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PolyOne Reports Record Third-Quarter Earnings

October 30, 2002

CLEVELAND, Oct 30, 2002 /PRNewswire-FirstCall via COMTEX/ --

* Resin & Intermediates segment's joint ventures drive quarterly earnings improvement * Distribution demand remains steady despite slowdown in U.S. economy * Company forecasts revenue decline in seasonally slow fourth quarter

PolyOne
Corporation (NYSE: POL), a leading global polymer services company, today
reported revenues of $668.5 million and net income of $9.8 million, or $0.11 per
share, for the third quarter ended September 30, 2002. The $9.8 million
represents PolyOne's highest quarterly net income since its formation in
September 2000.

Net income includes a pre-tax charge of $4.1 million relating to PolyOne's
portion of asset write-off and decommissioning costs associated with the
decision by Oxy Vinyls, LP, the Company's equity joint venture, to permanently
close a portion of the Deer Park, Texas, chlor-alkali plant. In addition, $1.2
million of pre-tax charges were recorded relating to business restructuring
announced in 2001. These charges reduced net income $3.4 million, or $0.03 per
share.

"Our earnings, while far from adequate, improved from the second quarter, driven
primarily by the performance of our OxyVinyls and SunBelt joint ventures," said
Thomas A. Waltermire, PolyOne chairman and chief executive officer. "We also saw
continued demand strength in Europe, Asia and our Distribution business, though
it was offset by slower-than-anticipated customer demand in most of our North
American businesses in the latter half of August and September.

"Despite these challenging business conditions, our employees steadily moved
forward with a large number of key strategic initiatives, such as the
modernization and upgrade of our North American Plastic Compounds and Colors
(PCC) manufacturing assets," added Waltermire. "This progress, coupled with our
new information systems and employee training initiatives, is helping us build
our capability to serve customers more efficiently."

                          Third-Quarter 2002 Results
                 (Dollars in millions, except per share data)

                                           3Q02        2Q02        3Q01
     Sales                                $668.5      $692.0      $659.6
     Operating income                       26.6        22.7        15.5
     Operating income before
      special items*                        31.9        23.4        20.7
     Net income                              9.8         6.1         2.9
     Net income before special items*       13.2         6.6         6.1
     Income per share, diluted              0.11        0.07        0.03
     Per share effect of excluding
      special items*, increase              0.03        0.00        0.04
     Per share effect of goodwill
      amortization expense
      on net income                         0.00        0.00        0.04


                               Year-to-Date Results
                   (Dollars in millions, except per share data)

                                              9 months 2002   9 months 2001
     Sales                                       $1,973.7       $2,064.7
     Operating income                                54.3            9.0
     Operating income before special items*          64.0           31.0
     Net loss                                       (41.4)         (16.0)
     Net income (loss) before cumulative effect
      of a change in accounting                      12.3          (16.0)
     Net income (loss) before cumulative effect
      of a change in accounting and special items*   18.5           (4.7)
     Loss per share, diluted                        (0.45)         (0.18)
     Income (loss) per share before cumulative
      effect of a change in accounting, diluted      0.13          (0.18)
     Per share effect of excluding special
      items*, increase                               0.07           0.13
     Per share effect of goodwill amortization
      expense on net income before cumulative
      effect of a change in accounting               0.00           0.12

    * A summary of all special items for 2002 and 2001 can be found in the
      attached table.

Third-Quarter 2002 Business Highlights

* The third-quarter results mark the third consecutive quarter of higher net
income, excluding special items. The results also continue a string of improved
year-over-year quarterly net income before special items that began with the
comparison of fourth- quarter 2001 and fourth-quarter 2000 results.

* PolyOne's international operations continued to improve from 2001 levels. For
the third quarter of 2002 and year to date, shipments were up 11 percent and 5
percent, respectively, compared with the same periods in 2001. Asian shipments
were particularly strong, rising 51 percent year to date compared with the first
nine months of 2001.

* Sales of PolyOne's Distribution segment also demonstrated solid improvement
over year-ago levels. Third-quarter and year-to-date 2002 revenues were up 17
percent and 11 percent, respectively, over the comparable 2001 periods. The
majority of this improvement resulted from PolyOne Distribution's April 2002
assumption of responsibility for PolyOne's Geon- brand vinyl compounds. Sales of
third-party materials also continued to show good growth.

* PolyOne succeeded in raising vinyl compound prices compared with the second
quarter of 2002. Nevertheless, PolyOne's North American PCC revenues slowed in
the third quarter, driven partly by softening vinyl compound demand. Quarterly
revenues were 6 percent lower than both second-quarter 2002 and third-quarter
2001 revenues.

