## UNITED STATES

## SECURITIES AND EXCHANGE COMMISSION

## WASHINGTON, D.C. 20549

## FORM 10-Q

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
         SECURITIES EXCHANGE ACT OF 1934
           For the quarterly period ended June 30, 2001

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
         SECURITIES EXCHANGE ACT OF 1934
           FOR THE TRANSITION PERIOD FROM _________ TO _________

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)

| | 5203 Bristol Industrial Way              |           
| | ---------------------------------------- | ----------
|
| | Buford, Georgia                          | 30518     
| | (Address of principal executive offices) | (Zip Code)

Registrant's telephone number, including area code:(770) 271-0233

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

As of August 13, 2001 the number of shares of common stock, $.01 par value, outstanding was 29,657,078.

---

### THERAGENICS CORPORATION

### TABLE OF CONTENTS

| | PART I.  FINANCIAL INFORMATION:                                                  |         
| | -------------------------------------------------------------------------------- | --------
|
| | ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)                                        | Page No.
|
| | Balance Sheets - December 31, 2000 and June 30, 2001                             | 3       
|
| | Statements of Earnings for the three and six months ended June 30, 2000 and 2001 | 5       
|
| | Statements of Cash Flows for the six months ended June 30, 2000 and 2001         | 6       
|
| | Statement of Shareholder' Equity for the six months ended June 30, 2001          | 7       
|
| | Notes to Financial Statements                                                    | 8       
|
| | ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION             | 11      
| | AND RESULTS OF OPERATIONS                                                        |         
|
| | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK               | 15      
|
| | PART II.  OTHER INFORMATION                                                      |         
|
| | ITEM 1. LEGAL PROCEEDINGS                                                        | 15      
|
| | ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS                   | 15      
|
| | ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                        | 16      
|
| | SIGNATURES                                                                       | 17      

---

### THERAGENICS CORPORATION
BALANCE SHEETS
(UNAUDITED)
(Amounts in thousands, except per share data)

|ASSETS                                        
|----------------------------------------------
|                                              
|                                              
|                                              
|                                              
|CURRENT ASSETS                                
|Cash and short-term investments               
|Marketable securities                         
|Trade accounts receivable, net                
|Inventories                                   
|Deferred income tax asset                     
|Prepaid expenses and other current assets     
|TOTAL CURRENT ASSETS                          
|PROPERTY AND EQUIPMENT                        
|Buildings and improvements                    
|Machinery and equipment                       
|Office furniture and equipment                
|                                              
|Less accumulated depreciation and
amortization
|                                              
|                                              
|Land and improvements                         
|Construction in progress                      
|TOTAL PROPERTY AND EQUIPMENT                  
|                                              
|OTHER ASSETS                                  
|TOTAL ASSETS                                  

---

### THERAGENICS CORPORATION
 BALANCE SHEETS
 (UNAUDITED)
 (Amounts in thousands, except per share data)

|LIABILITIES & STOCKHOLDERS'EQUITY        
|-----------------------------------------
|                                         
|                                         
|                                         
|                                         
|                                         
|CURRENT LIABILITIES                      
|Accounts payable                         
|Trade                                    
|Construction                             
|Accrued salaries, wages and payroll taxes
|Income taxes payable                     
|Other current liabilities                
|TOTAL CURRENT LIABILITIES                
|LONG TERM LIABILITIES                    
|Deferred income taxes                    
|Other                                    
|TOTAL LONG-TERM LIABILITIES              
|STOCKHOLDERS' EQUITY                     
|Common stock, $.01 par value, 100,000    
|shares authorized; 29,579 and 29,629     
|issued and outstanding                   
|Additional paid-in capital               
|Retained earnings                        
|TOTAL STOCKHOLDERS' EQUITY               
|TOTAL LIABILITIES AND                    
|STOCKHOLDERS' EQUITY                     

The accompanying notes are an integral part of these statements.

