SOURCE: Given Imaging

Given Imaging

February 15, 2011 17:16 ET

Given Imaging Reports Fourth Quarter and Full-Year 2010 Results

Fourth Quarter 2010 Revenues Increase 12% to a Record $44.9 Million; 2010 Fiscal Year Revenues Increase 11% to a Record $157.8 Million; 2010 Non-GAAP Net Income of $19.6 Million, or $0.64 per Share, Equal to 2009

YOQNEAM, ISRAEL--(Marketwire - February 15, 2011) - Given Imaging Ltd. (NASDAQ: GIVN) today announced financial results for the fourth quarter and twelve months ended December 31, 2010.

Worldwide revenues in the fourth quarter of 2010 were a record $44.9 million, a 12% increase from $40 million in the fourth quarter of 2009. Revenues in the Americas region were $27.9 million, including revenues of $5.2 million from the Bravo pH Monitoring System and $4.0 million from sales of Sierra Scientific Instruments, which was acquired in April 2010. In the same period in 2009 revenues in the Americas region were $24 million, including revenues of $4.4 million from Bravo. Revenues in the EMEA region were $11.7 million including $2.0 million from Sierra products. In the same period in 2009, EMEA revenues were $11.3 million. APAC revenues were $5.3 million in the fourth quarter of 2010 compared to $4.7 million in the same period in 2009.

Worldwide PillCam SB sales amounted to 57,900 capsules in the fourth quarter of 2010, compared to 60,800 in the same period last year. PillCam SB sales in the Americas region were 36,900 in the fourth quarter of 2010 compared to 38,400 in the same period last year. PillCam SB sales in the EMEA region were 14,100 compared to 15,900 in the fourth quarter of 2009, while PillCam SB sales in the APAC region were 6,900 compared to 6,500 in the same period in 2009.

Gross margin on a non-GAAP basis in the fourth quarter of 2010 was 77.7 percent, compared to 76.6 percent in the same period in 2009. On a GAAP basis, gross margin for the quarter was 77.2 percent. On a non-GAAP basis, net income for the fourth quarter of 2010 was $5.8 million, or $0.19 per share on a fully diluted basis, compared to net income of $6.4 million, or $0.21 per share on a fully diluted basis in 2009. On a GAAP basis, net income for the fourth quarter of 2010 was $3.2 million, or $0.11 per share, compared to $5.4 million, or $0.17 per share in the same quarter of last year. A reconciliation of GAAP results to non-GAAP results is attached.

Net cash provided by operating activities in the fourth quarter was $8.7 million, compared to $6.7 million in the fourth quarter of 2009.

Supplemental fourth quarter data can be found at www.givenimaging.com in the Investor Relations section.

"Fiscal year 2010 was very productive for Given Imaging. We grew revenues by 11 percent, reflecting solid growth in all three of our operating regions: the Americas, EMEA and Asia-Pacific. Sales of our flagship PillCam SB in the U.S. were relatively stable despite a more than 10 percent drop in overall GI procedures last year. We benefited from strong sales of our upper GI products including Bravo, which grew by 24% compared to 2009 to $18.6 million, and Sierra, which contributed nearly $18 million to our top line since acquiring this company last April. Our ongoing focus on lowering operational costs proved successful resulting in a record non-GAAP gross margin for the year of 77.4%, and we once again achieved a solid level of profitability. In addition, we generated record cash flow from operating activities of almost $31 million, reflecting the overall strength of our business," said Homi Shamir, president and CEO, Given Imaging.

"Following our record fourth quarter we enter 2011 as the global leader in specialty GI diagnostics products poised to expand the market for our existing product line and launch several exciting new products. We are cautiously optimistic that the market for GI medical procedures in the U.S. will begin to recover leading to renewed growth of our PillCam SB business, and we anticipate accelerating growth in the rest of the world. We are laser-focused on developing the market for PillCam COLON 2 outside the U.S., and look forward to beginning the U.S. pivotal clinical trial for this product soon after receiving IDE approval from the FDA."

Mr. Shamir concluded: "Reflecting our commitment to the PillCam COLON 2 program in support of the U.S. pivotal study, as well as smaller trials in Japan and Europe, we plan to increase our R&D investment by 15 to 20 percent compared to 2010, which is reflected in our 2011 earnings per share guidance."

