UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549

                                    FORM 10-Q


[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended September 30, 1996

                                       or

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from _________________ to ________________

Commission File Number:  1-7558


                           LAWTER INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)


          Delaware                                       36-1370818
(State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                        Identification No.)


                990 Skokie Boulevard; Northbrook, Illinois  60062
                    (Address of principal executive offices)


                                 (847) 498-4700
              (Registrant's telephone number, including area code)


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


                      APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

     Common stock $1.00 par value per share - 45,169,037 shares outstanding as
     of October 31, 1996.










                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.
The condensed financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission.  Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that disclosures are adequate to make
the information presented not misleading.  It is suggested that these condensed
financial statements be read in conjunction with the financial statements  and
the notes thereto included in the Company's latest annual report on Form 10-K.
In the opinion of the Company, all adjustments (consisting of normal recurring
accruals) necessary to present fairly the financial position of Lawter
International, Inc. and Subsidiaries as of September 30, 1996 and December 31,
1995 and the results of their operations for the three months ended September
30, 1996 and 1995, and the nine months ended September 30, 1996 and 1995, and
the statements of cash flows for the nine months ended September 30, 1996 and
1995, have been included.  It should be noted that these interim statements are
based on certain annual estimates such as the final level of LIFO inventories
and the provision for income taxes.  These and other similar items may be
subject to year end adjustments.  The results of operations for such interim
periods are not necessarily indicative of the results for the full year.

                   Lawter International, Inc. and Subsidiaries
                        Condensed Statements of Earnings
                              (Shown in thousands)

                                    Three Months Ended      Nine Months Ended
                                       September 30            September 30
                                   -------------------     -------------------
                                     1996       1995         1996       1995
                                   --------   --------     --------   --------
Sales                              $ 47,157   $ 50,971     $142,770   $153,469
Cost of Products Sold                32,163     37,799      101,659    111,981
                                   --------   --------     --------   --------
                                     14,994     13,172       41,111     41,488
Selling, General and
   Administrative Expenses            5,317      5,109       15,691     15,928
                                   --------   --------     --------   --------
                                      9,677      8,063       25,420     25,560
Investment Income                     1,044      1,607        3,988      4,565
                                   --------   --------     --------   --------
Earnings before Income Taxes         10,721      9,670       29,408     30,125
Provision for Income Taxes            3,077      2,515        8,239      7,830
                                   --------   --------     --------   --------
Net Earnings                        $ 7,644   $  7,155     $ 21,169   $ 22,295
                                   ========   ========     ========   ========

Earnings per Share of Common
   Stock (Note 2)                   $   .17   $    .16     $    .47   $    .50

Dividends per Share of Common
   Stock                            $   .10   $    .10     $    .30   $    .30

Weighted Average Shares
   Outstanding                       45,109     45,051       45,087     45,003

The accompanying notes to the condensed financial statements are an integral
part of these statements.

                                       -2-




                   Lawter International, Inc. and Subsidiaries
                            Condensed Balance Sheets
                              (Shown in thousands)

                                                 September 30        December 31
                                                 ------------        -----------
Assets                                               1996                1995
--------                                           --------            --------
Current Assets
      Cash                                         $ 12,814            $  9,865
      Time Deposits                                  56,492              53,815
      Marketable Securities                           9,044               6,481
      Accounts Receivable (net)                      38,991              42,557
      Inventories (Note 1)
             Raw Materials                           21,412              22,815
             Finished Goods                          20,089              22,362
      Prepaid Expenses                                4,734               2,222
                                                   --------            --------
                Total Current Assets                163,576             160,117
                                                   --------            --------
Property, Plant and Equipment                       147,898             126,406
      Less Accumulated Depreciation                 (58,491)            (55,505)
                                                   --------            --------
                Net Property                         89,407              70,901
                                                   --------            --------
Investment in Affiliates                             23,909              22,312
                                                   --------            --------
Intangibles and Other Assets                          8,047               8,144
                                                   --------            --------
                Total Assets                       $284,939            $261,474
                                                   ========            ========
Liabilities and Stockholders' Equity
------------------------------------
Current Liabilities
      Accounts Payable and Accrued Expenses        $ 34,965            $ 44,025
      Short-Term Borrowings                          40,454              39,983
      Income Taxes Payable                            7,005               8,215
                                                   --------            --------
                Total Current Liabilities            82,424              92,223
                                                   --------            --------
Deferred Income Taxes                                35,637              35,790
                                                   --------            --------
Long-Term Obligations                                29,050               4,100
                                                   --------            --------
                Total Liabilities                   147,111             132,113
                                                   --------            --------
Stockholders' Equity
      Preferred Stock (None Issued)                     ---                 ---
      Common Stock                                   45,303              45,066
      Additional Paid-in Capital                     10,251               8,036
      Retained Earnings                              86,845              79,218
      Cumulative Translation Adjustments             (4,281)             (2,914)
      Unrealized (Loss) on Investments                 (286)                ---
      Other                                              (4)                (45)
                                                   --------            --------
                Net Stockholders' Equity            137,828             129,361
                                                   --------            --------
                Total Liabilities and Equity       $284,939            $261,474
                                                   ========            ========
The accompanying notes to the condensed financial statements are an integral
part of these balance sheets.
                                       -3-





