##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended April 30, 2008
 or
 o
    
    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 0-22354
 MARTEK BIOSCIENCES CORPORATION
  Delaware
    
    52-1399362(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification Number)
 6480 Dobbin Road, Columbia, Maryland 21045
 (410) 740-0081
 
 
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



PART I FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    1Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    21Item 4. Controls and Procedures
    
    
    21PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    22Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item 3. Defaults Upon Senior Securities
    
    
    34Item 4. Submission of Matters to a Vote of Security Holders
    
    
    34Item 5. Other Information
    
    
    34Item 6. Exhibits
    
    
    35Signatures
    
    
    36Exhibit 31.01Exhibit 31.02Exhibit 32.01Exhibit 32.02




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 MARTEK BIOSCIENCES CORPORATION
  April 30,
    
    
    October 31,In thousands, except share and per share data
    
    2008
    
    
    2007(unaudited)AssetsCurrent assetsCash and cash equivalents
    
    $
    44,656
    
    
    $
    16,973Short-term investments and marketable securities
    
    
    
    
    
    
    4,675Accounts receivable, net
    
    
    44,593
    
    
    
    41,643Inventories, net
    
    
    112,521
    
    
    
    109,409Deferred tax asset
    
    
    14,967
    
    
    
    14,549Other current assets
    
    
    5,221
    
    
    
    8,237Total current assets
    
    
    221,958
    
    
    
    195,486Property, plant and equipment, net
    
    
    270,530
    
    
    
    277,915Deferred tax asset
    
    
    28,428
    
    
    
    36,757Long-term auction rate security investments
    
    
    14,701
    
    
    
    Goodwill
    
    
    51,592
    
    
    
    51,564Other intangible assets, net
    
    
    32,670
    
    
    
    34,320Other assets, net
    
    
    536
    
    
    
    653Total assets
    
    $
    620,415
    
    
    $
    596,695Liabilities and stockholders equityCurrent liabilitiesAccounts payable
    
    $
    15,357
    
    
    $
    18,118Accrued liabilities
    
    
    17,361
    
    
    
    25,154Current portion of notes payable and other long-term obligations
    
    
    8,269
    
    
    
    1,012Current portion of deferred revenue
    
    
    2,232
    
    
    
    1,857Total current liabilities
    
    
    43,219
    
    
    
    46,141Long-term debt under revolving credit facility
    
    
    
    
    
    
    Notes payable and other long-term obligations
    
    
    1,502
    
    
    
    9,310Long-term portion of deferred revenue
    
    
    9,246
    
    
    
    9,517Total liabilities
    
    
    53,967
    
    
    
    64,968CommitmentsStockholders equityPreferred stock, $.01 par value, 4,700,000 shares authorized; none issued or outstanding
    
    
    
    
    
    
    Series B junior participating preferred stock, $.01 par value; 300,000 shares authorized; none issued or outstanding
    
    
    
    
    
    
    Common stock, $.10 par value; 100,000,000 shares authorized; 32,990,055 and 32,335,622 shares issued and
outstanding, respectively
    
    
    3,299
    
    
    
    3,234Additional paid-in capital
    
    
    548,097
    
    
    
    530,575Accumulated other comprehensive (loss) income
    
    
    (534
    )
    
    
    203Retained earnings (accumulated deficit)
    
    
    15,586
    
    
    
    (2,285
    )Total stockholders equity
    
    
    566,448
    
    
    
    531,727Total liabilities and stockholders equity
    
    $
    620,415
    
    
    $
    596,695
 See accompanying notes.
  1




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##### Table of Contents



MARTEK BIOSCIENCES CORPORATION
  Three months ended April 30,
    
    
    Six months ended April 30,Unaudited
 In thousands, except per share data
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Product sales
    
    $
    87,875
    
    
    $
    72,336
    
    
    $
    166,484
    
    
    $
    139,048Contract manufacturing sales
    
    
    2,851
    
    
    
    4,350
    
    
    
    7,123
    
    
    
    7,899Total revenues
    
    
    90,726
    
    
    
    76,686
    
    
    
    173,607
    
    
    
    146,947Cost of revenues:Cost of product sales
    
    
    50,579
    
    
    
    45,817
    
    
    
    95,676
    
    
    
    88,786Cost of contract manufacturing sales
    
    
    2,764
    
    
    
    4,192
    
    
    
    6,452
    
    
    
    7,615Total cost of revenues
    
    
    53,343
    
    
    
    50,009
    
    
    
    102,128
    
    
    
    96,401Gross margin
    
    
    37,383
    
    
    
    26,677
    
    
    
    71,479
    
    
    
    50,546Operating expenses:Research and development
    
    
    6,819
    
    
    
    6,033
    
    
    
    12,800
    
    
    
    11,975Selling, general and administrative
    
    
    14,234
    
    
    
    10,488
    
    
    
    27,215
    
    
    
    21,120Amortization of intangible assets
    
    
    1,877
    
    
    
    1,373
    
    
    
    3,556
    
    
    
    2,919Restructuring charge
    
    
    
    
    
    
    83
    
    
    
    
    
    
    
    601Other operating expenses
    
    
    96
    
    
    
    623
    
    
    
    249
    
    
    
    1,096Total operating expenses
    
    
    23,026
    
    
    
    18,600
    
    
    
    43,820
    
    
    
    37,711Income from operations
    
    
    14,357
    
    
    
    8,077
    
    
    
    27,659
    
    
    
    12,835Interest and other income, net
    
    
    458
    
    
    
    270
    
    
    
    831
    
    
    
    553Interest expense
    
    
    (149
    )
    
    
    (703
    )
    
    
    (305
    )
    
    
    (1,427
    )Income before income tax provision
    
    
    14,666
    
    
    
    7,644
    
    
    
    28,185
    
    
    
    11,961Income tax provision
    
    
    5,464
    
    
    
    2,775
    
    
    
    10,314
    
    
    
