Theragenics(R) Reports Record Annual Revenue with 2007 Results

Theragenics Corporation® (NYSE: TGX), a medical device company serving the prostate cancer treatment and surgical products markets, today announced consolidated financial results for the fourth quarter and year ended December 31, 2007. Consolidated revenue for the quarter was $15.2 million compared to $14.8 million in the fourth quarter of 2006, an increase of 3%. For the year, consolidated revenue was $62.2 million, the highest annual revenue in the Company’s history, compared to $54.1 million in 2006, an increase of 15%. Net income for the quarter was $1.2 million, or $0.03 per diluted share, compared to net income of $4.0 million, or $0.12 per diluted share in the fourth quarter of 2006. For the year, net income was $5.6 million, or $0.17 per diluted share, compared to net income of $6.9 million, or $0.21 per diluted share in 2006. Results for the 2006 periods include the results of Galt Medical from August 2, 2006, the date Galt was acquired by Theragenics. The 2006 periods included the release of a deferred tax asset valuation allowance of $2.1 million in the fourth quarter and $3.6 million for the year, which significantly reduced the effective income tax rates for those periods. The fourth quarter of 2007 includes a $500,000 write down to the value of the Company’s Oak Ridge, Tennessee idled building, which has been shut down and held for sale since August 2005. Excluding the effect of the release of the deferred tax asset valuation allowance and the write down of the asset held for sale, pro forma earnings per share was $0.04 in the fourth quarter of 2007 compared with $0.06 per share in 2006, and $0.18 per share for the year ended December 31, 2007 compared to $0.10 in 2006. "We have just completed an exceptional year,” stated M. Christine Jacobs, Chairman & CEO. "We recorded our highest annual revenue ever, and we are stronger and more diversified than ever. Forty-six percent of our consolidated revenue was generated by our surgical products business, and both our surgical products and brachytherapy businesses continue to be profitable. Our balance sheet gives us flexibility going forward and our diversification strategy continues to deliver.” Ms. Jacobs continued, "On another positive note, the recent passing of the Medicare, Medicaid and SCHIP Extension Act of 2007, will ensure current reimbursement levels for brachytherapy seeds through June 30, 2008. This is good for patients, the procedure, the industry and Theragenics’ brachytherapy business. Looking forward, we intend to maintain our leadership position in the brachytherapy industry while investing for growth in our surgical products business. We are also actively pursuing continued growth and diversification through acquisitions. We are excited about our prospects in 2008 and beyond, which are supported by the financial flexibility provided by our diversified operations and strong 2007 results. These factors are especially important given the uncertainties existing in the U.S. economy and credit markets today. We intend to continue the momentum we have established.” Tables I and II to this press release contain condensed consolidated statements of earnings and balance sheets. Revenue and operating income by segment excluding special items are summarized in Tables III and IV, respectively. Tables V and VI include reconciliations of GAAP reported revenue to pro forma revenue excluding special items by segment, and GAAP reported earnings per share to pro forma earnings per share excluding the release of the deferred tax asset valuation allowance and write down of asset held for sale. Table VII includes a reconciliation of GAAP reported net earnings to earnings before interest, taxes, depreciation and amortization (EBITDA) excluding special items. Theragenics will host a conference call today at 11:00 a.m. Eastern Time. To access the call, dial 800-538-9844 or 706-634-7274 and provide the conference ID 32599268. This call is also being broadcast live over the Internet, and a recording will be available for one month on the Company’s website. To access the webcast, log on to www.theragenics.com and select Investor Relations followed by selecting "Company Presentations”. You also can access a phone replay of the call until Midnight, February 14, 2008, by dialing 800-642-1687 or 706-645-9291 and providing the conference ID code: 32599268. Theragenics Corporation (NYSE: TGX) operates two business segments: its brachytherapy