                   Lawter International, Inc. and Subsidiaries
                       Condensed Statements of Cash Flows
                              (Shown in thousands)

                                                           Nine Months Ended
                                                             September 30
                                                        -----------------------
                                                          1996           1995
                                                        --------       --------
Cash Flow from Operating Activities:
    Net Earnings                                        $ 21,169       $ 22,295
Adjustments to Reconcile Net Earnings to Net
  Cash Provided by (Used for) Operating Activities-
    Depreciation and Amortization                          3,779          4,071
    Deferred Income Taxes                                   (152)            35
    Undistributed Equity Income                           (1,643)        (1,577)
    Deferred Exchange Gain (Loss)                            730           (859)
    Purchase of Marketable Securities                    (23,202)        (3,179)
    Proceeds from Sales of Marketable Securities          20,980          1,000
    Net (Gain) Loss from Marketable Securities              (628)        (1,540)
(Increase) Decrease in Current Assets-
    Accounts Receivable                                    3,078         (3,097)
    Inventories                                            2,748        (15,567)
    Prepaid Expenses                                      (2,522)           349
Increase (Decrease) in Current Liabilities-
    Accounts Payable and Accrued Expenses                 (8,845)        (2,723)
    Income Taxes Payable                                    (851)        (2,067)
                                                        --------       --------
Net Cash Provided by (Used for) Operating Activities      14,641         (2,859)
                                                        --------       --------
Cash Flow from Investing Activities:
    Expenditures for Property, Plant
      & Equipment - Net                                  (23,768)       (13,764)
    Loans to Officers                                         (2)          (197)
    Repayment of Officers' Loans                              43            ---
                                                        --------       --------
Net Cash Provided by (Used for) Investing Activities     (23,727)       (13,961)
                                                        --------       --------
Cash Flow from Financing Activities:
    Exercise of Stock Options                              2,452          1,223
    Principal Payments on Long-Term Obligations              (50)           (50)
    Proceeds from Long-Term Borrowings                    25,000            ---
    Payment of Short-Term Borrowings                     (15,160)        (1,063)
    Proceeds from Short-Term Borrowings                   16,475         26,978
    Cash Dividends Paid                                  (13,542)       (13,481)
                                                        --------       --------
Net Cash Provided by (Used for) Financing Activities      15,175         13,607
                                                        --------       --------
Effect of Exchange Rate Changes on Cash                     (463)           590
                                                        --------       --------
Increase (Decrease) in Cash and Equivalents                5,626         (2,623)
Cash and Equivalents, Beginning of Period                 63,680         66,787
                                                        --------       --------
Cash and Equivalents, End of Period                     $ 69,306       $ 64,164
                                                        ========       ========


The accompanying notes to the condensed financial statements are an integral
part of these statements.

                                       -4-




                   Lawter International, Inc. and Subsidiaries

Notes to the Condensed Financial Statements

Note 1.  Inventories

At year end, the Company takes a complete physical inventory to determine
inventory values.  During interim periods, the Company uses a combination of
perpetual inventory records, physical inventories and the gross profit method to
determine inventory values.

The Company values the majority of its domestic inventories at last-in, first-
out (LIFO) cost which is not in excess of net realizable value.  The Company's
other inventories are valued at the lower of first-in, first-out (FIFO) cost or
market.