    4,342Net income
    
    $
    9,202
    
    
    $
    4,869
    
    
    $
    17,871
    
    
    $
    7,619Net income per shareBasic
    
    $
    0.28
    
    
    $
    0.15
    
    
    $
    0.54
    
    
    $
    0.24Diluted
    
    $
    0.28
    
    
    $
    0.15
    
    
    $
    0.54
    
    
    $
    0.23Weighted average common shares outstandingBasic
    
    
    32,916
    
    
    
    32,239
    
    
    
    32,830
    
    
    
    32,209Diluted
    
    
    33,231
    
    
    
    32,442
    
    
    
    33,151
    
    
    
    32,430
 See accompanying notes.
  2




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MARTEK BIOSCIENCES CORPORATION
  Accumulated
    
    RetainedAdditional
    
    
    Other
    
    EarningsCommon Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    (AccumulatedUnaudited
 In thousands, except share data
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    (Loss) Income
    
    Deficit)
    
    TotalBalance at October 31, 2007
    
    
    32,335,622
    
    
    $
    3,234
    
    
    $
    530,575
    
    
    
    $
    203
    
    
    
    $
    (2,285
    )
    
    $
    531,727Issuance of shares related to OmegaTech contingent
purchase price
    
    
    340,946
    
    
    
    34
    
    
    
    10,130
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,164Exercise of stock options and vesting of
restricted stock units, net
    
    
    313,487
    
    
    
    31
    
    
    
    4,963
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,994Equity-based compensation
    
    
    
    
    
    
    
    
    
    
    1,479
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,479Tax benefit of exercise of non-qualified stock
options and vesting of restricted stock units
    
    
    
    
    
    
    
    
    
    
    950
    
    
    
    
    
    
    
    
    
    
    
    
    
    950Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,871
    
    
    
    17,871Other comprehensive income (loss):Unrealized loss on available-for-sale securities,
net of tax of ($298)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (526
    )
    
    
    
    
    
    
    
    (526
    )Realized gain on exchange rate forward
contract, net of tax of $(149)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (262
    )
    
    
    
    
    
    
    
    (262
    )Unrealized gain on exchange rate forward
contract, net of tax of $28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    
    51Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,134Balance at April 30, 2008
    
    
    32,990,055
    
    
    $
    3,299
    
    
    $
    548,097
    
    
    
    $
    (534
    )
    
    
    $
    15,586
    
    
    $
    566,448
 See accompanying notes.
  3




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MARTEK BIOSCIENCES CORPORATION
  Six months ended April 30,Unaudited
 In thousands
    
    2008
    
    
    2007Operating activitiesNet income
    
    $
    17,871
    
    
    $
    7,619Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    14,197
    
    
    
    12,788Deferred tax provision
    
    
    9,579
    
    
    
    4,017Equity-based compensation expense
    
    
    1,318
    
    
    
    1,312Incremental tax benefit from exercise of non-qualified stock options and
vesting of restricted stock units
    
    
    (950
    )
    
    
    (310
    )Loss from disposal and write-down of assets and other
    
    
    320
    
    
    
    260Changes in operating assets and liabilities:Accounts receivable
    
    
    (2,949
    )
    
    
    (4,717
    )Inventories
    
    
    (2,951
    )
    
    
    (4,189
    )Other assets
    
    
    2,815
    
    
    
    2,940Accounts payable
    
    
    (2,762
    )
    
    
    (1,426
    )Accrued liabilities
    
    
    2,291
    
    
    
    (10,158
    )Deferred revenue and other liabilities
    
    
    (23
    )
    
    
    (346
    )Net cash provided by operating activities
    
    
    38,756
    
    
    
    7,790Investing activitiesPurchase of investments and marketable securities
    
    
    (16,925
    )
    
    
    Sale and maturities of investments and marketable securities
    
    
    6,075
    
    
    
    6,850Expenditures for property, plant and equipment
    
    
    (3,576
    )
    
    
    (3,059
    )Repurchase from sale-leaseback transaction
    
    
    
    
    
    
    (3,910
    )Capitalization of intangible and other assets
    
    
    (2,165
    )
    
    
    (3,929
    )Net cash used in investing activities
    
    
    (16,591
    )
    
    
    (4,048
    )Financing activitiesRepayments of notes payable and other long-term obligations
    
    
    (426
    )
    
    
    (505
    )Repayments under revolving credit facility, net
    
    
    
    
    
    
    (5,000
    )Proceeds from the exercise of stock options and vesting of restricted stock units, net
    
    
    4,994
    
    
    
    1,593Incremental tax benefit from exercise of non-qualified stock options and
vesting of restricted stock units
    
    
    950
    
    
    
    310Net cash
provided by (used in) financing activities
    
    
    5,518
    
    
    
    (3,602
    )Net increase in cash and cash equivalents
    
    
    27,683
    
    
    
    140Cash and cash equivalents, beginning of period
    
    
    16,973
    
    
    
    15,578Cash and cash equivalents, end of period
    
    $
    44,656
    
    
    $
    15,718Supplemental cash flow disclosures:Interest paid
    
    $
    316
    
    
    $
    1,544Income taxes paid
    
    $
    735
    
    
    $
    325Issuance of shares related to OmegaTech contingent purchase price
    
    $
    10,164
    
    
    $
    
 See accompanying notes.
  4




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
 Consolidation
 Use of Estimates
 Segment Information
 Revenue Recognition
  Shipping Income and Costs
 Foreign Currency Transactions and Hedging Activities
   5




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##### Table of Contents



Research and Development
 Advertising
 Other Operating Expenses
 Deferred Income Taxes
   Equity-Based Compensation
 Net Income Per Share
 Comprehensive Income
 Cash and Cash Equivalents
  6




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Investments and Marketable Securities
   Fair
Value of Financial Instruments
 Trade Receivables
 Inventories
 Property, Plant and Equipment
 Asset Description
    
    Useful Life (years)Building
    
    15  30Fermentation equipment
    
    10  20Oil processing equipment
    
    10  20Other machinery and equipment
    
    5  10Furniture and fixtures
    
    5  7Computer hardware and software
    
    3  7
  Patent Costs
  7




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Goodwill and Other Intangible Assets
 Impairment of Long-Lived Assets
 Reclassification
 2. DSM SUPPLY AND LICENSE AGREEMENT
   3. INVESTMENTS
    8




