THERAGENICS CORPORATION
5325 OAKBROOK PARKWAY
NORCROSS, GEORGIA 30093
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
You are cordially invited to attend the Annual Meeting of
Stockholders of Theragenics Corporation (the "Company") to be
held at 10:00 A.M., Atlanta time, on Friday, June 30, 1995, at
the Holiday Inn, 6050 Peachtree Industrial Blvd., N.W., Norcross,
Georgia 30071 for the following purposes:
1. To elect two directors;
2. To consider and vote on a proposal to ratify the
appointment of Grant Thornton as independent public
accountants;
3. To consider and act upon the proposal to approve the
adoption of the Company's 1995 Stock Option Plan; and
4. To transact such other business as may properly come
before such meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on
May 5, 1995, as the record date for the determination of the
stockholders entitled to notice of, and to vote at, the meeting.
Sincerely,
/s/Bruce W. Smith
Bruce W. Smith,
Secretary
Norcross, Georgia
May 26, 1995
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING OF
STOCKHOLDERS, YOU ARE REQUESTED TO FILL IN AND SIGN THE ENCLOSED
FORM OF PROXY AND MAIL IT IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IT IS
IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. IF YOU DO ATTEND THE
MEETING AND DECIDE THAT YOU WISH TO VOTE IN PERSON, YOU MAY
WITHDRAW YOUR PROXY.
<PAGE>
THERAGENICS CORPORATION
5325 Oakbrook Parkway
Norcross, Georgia 30093
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Theragenics
Corporation (the "Company") to be voted at the Annual Meeting of
Stockholders of the Company to be held on Friday, June 30, 1995,
at the Holiday Inn, 6050 Peachtree Industrial Blvd., N.W.,
Norcross, Georgia 30071, at 10:00 o'clock in the morning, Atlanta
time, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders.
The Board of Directors has fixed the close of business on
May 5, 1995, as the record date for the determination of
stockholders entitled to receive notice of, and to vote at, the
forthcoming Annual Meeting of Stockholders or any adjournment
thereof. Any person giving a proxy in the form accompanying this
statement has the power to revoke it at any time prior to its
exercise. A proxy may be revoked by attending and voting at the
meeting or by written notice to the Secretary of the Company
received at the Company's offices at 5325 Oakbrook Parkway,
Norcross, Georgia, 30093 prior to the date of the Annual Meeting.
When proxies are returned properly executed, the shares
represented thereby will be voted as directed in the executed
proxy. If the Proxy is returned but no choice is specified
therein, it will be voted for the election of the nominees named
therein and for each of the listed proposals.
The expenses for soliciting proxies for the forthcoming
Annual Meeting of Stockholders are to be paid by the Company.
Solicitation of proxies may be made by means of personal calls
upon, or telephonic or telegraphic communications with,
stockholders or their personal representatives by directors,
officers and employees of the Company, who will not be specially
compensated for such services. The Company may or may not engage
a proxy service to assist the Company in the solicitation of
proxies. It is anticipated that this Proxy Statement and enclosed
Proxy will first be mailed to stockholders entitled to notice of
and to vote at the Annual Meeting on or about May 26, 1995.
VOTING SECURITIES AND PRINCIPAL SECURITY HOLDERS
As of May 5, 1995, the Company had outstanding and entitled
to vote at the Annual Meeting 10,988,887 shares of Common Stock,
par value $.01 per share ("Common Stock").
The holders of Common Stock are entitled to vote as a single
class and to one vote per share, exercisable in person or by
proxy, at all meetings of stockholders. Holders of Common Stock
do not have any cumulative voting rights. Abstentions and "broker
non-votes" are counted for purposes of determining the presence
or absence of a quorum for the transaction of business but not
counted in determining the numbers of shares voted for or against
any nominee for director or any proposal. Directors shall be
elected by a plurality of the votes of the shares present in
person or represented by proxy and casting votes for the position
on the Board which that nominee represents.
<PAGE>
The following table sets forth the ownership of the
Company's Common Stock as of May 5, 1995 by each person known to
the Company to be the beneficial owner of more than 5% of such
Common Stock, by each executive officer and director and by all
executive officers and directors as a group:
<TABLE>
<CAPTION>
Amount and
Nature of Percentage of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership(1) Outstanding(2)
<S> <C> <C>
Mr. Charles Klimkowski 74,900 (3) *
208 South LaSalle Street
Chicago, IL 60604
M. Christine Jacobs 219,070 (4) 2.0%
5325 Oakbrook Parkway
Norcross, GA 30093
Bruce W. Smith 134,355 (5) 1.2%
5325 Oakbrook Parkway
Norcross, GA 30093
John V. Herndon 189,415 (6) 1.7%
617 Longview Drive
Waynesville, N.C. 28786
Peter A.A. Saunders 66,000 (7) *
2 Regents Close
South Croydon, Surrey CR2 7BW
England
Orwin L. Carter, Ph.D. 37,000 (8) *
1029 Third Avenue South
Stillwater, MN 55082
Otis W. Brawley, M.D. 12,000 (9) *
9715 Hill Street
Kensington, MD 20895
All Directors and Officers 732,740 (10) 6.3%
as a Group (seven persons)
Non-Management Owning > 5%
Bellingham Industries Inc. 2,383,500 21.7%
Urraca Building
Frederico Boyd Avenue
Panama City, Panama
</TABLE>
* Less than 1%
(1) Each person named in the table has sole voting and
investment power with respect to all shares of Common
Stock shown as beneficially owned by him or her.
(2) The percentage of shares of Common Stock is calculated
assuming that the beneficial owner has exercised any
conversion rights, options or other rights to subscribe
held by such beneficial owner that are currently
exercisable or exercisable within 60 days and that no
other conversion rights, options or other rights to
subscribe have been exercised by anyone else.
(3) Includes 24,000 shares purchasable by Mr. Klimkowski
within 60 days upon exercise of options.
(4) Includes 217,570 shares purchasable by Ms. Jacobs
within 60 days upon exercise of options.
(5) Includes 132,855 shares purchasable by Mr. Smith within
60 days upon exercise of options.
(6) Includes 189,415 shares purchasable by Mr. Herndon
within 60 days upon exercise of options.
(7) Includes 66,000 shares purchasable by Mr. Saunders
within 60 days upon exercise of options.
(8) Includes 36,000 shares purchasable by Dr. Carter within
60 days upon exercise of options.
(9) Includes 12,000 shares purchasable by Dr. Brawley
within 60 days upon exercise of options.
(10) Includes 677,840 shares purchasable by all executive
officers and directors within 60 days upon exercise of
options.
<PAGE>
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three
classes (Class I, Class II and Class III) with two directors in
each class. One class of directors is elected each year for a
three-year term. Two directors, representing the Class III
Directors, are to be elected at the Annual Meeting. These Class
III Directors will serve until the Annual Meeting of Stockholders
in 1998 or until their successors shall have been elected and
qualified. The current Board of Directors has selected, and will
cause to be nominated at the meeting, Dr. Orwin L. Carter and Ms.
M. Christine Jacobs, who upon election will comprise the Class
III Directors of the Board of Directors.
Provided that a quorum of stockholders is present at the
meeting in person or by proxy, directors will be elected by a
plurality of the votes cast at the meeting. The persons named on
the enclosed proxy card or their substitutes will vote all of the
shares that they represent for the above-named nominee unless
instructed otherwise on the proxy card. If at the time of the
Annual Meeting of Stockholders any nominee is unable or declines
to serve, the discretionary authority provided in the proxy will
be exercised to vote for a substitute. Management has no reason
to believe that a substitute nominee will be required.
The directors and director nominees have supplied the
Company with the following information concerning their age,
principal employment, other directorships and positions with the
Company:
<TABLE>
<CAPTION>
Director/Nominee Principal Occupation and
Other Information
<S> <S>
Class I Directors
John V. Herndon Mr. Herndon joined the Company in April
Director since 1987 1987, as Executive Vice President and in
Age: 54 July 1989, was appointed President,
Chief Executive Officer and Chairman of
the Board of Directors of the Company.
In August 1993, Mr. Herndon relinquished
his role as Chief Executive Officer
while retaining his position as Chairman
of the Board of Directors of the
Company. Mr. Herndon stepped down as
Chairman of the Board in December 1994,
and currently serves as a Director as
well as serving the Company in the
position of Advisor-to-the-President.
Peter A.A. Saunders Mr. Saunders is manager/owner of PASS
Director since 1989 Consultants, a Great Britain based
Age: 53 management consulting firm established
in 1988. From April 1991 to April 1993,
Mr. Saunders was also Managing Director
of United Artists Communications in
London, a cable television and telephone
service provider. Mr. Saunders presently
serves as a non-executive director for
several other British companies
including Coughlan's Patisserie (bakery
shops), Mayday Healthcare Trust
(hospital), Allied Radio plc (radio
stations), and Eurobell (Sussex) Ltd.
(cable TV and telecommunications).
Class II Directors
Charles R. Klimkowski Since 1980, Mr. Klimkowski has been
Director since 1993 employed by The Chicago Corporation,
Age: 59 most recently as a Senior Vice
President and Director, a Portfolio
Manager and a member of the Investment
Policy Committee. Mr. Klimkowski was
elected to the post of Chairman of
Theragenics' Board of Directors in
December 1994.
<PAGE>
Otis W. Brawley, M.D. Since 1990, Dr. Brawley has been Program
Director since 1995 Director of the Community Oncology and
Age: 36 Rehabilitation Branch, Early Detection
and Community Oncology Program, a
Division of Cancer Prevention and
Control of the National Cancer
Institute. Dr. Brawley has also been a
Commissioned Officer of the U.S. Public
Health Service since 1989 and Tenured
with the Research Officer Group since
February 1994. Dr. Brawley's
professional activities have included;
National Cancer Institute (NCI)
Coordinator and Project Officer of the
Prostate Cancer Prevention Trial, NCI
Coordinator of the Minority Based
Community Clinical Oncology Program, and
coauthor and associate investigator in
several protocols approved by the
National Institutes of Health Clinical
Center Investigational Review Committee.