seed business and its surgical products business. The brachytherapy business manufactures and markets its premier product, the palladium-103 TheraSeed® device (www.theraseed.com) and I-Seed, an iodine-125 based device, which are used primarily in the minimally invasive treatment of localized prostate cancer. Its surgical products business (www.cpmedical.com and www.galtmedical.com) manufactures and distributes wound closure and vascular access products. Wound closure products include sutures, needles and other surgical products with applications in, among other areas, urology, veterinary, cardiology, orthopedics, plastic surgery and dental. Vascular access includes introducers and guidewires used in the interventional radiology, interventional cardiology and vascular surgery markets. For additional information, call Theragenics’ Investor Relations Department at (800) 998-8479 or visit www.theragenics.com. This press release contains non-GAAP financial measures used by Management in its analysis of the Company’s operating performance. The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact the overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company’s performance. Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company's reported GAAP results. This press release contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, the accuracy of which is necessarily subject to risks and uncertainties, including, without limitation, statements regarding future growth, opportunities and investments, and anticipated positive results in general. Actual results may differ materially due to a variety of factors, including, among other things, uncertainties related to the integration of acquired companies into the Theragenics organization, capitalization on opportunities for growth within the Surgical Products business, ability to recognize value from areas of shared expertise, risks and uncertainties related to competition within the medical device industry, development and growth of new applications within the markets for brachytherapy, wound closure, and vascular access and, more broadly, medical devices, competition from other companies within the brachytherapy, wound closure, vascular access and medical device markets, competition from other methods of treatment, new product development cycles, effectiveness and execution of marketing and sales programs, changes in product pricing, changes in costs of materials used in production processes, continued acceptance and demand of the Company’s products by the markets in which it operates, introduction and/or availability of competitive products by others, potential changes in third-party (including CMS) reimbursement, implementation of the new legislation by CMS, physician training, third-party distribution agreements, ability to execute on acquisition opportunities on favorable terms and successfully integrate any acquisitions, and other factors set forth from time to time in the Company’s Securities and Exchange Commission filings. All forward looking statements and cautionary statements included in this document are made as of the date hereof based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward looking statement or cautionary statement. TABLE I THERAGENICS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In thousands except per share data)     Three Months Ended Year Ended   12/31/07       12/31/06     12/31/07       12/31/06   Product sales $ 14,938 $ 14,630 $ 61,286 $ 53,076 License fees   245     162     924     1,020   Total revenue 15,183 14,792 62,210 54,096 Cost of sales   7,814     7,954     31,994     27,752   Gross profit 7,369 6,838 30,216 26,344 Operating expenses: Selling, general & administrative 4,879 4,674 19,131 19,951 Amortization of purchased intangibles 469 525 1,875 1,371 Research & development 265 181 1,365 805 Write down of asset held for sale 500 - 500 - Restructuring expenses - - - 369 Gain on sale of assets   -     -     -     (201 )   6,113     5,380     22,871     22,295   Operating income 1,256 1,458 7,345 4,049 Non-operating items Interest income 539 350 2,192 1,541 Interest expense (163 ) (170 ) (691 ) (419 ) Other   -     -     1     (18 )   376     180     1,502     1,104   Earnings before income taxes 1,632 1,638 8,847 5,153 Income tax expense (benefit)   472     (2,362 )   3,212     (1,712 ) Net earnings $ 1,160   $ 4,000   $ 5,635   $ 6,865   Earnings per share: Basic $ 0.04 $ 0.12 $ 0.17 $ 0.21 Diluted $ 0.03   $ 0.12   $ 0.17   $ 0.21   