---

### THERAGENICS CORPORATION
                                     STATEMENTS OF EARNINGS
                                           (UNAUDITED)
                             (Amounts in thousands, except per share data)

| |                                   |                    |               |                  |               |               | 
| | --------------------------------- | ------------------ | ------------- | ---------------- | ------------- | ------------- | 
| |                                   | Three Months Ended |               | Six Months Ended |              
| |                                   | June 30,           |               | June 30,         |              
| |                                   | 2000               | 2001          |                  | 2000          | 2001          | 
| | REVENUE                          
| | Product sales                     | $    11,499        | $    13,054   |                  | $    22,753   | $    26,578   | 
| | Licensing Fees                    | 25                 | 67            |                  | 50            | 110           | 
| |                                   | 11,524             | 13,121        |                  | 22,803        | 26,688        | 
|
| | COST OF SALES                     | 3,475              | 3,731         |                  | 6,777         | 7,634         | 
| |                                  
| | GROSS PROFIT                      | $      8,049       | $      9,390  |                  | $    16,026   | $    19,054   | 
| |                                  
| | OPERATING EXPENSES               
| | Selling, general & administrative | 1,642              | 2,487         |                  | 3,464         | 5,073         | 
| | Research & development            | 571                | 723           |                  | 919           | 1,545         | 
| |                                   | 2,213              | 3,210         |                  | 4,383         | 6,618         | 
| | EARNINGS FROM OPERATIONS          | 5,836              | 6,180         |                  | 11,643        | 12,436        | 
| |                                  
| | OTHER INCOME (EXPENSE)           
| | Interest income                   | 443                | 408           |                  | 898           | 976           | 
| | Interest and financing costs      | (37)               | (19)          |                  | (74)          | (78)          | 
| | Other                             | 13                 | -             |                  | 10            | (35)          | 
| |                                   | 419                | 389           |                  | 834           | 863           | 
| |                                  
| | EARNINGS BEFORE INCOME TAXES      | 6,255              | 6,569         |                  | 12,477        | 13,299        | 
| | Income tax expense                | 2,155              | 2,356         |                  | 4,383         | 4,731         | 
| | NET EARNINGS                      | $      4,100       | $      4,213  |                  | $      8,094  | $      8,568  | 
| |                                  
| | NET EARNINGS PER COMMON SHARE    
| | Basic                             | $        0.14      | $        0.14 |                  | $        0.27 | $        0.29 | 
| | Diluted                           | $        0.14      | $        0.14 |                  | $        0.27 | $        0.29 | 
| |                                  
| | WEIGHTED AVERAGE SHARES          
| | Basic                             | 29,527             | 29,611        |                  | 29,524        | 29,597        | 
| | Diluted                           | 30,021             | 30,033        |                  | 30,157        | 29,934        | 

The accompanying notes are an integral part of these statements.

---

### THERAGENICS CORPORATION
                                                STATEMENTS OF CASH FLOWS
                                            (UNAUDITED)
                                       (Amounts in thousands, except per share data)

