UNITED STATES SECURITIES AND EXCHANGE
COMMISSION  WASHINGTON, D.C. 20549

FORM 10-Q

( X )    
               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT
               OF 1934

For the quarterly
period ended June 30, 2003

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
 (State or other jurisdiction of  
 incorporation or organization)                                     | 58-1528626
  (I.R.S. Employer
Identification Number)
|5203 Bristol Industrial Way
                Buford, Georgia           
(Address of principal executive offices) | 30518
(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 ___

Indicate by check mark whether the
registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).   YES X   
 NO ___

As of August 14, 2003 the number of
shares of $.01 par value common stock outstanding was 29,926,862.

---

THERAGENICS
CORPORATION®

TABLE OF CONTENTS

|                                                                               |         
|------------------------------------------------------------------------------ | --------
|
|PART I. FINANCIAL INFORMATION:                                                 |         
|                                                                              
|ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)                                       | Page No.
|                                                                              
|Balance Sheets - June 30, 2003 and December 31, 2002                           | 3       
|                                                                              
|Statements of Earnings for the three and six months ended June 30, 2003 and    | 5       
|                                                                              
|Statements of Cash Flows for the six months ended June 30, 2003 and 2002       | 6       
|                                                                              
|Statement of Changes in Stockholders' Equity for the six months ended June30,  | 7       
|                                                                              
|Notes to Financial Statements                                                  | 9       
|                                                                              
|ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT | 15      
|                                                                              
|ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK             | 23      
|                                                                              
|ITEM 4. CONTROLS AND PROCEDURES                                                | 23      
|                                                                              
|PART II. OTHER INFORMATION                                                     | 23      
|                                                                              
|ITEM 1. LEGAL PROCEEDINGS                                                      | 23      
|                                                                              
|ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS                  | 23      
|                                                                              
|ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                       | 24      
|                                                                              
|SIGNATURES                                                                     | 25      



---



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

ASSETS

|                                                     | June 30 | December 31
|---------------------------------------------------- | ------- | -----------
|
|
|CURRENT ASSETS                                       |         |            
|Cash and short-term investments                      |         |            
|Marketable Securities                                |         |            
|Trade accounts receivable, less allowance of $137 in |         |            
|2003 and $147 in 2002                                |         |            
|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                                                 |         |            
|Construction in progress                             |         |            
|                                                     |         |            
|TOTAL PROPERTY AND EQUIPMENT                         |         |            
|                                                     |         |            
|Product line purchase deposit                        |         |            
|Long-term deferred income tax asset                  |         |            
|OTHER ASSETS                                         |         |            
|                                                     |         |            
|TOTAL ASSETS                                         |         |            
|                                                     |         |            

The accompanying notes are an
integral part of these statements.



---



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

LIABILITIES &
STOCKHOLDERS EQUITY

|                                          | June 30, | December 31,
|----------------------------------------- | -------- | ------------
|
|
|CURRENT LIABILITIES                       |          |             
|Trade accounts payable                    |          |             
|Accrued salaries, wages and payroll taxes |          |             
|Other current liabilities                 |          |             
|                                          |          |             
|TOTAL CURRENT LIABILITIES                 |          |             
|                                          |          |             
|LONG-TERM LIABILITIES                     |          |             
|Deferred income taxes                     |          |             
|Asset retirement obligation               |          |             
|Other liabilities                         |          |             
|                                          |          |             
|TOTAL LONG-TERM LIABILITIES               |          |             
|                                          |          |             
|STOCKHOLDERS' EQUITY                      |          |             
|Common stock, $.01 par value, 100,000     |          |             
|shares authorized; 29,927 and 29,760      |          |             
|issued and outstanding                    |          |             
|Additional paid-in capital                |          |             
|Retained earnings                         |          |             
|Accumulated other comprehensive income    |          |             
|                                          |          |             
|TOTAL STOCKHOLDERS' EQUITY                |          |             
|                                          |          |             
|TOTAL LIABILITIES AND                     |          |             
|STOCKHOLDERS' EQUITY                      |          |             
|                                          |          |             

The
accompanying notes are an integral part of these statements.

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

|                                            | June 30, | June 30,
|------------------------------------------- | -------- | --------
|
|REVENUE                                     |          |         
|Product sales                               |          |         
|Licensing fees                              |          |         
|                                            |          |         
|Total revenue                               |          |         
|COST OF SALES                               |          |         
|                                            |          |         
|GROSS PROFIT                                |          |         
|                                            |          |         
|OPERATING EXPENSES                          |          |         
|Selling, general & administrative           |          |         
|Research & development                      |          |         
|                                            |          |         
|                                            |          |         
|                                            |          |         
|                                            |          |         
|EARNINGS FROM OPERATIONS                    |          |         
|                                            |          |         
|OTHER INCOME (EXPENSE)                      |          |         
|Interest income                             |          |         
|Interest and financing costs                |          |         
|Other                                       |          |         
|                                            |          |         
|                                            |          |         
|                                            |          |         
|Earnings before income tax and cumulative   |          |         
|effect of change in accounting principle    |          |         
|Income tax expense                          |          |         
|                                            |          |         
|Earnings before cumulative effect of change |          |         
|in accounting principle                     |          |         
|Cumulative effect of change in accounting   |          |         
|principle                                   |          |         
|                                            |          |         
|NET EARNINGS                                |          |         
|                                            |          |         
|                                            |          |         

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

|                                        | June 30, | June 30,
|--------------------------------------- | -------- | --------
|
|NET EARNINGS PER COMMON SHARE           |          |         
|Basic:                                  |          |         
|Earnings before cumulative effect of    |          |         
|change in accounting principle          |          |         
|Cumulative effect of change in          |          |         
|accounting principle                    |          |         
|                                        |          |         
|Net earnings per common share (basic)   |          |         
|                                        |          |         
|Diluted:                                |          |         
|Earnings before cumulative effect of    |          |         
|change in accounting principle          |          |         
|Cumulative effect of change in          |          |         
|accounting principle                    |          |         
|                                        |          |         
|Net earnings per common share (diluted) |          |         
|                                        |          |         
|WEIGHTED AVERAGE SHARES:                |          |         
|Basic                                   |          |         
|Diluted                                 |          |         
|Net Earnings                            |          |         
|Comprehensive income (loss)             |          |         
|Unrealized gain/(loss) on securities    |          |         
|available for sale:                     |          |         
|                                        |          |         
|Total comprehensive income              |          |         
|                                        |          |         

