Given Imaging Ltd. and its Consolidated Subsidiaries Specified Items For the Three Months Ended September 30, 2008 and 2009 (Unaudited, dollars in thousands) General Termination Research Selling And Of And And Administra- Marketing Tax Development Marketing tion Agreement Benefit Total Three month period ended September 30, 2009 Compensation expenses $ 93 $ 511 $ 1,586 $ - $ - $ 2,190 ----------- ---------- --------- ---------- -------- ------- Total $ 93 $ 511 $ 1,586 $ - $ - $ 2,190 =========== ========== ========= ========== ======== ======= Three month period ended September 30, 2008 Compensation expenses $ 97 $ 467 $ 1,306 $ - $ - $ 1,870 IP Litigation expenses - - (200) - - (200) Total $ 97 $ 467 $ 1,106 $ - $ - $ 1,670 =========== ========== ========= ========== ======== ======= Given Imaging Ltd. and its Consolidated Subsidiaries Specified Items For the Nine Months Ended September 30, 2008 and 2009 (Unaudited, dollars in thousands) General Termination Research Selling And Of And And Administra- Marketing Tax Development Marketing tion Agreement Benefit Total Nine month period ended September 30, 2009 Compensation Expenses $ 286 $ 1,509 $ 4,083 $ - $ - $ 5,878 Tax (benefit) - - - - (1,390) (1,390) ----------- --------- ----------- --------- -------- ------- Total $ 286 $ 1,509 $ 4,083 $ - $ (1,390) $ 4,488 =========== ========= =========== ========= ======== ======= Nine month period ended September 30, 2008 Compensation expenses $ 270 $ 1,303 $ 3,553 $ - $ - $ 5,126 IP Litigation expenses - - 3,375 - - 3,375 Patent litigation settlement - - (2,333) - - (2,333) Terminatiion of marketing agreement - - - (5,443) - (5,443) ----------- --------- ----------- --------- -------- ------- Total $ 270 $ 1,303 $ 4,595 $ (5443) $ - $ 725 =========== ========= =========== ========= ======== ======= Given Imaging Ltd. and its Consolidated Subsidiaries Reconciliation of GAAP results to non-GAAP results For the three months ended September 30, 2009 and 2008 Condensed, in thousands except share and per share data Q3 2009 Q3 2008 Specified Non Specified Non GAAP Items (*) GAAP GAAP Items (*) GAAP -------- --------- -------- -------- --------- -------- Revenues $ 35,220 - $ 35,220 $ 31,136 - $ 31,136 Cost of revenues (7,827) - (7,827) (7,793) - (7,793) -------- --------- -------- -------- --------- -------- Gross profit 27,393 - 27,393 23,343 - 23,343 -------- --------- -------- -------- --------- -------- Gross profit as a % of revenues 77.8% - 77.8% 75.0% - 75.0% Operating expenses Research and development, net (4,632) 93 (4,539) (3,540) 97 (3,443) Sales and marketing (14,758) 511 (14,247) (14,647) 467 (14,180) General and administrative (5,042) 1,586 (3,456) (4,276) 1,106 (3,170) Termination of marketing agreement - - - - - - Other, net (316) - (316) - - - -------- --------- -------- -------- --------- -------- Total operating expenses (24,748) 2,190 (22,558) (22,463) 1,670 (20,793) -------- --------- -------- -------- --------- -------- Operating profit 2,645 2,190 4,835 880 1,670 2,550 Operating profit as a % of revenues 7.5% - 13.7% 2.8% - 8.2% -------- --------- -------- -------- --------- -------- Financing income, net 1,086 - 1,086 729 - 729 -------- --------- -------- -------- --------- -------- Profit before taxes on income 3,731 2,190 5,921 1,609 1,670 3,279 Income tax expense (6) - (6) (107) - (107) -------- --------- -------- -------- --------- -------- Net Profit 3,725 2,190 5,915 1,502 1,670 3,172 Net loss attributable to non-controlli- ng interest 114 - 114 607 - 607 -------- --------- -------- -------- --------- -------- Net profit attributable to shareholders $ 3,839 $ 2,190 $ 6,029 $ 2,109 $ 1,670 $ 3,779 ======== ========= ======== ======== ========= ======== Net profit attributable to shareholders as a % of revenues 10.9% - 17.1% 6.8% - 12.1% Earnings per share Basic Earnings attributable to shareholders per Ordinary Share $ 