| |                                                                 |                |              | 
| | --------------------------------------------------------------- | -------------- | ------------ | 
| |                                                                 | Six Months     |             
| |                                                                 | Ended June 30, |             
| |                                                                 | 2000           | 2001         | 
| | CASH FLOWS FROM OPERATING ACTIVITIES                           
| | Net Earnings                                                    | $      8,094   | $      8,568 | 
| | Adjustments to reconcile net earnings to                        |                |              | 
| | net cash provided by operating activities                      
| | Deferred income taxes                                           | 755            | 257         
| | Depreciation & amortization                                     | 2,497          | 2,876       
| | Provision for allowances                                        | (181)          | 298         
| | Stock based compensation                                        | 94             | 62          
| | Income tax benefit from options                                 | 23             | 94          
| | Loss on disposal of equipment                                   | -              | 52          
| | Deferred rent                                                   | (2)            | (1)         
| |                                                                
| | Changes in assets and liabilities:                             
| | Accounts Receivable                                             | 1,962          | (1,301)     
| | Inventories                                                     | 49             | 114         
| | Prepaid expenses and other current assets                       | 45             | (455)       
| | Other assets                                                    | (9)            | (95)        
| | Trade accounts payable                                          | 272            | (268)       
| | Accrued salaries, wages and payroll taxes                       | 209            | 193         
| | Income taxes payable                                            | (361)          | (2,866)     
| | Other current liabilities                                       | (97)           | 174         
| | Net cash provided by operating activities                       | 13,544         | 7,702       
| |                                                                
| | CASH FLOWS FROM INVESTING ACTIVITIES                           
| | Purchases and construction of property and equipment            | (6,792)        | (4,343)     
| | Purchases and maturities of marketable securities               | (7,218)        | 386         
| | Net cash used by investing activities                           | (14,010)       | (3,957)     
| |                                                                
| | CASH FLOWS FROM FINANCING ACTIVITIES                           
| | Proceeds from exercise of stock options and stock purchase plan | 64             | 129         
| | Net cash provided by financing activities                       | 64             | 129         
| |                                                                
| | NET CHANGE IN CASH AND                                         
| | SHORT-TERM INVESTMENTS                                          | (402)          | (3,874)     
| |                                                                
| | CASH AND SHORT-TERM INVESTMENTS AT                             
| | BEGINNING OF PERIOD                                             | 18,765         | 29,722      
| |                                                                
| | CASH AND SHORT-TERM INVESTMENTS AT                             
| | END OF PERIOD                                                   | $      18,363  | $    33,596 

---

### THERAGENICS CORPORATION
                                                STATEMENT OF SHAREHOLDERS' EQUITY
                                         FOR THE THREE MONTHS ENDED JUNE 30, 2001
                                                   (UNAUDITED)
                              (Amounts in thousands, except per share data)

| |                              | Common Stock | Additional |         |          |         
| | ---------------------------- | ------------ | ---------- | ------- | -------- | --------
| |                              | Number of    | Par value  | paid-in | Retained |         
| |                              | shares       | $0.01      | capital | earnings | Total   
| | BALANCE, December 31, 2000   | $29,579      | $296       | $60,005 | $59,862  | $120,163
| | Exercise of stock options    | 42           | -          | 93      | -        | 93      
| | Employee stock purchase plan | 8            | -          | 36      | -        | 36      
| | Stock-based compensation     | -            | -          | 62      | -        | 62      
| | Tax effect from options      | -            | -          | 94      | -        | 94      
| | Net earnings for the period  | -            | -          | -       | 8,568    | 8,568   
| | BALANCE, June 30, 2001       | $29,629      | $296       | $60,290 | $68,430  | $129,016

The accompanying notes are an integral part of these statements.

---

## THERAGENICS
CORPORATION
NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2001

(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, results of
operations, cash flows and changes in stockholders equity for the periods
presented. 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 financial statements and
disclosures are adequate to make the information 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, 2000,
included in the Form 10-K filed by the Company.

## NOTE B 
DISTRIBUTION AGREEMENTS AND MAJOR CUSTOMERS

The Company sells its
TheraSeed® product directly to health care providers and to third party
distributors. Currently, the Company has non-exclusive distribution agreements
in place with four companies. Sales to three of the four non-exclusive
distributors represented 62% of product revenue for the quarter ended June 30,
2001, and 54% of product revenue for the six months ended June 30, 2001, with
sales to each of the three non-exclusive distributors exceeding 10% of total
revenue for each period. Accounts receivable from the four non-exclusive
distributors represented 59% of accounts receivable at June 30, 2001, with each
non-exclusive distributor exceeding 10% of total accounts receivable.

## NOTE C -
CONSTRUCTION IN PROGRESS AND PURCHASE COMMITMENTS

The U.S. Department of
Energy (DOE) has granted Theragenics access to unique DOE technology for use in
production of isotopes, including Pd-103. This technology venture represents
part of a DOE initiative to redirect Cold War assets to peacetime use and
cushion the economic impact of U.S. Defense Department cutbacks. The Company is
constructing a facility in Oak Ridge, Tennessee to house the equipment,
infrastructure and work force necessary to support the production of isotopes,
including Pd-103, using this DOE technology. The Company expects to invest
approximately $25 million to $30 million through 2001 to build this
manufacturing and R&D facility. Construction costs of approximately $21.4
million have been incurred on this project as of June 30, 2001, and are included
in construction in progress.