Dr. Brawley has received such
distinguished honors as the Public
Health Service Commendation in 1993 and
the National Cancer Institute and the
Equal Employment Opportunity Officer's
Commendation in 1991 and 1993.
Additionally he has coauthored more than
21 publications. Dr. Brawley also
reviews for several prestigious
publications.
Class III Director Nominees
Orwin L. Carter, Ph.D. Dr. Carter presently serves as a
Director since 1991 consultant with INCSTAR Corporation, an
Age: 52 affiliate of Sorin Biomedica. From 1989
to March 1995, Dr. Carter served INCSTAR
in various capacities including
Chairman, C.E.O. and President. Dr.
Carter also currently serves on the
Board of Directors of Lifecore
Biomedical, Inc.
M. Christine Jacobs Ms. Jacobs joined the Company as
Director since 1992 National Sales Manager in 1987 and was
Age: 44 subsequently promoted to Vice President
of General Sales and Marketing. Since
1992, Ms. Jacobs has been President and
Chief Operating Officer of the Company
and in August 1993, Ms. Jacobs was
promoted to the position of Chief
Executive Officer while retaining the
position of President. Ms. Jacobs also
serves as a director of the Georgia
Biomedical Partnership, a non-profit
organization which promotes economic and
environmental development beneficial to
the growth of biomedical business within
Georgia.
</TABLE>
The Board of Directors held three meetings in the fiscal
year ended December 31, 1994, and acted by unanimous written
consent in lieu of a meeting in a number of instances. All
members participated in all meetings. All Directors were involved
in informal discussions prior to the signing of all unanimous
written consents.
The Board of Directors has established two standing
committees and has assigned certain responsibilities to each of
those committees.
The Audit Committee, formed in 1991, met three times during
fiscal year 1994. The Audit Committee reviews the independence,
qualifications and activities of the Company's independent
certified public accountants and the activities of the Company's
accounting staff. The Audit Committee also recommends to the
Board the appointment of the Company's independent certified
public accountants and reviews and approves the Company's annual
financial statements together with other financial reports and
related matters. The Audit Committee is composed of Mr. Saunders
and Dr. Carter, each of whom attended all meetings.
<PAGE>
The Compensation Committee, formed in 1990, met once during
fiscal year 1994 and acted by unanimous written consent in lieu
of a meeting in one instance. The Compensation Committee makes
recommendations concerning remuneration of the Company's Chief
Executive Officer. The Compensation Committee is composed of Dr.
Carter and Mr. Klimkowski, each of whom attended the meeting.
The Board of Directors has no Nominating Committee.
Directors who are not officers of the Company receive $500
per meeting plus expenses as compensation for attending Board of
Directors and Committee meetings.
Executive Officers
The executive officers of the Company are set forth in the
table below. All executive officers serve the Company under
employment contracts.
<TABLE>
<CAPTION>
Executive Officer Office and Other Information
<S> <S>
M. Christine Jacobs President and Chief Executive Officer
Age: 44 since 1993. See information above under
Class III Director Nominees.
Bruce W. Smith Treasurer and Chief Financial Officer
Age: 42 of the Company and Secretary of the
Board of Directors since 1989. Mr. Smith
has served in financial capacities with
the Company since joining it in January
1987.
</TABLE>
REMUNERATION AND OTHER MATTERS
Executive Compensation
The following table summarizes the compensation paid by the
Company for services rendered during the years indicated to each
of the Company's executive officers whose total salary and bonus
exceeded $100,000 during the fiscal year ended December 31, 1994.
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term
Annual Compensation Compen-
Other sation All
Annual Number Other
Fiscal Compen- of Compen-
Principal Position Year Salary(1) Bonus sation(2) Options sation
<S> <C> <C> <C> <S> <C> <C>
M. Christine Jacobs 1994 $100,010 $28,000 --- --- $102
President & Chief 1993 $ 88,081 $16,667 --- 120,000 $143
Executive Officer 1992 $ 74,102 $25,806 --- --- ---
</TABLE>
(3)
(1) Includes amounts deferred under the 401(k) feature of
the Company's Employee Savings Plan.
(2) Excludes certain personal benefits, the total value of
which was less than 10% of the total annual salary and
bonus.
(3) The Company has an agreement with Ms. Jacobs, dated
August 1, 1993, which provides for her employment for
the period commencing August 1, 1993 and expiring July
31, 1996. This agreement provides for a minimum annual
salary of $100,000 plus an annual bonus determined by
the Board of Directors utilizing certain criteria. In
addition the agreement provides a severance package in
the event of termination of up to six months' salary
and other related benefits.
<PAGE>
The following table sets forth information concerning the
value of unexercised options as of December 31, 1994 held by Ms.
Jacobs. No stock appreciation rights have ever been issued by the
Company.
Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values Table
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options on Options on
December 31, December 31,
Shares 1994 1994
Acquired Exercisable/ Exercisable/
Name on Value Un- Un-
Exercise Realized exercisable exercisable
<S> <C> <C> <C> <C>
M. Christine Jacobs 0 $0 157,570/ $165,096/
100,000 $ 27,500
</TABLE>
Board Compensation Committee Report on Executive
Compensation. The Compensation Committee has a policy that a
significant portion of the Chief Executive Officer's pay should
be related to the performance of the Company. Historically, it
has been the Company's policy to establish employees' base
salaries at rates below what the Committee believes the officers
could command in the market and supplement these base salaries
with bonuses, if justified, based on the Company's and
individual's performance. The Committee believes this policy is
reflected, for example, in the terms of the Chief Executive's
employment contract and criteria for a performance bonus.
At the beginning of 1994, the Committee established criteria
for the C.E.O.'s performance bonus based upon a combination of
dollar sales levels and dollar after tax profitability. A matrix
(the "Matrix") was established with cells within the Matrix
representing specific combinations of sales and profits.
Performance falling within a particular cell would result in a
bonus to the C.E.O. expressed as a percent of the C.E.O.'s base
salary. This Matrix, which allowed for bonuses running from 5% to
100% of the C.E.O.'s base salary, was constructed to reward the
C.E.O. for reaching specific combinations of sales and profit
levels with higher sales and profit resulting in a larger bonus.
The percentages within the Matrix recognize both the benefit to
the Company of reaching certain sales and profit levels and to a
lesser extent the Committee's assessment of the compensation the
C.E.O. could obtain in the market. In addition to the bonus
called for in the Matrix, the Committee also has the option of
awarding the C.E.O. an additional bonus of up to 10% of her base
salary. This bonus which is subjectively determined by the
Committee is based on less quantifiable measures of performance
(i.e., problem resolution, marketing program development and
execution, internal processes and procedures development, cash
management and expense control, and the effective and efficient
application of available resources to ensure both short-term and
long-term Company health).
Based upon the above criteria, Ms. Jacobs, the Company's
C.E.O., was awarded a 28% bonus or $28,000. The 28% represents an
18% bonus called for by the Matrix plus a 10% bonus for the less
quantifiable measures of performance.
/s/ Orwin L. Carter /s/ Charles R. Klimkowski
Orwin L. Carter, Ph.D. Charles R. Klimkowski
<PAGE>
The Following table summarizes the cumulative total return
on investment in the Company's Common Stock for fiscal years 1989
through 1994:
<TABLE>
Comparison of Five Year - Cumulative Returns
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Theragenics Corporation 100 150 875 1100 850 475
Nasdaq Stock Market (US Companies) 100 85 136 159 181 177
Nasdaq Pharmaceuticals Stocks 100 120 319 266 237 178
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Dr. Orwin Carter and Mr. Charles Klimkowski, directors of
the Company and members of the Company's Compensation Committee,
received $2,500 and $500 respectively for consulting services
rendered to the Company.
PROPOSAL NUMBER TWO
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Stockholders will be asked to vote for a proposal to ratify
the appointment of Grant Thornton as the independent public
accountants of the Company for the fiscal year ending December
31, 1995. Grant Thornton has been the independent public
accountants for the Company since fiscal year 1989. If the
stockholders, by affirmative vote of the holders of a majority of
the votes cast, do not ratify this appointment, the Board of
Directors will reconsider its action and select other independent
public accountants without further stockholder action.
A representative of Grant Thornton is expected to be present
at the Annual Meeting to respond to appropriate questions and
will be given the opportunity to make a statement if such
representative desires to do so.
The Board of Directors recommends that the stockholders vote
FOR ratification of the appointment of Grant Thornton as the
independent public accountants of the Company.
<PAGE>
PROPOSAL NUMBER THREE
APPROVAL OF THE 1995 STOCK OPTION PLAN
Background and Description
As of April 3, 1995, the Board of Directors adopted the
Theragenics Corporation, 1995 Stock Option Plan (the "1995 Plan")
subject to subsequent approval by the shareholders. The 1995 Plan
is intended to provide participants an additional incentive to
achieve the Company's objectives by giving them an opportunity to
increase their stock ownership in the Company. The 1995 Plan is
designed to preserve cash, tie key employees to the Company and
induce qualified individuals to serve on Theragenics
Corporation's Board of Directors. By giving options as an
alternative to competitive remuneration for employee and director
services, the Company has been able to preserve cash needed for
capital investment and expansion of marketing programs and by
establishing option vesting schedules of up to five years the
Company has created an incentive for employees, who are otherwise
less than competitively remunerated, to stay with the Company.
The 1995 Plan provides that options may be granted for the
purchase of up to 500,000 shares of Common Stock, subject to
adjustment upon changes in capitalization.
Options may be granted only to employees and directors of
the Company. The Company receives no consideration upon the
granting of an option. The options may be granted either as
incentive stock options (which qualify for certain favorable tax
consequences, as discussed below), or as non-qualified stock
options, but no options may be granted after April 3, 2005.
