x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware |
58-1528626
|
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
|
incorporation or organization) |
Identification Number)
|
5203 Bristol Industrial Way
|
||
Buford, Georgia
|
30518
|
|
(Address of principal executive offices)
|
(Zip Code)
|
YES x
|
NO o
|
YES x
|
NO o
|
Large Accelerated Filer o
|
Accelerated Filer o
|
Non-Accelerated Filer o
|
Smaller Reporting Company x
|
YES o
|
NO x
|
Page No.
|
||
PART I. FINANCIAL INFORMATION
|
||
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|
||
Condensed Consolidated Statements of Earnings for the three and nine months ended September 30, 2011 and September 30, 2010
|
3
|
|
Condensed Consolidated Balance Sheets – September 30, 2011 and December 31, 2010
|
4
|
|
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2011 and September 30, 2010
|
5
|
|
Condensed Consolidated Statement of Shareholders’ Equity for the nine months ended September 30, 2011
|
6
|
|
Notes to Condensed Consolidated Financial Statements
|
7
|
|
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
14
|
|
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
22
|
|
ITEM 4. CONTROLS AND PROCEDURES
|
22
|
|
PART II. OTHER INFORMATION
|
22
|
|
ITEM 1. LEGAL PROCEEDINGS
|
22
|
|
ITEM 1A. RISK FACTORS
|
22
|
|
ITEM 6. EXHIBITS
|
23
|
|
SIGNATURES
|
24
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
REVENUE
|
||||||||||||||||
Product sales
|
$ | 20,500 | $ | 20,024 | $ | 61,206 | $ | 60,424 | ||||||||
License and fee income
|
562 | 388 | 1,645 | 1,083 | ||||||||||||
21,062 | 20,412 | 62,851 | 61,507 | |||||||||||||
COST OF SALES
|
12,293 | 11,919 | 37,407 | 36,343 | ||||||||||||
GROSS PROFIT
|
8,769 | 8,493 | 25,444 | 25,164 | ||||||||||||
OPERATING EXPENSES
|
||||||||||||||||
Selling, general and administrative
|
5,651 | 5,889 | 17,044 | 17,911 | ||||||||||||
Amortization of purchased intangibles
|
698 | 728 | 2,094 | 2,379 | ||||||||||||
Research and development
|
380 | 529 | 1,375 | 1,383 | ||||||||||||
Loss on sale of equipment
|
2 | 72 | 4 | 111 | ||||||||||||
6,731 | 7,218 | 20,517 | 21,784 | |||||||||||||
EARNINGS FROM OPERATIONS
|
2,038 | 1,275 | 4,927 | 3,380 | ||||||||||||
NON-OPERATING INCOME/(EXPENSE)
|
||||||||||||||||
Interest income
|
39 | 27 | 122 | 69 | ||||||||||||
Interest expense
|
(166 | ) | (257 | ) | (529 | ) | (796 | ) | ||||||||
Other
|
1 | - | 4 | 49 | ||||||||||||
(126 | ) | (230 | ) | (403 | ) | (678 | ) | |||||||||
EARNINGS BEFORE INCOME TAX
|
1,912 | 1,045 | 4,524 | 2,702 | ||||||||||||
Income tax expense
|
771 | 274 | 1,740 | 1,005 | ||||||||||||
NET EARNINGS
|
$ | 1,141 | $ | 771 | $ | 2,784 | $ | 1,697 | ||||||||
NET EARNINGS PER COMMON SHARE:
|
||||||||||||||||
Basic
|
$ | 0.03 | $ | 0.02 | $ | 0.08 | $ | 0.05 | ||||||||
Diluted
|
$ | 0.03 | $ | 0.02 | $ | 0.08 | $ | 0.05 | ||||||||
WEIGHTED AVERAGE SHARES:
|
||||||||||||||||
Basic
|
33,442 | 33,276 | 33,400 | 33,252 | ||||||||||||
Diluted
|
33,727 | 33,407 | 33,766 | 33,430 | ||||||||||||
ASSETS
|
|||||||
September 30,
2011
(Unaudited)
|
December 31,
2010
|
||||||
CURRENT ASSETS
|
|||||||
Cash and cash equivalents
|
$ | 29,545 | $ | 29,674 | |||
Marketable securities
|
13,751 | 10,949 | |||||
Trade accounts receivable, less allowance of $2,753 in 2011 and $2,413 in 2010
|
9,769 | 9,567 | |||||
Inventories
|
15,864 | 13,116 | |||||
Deferred income tax asset
|
1,943 | 1,843 | |||||
Prepaid expenses and other current assets