---

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

|                                                                | Ended June 30, | 
|--------------------------------------------------------------- | -------------- | 
|
|CASH FLOWS FROM OPERATING ACTIVITIES:                           |                | 
|Net Earnings                                                    |                | 
|Adjustments to reconcile net earnings to                        |                | 
|net cash provided by operating activities                       |                | 
|Cumulative effect of change in accounting principle             |                | 
|Deferred income taxes                                           |                | 
|Depreciation & amortization                                     |                | 
|Provision for allowances                                        |                | 
|Stock-based compensation                                        |                | 
|Income tax benefit from options                                 |                | 
|Loss on disposal of equipment                                   |                | 
|Other Liabilities                                               |                | 
|Changes in assets and liabilities:                              |                | 
|Accounts receivable                                             |                | 
|Inventories                                                     |                | 
|Prepaid expenses and other current assets                       |                | 
|Other assets                                                    |                | 
|Trade accounts payable                                          |                | 
|Accrued salaries, wages and payroll taxes                       |                | 
|Other current liabilities                                       |                | 
|                                                                |                | 
|Net cash provided by operating activities                       |                | 
|CASH FLOWS FROM INVESTING ACTIVITIES                            |                | 
|Purchases and construction of property and equipment            |                | 
|Purchases and maturities of marketable securities               |                | 
|                                                                |                | 
|Net cash used by investing activities                           |                | 
|CASH FLOWS FROM FINANCING ACTIVITIES:                           |                | 
|Proceeds from exercise of stock options and stock purchase plan |                | 
|                                                                |                | 
|Net cash provided by financing activities                       |                | 
|NET CHANGE IN CASH AND                                          |                | 
|SHORT-TERM INVESTMENTS                                          |                | 
|CASH AND SHORT-TERM INVESTMENTS AT                              |                | 
|BEGINNING OF PERIOD                                             |                | 
|                                                                |                | 
|CASH AND SHORT-TERM INVESTMENTS AT                              |                | 
|END OF PERIOD                                                   |                | 
|                                                                |                | 

The accompanying notes are an
integral part of these statements.

---

THERAGENICS CORPORATION®STATEMENTS OF STOCKHOLDERS' EQUITYFOR THE SIX MONTHS ENDED June 30, 2003(UNAUDITED)(Amounts in thousands, except per share data)

|                                     |  |  |  |        | Accumulated |  
|------------------------------------ |  |  |  | ------ | ----------- | -
|
|
|
|BALANCE, December 31, 2002           |  |  |  | 29,760 |             | $
|Exercise of stock options            |  |  |  | 155    |             |  
|Employee stock purchase plan         |  |  |  | 12     |             |  
|Stock-based compensation             |  |  |  |        |             |  
|Unrealized gain (loss) on securities |  | 
|available for sale                   |  |  |  |        |             |  
|Tax effect from options              |  |  |  |        |             |  
|Net earnings for the period          |  |  |  |        |             |  
|                                     |  |  |  |        |             |  
|BALANCE, June 30, 2003               |  |  |  | 29,927 |             | $
|                                     |  |  |  |        |             |  

The accompanying notes are an
integral part of these statements.

---

THERAGENICS
CORPORATION®NOTES TO FINANCIAL
STATEMENTSJUNE 30, 2003(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 that 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 accounting principles generally accepted in the United States
of America 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, 2002, included in
the Form 10-K filed by the Company.

Certain amounts in prior period
financial statements have been reclassified to conform to the current periods
presentation.

NOTE B 
DISTRIBUTION AGREEMENTS AND MAJOR CUSTOMERS

The Company sells its TheraSeed®
directly to health care providers and to third party distributors. Theragenics also
distributes an iodine-125 based medical device directly to health care providers. During
the first quarter of 2003, the distribution agreement with one distributor was
discontinued upon notification of the acquisition of the distributor by C. R. Bard, also a
TheraSeed® distributor. In addition, during the second quarter of 2003,
Theragenics was notified that a current distributor acquired another TheraSeed®
distributor. Currently, the Company has non-exclusive distribution agreements in place
with two companies for the distribution of TheraSeed®. Sales to three non-exclusive
distributors represented approximately 82% of total product revenue for the quarter ended
June 30, 2003, with sales to two of the non-exclusive distributors, C. R. Bard and
Medi-Physics, Inc. (formerly d/b/a/ Nycomed Amersham and now part of Oncura, a company
formed by a merger of the brachytherapy business of Amersham plc and Galil Medical Ltd.),
each exceeding 10% of total revenue for the quarter and year-to-date. Accounts receivable
from the three non-exclusive distributors represented approximately 73% of accounts
receivable at June 30, 2003, with two of the three non-exclusive distributors, C. R. Bard
and Medi-Physics, Inc. (formerly d/b/a Nycomed Amersham and now part of Oncura, a company
formed by a merger of the brachytherapy business of Amersham plc and Galil Medical Ltd.)
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 (plasma separation process
or PSP) for use in production of isotopes, including palladium-103. The
Company has constructed a facility in Oak Ridge, Tennessee to house the equipment,
infrastructure and work force necessary to support the production of isotopes, including
palladium-103, using this DOE technology. The building and the PSP became operational
during the latter half of 2002. Additional equipment in the amount of $1.7 million has not
yet been placed in service and is recorded as construction-in-progress on the accompanying
balance sheet for the period ending June 30, 2003.

