuring charges
(2)  Includes $9,334 gain from sale of assets

<TABLE>
<CAPTION>
                                                                      Depreciation
                                                     Operating            and            Capital       Identifiable
                                    Net Sales          Profit         Amortization     Expenditures       Assets
<S>                                 <C>               <C>                <C>             <C>            <C>
1997
  Processing                        $1,242,688        $107,841  (3)      $44,731         $45,955        $  942,204
  Distribution                         968,340          42,767  (4)        6,167           6,022           376,681
  Other                                 21,952          10,552  (5)          825             420            16,471
  Intersegment activity                (32,635)              -                 -               -                 -
  Corporate                                  -         (26,980)              916             207           133,649
                                    $2,200,345        $134,180           $52,639         $52,604        $1,469,005



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) (6)          615             760           204,019
  Discontinued operations                    -               -                 -           1,529                 -
                                    $1,901,954        $125,099           $47,241         $55,885        $1,231,596



(3)  Includes $5,140 of restructuring charges
(4)  Includes $1,000 of restructuring charges
(5)  Includes $6,340 gain from sale of assets
(6)  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:

                                   1997      1996      1995


Defined benefit plans
  Service cost                    $  411    $  430    $  306
  Interest cost on projected
    benefit obligation             5,979     5,911     6,161
  Return on plan assets           (8,941)   (6,933)   (6,215)
  Net amortization and deferral    2,673     1,735     1,869
  Net pension cost                   122     1,143     2,121
Defined contribution plans         5,464     5,213     5,006
                                  $5,586    $6,356    $7,127



Prior  to  1997, the Company had 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  had  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  was
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
<S>                                              <C>      <C>         <C>         <C>
                                                  1997     1996        1997        1996

Actuarial present value of benefit obligations
  Accumulated benefit obligations
    including vested benefits of
    $77,217 in 1997 and $75,799 in 1996          $1,223   $46,155     $78,174     $31,540

Projected benefit obligation                     $1,223   $47,494     $79,786     $31,873
Plan assets at fair value                         1,148    44,455      99,563      42,251
Projected benefits in excess of
   (less than) plan assets                           75     3,039     (19,777)    (10,378)

Consisting of
  Unrecognized net transition obligation              -       797         758         150
  Unrecognized net actuarial (gains) losses         (19)   10,244      (7,795)     (5,861)
  Adjustment to recognize minimum liability           -     9,870           -           -
  Accrued (prepaid) pension cost
     recognized in balance sheet                 $   94   $ 1,868    $(12,740)    $(4,667)

</TABLE>

The  projected  benefit obligation was determined  using  an
assumed  discount rate of 7.50% and 7.75% in 1997 and  1996,
respectively, and an assumed long-term rate of  increase  in
compensation  of  5% for both years.  The assumed  long-term
rate  of return on plan assets is 8.5%.  The 1997 change  in
the  discount rate caused the accumulated benefit obligation
to increase by approximately $1,835.

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, 1997 and 1996 is as follows:

                                                 1997          1996


Accumulated postretirement benefit obligation
  Retirees                                      $51,579       $49,128
  Fully eligible active plan participants         4,564         4,931
  Other active plan participants                  9,630         9,425
                                                 65,773        63,484
Unrecognized actuarial gain                      18,677        21,019
Accrued postretirement benefit obligation       $84,450       $84,503



Net   periodic  postretirement  benefit  cost  includes  the
following components:

                                              1997     1996    1995


Service cost                                 $  834   $1,060  $  915
Interest cost                                 4,807    4,863   5,196
Amortization of unrecognized actuarial gain    (781)    (425)   (799)
Net periodic postretirement benefit cost     $4,860   $5,498  $5,312



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 8.5% and 9.0% at December  31,
1997  and  1996, respectively, and decreasing  gradually  to
5.25% in 2005 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 $7,792 at December 31, 1997 and the  aggregate
service  and  interest  costs  components  of  net  periodic
postretirement benefit costs for 1997 by $1,236.

A  discount  rate  of  7.50% and 7.75%  in  1997  and  1996,
respectively,  was  used  in  determining  the   accumulated
benefit obligation.  The change in the actuarial assumptions
caused   the  accumulated  benefit  obligation  to  increase
approximately $1,558 in 1997.

