UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1996 Commission File No. 0-15443
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 November 7, 1996
Common Stock, 11,658,931
par value $.01
<PAGE>
THERAGENICS CORPORATION
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets - December 31, 1995 and
September 30, 1996 (unaudited) .......................3
Statements of Earnings for the Three and Nine
Months Ended September 30, 1995 and 1996 (unaudited)..5
Statements of Cash Flows for the Three and Nine
Months Ended September 30, 1995 and 1996 (unaudited)..6
Statements of Changes in Stockholders' Equity for
the Nine Months Ended September 30, 1996 (unaudited)..8
Notes to Financial Statements....................... 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................. 11
PART II - OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8K.................13
SIGNATURE................................................14
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
THERAGENICS CORPORATION
BALANCE SHEETS
DECEMBER 31, 1995 AND SEPTEMBER 30, 1996
ASSETS
<CAPTION>
December 31, September 30,
1995 1996
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 3,266,338 $ 1,712,174
Trade Accounts Receivable 1,335,645 2,169,232
Inventories 166,955 195,347
Prepaid expenses and other
current assets 67,521 69,325
--------- ---------
Total current assets 4,836,459 4,146,078
--------- ---------
PROPERTY AND EQUIPMENT
Building 1,690,045 1,702,170
Leasehold Improvement 138,978 138,978
Machinery and equipment 8,203,256 8,249,233
Office furniture and equipment 44,721 65,057
---------- ----------
10,077,000 10,155,438
Less accumulated depreciation
and amortization (2,194,164) (2,860,930)
---------- ----------
7,882,836 7,294,508
Land 49,485 523,353
Construction in progress 2,140,894 7,203,108
---------- ----------
10,073,215 15,020,969
OTHER ASSETS
Deferred Tax Asset 1,810,000 871,563
Patent Costs 90,704 84,763
Other 67,804 62,230
----------- -----------
1,968,508 1,018,556
----------- -----------
$16,878,182 $20,185,603
=========== ===========
</TABLE>
<PAGE>
<TABLE>
THERAGENICS CORPORATION
BALANCE SHEETS
(Continued)
DECEMBER 31, 1995 AND SEPTEMBER 30, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
December 31, September 30
1995 1996
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long term debt $ 511,362 $ 498,457
Trade accounts payable 348,191 250,291
Accrued salaries, wages,
and payroll taxes 225,138 271,219
Income taxes payable 3,255 -
Other current liabilities 12,680 221,953
--------- ---------
Total current liabilities 1,100,626 1,241,920
--------- ---------
LONG TERM DEBT:
Long Term Debt 1,008,135 641,793
SHAREHOLDERS' EQUITY:
Common stock, $.01 par
value, 50,000,000 shares
authorized; 11,394,785 and
11,658,931 shares had been
issued and outstanding as
of December 31, 1995 and
September 30, 1996, respectively. 113,948 116,589
Additional paid-in capital 16,390,170 17,470,128
Retained Earnings;
(Accumulated deficit) (1,734,697) 715,173
---------- ----------
Total stockholders' equity 14,769,421 18,301,890
---------- ----------
$16,878,182 $20,185,603
========== ==========
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
THERAGENICS CORPORATION
STATEMENTS OF EARNINGS
FOR THE THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
(Unaudited)
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
1995 1996 1995 1996
--------------------- -----------------------
<S> <C> <C> <C> <C>
REVENUES:
Sales ................ $1,926,456 $3,144,297 $5,587,134 $8,569,188
Licensing Fees ....... - - 85,431 100,000
COSTS & EXPENSES:
Cost of sales ......... 665,346 958,030 1,940,274 2,598,640
Selling, general, and
administrative ..... 607,124 721,771 1,884,724 2,185,371
Research and
development ........... 2,873 1,002 17,068 3,177
--------- --------- --------- ---------
1,275,343 1,680,803 3,842,066 4,787,188
OTHER INCOME (EXPENSE):
Interest income ....... 37,829 26,152 102,078 98,309
Interest expense ...... - (9,760) - (22,429)
Other ................. (9,738) 588 (17,078) (6,477)
---------- ---------- --------- ---------
28,091 16,980 85,000 69,403
---------- ---------- --------- ---------
NET EARNINGS BEFORE
INCOME TAXES ......... 679,204 1,480,474 1,915,499 3,951,403
Income tax expense .... 258,098 562,580 727,890 1,501,533
---------- ---------- --------- ---------
NET EARNINGS .......... 421,106 917,894 1,187,609 2,449,870