Fiscal Year 2010 Revenue Analysis

For the year ended December 31, 2010, revenues increased by 11% to $157.8 million, compared to $141.8 million in the same period of 2009. 2010 revenues include Sierra product revenues of $17.9 million, or 11% of total revenues. Bravo pH Monitoring System revenues were $18.6 million in 2010, representing 12% of total revenues.

Revenues in the Americas region increased by 11% for the year ended December 31, 2010 to $99.7 million compared to $89.7 million in 2009. Sales in the Americas region included $17.1 million from sales of Bravo, compared to $15 million in 2009. Sierra product sales in the Americas region since the acquisition were $11.2 million. Sales in the EMEA region were $40.2 million, compared to $38.4 million in the same period in 2009 and included $5.3 million and $1.4 million in sales from Sierra products and Bravo, respectively. Revenues in the APAC region were $17.2 million, an increase of 26% from $13.6 million last year.

On a non-GAAP basis, gross profit margin for the year was 77.4% compared to 76.6% in 2009. On a GAAP basis, gross profit margin for 2010 was 76.2%, as compared to 76.6% in 2009. On a GAAP basis, net income for 2010 was $8.5 million, or $0.28 per share on a fully diluted* basis, compared to $14.3 million, or $0.47 per share on a fully diluted basis in 2009. On a non-GAAP basis, net income for 2010 remained flat at $19.6 million, or $0.64 per share on a fully diluted* basis, compared to $19.5 million or $0.64 per share in the same period in 2009.

Cash and cash equivalents, short-term investments and marketable securities at December 31, 2010 increased to $90.5 million. Net cash provided by operating activities was $30.8 million compared to $24.2 million in 2009.

* Based on fully diluted shares of 30,525,654 at Dec 31, 2010, and 30,423,162 at Dec 31, 2009.

2011 Guidance

Taking into account the uncertainty that marks today's global economy as well as our increased investment to support several PillCam Colon clinical trials, the company anticipates that GAAP earnings per share will be between $0.35 - $0.40. Non-GAAP earnings per share is expected to be between $0.65 - $0.70. The Company expects that 2011 revenues will be between $165 million and $173 million.

Recent Developments

PillCam SB

-- The Brazilian Medical Association recently issued a reimbursement code
   for PillCam SB capsule endoscopy. Approximately 9.1 million of Brazil's
   44.3 million privately insured citizens are currently covered for the
   PillCam SB procedure and the company believes coverage for the remaining
   35.2 million privately insured individuals will be fully implemented by
   the latter part of 2011.

-- Germany's Ministry of Health recently announced its intent to create an
   outpatient reimbursement code for PillCam® SB capsule endoscopy for
   obscure gastrointestinal bleeding. The declaration begins a 12 to
   15-month process for establishing a medical code, after which the 73
   million Germans covered by the public health system, or about 90
   percent of the entire German population, will have access to the PillCam
   SB procedure, with full reimbursement under the German statutory health
   insurance system.

PillCam COLON 2

-- Germany's Institute for Reimbursement in Hospitals has published the
   2011 update of the Diagnosis Related Group (DRG) Codes which includes
   an inpatient reimbursement pathway for PillCam COLON capsule endoscopy.
   This went into effect on January 1, 2011 and covers any publicly insured
   individual, or approximately 90 percent of the German population.

-- In January, Given Imaging initiated a small study in the United States
   for PillCam COLON 2 to confirm the optimal procedures and logistics to
   be used in the pivotal trial to help support the Company's planned
   510(k)submission to the U.S. Food and Drug Administration (FDA).

Bravo

-- The FDA and the Canadian government cleared use of the Bravo pH
   Monitoring System in patients four years of age and older. The Bravo
   pH Monitoring System was previously indicated for individuals 18 years
   and older in both countries.

Upcoming Events

Given Imaging management will present at the following upcoming investor conferences:

-- February 23 - The Lazard Capital Markets Medical Device Conference
   taking place in Snowbird, Utah.

-- March 3 - The RBC Healthcare Conference taking place in New York.
   Homi Shamir, President and CEO will present at 2:30pm ET.

