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January 28, 2009

TO OUR SHAREHOLDERS, EMPLOYEES, AND OTHER STAKEHOLDERS:

We recognize that these are challenging economic times, and we believe that ICO
will not only survive the times, but emerge as a stronger and better company.  
In the midst of turmoil, we believe opportunities will arise, and we intend to
be in a position to take advantage of those opportunities.

During the first quarter of fiscal year 2009, we altered our focus from offense:
growth and expansion, to defense: protecting both our cash flow and the value of
our Company.  We believe that is the correct strategy for these times.

In fiscal year 2008, while our revenues grew, our volumes and our operating
income did not.  We are disappointed in the latter two measurements as we
believe our platform can deliver all three.

We know that fiscal year 2009 will be challenging.  The global credit crisis
that the world has witnessed, commencing in the later part of the 2008 calendar
year, is unprecedented.  In addition, currency movements during this period have
been dramatic, as have been the price fluctuations in commodity resins including
our most common base materials.  We believe, however, that there are always
niches in the polymer space that offer opportunity.  Our job is to seize those
opportunities.

We continue to focus on that which has contributed to ICO’s success:

Serving Customers:  Our focus remains primarily on providing quality services
and products to our customers, with emphasis on added-value products that help
our customers achieve their goals.  We aim to offer unique, leading edge
products to our customers, and we are capable of serving customers who
appreciate a global platform.

Developing People:  “People are our most important asset” is not just a phrase
at ICO.  Attracting, developing and motivating the right people for ICO is our
most significant challenge.  We know that in order to grow our business we need
talented, dedicated people in all facets of our business.  We are investing in
training our people and helping them grow.  Our compensation plans deliver fair
and reasonable rewards for performance and good execution.

Partnering With Suppliers:  We buy from producers of high quality resins or
additives throughout the world, and we work to maintain and enhance the
relationships with those suppliers.  They are our partners and an important key
to our success.

Investing Effectively:  We continue to invest in equipment that improves our
productivity and increases productive capacity in existing markets, and we aim
to invest in new markets with attractive growth characteristics.  In fiscal year
2009, we will continue to seek such opportunities.  Importantly, we strive to
allocate capital within our business to the highest return opportunities with
quantifiable risk.  In the long run, this is how we will create value for our
shareholders.

During fiscal year 2008, we continued to expand our business in Malaysia, and we
sought to expand our presence in Brazil.  We are optimistic about both of these
markets.

We elected to close the small facility we recently opened in Dubai.  We
concluded that this specific market had too many obstacles to provide a
reasonable return on our capital and resources. This decision does not mean that
we have given up on the Middle East.  It does, however, mean that we need to
approach the market in a different manner.  We believe we have a strategy to do
so.

Finally, investment in our business includes substantial investment in working
capital, including inventory and accounts receivable, less account payables.  We
believe that we have made improvements in the effectiveness of our management of
working capital, and aim to continue to do so in fiscal year 2009 and onward.

Continuing Commitment to Sound Corporate Governance and Growth of Shareholder
Value:  We pride ourselves on having a strong corporate governance environment. 
Furthermore, our executives are appropriately motivated through effective
compensation plans, which are well aligned with shareholders.

During fiscal year 2008 we finished repurchasing our preferred shares, and
commenced a share repurchase plan for our common shares.  As of the date of this
letter, we have purchased 578,081 common shares, for an average price of $5.19
per share, or an aggregate investment of $3.0 million.  In addition, during
fiscal year 2008, our shareholders’ equity grew from $91.0 million to $107.8
million.

On September 30, 2008, our net debt to total capital was 29% and that percentage
has continued to decline as of the date of this letter.  We believe in
maintaining a strong balance sheet for a company of our size, and will continue
to aim to do so.

Achieving Operating Results:  We will continue to control our costs, and we
recognize that an increase in volumes processed is the most assured means to
achieve operating leverage that produces attractive profitability.  In fiscal
year 2008, we earned just under 15% on equity.  While that rate is down from the
previous year, we believe it may have been among the highest returns in our
industry during that time frame, and it was achieved without substantial
financial leverage.

Confidence:  While we are keenly aware of the challenging economic environment,
we enter fiscal year 2009 with confidence in our team and our position in the
market.  Resin prices will rise and fall, products will change, but over the
course of the coming years, we, working with good customers, will strive to grow
our business by helping our customers succeed at making better products.

In closing, we extend our sincere appreciation to our customers, suppliers, and
employees for all their efforts in fiscal year 2008.  We look forward to
continuing to work together to meet the challenges presented in fiscal year
2009.

 
/s/ A. John Knapp, Jr.
 
A. John Knapp, Jr.
 
President and Chief Executive Officer