|
865 | 917 | |||||
TOTAL CURRENT ASSETS
|
71,737 | 66,066 | |||||
Property and equipment, net
|
35,307 | 36,722 | |||||
Intangible assets, net
|
10,174 | 12,319 | |||||
Other assets
|
85 | 80 | |||||
TOTAL ASSETS
|
$ | 117,303 | $ | 115,187 |
LIABILITIES & SHAREHOLDERS’ EQUITY
|
|||||||
CURRENT LIABILITIES
|
|||||||
Trade accounts payable
|
$
|
2,375
|
$
|
1,887
|
|||
Accrued salaries, wages and payroll taxes
|
2,766
|
2,340
|
|||||
Short-term borrowings
|
2,500
|
3,333
|
|||||
Income taxes payable
|
414
|
8
|
|||||
Other current liabilities
|
1,473
|
1,400
|
|||||
TOTAL CURRENT LIABILITIES
|
9,528
|
8,968
|
|||||
Long-term borrowings
|
22,000
|
23,667
|
|||||
Deferred income taxes
|
1,074
|
1,213
|
|||||
Decommissioning retirement liability
|
792
|
749
|
|||||
Other long-term liabilities
|
299
|
311
|
|||||
TOTAL LIABILITIES
|
33,693
|
34,908
|
|||||
COMMITMENTS AND CONTINGENCIES
|
|||||||
SHAREHOLDERS’ EQUITY
|
|||||||
Common stock, authorized 100,000 shares of $0.01 par value, issued and
outstanding, 33,974 in 2011 and 33,651 in 2010
|
340
|
336
|
|||||
Additional paid-in capital
|
74,488
|
73,902
|
|||||
Retained earnings
|
8,813
|
6,029
|
|||||
Accumulated other comprehensive gain (loss)
|
(31
|
)
|
12
|
||||
TOTAL SHAREHOLDERS’ EQUITY
|
83,610
|
80,279
|
|||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
117,303
|
$
|
115,187
|
Nine Months Ended
September 30,
|
||||||||
2011
|
2010
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net earnings
|
$ | 2,784 | $ | 1,697 | ||||
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
5,404 | 5,431 | ||||||
Deferred income taxes
|
(213 | ) | (768 | ) | ||||
Provision for allowances
|
452 | 853 | ||||||
Share-based compensation
|
560 | 397 | ||||||
Change in fair value of interest rate swaps
|
(98 | ) | 152 | |||||
Decommissioning retirement liability
|
43 | 40 | ||||||
Loss on sale of equipment
|
4 | 111 | ||||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable
|
(545 | ) | (2,819 | ) | ||||
Inventories
|
(2,857 | ) | (2,106 | ) | ||||
Prepaid expenses and other current assets
|
52 | 242 | ||||||
Trade accounts payable
|
496 | 334 | ||||||
Accrued salaries, wages and payroll taxes
|
426 | 510 | ||||||
Income taxes payable
|
406 | 803 | ||||||
Other current liabilities
|
18 | 504 | ||||||
Other
|
81 | (98 | ) | |||||
Net cash provided by operating activities
|
7,013 | 5,283 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchases and construction of property and equipment
|
(1,683 | ) | (7,988 | ) | ||||
Proceeds from sale of property and equipment
|
36 | 6 | ||||||
Purchases of marketable securities
|
(10,147 | ) | (13,885 | ) | ||||
Maturities of marketable securities
|
6,935 | 2,135 | ||||||
Proceeds from sales of marketable securities
|
187 | 663 | ||||||
Net cash used by investing activities
|
(4,672 | ) | (19,069 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Repayment of borrowings
|
(2,500 | ) | (2,500 | ) | ||||
Employee stock purchase plan
|
44 | - | ||||||
Retirement of common stock
|
(14 | ) | - | |||||
Net cash used by financing activities
|
(2,470 | ) | (2,500 | ) | ||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
$ | (129 | ) | $ | (16,286 | ) | ||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
29,674 | 45,326 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$ | 29,545 | $ | 29,040 | ||||
SUPPLEMENTARY CASH FLOW DISCLOSURE:
|
||||||||
Interest paid
|