Conference Call / Webcast Information

U.S. Call / Webcast

The company will host a conference call in English at 9:00 am ET on Wednesday, February 16, 2011. To participate in this teleconference, please dial 888-631-3389 fifteen minutes before the conference is scheduled to begin. Callers outside of the U.S. should dial 913-312-1520. The call will also be webcast live at www.givenimaging.com. A replay of the call will be available for two weeks on the company's website, or until March 2, 2011 by dialing 888-203-1112. Callers outside of the U.S. should dial 719-457-0820. The replay participant code is 5242909.

Hebrew Call

A separate conference call in Hebrew will take place on February 16, 2011 at 2:00 pm Israel time, 7:00 am ET. To access this call, please dial +972 3 918 0609 ten minutes before the conference is scheduled to begin. A replay of the call will be available from February 16 until February 18 by dialing +972 3 925 5901.

About Given Imaging Ltd.

Since 2001, Given Imaging has advanced gastrointestinal visualization by developing state-of-the art, patient-friendly tools based on its PillCam® Platform. PillCam® capsule endoscopy uses miniature video cameras in a capsule, wireless technology, and advanced software to provide physicians with clear images of the small intestine via PillCam® SB and the esophagus through PillCam® ESO. The PillCam® COLON video capsule, which is an investigational device in the U.S., is designed to visualize the colon. Given Imaging's other capsule products include the Agile™ patency capsule, to verify intestinal patency, and Bravo®, the only wireless, catheter-free, 48-hour pH test commercially available for pH testing to assess gastroesophageal reflux disease (GERD). In April 2010, Given Imaging acquired Sierra Scientific Instruments, the leading provider of specialty GI diagnostic solutions and pioneer of high-resolution manometry for assessing gastrointestinal motility. Sierra Scientific is now a wholly-owned subsidiary of Given Imaging. Given Imaging's headquarters, manufacturing and R&D facilities are located in Yoqneam, Israel, with operating subsidiaries in the United States, Germany, France, Japan, Australia, and Hong Kong. For more information, please visit www.givenimaging.com.

Use of Non-GAAP Measures

This press release provides financial measures for net income and basic and diluted earnings per share that exclude certain items and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance that enhances management's and investors' ability to evaluate the Company's net income and earnings per share and to compare it with historical net income and earnings per share.

The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when evaluating the business internally and therefore felt it is important to make these non-GAAP adjustments available to investors.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, projections about our business and our future revenues, expenses and profitability. Forward-looking statements may be, but are not necessarily, identified by the use of forward-looking terminology such as "will," "may," "anticipates," "estimates," "expects," "intends," "plans," "believes," and words and terms of similar substance. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual events, results, performance, circumstances or achievements of the Company to be materially different from any future events, results, performance, circumstances or achievements expressed or implied by such forward-looking statements. Factors that could cause actual events, results, performance, circumstances or achievements to differ from such forward-looking statements include, but are not limited to, the following: (1) our ability to develop and bring to market new products, (2) our ability to successfully complete any necessary or required clinical studies with our products, (3) our ability to receive regulatory clearance or approval to market our products or changes in regulatory environment, (4) our success in implementing our sales, marketing and manufacturing plans, (5) the level of adoption of our products by medical practitioners, (6) the emergence of other products that may make our products obsolete, (7) lack of an appropriate bowel preparation materials to be used with our PillCam COLON capsule, (8) protection and validity of patents and other intellectual property rights, (9) the impact of currency exchange rates, (10) the effect of competition by other companies, (11) the outcome of significant litigation, (12) the availability of reimbursement or other forms of funding for our products from government and commercial payors, (13) quarterly variations in operating results, (14) the possibility of armed conflict or civil or military unrest in Israel, (15) the impact of global economic conditions, (16) our ability to successfully integrate acquired businesses, (17) changes and reforms in applicable healthcare laws and regulations, and (18) other risks and factors disclosed in our filings with the U.S. Securities and Exchange Commission, including, but not limited to, risks and factors identified under such headings as "Risk Factors," "Cautionary Language Regarding Forward-Looking Statements" and "Operating Results and Financial Review and Prospects" in the Company's Annual Report on Form 20-F for the year ended December 31, 2009. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except for the Company's ongoing obligations to disclose material information under the applicable securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.


