10-Q

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 December 31, 2007
	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 0 - -10068

ICO, INC.

(Exact name of registrant as specified in its charter)

TEXAS	76-0566682
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1811 Bering Drive, Suite 200
Houston, Texas	77057
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number (713) 351-4100

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  ___

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.

    Large accelerated filer  o                        Accelerated filer  xNon-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ____ No  x

There were 27,347,998 shares of common stock without par value

outstanding as of January 25, 2008

-1- 

ICO, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

Part I.  Financial Information			Page
	Item 1.  Financial Statements
		Consolidated Balance Sheets as of December 31, 2007 and September 30, 2007	3
		Consolidated Statements of Operations for the Three Months Ended December 31, 2007 and 2006	4
		Consolidated Statements of Comprehensive Income for the Three Months
		Ended December 31, 2007 and 2006	5
		Consolidated Statements of Cash Flows for the Three Months Ended
		December 31,2007 and 2006	6
		Notes to Consolidated Financial Statements	7
	Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
	Item 3.  Quantitative and Qualitative Disclosures About Market Risk		23
	Item 4.  Controls and Procedures		24
Part II.  Other Information
	Item 1.     Legal Proceedings		24
	Item 1A.  Risk Factors		24
	Item 6.     Exhibits		25

-2- 

PART  I ― FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

ICO, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share data)

	December 31, 2007			September 30, 2007
ASSETS
Current assets:
Cash and cash equivalents	$	3,874		$	8,561
Trade receivables (less allowance for doubtful accounts
of $2,811 and $2,714, respectively)		79,569			95,142
Inventories		78,489			60,420
Deferred income taxes		1,382			1,778
Prepaid and other current assets		13,265			9,924
Total current assets		176,579			175,825
Property, plant and equipment, net		58,501			57,396
Goodwill		9,298			9,228
Other assets		3,521			3,768
Total assets	$	247,899		$	246,217
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings under credit facilities	$	25,848		$	16,133
Current portion of long-term debt		12,220			11,611
Accounts payable		55,446			66,906
Accrued salaries and wages		5,626			7,313
Other current liabilities		12,527			16,004
Total current liabilities		111,667			117,967
Long-term debt, net of current portion		29,993			29,605
Deferred income taxes		4,799			4,820
Other long-term liabilities		3,108			2,783
Total liabilities		149,567			155,175
Commitments and contingencies	─			─
Stockholders’ equity:
Convertible preferred stock, without par value – 0 and 345,000 shares
authorized, respectively; 0 and 46,381 shares issued and outstanding,
respectively, with a liquidation preference of $0 and $5,812,
respectively	─				2
Undesignated preferred stock, without par value – 500,000 and 155,000
shares authorized, respectively; no shares issued and outstanding	─			─
Common stock, without par value – 50,000,000 shares authorized;
27,362,998 and 26,709,370 shares issued and outstanding,
respectively		53,120			47,659
Additional paid-in capital		71,731			74,920
Accumulated other comprehensive income		6,926			5,416
Accumulated deficit		(33,445	)		(36,955	)
Total stockholders’ equity		98,332			91,042
Total liabilities and stockholders’ equity	$	247,899		$	246,217

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

-3- 

ICO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except share data)

	Three Months Ended December 31,
	2007			2006
Revenues:
Sales	$	101,188		$	77,587
Services		9,677			8,674
Total revenues		110,865			86,261
Cost and expenses:
Cost of sales and services (exclusive of depreciation shown below)		91,773			71,769
Selling, general and administrative		10,603			8,439
Depreciation and amortization		1,795			1,756
Impairment, restructuring and other costs		198		─
Operating income		6,496			4,297
Other income (expense):
Interest expense, net		(1,023	)		(664	)
Other		(133	)		(255	)
Income from continuing operations before income taxes		5,340			3,378
Provision for income taxes		1,814			818
Income from continuing operations		3,526			2,560
Loss from discontinued operations, net of benefit for
income taxes of $9 and $19, respectively		(16	)		(36	)
Net income	$	3,510		$	2,524
Preferred Stock dividends		(1	)		(308	)
Net gain on redemption of Preferred Stock	─				6,023
Net income applicable to Common Stock	$	3,509		$	8,239
Basic income per share:
Income from continuing operations	$	.13		$	.32
Loss from discontinued operations	─			─
Net income per common share	$	.13		$	.32
Diluted income per share:
Income from continuing operations	$	.13		$	.09
Loss from discontinued operations	─			─
Net income per common share	$	.13		$	.09
Basic weighted average shares outstanding		26,914,000			25,841,000
Diluted weighted average shares outstanding		27,873,000			28,204,000

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

-4- 

ICO, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited and in thousands)

	Three Months
	Ended December 31,
	2007		2006
Net income	$	3,510	$	2,524
Other comprehensive income
Foreign currency translation adjustment		1,034		2,166
Unrealized gain (loss) on foreign currency hedges		476		(366	)
Comprehensive income	$	5,020	$	4,324

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

-5- 

ICO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)

	Three Months Ended
	December 31,
	2007			2006
Cash flows provided by (used for) operating activities:
Net income	$	3,510		$	2,524
Loss from discontinued operations		16			36
Depreciation and amortization		1,795			1,756
Changes in assets and liabilities providing/(requiring) cash:
Receivables		16,534			4,738
Inventories		(17,799	)		5,393
Other assets		(2,392	)		(688	)
Income taxes payable		(316	)		(3,674	)
Deferred taxes		627			786
Accounts payable		(11,292	)		(4,202	)
Other liabilities		(2,097	)		(1,121	)
Net cash provided by (used for) operating activities by continuing
operations		(11,414	)		5,548
Net cash used for operating activities by discontinued operations		(25	)		(1,165	)
Net cash provided by (used for) operating activities		(11,439	)		4,383
Cash flows used for investing activities:
Capital expenditures		(2,505	)		(1,706	)
Net cash used for investing activities for continuing operations		(2,505	)		(1,706	)
Cash flows provided by (used for) financing activities:
Common stock transactions		350			236
Redemption of Preferred Stock		(200	)		(28,531	)
Preferred Stock dividends		(1,312	)	─
Increase (decrease) in short-term borrowings under credit
facilities, net		9,595			(2,638	)
Proceeds from long-term debt		2,402			14,490
Repayments of long-term debt		(1,671	)		(1,809	)
Debt financing costs	─				(160	)
Net cash provided by (used for) financing activities		9,164			(18,412	)
Effect of exchange rates on cash		93			62
Net decrease in cash and equivalents		(4,687	)		(15,673	)
Cash and cash equivalents at beginning of period		8,561			17,427
Cash and cash equivalents at end of period	$	3,874		$	1,754

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

-6- 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1.     BASIS OF FINANCIAL STATEMENTS

     The unaudited interim financial statements furnished reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of the interim period presented and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”).  All such adjustments are of a normal recurring nature.  The fiscal year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.  The results of operations for the three months ended December 31, 2007 are not necessarily indicative of the results expected for the fiscal year ended September 30, 2008. These interim financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on form 10-K for the year ended September 30, 2007.  The accounting policies for the periods presented are the same as described in Note 1 – Summary of Significant Accounting Policies to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007.

NOTE 2.     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, Fair Value Measurements (“SFAS 157”).  SFAS 157 defines “fair value,” establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements.  SFAS 157 does not require any new fair value measurements, rather, its application will be made pursuant to other accounting pronouncements that require or permit fair value measurements.  SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those years.  This standard will be effective for the Company starting with our interim period ending December 31, 2008.  The provisions of SFAS 157 are to be applied prospectively upon adoption, except for limited specified exceptions.  The Company does not expect the adoption of SFAS 157 to have a material impact on its financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115 (“SFAS 159”).  Under SFAS 159, a company may elect to measure eligible financial assets and financial liabilities at fair value at specified election dates.  Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings at each subsequent reporting date.  SFAS 159 is effective for fiscal years beginning after November 15, 2007.  We are currently assessing whether fair value accounting is appropriate for any of the Company’s eligible items and have not yet determined the impact, if any, of SFAS 159 on our financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS 141 (R)”) and No. 160, Noncontrolling interests in Consolidated Financial Statements (“SFAS 160”).  The goal of these standards is to improve, simplify, and converge internationally the accounting for business combinations and the reporting of noncontrolling interests in consolidated financial statements.  The provisions of SFAS 141 (R) and SFAS 160 are effective for the Company on October 1, 2009.  We have not yet determined the impact of adopting these standards.

