8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  August 6, 2008

____________________

ICO, INC.

(Exact name of registrant as specified in its charter)

Texas (State or other jurisdiction of incorporation) 0-10068 (Commission File Number) 76-0566682 (I.R.S. Employer Identification No.)

1811 Bering Drive, Suite 200

Houston, Texas 77057

(Address of principal executive offices and zip code)

(713) 351-4100

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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ITEM 2.02                      Results of Operations and Financial Condition

On August 6, 2008 (after the close of market), ICO, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2008.  A copy of the press release is attached herewith as Exhibit 99.1 and incorporated herein by reference.

The information contained herein shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

ITEM 7.01                      Regulation FD Disclosure

On August 6, 2008 (after the close of market), the Company issued a press release announcing its financial results for the quarter ended June 30, 2008.  A copy of the press release is attached herewith as Exhibit 99.1 and incorporated herein by reference.

On August 7, 2008, at 10:00 a.m. Central Time, the Company will hold a conference call to discuss its financial results for the quarter ended June 30, 2008.  This scheduled call and instructions for accessing the call were previously announced in press releases issued on July 16, 2008 and August 4, 2008, and again in the press release that was issued on August 6, 2008, which is attached as Exhibit 99.1 hereto.

A replay of the call will be accessible until November 6, 2008: (i) by calling 630-652-3044, and entering access code 22186048; (ii) at http://www.videonewswire.com/50067; or (iii) by a link on the landing page of the Company’s website at www.icopolymers.com.  The replay of the call will also be accessible for at least twelve (12) months after the date of the call on the Company’s website at www.icopolymers.com.

The information contained herein shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

ITEM 9.01                      Financial Statements and Exhibits

(d)           Exhibits

99.1           Press Release dated August 6, 2008.

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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 hereunto duly authorized.

	ICO, INC.
Date:  August 6, 2008	By:	/s/ Bradley T. Leuschner
	Name:	Bradley T. Leuschner
	Title:	Chief Financial Officer and
		Treasurer

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EX-99.1

ICO, Inc. Announces Financial Results for

Third Quarter Ended June 30, 2008

 HOUSTON, TEXAS, August 6, 2008 – ICO, Inc. (NASDAQ: ICOC), global producer of custom polymer powders and plastic film concentrates, today announced its results for the quarter ended June 30, 2008.

Third Quarter Highlights

·   Revenues of $115.7 million, an increase of $2.3 million or 2% from the prior year

·   Volumes declined 9% compared to the third quarter of fiscal 2007

·   Operating income of $6.5 million, down 28% year-over-year

·   Net income per share of $.17 fully diluted

·   Total debt outstanding decreased $10.0 million or 15% as a result of positive cash flow

Third Quarter 2008 vs. Third Quarter 2007

Revenues for the three months ended June 30, 2008 were $115.7 million, an increase of $2.3 million or 2% compared to the same quarter of the previous year.  The translation effect of stronger foreign currencies caused $8.9 million of the increase, while higher average selling prices and changes in product mix caused $1.8 million of the increase.  A 9% decrease in volumes sold reduced revenues by $8.3 million.

Gross margins declined from 18.1% to 16.0% primarily as a result of lower volumes sold, pricing pressures and higher operating costs, especially in our Bayshore Industrial segment and Australian locations.  The decline in gross margins led to a decline in operating income of $2.5 million or 28% compared to the prior year quarter. During the third quarter the Company reversed its valuation allowance on previous tax losses incurred in Brazil, which resulted in a reduction to income tax expense of $0.7 million.  Compared to the prior year quarter, income from continuing operations decreased $1.0 million or 18%, to $.17 per share for the three months ended June 30, 2008 as a result of the above items.

Third Quarter 2008 vs. Second Quarter 2008

Comparing the sequential quarterly results, revenues increased $3.6 million or 3% caused by the translation effect of stronger foreign currencies and changes in product sales mix and prices.  A 4% decline in volumes sold, combined with a decrease in feedstock margins, led to a reduction in gross margin from 17.2% to 16.0%.  The decline in gross margins, as well as lower net insurance recoveries of $1.2 million related to the July 2007 fire in the Company’s New Jersey location, led to a decline in operating income of $2.2 million or 25%.   Similar to the year-over-year quarterly comparison, profitability in our Bayshore Industrial segment and Australian locations also declined during the quarter, contributing to the sequential quarter reduction in operating income.  The reversal of the valuation allowance in Brazil and the Company’s lower

pre-tax income led to lower quarterly tax expense of $1.5 million.  Income from continuing operations declined $0.4 million or 7% as a result of the above.