---

## THERAGENICS
CORPORATION NOTES 
TO FINANCIAL STATEMENTS - CONTINUED
JUNE 30, 2001
(Unaudited)

## NOTE D -
LITIGATION

In January 1999, the Company
and certain of its officers and directors were named as defendants in certain
securities actions alleging violations of the federal securities laws, including
Sections 10(b), 20(a) and Rule 10b-5 of the Securities and Exchange Act of 1934,
as amended. These actions have been consolidated into a single action pending in
the U.S. District Court for the Northern District of Georgia. The complaint, as
amended, purports to represent a class of investors who purchased or sold
securities during the time period from January 29, 1998 to January 11, 1999. The
amended complaint generally alleges that the defendants made certain
misrepresentations and omissions in connection with the performance of the
Company during the class period and seeks unspecified damages. On May 14, 1999 a
stockholder of the Company filed a derivative complaint in the Delaware Court of
Chancery purportedly on behalf of the Company, alleging that certain directors
breached their fiduciary duties by engaging in the conduct that is alleged in
the consolidated federal class action complaint. The derivative action has been
stayed by the agreement of the parties. On July 19, 2000, the Court granted the
Companys motion to dismiss the consolidated federal class action complaint
for failure to state a claim against the Company, and granted the plaintiffs
leave to amend their complaint. On August 21, 2000, the plaintiffs filed a
second amended complaint. On March 30, 2001, the Court denied the defendants
motion to dismiss the plaintiffs second amended complaint, and on May 16,
2001 denied the Companys motion for reconsideration. The case is now in
the discovery phase. Management believes these charges are without merit and
intends to vigorously oppose the litigation, however, given the nature and early
stage of the proceedings, the ultimate outcome of the litigation cannot be
determined at this time. Accordingly, no provision for any liability that might
result from this litigation has been made. The Company maintains insurance for
claims of this general nature.

---

## Item 2.
Managements Discussion and Analysis of Financial Condition and Results
of Operations

Results of Operations

Revenues for the second
quarter of 2001 were $13.1 million, compared to $11.5 million for the second
quarter of 2000, an increase of $1.6 million, or 13.9%. Revenues for the six
months ended June 30, 2001 were $26.7 million, compared to $22.8 million for the
same period in 2000, an increase of $3.9 million, or 17.1%. During the first two
quarters of 2001, approximately 37% and 24% of unit sales, respectively, were
sold by Theragenics directly to customers, at higher prices than those sold to
third-party distributors. As a result, the average selling price of
TheraSeed® increased, accounting for the increases in revenue over the
comparable periods of 2000. Unit sales during the first quarter and first six
months of 2001 were essentially flat compared to the same periods in 2000.

During the first half of
2000 the Company was a party to a Sales and Marketing Agreement with Indigo
Medical, Inc. (Indigo) that granted Indigo exclusive worldwide marketing rights
to TheraSeed® for the treatment of prostate cancer. This agreement was
terminated effective January 5, 2001. Currently, the Company has non-exclusive
distribution agreements with four companies for the distribution of
TheraSeed®. Several customers that had been purchasing from Indigo now
purchase directly from Theragenics, while many other former Indigo customers are
purchasing TheraSeed® from Theragenics non-exclusive distributors.
Management expects these non-exclusive distributors to continue to aggressively
market to the former Indigo customers, and expects the percentage of direct
sales of TheraSeed® units by the Company, and accordingly, its average
revenue per TheraSeed® unit, to decline. Direct sales to customers declined
to 24% of unit sales in the second quarter of 2001 from 37% in the first
quarter, and the Company expects that direct sales to customers could eventually
decline to 10% of unit sales.