The 1995 Plan is administered by the 1995 Option Plan
Committee (the "Committee") of the Board of Directors or the
Board of Directors, which selects the recipients of options. The
Committee or Board also determines the number of shares, the
exercise price, the term, any conditions on exercise, the
consequences of any termination of employment, and other terms of
each option. In the case of an option intended to be an incentive
stock option, the term of the option may not exceed ten years
from the date of grant and the option price may not be less than
100% of the fair market value per share on the date of grant.
With respect to non-qualified stock options, there is no limit on
the term of the option, and the option price may not be less than
100% of the fair market value per share on the date of grant. For
options granted at an option price equal to the fair market value
on the date of grant, no compensation expense is incurred, either
at the time of grant or upon exercise. The exercise price is
payable in full upon exercise, and payment may be made in cash,
by delivery of shares of Common Stock (valued at their fair
market value at the time of exercise), or by a combination of
cash and stock. The market value per share of the Common Stock on
May 5, 1995, was $5.625, as determined by reference to the
closing bid price as reported in the NASDAQ system. In the
discretion of the Committee or Board, options under the 1995 plan
may include a "reload option". A reload option, if included in
the original option, would be triggered when an optionee paid the
exercise price of all or a portion of the original option by
delivering shares of Common Stock. In that event, the optionee
would automatically be granted an additional option to acquire
the same number of shares as had been delivered to pay such
exercise price. The reload option would be subject to all of the
terms and conditions of the original option, except that the
option price per share would be equal to the fair market value of
the Common Stock on the date the original option was exercised,
and except that the Committee or Board could specify additional
conditions or contingencies, such as continued employment by the
Company or holding of the shares acquired upon exercise of the
original option for a specified period of time. No options are
presently outstanding under the 1995 Plan.
Options granted under the 1995 Plan may not be transferred
by an optionee other than by will or by the laws of descent and
distribution.
The Board of Directors has the right at any time to
terminate or amend the 1995 Plan, but no such action may
terminate options already granted or otherwise affect the rights
of any optionee under any outstanding option without the
optionee's consent. Without shareholder approval, the Board may
not amend the 1995 Plan to (i) increase the total number of
shares of stock subject to option, or (ii) change or modify the
class of eligible participants.
<PAGE>
Federal Income Tax Consequences
There are no federal income tax consequences to an optionee
or to the Company on the granting of options. Federal tax
consequences upon exercise will vary depending on whether the
option is an incentive stock option or a non-qualified option.
Incentive Stock Options. When an optionee exercises an
incentive stock option, the optionee will not recognize any
taxable income at that time, and the Company will not be entitled
to a deduction. The optionee will recognize capital gain or loss
at the time of disposition of shares acquired through the
exercise of an incentive stock option if the shares have been
held for at least two years after the option was granted and one
year after it was exercised. The Company will not be entitled to
a tax deduction if the optionee satisfies these holding period
requirements. The federal income tax advantage to the holder of
incentive stock options who meets the holding-period requirements
is a deferral, until the acquired stock is sold, of taxation of
any increase in the stock's value from the time of grant of the
option to the time of its exercise, and taxation of such gain, at
the time of sale, as capital gain rather than ordinary income.
For the purpose of calculating tax upon disposition where
stock is surrendered in payment of the option price, the capital
gains holding period and basis of the new shares, to the extent
of the old shares surrendered, is the same as for the old shares;
the holding period for the additional shares (that is, the shares
received on exercise in excess of the old shares surrendered)
begins on the date the option is exercised, and such additional
shares have a basis equal to the amount, if any, of the price of
the option stock paid in cash.
If the holding period requirements are not met, then upon
sale of the shares the optionee generally recognizes as ordinary
income the excess of the fair market value of the shares at the
date of exercise over the option price; any increase in the value
of the option stock subsequent to exercise is long or short-term
capital gain to the optionee depending on the optionee's holding
period for the stock. However, if the sale is for a price less
than the value of the shares on the date of exercise, the
optionee may recognize ordinary income only to the extent the
sales price exceeded the option price. In either case, the
Company is entitled to a deduction to the extent of ordinary
income recognized by the optionee.
Non-Qualified Stock Options. Generally, when an optionee
exercises a non-qualified stock option the optionee recognizes
income in the amount of the aggregate fair market value of the
shares received upon exercise, less the aggregate amount paid for
those shares, and the Company may deduct as an expense the amount
of income so recognized by the optionee, provided that the
Company satisfies certain tax withholding requirements. The
holding period of the acquired shares begins upon the exercise of
the option, and the optionee's basis in the shares is equal to
the fair market value of the acquired shares on the date of
exercise.
If the optionee pays all or part of the purchase price by
delivering to the Company shares of Common Stock, there are no
federal income tax consequences to the optionee or the Company to
the extent of the number of shares so delivered. As to any
additional shares issued, the optionee recognizes income equal to
the aggregate fair market value of the additional shares
received, less any cash paid to the Company, and the Company is
allowed to deduct the amount of such income, provided that the
Company satisfies certain tax withholding requirements. The
holding period and basis of the new shares, to the extent of the
number of old shares delivered, is the same as for the old
shares. The holding period for the additional shares begins on
the date the option is exercised, and the basis in those
additional shares is equal to their fair market value on the date
of exercise.
Vote Required and Recommendation of the Board
The 1995 Plan is being submitted for shareholder approval in
order to obtain the benefits provided by Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and
by Section 422 of the Internal Revenue Code. Rule 16b-3 exempts
officers and directors engaging in certain stock transactions
from short-swing trading liability under Section 16(b) of the
1934 Act. Section 422 of the Internal Revenue Code requires
shareholder approval in order for options under the 1995 Plan to
be treated as incentive stock options. See "Federal Income Tax
Consequences - Incentive Stock Options", above.
<PAGE>
The affirmative vote of the holders of a majority of the
shares of Common Stock present at the Annual Meeting is required
to approve the adoption of the 1995 Plan, assuming the presence
of a quorum. The 1995 Plan provides that if it has not been
approved by the shareholders by July 31, 1995, it will terminate
on that date and all options previously granted thereunder will
be void and may not be exercised.
Recognizing the significant contributions of the employees
and directors to date and the need to motivate, compensate and
assure the retention of employees and directors as the Company
grows, the Board of Directors strongly recommends a vote "FOR"
approval of the adoption of the 1995 Plan.
COMPLIANCE WITH FILING REQUIREMENTS
Pursuant to Section 16(a) of the Securities Exchange Act of
1934, officers, directors, and beneficial owners of more than ten
percent of the outstanding Common Stock are required to file
reports with the Securities and Exchange Commission reporting
their beneficial ownership of the Common Stock at the time they
become subject to the reporting requirements and changes in
beneficial ownership occurring thereafter. Based on a review of
the reports submitted to the Company and written representations
from persons known to the Company to be subject to these
reporting requirements, the Company believes that its executive
officers and directors complied with the Section 16(a)
requirements, except that one transaction of Mr. Klimkowski's was
reported one month late.
STOCKHOLDERS PROPOSALS
Stockholders of Theragenics may submit proposals for
inclusion in the proxy materials. These proposals must meet the
stockholder eligibility and other requirements of the Securities
and Exchange Commission. In order to be included in the Company's
1996 proxy material, a stockholder's proposal must be received
not later than December 31, 1995 at Theragenics Corporation
offices, 5325 Oakbrook Parkway, Norcross, Georgia 30093, ATTN.:
Secretary.
In addition, Theragenics' By-Laws provide that in order for
business to be brought before the Annual Meeting, a stockholder
must deliver or mail written notice to the principal executive
offices of the Company, which written notice is received not less
than 60 days nor more than 90 days prior to the date of the
meeting. The notice must state the stockholder's name, address,
number and class of shares of Theragenics stock held, and briefly
describe the business to be brought before the meeting, the
reasons for conducting such business at the Annual Meeting, and
any material interest of the stockholder in the proposal.
The By-Laws also provide that if a stockholder intends to
nominate a candidate for election as a Director, the stockholder
must deliver written notice of his or her intention to the
Secretary of the Company. The notice must be received not less
than 60 days nor more than 90 days before the date of the meeting
of stockholders. The notice must set forth the name and address
of, and the number of shares owned by, the stockholder (and that
of any other stockholder known to be supporting said nominee).
The notice must also set forth the name of the nominee for
election as a Director, the age of the nominee, the nominee's
business address and experience during the past five years, the
number of shares of stock of the Company beneficially held by the
nominee, and such other information concerning the nominee as
would be required to be included in a proxy statement soliciting
proxies for the election of the nominee. In addition, the notice
must include the consent of the nominee to serve as a Director of
Theragenics if elected.
MISCELLANEOUS
The Company will furnish without charge a copy of its Annual
Report on Form 10-K filed with the Securities and Exchange
Commission for the fiscal year ended December 31, 1994, including
financial statements and schedules, to any record or beneficial
owner of its Common Stock as of May 5, 1995, who requests a copy
of such Report. Any request for the 10-K Report should be in
writing addressed to: Ron Warren, Director of Investor Relations,
<PAGE>
Theragenics Corporation, 5325 Oakbrook Parkway, Norcross, GA
30093. If the person requesting the Report was not a shareholder
of record on May 5, 1995, the request must include a
representation that such person was a beneficial owner of Common
Stock of the Company on that date. Copies of any exhibits to the
Form 10-K will be furnished on request and upon payment of the
Company's expenses in furnishing such exhibits.
OTHER MATTERS
Management is not aware of any matters to be presented for
action at the meeting other than those set forth in this Proxy
Statement. However, should any other business properly come
before the meeting, or any adjournment thereof, the enclosed
Proxy confers upon the persons entitled to vote the shares
represented by such Proxy discretionary authority to vote the
same in respect of any such other business in accordance with
their best judgment in the interest of the Company.
Norcross, Georgia
May 26, 1995
THERAGENICS CORPORATION
(Three photographs of employees of Theragenics Corporation
working at the Company's cyclotron facility are presented here on
the cover.)
