SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1995 Commission File No. 0-15443
THERAGENICS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 58-1528626
(State of incorporation) (I.R.S. Employer Identification Number)
5325 Oakbrook Parkway
Norcross, Georgia 30093
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (404)381-8338
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
Indicate the number of shares outstanding of each of the issuers
classes of common stock, as of the latest practicable date:
CLASS Shares Outstanding at August 3, 1995
Common Stock, 11,071,985
par value $.01
<PAGE> Page 2
THERAGENICS CORPORATION
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets -
December 31, 1994 and June 30, 1995 (unaudited)....... 3
Statements of Earnings for the Three and Six
Months Ended June 30, 1994 and 1995 (unaudited)....... 5
Statements of Cash Flows for the Three and Six
Months Ended June 30, 1994 and 1995 (unaudited)....... 6
Statements of Changes in Stockholders' Equity for
the Six Months Ended June 30, 1995 (unaudited)........ 8
Notes to Financial Statements......................... 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.. 10
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............... 13
SIGNATURE ............................................... 14<PAGE>
<PAGE> Page 3
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
<TABLE>
THERAGENICS CORPORATION
BALANCE SHEETS
DECEMBER 31, 1994 AND JUNE 30, 1995
ASSETS
<CAPTION>
December 31, June 30,
1994 1995
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 2,317,463 $ 3,139,502
Marketable securities 50,000 -
Trade Accounts Receivable 732,424 1,078,623
Inventories 192,161 216,526
Prepaid expenses and other
current assets 91,801 98,078
Total current assets 3,383,849 4,532,729
PROPERTY AND EQUIPMENT
Building (Note B) 899,760 1,673,154
Leasehold Improvement 138,978 142,652
Machinery and equipment (Note B) 5,167,815 8,177,100
Office furniture and equipment 44,721 44,721
6,251,274 10,037,627
Less accumulated depreciation
and amortization (1,445,206) (1,746,014)
4,806,068 8,291,613
Land 49,485 49,485
Construction in progress (Note B) 3,602,825 169,924
8,458,378 8,511,022
OTHER ASSETS
Deferred Tax Asset 2,179,000 1,714,703
Patent Costs 94,982 94,745
Other 52,449 30,948
2,326,431 1,840,396
$14,168,658 $14,884,147
<PAGE>
</TABLE>
<PAGE> Page 4
<TABLE>
THERAGENICS CORPORATION
BALANCE SHEETS
(Continued)
DECEMBER 31, 1994 AND JUNE 30, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
December 31, June 30,
1994 1995
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long term debt $ 469,765 $ 489,435
Trade accounts payable 226,209 218,245
Accrued salaries, wages,
and payroll taxes 110,132 210,018
Income taxes payable 113 -
Other current liabilities 33,036 64,373
Total current liabilities 839,255 982,071
LONG TERM DEBT:
Long Term Debt 1,519,354 1,269,778
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value,
50,000,000 shares authorized;
10,961,887 and 11,058,985
shares had been issued as of
December 31, 1994 and June 30,
1995, respectively. 109,618 110,590
Additional paid-in capital 15,207,453 15,262,228
Accumulated deficit (3,507,022) (2,740,520)
Total stockholders' equity 11,810,049 12,632,298
$14,168,658 $14,884,147
The accompanying notes are an integral part of these statements.<PAGE>
</TABLE>
<PAGE> Page 5
<TABLE>
THERAGENICS CORPORATION
STATEMENTS OF EARNINGS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1994 AND 1995
(Unaudited)
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
1994 1995 1994 1995
<S> <C> <C> <C> <C>
REVENUES:
Sales ............$1,104,670 $1,826,216 $2,258,527 $3,660,678
Licensing Fees ... - 85,431 - 85,431
COSTS & EXPENSES:
Cost of sales ..... 386,380 639,354 789,881 1,274,928
Selling, general, &
administrative .... 492,539 673,907 959,093 1,277,600
Research and
development ....... 3,403 6,635 6,495 14,195
882,322 1,319,896 1,755,469 2,566,723
OTHER INCOME (EXPENSE):
Interest income ... 37,608 32,940 64,280 64,249
