10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

_______________________________

FORM 10-Q

_______________________________ 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2012.

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM              TO             .

Commission file number: 001-15989

_______________________________

ENDO HEALTH SOLUTIONS INC.

(Exact Name of Registrant as Specified in Its Charter)

_______________________________

Delaware	13-4022871
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
100 Endo Boulevard Chadds Ford, Pennsylvania	19317
(Address of Principal Executive Offices)	(Zip Code)

(610) 558-9800

(Registrant’s Telephone Number, Including Area Code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

_______________________________

Indicate by check whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x    No   o

Indicate by check whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes x     No   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o  (Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    YES  o    NO   x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common Stock, $0.01 par value Shares outstanding as of October 30, 2012 : 114,095,441

ENDO HEALTH SOLUTIONS INC.

INDEX

		Page
Forward-Looking Statements		i
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets (Unaudited) September 30, 2012 and December 31, 2011	1
	Condensed Consolidated Statements of Operations (Unaudited) Three and Nine months Ended September 30, 2012 and 2011	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three and Nine months Ended September 30, 2012 and 2011	3
	Condensed Consolidated Statements of Cash Flows (Unaudited) Nine months Ended September 30, 2012 and 2011	4
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	63
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	91
Item 4.	Controls and Procedures	91
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	91
Item 1A	Risk Factors	91
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	92
Item 3.	Defaults Upon Senior Securities	92
Item 4.	Mine Safety Disclosures	92
Item 5.	Other Information	92
Item 6.	Exhibits	92
SIGNATURES		93

FORWARD-LOOKING STATEMENTS

Statements contained or incorporated by reference in this document contain information that includes or is based on “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements, including estimates of future revenues, future expenses, future net income and future net income per share, contained in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is included in this document, are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed results of operations. We have tried, whenever possible, to identify such statements by words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plan,” “projected,” “forecast,” “will,” “may” or similar expressions. We have based these forward-looking statements on our current expectations and projections about the growth of our business, our financial performance and the development of our industry. Because these statements reflect our current views concerning future events, these forward-looking statements involve risks and uncertainties. Investors should note that many factors, as more fully described under the caption “Risk Factors” in Item 1A of this document and in Item 1A under the caption “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2011, supplement and as otherwise enumerated herein, could affect our future financial results and could cause our actual results to differ materially from those expressed in forward-looking statements contained or incorporated by reference in this document.

We do not undertake any obligation to update our forward-looking statements after the date of this document for any reason, even if new information becomes available or other events occur in the future. You are advised to consult any further disclosures we make on related subjects in our reports filed with the Securities and Exchange Commission (SEC). Also note that, in Item 1A of this document and in Item 1A under the caption “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2011, we provide a cautionary discussion of the risks, uncertainties and possibly inaccurate assumptions relevant to our business. These are factors that, individually or in the aggregate, we think could cause our actual results to differ materially from expected and historical results. We note these factors for investors as permitted by Section 27A of the Securities Act and Section 21E of the Exchange Act. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider this to be a complete discussion of all potential risks or uncertainties.

i

PART I. FINANCIAL INFORMATION

Item  1.    Financial Statements

ENDO HEALTH SOLUTIONS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share and per share data)