Based on the importance of
third-party reimbursement to all providers of healthcare products and services,
Theragenics, like many others, closely monitors reimbursement of healthcare
costs. The U.S. Congress and the Health Care Financing Administration (HCFA)
frequently consider reforms that provide for reductions in Medicare spending and
prospective payment reform on healthcare purchasing levels and payment streams.
Due to the significance of these actions on revenue streams, management expects
that it, along with its non-exclusive distributors, will continue to monitor the
activities of the U.S. Congress and HCFA as they relate to Medicare and
prospective payments. Unfavorable changes in reimbursement for the
Companys TheraSeed® implant would adversely affect prices of
TheraSeed® and the Companys revenue stream.

At any point in time,
management of Theragenics and/or its non-exclusive distributors may change their
respective pricing policies for TheraSeed® in order to take advantage of
market opportunities or respond to competitive situations. Responding to market
opportunities and competitive situations could have an adverse effect on the
prices of TheraSeed®, while failure to do so could adversely affect market
share and volumes.

Cost of sales was $3.7
million during the second quarter of 2001, resulting in a gross profit margin of
71.6%, compared with cost of sales of $3.5 million and a gross profit margin of
69.8% during the second quarter of 2000. For the first half of 2001, cost of
sales was $7.6 million, resulting in a gross profit margin of 71.4%, compared
with cost of sales of $6.8 million and a gross profit margin of 70.3% during the
first half of 2000. Fourteen cyclotrons were in operation during the 2001
periods, while eleven cyclotrons were in operation during the first quarter of
2000, and thirteen cyclotrons were in operation during the second quarter of
2000. Cost of sales increased in the 2001 periods due to the increase in
depreciation and operating costs related to the additional cyclotrons in
operation during the 2001 periods. Maintenance expenses also increased during
the six months ended June 30, 2001 compared to the same period in 2000.

Selling, general and
administrative (SG&A) expenses were $2.5 million, or 19.0% of
revenue, during the second quarter of 2001, compared to $1.6 million, or 14.2%
of revenue, during the second quarter of 2000, an increase of $900,000 or 56.3%.
For the first half of 2001 SG&A expenses were $5.1 million, or 19.0% of
revenue, compared to $3.5 million, or 15.2% of revenue, during the first half of
2000, an increase of $1.6 million, or 45.7%. The increases in the 2001 periods
were primarily due to an increase in advertising, marketing, customer service
and cancer information expenses. These expenses were borne by Indigo under the
terms of the Indigo Agreement during the 2000 periods. Additionally, bad debt
expense increased, as the Company increased its allowance for doubtful accounts
in recognition of both the move to direct sales and the lack of collection
experience with the new non-exclusive distributors. Finally, compensation and
benefits, and start up expenses associated with the Companys PSP Project
(see Liquidity and Capital Resources below), also increased
during the 2001 periods.

The Company continues to
expect that marketing expenses will increase on a year over year basis during
2001 as it supports its brand, and seeding versus other treatment
options, in an attempt to increase demand for TheraSeed® implants. It is
expected that this support will take the form of TheraSeed® brand
advertising to consumers and physicians, clinical studies aimed at showing the
superiority of TheraSeed® implants in the treatment of prostate cancer,
technical field support to TheraSeed® customers and other customer service
and patient information activities.

Research and development
(R&D) expenses increased to $723,000, or 5.5% of revenue, in the second
quarter of 2001, from $571,000, or 5.0% of revenue, in the second quarter of
2000. R&D expenses also increased during the first half of 2001, to $1.5
million, or 5.8% of revenue in 2001 from $900,000, or 4.0% or revenue, in 2000.
The increase in R&D expenses was a result of the Companys R&D
initiatives, including restenosis studies carried out by the Atlanta
Cardiovascular Research Institute (see below), and development efforts to
improve the Companys proprietary production processes. The Companys
research and development initiatives are intended to expand the application of
Pd-103 to other oncological and non-oncological uses, and explore options for
using the Companys expertise and capabilities in other areas. Management
plans to continue to increase efforts in research and development as its
initiatives to diversify move forward and expects R&D expenditures to
increase to as much as 7.5% of revenue in 2001. However, R&D spending is
dependent on the complex scheduling of research and development activities in
progress as well as the pursuit of other appropriate opportunities as they
arise. Accordingly, R&D expenses may fluctuate significantly from period to
period.