          Given Imaging Ltd. and its Consolidated Subsidiaries
                             Excluded Items
          For the Three Months Ended December 31, 2009 and 2010
                    (Unaudited, dollars in thousands)


                     Research  Selling
                       And       And     General            Tax
             Gross    Develop-  Market-   And     Other   Expense
             Profit    ment      ing      Admin  Expenses (Benefit) Total
             -------- -------  -------- -------- -------- -------  -------

Three month
 period ended
 December 31,
 2010
Compensation
 expenses    $      - $   124  $    564 $  1,324 $      - $     -  $ 2,012
Sierra PPA        237       -        81      395        -    (127)     586
             -------- -------  -------- -------- -------- -------  -------
Total        $    237 $   124  $    645 $  1,719 $      0 $  (127) $ 2,598
             ======== =======  ======== ======== ======== =======  =======

Three month
 period ended
 December 31,
 2009
Compensation
 expenses    $      - $   (29) $    110 $  1,309 $      - $     -  $ 1,390
Impairment
 of Goodwill        -       -         -        -      483       -      483
Tax benefit         -       -         -        -        -    (857)    (857)
             -------- -------  -------- -------- -------- -------  -------
Total        $      0 $   (29) $    110 $  1,309 $    483 $  (857) $ 1,016
             ======== =======  ======== ======== ======== =======  =======




          Given Imaging Ltd. and its Consolidated Subsidiaries
                             Excluded Items
         For the Twelve Months Ended December 31, 2009 and 2010
                    (Unaudited, dollars in thousands)


                     Research  Selling
                       And       And     General            Tax
             Gross    Develop-  Market-   And     Other   Expense
             Profit    ment      ing      Admin  Expenses (Benefit) Total
             -------- -------  -------- -------- -------- -------  -------
Twelve month
 period ended
 December 31,
 2010
Compensation
 expenses    $      - $    428 $  1,557 $  6,497 $      - $     -  $ 8,482
Sierra
 acquisition
 expenses           -        -        -      686        -       -      686
Sierra PPA      1,982        -      245      645        -    (888)   1,984
             -------- -------- -------- -------- -------- -------  -------
Total        $  1,982 $    428 $  1,802 $  7,828 $      0 $  (888) $11,152
             ======== ======== ======== ======== ======== =======  =======

Twelve month
 period ended
 December 31,
 2009
Compensation
 expenses    $      - $    257 $  1,619 $  5,392 $      - $     -  $ 7,268
Impairment
 of Goodwill        -        -        -        -      483       -      483
Tax (benefit)       -        -        -        -        -  (2,608)  (2,608)
             -------- -------- -------- -------- -------- -------  -------
Total        $      0 $    257 $  1,619 $  5,392 $    483 $(2,608) $ 5,143
             ======== ======== ======== ======== ======== =======  =======




          Given Imaging Ltd. and its Consolidated Subsidiaries
           Reconciliation of GAAP results to non-GAAP results
          For the Three months ended December 31, 2010 and 2009
         Condensed, in thousands except share and per share data


                           Q4 2010                       Q4 2009
                          Specified   Non               Specified   Non
                  GAAP    Items (*)   GAAP      GAAP    Items (*)   GAAP
                --------  --------  --------  --------  --------  --------

Revenues        $ 44,920         -  $ 44,920  $ 40,040         -  $ 40,040
Cost of
 revenues        (10,232)      237    (9,995)   (9,379)        -    (9,379)

Gross profit      34,688       237    34,925    30,661         -    30,661
  Gross profit
   as a % of
   revenues         77.2%        -      77.7%     76.6%        -      76.6%

Operating
 expenses
Research and
 development,
 net              (5,643)      124    (5,519)   (4,211)      (29)   (4,240)
Sales and
 marketing       (18,696)      645   (18,051)  (16,171)      110   (16,061)
General and
 administrative   (7,002)    1,719    (5,283)   (4,898)    1,309    (3,589)
Other, net          (299)        -      (299)     (889)      483      (406)

Total operating
 expenses        (31,640)    2,488   (29,152)  (26,169)    1,873   (24,296)

