Exhibit 99.2
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Given Imaging Ltd.
And its Consolidated Subsidiaries
Interim Consolidated Financial Statements
As of June 30, 2005
(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
June 30, December 31,
2005 2004
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(Unaudited) (Audited)
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Assets
Current assets
Cash and cash equivalents $ 81,910 $ 80,861
Accounts receivable:
Trade (Net of provisions for doubtful debts of $211 and $115
as of June 30, 2005 and December 31, 2004, respectively) 11,447 12,261
Other 1,353 1,271
Inventories 15,336 13,794
Prepaid expenses 1,346 954
Deferred taxes 892 737
Advances to suppliers 212 555
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Total current assets 112,496 110,433
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Deposits 394 425
Assets held for severance benefits 1,431 1,339
Fixed assets, at cost, less accumulated depreciation 13,094 9,862
Other assets, at cost, less accumulated amortization 2,094 2,165
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Total assets $ 129,509 $ 124,224
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3
Given Imaging Ltd. and its Consolidated Subsidiaries
Consolidated Balance Sheets
In thousands except share data
June 30, December 31,
2005 2004
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(Unaudited) (Audited)
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Liabilities and shareholders' equity
Current liabilities
Current installments of obligation under capital lease $ 11 $ 11
Accounts payable:
Trade 5,453 5,147
Other 9,631 8,678
Deferred revenue 2,306 3,610
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Total current liabilities 17,401 17,446
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Long-term liabilities
Deferred income 13,485 9,340
Obligation under capital lease, net 41 48
Liability for employee severance benefits 1,699 1,596
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Total long-term liabilities 15,225 10,984
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Total liabilities 32,626 28,430
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Minority interest 627 1,177
Shareholders' equity
Share capital:
Ordinary Shares, NIS 0.05 par value each
(90,000,000 shares authorized as of June 30, 2005
and December 31, 2004
27,822,411 and 27,621,386 shares issued
and fully paid as of June 30, 2005 and
December 31, 2004, respectively) 325 323
Additional paid-in capital 148,628 147,878
Capital reserve 2,166 2,166
Unearned compensation - (3)
Accumulated deficit (54,863) (55,747)
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Total shareholders' equity 96,256 94,617
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Total liabilities and shareholders' equity $ 129,509 $ 124,224
============= ===============
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
Six-month period Three-month period Year ended
ended June 30, ended June 30, December 31,
------------------------ ---------------------- --------------
2005 2004 2005 2004 2004
------------ ------------ ----------- ---------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
------------ ------------ ----------- ---------- -----------
Revenues $ 42,535 $ 28,213 $ 20,526 $15,462 $ 65,020
Cost of revenues (11,452) (7,518) (5,051) (3,782) (17,734)
---------- ---------- ----------- ---------- -----------
Gross profit 31,083 20,695 15,475 11,680 47,286
---------- ---------- ----------- ---------- -----------
Operating expenses
Research and development, gross (4,018) (3,337) (2,115) (1,716) (7,363)
Royalty bearing participation 498 414 498 414 1,140
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Research and development, net (3,520) (2,923) (1,617) (1,302) (6,223)
Sales and marketing expenses (22,449) (14,883) (11,637) (7,864) (33,652)
General and administrative expenses (4,474) (2,966) (2,435) (1,758) (6,916)
---------- ---------- ----------- ---------- -----------
Total operating expenses (30,443) (20,772) (15,689) (10,924) (46,791)
---------- ---------- ----------- ---------- -----------
Operating profit (loss) 640 (77) (214) 756 495
Financing income (expenses), net (364) (63) (415) (124) 956
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Profit (loss) before taxes on income 276 (140) (629) 632 1,451
Taxes on income 58 - (16) - 690
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Profit (loss) before minority share 334 (140) (645) 632 2,141
Minority share in losses of subsidiary 550 476 281 289 747
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Net profit (loss) $ 884 $ 336 $ (364) $ 921 $ 2,888
========== ========== =========== ========== ===========
Basic profit (loss) per Ordinary Share $ 0.03 $ 0.01 $ (0.01) $ 0.04 $ 0.11
========== ========== =========== ========== ===========
Diluted profit (loss) per Ordinary Share $ 0.03 $ 0.01 $ (0.01) $ 0.03 $ 0.10
========== ========== =========== ========== ===========
Weighted average number of Ordinary Shares
