## UNITED STATES

## SECURITIES AND EXCHANGE COMMISSION

## WASHINGTON, D.C. 20549

## FORM 10Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF
THESECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
September 30, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF
THESECURITIES EXCHANGE ACT OF 1934FOR 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 November 14, 2002 the number of shares of
$.01 par value common stock outstanding was 29,760,058.

---

### THERAGENICS CORPORATION

### TABLE OF CONTENTS

| | PART I. FINANCIAL INFORMATION:                                   |  |         
| | ---------------------------------------------------------------- |  | --------
|
| | ITEM 1. FINANCIAL STATEMENTS
      (UNAUDITED)                   |  | Page No.
|
| | Balance Sheets 
      December 31, 2001 and September 30, 2002  |  | 3       
|
| | Statements of Earnings
      for the three and nine months ended
| | September 30, 2001 and 2002                                      |  | 5       
|
| | Statements of Cash
      Flows for the nine months ended        
| | September 30, 2001 and
      2002                                |  | 6       
|
| | Statement of Changes
      in Shareholders Equity for the nine 
| | months ended September 30,
      2002                            |  | 7       
|
| | Notes to Financial
      Statements                              |  | 8       
|
| | ITEM 2. MANAGEMENTS DISCUSSION
      AND ANALYSIS OF FINANCIAL 
| | CONDITION
      AND RESULTS OF OPERATION                         |  | 10      
|
| | ITEM 3. QUANTITATIVE AND
      QUALITATIVE DISCLOSURES ABOUT    
| | MARKET
      RISK                                                |  | 16      
|
| | ITEM 4. CONTROLS AND PROCEDURES                                  |  | 17      
|
| | PART II. OTHER INFORMATION                                       | 
|
| | ITEM 1. LEGAL PROCEEDINGS                                        |  | 17      
| | ITEM 6. EXHIBITS AND REPORTS ON
      FORM 8K                   |  | 17      
|
| | SIGNATURES                                                       |  | 18      
| | CERTIFICATIONS                                                   |  | 19      

---

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

|ASSETS                                        
|----------------------------------------------
|                                              
|                                              
|                                              
|                                              
|CURRENT ASSETS                                
|Cash and shortterm investments               
|Marketable securities                         
|Trade accounts receivable, net of allowance   
|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 & SHAREHOLDERSEQUITY        
|-----------------------------------------
|                                         
|                                         
|                                         
|                                         
|                                         
|CURRENT LIABILITIES                      
|Trade accounts payable                   
|Accrued salaries, wages and payroll taxes
|Other current liabilities                
|TOTAL CURRENT LIABILITIES                
|LONG TERM LIABILITIES                    
|Deferred income taxes                    
|Other                                    
|TOTAL LONGTERM LIABILITIES              
|SHAREHOLDERS EQUITY                     
|Common stock, $.01 par value, 100,000    
|shares authorized; 29,690 and 29,756     
|issued and outstanding                   
|Additional paidin capital               
|Retained earnings                        
|Accumulated other comprehensive income   
|TOTAL SHAREHOLDERS EQUITY               
|TOTAL LIABILITIES AND                    
|SHAREHOLDERS EQUITY                     

The accompanying notes are an integral part of these statements.

