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, 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:(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 9, 1996
Common Stock, 11,656,931
par value $.01
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THERAGENICS CORPORATION
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets -
December 31, 1995 and June 30, 1996 (unaudited) ..... 3
Statements of Earnings for the Three and Six
Months Ended June 30, 1995 and 1996 (unaudited) ..... 5
Statements of Cash Flows for the Three and Six
Months Ended June 30, 1995 and 1996 (unaudited) ..... 6
Statements of Changes in Stockholders' Equity for
the Six Months Ended June 30, 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 4. Submission of Matters to a Vote of Security
Holders ...............................................12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ......................12
SIGNATURE .......................................................13
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PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
<TABLE>
THERAGENICS CORPORATION
BALANCE SHEETS
December 31, 1995 AND JUNE 30, 1996
ASSETS
<CAPTION>
December 31, June 30,
1995 1996
<S> <C> <C>
(Unaudited)
CURRENT ASSETS
Cash and short-term investments $ 3,266,338 $ 2,488,492
Trade Accounts Receivable 1,335,645 1,733,060
Inventories 166,955 167,647
Prepaid expenses and other
current assets 67,521 109,700
Total current assets 4,836,459 4,498,899
PROPERTY AND EQUIPMENT
Building 1,690,045 1,702,170
Leasehold Improvement 138,978 138,978
Machinery and equipment 8,203,256 8,239,885
Office furniture and equipment 44,721 57,361
10,077,000 10,138,394
Less accumulated depreciation
and amortization (2,194,164) (2,634,846)
7,882,836 7,503,548
Land 49,485 206,668
Construction in progress 2,140,894 5,639,066
10,073,215 13,349,282
OTHER ASSETS
Deferred Tax Asset 1,810,000 1,383,933
Patent Costs 90,704 86,768
Other 67,804 71,533
1,968,508 1,542,234
$16,878,182 $19,390,415
</TABLE>
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<TABLE>
THERAGENICS CORPORATION
BALANCE SHEETS
(Continued)
December 31, 1995 AND JUNE 30, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
December 31, June 30,
1995 1996
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long term debt $ 511,362 $ 507,438
Trade accounts payable 348,191 704,651
Accrued salaries, wages,
and payroll taxes 225,138 230,098
Income taxes payable 3,255 -
Other current liabilities 12,680 40,588
Total current liabilities 1,100,626 1,482,775
LONG TERM DEBT:
Long Term Debt 1,008,135 761,854
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value,
50,000,000 shares authorized;
11,394,785 and 11,626,931
shares had been issued as of
December 31, 1995 and June 30,
1996, respectively. 113,948 116,269
Additional paid-in capital 16,390,170 17,232,238
Accumulated deficit (1,734,697) (202,721)
Total stockholders' equity 14,769,421 17,145,786
$16,878,182 $19,390,415
The accompanying notes are an integral part of these statements.
</TABLE>
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<TABLE>
THERAGENICS CORPORATION
STATEMENTS OF EARNINGS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(Unaudited)
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
1995 1996 1995 1996
<S> <C> <C> <C> <C>
REVENUES:
Sales $1,826,216 $2,726,535 $3,660,678 $5,423,569
Licensing Fees 85,431 - 85,431 101,322
COSTS & EXPENSES:
Cost of sales 639,354 886,988 1,274,928 1,640,611
Selling, general, and
administrative 673,907 770,828 1,277,600 1,463,600
Research and
development 6,635 1,085 14,195 2,174
1,319,896 1,658,901 2,566,723 3,106,385
OTHER INCOME (EXPENSE):
Interest income 32,940 34,262 64,249 72,157
Interest expense - (9,580) - (12,669)
Other (3,896) 908 (7,340) (7,065)
29,044 25,590 56,909 52,423
NET EARNINGS BEFORE
INCOME TAXES 620,795 1,093,224 1,236,295 2,470,929
Income tax expense 235,902 415,425 469,792 938,953
NET EARNINGS 384,893 677,799 766,503 1,531,976
NET EARNINGS PER COMMON
SHARE $ .03 $.06 $ .07 $.13
WEIGHTED AVERAGE
SHARES 11,783,995 12,203,945 11,745,723 12,170,261
The accompanying notes are an integral part of these statements.
