Given Imaging Ltd.
And its Consolidated Subsidiaries
Interim Consolidated Financial Statements
As of September 30, 2004
(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
U.S. $ in thousands except per share data
September 30, December 31,
------------- ------------
2004 2003
------------- ------------
Unaudited) (Audited)
Assets
Current assets
Cash and cash equivalents $ 66,885 $ 25,367
Accounts receivable:
Trade 8,040 6,945
Other 1,216 467
Inventories 13,386 8,485
Prepaid expenses 1,395 1,361
Advances to suppliers 446 -
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Total current assets 91,368 42,625
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Deposits 361 361
Assets held for severance benefits 1,181 1,008
Fixed assets, at cost, less accumulated depreciation 9,833 9,595
Other assets, at cost, less accumulated amortization 2,206 1,980
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Total assets $ 104,949 $ 55,569
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3
Given Imaging Ltd. and its Consolidated Subsidiaries
Consolidated Balance Sheets
U.S. $ in thousands except per share data
September 30, December 31,
------------- ------------
2004 2003
------------- ------------
Unaudited) (Audited)
Liabilities and shareholders' equity
Current liabilities
Current installments of obligation under capital lease $ 9 $ 27
Accounts payable:
Trade 5,305 2,216
Other 4,871 4,462
Deferred revenue 1,158 950
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Total current liabilities 11,343 7,655
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Long-term liabilities
Obligation under capital lease, net 47 4
Liability for employee severance benefits 1,422 1,188
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Total long-term liabilities 1,469 1,192
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Total liabilities 12,812 8,847
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Minority interest 1,243 1,924
Shareholders' equity
Share capital:
Ordinary Shares, NIS 0.05 par value each (90,000,000 and
60,000,000 shares authorized as of September 30, 2004 and
December 31, 2003, respectively;
27,475,086 and 25,649,188 shares issued
and fully paid as of September 30, 2004 and
December 31, 2003, respectively) 322 301
Additional paid-in capital 146,598 100,996
Capital reserve 2,166 2,166
Unearned compensation (7) (30)
Accumulated deficit (58,185) (58,635)
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Total shareholders' equity 90,894 44,798
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Total liabilities and shareholders' equity $ 104,949 $ 55,569
============= ============
The accompanying notes are an integral part of these consolidated financial
statements.
4
Given Imaging Ltd. and its Consolidated Subsidiaries
Consolidated Statements of Operations
U.S. $ in thousands except per share data
Nine month period Three month period
ended ended Year ended
September 30, September 30, December 31
------------------------ --------------------
2004 2003 2004 2003 2003
----------- ----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Revenues $ 42,807 $ 28,005 $ 14,594 $ 9,682 $ 40,539
Cost of revenues (11,154) (9,771) (3,636) (3,581) (13,551)
----------- ----------- ----------- ----------- -----------
Gross profit 31,653 18,234 10,958 6,101 26,988
Operating expenses
Research and development, gross (5,456) (5,264) (2,119) (1,526) (7,037)
Royalty bearing participation 702 1,005 288 314 1,303
----------- ----------- ----------- ----------- -----------
Research and development, net (4,754) (4,259) (1,831) (1,212) (5,734)
Sales and marketing expenses (22,588) (19,738) (7,705) (6,219) (26,804)
General and administrative expenses (4,644) (4,024) (1,678) (1,233) (5,312)
----------- ----------- ----------- ----------- -----------
Total operating expenses (31,986) (28,021) (11,214) (8,664) (37,850)
----------- ----------- ----------- ----------- -----------
Operating loss (333) (9,787) (256) (2,563) (10,862)
Financing income, net 102 627 165 573 995
----------- ----------- ----------- ----------- -----------
Loss before taxes on income (231) (9,160) (91) (1,990) (9,867)
Taxes on income - - - - -
----------- ----------- ----------- ----------- -----------
Loss before minority share (231) (9,160) (91) (1,990) (9,867)
Minority share in losses (profits) of subsidiary 681 130 205 (67) 258