FINANCIAL INSTRUMENTS

The  Company transacts business in various foreign currencies
and  is  subject to financial exposure from foreign  exchange
rate movement between the date a foreign currency transaction
is recorded and the date it is consummated.  To mitigate this
risk,  the  Company  enters into foreign exchange  contracts.
Gains and losses on these contracts generally offset gains or
losses  on  the assets and liabilities being hedged  and  are
recorded  as  other  income  or expense.   Additionally,  the
Company  enters into intercompany lending transactions.   The
Company also hedges this foreign exchange exposure.  Realized
and  unrealized  gains  and losses  on  these  contracts  are
recorded  as other income or expense.  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, 1997.  Foreign currency amounts are  translated
at exchange rates as of December 31, 1997.  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
       U.S. dollar                 $62,209      $     -
       German deutschmark              824       23,876
       French franc                      -       46,615
       Australian dollar             2,067        3,363
       Belgian franc                 2,367            -
       British pound sterling       13,047       10,388
       Other                         5,294        1,006
                                   $85,808      $85,248

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,  1997.   The fair value  of  long-term  foreign
exchange  contracts  is  based on quoted  market  prices  for
contracts with similar maturities.

The  carrying  amounts  and  fair  values  of  the  Company's
financial  instruments at December 31, 1997 and 1996  are  as
follows:

                                   1997              1996
                             Carrying  Fair    Carrying  Fair
                              Amount   Value    Amount   Value

Cash and cash equivalents    $41,430  $41,430  $30,028  $30,028
Notes payable to banks         2,919    2,919    2,304    2,304
Long-term debt
  9% Senior notes             37,185   37,910   37,185   38,784
  9.375% Senior notes         87,775  100,055   87,775   98,958
  Medium-term notes          120,000  122,545   20,000   19,762
  Bank borrowings             77,197   77,197   55,148   55,148
  Other                        5,219    5,219    8,624    8,624
Foreign exchange contracts       663      663    1,025    1,025



LEASE COMMITMENTS

Rental   expense   under  operating   leases   for   certain
manufacturing    facilities,   warehouses,    transportation
equipment  and  data  processing and  office  equipment  was
$21,009,  $18,646 and $17,843 for the years ending  December
31,  1997,  1996  and 1995, respectively.   Certain  of  the
Company's  leases have options to renew, and  there  are  no
significant contingent rentals.

At  December 31, 1997, future minimum lease commitments  for
noncancelable operating leases are $15,010 in 1998,  $11,838
in 1999, $8,682 in 2000, $7,365 in 2001, $6,478 in 2002  and
$14,711 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:

                                  1997       1996      1995


Interest and dividends          $  (589)  $(1,578)  $(4,809)
Gain on sale of assets           (6,340)        -    (9,334)
Expenses of closed facilities     3,166     4,160     4,854
Restructuring costs               6,140         -         -
Foreign exchange gain            (2,800)   (2,558)     (598)
Other                            (1,246)      315     1,307
                                $(1,669)  $   339   $(8,580)


DETAIL OF CURRENT AND OTHER LIABILITIES

Trade payables and accrued expenses and other liabilities  at
December 31 are principally 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.

                                            1997      1996


Trade payables and accrued expenses
    Trade payables                       $247,778  $217,142
    Salaries and wages                     12,466    14,760
    Associate benefits                     42,847    37,510
    Restructuring and acquisition costs    10,164    11,803
    Other postretirement benefits           4,763     4,970
Other liabilities
    Plant closedown costs                  11,420    12,933
    Environmental costs                    14,641    16,097
    Associate benefits                     27,544    37,178
    Other postretirement benefits          79,687    79,533
    Minority interest                      25,708     2,457


SUPPLEMENTAL CASH FLOW DATA

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


                                       1997      1996      1995

Acquisition of businesses
    Assets acquired                   $103,369  $130,712
    Liabilities assumed                  6,520    68,574
    Cash paid                           96,849    62,138
    Less cash acquired                     337     3,699
                                      $ 96,512  $ 58,439

Debt of companies acquired                      $ 19,106

Payment of incentive compensation
  awards with treasury stock          $  3,293  $  2,019   $ 1,636

Payment of stock options exercised
  with shares of common stock         $  3,069  $    817   $ 1,483

Release of common stock held by
  Associates Ownership Trust          $  8,134  $  2,122   $ 8,628

Transfer of common stock released
  from Associates Ownership Trust
    to treasury stock                 $ (6,166)        -   $(8,039)