</TABLE>
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<TABLE>
THERAGENICS CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(Unaudited)
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
1995 1996 1995 1996
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Earnings $ 384,893 $ 677,799 $ 766,503 $1,531,976
Adjustments to
reconcile net earnings
to net cash provided
by operating
activities:
Depreciation and
amortization 223,722 227,053 364,554 444,618
Change in assets and
liabilities:
Accounts receivable (43,558) 107,987 (346,199) (397,415)
Inventories (35,503) (39,085) (24,365) (692)
Prepaid expenses and
other current assets 20,345 63,443 (6,277) (42,179)
Deferred tax asset 230,407 (93,443) 464,297 426,067
Other assets 19,814 538 21,501 (3,729)
Trade accounts payable (34,446) 310,038 (7,964) 356,460
Accrued salaries, wages
and payroll taxes 73,290 89,574 99,886 4,960
Other current
liabilities 25,200 11,090 31,224 24,653
Total Adjustments 479,271 677,195 596,657 812,743
Net cash provided by
operating activities 864,164 1,354,994 1,363,160 2,344,719
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchases and
construction of
property and equipment (61,773)(1,912,690) (414,363)(3,716,749)
Retirements of
property and equipment 1,034 - 1,034 -
Patent costs (3,632) - (3,632) -
</TABLE>
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<TABLE>
THERAGENICS CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(Unaudited)
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Purchases/sales of
marketable
securities - - 50,000 -
Net cash provided/
(used) by investing
activities (64,371)(1,912,690) (366,961) (3,716,749)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Exercise of
stock options 53,746 669,290 55,746 844,389
Repayment of
term loan (115,815) (126,246) (229,906) (250,205)
Net cash provided/
(used) by financing
activities (62,069) 543,044 (174,160) 594,184
NET INCREASE IN CASH
AND SHORT-TERM
INVESTMENTS 737,724 (14,652) 822,039 (777,846)
CASH AND SHORT-TERM
INVESTMENTS AT
BEGINNING OF PERIOD 2,401,778 2,503,144 2,317,463 3,266,338
CASH AND SHORT-TERM
INVESTMENTS AT
END OF PERIOD $3,139,502 $2,488,492 $3,139,502 $2,488,492
The accompanying notes are an integral part of these statements.
</TABLE>
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<TABLE>
THERAGENICS CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(Unaudited)
<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, 1995 11,394,785 $113,948 $16,390,170 $(1,734,697) $14,769,421
Exercise of
stock options 232,146 2,321 361,700 - 364,021
Income tax benefit
from stock options
exercised - - 480,368 - 480,368
Net earnings for
the period - - - 1,531,976 1,531,976
BALANCE,
June 30, 1996 11,626,931 $116,269 $17,232,238 $(202,721) $17,145,786
The accompanying notes are an integral part of these statements.
</TABLE>
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THERAGENICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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 June 30,
1996, and the results of operations, cash flows, and changes in
shareholders equity for the three and six months ended June 30,
1996. 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, 1995, included in the Form 10-K filed by the
Company.
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Item 2. - Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Revenues - Revenues for the quarter were up 43% over the second
quarter of 1995 contributing to Y-T-D revenues ($5,524,891) being
47% higher than the first six months of last year. As in the first
quarter of this year, the increase can be primarily attributed to
educational efforts by the Company that have led to increased
patient and physician awareness that interstitial seeding is an
available and pragmatic option for the treatment of prostate
cancer. Manufacturing continued to provide a consistent flow of
product to make the sales gains possible. Y-T-D sales were also
higher due to first quarter receipt of a $100,000 licensing
payment called for by the TheraSphere (R) licensing agreement
between Theragenics and Nordion International.
The Company's net profit improved 76% to $677,799, or $.06 per
share in the second quarter of 1996, from $384,893 or $.03 per
share for the same period in 1995. Y-T-D profits grew 100% to
$1,531,976 from $766,503 with earnings per share of $.13 versus
$.07.