$ | 615 | $ | 701 | ||||
Income taxes paid
|
$ | 1,548 | $ | 971 | ||||
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Liability for property and equipment acquired
|
$ | 90 | $ | 661 |
Common Stock
|
Accumulated
|
||||||||||||||||||
Number
of
|
Par
Value
|
Additional
Paid-in
|
Retained
|
other
comprehensive
|
|||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
gain (loss)
|
Total
|
||||||||||||||
BALANCE, December 31, 2010
|
33,651
|
$
|
336
|
$
|
73,902
|
$
|
6,029
|
$
|
12
|
$
|
80,279
|
||||||||
Issuance of restricted shares
|
298
|
3
|
(3
|
)
|
-
|
-
|
-
|
||||||||||||
Employee stock purchase plan
|
33
|
1
|
43
|
-
|
-
|
44
|
|||||||||||||
Share-based compensation
|
-
|
-
|
560
|
-
|
-
|
560
|
|||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
(43
|
)
|
(43
|
)
|
|||||||||||
Shares retired
|
(8
|
)
|
-
|
(14
|
)
|
-
|
-
|
(14
|
)
|
||||||||||
Net earnings for the period
|
-
|
-
|
-
|
2,784
|
- |
2,784
|
|||||||||||||
BALANCE, September 30, 2011
|
33,974
|
$
|
340
|
$
|
74,488
|
$
|
8,813
|
$
|
(31
|
)
|
$
|
83,610
|
Balance, December 31, 2010
|
$
|
11,000
|
||||
New contracts
|
-
|
|||||
Matured contracts
|
(2,500
|
)
|
||||
Balance, September 30, 2011
|
$
|
8,500
|
Type
|
Maturity
|
Balance Sheet Location
|
September 30,
2011
|
December 31,
2010
|
||||||||
Interest rate swaps
|
June 2012
|
Other current liabilities
|
$ | 89 | $ | - | ||||||
Interest rate swaps
|
June 2012
|
Other long-term liabilities
|
$ | - | $ | 187 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
Location of Loss
(Gain) Recognized
|
||||||||||||||||
2011
|
2010
|
2011
|
2010
|
in Income
|
|
|||||||||||||
Periodic settlements
|
$ | 38 | $ | 45 | $ | 111 | $ | 148 |
Interest expense
|
|||||||||
Change in fair value
|
$ | (38 | ) | $ | 20 | $ | (98 | ) | $ | 152 |
Interest expense
|
● | Level 1 — Quoted prices in active markets for identical assets or liabilities. | |
● | Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. | |
● | Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. |
Quoted Prices
in Active
Markets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
|
|||||||||||||
September 30, 2011
|
||||||||||||||||
Money market funds
|
$ | 8,252 | $ | - | $ | - | $ | 8,252 | ||||||||
Marketable securities
|
13,751 | - | - | 13,751 | ||||||||||||
Total assets
|
$ | 22,003 | $ | - | $ | - | $ | 22,003 | ||||||||
Interest rate swaps liability
|
$ | - | $ | (89 | ) | $ | - | $ | (89 | ) | ||||||
Quoted Prices
in Active
Markets
(Level 1)
|
Significant
Other Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
|
|||||||||||||
December 31, 2010
|
||||||||||||||||
Money market funds
|
$ | 8,053 | $ | - | $ | - | $ | 8,053 | ||||||||
Marketable securities
|
10,949 | - | - | 10,949 | ||||||||||||
Total assets
|
$ | 19,002 | $ | - | - | $ | 19,002 | |||||||||
Interest rate swaps liability
|
$ | - | $ | (187 | ) | $ | - | $ | (187 | ) | ||||||
September 30,
2011
|
December 31,
2010
|
|||||||||
Raw materials
|
$ | 7,592 | $ | 5,709 | ||||||
Work in process
|
4,048 | 2,423 | ||||||||
Finished goods
|
3,981 | 4,625 | ||||||||
Spare parts and supplies
|
921 | 928 | ||||||||
16,542 | 13,685 | |||||||||
Allowance for obsolete inventory
|
(678 | ) | (569 | ) | ||||||
Inventories, net
|
$ | 15,864 | $ | 13,116 |
Expected dividend yield
|
0.0%
|
|
Expected volatility
|
62.8%
|
|
Risk-free interest rate
|
3.0%
|
|
Expected life
|
8 years
|
Shares
|
Weighted
average grant
date fair value
|
||||||||