Because the inventory determination under the LIFO method can only be made at
the end of each fiscal year based on the inventory levels and costs at that
point, interim LIFO determinations, including that at September 30, 1996, must
necessarily be based on management's estimates of expected year end inventory
levels and costs.  Such future estimates of inventory levels and prices are
subject to many forces beyond the control of management.

Note 2.  Earnings per Share

Earnings per share of common stock are computed on the weighted average shares
outstanding during the respective periods.  Net earnings per share would not be
materially different from reported earnings per share if all outstanding stock
options were exercised.

Note 3.  Restructuring Charge

In the fourth quarter of 1995, a new management team was formed.  The new
management, taking into account a change in market conditions, developed a new
corporate strategy.  Part of the decision making process included an evaluation
of the feasibility of continuing to utilize older manufacturing facilities.
With the anticipated completion of construction of the new ink vehicle and resin
facility in Europe combined with the new ink vehicle and resin facility in the
U. S., the Company decided to implement a restructuring plan.  This plan
included the decommissioning of older ink vehicle and resin plants.  This
resulted in a fourth quarter pretax charge of $8,449,000, of which $2,791,000
was charged to selling, general and administrative expenses for personnel
redundancy and $5,658,000 was charged to Cost of Products Sold for site
decommissioning.  These restructuring activities commenced in the fourth quarter
of 1995 and will continue through the early part of 1997.

The personnel redundancy costs relate to cash outlays for benefits to be paid to
the manufacturing and office employees at the older plants in Europe and North
America.  The labor force will be reduced by approximately 100 positions when
the restructuring plan is completed.  This will reduce the labor force to below
500 employees.  Through September 30, 1996, approximately 85 positions have been
eliminated and $1,636,000 has been charged against the reserve including
$278,000 utilized in the third quarter of 1996.

The site decommissioning costs represent demolition, cleanup and asset write
down costs for older facilities mainly in Europe and North America. Included in
the $5,658,000, is $4,461,000 for noncash items which relate to the write down
of the net book value of the assets at these locations.  Through September 30,
1996, $70,000 in cleanup costs for a facility in North America were paid and
charged against the reserve.

                                      -5-



(Note 3 continued)

In the future, operating costs will be reduced as a part of the restructuring
plan.  Labor costs will be reduced due to the decreased number of employees
necessary to operate the new plant in Europe.  Eliminating the older plants will
also reduce other manufacturing costs due to increased operating efficiencies.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

Liquidity and Capital Resources

Lawter's cash and equivalents, net of short-term borrowings, increased
$5,200,000 from $23,700,000 at December 31, 1995 to $28,900,000 at
September 30, 1996.  The increase in cash and equivalents was due primarily to
a $25,000,000 increase in long-term obligations, partially offset by
expenditures for the new polymer facility in Europe.  Lawter anticipates
maintaining a strong liquid position.

The construction of the new polymer facility in Antwerp, Belgium is complete.
This ends a six year project to modernize the Company's manufacturing process
with state-of-the-art equipment.  Capital additions for the near future include
a new corporate headquarters in Pleasant Prairie, Wisconsin.  In the third
quarter of 1996, it was determined that the corporate headquarters should be
moved from Northbrook, Illinois to Pleasant Prairie, Wisconsin, adjacent to the
major U.S. manufacturing and research facility.  Lawter will continue to
modernize its production facilities, although there are no other significant
capital additions planned at this time.

Results of Operations

SALES.  The Company's consolidated net sales decreased 7.5% in the third quarter
of 1996 when compared to the third quarter of 1995.  While domestic sales volume
increased 1%, average selling prices decreased 3% due to product mix, resulting
in a 2% decrease in domestic net sales.  Reportable European net sales decreased
18% as a result of a 12% decrease in sales volume, a 2% decrease in average
selling prices and a 5% decrease caused by the strengthening of the U.S. dollar.
Consolidated net sales for the first nine months of 1996 decreased 7.0% from
consolidated net sales for the first nine months of 1995.  Domestic average
selling prices decreased 7%, while sales volume increased 2%, resulting in a 4%
decrease in domestic net sales.  Reportable European net sales decreased 12% as
a result of an 8% decrease in sales volume, a 2% decrease caused by the stronger
dollar and a 1% decrease in average selling prices.