0.13 $ 0.08 $ 0.21 $ 0.07 $ 0.06 $ 0.13 ======== ========= ======== ======== ========= ======== Diluted Earnings attributable to shareholders per Ordinary Share $ 0.13 $ 0.07 $ 0.20 $ 0.07 $ 0.05 $ 0.12 ======== ========= ======== ======== ========= ======== (*)See specified items Given Imaging Ltd. and its Consolidated Subsidiaries Reconciliation of GAAP results to non-GAAP results For the nine months ended September 30, 2009 and 2008 Condensed, in thousands except share and per share data YTD 2009 YTD 2008 Specified Non Specified Non GAAP Items (*) GAAP GAAP Items (*) GAAP --------- --------- --------- -------- --------- -------- Revenues $ 101,723 - $ 101,723 $ 91,332 - $ 91,332 Cost of revenues (23,766) - (23,766) (23,736) - (23,736) --------- --------- --------- -------- --------- -------- Gross profit 77,957 - 77,957 67,596 - 67,596 --------- --------- --------- -------- --------- -------- Gross profit as a % of revenues 76.6% - 76.6% 74.0% - 74.0% Operating expenses Research and development, net (12,522) 286 (12,236) (10,439) 270 (10,169) Sales and marketing (45,257) 1,509 (43,748) (46,569) 1,303 (45,266) General and administr- ative (14,021) 4,083 (9,938) (14,449) 4,595 (9,854) Termination of marketing agreement - - - 5,443 (5,443) - Other, net (331) - (331) - - - --------- --------- --------- -------- --------- -------- Total operating expenses (72,131) 5,878 (66,253) (66,014) 725 (65,289) --------- --------- --------- -------- --------- -------- Operating profit 5,826 5,878 11,704 1,582 725 2,307 Operating profit (loss) as a % of revenues 5.7% - 11.5% 1.7% - 2.5% --------- --------- --------- -------- --------- -------- Financing income, net 1,276 - 1,276 3,195 - 3,195 --------- --------- --------- -------- --------- -------- Profit before taxes on income 7,102 5,878 12,980 4,777 725 5,502 Income tax benefit (expense) 1,160 (1,390) (230) (233) - (233) --------- --------- --------- -------- --------- -------- Net Profit 8,262 4,488 12,750 4,544 725 5,269 Net loss attributable to non-controlling interest 704 - 704 1,525 - 1,525 --------- --------- --------- -------- --------- -------- Net profit attributable to sharehold- ers $ 8,966 $ 4,488 $ 13,454 $ 6,069 $ 725 $ 6,794 ========= ========= ========= ======== ========= ======== Net profit attributable to shareholders as a % of revenues 8.8% - 13.2% 6.6% - 7.4% Earnings per share Basic Earnings attributable to shareholders per Ordinary Share $ 0.31 $ 0.15 $ 0.46 $ 0.21 $ 0.02 $ 0.23 ========= ========= ========= ======== ========= ======== Diluted Earnings attributable to shareholders per Ordinary Share $ 0.30 $ 0.15 $ 0.45 $ 0.20 $ 0.02 $ 0.22 ========= ========= ========= ======== ========= ======== (*)See specified items Given Imaging Ltd. and its Consolidated Subsidiaries Consolidated Balance Sheets In thousands except share data (Unaudited) September 30 December 31 2009 2008 ------------ ------------ Assets Current assets Cash and cash equivalents $ 42,199 $ 31,697 Short-term investments 26,537 28,509 Accounts receivable: Trade (Net of provisions for doubtful debts of $287 and of $210 as of September 30, 2009 and December 31, 2008, respectively) 21,247 21,673 Other 3,093 4,662 Inventories 24,477 18,931 Advances to suppliers 577 3,540 Deferred tax assets 1,512 1,178 Prepaid expenses 1,960 1,631 ------------ ------------ Total current assets 121,602 111,821 ------------ ------------ Deposits 1,099 1,094 Assets held for employee severance payments 4,658 3,686 Marketable Securities 20,097 30,063 Fixed assets, at cost, less accumulated depreciation 14,365 15,115 Intangible assets less accumulated amortization 11,598 12,067 Goodwill 4,063 4,069 ------------ ------------ Total Assets $ 177,482 $ 177,915 ============ ============ Given Imaging Ltd. and its Consolidated Subsidiaries Consolidated Balance Sheets In thousands except share data (Unaudited) September 30 December 31 