---

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

| |                                   |                    |               |                   |               |                | 
| | --------------------------------- | ------------------ | ------------- | ----------------- | ------------- | -------------- | 
| |                                   | Three Months Ended |               | Nine Months Ended |              
| |                                   | September 30,      |               | September 30,     |              
| |                                   | 2001               | 2002          |                   | 2001          | 2002           | 
| | REVENUE                          
| | Product sales                     | $    11,858        | $    9,781    |                   | $    38,436   | $    32,217    | 
| | Licensing Fees                    | 34                 | 47            |                   | 144           | 306            | 
| | Total Revenue                     | 11,892             | 9,828         |                   | 38,580        | 32,523         | 
|
| | COST OF SALES                     | 3,597              | 3,261         |                   | 11,231        | 10,596         | 
| |                                  
| | GROSS PROFIT                      | $      8,295       | $      6,567  |                   | $    27,349   | $    21,927    | 
| |                                  
| | OPERATING EXPENSES               
| | Selling, general & administrative | 2,678              | 2,952         |                   | 7,751         | 9,612          | 
| | Research & development            | 506                | 2,434         |                   | 2,051         | 4,619          | 
| |                                   | 3,184              | 5,386         |                   | 9,802         | 14,231         | 
| | EARNINGS FROM OPERATIONS          | 5,111              | 1,181         |                   | 17,547        | 7,696          | 
| |                                  
| | OTHER INCOME (EXPENSE)           
| | Interest income                   | 369                | 282           |                   | 1,345         | 795            | 
| | Interest and financing costs      | (36)               | (15)          |                   | (114)         | (77)           | 
| | Other                             | (3)                | (38)          |                   | (38)          | (34)           | 
| |                                   | 330                | 229           |                   | 1,193         | 684            | 
| |                                  
| | EARNINGS BEFORE INCOME TAXES      | 5,441              | 1,410         |                   | 18,740        | 8,380          | 
| | Income tax expense                | 2,009              | 526           |                   | 6,740         | 3,046          | 
| | NET EARNINGS                      | $      3,432       | $         884 |                   | $    12,000   | $      5,334   | 
| |                                  
| | NET EARNINGS PER COMMON SHARE    
| | Basic                             | $        0.12      | $        0.03 |                   | $        0.41 | $        0.18  | 
| | Diluted                           | $        0.11      | $        0.03 |                   | $        0.40 | $        0.18  | 
| |                                  
| | WEIGHTED AVERAGE SHARES          
| | Basic                             | 29,646             | 29,755        |                   | 29,614        | 29,851         | 
| | Diluted                           | 30,185             | 29,945        |                   | 29,999        | 30,126         | 
| | Comprehensive income (loss)      
|
| | NET EARNINGS                      | $      3,432       | $         884 |                   | $    12,000   | $      5,334   | 
| | Unrealized gain on securities    
| | available for sale:               | $                | $           |                   | $           | $           37 | 
|
| | Total comprehensive income        | $      3,432       | $         884 |                   | $    12,000   | $      5,371   | 

The accompanying notes are an integral part of these statements.

---

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

| |                                                                       | Nine
      Months         |            
| | --------------------------------------------------------------------- | ------------------------- | -----------
| |                                                                       | Ended
      September 30, |            
| |                                                                       | 2001                      | 2002       
| | CASH FLOWS FROM OPERATING ACTIVITIES                                 
| | Net Earnings                                                          | $12,000                   | $    5,334 
| | Adjustments to reconcile net
      earnings to                        |                           |            
| | net cash provided by operating
      activities                      
| | Deferred
      income taxes                                           | 477                       | 46         
| | Depreciation
      & amortization                                     | 4,333                     | 4,526      
| | Provision
      for allowances                                        | 270                       | 17         
| | Stock
      based compensation                                        | 92                        | 50         
| | Income tax
      benefit from options                                 | 160                       | 109        
| | Loss on
      disposal of equipment                                   | 52                        | 12         
| | Deferred
      rent                                                   | (2)                       | (3)        
| |                                                                      
| | Changes in assets and
    liabilities:                               
| | Accounts
      Receivable                                             | (244)                     | 659        
| | Inventories                                                           | (244)                     | (615)      
| | Prepaid
      expenses and other current assets                       | (593)                     | 382        
| | Other assets                                                          | (89)                      | (15)       
| | Trade accounts
    payable                                            | (22)                      | 570        
| | Accrued salaries,
      wages and payroll taxes                       | 416                       | 319        
| | Income taxes
payable                                                  | (2,866)                   |          
| | Other
      current liabilities                                       | 322                       | 387        
| | Net
      cash provided by operating activities                       | 14,062                    | 11,778     
| |                                                                      
| | CASH FLOWS FROM INVESTING ACTIVITIES                                 
| | Purchases and
      construction of property and equipment            | (5,678)                   | (2,716)    
| | Purchases and
      maturities of marketable securities               | 5,198                     | (3,908)    
| | Net
      cash used by investing activities                           | (480)                     | (6,624)    
| |                                                                      
| | CASH FLOWS FROM FINANCING ACTIVITIES                                 
| | Proceeds
      from exercise of stock options and stock purchase plan | 244                       | 291        
| | Net
      cash provided by financing activities                       | 244                       | 291        
| |                                                                      
| | NET INCREASE IN CASH AND                                             
| | SHORTTERM INVESTMENTS                                                | 13,826                    | 5,445      
| |                                                                      
| | CASH AND SHORTTERM INVESTMENTS AT                                   
| | BEGINNING OF PERIOD                                                   | 29,722                    | 45,373     
| |                                                                      
| | CASH AND SHORTTERM INVESTMENTS AT                                   
| | END OF PERIOD                                                         | $     43,548              | $    50,818