1994 ANNUAL REPORT
<PAGE>
THE BUSINESS OF THERAGENICS CORPORATION
Theragenics Corporation ("Theragenics" or the "Company") was
incorporated in November 1981 to commercially engage in the
development, manufacture, and marketing of therapeutic
radiological pharmaceuticals and devices for use primarily in the
treatment of cancer. The Company's products are intended to
permit a physician to introduce short-range, short-lived
radioactive material directly into cancerous tissue, thereby
concentrating the impact of the radiation on the cancerous tissue
to be destroyed while minimizing the effect on surrounding
healthy tissue. To date the Company has internally developed two
products - TheraSeed , a radioactive implant designed for the
treatment of localized tumors, and TheraSphere , radioactive
microspheres for the treatment of liver cancer. TheraSeed is
being commercially distributed in the United States while
TheraSphere is being commercially distributed in Canada.
The conventional treatments for cancer to date have been
surgery, radiation and chemotherapy. The treatments which have
been most successful are those which remove or kill all of the
cancerous tissue while avoiding excessive damage to the
surrounding healthy, normal tissue. When the cancerous tissue
cannot be completely removed or killed, the cancer usually
returns to the primary site often with metastases to other areas.
The Company's products are intended to permit a physician to
place short-range, short-lived radioactive material near or into
a cancerous tumor, thereby concentrating the impact of the
radiation on the cancerous tissue to be destroyed. The Company's
products are most effective on encapsulated, confined tumors.
Each of the Company's products is based on established physical
principles and has the simple objective of delivering sufficient
radiation to the target cancer to kill it while minimizing the
radiation to surrounding tissue.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
THE BUSINESS OF THERAGENICS CORPORATION.........................i
FINANCIAL HIGHLIGHTS............................................1
A LETTER TO OUR SHAREHOLDERS....................................2
THE PRODUCTS OF THERAGENICS.....................................4
MANAGEMENT'S DISCUSSION AND ANALYSIS............................6
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS..............8
FINANCIAL STATEMENTS............................................9
NOTES TO FINANCIAL STATEMENTS..................................13
SUPPLEMENTARY FINANCIAL INFORMATION............................16
STOCKHOLDER INFORMATION........................................17
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
Set forth below are selected financial data derived from the
statements of operations of the Company for the years ended
December 31, 1990, 1991, 1992, 1993 and 1994 and the balance
sheets of the Company at December 31, 1990, 1991, 1992, 1993 and
1994.
<TABLE>
For the Fiscal Years Ended
December 31,
<CAPTION>
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
Net sales $1,148,833 $2,469,413 $4,379,300 $4,090,803 $4,723,107
Licensing Fee - 300,000 - - -
Costs and expenses:
Cost of sales 641,914 818,184 1,227,154 1,677,631 1,790,450
Selling, general and
administrative 1,117,765 1,254,821 1,639,334 1,607,288 1,844,239
Research and
development 76,762 84,903 62,632 36,181 15,268
Other income(expense) 90,300 113,865 67,831 (85,959) 110,215
Taxes - 280,000 582,000 254,000 453,000
Net profit/(loss)
before extraordinary
credit and change
in accounting
method (597,308) 445,370 936,011 429,744 730,365
Extraordinary credit - 270,000 556,000 - -
Change in
accounting method - - 2,860,000 -
Net profit/(loss) (597,308) 715,370 1,492,011 3,289,744 730,365
Net profit/(loss)
per common share
before extraordinary
credit and change
in accounting
method (.06) .04 .08 .04 .06
Net profit/(loss)
per common share (.06) .07 .13 .28 .06
Weighted average
number of common
shares outstanding 9,857,665 10,759,230 11,431,149 11,709,218 11,582,793
Total assets $2,458,607 $3,299,375 $7,851,056 $12,618,869 $14,168,658
</TABLE>
(Three vertical bar graphs appear at the bottom of this page with
the following titles and depicted
data:
Revenues (millions); 1990 - $1,149; 1991 - $2,769; 1992 -
$4,379; 1993 - $4,091; & 1994 - $4,723.
Earnings Per Share; 1990 - ($0.06); 1991 - $0.04; 1992 -
$0.08; 1993 - $0.04; & 1994 - $0.06.
Total Assets (millions); 1990 - $2,459; 1991 - $3,299;
1992 - $7,851; 1993 - $12,619; & 1994 - $14,169.)
<PAGE>
A LETTER TO OUR SHAREHOLDERS
1994 was both a successful and pivotal year for Theragenics.
Financially we surpassed our results of previous years, while
maintaining our record of profitability. Let's discuss where
we've been, where we are and where we're going.
The Year In Review
We began 1994 squarely focused on developing a consistent supply
of our product, TheraSeed . This required us to refine chemical
processes, optimize cyclotron yield and standardize manufacturing
procedures. Along the way we realized cyclotrons shouldn't run
365 days a year. Cyclotrons require downtime for preventive
maintenance and scheduled cool-down periods. Our employees
benefit from a safer environment at reduced levels of radiation.
Once we became comfortable with the consistent supply, we
increased production levels again.
Meanwhile, we enhanced old marketing programs and implemented new
ones. These programs began to bear fruit during the last part of
1994. They are not only making a difference in revenue, they are
encouraging hundreds of patients and their families to obtain
those all important "second opinions."
We ended the year with sixteen consecutive profitable quarters,
record revenues, a strong balance sheet, a product that cures
cancer, and clinical results that thrilled our customers.
Financial highlights for 1994 include:
Revenue increased to $4,723,107.
Net income improved to $730,364.
Earnings per share were $0.06.
An unprecedented $2.1 million bank loan was secured.
What a year!
Current Events
1995 should be a break-out year. We now have the luxury of
increased production capacity and a marketing program that is
gaining momentum. Placements of well targeted stories about
TheraSeed and Theragenics continue to appear, including coverage
in the November 1994 issue of Family Circle and most recently,
in the May 15, 1995 issue of Business Week. Articles like these
create demand for TheraSeed . When combined with the increased
activity of our Cancer Information Center, a targeted advertising
campaign and an increasing number of medical centers performing
the procedure the result is growth.
Our Investor Relations Department was created in the last quarter
of 1994. Our new Director of Investor Relations has changed our
"corporate look" and our exposure to the financial community has
reached an all time high. At present, we have several articles
and positive Company references in print. Our newly installed
investor relations toll-free telephone number handles well over
100 calls per month.
<PAGE>
Future Outlook
We all take great pride and satisfaction in the progress
Theragenics made in 1994, and we are encouraged to see the trend
continuing in 1995. The overriding strategic question for your
company now is how to sustain the momentum, and, at the same
time, prepare for the next stage of growth.
Demographic trends and our own market research clearly show that
growth in the treatable prostate cancer market will continue to
accelerate. To meet the growing demand of an ever increasing
number of patients, Theragenics will have to further expand its
production capacity through automation, as well as additional
cyclotrons and other facilities.
When a small company like ours enters a growth phases it faces
special requirements, most importantly maintaining adequate
levels of cash. While we will generate cash to fund existing
operations, we may need to consider other options to help finance
our expansion a key concern of any growth company like
Theragenics.
Revenues are likely to continue increasing, and although these
steps may put some pressure on profits in the near-term, the
objective is to add long-term shareholder value, and to ensure
Theragenics' continued growth and financial stability.
In Conclusion
Our future is brighter than ever before. The story of your
company's accomplishments is impressive and is reflected in a
strong balance sheet, healthy margins and physicians that are
committed to our product a product that cures cancer.
I wish to thank our shareholders for their continued support, our
customers for believing in our product, our Directors for their
wisdom and guidance, and our employees, whose hard work and
"can-do" spirit make Theragenics what it is today.
I look forward to sharing our continued progress with you
throughout the year.
Sincerely,
/s/ M. Christine Jacobs
M. Christine Jacobs
Chief Executive Officer and President
(Photograph of M. Christine Jacobs on lower right hand corner of
this page.)
<PAGE>
THE PRODUCTS OF THERAGENICS
Market Overview
According to the American Cancer Society, prostate cancer will
affect one in three men over the age of 50 and is the most common
cancer among men. The American Cancer Society also estimates
that the incidence of prostate cancer will continue to escalate.
An estimated 244,000 new cases will be diagnosed in the United
States in 1995 and more than 40,000 deaths will be caused by
prostate cancer.
There are four methods of treating early stage prostate cancer:
watchful waiting, surgery, external beam radiation and implant
therapy ("seeding"). Seeding offers an attractive choice of
therapy for early stage prostate cancer when compared to other
more complicated treatments. Seeding is performed at more than
170 medical centers in the U.S. Implant therapy is considered by
many physicians and patients alike to be an attractive option for
treating prostate cancer because of its ability to destroy
cancerous cells without harming surrounding tissue or causing
serious side effects.
Implant therapy, provided on an outpatient basis, also enables
patients to resume normal activities in as little as two days,
whereas surgery and external beam radiation require much longer
hospitalization and recovery times.
Products
TheraSeed, commercially distributed in the United States, is
used to treat cancers of the prostate, lung, head, neck, oral
cavity, base of the skull, brain and eye. It has been in
production since 1987 and was cleared for marketing by the U.S.
Food and Drug Administration (FDA) in 1986.
TheraSphere is used to treat both primary and secondary liver
cancer where the primary cancer has been, or can be, arrested.
TheraSphere is commercially distributed in Canada. TheraSphere
offers life extension similar to published rates for chemotherapy
while producing less severe side effects. It also has the
additional advantage of requiring only a single treatment.
Production
In 1992 it became apparent that Theragenics could no longer rely
on outside vendors for the production of irradiated palladium
(Pd-103 the raw material used in TheraSeed ), necessitating a
manufacturing changeover in 1993. With the exception of
outsourced raw materials and parts, Theragenics now performs all
of the operations necessary for the production of TheraSeed at
its two facilities located in the Atlanta, Georgia area. One of
these facilities houses two cyclotrons which produce the Pd-103
material. The first cyclotron has been providing raw material
since 1993 and, having completed its pre-production testing, the
second unit is now operational.