	September 30, 2012			December 31, 2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	256,917		$	547,620
Accounts receivable, net	759,594			733,222
Inventories, net	363,747			262,419
Prepaid expenses and other current assets	28,155			29,732
Income taxes receivable	39,178			—
Deferred income taxes	264,908			215,103
Total current assets	$	1,712,499		$	1,788,096
MARKETABLE SECURITIES	2,631			19,105
PROPERTY, PLANT AND EQUIPMENT, NET	333,119			297,731
GOODWILL	2,569,288			2,558,041
OTHER INTANGIBLES, NET	2,285,187			2,504,124
OTHER ASSETS	118,067			125,486
TOTAL ASSETS	$	7,020,791		$	7,292,583
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	258,960		$	260,385
Accrued expenses	965,698			732,831
Current portion of long-term debt	124,947			88,265
Acquisition-related contingent consideration	6,027			4,925
Income taxes payable	—			35,372
Total current liabilities	$	1,355,632		$	1,121,778
DEFERRED INCOME TAXES	581,975			617,677
ACQUISITION-RELATED CONTINGENT CONSIDERATION	2,688			3,762
LONG-TERM DEBT, LESS CURRENT PORTION, NET	3,069,518			3,424,329
OTHER LIABILITIES	80,461			85,446
COMMITMENTS AND CONTINGENCIES (NOTE 12)
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.01 par value; 40,000,000 shares authorized; none issued	—			—
Common stock, $0.01 par value; 350,000,000 shares authorized; 139,673,311 and 138,337,002 shares issued; 113,991,489 and 117,158,880 shares outstanding at September 30, 2012 and December 31, 2011, respectively	1,397			1,383
Additional paid-in capital	1,016,353			952,325
Retained earnings	1,527,839			1,551,910
Accumulated other comprehensive loss	(7,504		)	(9,436		)
Treasury stock, 25,681,822 and 21,178,122 shares at September 30, 2012 and December 31, 2011, respectively	(669,885		)	(518,492		)
Total Endo Health Solutions Inc. stockholders’ equity	$	1,868,200		$	1,977,690
Noncontrolling interests	62,317			61,901
Total stockholders’ equity	$	1,930,517		$	2,039,591
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,020,791		$	7,292,583

See Notes to Condensed Consolidated Financial Statements.

1

ENDO HEALTH SOLUTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
REVENUES:
Net pharmaceutical product sales	$	578,780		$	569,657		$	1,681,441		$	1,603,004
Devices revenues	113,304			131,519			371,601			158,331
Service and other revenues	58,398			57,902			173,261			165,380
TOTAL REVENUES	$	750,482		$	759,078		$	2,226,303		$	1,926,715
COSTS AND EXPENSES:
Cost of revenues	294,267			302,172			953,657			770,427
Selling, general and administrative	210,446			244,359			698,522			581,878
Research and development	48,952			43,884			183,067			126,854
Patent litigation settlement, net	(46,238		)	—			85,123			—
Litigation-related contingencies	82,600			—			82,600			—
Asset impairment charges	11,163			22,691			54,163			22,691
Acquisition-related and integration items, net	5,776			5,818			16,580			29,517
OPERATING INCOME	$	143,516		$	140,154		$	152,591		$	395,348
INTEREST EXPENSE, NET	45,505			52,792			138,386			97,142
NET LOSS ON EXTINGUISHMENT OF DEBT	1,789			—			7,215			8,548
OTHER (INCOME) EXPENSE, NET	(250		)	(3,000		)	498			(2,777		)
INCOME BEFORE INCOME TAX	$	96,472		$	90,362		$	6,492		$	292,435
INCOME TAX	28,287			34,057			(9,263		)	100,283
CONSOLIDATED NET INCOME	$	68,185		$	56,305		$	15,755		$	192,152
Less: Net income attributable to noncontrolling interests	14,376			15,656			39,826			41,133
NET INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	53,809		$	40,649		$	(24,071	)	$	151,019
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.
Basic	$	0.46		$	0.35		$	(0.21	)	$	1.30
Diluted	$	0.45		$	0.34		$	(0.21	)	$	1.24
WEIGHTED AVERAGE SHARES:
Basic	116,022			116,816			116,688			116,611
Diluted	119,579			120,847			116,688			121,432

See Notes to Condensed Consolidated Financial Statements.

2

ENDO HEALTH SOLUTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In thousands)

	Three Months Ended September 30,												Nine Months Ended September 30,
	2012						2011						2012						2011
CONSOLIDATED NET INCOME				$	68,185					$	56,305					$	15,755					$	192,152
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Net unrealized gain (loss) on securities:
Unrealized gains (losses) arising during the period	$	589					$	(540	)				$	1,958					$	(1,922	)
Less: reclassification adjustments for gains (losses) realized in net income (loss)	—			589			—			(540		)	—			1,958			—			(1,922		)
Foreign currency translation gain (loss)				4,034						(5,326		)				466						(4,326		)
Fair value adjustment on derivatives designated as cash flow hedges:
Fair value adjustment on derivatives designated as cash flow hedges arising during the period	$	(801	)				$	—					$	(606	)				$	—
Less: reclassification adjustments for cash flow hedges settled and included in net income (loss)	138			(663		)	111			111			114			(492		)	111			111
OTHER COMPREHENSIVE INCOME (LOSS)				$	3,960					$	(5,755	)				$	1,932					$	(6,137	)
CONSOLIDATED COMPREHENSIVE INCOME (LOSS)				$	72,145					$	50,550					$	17,687					$	186,015
Less: Comprehensive income attributable to noncontrolling interests				14,376						15,656						39,826						41,133
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.				$	57,769					$	34,894					$	(22,139	)				$	144,882

See Notes to Condensed Consolidated Financial Statements.