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4. INVENTORIES
  April 30,
    
    
    October 31,2008
    
    
    2007Finished goods
    
    $
    59,077
    
    
    $
    57,852Work in process
    
    
    50,536
    
    
    
    48,721Raw materials
    
    
    2,908
    
    
    
    2,836Inventories, net
    
    $
    112,521
    
    
    $
    109,409
 5. PROPERTY, PLANT AND EQUIPMENT
  April 30,
    
    
    October 31,2008
    
    
    2007Land
    
    $
    2,320
    
    
    $
    2,320Building and improvements
    
    
    64,408
    
    
    
    63,892Machinery and equipment
    
    
    258,987
    
    
    
    256,739Furniture and fixtures
    
    
    2,792
    
    
    
    3,143Computer hardware and software
    
    
    15,559
    
    
    
    13,929344,066
    
    
    
    340,023Less: accumulated depreciation and amortization
    
    
    (80,610
    )
    
    
    (70,459
    )263,456
    
    
    
    269,564Construction in progress
    
    
    7,074
    
    
    
    8,351Property, plant and equipment, net
    
    $
    270,530
    
    
    $
    277,915
   9




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6. GOODWILL AND OTHER INTANGIBLE ASSETS
  April 30, 2008
    
    
    October 31, 2007Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedIntangible Asset
    
    Gross
    
    
    Amortization
    
    
    Net
    
    
    Gross
    
    
    Amortization
    
    
    NetTrademarks
    
    $
    2,129
    
    
    $
    (770
    )
    
    $
    1,359
    
    
    $
    2,098
    
    
    $
    (691
    )
    
    $
    1,407Patents
    
    
    23,440
    
    
    
    (7,870
    )
    
    
    15,570
    
    
    
    22,226
    
    
    
    (5,594
    )
    
    
    16,632Core technology
    
    
    1,708
    
    
    
    (626
    )
    
    
    1,082
    
    
    
    1,708
    
    
    
    (569
    )
    
    
    1,139Current products
    
    
    10,676
    
    
    
    (4,296
    )
    
    
    6,380
    
    
    
    10,676
    
    
    
    (3,940
    )
    
    
    6,736Licenses
    
    
    11,532
    
    
    
    (3,253
    )
    
    
    8,279
    
    
    
    10,996
    
    
    
    (2,590
    )
    
    
    8,40649,485
    
    
    
    (16,815
    )
    
    
    32,670
    
    
    
    47,704
    
    
    
    (13,384
    )
    
    
    34,320Goodwill
    
    
    51,592
    
    
    
    
    
    
    
    51,592
    
    
    
    51,564
    
    
    
    
    
    
    
    51,564$
    101,077
    
    
    $
    (16,815
    )
    
    $
    84,262
    
    
    $
    99,268
    
    
    $
    (13,384
    )
    
    $
    85,884
  7. NOTES PAYABLE AND LONG-TERM DEBT
      10




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8. COMMITMENTS AND CONTINGENCIES
 Purchase Commitments
 OmegaTech Contingent Purchase Price
  Patent Infringement Litigation
 Class Action Lawsuit
  Other
 9. STOCKHOLDERS EQUITY
     11




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10. NET INCOME PER SHARE
   Three months ended April 30,
    
    
    Six months ended April 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    9,202
    
    
    $
    4,869
    
    
    $
    17,871
    
    
    $
    7,619Weighted average shares outstanding, basic
    
    
    32,916
    
    
    
    32,239
    
    
    
    32,830
    
    
    
    32,209Effect of dilutive potential common shares:Stock options
    
    
    246
    
    
    
    187
    
    
    
    245
    
    
    
    209Restricted stock units
    
    
    69
    
    
    
    16
    
    
    
    76
    
    
    
    12Total dilutive potential common shares
    
    
    315
    
    
    
    203
    
    
    
    321
    
    
    
    221Weighted average shares outstanding, diluted
    
    
    33,231
    
    
    
    32,442
    
    
    
    33,151
    
    
    
    32,430Net income per share, basic
    
    $
    0.28
    
    
    $
    0.15
    
    
    $
    0.54
    
    
    $
    0.24Net income per share, diluted
    
    $
    0.28
    
    
    $
    0.15
    
    
    $
    0.54
    
    
    $
    0.23
  11. COMPREHENSIVE INCOME
  Three months ended April 30,
    
    
    Six months ended April 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income, as reported
    
    $
    9,202
    
    
    $
    4,869
    
    
    $
    17,871
    
    
    $
    7,619Other comprehensive income (loss):Unrealized
loss on available-for-sale securities, net of tax of $(298), $, $(298) and $, respectively
    
    
    (526
    )
    
    
    
    
    
    
    (526
    )
    
    
    Realized gain on exchange rate forward contract,
net of tax of $(33), $(23), $(149) and $(116), respectively
    
    
    (59
    )
    
    
    (40
    )
    
    
    (262
    )
    
    
    (195
    )Unrealized (loss) gain on exchange rate forward contract,
net of tax of $(5), $, $28 and $14, respectively
    
    
    (8
    )
    
    
    
    
    
    
    51
    
    
    