outstanding used in basic profit (loss) per
Ordinary Share calculation 27,690,826 25,797,382 27,742,711 25,900,192 26,633,964
========== ========== =========== ========== ===========
Weighted average number of Ordinary Shares
outstanding used in diluted profit (loss) per
Ordinary Share calculation 29,957,063 28,643,349 27,742,711 28,700,078 29,353,448
========== ========== =========== ========== ===========
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
In thousands except share data
Additional
Paid-In Capital
Ordinary Shares Capital reserve
--------------- ----------- --------
Shares Amount
------ ------
Six months ended June 30, 2005 (Unaudited)
Balance as of December 31, 2004 27,621,386 $ 323 $147,878 $ 2,166
Changes during the period:
Exercise of stock options 201,025 2 750 -
Amortization of unearned compensation - - - -
Net profit - - - -
---------- ------ -------- -------
Balance as of June 30, 2005 (Unaudited) 27,822,411 $ 325 $148,628 $ 2,166
========== ====== ======== =======
Six months ended June 30, 2004 (Unaudited)
Balance as of December 31, 2003 25,649,188 $ 301 $100,996 $ 2,166
Changes during the period:
Ordinary shares issued 1,500,000 17 44,337 -
Exercise of stock options 208,150 2 945
Forfeiture of stock options - - (11) -
Allocation of non-employees' stock option - - 62 -
Amortization of unearned compensation - - - -
Net profit - - - -
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Balance as of June 30, 2004 (Unaudited) 27,357,338 $ 320 $146,329 $ 2,166
========== ====== ======== =======
Three months ended June 30, 2005 (Unaudited)
Balance as of March 31, 2005 27,665,011 $ 324 $148,243 $ 2,166
Changes during the period:
Exercise of stock options 157,400 1 $ 385 -
Net loss - - - -
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Balance as of June 30, 2005 (Unaudited) 27,822,411 $ 325 $148,628 $ 2,166
========== ====== ======== =======
Three months ended June 30, 2004 (Unaudited)
Balance as of March 31, 2004 25,750,538 $ 302 $101,668 $ 2,166
Changes during the period:
Ordinary shares issued 1,500,000 17 44,337 -
Exercise of stock options 106,800 1 334 -
Forfeiture of stock options (10) -
Amortization of unearned compensation - - - -
Net profit - - - -
---------- ------ -------- -------
Balance as of June 30, 2004 (Unaudited) 27,357,338 $ 320 $146,329 $ 2,166
========== ====== ======== =======
Year ended December 31, 2004 (Audited)
Balance as of December 31, 2003 25,649,188 $ 301 $100,996 $ 2,166
Changes during the year:
Ordinary shares issued 1,500,000 17 44,250 -
Exercise of stock options 472,198 5 2,581 -
Forfeiture of stock options - - (11) -
Non-employees' stock option - - 62 -
Amortization of unearned compensation - - - -
Net profit - - - -
---------- ------ -------- -------
Balance as of December 31, 2004 (Audited) 27,621,386 $ 323 $147,878 $ 2,166
========== ====== ======== =======
Unearned Accumulated
Compensation deficit Total
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Six months ended June 30, 2005 (Unaudited)
Balance as of December 31, 2004 $ (3) $ (55,747) $ 94,617
Changes during the period:
Exercise of stock options - - 752
Amortization of unearned compensation 3 - 3
Net profit - 884 884
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Balance as of June 30, 2005 (Unaudited) $ - $ (54,863) $ 96,256
======== ============ =========
Six months ended June 30, 2004 (Unaudited)
Balance as of December 31, 2003 $ (30) $ (58,635) $ 44,798
Changes during the period:
Ordinary shares issued - - 44,354
Exercise of stock options 947
Forfeiture of stock options 3 - (8)
Allocation of non-employees' stock option - - 62
Amortization of unearned compensation 15 - 15
Net profit - 336 336
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Balance as of June 30, 2004 (Unaudited) $ (12) $ (58,299) $ 90,504
======== ============ =========
Three months ended June 30, 2005 (Unaudited)
Balance as of March 31, 2005 $ - $ (54,499) $ 96,234
Changes during the period:
Exercise of stock options - - 386
Net loss - (364) (364)
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Balance as of June 30, 2005 (Unaudited) $ - $ (54,863) $ 96,256
======== ============ =========
Three months ended June 30, 2004 (Unaudited)
Balance as of March 31, 2004 $ (19) $ (59,220) $ 44,897
Changes during the period:
Ordinary shares issued - - 44,354
Exercise of stock options - - 335
Forfeiture of stock options 2 - (8)
Amortization of unearned compensation 5 - 5
Net profit - 921 921
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Balance as of June 30, 2004 (Unaudited) $ (12) $ (58,299) $ 90,504
======== ============ =========
Year ended December 31, 2004 (Audited)
Balance as of December 31, 2003 $ (30) $ (58,635) $ 44,798
Changes during the year:
Ordinary shares issued - - 44,267
Exercise of stock options - - 2,586
Forfeiture of stock options 3 - (8)
Non-employees' stock option - - 62
Amortization of unearned compensation 24 - 24
Net profit - 2,888 2,888
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Balance as of December 31, 2004 (Audited) $ (3) $ (55,747) $ 94,617