(Photograph of one of the Company's cyclotrons appears with the
above paragraph.)
Sales and Distribution
Theragenics' marketing program for TheraSeed is targeted to our
two principal audiences: the general public and the medical
community. The basic goal is to increase awareness of seeding as
an attractive method of treatment, while highlighting its success
rate and the low incidence of complications compared to other
treatment choices. We are committed to patient education and
encourage patients and their families to take an active role in
evaluating all treatments.
One of the ways Theragenics supports public education is through
a comprehensive public relations program. Our efforts place
stories about seeding therapy in national and local magazines and
newspapers and on television to reach our target audience of men
over 50. These publicity efforts are supplemented by a targeted
advertising campaign in publications read by seniors, selected
national magazines and through participation in various medical
shows and conferences. The medical community program
<PAGE>
is directed at three particular groups of healthcare providers
urologists, radiation oncologists and medical physicists.
A principal objective of all the Company's marketing efforts is
to encourage patients to call our toll free Cancer Information
Center (800-458-4372) and request information about seeding
therapy. The Center is manned by professionals versed in all
treatment options. As a part of our commitment to patient
education, Center personnel assist patients in locating
physicians who perform this treatment in their geographic area.
Cost and Benefit Comparison with Surgery
Benefits of seeding include comparable cure rates in early stages
of prostate cancer, reduced risk of impotence and incontinence,
lower cost and greater convenience.
The cost of TheraSeed implants is about one-half of radical
surgery and approximately two-thirds of external beam radiation.
These costs are covered by virtually all medical insurance plans
and Medicare.
The procedure is usually done on an outpatient basis, under local
or general anesthesia. The seeds are placed into the prostate
using thin, hollow needles guided by a grid attached to an
ultrasound device. The implant procedure lasts about one hour.
The patient is discharged after the effects of the anesthesia
have subsided and usually resumes normal activities two days
later. TheraSeed delivers its dosage during the following three
months and thereafter, the seeds remain inert in the body.
In addition, the likelihood of possible side effects is reduced
significantly with TheraSeed . Patients treated with the
implants experience fewer cases of impotence and incontinence,
side effects that often accompany surgery and external radiation
treatments. With seed implants, approximately 85 percent of
patients under 70 years of age who are potent before the
procedure remain potent afterwards. The incontinence rate for
patients with no prior prostate surgery is less than two percent.
(Photograph of one of the Company's cyclotron operators at his
workstation appears with the above paragraph)
Efficacy
Dr. John Blasko of the Northwest Tumor Institute, recently
reported that a five-year study of 111 patients with localized
early stage prostate cancer showed that seeding therapy resulted
in a local disease control rate of 100 percent. Findings
revealed the clinical, biochemical and biopsy results following
TheraSeed therapy were superior to those of external beam
irradiation. Those same results were also comparable to those
achieved with radical prostatectomy (surgery) after five years.
Test results showed median pretreatment prostate specific antigen
(PSA) screening levels of 7.2 ng/ml dropped post treatment to 0.2
ng/ml. A normal PSA level is considered less than 4.0 ng/ml.
Future Applications and Expansion
As stated previously, in addition to its application in the
treatment of prostate cancer, TheraSeed has also been used to
treat cancers of the lung, head, neck, oral cavity, base of the
skull, brain, and eye. While each of these applications
represent potential areas of growth for Theragenics, in the near
term, we have chosen to concentrate our efforts and resources on
increasing our share of the vast prostate cancer market.
International sales of TheraSeed are also an opportunity for
future expansion.
In a recent agreement with Nordion International, Inc. of Canada,
Theragenics granted Nordion worldwide marketing and manufacturing
rights to its TheraSphere product. Nordion assumes the
responsibility for, and expense of, regulatory approval of this
product in the various territories. This agreement expands and
enhances the commercialization process of this promising
treatment for patients suffering from liver cancer.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the Company's financial
condition, results of operations and liquidity is intended to
clarify and highlight the Company's operating trends, liquidity
and capital resources. It should be read in conjunction with the
financial statements and related notes contained in the financial
section of this Report.
RESULTS OF OPERATIONS
REVENUES - Revenues increased more than 15% from 1993
ending 1994 at $4.7 million versus $4.1 million for 1993 and $4.4
million in 1992. In 1994, Theragenics did not encounter the
significant production problems it had faced in the previous
year. As the Company's experience with cyclotron operations and
subsequent radioactive processes continues to grow, the realities
of these operations have become clear. No single cyclotron can be
expected to run at full power for 52 weeks a year. In addition to
the need for regular maintenance, these operations require a
"cool down" period before maintenance can be performed. These
"cool down" periods are imperative as safety of the Company's
employees (i.e., minimizing radiation exposure) is among the
Company's highest priorities. Another fact associated with these
operations is that there will be unexpected downtimes and there
will be the need for occasional long shutdowns to repair or
replace major components. Significant improvements in cyclotron
operations and subsequent operations have been made in the past
and will continue to be aggressively pursued.
During the first part of 1994, the company proceeded
cautiously in its generation of sales, allowing confidence to
grow in the dependability of the #1 cyclotron. Once consistent
supply was demonstrated, the Company began reclaiming marketing
momentum. Fueling this momentum were favorable five-year clinical
data (July 1994) and the dedication of additional financial
resources to this area. Both existing and new marketing programs
received emphasis. These marketing efforts began to impact
revenues in the fourth quarter of 1994 as sales rose to
$1,335,000 eclipsing past sales of approximately $1,000,000 to
$1,200,000 recorded for six of the previous seven quarters.
COSTS AND EXPENSES - As a result of the increase in
sales, cost of sales rose. However, cost of sales as a percent of
sales fell from 41% in 1993 to 38% in 1994. This decrease in
percent of cost of sales to sales reflects the economies of scale
associated with the large fixed cost component of the Company's
expense base. Both 1993 and 1994 cost of sales figures are
significantly above 1992 reflecting primarily depreciation on the
Company's first cyclotron which came on line in early 1993. As
utilization of the Company's fixed cost base (as significantly
represented by facilities and cyclotron costs) increases, the
cost of sales to sales percentage can be expected to continue to
fall. But with the Company's second cyclotron scheduled to come
on-line in March/April 1995, depreciation will increase, with a
resulting increase of this percentage.
Selling, General and Administrative ("S,G&A") expenses
increased more than would have been expected if operations had
continued under the same structure as existed in 1993. Changes
were made in two specific areas in 1994 which increased S,G&A
costs. In marketing, aggressive advertising and public relations
programs were instituted midway through 1994 adding incremental
costs of more than $100,000. These programs proved to be quite
successful as sales in the fourth quarter of 1994 increased
significantly in what Management attributes as a direct response
to these programs. Due to the benefits seen (i.e., sales growth),
significant expansions of these programs are scheduled for 1995
resulting in continued significant increases in these
expenditures. Investor relations was the other area which
underwent significant change, resulting in the creation of an
Investor Relations ("IR") department. While incremental IR costs
rose only slightly in 1994, incremental costs in 1995 associated
with this new department are expected to be approximately
$100,000+. All other changes in S,G&A expenses fell within the
boundaries of change that would be expected given normal business
fluctuations and increases in sales.
<PAGE>
Other income and expense improved by $196,000. This
change was almost entirely attributable to a change in the
booking of interest expense. Although the Company made almost
$140,000 in interest payments related to long term debt, the
entire amount was required to be capitalized in accordance with
generally accepted accounting practices. This capitalization of
interest expense was necessary because interest payments must be
capitalized if a Company has construction-in-progress at the time
it is making interest payments. Because the Company expects to
continue to have construction-in-progress through 1995, no
booking of interest expense is expected even though interest
payments of approximately $150,000 will be made. The additional
reduction of interest expense was due to the replacement of an
existing loan with a new loan thereby reducing the effective
interest rate from 10.25% to 8.47%. In 1992, the Company had no
long-term debt and other interest expense for that year was
immaterial.
EARNINGS - In 1994, the Company recorded a net profit of
$730,000 or $.06 per share. In 1993, the Company recorded a net
profit of $3,290,000, or $.28 per share. Included in the 1993
profit number is a one-time positive earnings adjustment of
$2,860,000, or $.24 per share due to the mandated implementation
of FASB-109, "Accounting for Income Taxes." This booking which
appears on the balance sheet as an asset titled "Deferred Income
Tax Asset" primarily represents the tax benefit which arises from
the carryforward of prior years' operating losses. The
significant portions of the operating loss carryforwards were
incurred while the Company was in the development stage. Upon
receiving clearance to market its TheraSeed product from the
U.S. Food and Drug Administration (FDA) in 1986, the Company
commenced manufacturing and distribution of TheraSeed in 1987.
Since emerging from the development stage in 1989, the Company
has utilized approximately $3,400,000 of these operating loss
carryforwards through December 31, 1994 and has achieved sixteen
consecutive profitable quarters since 1991. In order to realize
income benefit from the remaining operating loss carryforwards at
December 31, 1994, it will be necessary for the Company to
generate future taxable income of approximately $6,460,000, prior
to the expiration of the operating loss carryforward periods.
Based on the Company's results of operations subsequent to
receiving FDA clearance for its product, and on expected future
results of operations, management currently strongly believes
these tax credits will be fully utilized prior to their statutory
expiration. In 1992, the Company recorded a net profit of
$1,492,000 or $.13 per share. Because of the differing accounting
principles applied among years, to accurately compare results of
the three years requires that "Net Earnings Before Extraordinary
Credit and Cumulative Effect of Change in Accounting Principle"
be the basis for comparison. Using this method, 1994's earnings
were $730,000, or $.06 per share, 1993's $430,000, or $.04 per
share and 1992's $936,000 or $.08 per share.
LIQUIDITY AND CAPITAL RESOURCES
Theragenics had cash, cash equivalents, short-term
investments and marketable securities of $2.4 million at December
31, 1994, compared to $3.4 million at year end 1993 and $3.5
million at year end 1992. Cash flows from operating activities in
1994 were $1.6 million compared to $1.1 million in 1993 and $1.9
million in 1992.