Non-vested at January 1, 2011
|
364 | $ | 1.76 | ||||||
Granted
|
298 | 1.76 | |||||||
Vested
|
(131 | ) | 2.20 | ||||||
Forfeited
|
-- | -- | |||||||
Non-vested at September 30, 2011
|
531 | $ | 1.65 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Comprehensive income:
|
||||||||||||||||
Net earnings
|
$ | 1,141 | $ | 771 | $ | 2,784 | $ | 1,697 | ||||||||
Other comprehensive income, net of taxes:
|
||||||||||||||||
Unrealized gain (loss) on securities available for sale
|
(62 | ) | 32 | (43 | ) | 34 | ||||||||||
Total comprehensive income
|
$ | 1,079 | $ | 803 | $ | 2,741 | $ | 1,731 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Revenues
|
||||||||||||||||
Surgical products
|
$ | 15,280 | $ | 14,472 | $ | 45,142 | $ | 43,937 | ||||||||
Brachytherapy seed
|
6,053 | 6,149 | 18,284 | 18,029 | ||||||||||||
Intersegment eliminations
|
(271 | ) | (209 | ) | (575 | ) | (459 | ) | ||||||||
$ | 21,062 | $ | 20,412 | $ | 62,851 | $ | 61,507 | |||||||||
Earnings from operations
|
||||||||||||||||
Surgical products
|
$ | 780 | $ | 154 | $ | 1,087 | $ | 152 | ||||||||
Brachytherapy seed
|
1,243 | 1,127 | 3,838 | 3,246 | ||||||||||||
Intersegment eliminations
|
15 | (6 | ) | 2 | (18 | ) | ||||||||||
$ | 2,038 | $ | 1,275 | $ | 4,927 | $ | 3,380 | |||||||||
Capital expenditures
|
||||||||||||||||
Surgical products
|
$ | 117 | $ | 588 | $ | 392 | $ | 6,420 | ||||||||
Brachytherapy seed
|
262 | 356 | 1,291 | 1,568 | ||||||||||||
$ | 379 | $ | 944 | $ | 1,683 | $ | 7,988 | |||||||||
Depreciation and amortization
|
||||||||||||||||
Surgical products
|
$ | 973 | $ | 1,246 | $ | 3,407 | $ | 3,689 | ||||||||
Brachytherapy seed
|
839 | 562 | 1,997 | 1,742 | ||||||||||||
$ | 1,812 | $ | 1,808 | $ | 5,404 | $ | 5,431 |
September 30,
2011
|
December 31,
2010
|
||||||
Identifiable assets
|
|
|
|||||
Surgical products
|
$
|
73,951
|
$
|
69,994
|
|||
Brachytherapy seed
|
63,182
|
65,649
|
|||||
Corporate investment in subsidiaries
|
111,439
|
111,439
|
|||||
Intersegment eliminations
|
(131,269
|
)
|
(131,895
|
)
|
|||
$
|
117,303
|
$
|
115,187
|
||||
Intangible assets
|
|||||||
Surgical products
|
$
|
10,102
|
$
|
12,198
|
|||
Brachytherapy seed
|
72
|
121
|
|||||
$
|
10,174
|
$
|
12,319
|
||||
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Product sales
|
||||||||||||||||
United States
|
$ | 17,928 | $ | 17,881 | $ | 53,779 | $ | 54,023 | ||||||||
Europe
|
1,894 | 1,772 | 6,078 | 5,368 | ||||||||||||
Other foreign countries
|
678 | 371 | 1,349 | 1,033 | ||||||||||||
20,500 | 20,024 | 61,206 | 60,424 | |||||||||||||
License and fee income
|
||||||||||||||||
United States
|
225 | 160 | 644 | 427 | ||||||||||||
Canada
|
337 | 228 | 1,001 | 656 | ||||||||||||
562 | 388 | 1,645 | 1,083 | |||||||||||||
$ | 21,062 | $ | 20,412 | $ | 62,851 | $ | 61,507 |
Three Months Ended
September 30,
|
Nine Months ended
September 30,
|
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net earnings
|
$ | 1,141 | $ | 771 | $ | 2,784 | $ | 1,697 | ||||||||
Weighted average common shares outstanding
|
33,442 | 33,276 | 33,400 | 33,252 | ||||||||||||
Incremental common shares issuable under
stock options and awards
|
285 | 131 | 366 | 178 | ||||||||||||
Weighted average common shares outstanding
assuming dilution
|
33,727 | 33,407 | 33,766 | 33,430 | ||||||||||||
Earnings per share
|
||||||||||||||||
Basic
|
$ | 0.03 | $ | 0.02 | $ | 0.08 | $ | 0.05 | ||||||||
Diluted
|