As part of its R&D
initiatives, the Company has an agreement with the Atlanta Cardiovascular
Research Institute (ACRI) to conduct pre-clinical animal studies addressing the
use of Pd-103 for the prevention of restenosis. Restenosis is the reclosing of
arteries that often occurs after coronary angioplasties. It is estimated that
nearly one-third of the 650,000 coronary angioplasties performed in the United
States each year fail or restenose within the first few months of the operation.
In the first phase of the study, which began in April 2000, the Company
delivered catheter-based Pd-103 devices to ACRI to demonstrate the effectiveness
of Pd-103 in inhibiting restenosis-like changes in pig coronary arteries after
balloon angioplasty. The preliminary data from Phase I of the study, reported in
August 2000, showed that the inhibitory effects of Pd-103 are similar to that of
other emitters, both beta and gamma, with efficacy possibly achieved with a
lower dose. At one month follow up, Phase I of the study suggested that use of
the Companys proprietary Pd-103 source, TheraSource, may allow for a
more rapid healing of a treated vessel wall compared to other isotopes currently
in use. Faster healing may lower the risk of late thrombosis or blood clotting.
If further studies continue to demonstrate more rapid healing, it could be a
significant advantage for TheraSource, reducing the dangers of blood clots
and the need for anticoagulant treatment. Based on the results of the studies
thus far, the Company is continuing its pre-clinical animal studies, and expects
longer-term data to be available later in 2001.

During the second quarter
of 2001, the Company met with representatives of the U.S. Food and Drug
Administration (FDA) to present the results of the pre-clinical animal studies,
discuss further pre-clinical studies planned, and discuss the requirements and
timing on proceeding with human clinical studies using TheraSource. The
Company is planning to enter human trials for coronary in-stent restenosis in
late 2001 or early 2002. However, the commencement and completion of any human
trials will be dependent upon receiving successful results from the ongoing
additional pre-clinical animal studies, the submission and approval of an
Investigational Device Exemption by the FDA, and evaluation of potential
competing forms of treatment.

Other R&D efforts are
also underway, including the use of Pd-103 in treating the wet form of
age-related macular degeneration. This disease is a degeneration of eyesight
that, in some cases, can lead to complete blindness. The Company has developed a
prototype device for macular degeneration animal studies and expects to begin
these studies during 2001.

Other income, comprised of
interest income and non-operating expenses, was $389,000 in the second quarter
of 2001 compared to $419,000 during the second quarter of 2000. For the first
half of the year, other income was $863,000 in 2001, compared to $834,000 in
2000. The Companys investments consist primarily of short-term cash
investments and high-credit quality municipal obligations, in accordance with
the Companys investment policies. While additional funds were available
for investment during the 2001 periods, the interest rate environment during
2001 has reduced the effective returns on a significant portion of the
Companys investments. Funds available for investment have and will
continue to be utilized for the Companys current and future expansion
programs and research and development activities. As funds continue to be used
for these programs and activities, and as interest rates continue to change,
management expects other income to fluctuate accordingly.

The Companys
effective income tax rate was approximately 36% for the quarter and six months
ended June 30, 2001, compared to approximately 35% for the 2000 periods. This
increase is a result of a reduction in tax credits generated by the
Companys investments in its expansion projects and research activities
during 2001. The Companys income tax rate in each period is lower than the
statutory rates primarily due to the recognition of tax credits generated by the
Companys investments in its expansion projects and research activities,
and tax-exempt interest income.

Liquidity and Capital Resources

The Company had cash,
short-term investments and marketable securities of $48.7 million at June 30,
2001, compared to $45.2 million at December 31, 2000. Marketable securities
consist primarily of short-term cash investments and high-credit quality
municipal obligations, in accordance with the Companys investment
policies. The increase in cash, short-term investments and marketable securities
was a result of cash generated by operations, partially offset by capital
expenditures. Working capital was $57.9 million at June 30, 2001, compared to
$49.9 million at December 31, 2000. The Company also has an Unsecured Credit
Agreement with a financial institution that provides for maximum borrowings of
$40.0 million under two lines of credit, and an additional uncommitted $10.0
million line of credit. No borrowings were outstanding under the Unsecured
Credit Agreement as of June 30, 2001.