Capital spending was $3.4 million in 1994, $2.7 million
in 1993 and $3.0 million in 1992. Land purchase, construction
and completion of Theragenics' cyclotron facility represented the
bulk of the spending in 1992 and 1993 while spending in 1994
represents an expansion of that same facility and the addition of
a second cyclotron.
Working capital totaled $2.5 million at December 31,
1994, including $.5 million representing the current portion of
an outstanding long-term obligation. This compares to $3.4
million at year end 1993 including $.6 million representing the
current portion of outstanding long-term obligations and $3.9
million at year end 1992. In September 1994, the Company received
a $2.1 million bank loan collateralized by certain manufacturing
equipment and facilities. Of the $2.1 million loan, $1.4 million
<PAGE>
was used to pay off existing long-term financing while the
remainder was used to provide partial financing for the purchase
of the second cyclotron and the facility expansion to house it.
In the first quarter of 1993, Theragenics received funding on a
$1.9 million loan secured by the Company's cyclotron facility.
Proceeds from this loan were used to provide funding of working
capital needs. In June of 1992, Theragenics completed a private
placement of 550,000 shares of its common stock which netted the
Company $2.8 million. These funds were used to provide partial
funding of the construction of Theragenics' new manufacturing
facility which was completed in 1993.
As of March 20, 1995, all but $3,000 of the
manufacturing expansion project including building expansion and
cyclotron purchase had been completed. Options to purchase
additional cyclotrons are being investigated but currently no
firm commitment to purchase nor timetable for future purchases
has been established.
Management may choose to raise additional funds in the
future through licensing, additional stock offerings or other
forms of financing. If raised, these additional funds along with
current cash balances and profit from future operations might be
made available by management to accelerate the purchase of
additional cyclotrons or to pursue other attractive opportunities
as they materialize.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS
Theragenics Corporation
We have audited the balance sheets of Theragenics
Corporation (a Delaware corporation) as of December 31, 1993 and
1994, and the related statements of earnings, shareholders'
equity, and cash flows for each of the three years in the period
ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the financial
position of Theragenics Corporation as of December 31, 1993 and
1994, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles.
As described in Note E, the Company changed its method
of accounting for income taxes in 1993, as required by Statement
of Financial Accounting Standards No. 109.
GRANT THORNTON LLP.
Atlanta, Georgia
January 12, 1995
<PAGE>
<TABLE>
BALANCE SHEETS
December 31, 1993 and December 31, 1994
Theragenics Corporation
ASSETS
<CAPTION>
December 31, December 31,
1993 1994
<S> <C> <C>
CURRENT ASSETS
Cash and short-term
investments (Note B-7) $ 3,083,021 $ 2,317,463
Marketable securities (Note B-8) 359,765 50,000
Trade accounts receivable (Note B-1) 535,291 732,424
Inventories (Notes B-2 and C) 159,327 192,161
Prepaid expenses and other
current assets 114,249 91,801
Total current assets 4,251,653 3,383,849
PROPERTY AND EQUIPMENT
(Notes B-3 and F)
Building and improvements 891,256 899,760
Leasehold improvement 127,636 138,978
Machinery and equipment 5,128,099 5,167,815
Office furniture and equipment 44,721 44,721
6,191,712 6,251,274
Less accumulated depreciation
and amortization (885,238) (1,445,206)
5,306,474 4,806,068
Land 49,485 49,485
Construction in progress (Note D) 290,836 3,602,825
5,646,795 8,458,378
OTHER ASSETS
Deferred tax asset (Note E) 2,612,000 2,179,000
Patent costs (Note B-4) 102,197 94,982
Other 6,224 52,449
2,720,421 2,326,431
$12,618,869 $14,168,658
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term
debt (Note F) $ 630,764 $ 469,765
Trade accounts payable 147,807 226,209
Accrued salaries, wages,
and payroll taxes 88,732 110,132
Income taxes payable (Note E) 1,613 113
Other current liabilities 16,594 33,036
Total current liabilities 885,510 839,255
LONG-TERM DEBT: (Note F) 699,675 1,519,354
COMMITMENTS AND CONTINGENCIES: (Note G)
SHAREHOLDERS' EQUITY: (Note I)
Common stock, $.01 par value,
50,000,000 shares authorized;
10,912,937 and 10,961,887 shares
had been issued as of December 31,
1993 and December 31, 1994,
respectively. 109,129 109,618
Additional paid-in capital 15,161,942 15,207,453
Accumulated deficit (4,237,387) (3,507,022)
Total shareholders' equity 11,033,684 11,810,049
$12,618,869 $14,168,658
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
STATEMENT OF EARNINGS
For The Three Years Ended December 31, 1994
Theragenics Corporation
<CAPTION>
Year Ended December 31,
1992 1993 1994
<S> <C> <C> <C>
REVENUES:
Sales (Note J) $ 4,379,300 $ 4,090,803 $ 4,723,107
COSTS & EXPENSES:
Cost of sales 1,227,154 1,677,631 1,790,450
Selling, general, and
administrative 1,639,334 1,607,288 1,844,239
Research and development 62,632 36,181 15,268
2,929,120 3,321,100 3,649,957
OTHER INCOME (EXPENSE):
Interest income 98,972 114,905 135,888
Interest expense (Note F) (13,304) (195,035) -
Other (17,837) (5,829) (25,673)
67,831 (85,959) 110,215
NET EARNINGS BEFORE INCOME
TAXES, EXTRAORDINARY CREDIT,
AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE $ 1,518,011 $ 683,744 $ 1,183,365
Income tax expense (Note E) 2,000 254,000 453,000
NET EARNINGS BEFORE
EXTRAORDINARY CREDIT AND
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE $ 936,011 $ 429,744 $ 730,365
Extraordinary credit
Tax benefit arising from
carryforward of prior years'
operating loss (Note E) 556,000 - -
NET EARNINGS BEFORE
CUMULATIVE EFFECT
OF CHANGE IN
ACCOUNTING PRINCIPLE $ 1,492,011 $ 429,744 $ 730,365
Cumulative effect on prior
years of change in method
of accounting for income
taxes (Note E) - 2,860,000 -
NET EARNINGS 1,492,011 $ 3,289,744 $ 730,365
NET EARNINGS PER COMMON
SHARE (Note B-6)
NET EARNINGS BEFORE
EXTRAORDINARY CREDIT AND
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE $ .08 $ .04 $ .06
Extraordinary credit .05 - -
Cumulative effect on prior years
of change in method of
accounting for income taxes - .24 -
NET EARNINGS PER
COMMON SHARE $ .13 $ .28 $ .06
WEIGHTED AVERAGE SHARES 11,431,149 11,709,218 11,582,793
</TABLE>
The accompanying notes are an integral part of these
statements.
<PAGE>
<TABLE>
STATEMENT OF SHAREHOLDERS' EQUITY
For The Three Years Ended December 31, 1994
Theragenics Corporation
<CAPTION>
Common Stock Additional
Number of Par value paid-in Accumulated
shares $.01 capital deficit Total
<S> <C> <C> <C> <C> <C>
BALANCE,
December 31, 1991 9,940,455 $ 99,404 $12,030,823 $(9,019,142) $ 3,111,085
Private placement
of 550,000 shares
at $5.50 per share,
net of offering
costs of $263,186 550,000 5,500 756,314 - 2,761,814
Exercise of stock
options 97,099 971 102,378 - 103,349
Redemption of
stock used for the
exercise of stock
options (3,919) (39) (23,475) - (23,514)
Net earnings for
the year - - - 1,492,011 1,492,011
BALANCE,
December 31,1992 10,583,635 $105,836 $14,866,040 $(7,527,131) $ 7,444,745
Exercise of
warrants 200,000 2,000 173,000 - 175,000
Exercise of
stock options 130,200 1,302 128,898 - 130,200
Redemption of
stock used for
the exercise
of stock options (898) (9) (5,996) - (6,005)
Net earnings for
the year - - - 3,289,744 3,289,744
BALANCE,
December 31,.1993 10,912,937 $109,129 $15,161,942 $(4,237,387) $11,033,684
Exercise of
stock options 49,900 499 49,401 - 49,900
Redemption of
stock used for
the exercise
of stock options (950) (10) (3,890) - (3,900)
Net earnings for
the year - - - 730,365 730,365
BALANCE,
December 31, 1994 10,961,887 $109,618 $15,207,453 $(3,507,022) $11,810,049
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
STATEMENTS OF CASH FLOWS
For The Three Years Ending December 31, 1994
Theragenics Corporation
<CAPTION>
Year Ended December 31,
1992 1993 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $1,492,011 $3,289,744 $ 730,365
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Cumulative effect for change
in accounting principle - (2,860,000) -
Deferred income tax expense - 248,000 433,000
Depreciation and amortization 83,082 515,831 571,615
Loss on disposal of property
and equipment 12,256 3,458 1,571
Change in assets and liabilities:
Accounts receivable (60,286) (18,347) (197,133)
Inventories 200,535 84,737 (32,834)
Prepaid expenses and
other current assets (45,385) (17,228) 22,448
Other assets - 17,526 (200)
Trade accounts payable 140,123 (102,239) 78,402
Accrued salaries, wages and
payroll taxes 79,668 (7,938) 21,400
Income tax payable 12,000 (20,387) (1,500)
Other current liabilities (7,495) (21,001) 16,442
Total adjustments 414,498 (2,177,588) 913,211
Net cash provided
by operating activities 1,906,509 1,112,156 1,643,576
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase and construction
of property and equipment (2,967,436) (2,740,263) (3,376,967)
Maturities of
marketable securities 103,818 205,127 309,765
Purchase of
marketable securities (49,875) - -
Patent costs (28,514) (51,346) (587)
Proceeds from sale of property
and equipment 11,029 - -
Net cash used by
investing activities (2,930,978) (2,586,482) (3,067,789)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt - 1,900,000 2,100,000
Repayment of long-term debt (6,274) (569,561) (1,441,320)
Proceeds from issuance of common
stock, net of offering costs 2,761,814 - -
Proceeds from exercise of stock
options and warrants, net 79,835 299,195 46,000
Other assets (23,750) - (46,025)
Net cash provided
by financing activities 2,811,625 1,629,634 658,655
NET INCREASE IN CASH AND
SHORT-TERM INVESTMENTS 787,156 155,308 (765,558)
CASH AND SHORT-TERM
INVESTMENTS AT
BEGINNING OF YEAR 1,140,557 2,927,713 3,083,021
CASH AND SHORT-TERM
INVESTMENTS AT
END OF YEAR $ 2,927,713 $3,083,021 $2,317,463
Supplementary Cash Flow Disclosure:
Interest paid, net of
amounts capitalized $ 13,304 $ 195,035 $ -
Interest received $ 104,226 $ 120,032 $ 144,452
Income taxes paid $ 15,000 $ 26,387 $ 21,500
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1993 and 1994
Theragenics Corporation
NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS
Theragenics Corporation (the "Company") was organized in
November 1981 to develop, manufacture, and market
radiological pharmaceuticals and devices used in the
treatment of cancer.