3

ENDO HEALTH SOLUTIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	Nine Months Ended September 30,
	2012			2011
OPERATING ACTIVITIES:
Consolidated net income	$	15,755		$	192,152
Adjustments to reconcile consolidated net income to Net cash provided by operating activities
Depreciation and amortization	211,780			169,187
Stock-based compensation	44,532			34,224
Amortization of debt issuance costs and premium / discount	27,101			24,283
Selling, general and administrative expenses paid in shares of common stock	358			180
Deferred income taxes	(87,379		)	(13,847		)
Net (gain) loss on disposal of property, plant and equipment	(156		)	319
Change in fair value of acquisition-related contingent consideration	28			(7,458		)
Net loss on extinguishment of debt	7,215			8,548
Asset impairment charges	54,163			22,691
Changes in assets and liabilities which provided (used) cash:
Accounts receivable	(24,666		)	(96,409		)
Inventories	(101,453		)	(28,879		)
Prepaid and other assets	3,037			(9,055		)
Accounts payable	(1,132		)	(21,656		)
Accrued expenses	240,880			134,834
Other liabilities	(18,081		)	(15,693		)
Income taxes payable/receivable	(74,850		)	25,110
Net cash provided by operating activities	$	297,132		$	418,531
INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(90,128		)	(39,609		)
Proceeds from sale of property, plant and equipment	1,081			1,147
Acquisitions, net of cash acquired	(3,210		)	(2,368,357		)
Proceeds from investments	18,800			36,000
Purchases of investments	—			(6,009		)
Other investments	—			(388		)
Payment on contingent consideration	—			(662		)
License fees	(5,700		)	(2,300		)
Proceeds from sale of business	—			12,990
Net cash used in investing activities	$	(79,157	)	$	(2,367,188	)
FINANCING ACTIVITIES:
Capital lease obligations repayments	(765		)	—
Proceeds from issuance of 2019 and 2022 Notes	—			900,000
Proceeds from issuance of Term Loans	—			2,200,000
Proceeds from other indebtedness	—			302
Principal payments on Term Loans	(333,950		)	(550,813		)
Payment on AMS Convertible Notes	(66		)	(519,040		)
Principal payments on other indebtedness	(685		)	—
Deferred financing fees	—			(81,535		)
Tax benefits of stock awards	4,268			5,519
Exercise of Endo Health Solutions Inc. stock options	15,317			21,780
Purchase of common stock	(156,000		)	(34,702		)
Issuance of common stock from treasury	4,606			—

4

	Nine Months Ended September 30,
	2012			2011
Cash distributions to noncontrolling interests	(39,234		)	(39,392		)
Cash buy-out of noncontrolling interests, net of cash contributions	(2,264		)	(402		)
Net cash (used in) provided by financing activities	$	(508,773	)	$	1,901,717
Effect of foreign exchange rate	95			397
NET DECREASE IN CASH AND CASH EQUIVALENTS	$	(290,703	)	$	(46,543	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	547,620			466,214
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	256,917		$	419,671
SUPPLEMENTAL INFORMATION:
Cash paid for interest	$	124,723		$	32,299
Cash paid for income taxes	$	151,924		$	95,551
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Purchases of property, plant and equipment financed by capital leases	$	1,360		$	119
Accrual for purchases of property, plant and equipment	$	3,160		$	2,849

See Notes to Condensed Consolidated Financial Statements.

5

ENDO HEALTH SOLUTIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012

NOTE 1. BASIS OF PRESENTATION

At our Annual Meeting of Stockholders on May 23, 2012, the Company’s stockholders approved the proposal to amend and restate the Company’s Amended and Restated Certificate of Incorporation to change the name of the Company from Endo Pharmaceuticals Holdings Inc. to Endo Health Solutions Inc., which we refer to herein as the Company or we, our, us, or Endo.