2009 2008 ----------- ----------- Liabilities and shareholders' equity Current liabilities Current installments of obligation under capital lease $ 149 $ 114 Accounts payable Trade 7,649 7,418 Other 18,665 17,612 Deferred income 219 1,523 ----------- ----------- Total current liabilities 26,682 26,667 ----------- ----------- Long-term liabilities Obligation under capital lease, net 401 485 Liability in respect of employees severance payments 5,257 4,599 ----------- ----------- Total long-term liabilities 5,658 5,084 ----------- ----------- Total liabilities 32,340 31,751 ----------- ----------- Equity Shareholders equity Ordinary Shares, NIS 0.05 par value each (90,000,000 shares authorized; 29,294,785 and 29,257,785 shares issued and fully paid as of September 30, 2009 and December 31, 2008, respectively) 344 343 Additional paid-in capital 179,910 173,983 Capital reserve 2,166 2,166 Accumulated other comprehensive income (loss) 431 (600) Accumulated deficit (38,554) (31,721) ----------- ----------- Shareholders' equity 144,297 144,171 ----------- ----------- Noncontrolling interest 845 1,993 ----------- ----------- Total Equity 145,142 146,164 ----------- ----------- Total liabilities and equity $ 177,482 $ 177,915 =========== =========== Given Imaging Ltd. and its Consolidated Subsidiaries Consolidated Statements of Operations In thousands except share and per share data (Unaudited) Nine-month period Three-month period ended ended September 30 September 30 Year ended ---------------------- ---------------------- December 31 2009 2008 2009 2008 2008 ---------- ---------- ---------- ---------- ---------- Revenues $ 101,723 $ 91,332 $ 35,220 $ 31,136 $ 125,108 Cost of revenues (23,766) (23,736) (7,827) (7,793) (33,001) ---------- ---------- ---------- ---------- ---------- Gross profit 77,957 67,596 27,393 23,343 92,107 ---------- ---------- ---------- ---------- ---------- Operating expenses Research and development, gross (13,543) (11,529) (5,019) (3,840) (15,126) In-process research and development acquired in a business combination - - - - (4,700) ---------- ---------- ---------- ---------- ---------- (13,543) (11,529) (5,019) (3,840) (19,826) Government grants 1,021 1,090 387 300 1,530 ---------- ---------- ---------- ---------- ---------- Research and development, net (12,522) (10,439) (4,632) (3,540) (18,296) Sales and marketing (45,257) (46,569) (14,758) (14,647) (60,902) General and administrative (14,021) (14,449) (5,042) (4,276) (19,320) Termination of marketing agreement - 5,443 - - 5,443 Other, net (331) - (316) - (867) ---------- ---------- ---------- ---------- ---------- Total operating expenses (72,131) (66,014) (24,748) (22,463) (93,942) ---------- ---------- ---------- ---------- ---------- Operating profit (loss) 5,826 1,582 2,645 880 (1,835) Financing income, net 1,276 3,195 1,086 729 4,004 ---------- ---------- ---------- ---------- ---------- Profit (loss) before taxes on income 7,102 4,777 3,731 1,609 2,169 Income tax (expense) benefit 1,160 (233) (6) (107) (250) ---------- ---------- ---------- ---------- ---------- Net Profit 8,262 4,544 3,725 1,502 1,919 Net loss attributable to noncontrolling interest 704 1,525 114 607 2,087 ---------- ---------- ---------- ---------- ---------- Net profit attributable to shareholders $ 8,966 $ 6,069 $ 3,839 $ 2,109 $ 4,006 ========== ========== ========== ========== ========== Earnings per share Basic Earnings attributable to shareholders per Ordinary Share $ 0.31 $ 0.21 $ 0.13 $ 0.07 $ 0.14 ========== ========== ========== ========== ========== Diluted Earnings attributable to shareholders per Ordinary Share $ 0.30 $ 0.20 $ 0.13 $ 0.07 $ 0.13 ========== ========== ========== ========== ========== Weighted average number of Ordinary Shares used to compute basic earnings per Ordinary share 29,264,952 29,252,785 29,278,785 29,254,618 29,254,035 ========== ========== ========== ========== ========== Weighted