$ | 0.03 | $ | 0.02 | $ | 0.08 | $ | 0.05 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||||||||||
2011
|
2010
|
Change (%)
|
2011
|
2010
|
Change (%)
|
|||||||||||||||||||
Revenues by segment:
|
||||||||||||||||||||||||
Surgical products
|
||||||||||||||||||||||||
Product sales
|
$ | 15,259 | $ | 14,469 | 5 | % | $ | 45,088 | $ | 43,918 | 3 | % | ||||||||||||
Licensing and fee income
|
21 | 3 | 600 | % | 54 | 19 | 184 | % | ||||||||||||||||
Total surgical products
|
15,280 | 14,472 | 6 | % | 45,142 | 43,937 | 3 | % | ||||||||||||||||
Brachytherapy seed
|
||||||||||||||||||||||||
Product sales
|
5,512 | 5,764 | (4 | % ) | 16,693 | 16,965 | (2 | % ) | ||||||||||||||||
Licensing and fee income
|
541 | 385 | 41 | % | 1,591 | 1,064 | 50 | % | ||||||||||||||||
Total brachytherapy seed
|
6,053 | 6,149 | (2 | % ) | 18,284 | 18,029 | 1 | % | ||||||||||||||||
Intersegment eliminations
|
(271 | ) | (209 | ) | (30 | % ) | (575 | ) | (459 | ) | (25 | % ) | ||||||||||||
Consolidated
|
||||||||||||||||||||||||
Product sales
|
20,500 | 20,024 | 2 | % | 61,206 | 60,424 | 1 | % | ||||||||||||||||
Licensing and fee income
|
562 | 388 | 45 | % | 1,645 | 1,083 | 52 | % | ||||||||||||||||
Total consolidated
|
$ | 21,062 | $ | 20,412 | 3 | % | $ | 62,851 | $ | 61,507 | 2 | % |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||||||||||||
2011
|
2010
|
Change ($)
|
2011
|
2010
|
Change ($)
|
||||||||||||||||||||
Surgical products
|
$ | 780 | $ | 154 | 626 | 1,087 | 152 | 935 | |||||||||||||||||
Brachytherapy seed
|
1,243 | 1,127 | 116 | 3,838 | 3,246 | 592 | |||||||||||||||||||
Intersegment eliminations
|
15 | (6 | ) | 21 | 2 | (18 | ) | 20 | |||||||||||||||||
Consolidated
|
$ | 2,038 | $ | 1,275 | 763 | 4,927 | 3,380 | 1,547 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Acquisition proposal expenses (a)
|
$ | - | $ | - | $ | 218 | $ | - | ||||||||
Professional fees (b)
|
- | 37 | - | 609 | ||||||||||||
Moving related expenses (c)
|
- | 433 | - | 570 | ||||||||||||
Core receivables (d)
|
- | 44 | - | 94 | ||||||||||||
(a) | Acquisition proposal expenses related to expenses to consider, address, and respond to an unsolicited acquisition proposal. |
(b) | Professional fees related to our legal action against the former owner of CP Medical to enforce certain non-compete |
agreements and to protect the trade secrets and other assets of that business. | |
(c) | Moving related expenses associated with the commencement of our move into our new specialty needle manufacturing facility. |
(d) | Core receivables represent amounts due from Core Oncology for which we believe collectability is doubtful. |
●
|
ordering patterns of our larger OEM and distributor customers,
|
●
|
costs incurred to address significant changes in demand,
|
●
|
continued investments in infrastructure, R&D, products, and companies as we make investments to support anticipated future growth and to develop products to address growth opportunities,
|
●
|
changes in product mix and sales channels, with sales through OEM channels generally carrying a relatively lower gross profit margin and sales through distributor channels generally carrying a somewhat higher gross profit margin,
|
●
|
continued pricing pressure from customers,
|
●
|
the implementation of our new, corporate-wide ERP systems,
|
●
|
the increasing scale of our surgical products business, and
|
●
|
trends of consumers making fewer visits to doctors’ offices and the effect on demand for medical devices.