The accompanying unaudited Condensed Consolidated Financial Statements of Endo Health Solutions Inc. have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying Condensed Consolidated Financial Statements of Endo and its subsidiaries, which are unaudited, include all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of September 30, 2012 and the results of our operations and our cash flows for the periods presented. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2011, the Financial Accounting Standards Board (FASB or the Board) issued Accounting Standards Update (ASU) 2011-05 on the presentation of comprehensive income. This ASU amends FASB Codification Topic 220, Comprehensive Income, to require an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2011 and early adoption is permitted. In December 2011, the FASB issued ASU 2011-12 which amends ASU 2011-05 to defer only those changes in ASU 2011-05 that relate to the presentation of reclassification adjustments to allow the Board time to re-deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. The Company has adopted all current required provisions of ASU 2011-05 and ASU 2011-12.

In July 2012, the FASB issued ASU 2012-02 on impairment testing for indefinite-lived intangible assets. This ASU amends FASB Codification Topic 350, Intangibles-Goodwill and Other to allow, but not require, an entity, when performing its annual or more frequent indefinite-lived intangible asset impairment test, to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The Company is currently evaluating ASU 2012-02. The adoption of this ASU is not expected to have a significant impact on the Company’s Consolidated Financial Statements.

NOTE 3. FAIR VALUE MEASUREMENTS

The financial instruments recorded in our Condensed Consolidated Balance Sheets include cash and cash equivalents, accounts receivable, marketable securities, equity and cost method investments, accounts payable and accrued expenses, acquisition-related contingent consideration, debt obligations, and derivative instruments. Included in cash and cash equivalents are money market funds representing a type of mutual fund required by law to invest in low-risk securities (for example, U.S. government bonds, U.S. Treasury Bills and commercial paper). Money market funds are structured to maintain the fund’s net asset value at $1 per unit, which assists in ensuring adequate liquidity upon demand by the holder. Money market funds pay dividends that generally reflect short-term interest rates. Thus, only the dividend yield fluctuates. Due to their short-term maturity, the carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair values.

6

The following table presents the carrying amounts and estimated fair values of our other financial instruments as of September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012				December 31, 2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Current assets:
Derivative instruments	$	467	$	467	$	1,471	$	1,471
	$	467	$	467	$	1,471	$	1,471
Long-term assets:
Auction-rate securities	$	—	$	—	$	17,463	$	17,463
Equity securities	2,631		2,631		1,642		1,642
Equity and cost method investments	14,794		N/A		20,661		N/A
	$	17,425			$	39,766
Current liabilities:
Acquisition-related contingent consideration—short-term	$	6,027	$	6,027	$	4,925	$	4,925
Current portion of Term Loan A Facility Due 2016	121,875		121,875		84,375		84,375
3.25% AMS Convertible Notes due 2036	795		795		841		841
4.00% AMS Convertible Notes due 2041	111		111		131		131
Current portion of other long-term debt	2,166		2,166		2,918		2,918
Derivative instruments	358		358		119		119
Minimum Voltaren® Gel royalties due to Novartis—short-term	24,037		24,037		30,000		30,000
Other	1,000		1,000		—		—
	$	156,369	$	156,369	$	123,309	$	123,309
Long-term liabilities:
Acquisition-related contingent consideration—long-term	$	2,688	$	2,688	$	3,762	$	3,762
1.75% Convertible Senior Subordinated Notes Due 2015, net	315,585		350,878		299,222		330,950
Term Loan A Facility Due 2016, less current portion	1,293,750		1,293,396		1,387,500		1,372,119
Term Loan B Facility Due 2018	160,550		161,272		438,250		439,017
7.00% Senior Notes Due 2019	500,000		544,063		500,000		532,500
7.00% Senior Notes Due 2020, net	396,828		434,000		396,618		424,750
7.25% Senior Notes Due 2022	400,000		436,000		400,000		422,500
Other long-term debt, less current portion	2,805		2,805		2,739		2,739
Minimum Voltaren® Gel royalties due to Novartis—long-term	—		—		20,100		20,100
Other	5,375		5,375		—		—
	$	3,077,581	$	3,230,477	$	3,448,191	$	3,548,437

Equity securities consist of publicly traded common stock, the value of which is based on a quoted market price. These securities are not held to support current operations and are therefore classified as non-current assets.