average number of Ordinary Shares used to compute diluted Earnings per Ordinary share 30,108,597 30,791,425 30,648,420 30,601,355 30,798,360 ========== ========== ========== ========== ========== The accompanying notes are an integral part of these consolidated financial statements. Given Imaging Ltd. and its Consolidated Subsidiaries Consolidated Statements of Cash Flows In thousands (Unaudited) Nine-month period Three-month period ended ended September 30, September 30, Year ended ------------------ ------------------ December 31, 2009 2008 2009 2008 2008 -------- -------- -------- -------- ---------- Cash flows from operating activities: Net profit $ 8,262 $ 4,544 $ 3,725 $ 1,502 $ 1,919 Adjustments required to reconcile net profit to net cash used in operating activities: Depreciation and amortization 4,513 3,839 1,531 1,298 5,183 In-process research and development - - - - 4,700 Goodwill impairment - - - - 406 Changes in deferred tax assets (334) 284 (517) 109 172 Stock option compensation 5,878 5,126 2,190 1,870 6,918 Other 100 197 236 188 621 Net increase in trading securities (6,355) - (2983) - - Decrease in accounts receivable - trade 426 4,295 1,134 1,507 1,642 Decrease (increase) in accounts receivable - other 1,569 6,775 (105) 2,192 5,723 (Increase) in prepaid expenses (329) (632) (711) (714) (342) Decrease (Increase) in advances to suppliers 2,963 (311) 262 (286) (3,350) Increase in inventories (5,546) (3,796) (2,858) (1,179) (2,971) Increase (decrease) in accounts payable 1,251 (2,792) 1,760 (1,007) (3,287) Decrease in deferred income (1,304) (6,585) (386) (72) (7,856) -------- -------- -------- -------- ---------- Net cash provided by operating activities 11,094 10,944 3,278 5,408 9,478 -------- -------- -------- -------- ---------- Cash flows from investing activities: Excess of cash investment over equity share in subsidiary - 965 - - - Purchase of fixed assets and intangible assets (3,619) (5,166) (1,171) (1,569) (6,300) Purchase of fixed assets, intangible assets and goodwill in a business combination - - - - (16,660) Deposits 16 (247) 26 (3) (192) Proceeds from sales of marketable securities and short term investments 32,424 52,396 11,698 17,682 67,743 Proceeds from sales of fixed assets - 30 - - 61 Investments in marketable securities (13,218) (54,071) (1,010) (21,557) (61,986) -------- -------- -------- -------- ---------- Net cash provided by (used in) investing activities 15,603 (6,093) 9,543 (5,447) (17,334) -------- -------- -------- -------- ---------- Cash flows from financing activities: Principal payments on capital lease obligation (97) (91) (32) (6) (120) Proceeds from the issuance of ordinary Shares 50 252 50 56 252 Dividend distribution (15,799) - - - - Purchase of shares from a noncontrolling shareholder in a subsidiary (382) - - - 2,288 Issuance of shares to a noncontrolling shareholder in a subsidiary - 1,207 - - - -------- -------- -------- -------- ---------- Net cash (used in) provided by financing activities (16,228) 1,368 18 50 2,420 -------- -------- -------- -------- ---------- Effect of exchange rate changes on cash 33 258 122 (15) 30 -------- -------- -------- -------- ---------- Increase (decrease) in cash and cash Equivalents 10,502 6,477 12,961 (4) (5,406) Cash and cash equivalents at beginning of period 31,697 37,103 29,238 43,584 37,103 -------- -------- -------- -------- ---------- Cash and cash equivalents at end of period $ 42,199 $ 43,580 $ 42,199 $ 43,580 $ 31,697 ======== ======== ======== ======== ========== Supplementary cash flow information Income taxes paid $ 728 $ 194 $ 643 $ 72 $ 259 ======== ======== ======== ======== ========== Assets acquired under capital lease $ - $ 109 $ - $ - $ 109 ======== ======== ======== ======== ==========
Contact Information: For further information contact: Fern Lazar/David Carey Lazar Partners Ltd. 212-867-1768