Weighted average shares: Basic 33,108 33,041 33,103 32,452 Diluted 33,262 33,125 33,299 32,540 TABLE II THERAGENICS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)     Assets December 31, 2007 December 31, 2006 Cash, short-term investments & marketable securities   $ 48,789 $ 32,980 Trade accounts receivable 7,882 7,556 Inventories 7,644 7,433 Deferred income tax asset 1,664 7,798 Asset held for sale - 3,400 Prepaid expenses & other current assets   1,338   3,478 Total current assets 67,317 62,645 Property, plant & equipment, net 27,972 30,901 Goodwill 38,658 38,824 Other intangible assets 11,881 13,762 Asset held for sale 2,900 - Other long-term assets   93   112 Total assets $ 148,821 $ 146,244   Liabilities & Shareholders’ Equity Current liabilities – accounts payable & accrued expenses $ 4,989 $ 4,381   Contract termination liability 1,487 1,513 Long-term debt 7,500 7,500 Deferred income tax liability, long-term 1,369 6,148 Other long-term liabilities   857   561 Total long-term liabilities 11,213 15,722   Shareholders’ equity   132,619   126,141 Total liabilities & shareholders’ equity $ 148,821 $ 146,244   TABLE III THERAGENICS CORPORATION AND SUBSIDIARIES REVENUE BY SEGMENT EXCLUDING SPECIAL ITEMS (Unaudited) (In thousands)     Three Months Ended Dec. 31, 2007   Three Months Ended Dec. 31, 2006 Brachy- therapy     Surgical products     Interseg. elim.     Consolidated Brachy- therapy     Surgical products     Interseg. elim.     Consolidated Revenue, U.S. GAAP $7,844 $7,398 $(59) $15,183 $8,014 $6,798 $(20) $14,792     Year Ended Dec. 31, 2007 Year Ended Dec. 31, 2006 Brachy- therapy Surgical Products Interseg. elim. Consolidated Brachy- Therapy Surgical products Interseg. elim. Consolidated Revenue, U.S. GAAP $33,520 $28,896 $(206) $62,210 $34,880 $19,372 $(156) $54,096 Less: One-time license fee(1)   - - - - (400) - - (400) Revenue excluding special item(a)   $33,520 $28,896 $(206) $62,210 $34,480 $19,372 $(156) $53,696   (1) One-time license fee due upon licensee receiving the CE mark and European registration for TheraSphere(R). This registration was received in the third quarter of 2006 and is not expected to recur in future periods. The Company has adjusted the total revenue as determined under U.S. GAAP by this amount in order to provide a more meaningful comparison between the periods presented.   (a) Represents a non GAAP financial measure. See page 2 of this press release for information on non-GAAP financial measures.     TABLE IV THERAGENICS CORPORATION AND SUBSIDIARIES OPERATING INCOME BY SEGMENT EXCLUDING SPECIAL ITEMS (Unaudited) (In thousands)     Three Months Ended Dec. 31, 2007   Three Months Ended Dec. 31, 2006 Brachy- therapy     Surgical products     Interseg. elim.     Consolidated Brachy- therapy     Surgical products     Interseg. elim.     Consolidated Operating income, U.S. GAAP $68 $1,211 $(23) $1,256 $475 $978 $5 $1,458 Write down of asset held for sale(1) 500 - - 500 - - - - Operating income excluding special items(a) $568 $1,211 $(23) $1,756 $475 $978 $5 $1,458                                         Year Ended Dec. 31, 2007 Year Ended Dec. 31, 2006 Brachy- therapy Surgical products Interseg. elim. Consolidated Brachy- therapy Surgical products Interseg. elim. Consolidated Operating income, U.S. GAAP $3,403 $3,977 $(35) $7,345 $2,122 $1,955 $(28) $4,049 Write down of asset held for sale(1) 500 - - 500 - - - - One time license fees(2) (400) (400) Restructuring related items, net(3) - - - - 170 - - 170 Operating income excluding special items(a) $3,903 $3,977 $(35) $7,845 $1,892 $1,955 $(28) $3,819   (1) Write down of asset held for sale to estimated fair value less costs to sell.   (2) One-time license fee due upon licensee receiving the CE mark and European registration for TheraSphere(R). This registration was received in the third quarter of 2006 and is not expected to recur in future periods.   (3) Net expenses in the period resulting from 2005 restructuring activities. The restructuring was completed in the second quarter of 2006.   (a) Represents a non GAAP financial measure. See page 2 of this press release for information on non-GAAP financial measures.   TABLE V THERAGENICS CORPORATION AND SUBSIDIARIES PRO FORMA REVENUE BY SEGMENT (Unaudited) (In thousands)   The following unaudited pro forma summary combines the Company’s revenue with that of Galt as if the August 2006 acquisition had occurred at the beginning of the calendar year of the period presented.  