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||||||
Interest paid or accrued, including loan fees
|
$
|
213
|
246
|
658
|
746
|
||||||||||
Fair value adjustment
|
(38
|
)
|
20
|
(98
|
)
|
152
|
|||||||||
Interest capitalized
|
(9
|
)
|
(9
|
)
|
(31
|
)
|
(102
|
)
|
|||||||
Total interest expense
|
$
|
166
|
257
|
529
|
796
|
●
|
changes in the U.S. healthcare industry and regulatory environment;
|
●
|
competition;
|
●
|
new product development cycles;
|
●
|
development and growth of new applications within our markets;
|
●
|
changes in FDA regulatory approval processes;
|
●
|
effectiveness and execution of marketing and sales programs, including those of our distributors;
|
●
|
changes in third-party reimbursement, including CMS and private payors;
|
●
|
potential changes in product pricing;
|
●
|
changes in costs and availability of materials and other operating costs;
|
●
|
continued acceptance of our products in the marketplace;
|
●
|
changes in demand for products;
|
●
|
our ability to meet customer demands and/or the need to incur additional costs and inefficiencies to meet such demand;
|
●
|
a reduction in the number of procedures utilizing our devices caused by cost containment pressures, alternative therapies, or by other reasons;
|
●
|
our ability to successfully identify, consummate and integrate strategic acquisitions or otherwise capitalize on opportunities for growth;
|
●
|
increased costs or product delays required to comply with existing and changing regulations applicable to our businesses, operations and products;
|
●
|
effectiveness of implementation of our new ERP system;
|
●
|
ability to realize our estimate of fair value upon sale or liquidation of cash, cash equivalents and marketable securities that we may hold;
|
●
|
retention of key employees;
|
●
|
damage to one or more of our facilities;
|
●
|
volatility in U.S. and global financial markets;
|
●
|
substantial defaults in payments or a material reduction in purchases by, or loss of, a large customer;
|
●
|
changes in circumstances that could impair our intangible assets;
|
●
|
new or revised tax legislation or challenges to our tax positions;
|
●
|
changes in accounting principles generally accepted in the United States of America;
|
●
|
general economic conditions, including changes in the financial markets that may affect the availability and cost of credit to us, our customers or our suppliers; and
|
●
|
the other factors set forth or incorporated by reference under “Risk Factors” in our 2010 Form 10-K.
|
Exhibit No.
|
Title
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification of Chief Executive Officer pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification of Chief Financial Officer pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101
|
Interactive Data Files providing financial information from the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 in XBRL (eXtensible Business Reporting Language). Pursuant to Regulation 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, and are otherwise not subject to liability.
|
|
REGISTRANT:
|
|||
THERAGENICS CORPORATION
|
|||
Date: November 10, 2011
|
By:
|
/s/ M. Christine Jacobs
|
|
M. Christine Jacobs
Chief Executive Officer
|
Date: November 10, 2011
|
By:
|
/s/ Francis J. Tarallo
|
|
Francis J. Tarallo
Chief Financial Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Theragenics Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: November 10, 2011
|
By:
|
/s/ M. Christine Jacobs
|
M. Christine Jacobs
|
||
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Theragenics Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: November 10, 2011
|
By:
|
/s/ Francis J. Tarallo
|
Francis J. Tarallo
|
||
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods referred to in the Report.
|
Date: November 10, 2011
|
By:
|
/s/ M. Christine Jacobs
|
M. Christine Jacobs
|
||
Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods referred to in the Report.