---

THERAGENICS
CORPORATION®NOTES TO FINANCIAL
STATEMENTS - CONTINUEDJUNE 30, 2003(Unaudited)

The Company diversified its product
line in 2003 with the purchase of the U. S. iodine-125 prostate brachytherapy business of
BEBIG Isotopen-und Medizintechnik GmbH (BEBIG), formerly distributed by Isotope Products
Laboratories (both subsidiaries of a publicly traded German company, Eckert & Ziegler
AG). The purchase gives Theragenics exclusive U.S. manufacturing and distribution
rights to an iodine-125-based medical device for the treatment of prostate cancer.
Theragenics also acquired BEBIGs assets related to this operation.
Non-exclusive rights to distribute TheraSeed® in Europe were granted to BEBIG as part
of the transaction. Progress payments will be made to BEBIG based upon completion of
pre-defined milestones. Therefore, the timing of all payments and subsequent delivery and
operation of the equipment may vary based on milestone completion. A total of
approximately $2.2 million in progress payments and professional fees has been paid
through June 30, 2003.

NOTE D 
CONTINGENCIES

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 and on March 30, 2001, the Court denied the defendants
motion to dismiss the plaintiffs second amended complaint. The Court also denied the
Companys motion for reconsideration. Subsequently, the court certified the class and
the parties commenced discovery. Discovery in the case is now complete, with the exception
of one expert witness deposition. Management believes these charges are without merit and
is opposing the litigation vigorously; however, given the nature and stage of the
proceedings, the ultimate outcome of the litigation cannot be determined at this time.
Accordingly, no provision has been made for any liability that might result from this
litigation.

---

THERAGENICS
CORPORATION®NOTES TO FINANCIAL
STATEMENTS - CONTINUEDJUNE 30, 2003(Unaudited)

NOTE E  ACCOUNTING
FOR STOCK-BASED COMPENSATION

The Company has four approved stock
option plans, which in aggregate cover up to five million shares of common stock. The
plans provide for the expiration of options ten years from the date of grant and require
the exercise price of the options granted to be at least equal to 100% of market value on
the date granted. Stock options become exercisable over a three  to five-year
vesting period.

In December 2002, the FASB issued
Statement No. 148, Accounting for Stock-Based Compensation  Transition and
Disclosure. FAS 148 amends FAS 123 Accounting for Stock-Based
Compensation to provide alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee compensation. In
addition, FAS 148 amends the disclosure requirement of FAS 123 to require more prominent
disclosures in both annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used on reported
results. The additional disclosure requirements of FAS 148 are effective for fiscal years
ending after December 15, 2002. The Company accounts for stock-based compensation for
employees under Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and elected the disclosure-only
alternative under SFAS No. 123, Accounting for Stock-Based Compensation.
No stock-based compensation cost is included in net earnings, as all options granted have
an exercise price equal to the market value of the stock on the date of grant. In
accordance with SFAS No. 148, Accounting for Stock Based
Compensation-Transition and Disclosure, the following table presents the effect on
net earnings and net earnings per share had compensation cost for the Companys stock
plans been determined consistent with SFAS No. 123 (in thousands, except per share
data):

|                                       | Three Months Ended | Six Months Ended
|-------------------------------------- | ------------------ | ----------------
|
|
|Net earnings, as reported              |                    |                 
|Less:  total stock-based compensation  |                    |                 
|expense determined under fair value    |                    |                 
|method for all stock options, net of   |                    |                 
|related income tax benefit             |                    |                 
|                                       |                    |                 
|Pro forma net earnings                 |                    |                 
|Basic net earnings per common share:   |                    |                 
|As reported                            |                    |                 
|Pro forma                              |                    |                 
|Diluted net earnings per common share: |                    |                 
|As reported                            |                    |                 
|Pro forma                              |                    |                 

---

THERAGENICS
CORPORATION®NOTES TO FINANCIAL
STATEMENTS - CONTINUEDJUNE 30, 2003(Unaudited)

Fair
value was estimated on the grant date using the Black-Scholes options-pricing model with
the following assumptions for options issued during second quarter ending June 30, 2003
and second quarter and six months ending June 30, 2002.

|                                | Three Months Ended |      | Six Months Ended
|------------------------------- | ------------------ | ---- | ----------------
|
|
|Expected dividend yield         |                    | 0.0  | %               
|Expected stock price volatility |                    | 75.5 | %               
|Risk-free interest rate         |                    | 3.4  | %               
|Expected life of option (years) |                    | 5.5  |                 
|                                |                    |      |                 

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NOTE F  ASSET
RETIREMENT OBLIGATIONS

In June 2001, the FASB issued Statement
of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations,
which is effective for the Companys 2003 fiscal year. Under Statement 143, a future
retirement obligation relating to future decommissioning costs of the Companys
equipment and buildings is recorded at present value by discounting the Companys
estimated future asset retirement obligation using the Companys estimated
credit-adjusted borrowing rate. The offset to the liability is capitalized as part of the
carrying amount of the related long-lived asset. The asset retirement obligation (ARO) has
been recorded in the accompanying balance sheet and will be adjusted to fair value over
the estimated useful lives of the assets as an accretion expense.

At January 1, 2003 the Company
adopted Statement 143 and recognized an initial ARO of approximately $478,000 and net
capitalized costs of $126,000. The impact of adopting the Statement was recognized as a
cumulative effect of change in accounting principle in the amount of $353,000 ($222,000
after taxes). The Company has recognized an increase in the ARO of approximately $15,000
representing the accretion expense and approximately $12,000 in amortization expense
related to the capitalized cost through the period ending June 30, 2003.