Quarterly Financial and Stock Price Data
M.A. Hanna Company and Consolidated Subsidiaries
Dollars in thousands except per share data
<TABLE>
Summarized unaudited quarterly financial and stock price data for 1997
and 1996 are as follows:

<CAPTION>
                                         First     Second      Third     Fourth
                                        Quarter    Quarter    Quarter    Quarter
<S>                                     <C>        <C>        <C>        <C>
1997
  Net sales                             $527,629   $555,382   $561,418   $555,916
  Gross margin                           101,477    106,020    103,907    107,205
  Net income                              15,228     17,104     16,631     15,638
  Net income per common share (diluted)      .33        .37        .36        .34
  Price range
      High                                 24.63      30.00      28.75      27.25
      Low                                  19.75      20.38      24.63      23.63
  Cash dividends paid                       .105       .105       .105      .1125

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 (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





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>

<TABLE>
SELECTED FINANCIAL DATA
M. A. Hanna Company and Consolidated Subsidiaries
Dollars in thousands except per share data

<CAPTION>
                                                       1997        1996         1995         1994         1993         1992
<S>                                                 <C>         <C>          <C>          <C>          <C>          <C>
Summary of Operations
Net sales                                           $2,200,345  $2,066,248   $1,901,954   $1,719,356   $1,412,071   $1,188,541
Cost of goods sold                                   1,781,736   1,685,167    1,552,643    1,393,036    1,146,191      961,925
Selling, general and administrative                    271,894     243,505      218,823      213,318      179,228      152,366
Amortization of intangibles                             14,204      14,313       13,969       12,458       12,006       11,069
Interest on debt                                        23,751      20,033       26,278       28,549       32,258       32,509
Income(loss) from continuing operations before
    income taxes, extraordinary charge and cumulative
    effect of changes in accounting principles         110,429     102,891       98,821       66,222       37,654       27,005
Income taxes                                            45,828      43,729       42,119       29,218       16,357        8,819
Income(loss) from continuing operations before
    extraordinary charge and cumulative effect
    of changes in accounting principles                 64,601      59,162       56,702       37,004       21,297       18,186
Net income                                              64,601      53,810      102,039       43,294        2,018       19,025
Per share of common stock (basic)
    Income(loss) from continuing operations               1.43        1.29         1.22          .80          .46          .42
    Net income                                            1.43        1.18         2.19          .93          .05          .44
    Dividends paid                                         .43         .40          .37          .34          .32          .29
Cash dividends paid on
    Common stock                                        19,175      18,291       16,962       15,688       14,003       12,630
    Preferred stock                                          -           -            -            -            -            -


Balance Sheet
Current assets                                      $  642,919  $  533,539   $  574,612   $  565,615   $  405,782   $  416,739
Current liabilities                                    398,993     351,939      335,251      337,491      259,680      229,327

Working capital                                        243,926     181,600      239,361      228,124      146,102      187,412
Property, plant and equipment - net                    288,313     254,407      227,021      204,135      184,296      195,117
Other assets                                           537,773     462,833      429,963      445,410      438,628      440,873
Net long-term assets of discontinued operations              -           -            -            -       94,904       99,836
Other liabilities                                     (205,480)   (182,852)    (179,580)    (173,888)    (176,422)    (174,558)
Long-term debt                                        (325,227)   (207,705)    (231,987)    (288,869)    (322,052)    (350,737)

Total stockholders' equity                          $  539,305  $  508,283   $  484,778   $  414,912   $  365,456   $  397,943
Shares of common stock outstanding                  50,476,968  50,989,815   51,964,377   53,541,141   53,417,283   52,650,162
Average diluted shares outstanding                  46,271,857  46,823,501   47,412,297   47,203,412   46,283,262   44,332,720
Book value per share of common stock                $    10.68  $     9.97   $     9.33   $     7.75   $     6.84   $     7.56


                                                        1991         1990         1989         1988
<S>                                                  <C>          <C>          <C>          <C>
Summary of Operations
Net sales                                            $1,006,638   $  960,228   $  918,276   $  797,563
Cost of goods sold                                      797,892      749,071      718,636      614,465
Selling, general and administrative                     147,998      137,674      135,741      128,573
Amortization of intangibles                              10,146        9,704        8,886        6,456
Interest on debt                                         23,221       18,301       21,128       23,622
Income(loss) from continuing operations before
    income taxes, extraordinary charge and cumulati
    effect of changes in accounting principles          (16,195)      44,023       44,797       28,554
Income taxes                                              8,225       12,830        7,608        4,107
Income(loss) from continuing operations before
    extraordinary charge and cumulative effect
    of changes in accounting principles                 (24,420)      31,193       37,189       24,447
Net income                                                1,875       55,871       86,920       83,223
Per share of common stock (basic)
    Income(loss) from continuing operations                (.48)         .50          .61          .33
    Net income                                              .01          .90         1.49         1.55
    Dividends paid                                          .28          .25          .20          .15
Cash dividends paid on
    Common stock                                         15,267       15,175       11,812        7,169
    Preferred stock                                       1,031            -        2,125        8,501