The Company manufactures and markets primarily one product,
which is used in the treatment of cancer. Use of the
Company's product is regulated by the U.S. Food and Drug
Administration (FDA). The Company sells its product primarily
to hospitals, physicians and other health service providers.
The Company therefore is directly affected by FDA regulations
and the well being of the health care industry.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently
applied in the preparation of the accompanying financial
statements follows:
1. Accounts Receivable
The Company considers accounts receivable to be fully
collectible; accordingly, no allowance for doubtful accounts
is required. If amounts become uncollectible, they will be
charged to operations when that determination is made.
2. Inventories
Inventories are stated at the lower of cost or market. Cost
is determined using the specific identification method.
Inventory costs consist primarily of costs incurred in the
extraction, purification and irradiation processes of an
isotope which is the basic component of one of the Company's
products.
3. Depreciation
Depreciation is provided for in amounts sufficient to relate
the cost of depreciable assets to operations over their
estimated service lives on a straight-line basis. Estimated
service lives are as follows:
<TABLE>
<S> <C> <S>
Building 30 years
Machinery, furniture and equipment 5-10 years
</TABLE>
4. Patent Costs
The Company capitalizes the costs of patent applications for
its products. Amortization is computed on a straight line
basis over the estimated economic lives of the patents,
commencing at the date of grant of the related patent. Patent
costs are net of accumulated amortization of $21,564 and
$29,366 at December 31, 1993 and 1994, respectively.
5. Research and Development Costs
The costs of research and development and consumable supplies
and materials to be used for the development of the Company's
intended products are expensed when incurred.
6. Net Earnings Per Common Share
The net earnings per common share is based on the weighted
average number of common shares and common equivalent shares
outstanding during each period (11,431,149 in 1992,
11,709,218 in 1993 and 11,582,793 in 1994).
Fully diluted information is not presented, as fully diluted
earnings per share is not materially different from the
primary earnings per share presented.
7. Statements of Cash Flows
For purposes of reporting cash flows, cash and short-term
investments include cash on hand, cash in banks and
commercial paper with original maturities of less than 90 days.
8. Marketable Securities
The Company adopted Statement of Financial Accounting
Standards No. 115, Accounting for Certain Investment in Debt
and Equity Securities (SFAS 115), effective January 1, 1994.
The adoption of SFAS 115 had no effect upon prior periods. At
December 31, 1994, marketable securities are categorized as
available for sale and as a result are stated at fair value,
which approximated market.
NOTE C - INVENTORIES
Inventory consists of the following:
<TABLE>
<CAPTION>
December 31,
1993 1994
<S> <C> <C>
Raw material $ 14,122 $ 17,361
Work in process 71,900 79,820
Finished goods 9,971 33,361
Raw material to
be recovered $ 63,334 $ 61,619
$159,327 $192,161
</TABLE>
"Raw material to be recovered" includes finished products
which cannot be sold due to loss of radiation. The irradiated
isotope contained in these products can be recovered and
reused through a purification process.
NOTE D - CONSTRUCTION IN PROGRESS
At December 31, 1993 and 1994, construction in progress
represented payments made for the construction of
manufacturing equipment and facility expansion. Total cost of
this project is expected to be less than $4,000,000 and is
expected to be completed in February 1995.
NOTE E - INCOME TAXES
The Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS" and
"FASB") No. 109, Accounting for Income Taxes, which requires
a change from the deferred method to the asset and liability
method of accounting for income taxes. Under the asset and
liability method, deferred income taxes are recognized for the
tax consequences of "temporary differences" by applying
enacted statutory tax rates applicable to future years to
differences between the financial statement carrying amounts
and the tax bases of existing assets and liabilities.
The Company implemented SFAS 109 as of January 1, 1993. The
deferred tax asset recorded is primarily a result of the
recognition of the Company's net operating loss carryforward.
The cumulative effect on prior years of the change in
accounting principle increased net earnings by $2,860,000
($.24 per share) and is included in earnings for 1993. The
effect of the change on 1993 was to decrease net earnings
before cumulative effect of a change in accounting principle
by $248,000 ($.02 per share) and increase net earnings by
$2,612,000 ($.22 per share). The effect of the change on
earnings before extraordinary items was not material.
The provision for income tax is summarized as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
1993 1994
<S> <C> <C>
Current tax expense $ 6,000 $ 20,000
Deferred tax expense 248,000 433,000
$ 254,000 $ 453,000
</TABLE>
Significant components of the deferred tax asset are as
follows:
<TABLE>
<CAPTION>
December 31,
1993 1994
<S> <C> <C>
Loss carryforwards $2,688,000 $2,455,000
Depreciation (143,000) (370,000)
Other 67,000 94,000
$2,612,000 $2,179,000
</TABLE>
The significant portions of the operating loss carryforwards
were incurred while the Company was in the development stage.
Upon receiving clearance to market its "TheraSeed " product
from the U.S. Food and Drug Administration (FDA) in 1986, the
Company commenced manufacturing and distribution of its
product in 1987. Since emerging from the development stage in
1989, the Company has utilized approximately $3,400,000 of
these operating loss carryforwards through December 31, 1994
by generating taxable income. In order to realize income
benefit from the remaining operating loss carryforwards at
December 31, 1994, it will be necessary for the Company to
generate future taxable income of approximately $6,460,000,
prior to the expiration of the operating loss carryforward
periods. Based on the Company's results of operations
subsequent to receiving FDA clearance to market for its
product, and on expected future results of operations,
management believes that currently it is more likely than not
that the income tax benefits of the operating loss
carryforwards will be realized within the carryforward period.
The provision for income taxes differs from the amount of
income tax determined by applying the applicable federal rates
due to the following:
<TABLE>
<CAPTION>
Year ending December 31,
1993 1994
Tax at applicable
<S> <C> <C>
federal rate of $232,000 $402,000
State tax, net 22,000 47,000
Other - 4,000
$254,000 $453,000
</TABLE>
For periods prior to January 1, 1993, the Company accounted
for income taxes under Accounting Principles Board Opinion No.
11 (APB 11). Substantially all income tax expense in these
prior periods was offset by operating loss carryforwards.
Accordingly, the tax benefit of the operating loss
carryforwards in prior periods was recognized as an
extraordinary credit in the period utilized.
For income tax purposes only, the Tax Reform Act of 1986
enacted an alternative minimum tax system for corporations
(the "AMT"). AMT is imposed at a 20% rate on the Company's AMT
income which is determined by making statutory adjustments to
regular taxable income. A company pays the greater of the
taxes computed under the "regular" tax system or the AMT
system. Because AMT net operating loss carryforwards may only
be utilized to offset 90% of the AMT income, the Company was
subject to the AMT in 1993 and 1994, resulting in an
alternative minimum tax of $6,000 and $20,000, respectively.
These amounts will be allowed as a credit carryover to reduce
the regular tax liability in future years, but not below the
AMT of such years.
At December 31, 1994, the Company had approximate net federal
operating loss carryforwards for regular tax and AMT purposes
as follows:
<TABLE>
<CAPTION>
Net operating Net operating
loss (regular) loss (AMT)
Year of expiration
<C> <C> <C>
2002 $1,579,000 $ 831,000
2003 2,485,000 2,485,000
2004 1,806,000 1,765,000
2005 590,000 555,000
$6,460,000 $5,636,000
</TABLE>
NOTE F - LONG-TERM DEBT
At December 31, 1994, long-term debt consists of a note
payable to a financial institution. The note is payable in
monthly installments of $51,862, including interest at 8.47%
and is collateralized by certain manufacturing equipment.
Provisions of the loan agreement limit the amount of annual
capital expenditures, the incurrence of additional debt and
requires, among other things, the maintenance of certain
minimum financial ratios. As of December 31, 1994, the Company
was in compliance with the provisions of the agreement.
Interest expense of approximately $140,000 related to long-term
debt was capitalized with the expansion of the
manufacturing facility. Future maturities of long-term debt at
December 31, 1994 are as follows: 1995: $469,765; 1996:
$511,375; 1997: $557,462; and 1998: $450,517.
The long-term debt referred to above replaced the borrowings
which were outstanding at December 31, 1993.
NOTE G - COMMITMENTS AND CONTINGENCIES
Licensing Agreement
The Company holds a worldwide exclusive license from the
University of Missouri for the use of technology, patented by
the University, used in the Company's "TheraSphere " product.
The licensing agreement provides for the payment of royalties
based on the level of sales and on lump sum payments received
pursuant to a licensing agreement with Nordion International,
Inc. (see below).