======== ============ =========
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
In thousands
Six-month period ended Three-month period ended Year ended
June 30, June 30, December 31,
----------------------------------------------------------------
2005 2004 2005 2004 2004
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(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
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Cash flows from operating activities:
Net profit (loss) $ 884 $ 336 $ (364) $ 921 $ 2,888
Adjustments required to reconcile net profit (loss) to
net cash used in operating activities:
Minority share in losses of subsidiary (550) (476) (281) (289) (747)
Depreciation and amortization 1,906 1,553 953 779 3,147
Deferred taxes (155) - (37) - (737)
Employees' stock options compensation 3 7 - (3) 16
Non-employees' stock options compensation - 62 - - 62
Other 38 - 15 (10) 48
Decrease (increase) in accounts receivable - trade 814 (507) 1,319 (532) (5,316)
Increase in accounts receivable (82) (755) (50) (515) (804)
Decrease (increase) in prepaid expenses (392) 173 (244) 253 360
Decrease (increase) in advances to suppliers 343 (577) 93 (215) (508)
Increase in inventories (1,583) (1,121) (1,242) (1,028) (5,648)
Increase in accounts payable 1,419 3,460 2,283 2,919 7,107
Increase (decrease) in deferred revenue 2,841 5 (488) 81 12,000
-------- -------- -------- -------- --------
Net cash provided by operating activities $ 5,486 $ 2,160 $ 1,957 $ 2,361 $11,868
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Cash flows from investing activities:
Purchase of fixed assets and other assets $(5,026) $(1,255) $(2,158) $ (898) $(3,245)
Proceeds from sales of fixed assets - 12 - - 57
Deposits 3 5 - 8 (42)
-------- -------- -------- -------- --------
Net cash used in investing activities $(5,023) $(1,238) $(2,158) $ (890) $(3,230)
-------- -------- -------- -------- --------
Cash flows from financing activities:
Principal payments on capital lease obligation $ (6) $ (30) $ (3) $ (12) $ (37)
Proceeds from the issuance of Ordinary Shares 752 45,301 474 44,689 46,853
-------- -------- -------- -------- --------
Net cash provided by financing activities $ 746 $45,271 $ 471 $44,677 $46,816
-------- -------- -------- -------- --------
Effect of exchange rate changes on cash $ (160) $ (51) $ (129) $ 21 $ 40
-------- -------- -------- -------- --------
Increase in cash and cash equivalents $ 1,049 $46,142 $ 141 $46,169 $55,494
Cash and cash equivalents at beginning of period $80,861 $25,367 $81,769 $25,340 $25,367
-------- -------- -------- -------- --------
Cash and cash equivalents at end of period $81,910 $71,509 $81,910 $71,509 $80,861
======== ======== ======== ======== ========
Supplementary cash flow information
Income taxes paid $ 92 $ 32 $ 52 $ 16 $ 107
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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
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 Company generated profit for the first time in the
second quarter of 2004.
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, 2004. Results for the interim periods presented are not
necessarily indicative of the results to be expected for the full year.
Note 2 - Recent Accounting Pronouncements
In April 2005, the Securities and Exchange Commission issued a new
rule, which defers the effective date of SFAS No. 123 (revised 2004),
"Share-Based Payment" ("SFAS 123R"). According to the new rule,
registrants must adopt SFAS No. 123R as of the beginning of their first
annual period beginning after June 15, 2005 and not as of beginning of
their first interim period beginning after June 15, 2005. Accordingly,
the effective date of the adoption of SFAS No.123R for the Company is
deferred from July 1, 2005 to January 1, 2006.
The Company currently expects to adopt SFAS 123R in the first quarter
of 2006, using the modified prospective method, although it continues
to review its alternatives for adoption under this new pronouncement.
Based upon its projection of unvested stock options at the
implementation date, the Company expects the adoption of SFAS 123R to
result in the recognition of material additional compensation expense
in 2006 and thereafter.
Note 3 - Provision for Sales Tax
The financial statements contain a provision of $1.2 million, net of
income tax, for potential bad debt, interest and penalties resulting
from the failure of the Company's U.S. subsidiary to appropriately
collect and remit sales tax on sales in the U.S. since the fourth
quarter of 2001.
Under most state laws and the terms of its customer agreements, the
Company has a right to collect the tax from its customers and the
Company already began contacting customers on this matter. This
provision represents the Company's estimates regarding the amounts it
may not be able to collect from its customers and remit to the
different jurisdictions, and any interest and penalties the Company
may have to pay these jurisdictions for failure to timely remit the
sales tax.