Balance Sheet
Current assets                                       $  275,060   $  276,711   $  264,772   $  240,029
Current liabilities                                     195,610      181,471      167,272      166,185

Working capital                                          79,450       95,240       97,500       73,844
Property, plant and equipment - net                     184,877      183,536      173,477      154,477
Other assets                                            443,702      458,394      444,479      406,426
Net long-term assets of discontinued operations         121,374      129,869      137,304      141,552
Other liabilities                                      (118,082)    (161,674)    (175,310)    (169,470)
Long-term debt                                         (330,863)    (137,691)    (134,834)    (137,725)

Total stockholders' equity                           $  380,458   $  567,674   $  542,616   $  469,104
Shares of common stock outstanding                   51,367,613   59,906,358   62,524,211   48,496,907
Average diluted shares outstanding                   54,472,086   63,136,015   63,399,335   62,614,373
Book value per share of common stock                 $     7.41   $     9.47   $     8.68   $     7.61







Shareholder Information
M.A. Hanna Company common stock is listed on the New York and Chicago stock
exchanges under the symbol MAH.  At December 31, 1997, the number
of shareholders of record of the Company's common stock was 4,658.

</TABLE>




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


RESULTS OF OPERATIONS

Revenues exceeded $2.2 billion in 1997 and established a new
record  for the Company.  Total revenues increased  6.5%  in
1997  and international revenues now comprise 21.7% of total
revenues.  Earnings per share grew 11.1% over the prior year
level and net income of $64.6 million also established a new
record  for the Company.  Within our processing segment,  we
had   good  growth  in  our  domestic  rubber  and   plastic
compounding  businesses and international operations.   1997
was a difficult year for our domestic colorants business  as
the   marketplace  migrated  to  less  robust  colors  which
resulted  in  lower  average  selling  prices.   Within  our
distribution  segment,  resin  distribution  also  had  good
growth  in 1997.  Shapes distribution implemented a hub  and
spoke  distribution system and opened two call centers which
will  reduce costs and improve service levels for customers.
During 1997, significant strategic objectives were advanced.
Three  acquisitions  were  consummated  which  expanded  our
product  portfolio and increased our international presence.
We  also  formed  a  joint venture, Techmer  PM  LLC,  which
strengthened our market position in domestic colorants.   We
opened  two  facilities during 1997 - a  domestic  wire  and
cable  colorants plant in Lehigh Valley, Pennsylvania and  a
colorants  plant  in  China.  Two  additional  international
facilities  are  under construction - a plastic  compounding
plant  in  China and a colorants plant in Hungary that  will
come  on  stream  in early 1998.  In addition,  we  recently
announced the pending acquisition of Melos Carl Bosch GmbH &
Co.,   our   first  international  acquisition   in   rubber
compounding.

1997 Compared with 1996

Revenues from processing businesses increased 10% over  1996
levels to $1,242.7 million due in part to higher volumes and
acquisitions,  partially offset by  lower  pricing  and  the
impact of foreign exchange.  Distribution revenues increased
from  $926.2  million  in 1996 to $968.3  million  in  1997.
Increases  in  unit  volume and product mix  were  partially
offset by lower pricing and the stronger U.S. dollar.  Sales
from  other  operations were down $10.5  million  from  1996
levels.    1996   revenue  included  revenues   from:    the
management  of Iron Ore Company of Canada, management  of  a
bulk  unloading  facility  in Cleveland  and  our  ownership
interest  in  the  IOC  sales  agency.   No  revenues   were
generated during 1997 from the aforementioned operations due
to  the expiration of our management contracts and the  sale
of our ownership interest in the sales agency.