* In PolyOne's Resin and Intermediates (R&I) segment, equity operating income
before special items increased $10.6 million in third-quarter 2002 compared with
second-quarter 2002 and $10.8 million versus third-quarter 2001. Both OxyVinyls
and SunBelt benefited from higher combined chlorine and caustic soda prices in
third-quarter 2002 versus the prior quarter. Polyvinyl chloride (PVC) resin
market prices increased on average approximately 5 cents per pound over
second-quarter 2002.

* PolyOne continues to make progress on its objective to realize $200 million in
annual income improvement in 2003 compared with the base year of 2000. In the
third quarter, PolyOne realized approximately $5 million of additional benefit
from its value capture initiatives. Most of this improvement resulted from
direct material sourcing and manufacturing initiatives to lower costs and
improve efficiencies.

* During the third quarter, the bond rating agencies Moody's Investors Service
and Standard & Poor's adjusted PolyOne's ratings and outlook. Moody's affirmed
PolyOne's investment-grade rating of Baa3, but added a negative outlook. S&P
lowered PolyOne's rating from BBB- to BB+ with a negative outlook. These moves
reflected a more pessimistic economic outlook resulting from anticipation of a
slowed North American economic recovery and a weaker trend into 2003 for the
chemical industry overall.

* PolyOne's capital expenditures were approximately $6.4 million during the
third quarter for the continuing expansion and modernization of the North
American PCC unit's manufacturing base to improve quality and customer service.
One PCC plant was closed in the third quarter and two additional plants ceased
production in October 2002. When PolyOne completes the upgrade by mid-2003, a
total of 14 sites will have closed since 2000 and approximately $45 million will
have been invested in new equipment and modernization projects, with projected
annual operating savings of $50 million.

Business Outlook

For most of PolyOne's businesses, the fourth quarter is historically the slowest
demand period of the year. In 2000 and 2001, fourth-quarter revenues fell
approximately 10 percent and 11 percent, respectively, from third-quarter
levels.

PolyOne projects that revenues in fourth-quarter 2002 will be higher than in
fourth-quarter 2001, with the current view being that the revenue decline from
third-quarter to fourth-quarter 2002 should be less than in 2001.

"The strengthening in North American demand in the first half of 2002 appears to
have lost momentum, consistent with reports for the North American Industrial
Production Index," said Waltermire. "The current slowdown among these customers
is evident in a number of our markets, with most customers reducing quantities
ordered.

"With this uncertainty as we prepare for 2003, we will remain diligent in
controlling expenses and capital outflows," Waltermire added. "Furthermore, we
are preparing to drive additional internal initiatives to get us to improved
return levels, even if we do not see an underlying economic upturn. We also
remain focused on capturing the value from the many improvements we have
initiated to better serve customers and become cost competitive."

Several factors could reduce the equity contribution from R&I by $9 million to
$11 million in the fourth quarter of 2002 compared with the prior quarter.
Typical seasonal slowing will likely result in lower PVC resin demand, and could
lead to reduced market prices. Moreover, industry forecasts call for somewhat
higher costs for natural gas and ethylene into the fourth quarter. The combined
price for chlorine and caustic soda is anticipated to improve modestly.

With the outlook for decreased customer demand and a lower contribution from
R&I, PolyOne could realize net income before special items that is only slightly
profitable in the fourth quarter. Value capture initiatives are expected to
provide only minimal benefit in the fourth quarter, with the next significant
step-up occurring in early 2003.

For the full year, PolyOne still estimates that 2002 capital expenditures will
total approximately $75 million to $80 million. As planned, PolyOne expects to
complete its previously announced acquisition of Transcolor, a color
concentrates producer near Pamplona, Spain, in December 2002. With the North
American PCC manufacturing asset reconfiguration progressing and with business
conditions slowing, working capital should continue to decline through the end
of the year.

Conference Call

PolyOne will host an analyst conference call at 9 a.m. Eastern time on Thursday,
October 31, 2002. The conference call number is 888-489-0038 or 706-643-1611
(international), conference topic: PolyOne Earnings Call. The call will be
broadcast live and then via replay for two weeks on the Company's Web site:
www.polyone.com .

Supplemental Information

Investors interested in more detailed information on PolyOne's results or the
performance of its business segments, please see the Supplemental Information
report issued today. The report is posted in the Investor Relations section of
the Company's Web site: www.polyone.com . It can also be obtained from the
contact listed at the end of this release.

About PolyOne

PolyOne Corporation, with 2001 revenues of $2.7 billion, is an international
polymer services company with operations in thermoplastic compounds, specialty
resins, specialty polymer formulations, engineered films, color and additive
systems, elastomer compounding and thermoplastic resin distribution.
Headquartered in Cleveland, Ohio, PolyOne has employees at manufacturing sites
in North America, Europe, Asia and Australia, and joint ventures in North
America, South America, Europe, Asia and Australia. Information on the Company's
products and services can be found at www.polyone.com .