An adjustment has also been made for certain non recurring revenue in 2006 in order to provide a more meaningful comparison of revenue between the periods presented.  This unaudited pro forma information is not intended to represent or be indicative of the Company’s consolidated results of operations or financial condition that would have been reported had the acquisition been completed as of the beginning of the calendar year presented, and should not be taken as indicative of the Company’s future consolidated results of operations or financial condition.     Three Months Ended Dec. 31, 2007   Three Months Ended Dec. 31, 2006 Brachy- Therapy     Surgical Products     Interseg. elim.     Consolidated Brachy- therapy     Surgical products     Interseg. elim.     Consolidated Revenue, U.S. GAAP $7,844 $7,398 $(59) $15,183 $8,014 $6,798 $(20) $14,792                                         Year Ended Dec. 31 2007 Year Ended Dec. 31, 2006 Brachy- Therapy Surgical Products Interseg. elim. Consolidated Brachy- therapy Surgical products Interseg. elim. Consolidated Revenue, U.S. GAAP $33,520 $28,896 $(206) $62,210 $34,880 $19,372 $(156) $54,096 One-time license fee(1)   - - - - (400) - - (400) Revenue in pre acquisition period(2) - - - - - 5,990 - 5,990 Pro forma revenue excluding special items(a) $33,520 $28,896 $(206) $62,210 $34,480 $25,362 $(156) $59,686   (1) One-time license fee due upon licensee receiving the CE mark and European registration for TheraSphere(R). This registration was received in the third quarter of 2006 and is not expected to recur in future periods.   (2) Revenue of Galt Medical Corp. for the period January 1, 2006 to August 1, 2006 (period prior to acquisition by Theragenics).   (a) Represents a non GAAP financial measure. See page 2 of this press release for information on non-GAAP financial measures.   TABLE VI THERAGENICS CORPORATION AND SUBSIDIARIES PRO FORMA EARNINGS PER SHARE EXCLUDING RELEASE OF DEFERRED TAX ASSET VALUATION ALLOWANCE AND WRITE DOWN OF ASSET HELD FOR SALE (In thousands)         Three Months Ended   Year Ended Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2007 Dec. 31, 2006 Net earnings, U.S. GAAP $1,160 $ 4,000 $5,635 $6,865 Less: Release of deferred tax asset valuation allowance - (2,147) - (3,625) Add: Write down of asset held for sale, net of tax effect 325 - 325 - Pro forma net earnings excluding effect of release of deferred tax asset valuation allowance and write down of asset held for sale(a) $1,485 $ 1,853 $5,960 $3,240       Three Months Ended   Year Ended Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2007 Dec. 31, 2006 Pro forma earnings per share excluding the effect of the release of the deferred tax asset valuation allowance and write down of asset held for sale(a) Basic $0.04 $0.06 $0.18 $0.10 Diluted $0.04 $0.06 $0.18 $0.10   Weighted average shares Basic 33,108 33,041 33,103 32,452 Diluted 33,262 33,125 33,299 32,540   (a) Represents a non GAAP financial measure.  See page 2 of this press release for information on non-GAAP financial measures.   TABLE VII THERAGENICS CORPORATION AND SUBSIDIARIES EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA), EXCLUDING SPECIAL ITEMS    (In thousands)     Three Months Ended Year Ended Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2007   Dec. 31, 2006 Net earnings, U.S. GAAP $ 1,160 $ 4,000 $ 5,635 $ 6,865 Income tax expense (benefit) 472 (2,362 ) 3,212 (1,712 ) Interest income (539 ) (350 ) (2,192 ) (1,541 ) Interest expense 163 170 691 419 Other non-operating income/expense   -     -     (1 )   18   Operating income 1,256 1,458 7,345 4,049 Depreciation and amortization 1,435 1,867 6,146 6,029 Stock-based compensation amortization   150     60     725     362   EBITDA (a) 2,841 $ 3,385 14,216 $ 10,440 Write down of asset held for sale (1) 500 - 500 One-time license fee (2) - - - (400 ) Restructuring related items, net (3)   -     -       170   EBITDA excluding special items (a) $ 3,341   $ 3,385   $ 14,716   $ 10,210       (1) Write down of asset held for sale to estimated fair value less costs to sell.   (2) One-time license fee due upon licensee receiving the CE mark and European registration for TheraSphere(R). This registration was received in the third quarter of 2006 and is not expected to recur.   (3) Net expenses in the period resulting from 2005 restructuring activities. The restructuring was completed in the second quarter of 2006.   (a) Represents a non GAAP financial measure. See page 2 of this press release for information on non-GAAP financial measures.