Gross  margins were 19% in 1997 compared with 18.4% in 1996.
The improvement in gross margin is due in part to the mix of
sales  between  our processing and distribution  businesses.
Our processing businesses, which had a higher overall growth
rate in sales than our distribution businesses, carry higher
gross  margins.   Margin  improvement  was  also  driven  by
acquisitions  and reductions in LIFO reserves.  Acquisitions
generated  .2%  points  improvement  in  margins  while  the
reductions   in  LIFO  reserves  generated   a   .1%   point
improvement.

Selling, general and administrative expenses increased  from
$243.5  million  in  1996 to $271.9 million  in  1997.   The
increase is due to higher levels of sales, acquisitions  and
higher  costs associated with the development of HannaLinkTM,
the    Company's    enterprise-wide   information    system.
Acquisitions   accounted  for  $10.2   million   while   the
incremental  cost  of HannaLinkTM was  $8.2  million.   As  a
percent   of  sales,  selling,  general  and  administrative
expenses were 12.4% in 1997 and 11.8% in 1996.

Other - net includes gains of $6.3 million from the sale  of
the Company's remaining interest in the Iron Ore Company  of
Canada  sales agency and its interest in Hollinger Hanna,  a
management  services  company.   Additionally,  the  Company
recorded   a   $5.1  million  charge  for  plant   closings,
facilities  rationalization and start up  costs  for  a  new
plant  within  the  processing segment and  a  $1.0  million
charge  for  the  reengineering of  its  resin  distribution
business.

Interest  on  debt increased $3.7 million in 1997  to  $23.8
million.   The  increase in interest expense  resulted  from
increased borrowings to fund acquisitions, the formation  of
a joint venture and increased working capital levels.

The  Company's effective tax rate was 41.5% in 1997 compared
with  42.5%  in 1996.  We continue to explore  tax  planning
strategies  that  will  enable us to sustain  or  lower  the
current tax rate in the future.

1996 Compared with 1995

Net  sales  were $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.

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  was
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
percent  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 carried  a  lower  rate  of
interest.

Other - net in 1995 included a gain of $9.3 million from the
sale  of the Company's remaining interest in IOC and  higher
levels of interest income.

LIQUIDITY AND SOURCES OF CAPITAL

Cash  flows from operating activities were $89.5 million  in
1997.   Working capital used $27.7 million reflecting  lower
inventory  turns  due in part to the roll out  of  our  area
distribution  centers  in our shapes distribution  business.
Payments  related to prior restructurings used $8.2 million.
Excluding  the restructuring payments, operating  activities
generated cash flow of $97.7 million.  Investment activities
used   $169.8   million   including   $111.5   million   for
acquisitions  and acquisition related obligations.   Capital
spending  was  $52.6  million, or  approximately  1.4  times
depreciation.    Additional   investments   in    associated
companies  of  $22.1  million  primarily  relates   to   the
formation of a joint venture with Techmer PM.  Proceeds from
the  sale of assets were $13.0 million and included the sale
of  our  interest  in  the Iron Ore  Sales  Partnership  and
Hollinger  Hanna, a management services company.   Financing
activities  generated $95.5 million.  Dividends  used  $19.2
million and the repurchase of .8 million shares for treasury
utilized  $18.0  million.  The Company  also  issued  $100.0
million  of  medium-term notes during 1997. At December  31,
1997, $180.0 million of additional debt securities could  be
issued  under a shelf registration statement filed with  the
Securities and Exchange Commission during 1996.

The  Company has a revolving credit facility which  provides
for  borrowings  up to $200 million and expires  in  January
2003.   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 1.6:1 at December 31, 1997  compared
with 1.5:1 at December 31, 1996.  Debt to total capital  was
37.6% and 29.0% at December 31, 1997 and 1996, respectively.

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  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, results of operations or cash flows
of the Company.

Year 2000

The Company is in the process of implementing new enterprise-
wide  information technology systems and applications across
our processing and distribution businesses to achieve a Year
2000 date conversion with no impact on our customer base  or
disruption to our operations.  Management believes that this
process  should be substantially completed during  1998.   A
significant portion of the implementation costs have already
been  incurred and are being amortized or charged to expense
in  current  operations.  The Company does not believe  that
future  costs  will be material to its financial  condition,
results of operations or cash flows.

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.
We  continue to follow the financial crisis in Asia.  We  do
not  believe we have a significant exposure because in  many
instances,  our business activities are transacted  in  U.S.
dollars.   Our operations are not concentrated  in  any  one
country and we sell to a diverse customer base.

On behalf of M.A. Hanna Management,

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