“Although our third quarter results were disappointing to us, we can see the benefits of being diversified,” stated A. John Knapp, Jr., the Company’s President and CEO.  “Our European region produced tremendous results for the quarter which helped offset some of the weakness we saw in our Bayshore Industrial segment and Australian locations.  During the quarter, we generated good cash flow as we reduced our debt levels by $10.0 million.  We remain confident in the success of our business over the long-term due to our product and geographic diversity.”

Balance Sheet and Liquidity

Total debt outstanding as of June 30, 2008 was $58.5 million, a decline of $10.0 million from March 31, 2008.  This reduction was accomplished by positive cash flow from operations of $13.5 million less net capital expenditures of $3.3 million.  Approximately $1.7 million of the capital expenditures related to our facility relocation from New Jersey to Pennsylvania.  For the first nine months of fiscal year 2008, shareholders’ equity increased $22.4 million or 25%, primarily as a result of year-to-date net earnings and the effect of stronger foreign currencies compared to the U.S. Dollar.  Our available borrowing capacity at June 30, 2008 was $68.0 million, an increase from March 31, 2008 by $11.0 million.

Conference Call on the Web

A live Internet broadcast of ICO, Inc.’s conference call regarding fiscal 2008 third quarter results can be accessed at 10:00 a.m. Central Time on Thursday, August 7, 2008 at http://www.videonewswire.com/event.asp?id=50067, where the webcast replay will be accessible for ninety days.  The webcast replay will also be accessible on the Company’s website at www.icopolymers.com for a period of twelve months.  (Minimum requirements to listen to the broadcast are:  The Windows Media Player software, downloadable free from

http://www.microsoft.com/windows/windowsmedia/player/download/download.aspx and at least a 28.8Kbps connection to the Internet.)

Investors are invited to participate in the conference by dialing 847-413-3733, passcode 22186048.  A replay of the conference call will be available by dialing 630-652-3044, passcode 22186048.

About ICO, Inc.

With 20 locations in 10 countries, ICO produces custom polymer powders for rotational molding and other polymer related businesses, such as the textile, metal coating and masterbatch markets. ICO remains an industry leader in size reduction, compounding and other tolling services for plastic and non-plastic materials. ICO's Bayshore Industrial subsidiary produces specialty compounds, concentrates and additives primarily for the plastic film industry.  Additional information about ICO, Inc. can be found on the Company’s website at www.icopolymers.com.

     This press release contains forward-looking statements, which are not statements of historical facts and involve certain risks, uncertainties and assumptions. These include, but are not limited to, restrictions imposed by the Company’s outstanding indebtedness, changes in the cost and availability of resins (polymers) and other raw materials, demand for the Company's services and products, business cycles and other industry conditions, international risks, operational risks, currency translation risks, the Company’s lack of asset diversification, the Company’s ability to manage global inventory, develop technology and proprietary know-how, and attract and retain key personnel, as well as other factors detailed in the Company's form 10-K for the fiscal year ended September 30, 2007 and its other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated.

ICO, Inc.

Consolidated Statement of Operations

(Unaudited and in thousands, except per share data and percentages)