NOTE 3.      STOCKHOLDERS’ EQUITY

During November 1993, the Company completed its initial offering of the $6.75 Convertible Exchangeable Preferred Stock (the “Preferred Stock”).  The shares of Preferred Stock were evidenced by and traded as depositary certificates (“Depositary Shares”), each representing 1/4 of a share of Preferred Stock.  A total of 1,290,000 Depositary Shares were sold at a price of $25 per share.  Each share of Preferred Stock was convertible into 10.96 shares of the Company’s Common Stock (equivalent to 2.74 shares of Common Stock per Depositary Share) at a conversion price of $9.125 per share of Common Stock.

During the quarter ended December 31, 2006, the Company repurchased 1,095,853 Depositary Shares for $26.00 per Depositary Share, for total consideration of $28.5 million.  The dividends that were in arrears on these 1,095,853 Depositary Shares of $7.2 million were extinguished by the repurchase.  This repurchase resulted in a net gain of $6.0 million in the three months ended December 31, 2006.  In September 2007, at the instruction of Preferred Stock shareholders, 8,624 Depositary Shares were converted into 23,622 shares of Common Stock.  Therefore, as of September 30, 2007, there were 185,523 Depositary Shares outstanding.  Dividends in arrears of $6.33 per Depositary Share on the outstanding 185,523 Depositary Shares as of September 30, 2007 aggregated $1.2 million.  The $1.2 million of dividends in arrears was declared for payment during the fourth quarter of fiscal year 2007 and was paid in October 2007.

-7- 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

     On October 3, 2007, the Company announced its plan to redeem all outstanding Depositary Shares representing the Preferred Stock at the close of market on November 5, 2007.  During the time period between the referenced announcement and the redemption, at the instruction of the shareholders, 177,518 Depositary Shares were converted into 486,321 shares of Common Stock.  As a result, the Company recorded a decrease to Additional Paid-In Capital of $4.4 million and an increase to Common Stock of $4.4 million.  The remaining 8,005 Depositary Shares outstanding on November 5, 2007 were redeemed by the Company at $25 per Depositary Share for a total consideration of $0.2 million, which was recorded as a reduction to Additional Paid-In Capital.  All of the outstanding Depositary Shares representing the Preferred Stock were canceled by the Company at the time of redemption.  As of the close of business on November 5, 2007, no shares of Preferred Stock or Depositary Shares remain outstanding.

A summary of the changes in the stockholders’ equity accounts for the three months ended December 31, 2007 is as follows:

												Accumulated
				Common			Common		Additional			Other
	Preferred			Stock			Stock		Paid-In			Comprehensive		Accumulated
	Stock			Shares			Amount		Capital			Income		Deficit			Total
	(Dollars in thousands)
Balance at September 30, 2007	$	2			26,709,370		$	47,659	$	74,920		$	5,416	$	(36,955	)	$	91,042
Issuance of shares in connection with employee benefit plans		–			34,047			479		–			–		–			479
Issuance of stock  options		–			–			–		95			–		–			95
Issuance of restricted stock		–			(510	)		–		147			–		–			147
Exercise of employee stock options		–			133,770			544		1,206			–		–			1,750
Preferred Stock Conversion to Common Stock		(2	)		486,321			4,438		(4,436	)		–		–			–
Preferred Stock redemption		–			–			–		(200	)		–		–			(200	)
Preferred Stock dividends		–			–			–		(1	)		–		–			(1	)
Translation adjustment		–			–			–		–			1,034		–			1,034
Unrealized net gain on foreign currency hedges		–			–			–		–			476		–			476
Net income		–			–			–		–			–		3,510			3,510
Balance at December 31, 2007	$	-			27,362,998		$	53,120	$	71,731		$	6,926	$	(33,445	)	$	98,332

NOTE 4.      EARNINGS PER SHARE (“EPS”)

The Company presents both basic and diluted EPS amounts.  Basic EPS is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period.  Diluted EPS assumes the conversion of all dilutive securities.

Basic and diluted earnings per share for the three months ended December 31, 2007, and 2006 are presented below:

	Three Months Ended December 31,
	2007		2006
Basic income per share:
Income from continuing operations	$	.13	$	.32
Loss from discontinued operations		–		–
Basic net income per common share	$	.13	$	.32
Diluted income per share:
Income from continuing operations	$	.13	$	.09
Loss from discontinued operations		–		–
Diluted net income per common share	$	.13	$	.09

For the three months ended December 31, 2006, the Company included the net gain on redemption of 84.9% of the Company’s outstanding Preferred Stock of $6.0 million in computing basic earnings per share, but the gain is excluded in the computation of diluted earnings per share. Refer to the following tables for a reconciliation of the amounts used in computing basic and diluted earnings per share.

-8- 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following presents the reconciliation from net income to net income applicable to common stock used in computing basic earnings per share:

	Three Months Ended December 31,
	2007			2006
	(Dollars in thousands)
Net income	$	3,510		$	2,524
Preferred stock dividends		(1	)		(308	)
Net gain on redemption of Preferred Stock		–			6,023
Net income applicable to common stock	$	3,509		$	8,239

In computing diluted earnings per share, the Company follows the if-converted method, which assumes the conversion of dilutive convertible securities.  For the quarter ended December 31, 2006, the Company separated the Preferred Stock that was redeemed from the outstanding Preferred Stock as of December 31, 2006 and treated each separately to determine if conversion was dilutive.  In doing so, the Preferred Stock redeemed was treated as being converted at the beginning of the quarter ended December 31, 2006.  Consequently, the net gain on redemption of Preferred Stock and the undeclared and unpaid Preferred Stock dividends were not included in computing net income applicable to Common Stock.  The following presents the reconciliation from net income to net income applicable to common stock used in computing diluted earnings per share:

	Three Months Ended December 31,
	2007			2006
	(Dollars in thousands)
Net income	$	3,510		$	2,524
Preferred stock dividends		(1	)		(82	)
Net income applicable to common stock	$	3,509		$	2,442

The difference between basic and diluted weighted-average common shares results from the assumed exercise of outstanding stock options calculated using the treasury stock method, impact from outstanding restricted stock awards using the treasury stock method and assumed conversion of the Preferred Stock redeemed during the three months ended December 31, 2006.  The following presents the number of incremental weighted-average shares used in computing diluted per share amounts:

	Three Months Ended December 31,
Weighted-average shares outstanding:	2007	2006
Basic	26,914,000	25,841,000
Incremental shares from assumed conversion
of Preferred Stock redeemed	–	1,428,000
Incremental shares from stock options	897,000	935,000
Incremental shares from restricted stock awards	62,000	–
Diluted	27,873,000	28,204,000

The total amount of anti-dilutive securities for the three months ended December 31, 2007 and 2006 were 663,000 and 1,703,000 shares, respectively.

NOTE 5.      INVENTORIES

Inventories consisted of the following:

	December 31, 2007		September 30, 2007
	(Dollars in thousands)
Raw materials	$	46,797	$	36,268
Finished goods		30,138		22,621
Supplies		1,554		1,531
Total inventories	$	78,489	$	60,420

-9- 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 6.      INCOME TAXES

The amounts of income before income taxes attributable to domestic and foreign continuing operations are as follows:

	Three months ended December 31,
	2007		2006
	(Dollars in thousands)
Domestic	$	2,419	$	2,574
Foreign		2,921		804
Total	$	5,340	$	3,378

The provision for income taxes consists of the following:

	Three months ended December 31,
	2007		2006
	(Dollars in thousands)
Current	$	1,239	$	738
Deferred		575		80
Total	$	1,814	$	818

A reconciliation of the income tax expense for continuing operations at the federal statutory rate of 35% to the Company's effective rate for the three months ending December 31, 2007 and 2006 are as follows:

	Three Months Ended
	December 31,
	2007			2006
	(Dollars in thousands)
Tax expense at statutory rate	$	1,869		$	1,182
Disqualifying disposition of stock options		(129	)		(18	)
Chargeback Reimbursement		(75	)		–
Foreign tax rate differential		(36	)		8
Change in the deferred tax assets valuation allowance		26			(68	)
State taxes, net of federal benefit		26			49
Tax rate change		122			–
Adjustment to tax contingency		–			(350	)
Non-deductible expenses and other, net		11			15
Income tax provision	$	1,814		$	818
Effective income tax rate		34%			24%

The Company does not provide for U.S. income taxes on foreign subsidiaries’ undistributed earnings intended to be permanently reinvested in foreign operations.  It is not practicable to estimate the amount of additional tax that might be payable should the earnings be remitted or should the Company sell its stock in the subsidiaries.  The Company has unremitted earnings from foreign subsidiaries of approximately $18.4 million.  The Company has determined that the undistributed earnings of foreign subsidiaries, exclusive of those repatriated under the American Jobs Creation Act, will be permanently reinvested.