NET EARNINGS PER COMMON
SHARE $ .04 $ .07 $ .10 $ .20
========== ========== ========== ==========
WEIGHTED AVERAGE
SHARES 11,937,322 12,298,440 11,826,326 12,220,313
========== ========== ========== ==========
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
THERAGENICS CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
(Unaudited)
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
1995 1996 1995 1996
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Earnings $ 421,106 $ 917,894 $1,187,609 $ 2,449,870
Adjustments to reconcile
net earnings to net cash
provided by operating
activities:
Depreciation and
amortization 223,259 228,089 587,813 672,707
Change in assets and
liabilities:
Accounts receivable (111,446) (436,172) (457,645) (833,587)
Inventories 21,562 (27,700) (2,803) (28,392)
Prepaid expenses and
other current assets 27,148 40,375 20,871 (1,804)
Deferred tax asset 253,472 512,370 717,769 938,437
Other assets 821 9,303 22,322 5,574
Trade accounts payable 2,277 (454,360) (5,687) (97,900)
Accrued salaries, wages
and payroll taxes 12,128 41,193 112,014 46,081
Other current
liabilities 35,061 181,365 66,285 206,018
------- ------- --------- --------
Total Adjustments 464,282 94,391 1,060,939 (907,134)
------- ------- --------- --------
Net cash provided by
operating activities 885,388 1,012,285 2,248,548 3,357,004
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchases and construction
of property and equipment (623,156) (1,897,771) (1,037,519) (5,614,520)
Retirements of
property and equipment 643 - 1,677 -
Patent costs 54 - (3,578) -
</TABLE>
<PAGE>
<TABLE>
THERAGENICS CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
(Unaudited)
<CAPTION>
Three Months Six Months
Ended September 30 Ended September 30
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Purchases/sales of
marketable securities - - 50,000 -
-------- ---------- -------- ----------
Net cash provided/(used)
by investing activities (622,459) (1,897,771) (989,420) (5,614,520)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Exercise of stock options 217,000 238,210 272,746 1,082,599
Repayment of term loan (118,369) (129,042) (348,275) (379,247)
Net cash provided/(used) -------- -------- -------- --------
by financing activities ( 98,631) 109,168 ( 75,529) 703,352
NET INCREASE (DECREASE) IN
CASH AND SHORT-TERM
INVESTMENTS 361,560 776,318 1,183,599 (1,554,164)
CASH AND SHORT-TERM
INVESTMENTS
AT BEGINNING OF PERIOD 3,139,502 2,488,492 2,317,463 3,266,338
--------- --------- --------- ---------
CASH AND SHORT-TERM
INVESTMENTS AT END
OF PERIOD $3,501,062 $1,712,174 $3,501,062 $1,712,174
========= ========= ========= =========
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
THERAGENICS CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited)
<CAPTION>
Retained
Common Stock Additional Earnings
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 264,146 2,641 588,380 - 591,021
Income tax benefit
from stock options
exercised - - 491,578 - 491,578
Net earnings for
the period - - - 2,449,870 2,449,870
--------- ------- ---------- --------- ---------
BALANCE,
September 30,
1996 11,658,931 $116,589 $17,470,128 $715,173 $18,301,890
========== ======= ========== ======= ==========
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
THERAGENICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements included herein have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Certain information and notes required by generally
accepted accounting principles for complete financial statements has been
condensed or omitted. However, there has been no material change in the
information disclosed in the notes to consolidated financial statements
included in the Annual Report on Form 10-K of Theragenics Corporation for the
year ended December 31, 1995. In the opinion of Management, all adjustments
including normal recurring accruals necessary to present fairly the financial
position as of September 30, 1996, and the results of operations, cash flows,
and changes in shareholders equity for the three and nine months ended
September 30, 1996 have been included. Operating results for the nine month
period ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. These financial
statements and notes should be read in conjunction with the audited financial
statements and notes thereto for the year ended December 31, 1995 included in
the Form 10-K filed by the Company.