---

THERAGENICS
CORPORATION®NOTES TO FINANCIAL
STATEMENTS - CONTINUEDJUNE 30, 2003(Unaudited)

The pro forma effects of the application
of Statement 143 as if the Statement had been adopted on January 1, 2002 (rather than
January 1, 2003) are presented below:



|Pro forma amounts assuming the
accounting change is applied
retroactively net-of-tax: | Three months ended |  | Six months ended |     
|------------------------------------------------------------------------------------- | ------------------ |  | ---------------- | ----
|
|
|
|Net earnings                                                                          |                    |  | $                | 266 
|Basic and diluted net earnings per                                                    |                    | 
|common share                                                                          |                    |  | $                | 0.01
|                                                                                      |                    |  |                  |     



The pro forma asset retirement
obligation liability balances as if Statement 143 had been adopted on January 1, 2002
(rather than January 1, 2003) are as follows:

|(in thousands)                                  | Six months ended June 30,
|----------------------------------------------- | -------------------------
|
|Pro forma amounts of liability for asset        |                          
|retirement obligation at beginning of 2003      |                          
|Pro forma amounts of liability for asset        |                          
|retirement obligation at end of six months 2003 |                          
|                                                |                          



NOTE G  NEW
ACCOUNTING PRONOUNCEMENTS

In December 2002, the Emerging Issues
and Task Force (EITF) issued Issue 00-21, or EITF 00-21, for Revenue Arrangements
with Multiple Deliverables. EITF 00-21 provides guidance on determining whether a
revenue arrangement contains multiple deliverable items and if so, requires revenue be
allocated among the different items based on fair value. EITF 00-21 also requires that
revenue on any item in a revenue arrangement with multiple deliverables not delivered
completely must be deferred until delivery of the item is completed. The effective date of
EITF 00-21 for the Company will be July 1, 2003. The Company does not believe that the
adoption of EITF 00-21 will have an impact on its financial statements, as the
Companys revenue arrangements do not involve multiple deliverables.

In April 2003 the Financial
Accounting Standards Board issued Statement No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities, effective for contracts entered into or
modified after June 30, 2003, and hedging relationships designated after June 30, 2003.
Statement No. 149 clarifies the definition of a derivative, and is intended to result in
more consistent reporting of contracts as either freestanding derivative instruments
subject to

---

THERAGENICS
CORPORATION®NOTES TO FINANCIAL
STATEMENTS - CONTINUEDJUNE 30, 2003(Unaudited)

Statement No. 133 in its entirety,  or as hybrid  instruments with debt host contracts and embedded  derivative  features.  The Company
does not expect the effect of the adoption of this statement to be material.

In January 2003, the FASB issued FASB
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51. This Interpretation addresses the consolidation by business
enterprises of variable interest entities as defined in the Interpretation. The
Interpretation applies immediately to variable interests in variable interest entities
created after January 31, 2003. For public enterprises with a variable interest in a
variable interest entity created before February 1, 2003, the Interpretation applies to
that enterprise no later than the beginning of the first interim or annual reporting
period beginning after June 15, 2003. The application of this Interpretation requires
certain disclosures in financial statements issued after January 31, 2003 if it is
reasonably possible that the Company will consolidate or disclose information about
variable interest entities when the Interpretation becomes effective. Management has
evaluated this accounting standard and has determined no disclosure is necessary, as the
Company does not have an interest in variable interest entities.

NOTE H  REVENUE
RECOGNITION

Product sales represent orders for
the TheraSeed® and I-Seed devices. The implantable radiation devices produced
according to patient and procedure requirements are sold to third-party distributors, as
well as to direct customers. All revenues from product sales are recognized upon shipment
and are generally not returnable. Licensing fees are recognized in the period to which
they relate.



---

THERAGENICS
CORPORATION®Item 2.    Management's' Discussion and Analysis of Financial Condition and
               Results of Operations

Overview

Theragenics Corporation® is the
manufacturer of TheraSeed®, a rice-sized, FDA-cleared device used to solid localized
tumors, primarily prostate cancer, with a one-time, minimally invasive procedure.
Theragenics is the worlds leading producer of palladium-103, the radioactive
isotope that supplies the therapeutic radiation for its TheraSeed® implant.
Physicians, hospitals and other healthcare providers, primarily located in the United
States, utilize the TheraSeed® product. TheraSeed® has also been approved for
marketing throughout the member countries of the European Union by obtaining its CE
Mark. Sales of TheraSeed® in Europe have not been significant. The Company currently
sells its TheraSeed® implants directly to physicians and non-exclusive third-party
distributors.

Early in 2003 the Company diversified
its product line with the purchase of the U.S. iodine-125 prostate brachytherapy business
of BEBIG Isotopen-und Medizintechnik GmbH (BEBIG), formerly distributed by Isotope
Products Laboratories (both subsidiaries of a publicly traded German company, Eckert &
Ziegler AG). The purchase gives Theragenics exclusive U.S. manufacturing and
distribution rights to an FDA-cleared iodine-125-based medical device for the treatment of
prostate cancer. The Company also procured an automated production line that is expected
to become operational in 2004. Non-exclusive rights to distribute TheraSeed® in Europe
were granted to BEBIG as part of the transaction. The Company believes that the ability to
provide both palladium-103 and iodine-125 devices will enhance the Companys ability
to market to customers who seek a single source for both palladium-103 and iodine-125
brachytherapy seeds. The product line and equipment purchase will not affect the
Companys existing non-exclusive distribution agreements for TheraSeed®.

The Company has an active and ongoing
program targeted at diversifying its future revenue stream. As part of this program the
Company constructed a facility in the Oak Ridge, Tennessee area to house the equipment,
infrastructure and work force necessary to support the production of isotopes, including
palladium-103, using unique plasma separation process (PSP) technology being leased from
the U.S. Department of Energy. PSP technology is a method of separating relatively large
quantities of specific non-radioactive isotopes from specific elements. In the past the
PSP technology demonstrated the ability to produce material for the U.S. Government to
support nuclear power generation. The Company believes that the PSP technology enables
current and future feasibility runs designed to validate isotope usage in various markets
and industries in addition to possibly increasing the Companys manufacturing
capacity and allowing for expanded use of palladium-103 in other applications.

In July 2002 Theragenics signed
an agreement with an international nuclear services company to produce test quantities of
certain gadolinium isotopes for purchase by such company using the Companys PSP
technology. The gadolinium for the international nuclear services company, delivered
during the second quarter of 2003, was intended for a non-medical application. The
revenue, recognized in the second quarter of 2003, was immaterial to total revenue.