|
|
|
|
Date: November 10, 2011
|
By:
|
/s/ Francis J. Tarallo
|
Francis J. Tarallo
|
||
Chief Financial Officer
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Per Share data | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Trade accounts receivable, allowance | $ 2,753 | $ 2,413 |
Common stock, authorized | 100,000 | 100,000 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, issued | 33,974 | 33,651 |
Common stock, outstanding | 33,974 | 33,651 |
Document and Entity Information | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Nov. 04, 2011 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2011 | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | TGX | |
Entity Registrant Name | THERAGENICS CORP | |
Entity Central Index Key | 0000795551 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 33,990,537 |
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SHARE-BASED COMPENSATION | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION |
NOTE F – SHARE-BASED COMPENSATION
Stock Options
During
the nine months ended September 30, 2011, we granted 423,500 stock
options (with a grant date fair value of $1.15 per share) to
executive officers in connection with our long-term incentive
compensation programs. The stock options vest ratably
over four years. The exercise price of the stock options
granted was $1.71 per share, which is equal to the market price of
the underlying common stock on the date of grant. The
grant date fair value of the stock options was estimated using the
Black-Scholes options-pricing model using the following
assumptions:
Expected
stock price volatility is based on the historical volatility of our
stock price over the most recent period commensurate with the
expected option life. When determining
the expected life of stock options, we classify options into groups
for employees where relatively homogeneous exercise behavior is
expected. The vesting period of the options, the length of time
similar grants have remained outstanding in the past, and the
expected volatility of the stock are also considered. These factors
may cause the expected volatility and expected life of options
granted to differ from period to period.
We
recognize compensation expense for option awards with graded
vesting on a straight-line basis over the requisite service period
for each separately vesting portion of the award. Compensation cost
related to stock options totaled $95,000 and $273,000 for the three
and nine months ended September 30, 2011, respectively, and $68,000
and $204,000 for the three and nine months ended September 30,
2010, respectively. As of September 30, 2011, there was
approximately $451,000 of unrecognized compensation cost related to
non-vested stock options, which is expected to be recognized over a
weighted average period of approximately 2.0 years. No
stock options were exercised during the nine months ended September
30, 2011 or 2010.
Restricted Stock
A
summary of activity in non-vested restricted stock awards during
the first nine months of 2011 follows (shares in
thousands):
Fair
value of restricted shares granted to employees and directors is
based on the fair value of the underlying common stock at the grant
date. Compensation expense related to restricted stock
totaled approximately $101,000 and $279,000 for the three and nine
months ended September 30, 2011, respectively, and $66,000 and
$191,000 for the three and nine months ended September 30, 2010,
respectively. As of September 30, 2011, there was approximately
$472,000 of unrecognized compensation cost related to the
restricted shares, which is expected to be recognized over a
weighted average period of approximately 2.0 years. The
total fair value of restricted stock vested was approximately
$232,000 and $254,000 for the nine months ended September 30, 2011
and 2010, respectively.
|
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
COMMITMENTS AND CONTINGENCIES |
NOTE K – COMMITMENTS AND CONTINGENCIES
From
time to time we may be a party to claims that arise in the ordinary
course of business, none of which, in our view, is expected to have
a material adverse effect on our consolidated financial position or
our results of operations.
|
RECENTLY ISSUED ACCOUNTING STANDARD | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
RECENTLY ISSUED ACCOUNTING STANDARD |
NOTE B – RECENTLY ISSUED
ACCOUNTING STANDARD
In
June 2011, the Financial Accounting Standards Board
(“FASB”) issued an accounting standards update that
eliminates the current option to present the components of other
comprehensive income as part of the statement of changes in
shareholders’ equity. Under this statement, we can
elect to present the total of comprehensive income, the components
of net income, and the components of other comprehensive income in
a single continuous statement of comprehensive income or in two
separate but consecutive statements. This statement will
be effective for us in our first quarter 2012 Form 10-Q and will be
applied retrospectively to all prior periods
presented.
