Statement of Accounting Policy

         The accompanying financial statements include the accounts of Myers Industries, Inc. and subsidiaries (collectively, the "Company"), and have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures are adequate to make the information not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's latest annual report on Form 10-K.

        In the opinion of the Company, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of June 30, 2006, and the results of operations and cash flows for the three months and six months ended June 30, 2006 and 2005. The results of operations for the six months ended June 30, 2006 are not necessarily indicative of the results of operations that will occur for the year ending December 31, 2006.

        Certain items previously reported in specific financial statement captions have been reclassified to conform with the 2006 presentation.

     Goodwill

        In the quarter ended June 30, 2006, a non-cash, non-tax deductible goodwill impairment charge of $109.8 million was recognized in the Company's Material Handling - Europe business segment. During the second quarter of 2006, the Company determined that the European businesses in its Material Handling - Europe business segment were not core to the Company's long term growth strategy and, accordingly, began evaluating the strategic options of these businesses. As a result of this evaluation and taking into consideration the economic factors and evolution of business conditions in Europe, it became necessary for the Company to perform an interim goodwill impairment test in accordance with Statement of Accounting Standards No. 142, "Goodwill and Other Intangible Assets." In performing this analysis, the fair value of the reporting unit was based on estimated proceeds from a potential sale and the implied fair value of goodwill was estimated by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value. As a result of this analysis, all of the recorded goodwill in the reporting unit was determined to be impaired and, accordingly, the Company recorded a $109.8 million impairment charge to write off goodwill in the Material Handling - Europe business segment as of June 30, 2006.

7
Part I - Financial Information

Myers Industries, Inc.
Notes to Condensed Consolidated Financial Statements
Unaudited

        The change in goodwill for the six months ended June 30, 2006 is as follows:

     Net Income Per Share

        Net income (loss) per share, as shown on the Condensed Statement of Consolidated Income, is determined on the basis of the weighted average number of common shares outstanding during the period as follows:

     Stock Compensation

        In 1999, the Company and its shareholders adopted the 1999 Stock Plan allowing the Board of Directors to grant key employees and Directors the right to purchase common stock of the Company at the market price on the date of grant. In general, options granted and outstanding vest over time, with 20 percent of the shares granted exercisable six months from the date of grant and an additional 20 percent of the shares granted vesting thereafter on each anniversary of the grant date. The options expire ten years from the date of grant. At June 30, 2006, there were 1,585,058 stock option shares available for future grant.

        On January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (Revised 2004), ("SFAS 123R"), Share-Based Payment, which requires the Company to measure all employee stock-based compensation awards using a fair value method and record the related expense in the financial statements. The Company elected to use the modified prospective transition method. The modified prospective transition method requires that compensation cost be recognized in the financial statements for all awards granted after the date of adoption as well as for existing awards for which the requisite service has not

        During 2006, the Company granted 32,500 options with an exercise price equal to the closing price of the Company's stock on the date of the grant. The options expire ten years from the date of grant. The average fair value of the options granted was $3.00. This value was estimated at the date of grant using a trinomial lattice option pricing model with the following weighted average assumptions:

        The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. The total intrinsic value of the options exercised during the six months ended June 30, 2006 and 2005 was approximately $1.4 million and $289,000, respectively.

     Inventory

             In November 2004, the FASB issued SFAS No. 151 ("SFAS 151"), Inventory Costs - an amendment of ARB No. 43, Chapter 4. SFAS 151 requires abnormal amounts of idle facility expense, freight, handling costs, spoilage to be recognized as current period charges. SFAS 151 also requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The adoption of SFAS 151 by the Company as of January 1, 2006, did not have a material effect of the Company's financial condition, results of operations or cash flows.

Recent Pronouncements

        In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation (FIN) No. 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109." This Interpretation provides accounting guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return as well as additional disclosures related to these tax positions. FIN No. 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently assessing the effect of FIN No. 48 on its financial statements.

     Supplemental Disclosure of Cash Flow Information

        The Company made cash payments for interest of $3,577,000 and $5,567,000 for the three months ended June 30, 2006 and 2005, respectively. Cash payments for interest totaled $5,991,000 and $7,782,000 for the six months ended June 30, 2006 and 2005, respectively. Cash payments for income taxes totaled $10,621,000 and $7,984,000 for the three months ended June 30, 2006 and 2005, respectively. Cash payments for income taxes were $12,679,000 and $8,803,000 for the six months ended June 30, 2006 and 2005, respectively.