---

### THERAGENICS CORPORATIONSTATEMENT OF SHAREHOLDERS
EQUITYFOR THE THREE MONTHS ENDED SEPTEMBER 30,
2002(UNAUDITED)(Amounts in thousands, except per share data)

| |                               |              |            |           |           | Accumulated   |           
| | ----------------------------- | ------------ | ---------- | --------- | --------- | ------------- | ----------
| |                               | Common Stock | Additional |           | other     |              
| |                               | Number of    | Par value  | paid-in   | Retained  | comprehensive |           
| |                               | shares       | $0.01      | capital   | earnings  | income        | Total     
| | BALANCE, December 31, 2001    | 29,690       | $    297   | $  60,714 | $  74,996 |               | $  136,007
| | Exercise of stock options     | 60           | 1          | 244       |           |               | 245       
| | Employee stock purchase plan  | 6            |            | 46        |           |               | 46        
| | Stock-based compensation      |              |            | 50        |           |               | 50        
| | Unrealized loss on securities |              |            |           |           |               |           
| | available for sale            |              |            |           |           | $    37       | 37        
| | Tax effect from options       |              |            | 109       |           |               | 109       
| | Net earnings for the period   |              |            |           | 5,334     |               | 5,334     
| | BALANCE, September 30, 2002   | 29,756       | $    298   | $  61,163 | $  80,330 | $    37       | $  141,828

The accompanying notes are an integral part of these statements.

---

## THERAGENICS
CORPORATION
 NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(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 accounting principles generally accepted in the
United States of America. 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, 2001,
included in the Form 10-K filed by the Company.

## NOTE B 
DISTRIBUTION AGREEMENTS AND MAJOR CUSTOMERS

The Company sells its
TheraSeed® device 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 non-exclusive distributors
represented approximately 84% and 81% of product revenue, for the quarter and
nine months ended September 30, 2002, respectively, with sales to three of the
four non-exclusive distributors exceeding 10% of total revenue for each period.
During the same periods in 2001, sales to three of the four non-exclusive
distributors represented approximately 65% and 57% of product revenue for the
quarter and nine months, respectively, 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 84% of
accounts receivable at September 30, 2002, with three of the four non-exclusive
distributors exceeding 10% of total accounts receivable. Accounts receivable
from three of the four non-exclusive distributors represented approximately 57%
accounts receivable at September 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 Palladium-103 (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 has constructed 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.
Construction, testing and pre-operational activities for a significant portion
of the facilities and equipment were substantially completed and included in
operations during the third quarter. As of September 30, 2002, facility and
equipment costs incurred were approximately $26.6 million.

---

## NOTES TO
FINANCIAL STATEMENTS  CONTINUED

## SEPTEMBER 30,
2002

## (Unaudited)

## NOTE D -
CONTINGENCIES

From time to time, the
Company may be a party to legal proceedings in the ordinary course of its
business. In the opinion of the Company, there are no such proceedings which,
individually or in the aggregate would be expected to have a material adverse
affect on the Companys financial position or results of operations.

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 discovery is
underway. Management believes these charges are without merit and intends to
oppose the litigation vigorously; 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.

## NOTE E 
RECENTLY ISSUED ACCOUNTING STANDARD

In June 2001, the Financial
Accounting Standards Board (FASB) issued Statement on Financial Accounting
Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations,
which will be effective for the Companys 2003 fiscal year. SFAS No. 143
provides accounting requirements for the recognition and measurement of
liabilities for obligations associated with the retirement of tangible
long-lived assets resulting from the acquisition, construction, development, and
operation of a long-lived asset. Under the standard, these liabilities will be
recognized at fair value as incurred and capitalized as part of the cost of the
related tangible long-lived asset. This additional asset cost will be amortized
over the related assets useful life. Accretion expense related to the
liability due to the passage of time will also be recorded. SFAS No. 143
requires that expense amounts related to periods prior to adoption of SFAS No.
143 be recorded as a cumulative effect adjustment in the year of adoption.
Management estimates that the adoption of this standard will result in an
increase in its liabilities of approximately $625,000, and a cumulative effect
expense of approximately $310,000 before income taxes, and $195,000 after income
taxes. Annual amortization of the increased asset costs and accretion expense
charged to operations is expected to be less than $100,000 before income taxes
and $63,000 after income taxes.