    24Comprehensive income
    
    $
    8,609
    
    
    $
    4,829
    
    
    $
    17,134
    
    
    $
    7,448
  12




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 This Managements Discussion and Analysis of Financial Condition and Results of Operations contains
forward-looking statements concerning our business and operations, including, among other things,
statements concerning the following:
 
    
    expectations regarding future revenue growth, gross margin, operating cash flow and
overall profitability;
    
    expectations regarding product introductions and growth in nutritional product sales;
    
    expectations regarding potential collaborations and acquisitions;
    
    expectations regarding demand for products with our nutritional oils;
    
    expectations regarding sales to and by our infant formula licensees and supplemented
infant formula market penetration levels;
    
    expectations regarding marketing of our oils by our infant formula licensees;
    
    expectations regarding future agreements with, and revenues from, companies in the
food and beverage, pregnancy and nursing, nutritional supplement, and animal feed
markets;
    
    expectations regarding future revenues from contract manufacturing customers;
    
    expectations regarding growing consumer recognition of the key health benefits of DHA
and ARA;
    
    expectations regarding competitive products;
    
    expectations regarding future efficiencies and improvements in manufacturing
processes and the cost of production of our nutritional oils;
    
    expectations regarding future purchase volumes and costs of third-party manufactured
oils;
    
    expectations regarding the amount of production capacity and our ability to meet
future demands for our nutritional oils;
    
    expectations regarding the amount of inventory held by us or our customers;
    
    expectations regarding production capacity utilization and the effects of excess
production capacity;
    
    expectations regarding future selling, general and administrative and research and
development costs;
    
    expectations regarding future capital expenditures;
    
    expectations regarding levels of consumption through governmental programs of infant
formula products containing our nutritional oils; and
    
    expectations regarding our ability to maintain and protect our intellectual property.
 Forward-looking statements include those statements containing words such as the following:
 
    
    will,
    
    should,
    
    could,
    
    anticipate,
    
    believe,
    
    plan,
    
    estimate,
    
    expect,
    
    intend, and other similar expressions.
 All of these forward-looking statements involve risks and uncertainties. They and other
forward-looking statements in this Form 10-Q are all made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. We wish to caution you that our actual
results may differ significantly from the results we discuss in our forward-looking statements. We
discuss some of the risks that could cause such differences in Part II, Item 1A. Risk Factors in
this report on Form 10-Q and in our various other filings with the Securities and Exchange
Commission. Our forward-looking statements speak only as of the date of this document, and we do
not intend to update these statements to reflect events or circumstances that occur after that
date.
 GENERAL
 lifesDHA lifesARA lifesDHA ® ® ® lifesARA
  13




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##### Table of Contents




    
    the timing of international infant formula market introductions by our customers;
    
    the timing of our customers ordering patterns;
    
    the timing and extent of stocking and destocking of inventory by our customers;
    
    the timing and extent of our customers production campaigns and plant maintenance
shutdowns;
    
    the timing and extent of introductions of DHA into various child and/or adult
applications and the marketplace success of such applications;
    
    the continued acceptance, and extent thereof, of products containing our oils under WIC
programs in the U.S.;
    
    the continued acceptance of these products by consumers and continued demand by our
customers;
    
    the ability of our customers to incorporate our oils into various foods and beverages;
    
    our ability to protect against competitive products through our patents;
    
    competition from alternative sources of DHA and ARA; and
    
    agreements with other future third-party collaborators to market our products or develop
new products.
  RECENT HIGHLIGHTS
  Food and Beverage Products
 
    
    Challenge Spreadable Butter with lifesDHA(United States)
    
    WhiteWave Foods Rachels® Wickedly Delicious Yogurt with lifesDHA(new flavors in
the United States)
    
    Plum Organics baby food with lifesDHA(United States)
    
    Soyaworlds So Good Omega DHA Soymilk with lifesDHA(Canada)
    
    Maverick Brands Sunkist Naturals Glorious Greens Smoothie with lifesDHA(United
States)
    
    National Foods Berri Australian Fresh Omega-3 for Heart & Mind juice-blend with
lifesDHA(Australia)
    
    Bimbo Bakeries Oroweat 9 Grain Bread with lifesDHA(United States)
    
    Canada Bread Companys Dempsters Smart 100% Whole Grain Wheat Bread with lifesDHA
(Canada)
  14




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##### Table of Contents



Nutritional Supplement Products
 
    
    Spectrum Organics Spectrum Essentials Vegetarian DHA with lifesDHA(United States)
    
    Floras Bija  Udos Choice DHA Omega-3 Truffles with lifesDHA(Canada)
    
    Floras Udos Choice Unrefined Algae DHA Vegetarian Softgel with lifesDHA(Canada)
    
    Source-Omegas Pure One Optimized Omega-3 with lifesDHA(United States)
   
    
    A study published in the American Journal of Clinical Nutrition(March 2008) examined
visual acuity in infants whose mothers received DHA supplementation during pregnancy. In
this randomized control trial, pregnant women were either supplemented with 400mg DHA per
day or given placebo during their second and third trimester and infant visual acuity was
measured in the children at 60 days of age. The results of the study showed that infants
from mothers who received DHA supplementation exhibited a better visual response than
those from mothers who received placebo. Marteks lifesDHAwas used in this study.
    
    A report published in the Journal of Pediatrics(March 2008) evaluating the role of
polyunsaturated fatty acids on infant development indicated that higher cord blood DHA
was associated with longer gestation and better visual acuity and cognitive function in
these infants. The authors note the importance of DHA during the third trimester of
pregnancy.
    
    A study published in the journal Pediatrics(June 2008) evaluated the effect of
enriching human milk with DHA and ARA to be fed to premature infants. In this
randomized, double-blind, placebo-controlled study, 141 premature infants received either
an added 32mg of DHA plus 31mg ARA or placebo per 100ml human milk. The intervention
began one week after birth and continued until hospital discharge (nine weeks on
average). The results showed that infants receiving the DHA/ARA enriched human milk
demonstrated better recognition memory and had higher problem solving scores at six
months than the non-enriched milk group. Marteks lifesDHAwas used in this study.
 MANAGEMENT OUTLOOK
    PRODUCTION
   15




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CRITICAL ACCOUNTING POLICIES AND
THE USE OF ESTIMATES
   16




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##### Table of Contents



RESULTS OF OPERATIONS
 Revenues
  Three months ended April 30,
    
    
    Six months ended April 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Product sales
    
    $
    87,875
    
    
    $
    72,336
    
    
    $
    166,484
    
    
    $
    139,048Contract manufacturing sales
    
    
    2,851
    
    
    
    4,350
    
    
    
    7,123
    
    
    
    7,899Total revenues
    
    $
    90,726
    
    
    $
    76,686
    
    
    $
    173,607
    
    
    $
    146,947
  Three months ended April 30,
    
    
    Six months ended April 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Infant formula market
    