Cash generated by
operations was $7.7 million and $13.5 million during the first half of 2001 and
2000, respectively. Cash generated from operations consists of net earnings plus
non-cash expenses such as depreciation, amortization and deferred income tax
expense. Depreciation and amortization increased to $2.9 million in the first
half of 2001 from $2.5 million in the first half of 2000. The increase in
depreciation and amortization was primarily a result of the increase in the
number of cyclotrons that were operational during 2001. Additionally, $1.3
million in cash was absorbed by an increase in accounts receivable during the
first half of 2001, as the Companys accounts receivable base changed as a
result of its direct to customer sales and non-exclusive distribution
agreements. In the first half of 2000, a decrease in accounts receivable
generated $2.0 million as Indigo paid its 1999-year end revenue sharing balance.
$2.9 million was also utilized to pay income taxes in the first half of 2001,
compared to $361,000 in the first half of 2000.

The Companys primary
use of cash in the first half of 2001 and 2000 related to capital spending to
increase manufacturing capacity. Capital expenditures totaled $4.3 million and
$6.8 million during the first half of 2001 and 2000, respectively. The Company
expects that the significant portion of capital expenditures in 2001 will relate
to its DOE Project (see below).

The U.S. Department of
Energy (DOE) has granted Theragenics access to unique DOE technology, known as
the Plasma Separation Process (PSP), for use in production of isotopes,
including Pd-103 (the PSP Project). This technology venture
represents part of a DOE initiative to redirect Cold War assets to peacetime use
and cushion the economic impact of U.S. Defense Department cutbacks. The Company
expects that the use of the PSP technology could significantly increase its
Pd-103 capacity and allow for expanded use of Pd-103 and TheraSeed® beyond
treatment of prostate cancer to new medical applications. The Company also
believes that the PSP Project may allow it to explore options for applying this
technology to other uses, including the production of isotopically engineered
materials for use in medical and non-medical applications, though there are no
assurances that this will be achieved. The Company is constructing a facility in
the Oak Ridge, Tennessee area to house the equipment, infrastructure and work
force necessary to support the production of isotopes, including Pd-103, using
this DOE technology. Construction costs of approximately $21.4 million have been
incurred on the PSP Project through June 30, 2001, and the Company expects to
additionally invest between $3.6 million and $8.6 million through 2001 to
complete this manufacturing and R&D facility.

The PSP Project is expected
to become operational in the second half of 2001, though no revenues are
expected to be generated from the PSP Project in 2001. Accordingly, the PSP
Project is expected to increase operating expenses by up to $1.0 million in the
second half of 2001. Additionally, costs to be incurred in the production of
stable isotopes could require an investment in inventory of up to $5.0 million.
This inventory investment could be significantly less, depending upon the type
of isotope produced.

As part of the PSP Project,
the Company has leased land in the Oak Ridge, Tennessee area and equipment
previously used by the government to produce isotopes. As a result of the
sensitive nature of the equipment, the specialized technology involved and the
restrictions on access to unique DOE-operated facilities, the Company has
contracted with the DOEs primary contractor for the Oak Ridge government
installation to handle certain technical and operational services that are
critical to the project, including moving, reassembling and recommissioning
equipment currently in storage, designing and fabricating new parts and
modifications to the equipment and DOE facilities; and operating and providing
ongoing access to the DOE facilities. The success of the project is dependent on
the continued cooperation of the DOE and its primary contractor, which could be
adversely affected by future changes in governmental program priorities and
funding. If the equipment cannot be moved and recommissioned successfully, if
there are problems with the operation or modification of the DOE-operated
facilities, or if unforeseen challenges arise, the project may not be successful
or the costs or timeliness associated with the project could exceed current
estimates. Additionally, as a result of the sensitive nature of the PSP
equipment and the specialized technology involved, the DOE can terminate the
Companys access in the event of national emergency or in the interest of
national defense, or require the Company to perform work involving programmatic
use of the technology for the DOE in connection with carrying out its
governmental mission. The Company would be entitled to compensation in the event
of termination in connection with national emergency or defense or for
programmatic use of the technology for the DOE.