The acquisition-related contingent consideration, which is required to be measured at fair value on a recurring basis, consists primarily of contingent cash consideration related to the November 2010 acquisition of Generics International (US Parent), Inc. (doing business as Qualitest Pharmaceuticals). The fair value of our acquisition-related contingent consideration is determined using an income approach (present value technique), which is discussed in more detail below. The fair value of our 1.75% Convertible Senior Subordinated Notes (Convertible Notes) is based on an income approach known as the binomial lattice model which incorporated certain inputs and assumptions, including scheduled coupon and principal payments, the conversion feature inherent in the Convertible Notes, the put feature inherent in the Convertible Notes, and stock price volatility assumptions of 32% at September 30, 2012 and 33% at December 31, 2011 that were based on historic volatility of the Company’s common stock and other factors. These fair value measurements are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy.

The fair values of the Term Loan Facilities and 2019, 2020, and 2022 Notes were based on market quotes and transactions proximate to the valuation date. The Company had previously used an income approach to value these debt instruments; however, the valuation methodology was subsequently transitioned to a market-based approach given the volume of observable market transactions

7

and quoted prices for these debt instruments. Based on this valuation methodology, we determined these debt instruments represent Level 2 measurements within the fair value hierarchy.

The total fair value of various foreign exchange forward contracts as of September 30, 2012 includes assets of $0.5 million reported in Prepaid expenses and other current assets and liabilities of $0.4 million, reported in Accrued expenses. We measure our derivative instruments at fair value on a recurring basis using significant observable inputs. Refer to Note 16. Derivative Instruments and Hedging Activities for more information regarding our derivative instruments.

The minimum Voltaren^® Gel royalty due to Novartis AG was recorded at fair value at inception during 2008 using an income approach (present value technique) and is being accreted up to the maximum potential minimum payments, less payments made to date. We believe the carrying amount of this minimum royalty guarantee at September 30, 2012 and December 31, 2011 represents a reasonable approximation of the price that would be paid to transfer the liability in an orderly transaction between market participants at the measurement date. Accordingly, the carrying value approximates fair value as of September 30, 2012 and December 31, 2011.

The fair value of equity method and cost method investments is not readily available nor have we estimated the fair value of these investments and disclosure is not required. The Company is not aware of any identified events or changes in circumstances that would have a significant adverse effect on the carrying value of any of our equity or cost method investments included in our Condensed Consolidated Balance Sheet at September 30, 2012 and December 31, 2011.

As of September 30, 2012, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis. Fair value guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

• Level 1—Quoted prices in active markets for identical assets or liabilities.

• Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s financial assets and liabilities measured at fair value on a recurring basis at September 30, 2012 and December 31, 2011, were as follows (in thousands):

	Fair Value Measurements at Reporting Date using
September 30, 2012	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Equity securities	$	2,631	$	—	$	—	$	2,631
Derivative instruments	—		467		—		467
Total	$	2,631	$	467	$	—	$	3,098
Liabilities:
Derivative instruments	$	—	$	358	$	—	$	358
Acquisition-related contingent consideration—short-term	—		—		6,027		6,027
Acquisition-related contingent consideration—long-term	—		—		2,688		2,688
Total	$	—	$	358	$	8,715	$	9,073

8

	Fair Value Measurements at Reporting Date using
December 31, 2011	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Money market funds	$	110,816	$	—	$	—	$	110,816
Equity securities	1,642		—		—		1,642
Derivative instruments	—		1,471		—		1,471
Auction-rate securities	—		—		17,463		17,463
Total	$	112,458	$	1,471	$	17,463	$	131,392
Liabilities:
Derivative instruments	$	—	$	119	$	—	$	119
Acquisition-related contingent consideration—short-term	—		—		4,925		4,925
Acquisition-related contingent consideration—long-term	—		—		3,762		3,762
Total	$	—	$	119	$	8,687	$	8,806

Auction-Rate Securities

In June 2012, our remaining auction-rate securities were called at par and we received proceeds of $18.8 million. Prior to being sold, these auction-rate securities had been classified as available-for-sale securities and had therefore been maintained at their fair value, with changes in value being recorded as part of Other comprehensive income (loss), net. Due to the fact that we received proceeds equal to par, the auction-rate securities were adjusted to their fair value of $18.8 million, with a corresponding gain to Other comprehensive income (loss), net. The previously recognized cumulative unrealized holding loss associated with these securities of $1.5 million was reversed in its entirety. As a result, no gain or loss was realized.