    $
    78,390
    
    
    $
    65,929
    
    
    $
    148,668
    
    
    $
    126,781Food and beverage market
    
    
    3,172
    
    
    
    1,147
    
    
    
    5,267
    
    
    
    1,868Pregnancy and nursing, nutritional
supplement and animal feed markets
    
    
    5,113
    
    
    
    4,176
    
    
    
    10,405
    
    
    
    8,149Non-nutritional products
    
    
    1,200
    
    
    
    1,084
    
    
    
    2,144
    
    
    
    2,250Total product sales
    
    $
    87,875
    
    
    $
    72,336
    
    
    $
    166,484
    
    
    $
    139,048
 lifesDHA .
      17




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##### Table of Contents



Cost of Revenues
  Three months ended April 30,
    
    
    Six months ended April 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Cost of product sales
    
    $
    50,579
    
    
    $
    45,817
    
    
    $
    95,676
    
    
    $
    88,786Cost of contract manufacturing sales
    
    
    2,764
    
    
    
    4,192
    
    
    
    6,452
    
    
    
    7,615Total cost of revenues
    
    $
    53,343
    
    
    $
    50,009
    
    
    $
    102,128
    
    
    $
    96,401
    Operating Expenses
  Three months ended April 30,
    
    
    Six months ended April 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Research and development
    
    $
    6,819
    
    
    $
    6,033
    
    
    $
    12,800
    
    
    $
    11,975Selling, general and administrative
    
    
    14,234
    
    
    
    10,488
    
    
    
    27,215
    
    
    
    21,120Amortization of intangible assets
    
    
    1,877
    
    
    
    1,373
    
    
    
    3,556
    
    
    
    2,919Restructuring charge
    
    
    
    
    
    
    83
    
    
    
    
    
    
    
    601Other operating expenses
    
    
    96
    
    
    
    623
    
    
    
    249
    
    
    
    1,096Total operating expenses
    
    $
    23,026
    
    
    $
    18,600
    
    
    $
    43,820
    
    
    $
    37,711
 Research and Development lifesDHA lifesDHA
 Selling, General and Administrative
 Amortization of Intangible Assets
  18




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Other Operating Expenses
 Interest and Other Income, Net
  Interest Expense
  Income Tax Provision
   Net
Income
  LIQUIDITY AND CAPITAL RESOURCES
  
    
    cash generated from operations;
    
    proceeds from the sale of equity securities;
    
    cash received from the exercise of stock options and warrants; and
    
    debt financing.
    19




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Less than
    
    
    1-3
    
    
    3-5
    
    
    More thanIn thousands
    
    Total
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsNotes payable (1)
    
    $
    9,620
    
    
    $
    8,334
    
    
    $
    424
    
    
    $
    280
    
    
    $
    582Borrowings under revolving credit facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    3,700
    
    
    
    1,130
    
    
    
    2,146
    
    
    
    143
    
    
    
    281Unconditional purchase obligations (2)
    
    
    119,354
    
    
    
    75,819
    
    
    
    43,535
    
    
    
    
    
    
    
    Total contractual cash obligations (3)
    
    $
    132,674
    
    
    $
    85,283
    
    
    $
    46,105
    
    
    $
    423
    
    
    $
    863
 (1)
    
    Minimum payments above include interest and principal due under these notes.(2)
    
    Primarily includes future inventory purchases from DSM pursuant to minimum purchase
commitment (see Note 2 to Consolidated Financial Statements).(3)
    
    The table above does not include uncertain tax payments of $700,000, the timing of
which is also uncertain.    
    
    our ability to operate profitably and generate positive cash flow;
    
    growth in our infant formula, food and beverage and other nutritional product sales;
    
    the extent and progress of our research and development programs;
    
    the progress of pre-clinical and clinical studies;
    
    the time and costs of obtaining and maintaining regulatory clearances for our products
that are subject to such clearances;
    
    the costs involved in filing, protecting and enforcing patent claims;
    
    competing technological and market developments;
    
    the development or acquisition of new products;
    
    the cost of acquiring additional and/or operating and expanding existing manufacturing
facilities for our various products and potential products (depending on which products we
decide to manufacture and continue to manufacture ourselves);
    
    the costs associated with our internal build-up of inventory levels;
    
    the costs associated with litigation to which we are a party;
    
    the costs of any merger and acquisition activity; and
    
    the costs of marketing and commercializing our products.
   20




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk.
     
 Item 4. Controls and Procedures.
 a)
    
    Evaluation of Disclosure Controls and Procedures.The Chief Executive Officer and Chief
Financial Officer of Martek Biosciences Corporation have evaluated the effectiveness of our
disclosure controls and procedures pursuant to Exchange Act rules 13a-15(e) and 15d-15(e)
and have concluded that, as of the end of the period covered by this report, the disclosure
controls and procedures were effective.b)
    
    Internal Control Over Financial Reporting.There was no change in our internal control
over financial reporting in connection with the evaluation required by paragraph (d) of
Rules 13a-15 or 15d-15 under the Exchange Act that occurred during Marteks quarter ended
April 30, 2008 that materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
  21




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
    Thraustochytrium Schizochytrium
      22




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23




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##### Table of Contents



Item 1A. Risk Factors.
  A substantial portion of our nutritional oil products sales is made to five of our existing
customers under agreements with no minimum purchase requirements. If demand by these customers
for our nutritional oil products decreases, our revenues may materially decline.
    We are aware of several products that are currently available, and products under development,
that may present a serious competitive threat to our products. If we are unable to maintain a
competitive differentiation from these products, our revenues may be adversely affected.
   