Operating
 profit            3,048     2,725     5,773     4,492     1,873     6,365
  Operating
   profit as a %
   of revenues       6.8%        -      12.9%     11.2%        -      15.9%

Financing
 income, net         909         -       909       308         -       308

Profit before
 taxes on
 income            3,957     2,725     6,682     4,800     1,873     6,673
Income tax
 benefit
 (expense)          (799)     (127)     (926)      382      (857)     (475)

Net Profit         3,158     2,598     5,756     5,182     1,016     6,198

Net loss
 attributable to
 non-controlling
 interest             45         -        45       187         -       187

Net profit
 attributable to
 shareholders   $  3,203  $  2,598  $  5,801  $  5,369  $  1,016  $  6,385
  Net profit
   attributable
   to share-
   holders
   as a % of
   revenues          7.1%        -      12.9%     13.4%        -      15.9%

Earnings per
 share

Basic Earnings
 attributable to
 shareholders
 per Ordinary
 Share          $   0.11  $   0.08  $   0.19  $   0.18  $   0.04  $   0.22

Diluted Earnings
 attributable to
 shareholders
 per Ordinary
 Share          $   0.11  $   0.08  $   0.19  $   0.17  $   0.03  $   0.21




          Given Imaging Ltd. and its Consolidated Subsidiaries
           Reconciliation of GAAP results to non-GAAP results
         For the nine months ended September 30, 2010  and 2009
         Condensed, in thousands except share and per share data


                          YTD 2010                      YTD 2009
                          Specified   Non               Specified   Non
                  GAAP    Items (*)   GAAP      GAAP    Items (*)   GAAP
                --------  --------  --------  --------  --------  --------

Revenues        $157,809         -  $157,809  $141,763         -  $141,763
Cost of
 revenues        (37,629)    1,982   (35,647)  (33,145)        -   (33,145)

Gross profit     120,180     1,982   122,162   108,618         -   108,618
  Gross profit
   as a % of
   revenues         76.2%        -      77.4%     76.6%        -      76.6%

Operating
 expenses
Research and
 development,
 net             (20,218)      428   (19,790)  (16,733)      257   (16,476)
Sales and
 marketing       (67,114)    1,802   (65,312)  (61,428)    1,619   (59,809)
General and
 administrative  (25,138)    7,828   (17,310)  (18,919)    5,392   (13,527)
Other, net          (759)        -      (759)   (1,220)      483      (737)

Total operating
 expenses       (113,229)   10,058  (103,171)  (98,300)    7,751   (90,549)

Operating
 profit            6,951    12,040    18,991    10,318     7,751    18,069
  Operating
   profit as a %
   of revenues       4.4%        -      12.0%      7.3%        -      12.7%

Financing
 income, net       2,599         -     2,599     1,584         -     1,584

Profit before
 taxes on
 income            9,550    12,040    21,590    11,902     7,751    19,653
Income tax
 benefit
 (expense)        (1,362)     (888)   (2,250)    1,542    (2,608)   (1,066)

Net Profit         8,188    11,152    19,340    13,444     5,143    18,587

Net loss
 attributable to
 non-controlling
 interest            290         -       290       891         -       891

Net profit
 attributable to
 shareholders   $  8,478  $ 11,152  $ 19,630  $ 14,335  $  5,143  $ 19,478
  Net profit
   attributable
   to share-
   holders
   as a % of
   revenues          5.4%        -      12.4%     10.1%        -      13.7%

Earnings  per
 share

Basic Earnings
 attributable to
 shareholders
 per Ordinary
 Share          $   0.29  $   0.37  $   0.66  $   0.49  $   0.18  $   0.67

Diluted Earnings
 attributable to
 shareholders
 per Ordinary
 Share          $   0.28  $   0.36  $   0.64  $   0.47  $   0.17  $   0.64




                 Given Imaging Ltd. and its Subsidiaries

                       Consolidated Balance Sheets
                    (In thousands except share data)


                                                          December 31,
                                                     ----------  ----------
                                                       2010        2009