Acquisition-Related Contingent Consideration

On November 30, 2010 (the Qualitest Pharmaceuticals Acquisition Date), Endo acquired Qualitest Pharmaceuticals, which was party to an asset purchase agreement with Teva Pharmaceutical Industries Ltd (Teva) (the Teva Agreement). Pursuant to this agreement, Qualitest Pharmaceuticals purchased certain pipeline generic products from Teva and could be obligated to pay consideration to Teva upon the achievement of certain future regulatory milestones (the Teva Contingent Consideration).

The range of the undiscounted amounts the Company could pay under the Teva Agreement is between zero and $12.5 million. The Company is accounting for the Teva Contingent Consideration in the same manner as if it had entered into that arrangement with respect to its acquisition of Qualitest Pharmaceuticals. Accordingly, the fair value was estimated based on a probability-weighted discounted cash flow model, or income approach. The resultant probability-weighted cash flows were then discounted using a discount rate of U.S. Prime plus 300 basis points. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. Using this valuation technique, the fair value of the contractual obligation to pay the Teva Contingent Consideration was determined to be $8.7 million at September 30, 2012 and $8.7 million at December 31, 2011, respectively.

Fair Value Measurements Using Significant Unobservable Inputs

The following table presents changes to the Company’s financial liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended September 30, 2012 (in thousands):

	Acquisition- related Contingent Consideration
Liabilities:
July 1, 2012	$	(8,619	)
Amounts (acquired) sold or (issued) settled, net	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	(96		)
September 30, 2012	$	(8,715	)

9

The following table presents changes to the Company’s financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended September 30, 2011 (in thousands):

	Auction-rate Securities
Assets:
July 1, 2011	$	17,505
Securities sold or redeemed	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	—
Unrealized losses included in Other comprehensive income (loss), net	(89		)
September 30, 2011	$	17,416

	Acquisition-related Contingent  Consideration
Liabilities:
July 1, 2011	$	(9,233	)
Amounts (acquired) sold / (issued) settled, net	248
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	228
September 30, 2011	$	(8,757	)

The following table presents changes to the Company’s financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2012 (in thousands):

	Auction-rate Securities
Assets:
January 1, 2012	$	17,463
Securities sold or redeemed	(18,800		)
Securities purchase or acquired	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	—
Unrealized gains included in Other comprehensive income (loss), net	1,337
September 30, 2012	$	—

	Acquisition- related Contingent Consideration
Liabilities:
January 1, 2012	$	(8,687	)
Amounts (acquired) sold or (issued) settled, net	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	(28		)
September 30, 2012	$	(8,715	)

10

The following table presents changes to the Company’s financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2011 (in thousands):

	Auction-rate Securities
Assets:
January 1, 2011	$	17,332
Securities sold or redeemed	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	—
Unrealized gains included in Other comprehensive income (loss), net	84
September 30, 2011	$	17,416

	Acquisition-related Contingent  Consideration
Liabilities:
January 1, 2011	$	(16,050	)
Amounts (acquired) sold / (issued) settled, net	(165		)
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	7,458
September 30, 2011	$	(8,757	)

The following is a summary of available-for-sale securities held by the Company as of September 30, 2012 and December 31, 2011 (in thousands):

	Available-for-sale
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
September 30, 2012
Equity securities	$	1,766	$	865	$	—	$	2,631
Long-term available-for-sale securities	$	1,766	$	865	$	—	$	2,631
Total available-for-sale securities	$	1,766	$	865	$	—	$	2,631

	Available-for-sale
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
December 31, 2011
Money market funds	$	110,816	$	—	$	—		$	110,816
Total included in cash and cash equivalents	$	110,816	$	—	$	—		$	110,816
Auction-rate securities	18,800		—		(1,337		)	17,463
Equity securities	1,766		—		(124		)	1,642
Long-term available-for-sale securities	$	20,566	$	—	$	(1,461	)	$	19,105
Total available-for-sale securities	$	131,382	$	—	$	(1,461	)	$	129,921

At December 31, 2011, our investments in auction-rate securities consisted of two securities which, as of that date, had been in unrealized loss positions for more than twelve months. The Company had determined that, as of December 31, 2011, the gross unrealized losses associated with the auction-rate securities were not other-than-temporary.