    
    The Ross Products Division of Abbott Laboratories, a significant Martek licensee and
customer, filed a generally recognized as safe notification on January 2, 2002 seeking Food
and Drug Administration (FDA) concurrence that its tuna oil source of DHA and its fungal
source of ARA, as manufactured by Suntory Limited, are generally recognized as safe when
used as ingredients in infant formula. In April 2006, the FDA notified Ross Products that
it had no questions at that time regarding Ross conclusion that DHA-rich oil from tuna and
ARA-rich oil from Mortierella alpinaare safe as sources of DHA and ARA in term and
post-discharge preterm infant formulas. While Ross Products has not announced any
introduction of its oils into infant formula in the U.S. and has agreed to purchase its
total needs for DHA and ARA from us through at least 2011, and while we are not aware of
any plans by our other licensees to do so, the GRAS notification removes a significant
regulatory hurdle to the introduction of competitive products in the U.S.
 
    
    Reliant Pharmaceuticals, which as recently announced will be acquired by
GlaxoSmithKline, is currently selling LOVAZA, a prescription DHA/ EPA ethyl ester for
treatment of hyperlipidemia. LOVAZA is a lipid-regulating agent which includes both EPA
and DHA from fish oil. Reliant Pharmaceuticals has recently filed an application with the
FDA for an indication that will expand the use of LOVAZA. Other pharmaceutical
applications using omega-3 fatty acids may be expected.
  24




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##### Table of Contents




    
    Suntory Limited, Cargill Inc., through a joint venture with a company in China, and
other independent Chinese manufacturers are producing and distributing a fungal source of
ARA. In addition, we are aware that there may be manufacturers in China and India
attempting to produce an algal source of DHA, but we are uncertain of the overall status
and commercial potential of these efforts.
 
    
    Some infant formulas now on the market outside the United States, including those
marketed by certain of Marteks licensees, use DHA derived from other sources, such as fish
oil or eggs.
 
    
    In December 2005, Lonza Group LTD, a Swiss chemical and biotechnology group, acquired
from Nutrinova Nutrition Specialties & Food Ingredients GmbH, a wholly-owned subsidiary of
Celanese Corporation, Nutrinovas business having as its product a DHA-rich microalgal oil.
Since the acquisition, Lonza has actively marketed its DHA oil to the food, beverage and
dietary supplement market in Europe and China, and was actively marketing in the United
States. Nutrinova and Lonza are defendants in patent infringement actions involving our
DHA patents that we have brought in both the United States and Germany. One of Nutrinovas
customers is also a defendant in these actions in Germany. These lawsuits are further
described below in the risk factor regarding patent protection and in Item 1 of Part II of
this Form 10-Q, Legal Proceedings.
 
    
    Other companies, several with greater financial resources than ours, are developing
plant-based DHA and other companies may be developing chemically synthesized DHA.
 
    
    Several large companies, including BASF AG, DSM and Ocean Nutrition, and a number of
smaller companies, manufacture microencapsulated fish oil products. Although
microencapsulation of the oil resolves many of the odor, stability and taste issues found
with fish oil, a microencapsulated product currently is more costly than regular fish oil.
Fish oil-based products (i) are used as a DHA source by some infant formula companies, (ii)
currently dominate the adult DHA supplement market and (iii) are included in certain foods
on the market in various parts of the world. Because fish oil is generally less costly than
our DHA oil, even when microencapsulated, and continues to improve in quality and gain
general market acceptance, fish oil presents a substantial competitive threat.
 If we are unable to obtain or maintain patent protection or if our patents do not provide
protection against competitive products, our results of operations may be adversely affected.
     25




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##### Table of Contents




    
    Aventis S.A. and Nagase & Co. Ltd. are challenging our European patent covering our
DHA-containing oils. At a hearing in October 2000, the Opposition Division of the European
Patent Office (EPO) revoked our patent on the grounds that it was not novel. We
immediately appealed this ruling, and in July 2002 we received a positive ruling from an
Appeal Board of the EPO, setting aside the prior decision to revoke this patent. The patent
was returned to the Opposition Division for a determination as to whether it has met the
legal requirement of inventive step. A hearing in August 2005 resulted in a ruling by the
Opposition Division that this requirement had been met and the validity of the patent was
upheld. Aventis appealed the decision to the Appeal Board of the EPO. Martek filed its
answer to Aventis grounds for appeal in July 2006. The appeal process is expected to be
completed in late 2008 or early 2009. Claim 1 of this patent is the basis of the patent
infringement suit against Nutrinova and Lonza in Germany, discussed below.
 
    
    With respect to our ARA patent issued by the EPO, BASF AG, Friesland Brands B.V., and
Suntory Limited filed their grounds for opposing this patent with the Opposition Division
of the EPO. At a hearing at the Opposition Division in April 2005, the Opposition Division
of the EPO upheld the patent in a form containing modified claims that were narrower than
the claims originally granted. In an effort to broaden the claims of the patent, we
appealed the decision. Suntory and BASF also appealed. Friesland Brands B.V. withdrew from
the opposition. In April 2007, the EPO granted another patent to Martek for ARA oil made
from Marteks microbial source for use in infant formula. This divisional ARA patent
strengthens Marteks intellectual property position by providing commercially significant
protection through the expiration date of the original patent,
January 22, 2012. Suntory, N.V. Nutricia
and Cargill have filed oppositions against this divisional ARA patent. In light of this
divisional ARA patent, the Company withdrew from the appeal it had previously filed related
to its original European ARA patent for infant formula that was upheld with narrowed claims
by the EPO in April 2005. The original patent is no longer in force and effect.
 
    
    Prior to our purchase of OmegaTech, Aventis Research and Technologies GmbH & Co. KG, and
Nagase Limited challenged OmegaTechs European patent covering its DHA-containing oils. At
a hearing in December 2000, the Opposition Division of the EPO upheld some of the claims
and revoked other claims. OmegaTech immediately appealed this ruling, as did Aventis. At an
appeal hearing in May 2005, we received a favorable decision from the Appeal Board of the
EPO, which overturned the decision of the Opposition Division and returned the case to the
Opposition Division for review on the merits of the patent claims. In a November 2007
hearing, the Opposition Division upheld claims that are narrower than the claims originally
granted but broader than the claims that were previously upheld in the December 2000
Opposition Division hearing. Martek and Aventis have appealed. The appeal process is not
expected to be completed before 2009, during which time the patent will remain in full
force and effect.
 