<PAGE>
Item 2. - Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Revenues - Revenues for the quarter were up 63 percent over the third quarter
of 1995 contributing to YTD revenues ($8,669,188) being 53 percent higher than
the first nine months of last year. Marketing efforts along with a general
increase in awareness of prostate cancer treatment options have contributed
to increased patient and physician acceptance of interstitial seeding as a
desirable option for the treatment of this disease.
The Company's net profit more than doubled in the third quarter to $917,894, or
$.07 per share as compared to $421,106 or $.04 per share for the same period in
1995. YTD profits rose 106 percent to $2,449,870 from $1,187,609 with
earnings per share of $.20 versus $.10.
Costs and Expenses - Cost of sales for the third quarter and the nine months as
a percent of revenues decreased to approximately 30 percent versus 34 percent
for the same periods last year reflecting economies of scale. Cost of sales for
the third quarter and the first nine months of 1996 increased over the third
quarter and first nine months of 1995 by $292,684 and $658,366 respectively.
Both increases were in line with increased sales. As new production equipment
(i.e., cyclotrons) is brought on line, expenses (including depreciation)
associated with this new equipment are expected to depress gross margins
slightly until capacity utilization of the equipment increases. Additionally,
the Company constantly evaluates and implements programs to improve the quality
and efficiency of its manufacturing operations while maintaining an emphasis on
a safe work environment. Although it is impossible to forecast the collective
impact of these programs, they can impact cost of sales in both the near and
long terms.
S,G&A expenses for the third quarter as a percent of sales decreased
to 23 percent from 32 percent for the same period last year. The nine-month
percentages were 25 percent for 1996 versus 34 percent for 1995. While these
reductions reflect economies of scale, continued declines of S,G&A expenses as a
percent of sales cannot be expected to continue as personnel and systems
reach their capacity workload. Dollar value of S,G&A expenses were $.7 million
in the third quarter of 1996, compared to $.6 million in the third quarter of
1995. For the first nine months of the year, S,G&A expenses were $2.2 million,
compared to 1.9 million in the same period in 1996. The increase was primarily
due to higher marketing investment in support of the Company's volume growth.
The decrease in interest income can be attributed mainly to the decrease in
short-term investments due to increased capital expenditures.
Liquidity and Capital Resources
The Company had cash, cash equivalents, short-term investments and marketable
securities of $1.7 million at September 30, 1996, compared to $3.3 million at
December 31, 1995. The $1.6 million reduction in cash was primarily attributable
to capital expenditures of $5.6 million of construction in progress payments for
cyclotrons number three and four, the facilities to house the equipment and the
purchase of land for future expansion. Cash from operations funded $3.4 million
of the construction in progress payments. In addition, approximately $1.1
million was generated through the exercise of stock options while $.4 million
was used for debt repayment.
Following the close of the third quarter an additional $.5 million payment was
made on cyclotron number three. Management estimates that approximately $1.0
million remains to be spent on the expansion project for cyclotrons three and
four. The Company currently has in place a $5 million dollar credit facility of
which less than $1 million has been drawn. 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
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. From time to time,
the Company may also make other forward-looking statements relating to such
matters as well as anticipated financial performance, business prospects,
technological developments, research and development activities and similar
matters. 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>
PART II - OTHER INFORMATION
Item 6.- Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September 30,
1996.
<PAGE>
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: November 7, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,712,174
<SECURITIES> 0
<RECEIVABLES> 2,169,232
<ALLOWANCES> 0
<INVENTORY> 195,347
<CURRENT-ASSETS> 4,146,078
<PP&E> 17,881,899
<DEPRECIATION> 2,860,930
<TOTAL-ASSETS> 20,185,603
<CURRENT-LIABILITIES> 1,241,920
<BONDS> 0
0
0
<COMMON> 116,589
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 20,185,603
<SALES> 8,669,188
<TOTAL-REVENUES> 8,669,188
<CGS> 2,598,640
<TOTAL-COSTS> 4,787,188
<OTHER-EXPENSES> 69,403
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,429
<INCOME-PRETAX> 3,951,403
<INCOME-TAX> 1,501,533
<INCOME-CONTINUING> 2,449,870
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,449,870
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