The Company has granted certain of its geographical rights
under the licensing agreement with the University of Missouri
to Nordion International, Inc., a Canadian company which is a
producer, marketer and supplier of radioisotope products and
related equipment. Under the Nordion agreement, the Company
received $300,000 in February 1991 as a result of obtaining
new drug approval in Canada. Upon obtaining a new drug
approval for TheraSphere in the United States, Nordion will
have the option of extending its territorial rights to the
United States for $2,500,000. The Company is entitled to a
percentage of future revenues earned by Nordion as royalties
under the agreement. Nordion's obligation to pay royalties
will terminate upon expiration of the patents owned by the
University. Royalties from this agreement for each of the
three years in the period ended December 31, 1994 were not
significant.
Line of Credit
The Company has a line of credit agreement with a bank which
provides for borrowings of up to $500,000. Interest on
outstanding borrowings is payable monthly at the prime rate
plus 1 percent. The agreement is collateralized by accounts
receivable. No amounts were outstanding under this agreement
at December 31, 1993 or 1994.
Letters of Credit
The Company has a letter of credit for approximately $315,000
relating to regulatory requirements.
Lease Commitment
The Company leases office space under a noncancelable lease
which expires in December 1998. Approximate minimum lease
payments under the lease are as follows:
<TABLE>
<C> <C>
1995 62,000
1996 64,000
1997 67,000
1998 69,000
$262,000
</TABLE>
Rent expense was approximately $70,000 annually for each of
the years ended December 31, 1992 and 1993, and $61,000 for
the year ended December 31, 1994.
NOTE H - TRANSACTIONS WITH RELATED PARTIES
Certain shareholders and directors provide consulting services
to the Company. Total consulting fees paid to shareholders
and directors were approximately $27,000, $77,500 and $5,500
during the years ended December 31, 1992, 1993 and 1994,
respectively.
Legal services related to patents are provided by a law firm
in which a shareholder of the Company is general partner.
Total fees paid to the law firm were approximately $8,800,
$3,000 and $11,300 during the years ended December 31, 1992,
1993 and 1994, respectively.
NOTE I - STOCK OPTIONS AND WARRANTS
The Company's board of directors has approved two stock option
plans. The 1986 Incentive and Nonincentive Stock Option Plan
covers up to 700,000 shares of common stock and terminates in
June 1996. The 1990 Stock Option Plan covers up to 1,000,000
shares of common stock and terminates in June 2000. The plans
provide for the expiration of options for up to ten years from
the date of grant and require the exercise price of options
granted to be at least equal to 100% of market value on the
date granted. Stock option transactions for the three years
ended December 31, 1994 are summarized below:
<TABLE>
Option Shares
<CAPTION>
1992 1993 1994
<S> <C> <C> <C>
Outstanding,
beginning of year 1,304,615 1,188,316 1,258,116
Granted - 200,000 40,000
Exercised (97,099) (130,200) (49,900)
Canceled (19,200) - (21,500)
Outstanding,
end of year 1,188,316 1,258,116 1,226,716
Option price $1.00- $1.00- $1.00-
$4.25 $6.38 $6.38
</TABLE>
As of December 31, 1994, options covering 858,889 shares were
exercisable. Expiration dates for these options range from
1995-2004.
Two hundred thousand warrants were exercised during 1993,
resulting in proceeds to the Company of $175,000. The Company
also has warrants outstanding at December 31, 1994, covering
100,000 shares of common stock. The warrants are exercisable
at a price of $7.50 per share and expire in May 1999.
NOTE J - MAJOR CUSTOMERS
During 1992 and 1994, there were sales made to one major
customer that equaled approximately 10 percent of sales.
During 1993, there were no customers which individually
comprised 10 percent of sales.
NOTE K - EMPLOYEE BENEFIT PLAN
The Company sponsors a defined contribution 401(k) Plan
covering all employees with at least six months of service and
at least 21 years of age. The Plan permits participants to
defer a portion of their compensation through payroll
deductions. The Company may, at its discretion, contribute to
the Plan on behalf of participating employees. No such Company
discretionary contributions have been made during any of the
three years ended December 31, 1994.
<TABLE>
SUPPLEMENTARY FINANCIAL INFORMATION
Quarterly Results
<CAPTION>
1993 1st 2nd 3rd 4th
<S> <C> <C> <C> <C>
Net Sales 1,166,584 1,170,985 970,036 783,198
Earnings before extraordinary
credit and cumulative effect of
change in accounting principle 139,891 192,705 51,132 46,016
Net Earnings 2,999,891 192,705 51,132 46,016
Earnings before extraordinary
credit and cumulative effect of
change in accounting principle
per Common Share .01 .02 .00 .00
Net Earnings per Common Share .26 .02 .00 .00
1994
Net Sales 1,153,857 1,104,670 1,129,094 1,335,486
Earnings before extraordinary
credit and cunulative effect of
change in accounting principle 177,649 147,483 117,625 287,608
Net Earnings 177,649 147,483 117,625 287,608
Earnings before extraordinary
credit and cunulative effect of
change in accounting principle
per Common Share .02 .01 .01 .02
Net Earnings per Common Share .02 .01 .01 .02
</TABLE>
<PAGE>
STOCKHOLDER INFORMATION
INVESTOR COMMUNITY INFORMATION
Stockholders, registered representatives, professional investment
managers and financial analysts wanting additional information
about Theragenics Corporation are invited to contact:
Mr. Ronald A. Warren
Director of Investor Relations
Theragenics Corporation
5325 Oakbrook Parkway
Norcross, Georgia 30093
800-998-8479 or 404-381-8338.
AVAILABILITY OF FORM 10-K
The Company will furnish without charge a copy of its Annual
Report on Form 10-K filed with the Securities and Exchange
Commission for the fiscal year ended December 31, 1994, including
financial statements and schedules, to any record or beneficial
owner of its Common Stock as of May 5, 1995, who requests a copy
of such Report. Any request for the 10-K Report should be in
writing addressed to:
Mr. Ronald A. Warren
Director of Investor Relations
Theragenics Corporation
5325 Oakbrook Parkway
Norcross, Georgia 30093.
COMMON STOCK PRICE RANGES
Theragenics Corporation's common stock is traded on the national
market system under the Nasdaq Symbol "THRX." The following
table sets forth the quarterly high and low closing sales prices
for the periods indicated as reported by Nasdaq. The prices
shown represent actual sales prices without retail markups,
markdowns or commissions.
<TABLE>
<CAPTION>
High Low
<S> <C> <C>
1993
First Quarter $7-1/4 $5-1/4
Second Quarter $7-7/8 $6-3/8
Third Quarter $6-3/4 $4-1/2
Fourth Quarter $6 $3-1/2
1994
First Quarter $4-3/8 $3-1/4
Second Quarter $4-3/4 $3-1/2
Third Quarter $4-5/8 $3-3/8
Fourth Quarter $3-7/8 $2-1/4
</TABLE>
TRANSFER AGENT AND REGISTRAR
Stockholders wishing to change the name on their certificates, or
to report a lost certificate, should contact the transfer agent:
Trust Company Bank
Tom Donaldson
Stock Transfer Department
P.O. Box 4625
Mail Code 008
Atlanta, Georgia 30302
404-588-7831.
INDEPENDENT PUBLIC ACCOUNTANTS
Grant Thornton, Atlanta, Georgia
GENERAL COUNSEL
Smith, Gambrell & Russell, Atlanta, Georgia
COMMON SHAREHOLDERS OF RECORD
As of May 5, 1995 Theragenics had 718 record holders of common
stock.
DIVIDEND POLICY
Theragenics has never paid cash dividends on the common stock,
and has no current plans to begin paying cash dividends.
DIRECTORS AND EXECUTIVE OFFICERS
Charles Klimkowski
Chairman, Theragenics Corporation
Senior Vice President, The Chicago Corporation
M. Christine Jacobs
President and Chief Executive Officer
Otis Brawley, M.D.
Director of Oncology and Rehabilitation Branch,
Early Detection and Community Oncology Program,
National Cancer Institute
Dr. Orwin L. Carter, Ph.D.
Consultant, INCSTAR Corporation
John V. Herndon
Advisor-to-the-President, Theragenics Corporation
Peter A.A. Saunders
Consultant, PASS Consultants
Bruce W. Smith
Treasurer, Chief Financial Officer and Secretary
Director of Theragenics Corporation
<PAGE>
THERAGENICS CORPORATION
5325 OAKBROOK PARKWAY, NORCROSS, GA 30093
phone 404.381.8338
THERAGENICS CORPORATION
5325 OAKBROOK PARKWAY
NORCROSS, GEORGIA 30093
PROXY - Annual Meeting of Stockholders - June 30, 1995.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Ms. M. Christine Jacobs and Mr.
Bruce W. Smith, or either of them (the "Proxies"), as the
undersigned's proxy or proxies, each with the power to appoint
her/his substitute, and hereby authorizes them to represent and
to vote, as designated below, all shares of Common Stock of
Theragenics Corporation (the "Company") which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the
Company to be held on June 30, 1995, or any adjournment thereof.
1. ELECTION OF DIRECTORS.
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees
listed below
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list
below.)
ORWIN L. CARTER M. CHRISTINE JACOBS
2. PROPOSAL TO RATIFY THE APPOINTMENT OF GRANT THORNTON AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL
YEAR ENDING DECEMBER 31, 1995
FOR AGAINST ABSTAIN
(CONTINUED ON REVERSE SIDE)
<PAGE>
3. PROPOSAL TO ADOPT THE COMPANY'S 1995 STOCK OPTION PLAN.
FOR AGAINST ABSTAIN
4. In their discretion, the Proxies, or either of them, are
authorized to vote upon such other business as may properly come
before the meeting or any adjournment thereof.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction
is made, this proxy will be voted in favor of Orwin L. Carter and
M. Christine Jacobs for election as directors and FOR Proposals 2
and 3.
DATE ___________________________________
________________________________________
Signature
________________________________________
Signature, if held jointly
Please sign exactly as your name or
names appear at left. When shares are
held by joint tenants, both should sign.
If signing in any fiduciary or
representative capacity, give full title
as such.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN
THE ENCLOSED ENVELOPE.