    
    An EPO Opposition Division hearing was held on November 15, 2005, with respect to a
European DHA patent acquired by Martek as part of the OmegaTech purchase. The patent was
upheld in modified form. This patent is directed to processes for fermenting
Thraustochytriumand Schizochytriumunder low chloride conditions and the resulting
products. Nutrinova Nutrition Specialties & Food Ingredients GmbH is the only opponent, and
has appealed. The appeal hearing is scheduled for October 2008.
 
    
    In September 2003, we filed a patent infringement lawsuit in the U.S. District Court in
Delaware against Nutrinova Inc., Nutrinova Nutrition Specialties & Food Ingredients GmbH,
Celanese Ventures GmbH, and Celanese AG. Celanese Ventures GmbH and Celanese AG were
dropped from the lawsuit. Lonza Ltd. was added to the lawsuit. In October 2006, after an
almost two week trial in Wilmington, Delaware, the jury returned a favorable verdict to
Martek, deciding that all three of the asserted Martek DHA patents were valid and
infringed, and that one was willfully infringed. In October 2007, the judge upheld the
October 2006 jury verdict that the defendants infringed all of the asserted claims of U.S.
Patent Nos. 5,340,594 and 6,410,281 (the 281 Patent) and that these patents were not
invalid. The judge has granted a permanent injunction against the defendants with respect
to those two patents. The judge also upheld the jury verdict that the defendants had acted
willfully in their infringement of the 281 Patent. It is likely that the defendants will
appeal the decision. Regarding the third patent involved in the case, U.S. Patent No.
6,451,567, the judge reversed the jury verdict and found that the asserted claims of this
patent were invalid. Martek has requested the judge to reconsider his ruling on the third
patent.
 
    
    We also filed a patent infringement suit involving Nutrinova Nutrition Specialties &
Food Ingredients GmbH and Celanese Ventures GmbH in Germany in January 2004. Lonza Ltd. and
a customer of Nutrinova have also been added to this lawsuit. The complaint alleges
infringement of our European patent relating to DHA-containing oils. A hearing was held in
a district court in Dusseldorf in September 2007 and the court issued its decision in
October 2007, ruling that Marteks patent was infringed by the defendants. The defendants
have appealed, and the appeal hearing is scheduled for February 2009.
 
    
    With respect to our ARA patent in South Korea, Suntory has filed an opposition. A
hearing on the matter was held in late January 2006 and the Korean Intellectual Property
Office Examiners ruled against Martek. Martek appealed. The appeal brief was filed in
February 2007 and Suntory responded in August 2007. The Korean Intellectual Property
Office ruled against Martek in September 2007, and we appealed to the Patent Court in
October 2007. The patent will remain in full force and effect during the pendency of the
appeal.
 
    
    Suntory has also initiated an invalidation case against our blended oil patent in South
Korea. Our response to Suntory was filed in February 2005, Suntory responded in March 2006
and Martek filed further submissions in May 2006. A hearing was held in July 2006. A
ruling against Martek was issued in February 2007. Martek appealed in April 2007. The
appeal hearing is scheduled for June 2008. The patent will remain in full force and effect
during the pendency of the appeal process.
  26




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##### Table of Contents




    
    Martek is opposing two of Suntorys low sterol ARA oil patents in Europe and one in
Australia. The patents are generally directed to processes for producing microbial ARA oil
having a low ratio of certain sterols, the resulting oil and its use in infant formula.
Martek believes that the patents are invalid for a number of reasons, including prior art
that anticipates the claims relevant to Martek. Evidence that Marteks ARA oil was
publicly available before the priority date of the patents has been provided to the EPO.
An Opposition Division hearing on the first European patent was held in April 2008, and the
Opposition Division revoked the Suntory patent. We expect Suntory will appeal during which
time the patent will remain in full force and effect. Hearings on the other European
patent and on the Australian patent are expected in late 2008 or 2009.
 
    
    Third parties have filed Requests for
Reexamination (“Requests”) of nine of Martek’s U.S.
patents.  Six of these Requests were filed by Lonza with respect to six of
Martek’s DHA patents and an anonymous party filed the other three
Requests with respect to two of Martek’s blended oils patents and one ARA
patent.  The U.S. Patent Office has granted six of the Requests to
initiate a Reexamination process, and because such Requests are typically
granted, it is likely that the U.S. Patent Office will grant the remaining
three Requests.  As a result of Reexamination, the claims of the subject
patents can be upheld in their current form, amended, abandoned or
cancelled.  Four of the patents are likely to expire before the initial
Reexamination process is complete.  In the event that Martek elects to
appeal an unfavorable decision regarding any of the remaining five patents,
which are scheduled to expire between 2011 and 2014, it is likely that any such
patent would expire before all appeal options were exhausted.
 
    
    There are additional intellectual property proceedings pending against Martek or that
Martek has pending against third parties that are not considered material.
   If our food and beverage customers do not introduce products containing our nutritional oils on
a broad scale into the marketplace and consumers do not purchase such products, our sales to the
food and beverage market will be limited.
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##### Table of Contents



Our oils are very sensitive to oxidation and may not be very compatible with many liquid or dry
foods that are currently on the market. If economical methods are not developed to successfully
incorporate our oils into various food and beverage applications, we may never be able to gain
large-scale entry into the food and beverage market.
  If clinical trials do not continue to yield positive results on the benefits of DHA on cognitive
function, cardiovascular health or other health applications, our future revenues may be limited
in the food and beverage and the dietary supplement markets.
  If our oils are unable to be used in organic food and beverage products, the opportunity for
sales of our oils into the food and beverage market will be limited to non-organic products.
   Because food and beverage pricing is very competitive, the premium that our oils adds to the
cost of the food or beverage may never allow it to be priced at levels that will allow
acceptance by consumers.
  If we are unable to gain broad regulatory approvals for the incorporation of our oils into foods
and beverages worldwide, our future revenues in the food and beverage market may be limited.
   28