Assets

Current assets
Cash and cash equivalents                            $   34,619  $   46,458
Short-term investments                                   51,973      31,736
Accounts receivable:
   Trade, net                                            27,862      24,742
   Other                                                  4,291       3,799
Inventories                                              19,076      17,302
Advances to suppliers                                       441         534
Deferred tax assets                                       1,638       2,207
Prepaid expenses                                          1,585       1,036
                                                     ----------  ----------

Total current assets                                    141,485     127,814

Deposits                                                  1,212       1,062

Assets held for employees' severance payments             6,393       4,968

Marketable securities                                     3,873      16,956

Long-term inventory                                       5,626       6,015

Fixed assets, less accumulated depreciation              13,709      13,843

Deferred tax assets                                           -         192

Intangible assets less accumulated amortization          25,813      11,284

Goodwill                                                 24,089       3,586
                                                     ----------  ----------



Total Assets                                         $  222,200  $  185,720
                                                     ==========  ==========




                 Given Imaging Ltd. and its Subsidiaries

                       Consolidated Balance Sheets
                    (In thousands except share data)


                                                          December 31,
                                                      --------------------
                                                        2010       2009

Liabilities and equity

Current liabilities

Current installments of obligation under capital
 lease                                                $     168  $     145
Accounts payable:
   Trade                                                  9,125      6,789
   Other                                                 26,065     20,060
Deferred revenue                                            788        234
                                                      ---------  ---------

Total current liabilities                                36,146     27,228
                                                      ---------  ---------

Long-term liabilities
Obligation under capital lease                              244        356
Liability in respect of employees' severance payments     7,151      5,530
Deferred tax liabilities                                  5,871          -
                                                      ---------  ---------
Total long-term liabilities                              13,266      5,886
                                                      ---------  ---------

Total liabilities                                        49,412     33,114
                                                      ---------  ---------

Commitments and contingencies

Equity
Shareholders` equity:
Ordinary Shares, NIS 0.05 par value each
 (90,000,000 shares authorized as of December 31,
 2010 and 2009, 29,829,277 and 29,370,972 shares
 issued and fully paid as of December 31, 2010 and
 2009, respectively)                                        350        345
Additional paid-in capital                              194,899    182,203
Capital reserve                                           2,051      2,166
Accumulated other comprehensive income                       95        399
Accumulated deficit                                     (24,707)   (33,185)
                                                      ---------  ---------
Shareholders` equity                                    172,688    151,928
                                                      ---------  ---------
Non-controlling interests                                   100        678
                                                      ---------  ---------
Total equity                                            172,788    152,606
                                                      ---------  ---------



Total liabilities, shareholders' equity and
 non-controlling interests                            $ 222,200  $ 185,720
                                                      =========  =========




                 Given Imaging Ltd. and its Subsidiaries

                  Consolidated Statements of Operations
             (In thousands except share and per share data)


                                              Year ended December 31,
                                        ----------------------------------
                                           2010        2009        2008
                                        ----------  ----------  ----------

Revenues                                $  157,809  $  141,763  $  125,108
Cost of revenues                           (37,629)    (33,145)    (33,001)
                                        ----------  ----------  ----------

Gross profit                               120,180     108,618      92,107
                                        ----------  ----------  ----------

Operating expenses
Research and development, gross            (21,695)    (17,842)    (15,126)
In-process research and development
 acquired in a business combination              -           -      (4,700)
                                        ----------  ----------  ----------
                                           (21,695)    (17,842)    (19,826)
Government grants                            1,477       1,109       1,530
                                        ----------  ----------  ----------
Research and development, net              (20,218)    (16,733)    (18,296)

Sales and marketing                        (67,114)    (61,428)    (60,902)
General and administrative                 (25,138)    (18,919)    (19,320)
Termination of marketing agreement               -           -       5,443
Other, net                                    (759)     (1,220)       (867)
                                        ----------  ----------  ----------

Total operating expenses                  (113,229)    (98,300)    (93,942)
                                        ----------  ----------  ----------

Operating profit (loss)                      6,951      10,318      (1,835)

Financial income, net                        2,599       1,584       4,004
                                        ----------  ----------  ----------

Profit before taxes on income                9,550      11,902       2,169

Income tax benefit (expense)                (1,362)      1,542        (250)
                                        ----------  ----------  ----------

Net Profit                                   8,188      13,444       1,919

Net loss attributable to
 non-controlling interest                      290         891       2,087
                                        ----------  ----------  ----------