In June 2006, the Financial Accounting Standards Board issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109 (“FIN 48”), which clarifies the accounting and disclosure for “uncertain tax positions” (as the term is defined in FIN 48).  FIN 48 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes.  On October 1, 2007, the Company adopted the provisions of FIN 48.  The adoption of FIN 48 did not have a material impact on our financial position or results of operations.  The Company also adopted the accounting policy to classify any interest and penalties on unrecognized tax positions as income tax in the event any arise in the future.  The Company does not anticipate that any tax contingencies which may arise in the next twelve months will have a material impact on our financial position or results of operations.

-10- 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The Company files income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions.  The Company is no longer subject to U.S. income tax examinations for periods preceding 2004.  In our other major tax jurisdictions, the earliest years remaining open to examination are as follows: France - 2004, Australia – 2003, New Zealand - 2002 and the Netherlands – 2002. In addition, in our other foreign jurisdictions, we are no longer subject to tax examinations for periods preceding 2001.

NOTE 7.      COMMITMENTS AND CONTINGENCIES

The Company has letters of credit outstanding in the United States of approximately $1.9 million as of December 31, 2007 and September 30, 2007, respectively, and foreign letters of credit outstanding of $7.0 million and $11.8 million as of December 31, 2007 and September 30, 2007, respectively.

Thibodaux Litigation.  Since September 2004, the Company has been a defendant in litigation pending in District Court in the Parish of Orleans, Louisiana (the “Thibodaux Lawsuit”) filed by C.M. Thibodaux Company (“Thibodaux”).  Other defendants in the case include Intracoastal Tubular Services, Inc. (“ITCO”), thirty different oil companies (the “Oil Company Defendants”), several insurance companies and four trucking companies.  Thibodaux, the owner of industrial property located in Amelia, Louisiana that has historically been leased to tenants conducting oilfield services businesses, contends that the property has been contaminated with naturally occurring radioactive material (“NORM”).  NORM is found naturally occurring in the earth, and when pipe is removed from the ground it is not uncommon for the corroded rust on the pipe to contain very small amounts of NORM.  The Company’s former Oilfield Services business leased a portion of the subject property from Thibodaux.  Thibodaux contends that the subject property was contaminated with NORM generated during the servicing of oilfield equipment by the Company and other tenants, and further alleges that the Oil Company defendants (customers of Thibodaux’s tenants) and trucking companies (which delivered tubular goods and other oilfield equipment to the subject property) allowed or caused the uncontrolled dispersal of NORM on Thibodaux’s property.  Thibodaux seeks recovery from the Defendants for clean-up costs, diminution or complete loss of property values, and other damages.  Discovery in the Thibodaux Lawsuit is ongoing, and the Company intends to assert a vigorous defense in this litigation.  At this time, the Company does not believe it has any liability in this matter.  In the event the Company is found to have liability, the Company believes it has insurance coverage applicable to this claim subject to a $1.0 million self-insured retention.  An adverse judgment against the Company, combined with a lack of insurance coverage, could have a material adverse effect on the Company's financial condition, results of operations and/or cash flows.

Environmental Remediation.  The Comprehensive Environmental Response, Compensation, and Liability Act, as amended (“CERCLA”), also known as “Superfund,” and comparable state laws impose liability without regard to fault or the legality of the original conduct on certain classes of persons who are considered to be responsible for the release of a “hazardous substance” into the environment.  These persons include the owner or operator of the disposal site or the site where the release occurred, and companies that disposed or arranged for the disposal of the hazardous substances at the site where the release occurred.  Under CERCLA, such persons may be subject to joint and several liability for the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural resources, and for the costs of certain health studies, and it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances into the environment.  The Company, through acquisitions that it has made, is identified as one of many potentially responsible parties (“PRPs”) under CERCLA in four claims relating to the following sites: (i) the French Limited site northeast of Houston, Texas; (ii) the Sheridan Disposal Services site near Hempstead, Texas; (iii) the Combe Fill South Landfill site in Morris County, New Jersey; and (iv) the Malone Service Company (MSC) Superfund site in Texas City, Texas.

Active remediation of the French Limited site was concluded in 1996.  If the Company is required to contribute to the costs of additional remediation at that site, such additional costs are not expected to have a material adverse effect on the Company.  With regard to the three remaining Superfund sites, the Company believes it remains responsible for only de minimus levels of wastes contributed to those sites, and that there are numerous other PRPs identified at each of these sites that contributed significantly larger volumes of wastes to the sites.  The Company expects that its share of any allocated liability for cleanup of the Sheridan Disposal Services site and the Combe Fill South Landfill site will not be significant, and based on the Company’s current understanding of the remedial status of each of these sites, together with its relative position in comparison to the many other PRPs at those sites, the Company does not expect its future environmental liability with respect to those sites to have a material adverse effect on the Company’s financial condition, results of operation, and/or cash flows.  With regard to the MSC site, in fiscal year 2005 the Company estimated the Company’s exposure and accrued a liability in that amount, based on settlement offers made to PRPs by the Environmental Protection Agency (“EPA”) in fiscal year 2005 and the Company’s settlement discussions at that time.  The EPA subsequently withdrew its settlement offers to PRPs, in order to process additional evidence of transactions at the MSC site, and the EPA is expected to issue a new allocation to the PRPs,

-11- 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

upon which revised settlement offers are expected.  The Company does not expect the eventual outcome with respect to the MSC site to have a material adverse effect on the Company’s financial condition, results of operations and/or cash flows.

Other Legal Proceedings.  The Company is also named as a defendant in certain other lawsuits arising in the ordinary course of business. The outcome of these lawsuits cannot be predicted with certainty, but the Company does not believe they will have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

NOTE 8.      DEBT

Term debt at December 31, 2007 and September 30, 2007 consisted of the following.

	December 31,		September 30,
	2007		2007
	(Dollars in thousands)
Term loan of ICO, Inc. under the terms of the Key Bank credit agreement collateralized by assets of the Company’s subsidiaries.  Principal and interest paid quarterly with a variable interest rate through October 2011.  Interest rate as of December 31, 2007 was 6.1%.	$	12,500	$	13,333
Term loan of the Company’s Italian subsidiary, collateralized by a mortgage over the subsidiary’s real estate. Principal and interest paid quarterly with a fixed interest rate of 5.2% through June 2016.		6,434		6,408
Various other U.S. loans of the Company’s U.S. subsidiaries collateralized by mortgages on land and buildings and other assets of the subsidiaries.  As of December 31, 2007, these loans had a weighted average interest rate of 6.0% with maturity dates between November 2008 and May 2021.  The interest and principal payments are made monthly.		8,774		8,780
Various other loans provided by foreign banks of the Company’s foreign subsidiaries collateralized by mortgages on land and buildings and other assets of the subsidiaries.  As of December 31, 2007, these loans had a weighted average interest rate of 6.6% with maturity dates between August 2008 and March 2015.  The interest and principal payments are made monthly or quarterly.		14,505		12,695
Total term debt		42,213		41,216
Less current maturities of long-term debt		12,220		11,611
Long-term debt less current maturities	$	29,993	$	29,605

The Company maintains several lines of credit.  The facilities are collateralized by certain assets of the Company.  The following table presents the borrowing capacity, outstanding borrowings and net availability under the various credit facilities in the Company’s domestic and foreign operations.