The Company recently entered into an
agreement with UT-Battelle, LLC (Battelle), a partnership between the University of
Tennessee and Battelle, which manages the Oak Ridge National Laboratory for the U. S.
Department of Energy. Under the terms of the agreement, feasibility runs will be performed
to validate the PSPs capabilities to produce specific isotopes of certain elements
in the rare earth group of elements. Battelle intends to evaluate the materials produced by the
PSP in experiments designed to determine their effectiveness as a fuel life extender for
nuclear power generation. This initial agreement will not have a material impact on
revenue or earnings, but the knowledge gained from the feasibility runs could provide
information that may determine future uses of the PSP.

In addition to feasibility runs and
isotope production, the PSP is capable of supplying palladium raw material that requires further
processing that is expected to be equivalent to production
from fifteen to twenty cyclotrons if necessary to support the ongoing research and
development (R&D) initiatives underway to foster the Companys diversification
program, such as the TheraP clinical trial.

Following the approval of the
Investigational Device Exemption granted by the U. S. Food and Drug Administration (FDA)
in August 2002 to initiate the TheraP clinical trial, Theragenics began a clinical
trial using a patented palladium-103 device early in 2003. The Companys device,
called the TheraSource Intravascular Brachytherapy System, is designed to prevent
restenosis or renarrowing of arteries following treatment of peripheral vascular disease
by percutaneous transluminal angioplasty. The trial was initiated at the Fuqua Heart
Center at Piedmont Hospital and St. Josephs Hospitals, both in Atlanta. A third
center is also under consideration for the study, to accelerate enrollment. In total, the
trial calls for 30 patients in up to three centers to be enrolled in order to study the
safety and feasibility of the system. Preliminary indications from the study are
encouraging, although the study is ongoing and conclusions cannot yet be reached.

Additionally, an animal pilot study
using palladium-103 in a prototype device designed for the treatment of age-related
macular degeneration (AMD), a disease that leads to loss of eyesight and in some cases
complete blindness, was completed early in 2002. Efforts continue toward the submission of
an Investigational Device Exemption (IDE) to the FDA to begin a trial evaluating the
safety and efficacy of a palladium-103 device for the treatment of AMD. Theragenics
management plans to accelerate these efforts and will incur research and development
expenditures based on these opportunities. As a result it is expected that research and
development expenditures will increase in future quarters.

The Company is also searching for,
reviewing and evaluating external opportunities for diversification in the form of joint
ventures, partnerships, and/or acquisitions of technologies, products or companies.

Results of Operations

Revenues for the second quarter of
2003 were $8.9 million, compared to $11.1 million for the second quarter of 2002, a
decrease of $2.2 million, or 19.1%. Revenues for the six months ended June 30, 2003 were
$20.1 million, compared to $22.7 million for the same period in 2002, a decrease of $2.6
million, or 11.4%. During the second quarter of 2003, unit sales of the TheraSeed®
product decreased approximately 21.3% from the second quarter of 2002 and decreased
approximately 12.7% during the first six months of 2003 compared to the same period in
2002. Revenues from distributors decreased approximately 21.7% in the second quarter 2003
as compared to the second quarter of 2002. As a result of the Companys direct sales
initiative in the first half of 2003, revenues from sales to direct customers were 20.4%
of total sales revenues in the second quarter of 2003 compared to 17.6% exclusively from
TheraSeed® sales in the same quarter of 2002. This increase is directly related to a
decrease in sales through distributors and also to the decrease in revenues from direct
customers of approximately 6.2% in the second quarter of 2003 compared to the same period
in 2002.

Currently, the Company has
non-exclusive distribution agreements in place with two companies for the distribution of
TheraSeed®. During the first and second quarters of 2003, distribution agreements with
two prior distributors were discontinued upon notification of their respective
acquisitions by an existing TheraSeed® distributor. Reduced sales to this distributor
(as compared to prior sales to such existing distributor combined with the distributors it
acquired) accounted for a significant portion of the sales decline.

In the second quarter of 2003, the
average selling price realized by TheraSeed® was consistent with the average selling
price realized in the second quarter of 2002. However, the Companys weighted average
unit selling price in the second quarter of 2003 was slightly lower than that in the
second quarter of 2002, due to the introduction in 2003 of the lower-priced I-Seed device.
The average unit sales price decrease combined with a decrease in unit volume sales
(TheraSeed® and I-Seed combined) of approximately 17.3% and 9.2% during the second
quarter and year to date 2003, respectively, compared to the same periods in 2002,
contributed to the total decrease in revenues.

Management believes that the
brachytherapy industry continues to be affected by the recent changes in Medicare
reimbursement, declining prices for iodine-125 and palladium-103 products and ongoing
consolidation in the industry, including the distributors of TheraSeed®. At any point
in time, the Company and/or its non-exclusive distributors may change their respective
pricing policies for the TheraSeed® or I-Seed (in the case of the Company) device in
order to take advantage of market opportunities to respond to competitive situations.
Responding to market opportunities and competitive situations could have an adverse effect
on the prices of the TheraSeed® or I-Seed device and could have a favorable effect or
prevent an unfavorable effect on market share and volumes. Conversely, the Company and its
non-exclusive distributors could individually and independently decide to maintain per
unit pricing under certain competitive situations that could adversely affect current or
potential market share and volumes.

Licensing fees revenue represents
licensing payments received for the Companys TheraSphere® technology. Such
licensing fees are not expected to become material in the foreseeable future.