Interest expense .. (25,141) - (54,584) -
Other ............. (4,332) (3,896) 378 (7,340)
8,135 29,044 10,074 56,909
NET EARNINGS BEFORE
INCOME TAXES ..... 230,483 620,795 513,132 1,236,295
Income tax expense 83,000 235,902 188,000 469,792
NET EARNINGS ...... 147,483 384,893 325,132 766,503
NET EARNINGS PER
COMMON SHARE $ .01 $.03 $ .03 $.07
WEIGHTED AVERAGE
SHARES 11,607,675 11,783,995 11,607,917 11,745,723
The accompanying notes are an integral part of these statements.<PAGE>
</TABLE>
<PAGE> Page 6
<TABLE>
THERAGENICS CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1994 AND 1995
(Unaudited)
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
1994 1995 1994 1995
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Earnings.........$ 147,483 $ 384,893 $ 325,132 $ 766,503
Adjustments to
reconcile net
earnings to net
cash provided by
operating
activities:
Depreciation and
amortization..... 139,931 223,722 280,265 364,554
Change in assets
and liabilities:
Accounts
receivable....... (3,314) (43,558) (122,653) (346,199)
Inventories...... (11,095) (35,503) (22,409) (24,365)
Prepaid expenses
and other current
assets........... 28,087 20,345 58,335 (6,277)
Deferred tax asset 68,000 230,407 173,000 464,297
Other assets..... - 19,814 (200) 21,501
Trade accounts
payable.......... 14,103 (34,446) (15,541) (7,964)
Accrued salaries,
wages and
payroll taxes.... 37,289 73,290 52,937 99,886
Other current
liabilities...... 75,531 25,200 79,080 31,224
Total Adjustments 348,532 479,271 482,814 596,657
Net cash provided
by operating
activities........ 496,015 864,164 807,946 1,363,160
<PAGE>
</TABLE>
<PAGE> Page 7
<TABLE>
THERAGENICS CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1994 AND 1995
(Unaudited)
(continued)
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
1994 1995 1994 1995
<S> <C> <C> <C> <C>
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchases and
construction of
property and
equipment......... (26,685) (61,773) (115,551) (414,363)
Retirements of
property and
equipment......... (3) 1,034 1,569 1,034
Patent costs...... 1,946 (3,632) 3,304 (3,632)
Purchases/sales
of marketable
securities........ - - 103,484 50,000
Market value change
of marketable
securities........ (4,145) - (654) -
Net cash provided
/(used) by investing
activities........ (28,887) (64,371) (7,848) (366,961)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Exercise of
stock options.... 6,000 53,746 6,000 55,746
Repayment of
term loan........ (155,630) (115,815) (307,337) (229,906)
Net cash provided
/(used) by financing
activities....... (149,630) (62,069) (301,337) (174,160)
NET INCREASE IN CASH
AND SHORT-TERM
INVESTMENTS....... 317,498 737,724 498,761 822,039
CASH AND SHORT-TERM
INVESTMENTS AT
BEGINNING OF PERIOD 3,264,284 2,401,778 3,083,021 2,317,463
CASH AND SHORT-TERM
INVESTMENTS AT
END OF PERIOD......$3,581,782 $3,139,502 $3,581,782 $3,139,502
The accompanying notes are an integral part of these statements.<PAGE>
</TABLE>
<PAGE> Page 8
<TABLE>
THERAGENICS CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(Unaudited)
<CAPTION>
Common Stock Additional
Number of Par Value Paid-in Accumulated
shares $.01 capital deficit Total
<C> <C> <C> <C> <C> <C>
BALANCE,
December 31,
1994........ 10,961,887 $109,618 $15,207,453 $(3,507,022) $11,810,049
Exercise of
stock options 97,098 972 54,774 - 55,746
Net earnings
for the
period...... - - - 766,503 766,503
BALANCE,
June 30,
1995........ 11,058,985 $110,590 $15,262,227 $(2,740,519) $12,632,298
The accompanying notes are an integral part of these statements.<PAGE>
</TABLE>
<PAGE> Page 9
THERAGENICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The interim financial statements included herein have
been prepared by the Company without audit. These
statements reflect all adjustments which are, in the
opinion of management, necessary to present fairly the
financial position as of June 30, 1995, and the results
of operations, cash flows, and changes in shareholders
equity for the three and six months ended June 30, 1995.