	Domestic					Foreign				Total
	As of					As of				As of
	December 31,		September 30,			December 31,		September 30,		December 31,		September 30,
	2007		2007			2007		2007		2007		2007
	(Dollars in millions)
Borrowing Capacity (a)	$	27.5		$	28.1	$	50.6	$	58.6	$	78.1	$	86.7
Outstanding Borrowings		8.9			–		16.9		16.1		25.8		16.1
Net availability	$	18.6		$	28.1	$	33.7	$	42.5	$	52.3	$	70.6
(a) Based on the credit facility limits less outstanding letters of credit.

     On October 27, 2006, the Company entered into a five-year Credit Agreement (the “Credit Agreement”) with KeyBank National Association and Wells Fargo Bank National Association (collectively referred to herein as “KeyBank”), establishing a $45.0 million domestic credit facility (the “Credit Facility”).  The borrowing capacity available to the Company under the KeyBank Credit Facility consists of a five-year $15.0 million term loan and a five-year $30.0 million revolving credit facility.  The $45.0 million KeyBank Credit Facility contains a variable interest rate and contains certain financial and nonfinancial covenants. The borrowing capacity of the $30.0 million revolving credit facility varies based upon the levels of domestic cash, receivables and inventory.

-12- 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The Company has various foreign credit facilities in eight foreign countries. The available credit under these facilities varies based on the levels of accounts receivable within the foreign subsidiary, or is a fixed amount. The foreign credit facilities, which carry various financial covenants, are collateralized by assets owned by the foreign subsidiaries.

At December 31, 2007, the Company’s Australian subsidiary was in violation of a financial debt covenant related to $4.0 million of long-term debt and $2.3 million of short term borrowings under its credit facility with its lender in Australia.  Of the $33.7 million of total foreign credit availability as of December 31, 2007, $1.9 million related to the Company’s Australian subsidiary.  The Australian covenant not met related to a metric of quarterly profitability compared to interest expense.  Although profitable for the quarter, a decline in profitability during the quarter led to the covenant violation.  The Company obtained a waiver from its lender in Australia on this financial debt covenant violation.

 As of December 31, 2006, the Company’s New Zealand subsidiary was in violation of a financial debt covenant related to $3.0 million of short-term borrowings under its credit facility.  As of December 31, 2007, the New Zealand subsidiary is no longer in violation of its financial debt covenants.

NOTE 9.      EMPLOYEE BENEFIT PLANS

The Company maintains several defined contribution plans that cover domestic and foreign employees who meet certain eligibility requirements related to age and period of service with the Company. The plan in which each employee is eligible to participate depends upon the subsidiary for which the employee works. All plans have a salary deferral feature that enables participating employees to contribute up to a certain percentage of their earnings, subject to governmental regulations. Many of the foreign plans require the Company to match employees’ contributions in cash.  The Company’s domestic 401(k) plan has historically been voluntarily matched, typically with ICO Common Stock.  Foreign and domestic employees’ interests in Company matching contributions are generally vested immediately upon contribution.

The Company maintains a defined benefit plan for employees of the Company’s Dutch operating subsidiary. Participants contribute a portion of the cost associated with the benefit plan. The plan provides retirement benefits at the normal retirement age of 65. This plan is insured by an insurance contract with Aegon Levensverzekering N.V. ("Aegon"), located in The Hague, The Netherlands. The insurance contract guarantees the funding of the Company’s future pension obligations for its defined benefit pension plan. In accordance with the contract, Aegon will pay all future obligations under the provisions of this plan, while the Company pays annual insurance premiums. Payment of the insurance premiums by the Company constitutes an unconditional and irrevocable transfer of the related pension obligation from the Company to Aegon.  Aegon has a Standard and Poor’s financial strength rating of AA. The premiums paid for the insurance contracts are included in pension expense.

The Company also maintains several termination plans, usually mandated by law, within certain of its foreign subsidiaries that provide a one-time payment if a covered employee is terminated.

The defined contribution plan expense for the three months ended December 31, 2007 and 2006 was $0.4 million and $0.3 million, respectively.  The defined benefit plan pension expense for the three months ended December 31, 2007 and 2006 was $0.1 million, and $0.2 million, respectively.

NOTE 10.    IMPAIRMENT, RESTRUCTURING AND OTHER COSTS

On July 2, 2007, the Company’s facility in New Jersey suffered a fire that damaged certain equipment and one of the facility’s buildings.  Through December 31, 2007, the Company submitted initial claims for recovery of $1.7 million to its insurance carrier and recorded a receivable of $1.6 million ($1.7 million less $0.1 million deductible) in the fourth quarter of fiscal year 2007.  The Company’s insurance carrier paid $1.0 million through December 31, 2007, however, $0.9 million of the amount paid by the insurance carrier is currently held in escrow by the Company’s U.S. mortgage lender.  As of December 31, 2007, the Company has a receivable of $1.5 million in its Consolidated Balance Sheet (which includes the $0.9 million held in escrow).  During the three months ended December 31, 2007, the Company incurred $0.2 million of additional costs related to the fire.

NOTE 11.    DISCONTINUED OPERATIONS

During fiscal year 2002, the Company completed the sale of substantially all of its Oilfield Services business to National Oilwell Varco, Inc., formerly Varco International, Inc.  The Oilfield Services results of operations are presented as discontinued operations, net of income taxes, in the Consolidated Statement of Operations.  Legal fees and other expenses incurred related to discontinued operations are expensed as incurred to discontinued operations.

-13- 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 12.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s primary market risk exposures include debt obligations that carry variable interest rates, foreign currency exchange risk and resin price risk.  As of December 31, 2007, the Company had $75.4 million of net investment in foreign wholly-owned subsidiaries.  The Company does not hedge the foreign exchange rate risk inherent with this non-U.S. Dollar denominated investment. The Company does enter into forward currency exchange contracts related to future purchase obligations denominated in a nonfunctional currency.  These forward currency exchange contracts qualify as cash flow hedging instruments and are highly effective. The Company recognizes the amount of hedge ineffectiveness in the Consolidated Statement of Operations.  The hedge ineffectiveness was not a significant amount for the three months ended December 31, 2007 and 2006, respectively.  The Company’s principal foreign currency exposures relate to the Euro, British Pound, Australian Dollar, New Zealand Dollar, Malaysian Ringgit and Brazilian Real. The following table includes the total value of foreign exchange contracts outstanding as of December 31, 2007 and September 30, 2007:

	As of
	December 31,	September 30,
	2007	2007
Notional value	$18.9 million	$12.6 million
Fair market value	$19.1 million	$13.3 million
Maturity Dates	January 2008 through May 2008	October 2007 through December 2007

The Company’s revenues and profitability are impacted by changes in resin prices.  The Company uses various resins (primarily polyethylene) to make its products.  As the price of resin increases or decreases, market prices for the Company’s products will generally also increase or decrease.  This will typically lead to higher or lower average selling prices and will impact the Company’s operating income and operating margin.  The impact on operating income is due to a lag in matching the change in raw material cost of goods sold and the change in product sales prices.  As of December 31, 2007 and September 30, 2007, the Company had $46.8 million and $36.3 million of raw material inventory and $30.1 million and $22.6 million of finished goods inventory, respectively.  The Company attempts to minimize its exposure to resin price changes by monitoring and carefully managing the quantity of its inventory on hand and product sales prices.