---

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

Results of Operations

Revenues for the third
quarter of 2002 were $9.8 million, compared to $11.9 million for the third
quarter of 2001, a decrease of $2.1 million, or 17.6%. Revenues for the nine
months ended September 30, 2002 were $32.5 million, compared to $38.6 million
for the same period in 2001, a decrease of $6.1 million, or 15.8%. During the
third quarter of 2002, unit sales of the TheraSeed® device product
decreased approximately 14.9% from the third quarter of 2001 and decreased
approximately 9.9% during the first nine months of 2002 compared to the same
period in 2001. The change in distribution mix also contributed to the decrease
in revenues. Theragenics sold approximately 16.1% of the total unit sales
directly to customers, compared to approximately 27.4% in the same quarter of
2001 and, as a result, the average selling price of TheraSeed® device
decreased.

The Company believes that
the decrease in unit sales is a result of several factors including customer
concern over the potential impact of the Center for Medicare and Medicaid (CMS)
proposed rules for 2003 Medicare reimbursement (See Medicare
Developments below), and disappointing sales by the Companys
non-exclusive distribution partners. The change in distribution mix and the
resultant decrease in average unit selling price reflected the following
factors. In January 2001 a distribution agreement with Indigo Medical Inc.
(Indigo), a Johnson and Johnson Company, terminated, and the Company initially
increased its number of direct sales and sales through its other non-exclusive
distributors. However, Theragenics sold to a significant portion of these
former Indigo customers while publicly stating that it expected its share of
TheraSeed® device sales to decline as its other non-exclusive distributors
began to market aggressively to the former Indigo customers. As expected, the
percentage of direct-to-customer sales for Theragenics has declined from
2001 as the non-exclusive distributors began aggressively marketing to the
former Indigo customers.

Cost of sales was $3.3
million during the third quarter of 2002, resulting in a gross profit margin of
66.8%, compared with cost of sales of $3.6 million and a gross profit margin of
69.8% during the third quarter of 2001. For the nine months of 2002, cost of
sales was $10.6 million, resulting in a gross profit margin of 67.4%, compared
with cost of sales of $11.2 million and a gross profit margin of 70.9% during
the same period of 2001. The increase in cost of sales as a percentage of
revenues is largely due to the considerable fixed cost component of
Theragenics operations, partially offset by the transfer of material and
resources to support the research and development initiatives.

Selling, general and
administrative (SG&A) expenses were $3.0 million, or 30% of revenue, during
the third quarter of 2002, compared to $2.7 million, or 22.5% of revenue, during
the third quarter of 2001, an increase of $0.3 million or 10.2%. For the first
nine months of 2002, SG&A expenses were $9.6 million, or 29.5% of revenue,
compared to $7.8 million, or 20.0% of revenue, an increase of $1.8 million, or
24.0%. The increases in the 2002 periods were primarily due to an increase in
advertising and marketing activities related to the Companys
direct-to-consumer advertising campaign and an increase in professional fees
related to, among other things, advocacy activities supporting adequate
reimbursement for TheraSeed® device. Additionally, compensation and
benefits, and start up expenses associated with the Companys PSP project
(see Liquidity and Capital Resources below), also increased
during the 2002 periods.

---

The Company expects to
continue its marketing activities for the remainder of 2002 in an effort to
support its brand, increase patient awareness of the TheraSeed® device
treatment alternative for prostate cancer and increase the demand for the
TheraSeed® device. The TheraSeed® device brand advertising targets
consumers and physicians and includes clinical studies aimed at illustrating the
superiority of TheraSeed® device in the treatment of prostate cancer.
Additional marketing activities include changes in selling strategies
incorporating a renewed focus on direct sales. Although brand advertising
expenses were previously anticipated to reach as high as $5 million by year-end,
Management now expects that in 2002 brand advertising will amount to
approximately $3.5 million.

