Given Imaging (GIVN) 6-K Given Imaging LTD.

Exhibit 99.2

Given Imaging Ltd.

And its Consolidated Subsidiaries

Interim Consolidated Financial Statements

As of September 30, 2006

(Unaudited)

Given Imaging Ltd. and its Consolidated Subsidiaries

Index to Consolidated Financial Statements

Page

Consolidated Balance Sheets 3

Consolidated Statements of Operations 5

Consolidated Statements of Changes in Shareholders’ Equity 6

Consolidated Statements of Cash Flows 7

Notes to the Consolidated Financial Statements 8

Given Imaging Ltd. and its Consolidated Subsidiaries

Consolidated Balance Sheets

In thousands except share data

	September 30,		December 31,
	2006		2005
	(Unaudited)		(Audited)
Assets
Current assets
Cash and cash equivalents	$	35,206	$	65,356
Short-term investments		12,966		288
Accounts receivable:
Trade (Net of provisions for doubtful debts of $700 and $431
as of September 30, 2006 and December 31, 2005, respectively)		16,543		18,325
Other		1,634		6,264
Inventories		18,445		16,172
Prepaid expenses		2,081		1,020
Deferred taxes		1,448		1,219
Advances to suppliers		77		332
Total current assets		88,400		108,976
Deposits		457		401
Marketable securities		42,137		21,664
Assets held for severance benefits		1,821		1,690
Fixed assets, at cost, less accumulated depreciation		15,327		13,862
Other assets, at cost, less accumulated amortization		2,833		2,517
Total assets	$	150,975	$	149,110

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Given Imaging Ltd. and its Consolidated Subsidiaries

Consolidated Balance Sheets

In thousands except share data

	September 30,			December 31,
	2006			2005
	(Unaudited)			(Audited)
Liabilities and shareholders’ equity
Current liabilities
Current installments of obligation under capital lease	$	12		$	11
Accounts payable:
Trade		3,894			5,529
Other		12,892			13,886
Deferred revenue		3,383			3,333
Total current liabilities		20,181			22,759
Long-term liabilities
Deferred income		20,824			22,172
Obligation under capital lease, net		21			34
Liability for employee severance benefits		2,217			2,040
Total long-term liabilities		23,062			24,246
Total liabilities		43,243			47,005
Minority interest		3,856			61
Shareholders’ equity
Share capital:
Ordinary Shares, NIS 0.05 par value each (90,000,000 shares authorized as of
September 30, 2006 and December 31, 2005, 28,073,231
and 27,950,281 shares issued and fully paid as of September 30, 2006 and
December 31, 2005, respectively)		329			327
Additional paid-in capital		153,754			148,955
Capital reserve		2,166			2,166
Accumulated deficit		(52,373	)		(49,404	)
Total shareholders’ equity		103,876			102,044
Total liabilities and shareholders’ equity	$	150,975		$	149,110

The accompanying notes are an integral part of these consolidated financial statements.

4

Given Imaging Ltd. and its Consolidated Subsidiaries

Consolidated Statements of Operations

In thousands except share and per share data

	Nine-month period ended September 30,						Three-month period ended September 30,						Year ended December 31,
	2006			2005			2006			2005			2005
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Audited)
Revenues	$	67,557		$	62,376		$	24,050		$	19,841		$	86,776
Cost of revenues		16,969			16,070			6,058			4,618			22,070
Gross profit		50,588			46,306			17,992			15,223			64,706
Operating expenses
Research and development, gross		(9,374	)		(6,079	)		(2,753	)		(2,061	)		(8,833	)
Royalty bearing participation		1,287			872			447			374			1,244
Research and development, net		(8,087	)		(5,207	)		(2,306	)		(1,687	)		(7,589	)
Sales and marketing expenses		(37,123	)		(32,227	)		(11,239	)		(9,778	)		(43,281	)
General and administrative expenses		(12,254	)		(7,013	)		(4,410	)		(2,539	)		(9,657	)
Total operating expenses		(57,464	)		(44,447	)		(17,955	)		(14,004	)		(60,527	)
Operating profit (loss)		(6,876	)		1,859			37			1,219			4,179
Financing income, net		2,958			155			581			519			762
Profit (loss) before taxes on income		(3,918	)		2,014			618			1,738			4,941
Taxes on income		(28	)		5			(254	)		(53	)		286
Profit (loss) before minority share		(3,946	)		2,019			364			1,685			5,227
Minority share in losses of subsidiary		977			803			377			253			1,116
Net (loss) profit	$	(2,969	)	$	2,822		$	741		$	1,938		$	6,343
Basic (loss) profit per Ordinary Share	$	(0.10	)	$	0.10		$	0.02		$	0.07		$	0.23
Diluted (loss) profit per Ordinary Share	$	(0.10	)	$	0.09		$	0.02		$	0.07		$	0.21
Weighted average number of Ordinary Shares outstanding used
in basic profit per Ordinary Share calculation		28,017,914			27,736,989			28,061,356			27,829,442			27,781,223
Weighted average number of Ordinary Shares outstanding used
in diluted profit per Ordinary Share calculation		28,017,914			29,731,618			29,377,249			29,568,874			29,695,164