Foreign Currency Intercompany Accounts and Notes Receivable.  From time-to-time, the Company’s U.S. subsidiaries provide capital to foreign subsidiaries of the Company through U.S. dollar denominated interest bearing promissory notes.  In addition, certain of the Company’s foreign subsidiaries also provide access to capital to other foreign subsidiaries of the Company through foreign currency denominated interest bearing promissory notes.  Such funds are generally used by the Company’s foreign subsidiaries to purchase capital assets and/or for general working capital needs.  In addition, the Company’s U.S. subsidiaries sell products to the Company’s foreign subsidiaries in U.S. dollars on trade credit terms.  The Company’s foreign subsidiaries also sell products to other foreign subsidiaries of the Company denominated in foreign currencies that may not be the functional currency of the foreign subsidiaries.  Because these intercompany debts are accounted for in the local functional currency of the foreign subsidiary, any appreciation or depreciation of the foreign currencies in which the transactions are denominated will result in a gain or loss, respectively, to the Consolidated Statement of Operations.  These intercompany loans are eliminated in the Company’s Consolidated Balance Sheet.  At December 31, 2007, the Company had the following significant outstanding intercompany amounts as described above:

Country of subsidiary with	Country of subsidiary with	Amount in US$ as of	Currency denomination
intercompany receivable	intercompany payable	December 31, 2007	of receivable
United States	Australia	$8.5 million	U.S. Dollar
New Zealand	Australia	$2.7 million	New Zealand Dollar
New Zealand	Malaysia	$1.2 million	New Zealand Dollar
United States	Italy	$1.1 million	U.S. Dollar

-14- 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 13.    SEGMENT INFORMATION

Our management structure and reportable segments are organized into five business segments defined as ICO Polymers North America, ICO Brazil, Bayshore Industrial, ICO Europe and ICO Asia Pacific.  This organization is consistent with the way information is reviewed and decisions are made by executive management.

ICO Polymers North America, ICO Brazil, ICO Europe and ICO Asia Pacific primarily produce competitively priced engineered polymer powders for the rotational molding industry as well as other specialty markets for powdered polymers, including masterbatch and concentrate producers, users of polymer-based metal coatings, and non-woven textile markets. Additionally, these segments provide specialty size reduction services on a tolling basis (“tolling” refers to processing customer owned material for a service fee).  The Bayshore Industrial segment designs and produces proprietary concentrates, masterbatches and specialty compounds, primarily for the plastic film industry, in North America and in selected export markets.  The Company’s European segment includes operations in France, Holland, Italy and the U.K.  The Company’s ICO Asia Pacific segment includes operations in Australia, Malaysia, New Zealand and the United Arab Emirates.

Three Months Ended December 31, 2007	Revenue From External Customers		Inter- Segment Revenues		Operating Income (Loss)			Depreciation and Amortization		Impairment, Restructuring and Other Costs (a)		Expenditures for Additions to Long-Lived Assets
	(Dollars in thousands)
ICO Europe	$	46,313	$	157	$	2,998		$	567		–		$	300
Bayshore Industrial		31,777		6		3,928			385		–			261
ICO Asia Pacific		17,945		–		862			349		–			1,033
ICO Polymers North America		10,331		991		446			389		198			839
ICO Brazil		4,499		–		137			66		–			58
Total from Reportable Segments		110,865		1,154		8,371			1,756		198			2,491
Unallocated Corporate expense		–		–		(1,875	)		39		–			14
Total	$	110,865	$	1,154	$	6,496		$	1,795	$	198		$	2,505

Three Months Ended December 31, 2006	Revenue From External Customers		Inter- Segment Revenues		Operating Income (Loss)			Depreciation and Amortization		Impairment, Restructuring and Other Costs (a)		Expenditures for Additions to Long-Lived Assets
	(Dollars in thousands)
ICO Europe	$	34,267	$	16	$	675		$	664	$	–	$	178
Bayshore Industrial		23,880		20		3,290			373		–		351
ICO Asia Pacific		15,613		–		718			239		–		932
ICO Polymers North America		9,606		515		1,008			369		–		170
ICO Brazil		2,895		–		77			57		–		65
Total from Reportable Segments	$	86,261	$	551	$	5,768		$	1,702	$	–	$	1,696
Corporate		–		–		(1,471	)		54		–		10
Total	$	86,261	$	551	$	4,297		$	1,756	$	–	$	1,706

Total Assets	As of December 31, 2007 (c)		As of September 30, 2007 (c)
	(Dollars in thousands)
ICO Europe	$	100,284	$	99,357
Bayshore Industrial		42,288		50,487
ICO Asia Pacific		70,096		60,817
ICO Polymers North America		25,291		24,478
ICO Brazil		7,387		6,563
Total from Reportable Segments		245,346		241,702
Other (b)		2,553		4,515
Total	$	247,899	$	246,217

(a) Impairment, restructuring and other costs are included in operating income (loss).

(b) Consists of unallocated Corporate assets.

(c) Includes goodwill of $4.8 million and $4.7 million for ICO Asia Pacific as of December 31, 2007 and September 30, 2007, respectively, and $4.5 million for Bayshore Industrial as of December 31, 2007 and September 30, 2007.

-15- 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

A reconciliation of total reportable segment operating income to income from continuing operations before income taxes is as follows:

	Three Months Ended December 31,
	2007			2006
	(Dollars in thousands)
Reportable segments operating income	$	8,371		$	5,768
Unallocated corporate expense		(1,875	)		(1,471	)
Consolidated operating income		6,496			4,297
Other income (expense):
Interest expense, net		(1,023	)		(664	)
Other		(133	)		(255	)
Income from continuing operations before income taxes	$	5,340		$	3,378

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

Introduction

How We Generate Our Revenues

The Company’s revenues are primarily derived from product sales and toll processing services in the polymer processing industry.

Product sales result from the sale of finished products to the customer such as polymer powders, proprietary concentrates, masterbatches and specialty compounds. The creation of such products begins with the Company purchasing resin (primarily polyethylene) and other raw materials that are processed by the Company, which may involve size reduction and/or compounding.  Compounding involves melt blending various resins and additives to produce a homogeneous material. Compounding includes the manufacture and sale of concentrates.  Concentrates are polymers loaded with high levels of chemical and organic additives that are melt blended into base resins to give plastic films and other finished products desired physical properties.  After processing, the Company sells the finished products to customers.  The finished products produced by the Company are most often used to manufacture household items (such as toys, household furniture and trash receptacles), automobile parts, agricultural products (such as fertilizer and water tanks), paint and metal and fabric coatings.

The Company’s concentrate products are primarily used by third parties to produce plastic films.  These products are mostly sold throughout North America.

Toll processing services involve both size reduction and compounding whereby these services are performed on customer owned material for a fee.  We consider our toll processing services to be completed when we have processed the customer owned material and no further services remain to be performed.  Pursuant to the service arrangements with our customers, we are entitled to collect our agreed upon toll processing fee upon completion of our toll processing services.  Shipping of the product to and from our facilities is determined by and paid for by the customer.  The revenue we recognize for toll processing services is net of the value of our customer’s product as we do not take ownership of our customer’s material during any stage of the process.

Demand for the Company’s products and services tends to be driven by overall economic factors and, particularly, consumer spending.  The trend of applicable resin prices also impacts customer demand.  As resin prices are falling, customers tend to reduce their inventories and, therefore, reduce their need for the Company’s products and services as customers choose to purchase resin on a just-in-time basis rather than building large levels of inventory.  Conversely, as resin prices are rising, customers often increase their inventories and accelerate their purchases of products and services from the Company to help lower their raw material costs.  Additionally, demand for the Company’s products and services tends to be seasonal, with customer demand historically being weakest during the Company’s first fiscal quarter due to the holiday season.

Cost of Sales and Services

Cost of sales and services is primarily comprised of raw materials (resins and various additives), compensation and benefits to non-administrative employees, electricity, repair and maintenance, occupancy costs and supplies.

-16- 

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of compensation and related benefits paid to the sales and marketing, executive management, information technology, accounting, legal, human resources and other administrative employees of the Company, other sales and marketing expenses, communications costs, systems costs, insurance costs, consulting costs and legal and professional accounting fees.

How We Manage Our Operations

The Company’s management structure and reportable segments are organized into five business segments defined as ICO Polymers North America, ICO Brazil, Bayshore Industrial, ICO Europe and ICO Asia Pacific.  This organization is consistent with the way information is reviewed and decisions are made by executive management.

ICO Polymers North America, ICO Brazil, ICO Europe and ICO Asia Pacific primarily produce competitively priced polymer powders for the rotational molding industry as well as other specialty markets for powdered polymers, including masterbatch and concentrate producers, users of polymer-based metal coatings, and non-woven textile markets.  Masterbatches are concentrates that incorporate all of the additives a customer needs into a single package for a particular product manufacturing process, as opposed to requiring numerous packages.  Additionally, these segments provide specialty size reduction services on a tolling basis.  The Bayshore Industrial segment designs and produces proprietary concentrates, masterbatches and specialty compounds, primarily for the plastic film industry, in North America and in selected export markets. The Company’s ICO Europe segment includes operations in France, Holland, Italy and the U.K.  The Company’s ICO Asia Pacific segment includes operations in Australia, Malaysia, New Zealand and the United Arab Emirates.

