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 March 31, 1996 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:(770) 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 May 6, 1996
Common Stock, par value $.01 11,525,264
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THERAGENICS CORPORATION
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets - December 31, 1995 and
March 31, 1996 (unaudited) ............................ 3
Statements of Earnings for the Three Months Ended
March 31, 1995 and 1996 (unaudited) ................... 5
Statements of Cash Flows for the Three Months Ended
March 31, 1995 and 1996 (unaudited) ................... 6
Statements of Changes in Stockholders' Equity for
the Three Months Ended March 31, 1996 (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 ................. 12
SIGNATURE ................................................ 13
Page 2
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PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
<TABLE>
THERAGENICS CORPORATION
BALANCE SHEETS
DECEMBER 31, 1995 AND MARCH 31, 1996
ASSETS
<CAPTION>
December 31, March 31,
1995 1996
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 3,266,338 $ 2,503,144
Trade Accounts Receivable 1,335,645 1,841,047
Inventories 166,955 128,562
Prepaid expenses and
other current assets 67,521 173,143
Total current assets 4,836,459 4,645,896
PROPERTY AND EQUIPMENT
Building 1,690,045 1,709,711
Leasehold Improvement 138,978 138,978
Machinery and equipment 8,203,256 8,220,086
Office furniture and equipment 44,721 53,490
10,077,000 10,122,265
Less accumulated depreciation
and amortization (2,194,164) (2,409,796)
7,882,836 7,712,469
Land 49,485 49,485
Construction in progress 2,140,894 3,899,688
10,073,215 11,661,642
OTHER ASSETS
Deferred Tax Asset 1,810,000 1,635,110
Patent Costs 90,704 88,771
Other 67,804 72,071
1,968,508 1,795,952
$16,878,182 $18,103,490
</TABLE>
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<TABLE>
THERAGENICS CORPORATION
BALANCE SHEETS
(Continued)
DECEMBER 31, 1995 AND MARCH 31, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
December 31, March 31,
1995 1996
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long term debt $ 511,362 $ 522,602
Trade accounts payable 348,191 394,613
Accrued salaries, wages,
and payroll taxes 225,138 140,524
Income taxes payable 3,255 -
Other current liabilities 12,680 29,498
Total current liabilities 1,100,626 1,087,237
LONG TERM DEBT:
Long Term Debt 1,008,135 872,936
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value,
50,000,000 shares authorized;
11,394,785 and 11,504,884
shares had been issued as of
December 31, 1995 and March 31,
1996, respectively. 113,948 115,049
Additional paid-in capi 16,390,170 16,908,788
Accumulated deficit (1,734,697) (880,520)
Total stockholders' equity 14,769,421 16,143,317
$16,878,182 $18,103,490
</TABLE>
The accompanying notes are an integral part of these balance sheets.
Page 4
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<TABLE>
THERAGENICS CORPORATION
STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996
(Unaudited)
<CAPTION>
Three Months
Ended March 31
1995 1996
<S> <C> <C>
REVENUES:
Sales $ 1,834,462 $ 2,697,034
Licensing fees - 101,322
1,834,462 2,798,356
COSTS & EXPENSES:
Cost of sales 635,574 753,623
Selling, general and
administrative 603,693 692,772
Research and development 7,560 1,089
1,246,827 1,447,484
OTHER INCOME (EXPENSE):
Interest income 31,309 37,895
Interest expense - (3,089)
Other (3,444) (7,973)
27,865 26,833
NET EARNINGS BEFORE
INCOME TAXES $ 615,500 $ 1,377,705
Income tax expense 233,890 523,528
NET EARNINGS $ 381,610 $ 854,177
NET EARNINGS PER COMMON
SHARE .03 .07
WEIGHTED AVERAGE SHARES 11,538,758 12,106,457
</TABLE>
The accompanying notes are an integral part of these statements.
Page 5
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<TABLE>
THERAGENICS CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996
(Unaudited)
<CAPTION>
Three Months
Ended March 31
1995 1996
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net earnings $ 381,610 $ 854,177
Adjustments to reconcile
net earnings to net cash
provided by operating
activities:
Depreciation and
amortization 140,832 217,565
Changes in assets
and liabilities:
Accounts receivable (302,641) (505,402)
Inventories 11,138 38,393
Prepaid expenses and
other current assets (26,622) (105,622)
Deferred tax asset 233,890 519,510
Other assets 1,687 (4,267)
Trade accounts payable 26,482 46,422
Accrued salaries, wages
and payroll taxes 26,596 (84,614)
Other current liabilities 6,024 13,563
Total Adjustments 117,386 135,548
Net cash provided
by operating activities 498,996 989,725
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases and construction
of property and equipment (352,590) (1,804,059)
Purchase and sale of
marketable securities 50,000 -
Net cash used by
investing activities (302,590) (1,804,059)
</TABLE>
Page 6
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<TABLE>
THERAGENICS CORPORATION
STATEMENTS OF CASH FLOWS
(Continued)
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996
(Unaudited)
<CAPTION>
Three Months
Ended March 31
1995 1996
<S> <C> <C>
CASH FLOWS FROM
FINANCING ACTIVITIES:
Exercise of stock
options(net) 2,000 175,099
Repayment of term loan (114,091) (123,959)
Net cash provided
/(used) by
financing activities (112,091) 51,140
NET INCREASE IN CASH AND
SHORT-TERM INVESTMENTS 84,315 (763,194)
CASH AND SHORT-TERM
INVESTMENTS AT
BEGINNING OF PERIOD 2,317,463 3,266,338
CASH AND SHORT-TERM
INVESTMENTS AT
END OF PERIOD $ 2,401,778 $ 2,503,144
</TABLE>
Supplementary Schedule of Non Cash Financing Activities:
During the first quarter, the Company realized an income tax
benefit from the exercise and early disposition of certain stock
options, resulting in an increase in the deferred tax asset and
additional paid-in capital of $344,620.