All such adjustments are of a normal recurring nature.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance
with generally accepted accounting principles have been
condensed or omitted. The Company believes that the
disclosures are adequate to make the information
presented not misleading. It is suggested that these
financial statements and notes be read in conjunction
with the audited financial statements and notes for the
year ended December 31, 1994, included in the Form 10-K
filed by the Company.
NOTE B - CONSTRUCTION IN PROGRESS
In April 1995, $3.8 million related to the Company's #2
cyclotron capacity expansion project was moved from
construction in progress and placed in service with
approximately $.8 million representing building costs
and $3.0 million representing machinery and equipment
costs.
<PAGE>
<PAGE> Page 10
Item 2. - Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Revenues - Revenues for the quarter ($1,911,647) were up 73% over
the second quarter of 1994 contributing to year to date revenues
($3,746,109) being 66% over the first six months of last year.
As in the first quarter of this year, the increase in second
quarter sales resulted primarily from the Company's marketing
campaign which was accelerated in the second half of 1994 with
continued emphasis in the first and second quarter of 1995.
Improvement in manufacturing reliability continues to provide a
consistent flow of product to make the sales gains possible.
In addition lump-sum payments associated with the licensing of
the Company's TheraSphere product were received in the second
quarter contributing to the improvement in revenues.
The Company's net profit improved 161% to $385,000, or $.033 per
share in the second quarter of 1995, from $147,000 or $.013 per
share for the same period in 1994. Year to date profits grew 136%
to $767,000 from $325,000 with earnings per share of $.065 versus
$.028.
Costs and Expenses - Cost of sales for the second quarter
increased by $253,000 primarily due to costs associated with
increase sales plus additional depreciation expense of $81,000
reflecting the placing in service of the Company's second
cyclotron on April 1, 1995. Also contributing to the rise in cost
of sales was the continuation of the Company's efforts to improve
efficiencies in the manufacturing area. These efforts and costs
are most likely to continue as the Company identifies
opportunities to improve quantity, quality or safety. With the
exception of the depreciation expense related to cyclotron #2,
the same factors account for the $485,000 increase in cost of
sales for the first six months of 1995 compared to the same
period of 1994.
S,G&A expenses as a percent of sales decreased from 45% in the
second quarter of 1994 to 35% for the same period in 1994. The
six-month percentages were reduced to 34% in 1995 versus 42% in
1994. As sales increase, S,G&A expenses are expected to continue
to decline as a percent of sales except for variable components
such as advertising and public relations expense which have and
will continue to significantly increase in line with the recent
acceleration of the Company's marketing programs. Those
increases, together with additional costs in insurance, investor
relations (including Annual Meeting and Annual Report costs) and
personnel expenses aggregated the $181,000 increase in 1995
second quarter S,G&A over the second quarter of 1994. These same
expenses account for the $319,000 increase in S,G&A for the first
six months of 1995 over the same period in 1994. Costs in these
areas are expected to remain at the higher levels.
<PAGE> Page 11
Other Income and Expense shows an improvement of approximately
$21,000 primarily due to a decrease in interest expense.
However, 1994's second quarter reflects $25,000 as interest
expense which should have been capitalized because of
construction in progress. Interest expense was also booked
improperly in the first quarter of 1994 resulting in the six-
months ended June 30, 1995 recording a $47,000 decrease in Other
Income and Expense from the same period in 1994.
Liquidity and Capital Resources
The Company had cash, cash equivalents, short-term investments
and marketable securities of $3.2 million at June 30, 1995,
compared to $2.4 million at December 31, 1994. Operating
activities for the first six months of 1995 provided $1,363,000
in additional cash. This positive cash flow from operations
primarily represents the quarter's profit of $766,000, an
adjustment for depreciation of $365,000 which is a non-cash
expense, a tax loss carryforward adjustment of $464,000 which
reduces cash tax payments, an increase in salaries, vacations and
payroll taxes payable of $100,000 and other miscellaneous items
of approximately $14,000 offset by an increase in accounts
receivable of $346,000 due to increased sales.
