Martek Announces Third Quarter 2008 Financi...(existingcustomer. The Company's contract...)

Gross Margin and Operating Expenses

Overall gross margin for the third quarter of fiscal 2008 was 41.5%, an increase over the 41.2% gross margin realized in the second quarter of 2008 and the 38.5% gross margin realized in the third quarter of fiscal 2007. The gross profit margin improvements resulted largely from DHA productivity gains and increased capacity utilization at Martek's manufacturing facilities, as well as reductions in ARA costs. The Company expects its fourth quarter gross margin percentage to be consistent with that of the third quarter, and anticipates further gross margin improvements in fiscal 2009.

Research and development expenses in the third quarter of fiscal 2008 were $6.3 million, or 7% of revenue, a slight decrease from the $6.6 million, or 8% of revenue, in the third quarter of fiscal 2007. The Company's research and development efforts continue to focus on developing new food and beverage applications for life'sDHA(TM), broadening the scientific evidence supporting the benefits of life'sDHA(TM) throughout life, improving manufacturing processes and developing new products to expand the Company's market offerings. In the future, the Company expects to continue to experience quarter-to-quarter fluctuations in research and development expenses primarily due to the timing of outside services, including third-party clinical trial services. As noted last quarter, the Company anticipates that its research and development spend for the full fiscal year 2008 will approximate 7.5% of revenue, which includes higher planned expenditures in the fourth quarter for outside clinical trials.

During the third quarter of fiscal 2008, selling, general and administrative expenses were $13.6 million, or 15% of revenue, w
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