	Three Months Ended									Nine Months Ended
	June 30,						March 31,			June 30,
	2008			2007			2008			2008			2007
Product Sales	$	105,494		$	102,963		$	102,120		$	308,802		$	265,443
Toll Services		10,224			10,415			10,006			29,907			28,915
Total Revenues		115,718			113,378			112,126			338,709			294,358
Cost of sales and services (exclusive of depreciation shown
separately below)		97,234			92,836			92,838			281,845			241,976
Gross Profit (1)		18,484			20,542			19,288			56,864			52,382
Selling, general and administrative expense		10,441			9,727			10,387			31,431			27,440
Depreciation and amortization		1,932			1,855			1,853			5,580			5,466
Impairment, restructuring and other costs (income)		(356	)		-			(1,598	)		(1,756	)		(654	)
Operating income		6,467			8,960			8,646			21,609			20,130
Other income (expense):
Interest expense, net		(1,039	)		(799	)		(1,096	)		(3,158	)		(2,301	)
Other income (expense)		165			(129	)		(68	)		(36	)		(296	)
Income from continuing operations before income taxes		5,593			8,032			7,482			18,415			17,533
Provision for income taxes		960			2,400			2,489			5,263			3,819
Income from continuing operations		4,633			5,632			4,993			13,152			13,714
Income (loss) from discontinued operations, net of income taxes		-			(18	)		-			(16	)		1,421
Net income	$	4,633		$	5,614		$	4,993		$	13,136		$	15,135
Preferred Stock dividends		-			(82	)		-			(1	)		(472	)
Net gain on redemption of Preferred Stock		-			-			-			-			6,023
Net income applicable to Common Stock	$	4,633		$	5,532		$	4,993		$	13,135		$	20,686
Basic income from continuing operations per common share	$	0.17		$	0.21		$	0.18		$	0.48		$	0.74
Basic net income per common share	$	0.17		$	0.21		$	0.18		$	0.48		$	0.80
Diluted income from continuing operations per common share	$	0.17		$	0.20		$	0.18		$	0.47		$	0.49
Diluted net income per common share	$	0.17		$	0.20		$	0.18		$	0.47		$	0.54
Basic weighted average shares outstanding		27,433,000			26,056,000			27,263,000			27,202,000			25,934,000
Diluted weighted average shares outstanding		27,975,000			27,598,000			27,949,000			27,975,000			27,892,000
Gross Margin (2)		16.0%			18.1%			17.2%			16.8%			17.8%
(1) Calculated as Total Revenues minus Cost of Sales and Services, exclusive of Depreciation Expense.
(2) Calculated as Gross Profit divided by Total Revenues.

ICO, Inc.

Consolidated Balance Sheet

 (Unaudited and in thousands, except share data and ratios)

	June 30,			September 30,
	2008			2007
ASSETS
Current assets:
Cash and cash equivalents	$	3,909		$	8,561
Trade receivables		89,438			95,142
Inventories		72,302			60,420
Deferred income taxes		2,140			1,778
Prepaid and other current assets		8,868			9,924
Total current assets		176,657			175,825
Property, plant and equipment, net		65,039			57,396
Goodwill		9,258			9,228
Other assets		4,250			3,768
Total assets	$	255,204		$	246,217
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings under credit facilities	$	13,468		$	16,133
Current portion of long-term debt		17,089			11,611
Accounts payable		54,601			66,906
Accrued salaries and wages		7,010			7,313
Other current liabilities		13,517			16,004
Total current liabilities		105,685			117,967
Long-term debt, net of current portion		27,906			29,605
Deferred income taxes		4,894			4,820
Other long-term liabilities		3,255			2,783
Total liabilities		141,740			155,175
Commitments and contingencies		-			-
Stockholders' equity:
Convertible exchangeable preferred stock		-			2
Undesignated preferred stock		-			-
Common stock		54,302			47,659
Additional paid-in capital		72,158			74,920
Accumulated other comprehensive income		10,823			5,416
Accumulated deficit		(23,819	)		(36,955	)
Total stockholders' equity		113,464			91,042
Total liabilities and stockholders' equity	$	255,204		$	246,217
OTHER BALANCE SHEET DATA
Working capital	$	70,972		$	57,858
Current ratio		1.7			1.5
Total debt	$	58,463		$	57,349
Debt-to-capitalization		34.0%			38.6%

ICO, Inc.

Supplemental Segment Information

 (Unaudited and in thousands, except percentages)

Revenues
Three Months Ended June 30:	2008		% of Total		2007		% of Total		Change			%
ICO Europe	$	58,226		50%	$	47,797		42%	$	10,429			22%
Bayshore Industrial		19,044		16%		25,684		23%		(6,640	)		(26%	)
ICO Asia Pacific		21,417		19%		25,528		22%		(4,111	)		(16%	)
ICO Polymers North America		12,081		10%		11,083		10%		998			9%
ICO Brazil		4,950		5%		3,286		3%		1,664			51%
Consolidated	$	115,718		100%	$	113,378		100%	$	2,340			2%
Nine Months Ended June 30:	2008		% of Total		2007		% of Total		Change			%
ICO Europe	$	158,720		47%	$	124,178		42%	$	34,542			28%
Bayshore Industrial		71,563		21%		69,465		24%		2,098			3%
ICO Asia Pacific		58,989		18%		59,624		20%		(635	)		(1%	)
ICO Polymers North America		34,971		10%		31,486		11%		3,485			11%
ICO Brazil		14,466		4%		9,605		3%		4,861			51%
Consolidated	$	338,709		100%	$	294,358		100%	$	44,351			15%