     Comprehensive Income

        An unaudited summary of comprehensive income for the three months and six months ended June 30, 2006 and 2005 was as follows:

    Retirement Plans

        For the Company's two defined benefit pension plans, the net periodic benefit cost for the three months and six months ended June 30, 2006 and 2005 was as follows:

     The Company previously disclosed in its financial statements for the year ended December 31, 2005, that it expected to make contributions of approximately $700,000 to its defined benefit plans in 2006. As of June 30, 2006, contributions of $271,000 have been made to these plans.

     Subsequent Event

        In July 2006, the Company entered into an amendment of its revolving credit agreement (the "Credit Agreement"). The amendment revises the definition of EBIT (earnings before interest and taxes) to exclude certain charges, including the goodwill impairment charge recorded in the quarter ended June 30, 2006. The amendment also waives the violations of the Credit Agreement covenants related to minimum interest coverage and maximum leverage ratios as of June 30, 2006.

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

        For the quarter ended June 30, 2006, net sales were $238.2 million, an increase of 6 percent from the $225.0 million reported in 2005 as the Company had strong sales in most of its business segments. Despite the increased sales, the Company reported a net loss of $100 million in the quarter ended June 30, 2006, which includes a goodwill impairment charge of $109.8 million related to its Material Handling - Europe business segment.

        For the six months ended June 30, 2006, net sales were $483.1 million, an increase of 5 percent from the $461.2 million reported in the first half of 2005. Due to the impact of the goodwill impairment charge, the Company reported a net loss of $89.2 million in the six months ended June 30, 2006, compared to net income of $13.0 million in the prior year period.

        During the quarter and six months ended June 30, 2006, the Company experienced increased sales in its Distribution, Material Handling -- North America and Automotive and Custom business segments, primarily on the basis of higher selling prices which began to take effect in the second half of 2005. The increased selling prices also resulted in a higher gross margin of 30.4 percent for the second quarter of 2006 compared to 26.1 percent in the prior year period, even though the Company experienced higher raw material cost in the second quarter of 2006. For the six months ended June 30, 2006, gross margins improved to 29.3 percent compared to 26.6 percent in the prior year. On average, plastic resin raw material costs were approximately 10 percent higher in the quarter and 6 percent higher for the six months ended June 30, 2006 compared with the prior year periods.

        Selling and administrative expenses for the second quarter of 2006 increased $5.8 million or 12 percent compared with the prior year quarter. For the six months ended June 30, 2006, expenses increased $6.8 million

or 7 percent compared to the second quarter of 2005. The increases reflect the impact of variable selling expense on higher sales combined with costs associated with streamlining the Company's organizational structure. As a percentage of sales, selling and administrative costs increased to 22.4 percent for the quarter and 21.2 percent for the six months ended June 30, 2006 compared to 21.2 percent and 20.7 percent in the prior year periods.

        In the quarter ended June 30, 2006, a non-cash, non-tax deductible goodwill impairment charge of $109.8 million was recognized in the Company's Material Handling - Europe business segment. During the second quarter of 2006, the Company determined that the European businesses in its Material Handling -- Europe business segement were not core to the Company's long term growth strategy and, accordingly, began evaluating the strategic options of these businesses. As a result of this evaluation and taking into consideration the economic factors and evolution of business conditions in Europe, it became necessary for the Company to perform an interim goodwill impairment test in accordance with Statement of Accounting Standards No. 142, "Goodwill and Other Intangible Assets." In performing this analysis, the fair value of the reporting unit was based on estimated proceeds from a potential sale and the implied fair value of goodwill was estimated by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value. As a result of this analysis, all of the recorded goodwill in the reporting unit was determined to be impaired and, accordingly, the Company recorded the $109.8 million impairment charge to write off goodwill in the Material Handling - Europe business segment as of June 30, 2006.

        Net interest expense for the quarter ended June 30, 2006 was $4.2 million, an increase of 8 percent compared to $3.9 million in the prior year period. For the six months ended June 30, 2006, net interest expense was $8.2 million an increase of 6 percent from the prior year period. For both the quarter and year to date periods, the increase in current year expenses reflects higher interest rates which more than offset lower average borrowing levels.