The accompanying notes are an integral part of these consolidated financial statements.

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Given Imaging Ltd. and its Consolidated Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

In thousands except share data

	Ordinary Shares				Additional Paid-In Capital		Capital reserve		Unearned compensation			Accumulated deficit			Total
	Shares		Amount
Nine months ended September 30, 2006 (Unaudited)
Balance as of December 31, 2005		27,950,281	$	327	$	148,955	$	2,166	$	—		$	(49,404	)	$	102,044
Changes during the period:
Exercise of stock options		122,950		2		664		—		—			—			666
Stock based compensation		—		—		4,135		—		—			—			4,135
Net loss		—		—		—		—		—			(2,969	)		(2,969	)
Balance as of September 30, 2006 (Unaudited)		28,073,231	$	329	$	153,754	$	2,166	$	—		$	(52,373	)	$	103,876
Nine months ended September 30, 2005 (Unaudited)
Balance as of December 31, 2004		27,621,386	$	323	$	147,878	$	2,166	$	(3	)	$	(55,747	)	$	94,617
Changes during the period:
Exercise of stock options		241,711		3		889		—		—			—			892
Amortization of unearned compensation		—		—		—		—		3			—			3
Net profit		—		—		—		—		—			2,822			2,822
Balance as of September 30, 2005 (Unaudited)		27,863,097	$	326	$	148,767	$	2,166	$	—		$	(52,925	)	$	98,334
Three months ended September 30, 2006 (Unaudited)
Balance as of June 30, 2006		28,047,231	$	328	$	152,531	$	2,166	$	—		$	(53,114	)	$	101,911
Changes during the period:
Exercise of stock options		26,000		1		99		—		—			—			100
Stock based compensation		—		—		1,124		—		—			—			1,124
Net profit		—		—		—		—		—			741			741
Balance as of September 30, 2006 (Unaudited)		28,073,231	$	329	$	153,754	$	2,166	$	—		$	(52,373	)	$	103,876
Three months ended September 30, 2005 (Unaudited)
Balance as of June 30, 2005		27,822,411	$	325	$	148,628	$	2,166	$	—		$	(54,863	)	$	96,256
Changes during the period:
Exercise of stock options		40,686		1		139		—		—			—			140
Net profit		—		—		—		—		—			1,938			1,938
Balance as of September 30, 2005 (Unaudited)		27,863,097	$	326	$	148,767	$	2,166	$	—		$	(52,925	)	$	98,334
Year ended December 31, 2005 (Audited)
Balance as of December 31, 2004		27,621,386	$	323	$	147,878	$	2,166	$	(3	)	$	(55,747	)	$	94,617
Changes during the year:
Exercise of stock options		328,895		4		1,077		—		—			—			1,081
Amortization of unearned compensation		—		—		—		—		3			—			3
Net profit		—		—		—		—		—			6,343			6,343
Balance as of December 31, 2005 (Audited)		27,950,281	$	327	$	148,955	$	2,166	$	—		$	(49,404	)	$	102,044

The accompanying notes are an integral part of these consolidated financial statements.