The accompanying notes are an integral part of these statements.
Page 7
<PAGE>
<TABLE>
THERAGENICS CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(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, 1995 11,394,785 $113,948 $16,390,170 $(1,734,697) $14,769,421
Exercise of
stock options
(net) 110,099 1,101 173,998 - 175,099
Income tax benefit
from stock options
exercised - - 344,620 - 344,620
Net earnings for
the period - - - 854,177 854,177
BALANCE,
March 31, 1996 11,504,884 $115,049 $16,908,788 $ (880,520) $16,143,317
</TABLE>
The accompanying notes are an integral part of these statements.
Page 8
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THERAGENICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(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 March
31, 1996, and the results of operations, cash flows, and changes
in shareholders equity for the three months ended March 31, 1996.
All such adjustments were 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, 1995, included in the Form 10-K filed by the
Company.
Net earnings per common share is based on the weighted
average number of common shares and common equivalent shares
outstanding during each period. Fully diluted information is not
presented, as fully diluted earnings per share is not materially
different from the primary earnings per share presented.
Page 9
<PAGE>
Item 2. - Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Revenues - Revenues for the quarter ended March 31, 1996 were up
more than 52% over the first quarter of the prior year. This
increase in revenues was due to the continued acceleration of
acceptance of seeding as a viable treatment of prostate cancer.
Marketing efforts have been successful in educating patients and
doctors alike as to the availability of this treatment option.
Concurrently manufacturing has delivered the consistent results
necessary to support this strong growth. Also contributing to
revenue growth was the receipt in the first quarter of 1996 of a
$100,000 annual licensing payment called for by the TheraSphere
licensing agreement between Theragenics and Nordion
International.
The company's net profit improved almost 124% to $854,000, or
$.07 per share in the first quarter of 1996, from $382,000 or
$.03 per share for the same period in 1995. Improvement in
profits was directly related to increased sales with margins
improving as a result of economies of scale. The $100,000
licensing payment also significantly contributed to profit as
Theragenics incurred little expense as a result of this
additional revenue.
Costs and Expenses - Cost of sales for the first quarter
increased over last year's first quarter primarily as the result
of increased depreciation expense. The Company's second cyclotron
did not beg1n depreciating until April 1, 1995. As product sold
increased, the variable costs of these sales also rose. Partially
offsetting these increases was the absence in the first quarter
of 1996 of expenses associated with 1995's first quarter
start-up of cyclotron number two.
Selling, general and administrative ("S,G&A") expenses as a
percent of sales dropped from 33% in 1995's first quarter to 25%
for the most recently completed quarter. This drop in percentage
reflects certain economies of scale which the Company has
realized as the Company has grown. Advertising, marketing, public
and investor relations, and staffing increases were the primary
contributors to the absolute increase of $89,000. Higher absolute
spending levels are expected to continue as incremental growth is
pursued.
Other Income and Expense for the first quarter of 1996 was
relatively unchanged from that recorded in the same period last
year.
Liquidity and Capital Resources
The Company had cash, cash equivalents and short-term
investments of $2.5 million at March 31, 1996, compared with $3.3
million at December 31, 1995. This $763,000 reduction in cash
Page 10
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was primarily attributable to the funding of $1.8 million in
progress payments for the construction of cyclotrons three and
four and the facilities to house these cyclotrons. Cash provided
from operations funded almost $1.0 million of these progress
payments and cash generated from the exercise of stock options
provided another $175,000 but utilization of such funds was
partially offset by required long term debt repayment of
$124,000.
Management estimates that approximately $5,000,000 remains to be
spent on the expansion project for cyclotron three and four. The
Company currently has an unused $5,000,000 credit facility in
place with NationsBank. As such Management strongly believes that
funding for the remainder of this project should be available
from current cash balances, cash from future operations and
Theragenics' credit facility.
Management believes that cash flow from operations, the
availability of funds under its bank credit agreements and the
availability of other forms of financing should permit the
Company to meet its anticipated capital expenditures and working
capital needs as well as to service its debt and fund future
growth as new business opportunities arise.
Page 11
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
23. Financial Data Schedule (For SEC use only)
(b) Reports on Form 8-K.
The company filed a Report on Form 8-K dated
March 12, 1996, reporting the time, date and
place of the 1996 Annual Meeting of Shareholders
along with the proposals to be voted on and the
record date for determining shareholders entitled
to vote at said meeting.
Page 12
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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: May 14, 1996
Page 13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from SEC Form 10Q
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,503,144
<SECURITIES> 0
<RECEIVABLES> 1,841,047
<ALLOWANCES> 0
<INVENTORY> 128,562
<CURRENT-ASSETS> 4,645,896
<PP&E> 14,071,438
<DEPRECIATION> 2,409,796
<TOTAL-ASSETS> 18,103,490
<CURRENT-LIABILITIES> 1,087,237
<BONDS> 872,936
0
0
<COMMON> 17,023,837
<OTHER-SE> (880,520)
<TOTAL-LIABILITY-AND-EQUITY> 18,103,490
<SALES> 2,697,034
<TOTAL-REVENUES> 2,836,251
<CGS> 753,623
<TOTAL-COSTS> 1,447,484
<OTHER-EXPENSES> 7,973
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,089
<INCOME-PRETAX> 1,377,705
<INCOME-TAX> 523,528
<INCOME-CONTINUING> 854,177
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 854,177
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