        The Company's income tax rate for the quarter and six month periods ended June 30, 2006, was significantly impacted by the goodwill impairment charge of $109.8 million which was not deductible for tax purposes. Excluding the impact of the goodwill impairment, income taxes as a percent of income before taxes for the quarter ended June 30, 2006, increased to 32.9 percent compared to 26.9 percent in the prior year period. The lower effective rate in 2005 was primarily the result of foreign tax rate differences, including the utilization of foreign tax loss carry forwards for which valuation allowances were previously provided. Excluding the impact of the goodwill adjustment, income taxes as a percent of pretax income for the six months ended June 30, 2006 increased to 33.8 percent from 32.5 percent in the prior year period. The higher effective rate in 2006 was the result of foreign tax rate differences and the relative proportion of domestic and foreign based income to pretax income.

Business Segment Results

Distribution

        Sales in the Distribution business segment for the quarter ended June 30, 2006 were $50.1 million, an increase of 2 percent compared to the prior year period. For the six month period, sales in the current year were $96.6 million, an increase of 6 percent compared to $91.5 million in the first six months of 2005. The increased sales reflect higher selling prices and increased volume of both equipment and consumable supplies, although the segment experienced a slow down of equipment sales in the current quarter.

        Income before taxes was $5.5 million in the second quarter of 2006, an increase of 4 percent compared to $5.3 million in the prior year period. Increased sales of higher margin supplies and improved performance from the business segment's export and international branch operations were the primary reason for the current year increase. For the six months ended June 30, 2006, income before taxes increased 14 percent to $10.3 million compared to $9.0 million in the prior year period. This increase was a result of the increased sales combined with ongoing cost controls and the improved performance of the export and international business.

Material Handling -- North America

        Sales in the Material Handling -- North America business segment were $60.0 million for the quarter ended June 30, 2006, an increase of $12.0 million or 25 percent compared to the $48.0 million reported in the second quarter of 2005. For the six months ended June 30, 2006, sales were $122.1 million, an increase of 15 percent compared to the $105.9 million reported in the first half of 2005. The increase in sales for both the quarter and year to date periods was primarily the result of higher selling prices implemented through most product lines and markets.

        Income before taxes in the second quarter of 2006 was $8.4 million, an increase of 664 percent compared the $1.1 million reported in the second quarter of 2005. For the six months ended June 30, 2006, income before taxes was $16.9 million, an increase of 177 percent compared to the $6.1 million reported in the first half of 2005. The increased profitability in both periods primarily reflects improved gross margins as higherselling prices and productivity gains more than offset the impact of higher plastic raw material costs. On average, raw material plastic resin prices were approximately 10 percent higher in the quarter and 6 percent higher for the six months ended June 30, 2006 compared with the prior year periods.

Material Handling - Europe

        Sales in the Material Handling - Europe business segment in the second quarter of 2006 were $44.1 million, a decrease of 2 percent from the $45.0 million reported in the prior year period as slow conditions in the markets served by this segment continued to constrain demand. There was no significant impact on sales in the quarter from the translation of foreign currencies. For the six months ended June 30, 2006, sales were $83.3 million, a decrease of 7 percent compared to the $89.4 million reported in the first half of 2005. The translation of foreign currencies, primarily the euro, decreased sales by $2.4 million in the current year. Excluding the impact of foreign currency translation, sales in the segment were down $3.7 million or 4 percent for the year as weakness in European industrial markets resulted in lower sales volumes for those product lines.

        The business segment reported a loss before income taxes of $106.9 million for the quarter and $106.1 million for the six months ended June 30, 2006 which included a goodwill impairment charge of $109.8 million. Additionally, improvement in lower operating expenses and higher selling prices in some product lines offset the impact of lower sales volumes. Foreign currency translation did not have a significant effect on the segment's income before taxes reported between years.

Automotive and Custom

        In the Automotive and Custom business segment, sales for the second quarter of 2006 were $52.9 million, an increase of 6 percent compared to $49.7 million in the prior year period. For the six month period, 2006 sales in the business segment were $104.7 million, an increase of 7 percent compared to the $97.7 million reported in 2005. The higher sales reflect both increased volume and higher selling prices from strategic pricing initiatives in some market segments.

        Income before taxes for the second quarter of 2006 was $4.7 million, an increase of 42 percent compared to the $3.3 million reported in the second quarter of 2005. For the six months ended June 30, 2006, income before taxes was $8.6 million, an increase of 32 percent from $6.5 million in the prior year period. The improvement in profitability was primarily due to higher margins resulting from increased selling prices.