Forward-Looking Statements

In this release, statements that are not reported financial results or other
historical information are "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995, including, for example,
statements about business outlook, assessment of market conditions, strategies,
future plans, future sales, prices for major products, inventory levels, capital
spending and tax rates. These forward-looking statements are not guarantees of
future performance. They are based on management's expectations that involve a
number of business risks and uncertainties, any of which could cause actual
results to differ materially from those expressed in or implied by the
forward-looking statements. Factors that could cause actual results to differ
materially include, but are not limited to: (1) an inability to achieve or
delays in achieving savings related to consolidation and restructuring programs;
(2) delays in achieving or inability to achieve the Company's strategic value
capture initiatives, including cost reduction and employee productivity goals,
or achievement of less than the anticipated financial benefit from the
initiatives; (3) the effect on foreign operations of currency fluctuations,
tariffs, nationalization, exchange controls, limitations on foreign investment
in local businesses and other political, economic and regulatory risks; (4)
changes in U.S., regional or world polymer and/or rubber consumption growth
rates affecting the Company's markets; (5) changes in global industry capacity
or in the rate at which anticipated changes in industry capacity come online in
the polyvinyl chloride (PVC), chlor-alkali, vinyl chloride monomer (VCM) or
other industries in which the Company participates; (6) fluctuations in raw
material prices, quality and supply and in energy prices and supply, in
particular fluctuations outside the normal range of industry cycles; (7)
production outages or material costs associated with scheduled or unscheduled
maintenance programs; (8) costs or difficulties and delays related to the
operation of joint venture entities; (9) lack of day-to-day operating control,
including procurement of raw materials, of equity or joint venture affiliates;
(10) partial control over investment decisions and dividend distribution policy
of the OxyVinyls partnership and other minority equity holdings of the Company;
(11) an inability to launch new products and/or services that strategically fit
the Company's businesses; (12) the possibility of goodwill impairment; (13) an
inability to maintain any required licenses or permits; and (14) an inability to
comply with any environmental laws and regulations. (ref. #1102)

                       PolyOne Corporation and Subsidiaries
             Condensed Consolidated Statements of Income (Unaudited)
                       (In millions, except per share data)

                                            Three Months      Nine Months
                                               Ended             Ended
                                           September 30,     September 30,
                                            2002    2001     2002      2001

    Sales                                  $668.5  $659.6  $1,973.7  $2,064.7

    Operating costs and expenses:
    Cost of sales                           564.7   548.5   1,646.3   1,725.7
    Selling and administrative               69.6    73.8     227.0     233.3
    Depreciation and amortization            18.9    20.6      56.3      72.9
    Employee separation and plant phase-
     out                                      0.2       -       1.1       9.8
    Merger and integration costs                -     0.1         -       5.9
    Loss on divestiture of equity
     investment                               -       -         1.5       -
    (Income) loss from equity affiliates
     and minority interest                  (11.5)    1.1     (12.8)      8.1
    Operating income                         26.6    15.5      54.3       9.0

    Interest expense                        (11.9)   (8.9)    (32.1)    (32.7)
    Interest income                           0.2     0.6       0.7       2.0
    Other expense, net                        1.0    (2.6)     (2.8)     (3.5)
    Income (loss) before income taxes and
     cumulative effect of change in accounting
     method                                  15.9     4.6      20.1     (25.2)

    Income tax (expense) benefit             (6.1)   (1.7)     (7.8)      9.2

    Income (loss) before cumulative effect
     of a change in accounting                9.8     2.9      12.3     (16.0)

    Cumulative effect of a change in
     goodwill accounting, net of income
     tax benefit of $1.0 million                -       -     (53.7)        -

    Net income (loss)                        $9.8    $2.9    $(41.4)   $(16.0)


    Income (loss) per share of common
     stock:
         Basic income (loss) per share
          before effect of change in
          accounting                         $.11    $.03      $.13     $(.18)
         Cumulative effect of a change in
          accounting                            -       -      (.59)        -
         Basic income (loss) per share       $.11    $.03     $(.46)    $(.18)

         Diluted income (loss) per share
          before effect of change in
          accounting                         $.11    $.03      $.13     $(.18)
         Cumulative effect of a change in
          accounting                            -       -      (.58)        -
         Diluted income (loss) per share     $.11    $.03     $(.45)    $(.18)

    Weighted average shares used to
     compute loss per share:
         Basic                               90.7    89.8      90.6      89.8
         Diluted                             91.7    90.9      92.1      90.4

    Dividends paid per share of common
     stock                                 $.0625  $.0625    $.1875    $.1875



                      PolyOne Corporation and Subsidiaries
                Condensed Consolidated Balance Sheet (Unaudited)
                                  (In millions)