During the first six months of 1995, the Company used cash in the
amount of $225,500 predominantly for final payment on the
Company's second cyclotron and the building expansion including
capitalized interest. An additional $127,500 was used to pay for
a substantial part of the steel necessary to build a third and
fourth cyclotron, while the remaining $62,000 represented capital
equipment and capitalized interest.
Finally, repayment of long term debt totaled $116,000 during the
second quarter and $230,000 for the six-month period ended June
30, 1995.
As reported in a Form 8-K filed with the SEC on July 13, 1995,
Theragenics Corporation (`Theragenics`) entered into two
agreements (`Agreement(s)`) dated June 29, 1995, each for the
purchase of one cyclotron. The Agreements call for the
manufacturer to install and turn over to Theragenics one
cyclotron in the late third quarter of 1996 and to install and
turn over to Theragenics another cyclotron in the mid to late
first quarter of 1997. The Agreement on the second cyclotron
allows Theragenics, at its discretion and at additional cost, to
accelerate for up to two months or delay for up to 22 months the
delivery and installation of the second cyclotron. Both
agreements are payable in the manufacturer's country's currency
and consequently the costs are subject to changes as a result of
fluctuations in foreign currencies against the U.S. Dollar. The
Company at the present time does not foresee these changes in
costs to be material.
The two additional cyclotron purchases will require expansions of
the Company's facilities, including additional land purchases and
new or expanded building facilities. The Company's present
<PAGE> Page 12
estimate of those costs approximates $8,500,000, based on today's
exchange rate of US. dollars to the manufacturer's country's
currency for the purchase of the two cyclotrons and cost
estimates for current expansion plans for the manufacturing
facilities. This estimate is subject to fluctuation in the price
of the cyclotrons resulting from changes in foreign currencies
against the U.S. Dollar and fluctuation of building expansion
costs as plans for the expansion become finalized. The Company
does not believe that either of these potential changes in costs
will be material.
Theragenics currently plans to finance these two manufacturing
expansion projects from a combination of current cash balances,
cash flow from future operations and long term bank debt.
Theragenics currently has not received any firm commitments for
bank financing of the above-named projects. Management believes
that such financing is available but cannot offer assurances of
receiving such financing. Management may choose to and reserves
the right to raise additional funds through additional stock
offerings or other forms of financing for these projects or other
attractive opportunities as they materialize.
<PAGE>
<PAGE> Page 13
PART II - OTHER INFORMATION
Item 4.- Submission of Matters to a Vote of Security Holders
(a) The annual meeting of shareholders was held June 30,
1995.
(b) Orwin L. Carter and M. Christine Jacobs were
reelected to the board of directors and will each
serve for a three-year term. Dr. Carter received
8,791,796 votes for his election and 122,783 votes
withheld authority. Ms. Jacobs received 8,645,864
votes for her election and 268,715 votes withheld
authority. The appointment of Grant Thornton as
independent public accountants for the Company for
the fiscal year ending December 31, 1995, was
ratified and approved by a vote of 8,827,309 shares
for and 46,920 shares against with 40,350 shares
abstaining. The Company's 1995 Stock Option Plan was
adopted by a vote of 7,522,778 shares for and
583,772 shares against with 222,541 shares
abstaining from voting and 585,488 shares as broker
non votes.
Item 6.- Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K.
The company filed a Report on Form 8-K dated June
29, 1995, reporting the signing of two agreements,
each for the purchase of one cyclotron from the
manufacturer of the Company's current two
cyclotrons.<PAGE>
<PAGE> Page 14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
REGISTRANT:
THERAGENICS CORPORATION
By: /s/ M. Christine Jacobs
M. Christine Jacobs
President
PRINCIPAL FINANCIAL OFFICER:
/s/ Bruce W. Smith
Bruce W. Smith
Treasurer and
Chief Financial Officer
Dated: August 3, 1995