Net profit attributable to shareholders $    8,478  $   14,335  $    4,006
                                        ==========  ==========  ==========

Earnings per share:

Basic Earnings per Ordinary Share       $     0.29  $     0.49  $     0.14
                                        ==========  ==========  ==========

Diluted Earnings per Ordinary Share     $     0.28  $     0.47  $     0.13
                                        ==========  ==========  ==========

Weighted average number of Ordinary
 Shares used to compute basic
 Earnings per Ordinary Share            29,670,842  29,281,897  29,254,035
                                        ==========  ==========  ==========
Weighted average number of Ordinary
 Shares used to compute diluted
 Earnings per Ordinary Share            30,525,654  30,423,162  30,798,360
                                        ==========  ==========  ==========




                 Given Imaging Ltd. and its Subsidiaries
                  Consolidated Statements of Cash Flows
                             (In thousands)


                                              Year ended December 31,
                                        ----------------------------------
                                           2010        2009        2008
                                        ----------  ----------  ----------
Cash flows from operating activities:
Net profit                              $    8,188  $   13,444  $    1,919

Adjustments required to reconcile net
 profit to net cash provided by
 operating activities:

Depreciation and amortization                7,662       6,096       5,183
In-process research and development              -           -       4,700
Goodwill impairment                             20         483         406
Deferred tax assets                            761      (1,221)        172
Deferred tax liabilities                      (888)          -           -
Stock based  compensation                    8,482       7,268       6,918
Loss from disposal of long term assets         739         714         473
Other                                          304        (144)        148
Decrease (increase) in accounts
 receivable - trade                            560      (3,069)      1,642
Decrease (increase) in other accounts
 receivable                                   (488)        863       5,723
Decrease (increase) in prepaid expenses        (23)        595        (342)
Decrease (increase) in advances to
 suppliers                                      93       3,006      (3,350)
Decrease (increase) in inventories           2,331      (4,386)     (2,971)
Increase (decrease) in accounts payable      3,389       1,819      (3,287)
Increase (decrease) in deferred revenue        554      (1,289)     (7,856)
                                        ----------  ----------  ----------
Net cash provided by operating
 activities                                 31,684      24,179       9,478
                                        ----------  ----------  ----------

Cash flows from investing activities:
Purchase of fixed assets and intangible
 assets                                     (5,056)     (4,794)     (6,300)
Purchase of fixed assets, intangible
 assets, and goodwill in a business
 combination                                     -           -     (16,660)
Deposits, net                                   (6)         34        (192)
Acquisition of Sierra, net of cash
 acquired (1)                              (34,709)
Proceeds from sale and maturity of
 marketable securities and short term
 investments                                29,352      38,085      67,743
Proceeds from sales of fixed assets              -           -          61
Investments in marketable securities       (36,968)    (27,410)    (61,986)
                                        ----------  ----------  ----------
Net cash provided by (used in)
 investing activities                      (47,387)      5,915     (17,334)
                                        ----------  ----------  ----------

Cash flows from financing activities:
Principal payments on capital lease
 obligation                                   (143)       (131)       (120)
Proceeds from the issuance of Ordinary
 Shares                                      4,219         954         252
Dividend distribution                            -     (15,799)          -
Purchase of shares from a
 non-controlling shareholder in a
 subsidiary                                   (403)       (382)          -
Issuance of shares by a consolidated
 company                                         -           -       2,288
                                        ----------  ----------  ----------
Net cash provided by (used in)
 financing activities                        3,673     (15,358)      2,420
                                        ----------  ----------  ----------

Effect of exchange rate changes on cash
 and cash equivalents                          191          25          30
                                        ----------  ----------  ----------
Increase (decrease) in cash and cash
 equivalents                               (11,839)     14,761      (5,406)
Cash and cash equivalents at beginning
 of year                                    46,458      31,697      37,103
                                        ----------  ----------  ----------
Cash and cash equivalents at end of
 year                                   $   34,619  $   46,458  $   31,697
                                        ==========  ==========  ==========

Supplementary cash flow information:

Income taxes paid                       $      234  $      877  $      259
                                        ==========  ==========  ==========

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