Lawn and Garden

        In the Lawn and Garden business segment, sales in the quarter ended June, 30, 2006 were $36.8 million, a decrease of 7 percent from the $39.6 million in the prior year period. For the six month period, current year sales were $88.3 million, a decrease of 2 percent from the $90.3 million reported in the second half of 2005. The reduction in sales was primarily volume driven as weather conditions in the South and Midwest regions of the United States resulted in low demand from growers for certain product lines throughout the first half of the year.

        Income before taxes of $2.0 million in the quarter and $8.9 million for the six months ended June 30, 2006 were essentially flat with the prior year periods as increased selling prices offset lower sales volume.

Liquidity and Capital Resources

        Cash provided from operating activities was $33.3 million for the six months ended June 30, 2006 compared with $27.5 million in the prior year period. The increase of $5.8 million in cash provided by operating activities was primarily due to an increase of $7.7 million in 2006 net income for the period, excluding the non cash goodwill impairment charge. Depreciation and other non cash expenses were $17.4 million in the current year compared with $20.9 million in 2005 and cash used for working capital was reduced to $4.7 million in the six months ended June 30, 2006 compared to $6.3 million in the prior year period. The decrease in cash used for working capital reflects a reduction of $8.5 million in cash provided by inventories as current year inventories have been relatively stable while the prior year period included a substantial reduction of inventories built up at 2004 yearend to protect against price increases. Offsetting the reduced cash provided by inventories was a reduction of $10.3 million in cash used for accounts payable and accrued expenses. Total debt at June 30, 2006 was $236.0 million, a reduction of $16.8 million from $252.8 million at December 31, 2005. At June 30, 2006, the Company had working capital of $177.9 million and a current ratio of 2.4, which represents a slight improvement compared to the prior year end.

        In July 2006, the Company entered into an amendment of its revolving credit agreement (the "Credit Agreement"). The amendment revises the definition of EBIT (earnings before interest and taxes) to exclude certain charges, including the goodwill impairment charge recorded in the quarter ended June 30, 2006. The amendment also waives the violations of the Credit Agreement covenants related to minimum interest coverage and maximum leverage ratios as of June 30, 2006 resulting from the goodwill impairment charge. The Company believes it is in compliance with all of the covenants of the Credit Agreement as amended. At June 30, 2006, the Company has approximately $98 million available under the Credit Agreement.

        Capital expenditures for the six months ended June 30, 2006 were $7.1 million and are expected to be in the range of $20 to $25 million for the year ending December 31, 2006. Cash flows from operations and funds available under the Credit Agreement will be the Company's primary sources of financing. Management believes that cash flows from operations and available credit facilities will be sufficient to meet expected business requirements including capital expenditures, dividends, working capital and debt service.

Recent Pronouncements

        In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation (FIN) No. 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109." This Interpretation provides accounting guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return as well as additional disclosures related to these tax positions. FIN No. 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently assessing the effect of FIN No. 48 on its financial statements.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

        The Company has financing arrangements that require interest payments based on floating interest rates. As such, the Company's financial results are subject to changes in the market rate of interest. Our objective in managing the exposure to interest rate changes is to limit the volatility and impact of rate changes on earnings while maintaining the lowest overall borrowing cost. At present, the Company has not entered into any interest rate swaps or other derivative instruments to fix the interest rate on any portion of its financing arrangements with floating rates.

        Some of the Company's subsidiaries operate in foreign countries and, as such, their financial results are subject to the variability that arises from exchange rate movements. The Company believes that foreign currency exchange rate fluctuations do not represent a significant market risk due to the nature of the foreign countries in which we operate, primarily Canada and Western Europe, as well as the size of those operations relative to the total Company.

        The Company uses certain commodities, primarily plastic resins, in its manufacturing processes. As such, the cost of operations is subject to fluctuation as the market for these commodities changes. The Company monitors this risk but currently has no derivative contracts to hedge this risk, however, the Company also has no significant purchase obligations to purchase fixed quantities of such commodities in future periods.

Item 4.     Controls and Procedures

        The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluation the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

        The Company carries out a variety of on-going procedures, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, to evaluate the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on the foregoing, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this report.

        There has been no change in the Company's internal controls over financial reporting during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

Exhibit Index