|
DISTRIBUTION AGREEMENTS AND MAJOR CUSTOMERS | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
DISTRIBUTION AGREEMENTS AND MAJOR CUSTOMERS |
NOTE H - DISTRIBUTION AGREEMENTS AND MAJOR CUSTOMERS
Distribution
Agreements
Our
brachytherapy seed business sells our TheraSeed®
device directly to healthcare providers and to third-party
distributors. Under our third-party distribution
agreements, we are the exclusive palladium-103 seed supplier for
the treatment of prostate cancer for each distributor, and each
distributor has the non-exclusive right to sell
TheraSeed®
in the U.S. and Canada. Certain agreements also provide
distributors with rights to distribute TheraSeed®
for the treatment of solid localized tumors other than prostate and
with rights to distribute to certain locations outside of North
America. Such applications (non-prostate and outside of
North America) have not been material. Our principal
non-exclusive distribution agreement is with C. R. Bard
(“Bard”). Our agreement with Bard (the “Bard
Agreement”) provides for automatic one year extensions of the
term, unless either party gives notice of its intent not to renew
at least twelve months prior to the end of the current term. The
current term expires December 31, 2012 and will be automatically
extended for one additional year unless either party gives notice
of its intent not to extend by December 31, 2011.
Core
Oncology (“Core”) became an additional non-exclusive
distributor of TheraSeed®
in January 2010. In February 2011, we terminated our
agreement with Core due to Core’s failure to satisfy its
financial obligation to us in accordance with the contractual terms
of the agreement. Core had
been attempting to become current with amounts due to
us. However, litigation filed against Core by a third
party in late January 2011 created what we viewed as an
unacceptable level of uncertainty surrounding Core’s ability
to satisfy their financial obligations to us for both current and
ongoing sales. Subsequent to termination of the
agreement, we have continued to sell to Core on a prepaid
basis.
Major
Customers
Sales
to Bard under the Bard Agreement represented approximately 26% and
28% of total brachytherapy seed segment revenue for the three and
nine months ended September 30, 2011, respectively, and 30% and 34%
of total brachytherapy seed segment revenue for the three and nine
months ended September 30, 2010, respectively. Our surgical
products segment also sells to Bard. Total consolidated
sales to Bard, including sales in our brachytherapy seed segment
and our surgical products segment, represented less than 10% of
consolidated revenue for both the three and nine months ended
September 30, 2011 and 11% and 12% for the three and nine
months ended September 30, 2010, respectively.
Accounts
receivable from Bard represented approximately 21% of brachytherapy
accounts receivable and less than 10% of consolidated accounts
receivable at September 30, 2011. At December 31, 2010, accounts
receivable from Bard under the Bard Agreement represented
approximately 19% of brachytherapy accounts receivable and 10% of
consolidated accounts receivable.
Sales
to Core in our brachytherapy segment totaled approximately 11% and
12% of total brachytherapy seed segment revenue for the three and
nine months ended September 30, 2011, respectively, and 14% and 13%
for the three and nine months ended September 30, 2010,
respectively. Accounts receivable due from Core on a
consolidated basis was $2.2 million and $2.1 million at September
30, 2011 and December 31, 2010, respectively. An
allowance for doubtful accounts was established for all unpaid
amounts due from Core at September 30, 2011 and December 31, 2010,
respectively.
|
SEGMENT REPORTING | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING |
NOTE I - SEGMENT REPORTING
We
are a medical device company serving the surgical products and
cancer treatment markets, operating in two business segments. Our
surgical products business consists of wound closure, vascular
access, and specialty needle products. Our brachytherapy seed
business produces, markets, and distributes “seeds”
primarily in the minimally invasive treatment of localized prostate
cancer. Our brachytherapy product line includes our
palladium-103 TheraSeed®
device and the iodine-125 based devices, I-Seed and
OncoSeed™, all of which are used primarily in the
minimally invasive treatment of localized prostate cancer and
services.
The
following tables provide certain information for these segments (in
thousands):
We
evaluate business segment performance based on segment revenue and
segment earnings from operations. Earnings
from operations by segment do not include interest expense,
interest income, other income and expense, or provisions for income
taxes. Intersegment eliminations are primarily for
surgical products segment sales transactions. Corporate
expenses are allocated based upon the relative revenue for each
segment.
Supplemental
information related to significant assets and liabilities follows
(in thousands):
Information
regarding revenue by geographic regions follows (in
thousands):
Foreign
sales are attributed to countries based on the location of the
customer. The license
fees attributed to Canada are with Nordion, a Canadian based
company, for the license of our TheraSphere®
product. Substantially all foreign product sales are
related to the surgical products segment. All of our
long-lived assets are located within the United
States.
|
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