Results of Operations

Three months ended December 31, 2007 compared to the three months ended December 31, 2006

Executive Summary

During the first quarter of fiscal 2008, the Company generated revenues of $110.9 million, an increase of $24.6 million compared to the first quarter of fiscal 2007.  All of the Company’s segments contributed to the increase in revenues.  Total volumes sold increased 8%.  Operating income increased 51%, or $2.2 million to $6.5 million.  This was a result of the increase in revenues and a 40 point basis increase in gross margin (to 17.2%) partially offset by an increase in SG&A.

	Summary Financial Information
	Three Months Ended December 31,
	2007		2006		Change			%
	(Dollars in thousands)
Total revenues	$	110,865	$	86,261	$	24,604			29%
SG&A (1)		10,603		8,439		2,164			26%
Operating income		6,496		4,297		2,199			51%
Income from continuing operations		3,526		2,560		966			38%
Net income	$	3,510	$	2,524	$	986			39%
Volumes (2)		81,900		76,000		5,900			8%
Gross margin (3)		17.2%		16.8%		.4%
SG&A as a percentage of revenue		9.6%		9.8%		(.2%	)
Operating income as a percentage of revenue		5.9%		5.0%		.9%

(1) “SG&A” is defined as selling, general and administrative expense.

(2) “Volumes” refers to total metric tons sold either by selling proprietary products or toll processing services.

(3) Gross margin is calculated as the difference between revenues and cost of sales and services excluding

depreciation, divided by revenues.

Revenues.Total revenues increased $24.6 million or 29% to $110.9 million.  The increase in revenues was a result of the changes in volumes sold by the Company (“volume”), changes in selling prices and mix of finished products sold or services performed (“price/product mix”) and, finally, the impact from changes in foreign currencies relative to the U.S. Dollar (“translation  effect”).

-17- 

The components of the increase in revenue are:

	Increase
	%	$
	(Dollars in thousands)
Volume	10%	$   8,848
Price/product mix	10%	8,489
Translation effect	9%	7,267
Total change in revenue	29%	$ 24,604

The Company’s revenues are impacted by the change in raw material prices (“resin” prices) as well as product sales mix.  As the price of resin increases or decreases, market prices for our products will generally also increase or decrease.  This will typically lead to higher or lower average selling prices.  Average selling prices were higher in the three months ended December 31, 2007 compared to selling prices in the three months ended December 31, 2006.  This fact, as well as a change in product sales mix primarily at Bayshore, caused an increase in our revenues of $8.5 million compared to the first quarter of fiscal year 2007.  Although the Company participates in numerous markets, the graph below illustrates the trend in our resin prices.

Total volumes sold increased 5,900 metric tons, or 8%, during the first quarter of fiscal year 2008 compared to the first quarter of 2007.  This increase in volumes sold led to an increase in revenues of $8.8 million.  All segments of the Company experienced an increase in volumes sold with the exception of the Company’s ICO Polymers North America region.

 Last, the translation effect of changes in foreign currencies relative to the U.S. Dollar caused an increase in revenues of $7.3 million due primarily to a stronger Euro compared to the U.S. Dollar.

 A comparison of revenues by segment and discussion of the significant segment changes is provided below.

Revenues by segment for the three months ended December 31, 2007 compared to the three months ended

December 31, 2006:

	Three Months Ended December 31
	2007		% of Total			2006		% of Total			Change		%
	(Dollars in thousands)
ICO Europe	$	46,313		42	%	$	34,267		40	%	$	12,046		35	%
Bayshore Industrial		31,777		29	%		23,880		28	%		7,897		33	%
ICO Asia Pacific		17,945		16	%		15,613		18	%		2,332		15	%
ICO Polymers North America		10,331		9	%		9,606		11	%		725		8	%
ICO Brazil		4,499		4	%		2,895		3	%		1,604		55	%
Total	$	110,865		100	%	$	86,261		100	%	$	24,604		29	%

-18- 

December 31, 2007 Revenues by Segment                             December 31, 2006 Revenues by Segment

                                                             

ICO Europe’s revenues increased $12.0 million or 35% due to higher volumes sold of 12% which increased revenues by $4.6 million.  The higher volumes were caused by an increase in customer demand and improved market and economic conditions.  Additionally, the translation effect of stronger European currencies compared to the U.S. Dollar caused an increase in revenues of $4.5 million.  Higher average selling prices caused by higher resin prices increased revenues by $2.9 million.

Bayshore Industrial’s revenues increased $7.9 million or 33% as a result of a change in product mix which increased revenues $6.3 million as well as an increase in volumes sold which increased revenues by $1.6 million.

 ICO Asia Pacific revenues increased $2.3 million or 15% primarily due to the translation effect of stronger foreign currencies of that region (Australian Dollar, New Zealand Dollar, Malaysian Ringgit) compared to the U.S. Dollar of $2.0 million.

 ICO Polymers North America’s revenues increased $0.7 million or 8% primarily due to an increase in sales revenues as a result of an increase in product sales volumes.

 ICO Brazil’s revenues increased $1.6 million or 55% due to an increase in volume sold which increased revenues by $0.9 million and the effect of the stronger Brazilian currency compared to the U.S. Dollar of $0.8 million.

 Gross Margins.  Consolidated gross margins (calculated as the difference between revenues and cost of sales and services, divided by revenues) increased from 16.8% to 17.2%.  This improvement was primarily due to an increase in our feedstock margins (the difference between product sales revenues and related cost of raw materials sold) partially offset by the impact from the mix of products sold and higher production costs.

Selling, General and Administrative.  Selling, general and administrative expenses (“SG&A”) increased $2.2 million or 26%.  The increase in SG&A was due to a higher compensation and benefits cost of $0.6 million, higher external professional fees of $0.5 million and the effect of stronger foreign currencies relative to the U.S. Dollar which had the effect of increasing SG&A by $0.6 million.  As a percentage of revenues, SG&A declined to 9.6% of revenue during the three months ended December 31, 2007 compared to 9.8% for the same quarter last year due to the increase in revenues.

Impairment, restructuring and other costs.  In the first quarter of fiscal year 2008, the Company incurred $0.2 million of costs as a result of the fire in the Company’s New Jersey facility in July 2007.

Operating income.  Consolidated operating income increased $2.2 million or 51% during the three months ended December 31, 2007 to $6.5 million.  The increase was primarily due to the increase in volumes sold offset partially by the higher SG&A costs.

-19- 

Operating income (loss) by segment and discussion of significant segment changes follows.

Operating income (loss)	Three Months Ended December 31,
	2007			2006			Change			%
	(Dollars in thousands)
ICO Europe	$	2,998		$	675		$	2,323			344	%
Bayshore Industrial		3,928			3,290			638			19	%
ICO Asia Pacific		862			718			144			20	%
ICO Polymers North America		446			1,008			(562	)		(56	%)
ICO Brazil		137			77			60			78	%
Total reportable segments		8,371			5,768			2,603			45	%
Unallocated general corporate expense		(1,875	)		(1,471	)		(404	)		27	%
Consolidated	$	6,496		$	4,297		$	2,199			51	%

Operating income as a percentage of revenues	Three Months Ended December 31,
	2007	2006	Change
	(Dollars in thousands)
ICO Europe	6%	2%	4%
Bayshore Industrial	12%	14%	(2%	)
ICO Asia Pacific	5%	5%	–
ICO Polymers North America	4%	10%	(6%	)
ICO Brazil	3%	3%	–
Consolidated	6%	5%	1%

ICO Europe’s operating income increased $2.3 million or 344% due to an increase in volumes sold and an increase in feedstock margins per metric ton.

Bayshore Industrial’s operating income increased $0.6 million or 19% due to a favorable change in product mix as well as an increase in volumes sold.

 ICO Polymers North America’s operating income decreased $0.6 million or 56% primarily due to the effects of the July 2007 fire in the Company’s New Jersey facility, which has temporarily reduced the capacity of the plant.  The Company expects to submit business interruption insurance claims with its insurance company in the next three to six months.