Cost of sales was approximately $4
million during the second quarter of 2003, resulting in a gross profit margin of 55.8%,
compared with cost of sales of $3.7 million and a gross profit margin of 66.7% during the
second quarter of 2002. For the first half of 2003, cost of sales was $8.5 million,
resulting in a gross profit margin of 57.6%, compared with cost of sales of $7.3 million
and a gross profit margin of 67.7% during the first half of 2002. Costs associated with
the Oak Ridge facility and PSP project were capitalized for a portion of 2002. However,
the results reflect a decline in margins as expenses related to the Oak Ridge operations
in the amount of approximately $868,000 in the second quarter of 2003 and $1.8 million in
the first six months of 2003 are recognized in cost of sales. Also, direct costs related
to I-Seed sales contributed to the decrease in the gross margin in 2003. Direct costs
related to I-Seed production are expected to remain relatively high as a percentage of
revenue until the product line is produced in-house. The product line for I-Seed is
expected to be operational early in 2004. A portion of the increase in cost of sales as a
percentage of sales for the second quarter and six months ending June 30, 2003 compared to
the same periods in 2002, was due to the considerable fixed cost component of
Theragenics operations. The increases described above were partially offset by
material and labor transferred to support the ongoing research and development efforts in
the areas of peripheral vascular disease and macular degeneration (see
Overview above). Also, the cost of sales increases were partially offset by
the completion of depreciation during the first quarter of 2003 of the first of fourteen
cyclotrons placed in operation.

Selling, general and administrative
(SG&A) expenses were $3.2 million, or 36.1% of revenue, during the second quarter of
2003, compared to $3.6 million, or 32.3% of revenue, during the second quarter of 2002, a
decrease of $0.3 million or 9.5%. For the first half of 2003, SG&A expenses were $6.6
million, or 33% of revenue, compared to $6.7 million, or 29.3% of revenue, during the
first half of 2002, a minor decrease of approximately $39,000 or 0.6%. The decreases in
the 2003 periods, primarily in the second quarter of 2003 compared to the same period of
2002, were due to efficiencies realized, leading to reduced expenses, in advertising and
marketing activities in the Companys direct-to-consumer advertising campaign. Also,
compensation and benefits, and start up expenses associated with the Companys PSP
project (see Overview above and Liquidity and Capital Resources
below), recognized in SG&A or capitalized in the same periods of 2002 are now
primarily recognized in cost of sales. These decreases were partially offset by a
significant increase in Directors and Officers liability insurance premiums and an
increase in headcount and expenses associated with the direct sales force through the
hiring of brachytherapy specialists to promote the TheraSeed® brand. Additional
marketing activities include outsourcing of the Companys cancer information center
to healthcare specialist, Telerx, a subsidiary of Merck Pharmaceutical, for cancer
information inquiries and patient support.

R&D expenses increased to $1.6
million, or approximately 18% of revenue, in the second quarter of 2003, from
approximately $1.3 million, or approximately 11.3% of revenue, in the second quarter of
2002. R&D expenses also increased during the first half of 2003, to $3.1 million, or
15.5% of revenue from $2.2 million, or 9.6% of revenue, in 2002. The increase in R&D
expenses was a result of the Companys diversification initiatives geared to expand
the application of palladium-103 to other oncological and non-oncological uses, and to
explore options for using the Companys expertise and capabilities in other areas.
The bulk of these expenses were associated with the Companys peripheral vascular and
macular degeneration programs (see Overview above).

Management plans to continue to
increase efforts in R&D as its initiatives to diversify move forward, and expects
R&D expenditures to increase accordingly. Such increases in R&D may negatively
affect margins. However, R&D spending is dependent on the complex scheduling of
R&D 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.

Other income, comprising interest
income and non-operating expenses, was $225,000 in the second quarter of 2003 compared to
$244,000 during the second quarter of 2002. For the first half of the year, other income
was $453,000 in 2003, compared to $455,000 in 2002. 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. Funds available for investment
have and will continue to be utilized for the Companys current and future expansion
programs, diversification efforts, 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 35% for the quarter and six months ended June 30, 2003. The
Companys income tax rate in the period is lower than the statutory rate due to the
recognition of tax credits generated by the Companys investments in research
activities and tax-exempt interest income.

Critical Accounting
Policies

The financial statements of
Theragenics Corporation® are prepared in conformity with accounting principles
generally accepted in the United States of America. Management is required to make certain
estimates, judgments and assumptions that we believe are reasonable based upon the
information available. These estimates and assumptions affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the periods presented. The significant accounting policies
which we believe are the most critical to aid in fully understanding and evaluating our
reported financial results include the following:

Allowance for doubtful accounts.
Management judgments and estimates are made and used in connection with establishing an
allowance for the possibility that portions of our accounts receivable balances may become
uncollectable. Accounts receivable are reduced by this allowance. Specifically, management
analyzes accounts receivable in relation to current economic trends and changes in our
customer payment history in establishing this allowance. The accounts receivable balance,
net of the provision for this trade accounts receivables allowance of $137,000, was
approximately $4.5 million as of June 30, 2003.

Property, plant and equipment.
Property, plant and equipment are recorded at cost and depreciated on a straight-line
basis over the estimated useful lives of such assets. The Companys estimates can
result in differences from the actual useful lives of certain assets. We currently own and
operate 14 cyclotrons, the first of which entered service in 1993. Each of the
Companys cyclotrons is depreciated using an estimated 10-year life. The cyclotrons
incorporate a number of proprietary design modifications that render the cyclotrons unique
to commercial applications. Managements estimate of the useful life of these
cyclotrons is based on the Companys experience to date with these cyclotrons. Based
on experience gained relative to the operation, repair, refurbishment, and maintenance of
the cyclotrons, management believes there is a substantive basis for the current
depreciable lives of the cyclotrons. Although the older cyclotrons require increased
costs, the material harvested from each machine is imperative to ongoing operations and
the Companys current research and development initiatives. Therefore, all of the
cyclotrons, including the older machines, remain in service.

The DOE has granted Theragenics
access to unique DOE technology, known as the plasma separation process (PSP), for use in
production of isotopes, including palladium-103. The PSP equipment was placed in service
during the second half of 2002 and is depreciated using an estimated 15-year life. The PSP
equipment utilizes specialized, unique technology. Management will continue to
periodically examine estimates used for depreciation for reasonableness in relation to the
cyclotrons and PSP equipment. If the Company determines that the useful life of property,
plant or equipment should be shortened or lengthened, depreciation expense would be
adjusted accordingly for the remaining useful life (lives) of the identified asset(s).