Research and development
(R&D) expenses increased to $2.4 million, or 24.7% of revenue, in the third
quarter of 2002, from $506,000, or approximately 4.2% of revenue, in the third
quarter of 2001. R&D expenses also increased during the first nine months of
2002, to $4.6 million, or approximately 14.2% of revenue in 2002 from $2.1
million, or 5.3% of revenue, in 2001. The increases in R&D expenses for the
quarter and year-to-date were the result of the Companys diversification
efforts, including treatments for peripheral vascular disease and macular
degeneration2. R&D expenses included costs of
materials that would otherwise have been included in cost of sales ($1.6 million
and $2.4 million for the three months and nine months ending September 30, 2002
compared to $0.3 million and $0.8 million for the same periods in 2001).

The Company was granted in
August of this year an Investigation Device Exemption (IDE) approval from the
U.S. Food and Drug Administration to initiate its TheraP clinical trial. The
TheraP trial is a nonrandomized trial utilizing the Companys Palladium-103
device, TheraSource, to treat restenosis1in
peripheral vessels. The trial will investigate the safety and feasibility of the
TheraSource Intravascular Brachytherapy System for preventing restenosis
and will include long diffuse lesions in the superficial femoral and popliteal
arteries. The Company expects to enroll up to 30 patients in three sites and the
trial is expected to commence during the fourth quarter of 2002 or early in
2003.

Another diversification
effort includes the use of Pd-103 in treating the wet form of age-related
macular degeneration. Earlier this year, the Company completed an animal pilot
study using its prototype device. The results of this study were favorable and
in line with expectations. Upon recommendations of external advisors during the
third quarter, management is investigating requirements necessary to proceed
toward the implementation of human clinical trials. The Company also maintains
an active research and development program centered on isotopes and their usage.
Theragenics will continue these efforts and additional research and development
expenditures could occur based upon these opportunities.

Management plans to
continue its efforts in research and development as its initiatives to diversify
move forward. 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 from period to period.

1.  Restenosis is the renarrowing of blood vessels following
procedures that are done to open blocked or stenosed blood vessels.

2.  Macular degeneration is a
disease that can lead to loss of eyesight and in some cases complete blindness

---

Other income, comprising
interest income and non-operating expenses, amount to $229,000 in the third
quarter of 2002 compared to $330,000 during the third quarter of 2001. For the
first nine months of the year, other income was $684,000, compared to $1.2
million in 2001. The Companys investments consist primarily of short-term
cash investments and high-credit quality municipal obligations, in accordance
with the Companys investment policy. While additional funds were invested
during 2002, the lower interest rate environment in 2001 and continuing through
2002 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, 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 37% for the three and nine months
ended September 30, 2002, compared to approximately 37% and 36% for the three
months and nine months ended in 2001. The year over year increase is a result of
a reduction in tax credits generated by the Companys investments in its
expansion projects during 2002. The Companys income tax rate in each
period is lower than the statutory rate primarily 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 SEC has encouraged
companies to identify critical accounting policies. Critical
accounting policies are those that are most important to the portrayal of a
companys financial condition and results, and that require
managements most difficult, subjective or complex judgments, often as a
result of the need to make estimates about the effects of matters that are
inherently uncertain. In response to the SEC statements, management has
identified the following critical accounting policies used in the preparation of
our financial statements and accompanying notes. These polices have been
reviewed with the Audit Committee of the Companys Board of Directors.

Revenue  Recognition.  Revenue from product sales is recognized  upon  shipment.
Licensing  fees are recognized in the period to which
they relate.

Allowance for doubtful
accounts. Management judgments and estimates are made and used in connection
with establishing an allowance for the possibility that portions of the
Companys accounts receivable balances may become uncollectable.
Specifically, management analyzes accounts in relation to current economic
trends and changes in our customer payment history in establishing this
allowance. Accounts receivable are reduced by this allowance. The Companys
accounts receivable balance, net of the provision for this trade accounts
receivables allowance of $204,000, was approximately $6.8 million as of
September 30, 2002.

Property, Plant and
Equipment.Property, plant and equipment are recorded at cost and are
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. The Company currently owns and operates 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. Management will continue to periodically examine
estimates used for depreciation for reasonableness in relation to the
cyclotrons. 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).

Recently Issued
Accounting Standard. Theragenics has identified retirement obligations
associated with the decommissioning of its cyclotrons and related facilities.
Management expects the adoption of SFAS No. 143 (see Notes to the
Financial Statements, above) in 2003 will result in an increase to its
liabilities of approximately $625,000, and a cumulative effect expense of
approximately $310,000 before income taxes, and $195,000 after income taxes.
Annual amortization of the increased asset costs and accretion expense charged
to operations is expected to be less than $100,000 before income taxes and
$63,000 after income taxes.