                                                September 30,     December 31,
    Assets                                           2002              2001
    Current assets:
    Cash and cash equivalents                        $53.4             $18.2
    Trade accounts receivable, net                   217.3             135.6
    Other receivables                                 11.1              11.4
    Inventories                                      292.6             255.3
    Deferred taxes                                    50.6              48.6
    Other current assets                              16.1              16.5
    Total current assets                             641.1             485.6
    Property, net                                    683.2             683.6
    Investment in equity affiliates                  278.0             287.9
    Goodwill, net                                    446.8             476.3
    Other intangible assets, net                      32.7              61.0
    Other non-current assets                          49.2              66.8
      Total assets                                $2,131.0          $2,061.2

    Liabilities and Shareholders' Equity
    Current liabilities:
    Short-term bank debt                             $14.9             $14.7
    Accounts payable                                 296.0             311.4
    Accrued expenses                                 159.4             169.4
    Current portion of long-term debt                  4.5               4.6
      Total current liabilities                      474.8             500.1
    Long-term debt                                   589.4             426.8
    Deferred taxes                                    65.4              64.5
    Post-retirement benefits other than
     pensions                                        124.2             126.2
    Other non-current liabilities,
     including pensions                              199.3             214.5
    Minority interest in consolidated
     subsidiaries                                     16.3              15.7
      Total liabilities                            1,469.4           1,347.8
    Shareholders' equity:
    Preferred stock                                      -                 -
    Common stock                                       1.2               1.2
    Other shareholders' equity                       660.4             712.2
      Total shareholders' equity                     661.6             713.4
        Total liabilities and shareholders'
          equity                                  $2,131.0          $2,061.2


                     PolyOne Corporation and Subsidiaries
          Condensed Consolidated Statements of Cash Flows (Unaudited)
                                 (In millions)

                                            Three Months    Nine Months
                                               Ended           Ended
                                           September 30,    September 30,
                                            2002    2001    2002     2001
    Operating Activities
      Net income (loss)                     $9.8    $2.9   $(41.4)  $(16.0)
      Adjustments to reconcile net loss
       to net cash provided (used) by operating
       activities:
          Employee separation and plant
           phase-out charges                 0.2      -       1.1      9.8
          Cash payments on employee
           separation and plant phase-out   (4.4)   (6.3)   (12.1)   (19.1)
          Cumulative effect of a change
           in accounting                      -       -      53.7       -
          Depreciation and amortization     18.9    20.6     56.3     72.9
          Unrealized currency gains         (7.2)   (3.5)   (10.8)      -
          Investment write-down, loss on
           sale of equity affiliate           -       -       1.5       -
          Companies carried at equity and
           minority interest:
             (Income) loss                 (11.6)    1.1    (12.3)     8.1
             Dividends received               -      1.0      2.1      2.0
          Change in assets and
           liabilities:
              Operating working capital:
                  Accounts receivable       19.9     9.0    (73.9)   137.3
                  Inventories               (2.2)   (6.2)   (33.4)    55.1
                  Accounts payable          (6.0)  (22.8)   (20.7)    23.6
              Accrued expenses and other   (10.0)   (5.2)    11.4    (21.0)
    Net cash provided (used) by operating
     activities                              7.4    (9.4)   (78.5)   252.7

    Investing Activities
      Capital expenditures                 (18.6)  (11.6)   (52.4)   (47.6)
      Cash received from equity
       affiliates                           15.8     1.6     16.2      2.1
      Proceeds from sale of assets           0.8      -       1.9      2.8
    Net cash used by investing activities   (2.0)  (10.0)   (34.3)   (42.7)

    Financing Activities
      Change in short-term debt             (0.6)   22.2     (1.3)  (200.0)
      Change in long-term debt              (1.0)   (4.6)   153.5     (1.5)
      Termination of interest rate swap
       agreements                            8.3     4.3      8.3      4.3
      Proceeds from the exercise of stock
       options                               2.0      -       7.0       -
      Dividends                             (5.7)   (5.7)   (16.9)   (17.0)
    Net cash provided (used) by financing
     activities                              3.0    16.2    150.6   (214.2)

    Effect of exchange rate changes on
     cash                                   (1.2)    0.2     (2.6)    (0.5)

    Increase (decrease) in cash and cash
     equivalents                             7.2    (3.0)    35.2     (4.7)

    Cash and cash equivalents at
     beginning of period                    46.2    36.2     18.2     37.9

    Cash and cash equivalents at end of
     period                                $53.4   $33.2    $53.4    $33.2

SOURCE PolyOne Corporation

CONTACT: Dennis Cocco, Chief Investor & Communications Officer of
PolyOne, +1-216-589-4018

URL: http://www.polyone.com

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