Operating income (loss)
Three Months Ended June 30:	2008			2007			Change			%
ICO Europe	$	3,901		$	3,376		$	525			16%
Bayshore Industrial		2,045			3,329			(1,284	)		(39%	)
ICO Asia Pacific		(11	)		2,315			(2,326	)		(100%	)
ICO Polymers North America		1,811			1,553			258			17%
ICO Brazil		224			63			161			256%
Total Operations		7,970			10,636			(2,666	)		(25%	)
Unallocated General Corporate Expense		(1,503	)		(1,676	)		173			(10%	)
Consolidated	$	6,467		$	8,960		$	(2,493	)		(28%	)
Nine Months Ended June 30:	2008			2007			Change			%
ICO Europe	$	10,419		$	6,559		$	3,860			59%
Bayshore Industrial		8,755			9,642			(887	)		(9%	)
ICO Asia Pacific		1,612			4,161			(2,549	)		(61%	)
ICO Polymers North America		5,194			4,313			881			20%
ICO Brazil		553			267			286			107%
Total Operations		26,533			24,942			1,591			6%
Unallocated General Corporate Expense		(4,924	)		(4,812	)		(112	)		2%
Consolidated	$	21,609		$	20,130		$	1,479			7%

Operating income (loss) as a	Three Months Ended			Nine Months Ended
percentage of revenues	June 30,			June 30,
	2008	2007	Change	2008	2007	Change
ICO Europe	7%	7%	0%	7%	5%	2%
Bayshore Industrial	11%	13%	(2%)	12%	14%	(2%)
ICO Asia Pacific	0%	9%	(9%)	3%	7%	(4%)
ICO Polymers North America	15%	14%	1%	15%	14%	1%
ICO Brazil	5%	2%	3%	4%	3%	1%
Consolidated	6%	8%	(2%)	6%	7%	(1%)

ICO, Inc.

Supplemental Segment Information (cont'd.)

 (Unaudited and in thousands, except percentages)

Revenues
	Three Months Ended
	June 30,				March 31,
	2008		% of Total		2008		% of Total		Change			%
ICO Europe	$	58,226		50%	$	54,181		48%	$	4,045			7%
Bayshore Industrial		19,044		16%		20,742		18%		(1,698	)		(8%	)
ICO Asia Pacific		21,417		19%		19,627		18%		1,790			9%
ICO Polymers North America		12,081		10%		12,559		11%		(478	)		(4%	)
ICO Brazil		4,950		5%		5,017		5%		(67	)		(1%	)
Consolidated	$	115,718		100%	$	112,126		100%	$	3,592			3%

Operating income (loss)
	Three Months Ended
	June 30,			March 31,
	2008			2008			Change			%
ICO Europe	$	3,901		$	3,520		$	381			11%
Bayshore Industrial		2,045			2,782			(737	)		(26%	)
ICO Asia Pacific		(11	)		761			(772	)		(101%	)
ICO Polymers North America		1,811			2,937			(1,126	)		(38%	)
ICO Brazil		224			192			32			17%
Total Operations		7,970			10,192			(2,222	)		(22%	)
Unallocated General Corporate Expense		(1,503	)		(1,546	)		43			(3%	)
Consolidated	$	6,467		$	8,646		$	(2,179	)		(25%	)

Operating income (loss) as a	Three Months Ended
percentage of revenues	June 30,		March 31,
	2008		2008		Change
ICO Europe		7%		6%		1%
Bayshore Industrial		11%		13%		(2%	)
ICO Asia Pacific		0%		4%		(4%	)
ICO Polymers North America		15%		23%		(8%	)
ICO Brazil		5%		4%		1%
Consolidated		6%		8%		(2%	)