Management is required to
use estimates in determining the potential impact of SFAS No.143 on its
financial statements. Factors including the regulatory environment, inflation,
alternative uses of the cyclotrons, and new or alternative technologies, among
other things, used in determining these estimates may change over time.
Therefore, changes in these factors will require the Company to reexamine and
adjust the anticipated effect of asset retirement obligations accordingly. The
Company will implement SFAS No. 143 in 2003.

## Commitments
and Other Contractual Obligations

The Company leases land,
space and office equipment under noncancelable leases that expire at various
date through April 2020 as follows. Approximate minimum lease payments under the
leases are as follows:

|Obligation             |            | Payments due by period
|---------------------- | ---------- | ----------------------
|                       | Total      | 2002                  
|                      
|Land lease             | $3,628,625 | $ 34,125              
|Equipment              | $ 104,528  | $ 8,600               
|Rental property        | $ 184,096  | $ 11,400              
|Other Operating Leases | $   540    | $  540                

Liquidity and Capital Resources

The Company had cash,
short-term investments and marketable securities of $65.6 million at September
30, 2002, compared to $56.2 million at December 31, 2001. Marketable securities
consist primarily of short-term cash investments and high-credit quality
municipal obligations, in accordance with the Companys investment policy.
Marketable securities are classified as available for sale and are reported at
fair value, based upon quoted market prices at the balance sheet date. 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 $72.8 million at September 30, 2002, compared
to $65.3 million at December 31, 2001. 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 September 30, 2002. Letters of credit totaling $809,068
were outstanding under this agreement as of September 30, 2002. 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.

Cash generated by
operations was $11.8 million and $14.0 million during the first nine months of
2002 and 2001, 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. Cash from operations
increased over the first nine months of 2002 primarily because payment of an
approximate $2.0 million prior period income tax liability was made in the first
nine months of 2001 while no similar liability existed in 2002 and approximately
$0.9 million more of 2001s year-to-date income was in the form of accounts
receivable rather than cash, as the Companys accounts receivable base
changed as a result of its direct to customer sales and non-exclusive
distribution agreements. The slight increase in depreciation and amortization in
the first nine months of 2002 was due to the building and equipment placed in
service at the Oak Ridge facility during the third quarter of 2002. These
primary sources of cash from operations were partially offset by the
year-over-year decrease in net income.

Capital expenditures
totaled $2.7 million and $5.6 million during the first nine months of 2002 and
2001, respectively. This spending related primarily to the Companys PSP
project (see below).

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 Pd-103, using DOE technology. Construction costs of approximately
$26.6 million have been incurred on the PSP project through September 30, 2002.
Construction, testing and preoperational activities were substantially completed
for a significant portion of the PSP project during the third quarter, and the
Company expects the total cost of the PSP project to be less than $30.0 million
as it is fully completed during the year.

In addition to using cash
to fund the PSP project in 2002, the Company expects that R&D spending will
continue to increase (see Results of Operations, above). The
Company expects that R&D expense spending may total approximately 15% of
revenue in 2002, but could vary depending on the scheduling and progress of
R&D activities as well as the pursuit of currently unforeseen opportunities.
Cash could also be used in 2002 for marketing and TheraSeed® device 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 $291,000 and $244,000 in the first nine months of 2002 and 2001,
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.

In July 2002, the Company
entered into a Market Development and Distribution Agreement for stable isotopes
with Trace Sciences International, Inc. (Trace Sciences). The
Agreement provides a framework under which Trace Sciences, an international
supplier of enriched stable metal isotopes, will perform global market
development and limited sales activities to cultivate the PSPs unique
capabilities. Also in July 2002, the Company announced an agreement for the
first sale of stable isotopes to be produced by the PSP. Under this agreement,
the Company expects to provide test quantities of certain gadolinium isotopes to
a customer to determine their effectiveness as a fuel life extender in nuclear
power generation. While this agreement will not have a significant impact on the
Companys revenue or earnings, management believes it demonstrates the
potential for the PSP to create new opportunities for the Company.