Liquidity and Capital
Resources

The Company had cash, short-term
investments and marketable securities of $70.0 million at June 30, 2003, compared to $68.3
million at December 31, 2002. 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 primarily a result of cash generated by operations offset
primarily by capital expenditures. Working capital was $76.9 million at June 30, 2003,
compared to $74.7 million at December 31, 2002. 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,
2003. Letters of credit totaling $933,000 were outstanding under this agreement as of June
30, 2003. These letters of credit represent decommission funding required by the Georgia
Department of Natural Resources and a utility deposit to the City of Oak Ridge, Tennessee
in connection with the PSP facility. The existing Unsecured Credit Agreement, originally
scheduled to expire August 30, 2003, has been extended to October 31, 2003. The Company
intends to replace or renew its existing credit facilities. Alternative financing may be
on less favorable terms to the Company than the existing credit facilities.

Cash generated by operations was $4.3
million and $8.1 million during the first six months of 2003 and 2002, respectively. Cash
generated from operations consists of net earnings plus non-cash expenses such as
depreciation, amortization, deferred income tax expense and changes in balance sheet items
such as accounts receivable, inventories, prepaid expenses and payables. Depreciation and
amortization increased to approximately $3.3 million in the first six months of 2003 from
$2.9 million in the same period of 2002 largely due to the depreciation of the building
and equipment placed in service at the Oak Ridge facility during the latter half of 2002.
The increase in depreciation and amortization contributed by the Oak Ridge facility and
equipment was partially offset by the completion of the depreciable life of one cyclotron
mid way through the first quarter of 2003. Inventories increased approximately $700,000 in
the first six months of 2003 primarily due to a palladium-103 purchase of approximately
$500,000 to support ongoing and future R&D initiatives (see Results of
Operations above). The raw material, purchased from a U.S. mining company, will be
processed using PSP technology housed in the Oak Ridge facility. Inventory also increased
in the six months ending June 30, 2003 as raw material, components and shipping supply
inventory increased to accommodate the I-Seed product line. Prepaid expenses and other
current assets increased as payments representing repair and spare parts for cyclotrons
and equipment increased in 2003 compared to the same period in 2002. These primary sources
of cash from operations were partially offset by the year-over-year decrease in net
income.

Cash used in investing activities
totaled $13.7 million and $7.8 million during the first half of 2003 and 2002,
respectively. This spending related primarily to purchases of marketable securities
according to the Companys investment policy. Also, the Companys purchase of
the U. S. iodine-125 prostate brachytherapy business of BEBIG (see Overview
above) contributed to capital spending in the period ending June 30, 2003. The Company
procured an automated production line as part of the agreement that is expected to become
operational in 2004. Progress payments have been made to BEBIG and will continue upon
completion of pre-defined milestones. Therefore, the timing of all payments and subsequent
delivery and operation of the equipment may vary based on milestone completion. A total of
approximately $2.2 million in progress payments and capitalized professional fees has been
paid through June 30, 2003.

The Company has constructed a
facility in the Oak Ridge, Tennessee area to house the equipment, infrastructure and work
force intended to support the production of isotopes, including palladium-103, using DOE
technology. Construction costs of approximately $27 million have been incurred on the PSP
Project through June 30, 2003. The building and PSP became operational during the latter
half of 2002. Additional equipment in the amount of $1.7 million related to the Oak Ridge
facility is expected to become operational during 2003 and/or 2004.

The Company expects that R&D
spending will continue at the current level or will increase (see Results of
Operations, above). At this time, routine capital expenditures, and the purchase of
the equipment and facility renovations related to the iodine-125 line, are expected to
reach approximately $12 million during 2003. Cash could also be used in 2003 for increased
marketing and TheraSeed® support activities (see Results of Operations
above), and in the pursuit of diversification efforts such as the purchase of
technologies, products or companies.

Cash provided by financing activities
was $470,000 and $274,000 in the first half of 2003 and 2002, 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.

Medicare Developments

Previously, Theragenics
TheraSeed® device and other brachytherapy seeds fell within various transitional
pass-through codes, which were separate from the procedure payment codes that
comprise much of Medicares Outpatient Prospective Payment System (OPPS). On April 1,
2002, The Centers for Medicare and Medicaid Services (CMS) implemented changes in hospital
payments for brachytherapy and other services provided under Medicares OPPS for the
remainder of 2002. Through December 31, 2002, CMS bundled a portion of pass-through
reimbursement for all brachytherapy seeds and other devices with the associated procedure
codes, thereby effectively sheltering seeds from pro rata reductions that
would otherwise have applied under current Medicare Law. To the extent that these
pass-through device costs exceeded the bundled amount, the remaining cost was subject to a
63.6% pro-rated reduction in reimbursement.

On November 1, 2002, CMS issued
its rule for 2003 Medicare OPPS reimbursement. Under the new rule, CMS bundled the costs
of the brachytherapy procedure, as well as the costs for catheters, needles and all seeds,
into two new codes for prostate brachytherapy (one for palladium-103 and one for
iodine-125). By creating two codes and setting separate reimbursement amounts in the final
rule for palladium-103 seed brachytherapy (including the TheraSeed® device) and
iodine-125 seed brachytherapy (including the I-Seed device), CMS made an important,
positive change compared to its initial proposal published on August 9, 2002.
Specifically, the per-patient amount under the 2003 final rule for palladium-103 prostate
brachytherapy exceeds the original payment amount proposed in August 2002 for both
palladium-103 and iodine-125. The 2003 per-patient amount for palladium-103 prostate
brachytherapy also exceeds the 2003 payment amount for iodine-125 prostate brachytherapy.
To the extent that the brachytherapy costs exceed the bundled amount, the remaining cost
may no longer be submitted for reimbursement.

Medicare reimbursement for
brachytherapy continues to create confusion for hospitals and doctors. The Company
believes that this confusion may have had a detrimental impact on sales in 2003 (see
Results of Operations above). Management continues to closely monitor any
effects of the new reimbursement structure on the brachytherapy market as it continues to
evaluate pricing, marketing and distribution strategies.