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Given Imaging Ltd. and its Consolidated Subsidiaries

Consolidated Statements of Cash Flows

In thousands

	Nine-month period ended September 30,						Three-mont  period ended September 30,						Year ended December 31,
	2006			2005			2006			2005			2005
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Audited)
Cash flows from operating activities:
Net profit (loss)	$	(2,969	)	$	2,822		$	741		$	1,938		$	6,343
Adjustments required to reconcile net profit to
net cash used in operating activities:
Minority share in losses of subsidiary		(977	)		(803	)		(377	)		(253	)		(1,116	)
Depreciation and amortization		3,049			2,701			1,071			795			3,596
Deferred taxes		(229	)		(112	)		35			43			(482	)
Employees’ stock options compensation		4,135			3			1,124			—			3
Other		(152	)		13			(38	)		(25	)		98
Decrease (increase) in accounts receivable - trade		1,782			(2,175	)		(912	)		(2,989	)		(6,064	)
Decrease (increase) in accounts receivable - other		4,630			(9,975	)		352			(9,893	)		(4,993	)
Increase in prepaid expenses		(1,061	)		(793	)		(313	)		(401	)		(66	)
Decrease (increase) in advances to suppliers		255			44			442			(299	)		223
Decrease (increase) in inventories		(2,273	)		(2,529	)		1,134			(946	)		(2,378	)
Increase (decrease) in accounts payable		(2,799	)		4,150			(1,065	)		2,731			5,769
Increase (decrease) in deferred revenue		(1,298	)		12,417			(702	)		9,576			12,555
Net cash provided by operating activities	$	2,093		$	5,763		$	1,492		$	277		$	13,488
Cash flows from investing activities:
Purchase of fixed assets and other assets	$	(4,962	)		(6,491	)		(1,243	)		(1,465	)		(7,948	)
Acquisition of marketable securities		(32,844	)		(21,919	)		(7,980	)		(21,919	)		(21,919
Deposits		(34	)		(31	)		(33	)		(34	)		(16	)
Net cash used in investing activities	$	(37,840	)		(28,441	)		(9,256	)		(23,418	)		(29,883	)
Cash flows from financing activities:
Principal payments on capital lease obligation	$	(11	)		(9	)		(2	)		(3	)		(12	)
Proceeds from the issuance of Ordinary Shares		666			892			100			140			1,081
Issuance of shares by consolidated company		4,772			—			—			—			—
Net cash provided by financing activities	$	5,427		$	883		$	98		$	137		$	1,069
Effect of exchange rate changes on cash	$	170		$	(166	)		69		$	(6	)		(179	)
Decrease in cash and cash equivalents	$	(30,150	)		(21,961	)		(7,597	)		(23,010	)		(15,505	)
Cash and cash equivalents at beginning of period	$	65,356		$	80,861		$	42,803		$	81,910		$	80,861
Cash and cash equivalents at end of period	$	35,206		$	58,900		$	35,206		$	58,900		$	65,356
Supplementary cash flow information
Income taxes paid	$	95		$	169		$	23		$	77		$	163

The accompanying notes are an integral part of these consolidated financial statements.

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Given Imaging Ltd. and its Consolidated Subsidiaries

Notes to the Consolidated Financial Statements

In thousands except share data

Note 1 - Organization and Basis of Presentation

A. Description of business

Given Imaging Ltd. (the “Company”) was incorporated in Israel in January 1998.

The medical device industry in which the Company is involved is characterized by the risks of regulatory barriers and reimbursement issues. Penetration into the world market requires the investment of considerable resources and continuous development efforts. The Company’s future success is dependent upon several factors including the technological quality, regulatory approvals and sufficient reimbursement for its products.

B. Basis of presentation

The accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments), which, in the opinion of management, are necessary to present fairly, the financial information included therein. It is suggested that these financial statements be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2005. Results for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Note 2 - Recently Adopted Accounting Standards

Effective January 1, 2006, the Company adopted the fair value recognition provisions of Statement No. 123 (revised 2004), “Share-Based Payment” (“Statement 123R”), using the modified-prospective-transition method. Under that transition method, compensation costs recognized in the first quarter of 2006 include also compensation costs for all share-based payments granted prior to, but not yet vested, as of December 31, 2005. The amount of compensation costs recognized is based upon the grant date fair value estimated under the Black-Scholes option valuation model in accordance with the original provisions of Statement 123, Accounting for Stock-Based Compensation. Results for prior periods have not been restated, as it is not required.

For the nine-month and three-month periods ended September 30, 2006, the Company recognized compensation expense of $ 2,734 and $ 264, respectively, for non-vested shares and $ 1,401 and $ 860, respectively, for share options.

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