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##### Table of Contents



If it is determined that large amounts of eicosapentaenoic acid (EPA) must accompany DHA in
order to achieve optimal health benefits, we may never be able to gain large- scale entry into
the food and beverage market.
   We have a single third-party supplier of our ARA with whom we have a contractual relationship.
If this supplier of our ARA is unable to supply us with our required amounts of ARA or if an
over-capacity situation by our supplier leads to higher cost ARA, our results of operations
and/or financial position may be adversely affected.
  If customer demand for our nutritional oils requires us or our major suppliers to increase
production beyond current levels, we may experience certain risks associated with the ramp-up of
commercial manufacturing that could have a material adverse effect on our business, financial
condition, and/ or results of operations.
   
    
    we may experience problems processing, handling and shipping the higher quantities of
oil produced from our expanded facilities;
 
    
    the costs of expanding, operating and maintaining our production facilities may exceed
our expectations;
 
    
    product defects may result;
 
    
    lower than anticipated fermentation success rates may result;
 
    
    lower downstream processing yields may result;
 
    
    environmental and safety problems may result from our production process; and
 
    
    regulatory issues relating to the scale-up and operations regarding our production
processes may arise.
  We have significantly increased our manufacturing capacity and have incurred substantial costs
in doing so. If we are unable to increase our revenues from our nutritional oils produced at
these facilities, we may continue to experience excess production capacity and we may be unable
to recover these plant expansion costs, which could result in a write-down of certain production
assets.
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##### Table of Contents



Failure to effectively manage our growth could disrupt our operations and prevent us from
generating the revenues and gross profit margins we expect.
  Experts differ in their opinions on the importance of DHA and/or ARA in infant formula and the
levels of DHA and/or ARA required to achieve health benefits for babies. Some experts feel that
they are not necessary ingredients for infant development. If clinical trials do not continue
to yield positive results, certain favorable regulatory guidelines are not enacted or current
favorable regulatory guidelines are amended, our future revenues in the infant formula market
may be limited.
    Our opportunity in the U.S. infant formula market may be limited by the renewal rate of
supplemented formulas into the Women, Infants and Children program or if the eligibility
requirements for participating in the program are made more restrictive or if the amount of
infant formula offered to participants is reduced.
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##### Table of Contents



Our business would be harmed if we fail to comply with applicable good manufacturing practices
as required by the FDA.
  Our manufacturing process involves the handling of hazardous materials and emission of regulated
pollutants. If we fail to properly handle these hazardous materials and/ or emissions,
substantial costs and harm to our business could result.
  Our corporate compliance program cannot guarantee that we are in compliance with all potentially
applicable federal and state regulations.
  Our business exposes us to potential product liability claims and recalls, which could adversely
impact our financial condition and performance.
  We may need additional capital in the future to continue our research and development efforts,
to conduct product testing, including preclinical and clinical trials, and to market our
products. We may also need additional capital to expand our production capacity if market
demand for our products continues to grow.
   31




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The market price of our common stock may experience a high level of volatility due to factors
such as the volatility in the market for biotechnology stocks generally, and the short-term
effect of a number of possible events.
  
    
    announcements of technical innovations, new commercial products and product launches by
us or our competitors;
 
    
    announcements of use of competitors DHA and/or ARA products by our customers;
 
    
    arrangements or strategic partnerships by us or our competitors;
 
    
    announcements of license agreements, acquisitions or strategic alliances;
 
    
    announcements of sales by us or our competitors
 
    
    announcements of results of clinical trials by us, our competitors or others;
 
    
    patent or other intellectual property achievements or adverse developments;
 
    
    quarterly fluctuations in our revenues and results of operations;
 
    
    failure to enter into favorable third-party manufacturing agreements;
 
    
    regulatory decisions (approvals or disapprovals) or changes concerning our products and
our competitors products;
 
    
    events related to threatened, new or existing litigation, or the results thereof;
 
    
    changes in our estimates of financial performance or changes in recommendations by
securities analysts; and
 
    
    general market conditions for growth companies and bioscience companies.
    32




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If significant shares eligible for future sales are sold, the result may depress our stock price
by increasing the supply of our shares in the market at a time when demand may be limited.
  Changes in foreign currency exchange rates or interest rates could reduce profitability.
   33




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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  Proposal 1:
    
    Election of Directors:
  Votes For
    
    
    Votes Against
    
    
    AbstainHarry J. DAndrea
    
    
    22,704,616
    
    
    
    7,642,193
    
    
    
    76,536Polly B. Kawalek
    
    
    20,027,103
    
    
    
    10,279,647
    
    
    
    116,595Jerome C. Keller
    
    
    22,644,322
    
    
    
    7,700,682
    
    
    
    78,341Douglas J. MacMaster, Jr.
    
    
    22,534,329
    
    
    
    7,788,185
    
    
    
    100,831Robert H. Mayer
    
    
    29,781,081
    
    
    
    563,442
    
    
    
    78,822Eugene H. Rotberg
    
    
    22,572,305
    
    
    
    7,771,936
    
    
    
    79,104
  Term ExpiresJames R. Beery
    
    At the 2009 Annual MeetingSteve Dubin
    
    At the 2009 Annual MeetingRobert J. Flanagan
    
    At the 2009 Annual Meeting
 Proposal 2:
    
    Ratification of the appointment of Ernst & Young LLP as the Companys independent
registered public accounting firm for the fiscal year 2008:
  Votes For
    
    Votes Against
    
    Abstain29,224,769
    
    1,121,866
    
    76,710
 
 Item 5. Other Information.
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##### Table of Contents



Item 6. Exhibits.
 31.01
    
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).*31.02
    
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).*32.01
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *32.02
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
 *
    
    Filed or furnished herewith.  35




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##### Table of Contents



SIGNATURES
  MARTEK BIOSCIENCES CORPORATION(Registrant)Date: June 9, 2008
    /s/ Peter L. BuzyPeter L. BuzyChief Financial Officer, Treasurer and Executive Vice
President for Finance and Administration
(Principal Financial and Accounting Officer)  36




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    

Description31.01
    
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).*31.02
    
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).*32.01
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *32.02
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
 *
    
    Filed or furnished herewith.  37