Theragenics has been pursuing,
and will continue to pursue avenues to attempt to address the reimbursement structure set
forth by CMS. Theragenics is continuing its efforts to assist policymakers in
formulating and revising Medicare policies to recognize the unique aspects of
classification and reimbursement that apply to the TheraSeed® device and recognize its
superior characteristics compared to other avenues of treatment. These efforts include
working with policymakers to advance legislation, which would create more favorable
reimbursement for brachytherapy devices. Theragenics in conjunction with the
brachytherapy device industry was successful in getting appropriate language in the House
Medicare Reform Bill. In addition less favorable placeholder language was
included in the Senate Bill. At this time, the Company is unable to predict which, if any,
of the proposed reforms will be enacted.

The Company continues to engage a
consulting firm specializing in reimbursement practices to help communicate brachytherapy
reimbursement guidelines to customers.

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, third-party reimbursement, CMS policy, sales mix, effectiveness of
non-exclusive distribution agreements, pricing for the TheraSeed® and I-Seed devices,
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, the development of new markets and technologies, the
capabilities of the PSP to produce enriched isotopes, opportunities for isotopes produced
by Theragenics, the identification and development of new markets and applications
for isotopes, Theragenics plans and strategies for diversification, 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
statements relating to anticipated financial performance, business prospects,
technological developments, other 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, risks associated with customer
distribution concentration and consolidation among non-exclusive distributors, potential
costs and delays in capacity expansion and start-up, (especially as it relates to the PSP
project and the iodine-125 line and automated equipment purchase from BEBIG), the actual
start-up for the PSP project, the actual installation of the automated equipment for the
iodine-125 line, the iodine-125 product line, potential changes in product pricing and
competitive conditions, continued acceptance of TheraSeed® or the I-Seed devices by
the market, management of growth, acceptance and efficacy of pallidium-103 for other
applications, adverse changes in governmental program priorities and budgetary funding by
the relevant governmental authorities, continuing access to unique DOE technology,
government regulation of the therapeutic radiological pharmaceutical and device business,
potential changes in third-party reimbursement, Congressional action or inaction on the
Presidents Medicare Bill, risks associated with market development activities, inability
of the PSP to produce isotopes suited for a particular application, potential inability to produce selected
isotopes at costs competitive to other options, risks associated with governmental
regulations and related export controls and security requirements for PSP products. 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. Letters
of credit totaling approximately $933,000 were outstanding under the terms of the
Unsecured Credit Agreement as of June 30, 2003. No borrowings were outstanding under the
Unsecured Credit Agreement as of June 30, 2003. (See Liquidity and Capital Resources
above).

Item 4.     Controls and
Procedures

At the end of the period covered by
this report, the Company carried out an evaluation, under the supervision and with the
participation of the Companys management, including the Companys President and
Chief Executive Officer and its Chief Financial Officer, of the effectiveness of the
design and operation of the Companys disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. Based upon that evaluation, the Companys President and
Chief Executive Officer and its Chief Financial Officer concluded that the Companys
disclosure controls and procedures are effective in alerting them on a timely basis to
material information relating to the Company that is required to be included in the
Companys periodic filings with the Securities and Exchange Commission. Furthermore,
with regard to the Companys internal controls, there have been no significant
changes in the Companys internal controls or, to the Companys knowledge, in
other factors that materially affected, or are likely to materially affect the
Companys internal control over financial reporting. Management necessarily applied
its judgment in assessing the costs and benefits of such controls and procedures, which,
by their nature, can provide only reasonable assurance regarding managements control
objectives.

PART II.      OTHER INFORMATION

Item 1.     Legal Proceedings.

See Note D to the Companys
financial statements included in Part I, 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 13, 2003.
|--- |  | ------------------------------------------------------------

|(b) |  | Otis Brawley and Earnest Deavenport, Jr. were reelected to the board of
          directors and will serve for a three-year term. Mr. Brawley received 27,343,342
          votes for his election with 300,456 withholding authority, and Mr. Deavenport
          received 27,340,613 votes for his election with 303,185 withholding authority.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | Grant Thornton LLP was approved as independent accountants for the Company for
          the fiscal year ending December 31, 2003 by a vote of 27,463,752 shares for,
          152,889 shares against and 27,157 shares abstaining.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | (a)  |  | Exhibits                                                                                                                                                                  
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
| | 10.1 |  | First amendment to executive employment agreement for M. Christine Jacobs.                                                                                                
| | 10.2 |  | Fourth amendment to executive employment agreement for Bruce W. Smith.                                                                                                    
| |     
| | 10.3 |  | Extension of credit agreement dated August 30, 1999 between
Theragenics Corporation® and Wachovia Bank, National Association.                                             
| | 31.1 |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                  
| | 31.2 |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                  
| | 32.1 |  | Certification of Chief Executive Officer Pursuant of Section 1350, Chapter 63 of
         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 United States Code, as Adopted to Section 906 of the Sarbanes-Oxley Act of 2002.         

| | (b) |  | Reports on Form 8-K                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Form
8-K furnished on April 22, 2003 under Item 9, Regulation FD Disclosure but
intended to be furnished under Item 12, Results of Operations and Financial
Condition (with respect to a press release relating to the Companys
performance in the first quarter ended March 31, 2003). On July 29, 2003, the Company
furnished a Current Report on Form 8-K under Item 12 that included a press release and
edited conference call transcript announcing the Companys financial results for the
quarter ended June 30, 2003.

---

SIGNATURES

Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.

| | REGISTRANT:                                                              
| | -------------------------------------------------------------------------
| |                                                                          
| | THERAGENICS CORPORATION®                                                 
| |                                                                          
| | /s/ M. Christine Jacobs
 M. Christine Jacobs
  Chief Executive Officer   
| |                                                                          
| | /s/ James A. MacLennan
    James A. MacLennan
    Chief Financial Officer

Dated: August 14, 2003