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Martek Announces Third Quarter 2007 Financial Results
Date:9/5/2007

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Gross Margin and Operating Expenses

Martek's gross margin for the third quarter of fiscal 2007 was 38.5%, which represents the third straight quarter of margin improvement as well as growth from the 36.1% gross margin in last year's third quarter. Compared to second quarter margins of 34.8%, third quarter gross margins were positively affected by lower ARA costs as a result of higher volumes compared to 2006 and the recent amendment to the Company's ARA license and supply agreement with DSM, as well as continued improvement in DHA productivity. These improvements offset the decrease in contract manufacturing margins caused by costs incurred in discontinuing certain products. As part of the amendment noted above, certain issues related to ARA purchased in prior years were resolved between the parties resulting in a third quarter margin gain to Martek of approximately 2.5%. The Company expects gross margins in the fourth quarter to approximate or exceed the gross margins realized in the current quarter as a result of ongoing improved ARA pricing resulting from higher ARA volumes and the continuing cost reductions resulting from the amended agreement with DSM as well as more efficient DHA production.

Research and development expenses increased to
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SOURCE Martek Biosciences Corporation
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