In addition to using cash
to fund the PSP Project in 2001, the Company expects that R&D spending will
continue to increase. Pre-clinical animal studies addressing the use of Pd-103
for the prevention of restenosis are underway, and the Company is working toward
beginning human clinical trials in late 2001 or early 2002. Other R&D
activities are also occurring (see Results of Operations,
above). The Company expects that R&D expense spending may total up to
approximately 7.5% of revenue in 2001, but could vary depending on the
scheduling and progress of R&D activities as well as the pursuit of
currently unforeseen opportunities.

Cash provided by financing
activities was $129,000 and $64,000 in the first half of 2001 and 2000,
respectively, consisting of cash proceeds from the exercise of stock options and
the Companys Employee Stock Purchase Plan.

The Company believes that
current cash and investment balances, cash from future operations and credit
facilities, will be sufficient to meet its currently anticipated working capital
and capital expenditure requirements. In the event additional financing becomes
necessary, management may choose to raise those funds through other means of
financing as appropriate.

Forward Looking and Cautionary Statements

This document contains
certain forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 including, without limitation, statements
regarding sales, marketing and distribution efforts, sales mix, effectiveness of
non-exclusive distribution agreements, pricing for TheraSeed®, future cost
of sales, R&D efforts and expenses, inventory investment, SG&A expenses,
other income, timing and ultimate outcome of the Companys activities in
restenosis, macular degeneration and other diversification efforts, potential
new products and opportunities, the PSP Project, 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 research and development
activities, including animal studies and clinical trials related to new
products, risks associated with new product development cycles, effectiveness
and execution of marketing and sales programs of Theragenics and its
non-exclusive distributors, potential costs and delays in capacity expansion and
start-up, (especially as it relates to the PSP Project), the actual start-up for
the PSP Project, potential changes in product pricing and competitive
conditions, continued acceptance of TheraSeed® by the market, execution and
effectiveness of competitors, management of growth, acceptance and efficacy of
Pd-103 for other applications, adverse changes in governmental program
priorities and budgetary funding by the relevant governmental authorities,
potential costs and delays in the startup and refinement of technology and
related equipment, potential equipment failure, potential inability to obtain,
construct or install necessary parts or modifications to production equipment or
facilities, government regulation of the therapeutic radiological pharmaceutical
and device business, and potential changes in third-party reimbursement. All
forward looking statements and cautionary statements included in this document
are made as of the date hereby 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.

## Item 3.
Quantitative and Qualitative Disclosures About Market Risk

The Companys market
risk exposure related to market risk sensitive financial instruments is not
material. As of June 30, 2001, there were no outstanding borrowings under the
Companys Unsecured Credit Agreement.

## PART II. OTHER
INFORMATION

## Item 1. Legal
Proceedings.

See Note D to the
Companys financial statements included in Item 1 of this report, which is
incorporated by reference hereby.

## Item 4.
Submission of Matters to a Vote of Securities Holders

(a) The annual meeting of shareholders was held on May 8, 2001.

(b) M. Christine  Jacobs and Orwin L. Carter,  Ph.D.  were reelected to the board of
                     directors and will serve for a three-year term. Ms. Jacobs received  23,252,293  votes for her
                     election with 2,163,936  withholding  authority,  and Mr. Carter received
                     24,611,939 votes for his election with 804,290 withholding authority.

(c) The appointment of
Grant Thornton LLP as independent accountants for the Company
     for the fiscal year ending December 31, 2001 was approved by a vote of 25,196,584
     shares for, 154,347 shares against and 65,298 shares abstaining.

## Item 6.
Exhibits and Reports on Form 8-K.

(a) No reports on Form 8-K
were filed during the quarter ended June 30, 2001.

---

#### SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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                  
| | Chief Executive Officer              
| |                                      
| | By:/s/ Bruce W. Smith                
| | Bruce W. Smith                       
| | Treasurer and Chief Financial Officer

Dated: August 13, 2001