Unallocated general corporate expense increased $0.4 million or 27% due primarily to higher external professional fees.

Interest Expense, Net.  For the three months ended December 31, 2007, net interest expense increased $0.4 million or 54% as a result of an increase in borrowings due primarily to the repurchase of Preferred Stock in the first quarter of fiscal 2007.

Income Taxes (from continuing operations).  The Company’s effective income tax rates were provisions of 34% and 24% during the three months ended December 31, 2007 and 2006, compared to the U.S. statutory rate of 35%.  The Company’s effective income tax rate of 24% during the three months ended December 31, 2006 was primarily due to reduction of the tax contingency reserve by $0.4 million.

Net Income.  For the three months ended December 31, 2007, the Company had net income of $3.5 million compared to net income of $2.5 million for the comparable period in fiscal 2007, due to the factors discussed above.

Foreign Currency Translation.  The fluctuations of the U.S Dollar against the Euro, British Pound, New Zealand Dollar, Brazilian Real, Malaysian Ringgit and the Australian Dollar have impacted the translation of revenues and expenses of our international operations.  The table below summarizes the impact of changing exchange rates for the above currencies for the three months ended December 31, 2007.

	Three Months Ended
	December 31, 2007
Net revenues	$7.3 million
Operating income	$0.4 million
Pre-tax income	$0.3 million
Net income	$0.2 million

-20- 

Recently Issued Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, Fair Value Measurements (“SFAS 157”).  SFAS 157 defines “fair value,” establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements.  SFAS 157 does not require any new fair value measurements, rather, its application will be made pursuant to other accounting pronouncements that require or permit fair value measurements.  SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those years.  This standard will be effective for the Company starting with our interim period ending December 31, 2008.  The provisions of SFAS 157 are to be applied prospectively upon adoption, except for limited specified exceptions.  The Company does not expect the adoption of SFAS 157 to have a material impact on its financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115 (“SFAS 159”).  Under SFAS 159, a company may elect to measure eligible financial assets and financial liabilities at fair value at specified election dates.  Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings at each subsequent reporting date.  SFAS 159 is effective for fiscal years beginning after November 15, 2007.  We are currently assessing whether fair value accounting is appropriate for any of the Company’s eligible items and have not yet determined the impact, if any, of SFAS 159 on our financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS 141 (R)”) and No. 160, Noncontrolling interests in Consolidated Financial Statements (“SFAS 160”).  The goal of these standards is to improve, simplify, and converge internationally the accounting for business combinations and the reporting of noncontrolling interests in consolidated financial statements.  The provisions of SFAS 141 (R) and SFAS 160 are effective for the Company on October 1, 2009.  We have not yet determined the impact of adopting these standards.

Liquidity and Capital Resources

 The following are considered by management as key measures of liquidity applicable to the Company:

	December 31, 2007	September 30, 2007
Cash and cash equivalents	$3.9 million	$8.6 million
Working capital	$64.9 million	$57.9 million

Cash and cash equivalents declined $4.7 million and working capital increased $7.0 million during the three months ended December 31, 2007 due to the factors described below.

Cash Flows

	Three Months Ended December 31,
	2007			2006
	(Dollars in thousands)
Net cash provided by (used for) operating activities by continuing operations	$	(11,414	)	$	5,548
Net cash used for operating activities by discontinued operations		(25	)		(1,165	)
Net cash used for investing activities		(2,505	)		(1,706	)
Net cash provided by (used for) financing activities		9,164			(18,412	)
Effect of exchange rate changes		93			62
Net decrease in cash and cash equivalents	$	(4,687	)	$	(15,673	)

Cash Flows From Operating Activities

During the three months ended December 31, 2007, the Company used $11.4 million of cash for operating activities by continuing operations as a result of changes in working capital.  In the prior year period ended December 31, 2006, the Company generated cash of $5.5 million from operating activities by continuing operations.  The main reason for the change was due to an increase in inventory in the current year compared with a decrease in inventory in the prior year.   The increase in inventory in the current year was primarily due to the timing of inventory purchases, an anticipated increase in sales activity and higher inventory volumes in our Australia location.  In Australia, we encountered what we believe is a temporary reduction in demand in the water tank market which led to higher inventory volumes.  We expect that our overall inventory volumes will decline over the coming months compared to our levels at December 31, 2007.

Cash used for discontinued operations decreased $1.1 million as a result of the settlement with National Oilwell Varco, Inc. in the prior year period.

-21- 

Cash Flows Used for Investing Activities

Capital expenditures totaled $2.5 million during the three months ended December 31, 2007 and were related primarily to expanding the Company’s production capacity in its Asia Pacific region as well as expenditures incurred related to the Company’s New Jersey building and equipment as a result of the July 2007 fire.  The Company expects capital expenditures to be approximately $14.0 million for the remainder of the fiscal year.

Cash Flows Used For Financing Activities

During the three months ended December 31, 2007, financing activities provided $9.2 million of cash.  This was primarily due to borrowings under the Company’s U.S. credit facility as a result of the higher inventory levels.  In the prior year period, the Company used $18.4 million for financing activities primarily to finance the repurchase of 85% of the Company’s Preferred Stock.

Financing Arrangements

The Company maintains several lines of credit.  The facilities are collateralized by certain assets of the Company.  The following table presents the borrowing capacity, outstanding borrowings and net availability under the various credit facilities in the Company’s domestic and foreign operations.

	Domestic					Foreign				Total
	As of					As of				As of
	December 31,		September 30,			December 31,		September 30,		December 31,		September 30,
	2007		2007			2007		2007		2007		2007
	(Dollars in millions)
Borrowing Capacity (a)	$	27.5		$	28.1	$	50.6	$	58.6	$	78.1	$	86.7
Outstanding Borrowings		8.9			–		16.9		16.1		25.8		16.1
Net availability	$	18.6		$	28.1	$	33.7	$	42.5	$	52.3	$	70.6
(a) Based on the credit facility limits less outstanding letters of credit.

    On October 27, 2006, the Company entered into a five-year Credit Agreement (the “Credit Agreement”) with KeyBank National Association and Wells Fargo Bank National Association (collectively referred to herein as “KeyBank”), establishing a $45.0 million domestic credit facility (the “Credit Facility”).  The borrowing capacity available to the Company under the KeyBank Credit Facility consists of a five-year $15.0 million term loan and a five-year $30.0 million revolving credit facility.  The $45.0 million KeyBank Credit Facility contains a variable interest rate and contains certain financial and nonfinancial covenants.  The borrowing capacity of the $30.0 million revolving credit facility varies based upon the levels of domestic cash, receivables and inventory.

The Company has various foreign credit facilities in eight foreign countries. The available credit under these facilities varies based either on the levels of accounts receivable within the foreign subsidiary, or is a fixed amount. The foreign credit facilities, which carry various financial covenants, are collateralized by assets owned by the foreign subsidiaries.

At December 31, 2007, the Company’s Australian subsidiary was in violation of a financial debt covenant related to $4.0 million of long-term debt and $2.3 million of short term borrowings under its credit facility with its lender in Australia.  Of the $33.7 million of total foreign credit availability as of December 31, 2007, $1.9 million related to the Company’s Australian subsidiary.  The Australian covenant not met related to a metric of quarterly profitability compared to interest expense.  Although profitable for the quarter, a decline in profitability during the quarter led to the covenant violation.  The Company obtained a waiver from its lender in Australia on this financial debt covenant violation.

As of December 31, 2006, the Company’s New Zealand subsidiary was in violation of a financial debt covenant related to $3.0 million of short-term borrowings under its credit facility.  As of December 31, 2007, the New Zealand subsidiary is no longer in violation of its financial debt covenants.

Presently, the Company anticipates that cash flow from operations and availability under credit facilities will be sufficient to meet its short and long-term operational requirements.

Off-Balance Sheet Arrangements.The Company does not have any financial instruments classified as off-balance sheet (other than operating leases) as of December 31, 2007 and September 30, 2007.