Medicare Developments

Currently,
Theragenics TheraSeed® device and other brachytherapy seeds
fall within various transitional pass-through codes, which are
separate from the procedure payment codes that comprise much of Medicares
Outpatient Prospective Payment System (OPPS). Effective 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 has bundled a
portion of pass-through reimbursement for brachytherapy seeds and other
pass-through 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 exceed the bundled amount, the remaining cost is subject to a 63.6% pro
rata reduction in reimbursement. Management does not anticipate any impact on
the price of the TheraSeed® device product for the remainder of 2002 as a
result of the current reimbursement structure.

On November 1, 2002,
CMS issued its final rule for 2003 Medicare OPPS reimbursement. Under the final
rule, CMS bundled the costs of the brachytherapy procedure, as well as the costs
for the 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 TheraSeed® device) and
iodine-125 seed brachytherapy, CMS made an important, positive change for our
TheraSeed® device product from its initial proposal published on
August 9, 2002. Specifically, the per patient amount under the 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 brachetherapy also exceeds the payment
amount for iodine-125 prostate brachetherapy. To the extent that these
pass-through device costs exceed the bundled amount, the remaining cost may no
longer be submitted for reimbursement.

At this time, Management is
unable to predict the impact of the final rules on future sales. However,
Management will be closely monitoring any effects on the market for
TheraSeed® device 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. Specifically, 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.

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,
sales mix, effectiveness of non-exclusive distribution agreements, pricing for
TheraSeed® device, 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, 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® device by the market,
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, government regulation of the therapeutic
radiological pharmaceutical and device business, potential changes in
third-party reimbursement, 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. At any point in time,
Theragenics and/or its non-exclusive distributors may change their
respective pricing policies for TheraSeed® device 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® 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. 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 September 30, 2002, there were no outstanding borrowings under
the Companys Unsecured Credit Agreement.

## Item 4.
Controls and Procedures

Within 90 days prior to the
date of 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 the 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 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 could significantly
affect these internal controls subsequent to the date the Company carried out
its evaluation.

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

| | (a)Exhibits                                                                          
| | -------------------------------------------------------------------------------------
| | Exhibit No.                                                                          
| | 10.1                                                                                 
| | 99.1                                                                                 
| | 99.2                                                                                 
|
| | (b)
   No reports on Form 8-K were filed during the quarter ended September 30, 2002.

---

#### 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/ James A. MacLennan                  
| | James A. MacLenna                          
| | Treasurer and Chief
      Financial Officer

Dated: November 14, 2001

---

#### Certification

I, M. Christine Jacobs, President and Chief Executive Officer, certify that:

|1. | I have reviewed this quarterly report on Form 10-Q of Theragenics Corporation (the "Registrant");
|-- | -------------------------------------------------------------------------------------------------

|2. | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The Registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | designed such disclosure controls and procedures to ensure that material
information relating to the Registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | evaluated the effectiveness of the Registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The Registrants other certifying officer and I have disclosed,
based on our most recent evaluation, to the Registrants auditors and the
audit committee of Registrants board of directors (or persons performing
the equivalent function):
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | all significant deficiencies in the design or operation of internal controls
which could adversely affect the Registrants ability to record, process,
summarize and report financial data and have identified for the
Registrants auditors any material weaknesses in internal controls; and
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrants internal
controls; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | The Registrants other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: November 14, 2002

/s/ M. Christine JacobsM. Christine Jacobs         
          
      
President and Chief Executive Officer

---

#### Certification

I, James A. MacLennan,  Chief Financial Officer, certify that:

|1. | I have reviewed this quarterly report on Form 10-Q of Theragenics Corporation (the "Registrant");
|-- | -------------------------------------------------------------------------------------------------

|2. | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The Registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | designed such disclosure controls and procedures to ensure that material
information relating to the Registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | evaluated the effectiveness of the Registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The Registrants other certifying officer and I have disclosed,
based on our most recent evaluation, to the Registrants auditors and the
audit committee of Registrants board of directors (or persons performing
the equivalent function):
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | all significant deficiencies in the design or operation of internal controls
which could adversely affect the Registrants ability to record, process,
summarize and report financial data and have identified for the
Registrants auditors any material weaknesses in internal controls; and
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d) | any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrants internal
controls; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | The Registrants other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: November 14, 2002

/s/ James A. MacLennan
                                                                       James A. MacLennan     
                                                                       Chief Financial Officer