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This excerpt taken from the MATK 10-K filed Jan 13, 2005. Other The Company is
involved in various other legal actions primarily concerning its
intellectual property. Management believes that these actions,
either individually or in the aggregate, will not have a
material adverse effect on the Company’s results of
operations or financial condition. From time to time, Martek may
also be a party to litigation or administrative proceedings
relating to claims arising from its operations in the normal
course of business. Management believes that the ultimate
resolution of any such litigation or administrative proceedings
against the Company is unlikely, either individually or in the
aggregate, to have a material adverse effect on the
Company’s financial condition or results of operations.
The Company has licensed certain technologies and recognized license fee revenue under various agreements. License fees are recorded as unearned revenue and amortized on a straight-line basis over the term of the agreement. During fiscal 2004, the Company signed three new license agreements relating to the use of its oils in infant formula and recorded license fees and product prepayments of approximately $400,000. There were approximately $5.5 million in license fees and prepayments recorded in fiscal 2003. The Company recognized approximately $400,000, $200,000 and $200,000 as license revenue for the years ended October 31, 2004, 2003 and 2002, respectively. The balance of these license fees and prepaid product purchases remaining in unearned revenue was approximately $11.2 million and $11.8 million at October 31, 2004 and 2003, respectively.
Basic Earnings Per Share is computed using the weighted average number of common shares outstanding. Diluted Earnings Per Share is computed using the weighted average number of common shares outstanding, giving effect to stock options and warrants using the treasury stock method. 61
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table presents the calculation of basic and diluted net income (loss) per share (in thousands, except per share amounts):
Employee stock options to purchase approximately 400,000, 47,000 and 4.2 million shares were outstanding but were not included in the computation of diluted net income per share for the years ended October 31, 2004, 2003 and 2002, respectively because the effects would have been antidilutive.
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