GROSS MARGINS.  Gross margins as a percent of net sales were 31.8% and 25.8% for
the quarters ended September 30, 1996 and 1995, respectively, and 28.8% and
27.0% for the nine months ended September 30, 1996 and 1995, respectively.  The
higher percentages in both 1996 periods were principally due to decreasing raw
material costs, increased cost efficiencies associated with the restructuring
plan, the accounting for benefits from business interruption insurance proceeds
accrued for the temporary shut down of the Irish plant and other cost control
measures, partially offset by the startup costs associated with the new polymer
plant in Belgium.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and
administrative expenses include net foreign transaction exchange losses of
$(45,000) and $(107,000) for the three months ended September 30, 1996 and 1995,
respectively, and $(425,000) and $(168,000) for the nine months ended September
30, 1996 and 1995, respectively.  Transaction gains and losses result mainly
from the effect of exchange rate fluctuations on transactions of the foreign
subsidiaries which are denominated in currencies other than the

                                      -6-




subsidiaries' functional currencies.  Excluding these net transaction losses,
selling, general and administrative expenses as a percent of sales were 11.2%
and 10.7% for the three months and nine months ended September 30, 1996,
respectively, and 9.8% and 10.3% for the three months and nine months ended
September 30, 1995, respectively.  On a year to date basis, selling, general and
administrative expenses decreased due to tight controls of cost and the benefits
from the restructuring plan.

INVESTMENT INCOME.  Investment income in the quarter ended September 30, 1996
decreased from the same period in 1995 due principally to a $96,000 gain from
marketable securities in 1996 versus a $679,000 gain in 1995.  For the first
nine months of 1996, investment income decreased from the same period of 1995
due primarily to an $817,000 gain from marketable securities in 1996 versus a
$1,538,000 gain in 1995.

INCOME TAXES.  The effective tax rates were 28.7% and 26.0% for the three months
ended September 30, 1996 and 1995, respectively, and 28.0% and 26.0% for the
nine months ended September 30, 1996 and 1995, respectively.  The higher tax
rate in both 1996 periods was due to lower earnings at entities that have a
lower tax rate.

RESTRUCTURING CHARGE.  In the fourth quarter of 1995, a new management team was
formed.  The new management, taking into account a change in market conditions,
developed a new corporate strategy.  Part of the decision making process
included an evaluation of the feasibility of continuing to utilize older
manufacturing facilities.  With the anticipated completion of construction of
the new ink vehicle and resin facility in Europe combined with the new ink
vehicle and resin facility in the U. S., the Company decided to implement a
restructuring plan.  This plan included the decommissioning of older ink vehicle
and resin plants.  This resulted in a fourth quarter pretax charge of
$8,449,000, of which $2,791,000 was charged to selling, general and
administrative expenses for personnel redundancy and $5,658,000 was charged to
Cost of Products Sold for site decommissioning.  These restructuring activities
commenced in the fourth quarter of 1995 and will continue through the early part
of 1997.

The personnel redundancy costs relate to cash outlays for benefits to be paid to
the manufacturing and office employees at the older plants in Europe and North
America.  The labor force will be reduced by approximately 100 positions when
the restructuring plan is completed.  This will reduce the labor force to below
500 employees.  Through September 30, 1996, approximately 85 positions have been
eliminated and $1,636,000 has been charged against the reserve including
$278,000 utilized in the third quarter of 1996.

The site decommissioning costs represent demolition, cleanup and asset write
down costs for older facilities mainly in Europe and North America. Included in
the $5,658,000, is $4,461,000 for noncash items which relate to the write down
of the net book value of the assets at these locations.  Through September 30,
1996, $70,000 in cleanup costs for a facility in North America were paid and
charged against the reserve.

In the future, operating costs will be reduced as a part of the restructuring
plan.  Labor costs will be reduced due to the decreased number of employees
necessary to operate the new plant in Europe.  Eliminating the older plants will
also reduce other manufacturing costs due to increased operating efficiencies.






                                      -7-





                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                                    LAWTER INTERNATIONAL, INC.
                                                    --------------------------
                                                           (Registrant)



November 13, 1996                                   /s/ John P. O'Mahoney
-----------------                                   --------------------------
                                                    John P. O'Mahoney
                                                    Chairman and
                                                      Chief Executive Officer



November 13, 1996                                   /s/ Mark W. Joslin
-----------------                                   --------------------------
                                                    Mark W. Joslin
                                                    Chief Financial Officer
                                                      and Treasurer
































                                       -8-