Net profit (loss) $ 450 $ (9,030) $ 114 $ (2,057) $ (9,609)
=========== =========== =========== =========== ===========
Basic profit (loss) per Ordinary Share $ 0.017 $ (0.355) $ 0.004 $ (0.081) $ (0.377)
=========== =========== =========== =========== ===========
Diluted profit (loss) per Ordinary Share $ 0.015 $ (0.355) $ 0.004 $ (0.081) $ (0.377)
============ ============ =========== =========== ===========
Weighted average number of Ordinary Shares
outstanding used in basic profit (loss) per
Ordinary Share calculation 26,332,954 25,456,461 27,404,098 25,532,223 25,493,073
=========== =========== =========== =========== ===========
Weighted average number of ordinary shares
used to compute diluted profit (loss) per
Ordinary Shares 29,091,795 25,456,461 30,139,467 25,532,223 25,493,073
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
5
Given Imaging Ltd. and its Consolidated Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity
U.S. $ in thousands except per share data
Additional
Paid-In Capital Unearned Accumulated
Ordinary Shares Capital reserve compensation deficit Total
----------------- ---------- ------- ------------ ----------- -----
Shares Amount
------ ------
Nine months ended September 30, 2004 (Unaudited)
Balance as of December 31, 2003 25,649,188 $ 301 $100,996 $2,166 $ (30) $ (58,635) $44,798
Changes during the period:
Ordinary shares issued 1,500,000 17 44,250 - - - 44,267
Exercise of stock options 325,898 4 1,301 - - - 1,305
Forfeiture of stock options - - (11) - 3 - (8)
Allocation of non-employee's stock option - - 62 - - - 62
Amortization of unearned compensation - - - - 20 - 20
Net profit - - - - - 450 450
---------- ----- -------- ------ -------- ---------- -------
Balance as of September 30, 2004 (Unaudited) 27,475,086 $ 322 $146,598 $2,166 $ (7) $ (58,185) $90,894
========== ===== ======== ====== ======== ========== =======
Nine months ended September 30, 2003 (Unaudited)
Balance as of December 31, 2002 25,373,513 $ 298 $100,262 $2,166 $ (123) $ (49,026) $53,577
Changes during the period:
Exercise of stock options 178,287 2 110 - - - 112
Forfeiture of stock options - - (73) - 73 - -
Acceleration of vesting - - 31 - - - 31
Allocation of non-employees; stock options - - 29 - - - 29
Net loss - - - - - (9,030) (9,030)
---------- ----- -------- ------ -------- ---------- -------
Balance as of September 30, 2003 (Unaudited) 25,551,800 $ 300 $100,359 $2,166 $ (50) $ (58,056) $44,719
========== ===== ======== ====== ======== ========== =======
Three months ended September 30, 2004 (Unaudited)
Balance as of June 30, 2004 27,357,338 $ 320 146,329 $2,166 $ (12) $ (58,299) $90,504
Changes during the period:
Additional issuance costs - - (87) - - - (87)
Exercise of stock options 117,748 2 356 - - - 358
Amortization of unearned compensation - - - - 5 - 5
Net profit - - - - - 114 114
---------- ----- -------- ------ -------- ---------- -------
Balance as of September 30, 2004 (Unaudited) 27,475,086 $ 322 $146,598 $2,166 $ (7) $ (58,185) $90,894
========== ===== ======== ====== ======== ========== =======
Three months ended September 30, 2003 (Unaudited)
Balance as of June 30, 2003 25,493,113 $ 300 $100,226 $2,166 $ (50) $ (55,999) $46,643
Changes during the period:
Exercise of stock options 58,687 - 73 - - - 73
Acceleration of vesting - - 31 - - - 31
Allocation of non-employees' stock options - - 29 - - - 29
Net loss - - - - - (2,057) (2,057)
---------- ----- -------- ------ -------- ---------- -------
Balance as of September 30, 2003 (Unaudited) 25,551,800 $ 300 $100,359 $2,166 $ (50) $ (58,056 $44,719
========== ===== ======== ====== ======== ========== =======
Year ended December 31, 2003 (Audited)
Balance as of December 31, 2002 25,373,513 $ 298 $100,262 $2,166 $ (123) $ (49,026) $53,577
Changes during the year:
Exercise of stock options 275,675 3 722 - - - 725
Forfeiture of stock options - - (78) - 78 - -
Acceleration of vesting - - 31 - - - 31
Allocation of non-employees' stock option - - 59 - - - 59
Amortization of unearned compensation - - - - 15 - 15
Net loss - - - - - (9,609) (9,609)
---------- ----- -------- ------ -------- ---------- -------
Balance as of December 31, 2003 (Audited) 25,649,188 $ 301 $100,996 $2,166 $ (30) $ (58,635) $44,798
========== ===== ======== ====== ======== ========== =======
The accompanying notes are an integral part of these consolidated financial
statements.