Costs and Expenses - Cost of sales for the second quarter of 1996
increased over the second quarter of 1995 by $247,634 primarily
due to costs associated with increased sales. Also contributing
to the rise in cost of sales was the continuation of the
Company's efforts to improve efficiencies in manufacturing through
additions of professional personnel with expertise to aid in
paving the way for increased capacity, ISO standardization, and
improved manufacturing capabilities. These efforts and costs are
most likely to continue as the Company identifies opportunities
to improve quantity, quality and safety. The same factors account
for the $365,683 increase in cost of sales for the first six
months of 1996 compared to the same period of 1995.
S,G&A expenses as a percent of sales decreased from 35% in the
second quarter of 1995 to 28% for the same period in 1996. The
six-month percentages were reduced to 26% in 1996 versus 34% in
1995. 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 patient focused public relations expenses
which have continued to 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),
personnel and costs associated with providing more office space
for the additional personnel were primarily responsible for the
$96,921 increase in 1996 second quarter S,G&A over the second
quarter of 1995. Costs in these areas are expected to remain at
the higher levels.
Other Income and Expense for the second quarter of 1996 changed
relatively little in comparison to the same period in 1995.
PAGE 10
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Liquidity and Capital Resources
The Company had cash, cash equivalents, short-term investments
and marketable securities of $2.5 million at June 30, 1996,
compared to $3.3 million at December 31, 1995. The $.8 million
reduction in cash was primarily attibutable to funding of $3.7
million in construction in progress payments for cyclotrons
number three and four and the facilities to house the equipment.
Cash from operations funded almost $2.3 million of the
construction in progress payments. Cash generated from the
exercise of stock options provided an additional $.8 million, but
utilization of such funds was partially offset by required
long-term debt repayment of $.2 million.
Management estimates that approximately $3 million remains to be
spent on the expansion project for cyclotrons three and four. The
Company currently has an unused $5 million credit facility in
place with NationsBank. 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. Theragenics may consider, among
other things, additional debt or equity financing to fund future
capital expenditures to increase the Company's production
capabilities.
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.
This document contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995 including, without limitation, statements regarding future
costs of sales, S,G&A expenses and the sufficiency of the
Company's liquidity and capital resources. These forward-looking
statements are subject to certain risks, uncertainties and other
factors which could cause actual results to differ materially
from those anticipated, including risks associated with the
management of growth, government regulation of the therapeutic
radiological pharmaceutical and device business, dependence on
health care professionals, and competition from conventional and
newly developed methods of treating localized cancer.
PAGE 11
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PART II - OTHER INFORMATION
Item 4.- Submission of Matters to a Vote of Security Holders
(a) The annual meeting of shareholders was held May 24,
1996.
(b) Peter A. A. Saunders and John V. Herndon were reelected
to the board of directors and will each serve for a
three-year term. Mr. Saunders received 9,390,787 votes
for his election and 89,929 votes withheld authority.
Mr. Herndon received 9,313,245 votes for his election
and 171,471 votes withheld authority. The appointment of
Grant Thornton as independent public accountants for the
company for the fiscal year ending December 31, 1996,
was ratified and approved by a vote of 9,393,799 shares
for and 63,339 shares against with 23,518 shares
abstaining from voting.
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
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 Jacob
President
PRINCIPAL FINANCIAL OFFICER:
/s/ Bruce W. Smith
Bruce W. Smith
Treasurer and
Chief Financial Officer
Dated: August 14, 1996
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,488,492
<SECURITIES> 0
<RECEIVABLES> 1,733,060
<ALLOWANCES> 0
<INVENTORY> 167,647
<CURRENT-ASSETS> 4,498,899
<PP&E> 15,984,128
<DEPRECIATION> 2,634,846
<TOTAL-ASSETS> 19,390,415
<CURRENT-LIABILITIES> 1,482,775
<BONDS> 761,854
0
0
<COMMON> 17,348,507
<OTHER-SE> (202,721)
<TOTAL-LIABILITY-AND-EQUITY> 19,390,415
<SALES> 5,423,569
<TOTAL-REVENUES> 5,597,048
<CGS> 1,640,611
<TOTAL-COSTS> 3,106,385
<OTHER-EXPENSES> 7,065
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,669
<INCOME-PRETAX> 2,470,929
<INCOME-TAX> 938,953
<INCOME-CONTINUING> 1,531,976
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,531,976
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