-22- 

Forward-Looking Statements

The statements contained in all parts of this document, including, but not limited to, timing of new services or facilities, ability to compete, future capital expenditures, effects of compliance with laws, fluctuation of the U.S. Dollar against foreign currencies, matters relating to operating facilities, effect and cost of litigation and remediation, future liquidity, future acquisitions, future market conditions, reductions in expenses, derivative transactions, net operating losses, tax credits, tax refunds, demand for the Company’s products and services, future growth plans, financial results and any other statements which are not historical facts are forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), that involve substantial risks and uncertainties.  When words such as “anticipate,” “believe,” “estimate,” “intend,” “expect,” “plan” and similar expressions are used, they are intended to identify the statements as forward-looking.  Actual results, performance or achievements can differ materially from results suggested by these forward-looking statements due to a number of factors, including results of operations, the Company’s financial condition, results of litigation, capital expenditures and other spending requirements, demand for the Company’s products and services and those described below and elsewhere in this document and those described in the Company’s other filings with the SEC.

ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s primary market risk exposures include debt obligations carrying variable interest rates, foreign currency exchange risk and resin price risk.  As of December 31, 2007, the Company had $75.4 million of net investment in foreign wholly-owned subsidiaries.  The Company does not hedge the foreign exchange rate risk inherent with this non-U.S. Dollar denominated investment. The Company does enter into forward currency exchange contracts related to future purchase obligations denominated in a nonfunctional currency.  These forward currency exchange contracts qualify as cash flow hedging instruments and are highly effective. The Company recognizes the amount of hedge ineffectiveness in the Consolidated Statement of Operations.  The hedge ineffectiveness was not a significant amount for the three months ended December 31, 2007 or 2006.  The Company’s principal foreign currency exposures relate to the Euro, British Pound, Australian Dollar, New Zealand Dollar, Malaysian Ringgit and Brazilian Real. The following table includes the total value of foreign exchange contracts outstanding as of December 31, 2007 and September 30, 2007:

	As of
	December 31,	September 30,
	2007	2007
Notional value	$18.9 million	$12.6 million
Fair market value	$19.1 million	$13.3 million
Maturity Dates	January 2008  through May 2008	October 2007  through December 2007

The Company’s revenues and profitability are impacted by changes in resin prices.  The Company uses various resins (primarily polyethylene) to make its products.  As the price of resin increases or decreases, market prices for the Company’s products will generally also increase or decrease.  This will typically lead to higher or lower average selling prices and will impact the Company’s gross profit and gross margin.  The impact on gross profit is due to a lag in matching the change in raw material cost of goods sold and the change in product sales prices.  As of December 31, 2007 and September 30, 2007, the Company had $46.8 million and $36.3 million of raw material inventory and $30.1 million and $22.6 million of finished goods inventory, respectively.  The Company attempts to minimize its exposure to resin price changes by monitoring and carefully managing the quantity of its inventory on hand and product sales prices.

The Company’s variable interest rates subject the Company to the risks of increased interest costs associated with any upward movements in market interest rates.  As of December 31, 2007, the Company had $43.7 million of variable interest rate debt.  The Company’s variable interest rates are tied to various bank rates.  At December 31, 2007, based on our current level of borrowings, a 1% increase in interest rates would increase interest expense annually by approximately $0.4 million.

Foreign Currency Intercompany Accounts and Notes Receivable.  From time-to-time, the Company’s U.S. subsidiaries provide capital to foreign subsidiaries of the Company through U.S. dollar denominated interest bearing promissory notes.  In addition, certain of the Company’s foreign subsidiaries also provide access to capital to other foreign subsidiaries of the Company through foreign currency denominated interest bearing promissory notes.  Such funds are generally used by the Company’s foreign subsidiaries to purchase capital assets and/or for general working capital needs.  In addition, the Company’s U.S. subsidiaries sell products to the Company’s foreign subsidiaries in U.S. dollars on trade credit terms.  The Company’s foreign subsidiaries also sell products to other foreign subsidiaries of the Company denominated in foreign currencies that may not be the

-23- 

functional currency of the foreign subsidiaries.  Because these intercompany debts are accounted for in the local functional currency of the foreign subsidiary, any appreciation or depreciation of the foreign currencies in which the transactions are denominated will result in a gain or loss, respectively, to the Consolidated Statement of Operations.  These intercompany loans are eliminated in the Company’s Consolidated Balance Sheet.  At December 31, 2007, the Company had the following significant outstanding intercompany amounts as described above:

Country of subsidiary with	Country of subsidiary with	Amount in US$ as of	Currency denomination
intercompany receivable	intercompany payable	December 31, 2007	of receivable
United States	Australia	$8.5 million	U.S. Dollar
New Zealand	Australia	$2.7 million	New Zealand Dollar
New Zealand	Malaysia	$1.2 million	New Zealand Dollar
United States	Italy	$1.1 million	U.S. Dollar

ITEM 4.       CONTROLS AND PROCEDURES

As of December 31, 2007, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b).  Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective.

There were no changes in the Company’s internal controls over financial reporting during our first fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a description of the Company’s legal proceedings, see Note 7 to the Consolidated Financial Statements included in Part I, Item 1 of this quarterly report on Form 10-Q and Part I, Item 3 of the Company’s Form 10-K filed December 10, 2007.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, under the heading "Risk Factors” in our Annual Report on Form 10-K for the year ended September 30, 2007, which could materially affect our business, financial condition or future results.  The risks described in our Annual Report on Form 10-K are not the only risks facing our Company.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

-24- 

ITEM 6. EXHIBITS

The following instruments and documents are included as Exhibits to this Form 10-Q:

Exhibit No.		Exhibit
31.1*	—	Certification of Chief Executive Officer and ICO, Inc. pursuant to 15 U.S.C. Section 7241.
31.2*	—	Certification of Chief Financial Officer and ICO, Inc. pursuant to 15 U.S.C. Section 7241.
32.1**	—	Certification of Chief Executive Officer of ICO, Inc. pursuant to 18 U.S.C. Section 1350.
32.2**	—	Certification of Chief Financial Officer of ICO, Inc. pursuant to 18 U.S.C. Section 1350.
*Filed herewith
**Furnished herewith

-25- 

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.

	ICO, Inc.
	(Registrant)
February 8, 2008	/s/ A. John Knapp, Jr.
	A. John Knapp, Jr.
	President, Chief Executive Officer, and
	Director (Principal Executive Officer)
	/s/ Bradley T. Leuschner
	Bradley T. Leuschner
	Chief Financial Officer and Treasurer
	(Principal Financial Officer)

  - -26-

EX-31.1

Exhibit 31.1

CERTIFICATION

I, A. John Knapp, Jr., certify that:

1.           I have reviewed this quarterly report on Form 10-Q for the quarter ended December 31, 2007 of ICO, Inc.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)           Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	February 8, 2008
	/s/ A. John Knapp, Jr.
Name:	A. John Knapp, Jr.
Title:	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Bradley T. Leuschner, certify that:

1.           I have reviewed this quarterly report on Form 10-Q for the quarter ended December 31, 2007 of ICO, Inc.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)           Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	February 8, 2008
	/s/ Bradley T. Leuschner
Name:	Bradley T. Leuschner
Title:	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER OF ICO, INC.

PURSUANT TO 18 U.S.C. § 1350

In connection with the accompanying quarterly report on Form 10-Q for the quarter ended December 31, 2007 and filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, A. John Knapp, Jr., the Chief Executive Officer of ICO, Inc., hereby certify, to my knowledge, that:

1.          The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.          The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant in respect of those items required to be described or presented in such Report under Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934.

	/s/ A. John Knapp, Jr.
Name:	A. John Knapp, Jr.
	Chief Executive Officer
Date:	February 8, 2008

This certification is furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed to be a part of the Report or “filed” for any purpose whatsoever.

EX-32.2

Exhibit 32.2

CERTIFICATION OF

CHIEF FINANCIAL OFFICER OF ICO, INC.

PURSUANT TO 18 U.S.C. § 1350

In connection with the accompanying quarterly report on Form 10-Q for the quarter ended December 31, 2007 and filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jon C. Biro, the Chief Financial Officer of ICO, Inc., hereby certify, to my knowledge, that:

1.          The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.          The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant in respect of those items required to be described or presented in such Report under Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934.

	/s/ Bradley T. Leuschner
Name:	Bradley T. Leuschner
	Chief Financial Officer
Date:	August 8, 2007

This certification is furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed to be a part of the Report or “filed” for any purpose whatsoever.