6
Given Imaging Ltd. and its Consolidated Subsidiaries
Consolidated Statements of Cash Flows
U.S. $ in thousands except per share data
Nine month period ended Three month period ended Year ended
September 30, September 30, December 31
------------------------ ------------------------
2004 2003 2004 2003 2003
----------- ---------- ----------- ----------- ----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Cash flows from operating activities:
Net profit (loss) $ 450 $ ( 9,030) $ 114 $ (2,057) $ (9,609)
Adjustments required to reconcile net profit (loss) to
net cash used in operating activities:
Minority share in profits (losses) of subsidiary (681) (130) (205) 67 (258)
Depreciation and amortization 2,341 2,231 788 803 3,030
Employees' stock options compensation 12 31 5 31 46
Non-employees' stock options compensation 62 29 - 29 59
Other 57 (1) 57 9 9
Decrease (increase) in accounts receivable (1,844) 2,156 (582) 733 938
Decrease (increase) in prepaid expenses (34) 215 (207) (116) (103)
Decrease (increase) in advances to suppliers (446) 4 131 31 -
Decrease (increase) in inventories (5,218) 78 (4,097) 1,319 1,860
Increase (decrease) in accounts payable 3,556 (4,813) 96 (1,850) (4,708)
Increase (decrease) in deferred revenue 208 89 203 (2) 223
Decrease in payable to related parties - (35) - - (35)
----------- ---------- ----------- ----------- ----------
Net cash used in operating activities $ (1,537) $ (9,176) $ (3,697) $ (1,003) $ (8,548)
----------- ---------- ----------- ----------- ----------
Cash flows from investing activities:
Purchase of fixed assets and other assets $ (2,473) $ (2,272) $ (1,218) $ (520) $ (2,550)
Proceeds from sales of fixed assets 57 34 45 34 60
Deposits, net (9) (47) (14) 6 (157)
----------- ---------- ----------- ----------- ----------
Net cash used in investing activities $ (2,425) $ (2,285) $ (1,187) $ (480) $ (2,647)
----------- ---------- ----------- ----------- ----------
Cash flows from financing activities:
Principal payments on capital lease obligation $ (34) $ (51) $ (4) $ (27) $ (72)
Proceeds from the issuance of Ordinary Shares 45,572 112 271 73 725
----------- ---------- ----------- ----------- ----------
Net cash provided by financing activities $ 45,538 $ 61 $ 267 $ 46 $ 653
----------- ---------- ----------- ----------- ----------
Effect of exchange rate changes on cash $ (58) $ 84 $ (7) $ 29 $ 117
----------- ---------- ----------- ----------- ----------
Increase (decrease) in cash and cash equivalents $ 41,518 $ (11,316) $ (4,624) $ (1,408) $(10,425)
Cash and cash equivalents at beginning of period $ 25,367 $ 35,792 $ 71,509 $ 25,884 $ 35,792
----------- ---------- ----------- ----------- ----------
Cash and cash equivalents at end of period $ 66,885 $ 24,476 $ 66,885 $ 24,476 $ 25,367
=========== ========== =========== =========== ==========
Supplementary cash flow information
Nine month period ended Three month period ended Year ended
September 30, September 30, December 31
------------------------ ------------------------
2004 2003 2004 2003 2003
----------- ---------- ----------- ----------- ----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Interest paid $ - $ 2 $ - $ - $ 3
Income taxes paid $ 76 $ 39 $ 44 $ 9 $ 68
The accompanying notes are an integral part of these consolidated financial
statements.
7
Given Imaging Ltd. and its Consolidated Subsidiaries
Notes to the Consolidated Financial Statements
U.S. $ in thousands except per 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 Company has generated revenues from sales of its
products commencing the third quarter of 2001. Due in large part to the
significant expenditures required to develop and market its product,
the Company has generated profit for the first time in the second
quarter of 2004.
The novel 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 from third-party healthcare payers of its products.
B. Basis of presentation
The accompanying unaudited 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, 2003. Results for the interim periods presented are not necessarily
indicative of the results to be expected for the full year.
Note 2 - Share Capital
On June 23, 2004, the Company issued, in a follow-on offering,
1,500,000 of its ordinary shares at a price of $32 per share.
The net proceeds, after deducting underwriters fees and issuance
expenses, amounted to $44.3 million.
The Company also increased its authorized share capital by NIS 1.5
million such that the Company's authorized share capital is NIS
4,500,000 divided into 90 million Ordinary Shares, par value NIS 0.05
each, and amended the Articles and the Company's Memorandum of
Association to reflect such increase.
8