At September 30, 2012 and December 31, 2011, our equity securities consisted of investments in the stock of three publicly traded companies. As of September 30, 2012, one investment had been in an unrealized loss position for more than twelve months. As of December 31, 2011, two investments had been in an unrealized loss position for less than twelve months and one had been in an unrealized loss position for more than twelve months. The Company does not believe the remaining unrealized losses are other-than-

11

temporary at September 30, 2012 or December 31, 2011 primarily because the Company has both the ability and intent to hold these investments for a period of time we believe will be sufficient to recover such losses.

Nonrecurring Fair Value Measurements

The Company's financial assets measured at fair value on a nonrecurring basis during the three months ended September 30, 2012 were as follows (in thousands):

	Fair Value Measurements at Reporting Date using						Total Expense for the Three Months Ended September 30, 2012
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Sanctura XR® developed technology intangible asset	$	—	$	—	$	5,000	$	(11,163	)
Total	$	—	$	—	$	5,000	$	(11,163	)

The Company's financial assets measured at fair value on a nonrecurring basis during the nine months ended September 30, 2012 were as follows (in thousands):

	Fair Value Measurements at Reporting Date using						Total Expense for the Nine Months Ended September 30, 2012
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Sanctura XR® developed technology intangible asset	$	—	$	—	$	5,000	$	(51,163	)
AMS IPR&D intangible asset	—		—		1,000		(3,000		)
Total	$	—	$	—	$	6,000	$	(54,163	)
Liabilities:
Patent litigation settlement liability(1)	—		—		131,361		(131,361		)
Total	$	—	$	—	$	131,361	$	(131,361	)

_____________

(1) As a result of a subsequent change in estimate with respect to this obligation, the Company reduced its liability associated with the Watson Settlement Agreement by $46.2 million to $85.1 million during the third quarter of 2012.

See Note 9. Goodwill and Other Intangibles for a discussion of asset impairment charges. See Note 12. Commitments and Contingencies for a discussion of the patent litigation settlement liability.

NOTE 4. INVENTORIES

Inventories are comprised of the following at September 30, 2012 and December 31, 2011, respectively (in thousands):

	September 30, 2012		December 31, 2011
Raw materials	$	111,916	$	103,064
Work-in-process	61,825		51,063
Finished goods	190,006		108,292
Total	$	363,747	$	262,419

Inventory amounts in the table above are shown net of obsolescence. Our reserve for obsolescence is not material to the Condensed Consolidated Balance Sheets for any of the periods presented and therefore has not been separately disclosed.

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NOTE 5. ACQUISITIONS

American Medical Systems Holdings, Inc. (AMS)

On June 17, 2011 (the AMS Acquisition Date), the Company completed its acquisition of all outstanding shares of common stock of AMS for approximately $2.4 billion in aggregate consideration, including $70.8 million related to existing AMS stock-based compensation awards and certain other amounts, at which time AMS became a wholly-owned, indirect subsidiary of the Company. AMS’s shares were purchased at a price of $30.00 per share.

AMS is a worldwide developer and provider of technology solutions to physicians treating men’s and women’s pelvic health conditions. The AMS business and applicable services include:

Men’s Health.

AMS supplies surgical solutions for the treatment of male urinary incontinence, the involuntary release of urine from the body. The fully implantable AMS 800^® system includes an inflatable urethral cuff to restrict flow through the urethra and a control pump that allows the patient to discreetly open the cuff when he wishes to urinate. Since 2000, AMS has also been selling the InVance^® sling system, a less-invasive procedure for men with moderate incontinence, and in 2007, AMS released the AdVance^® sling system for the treatment of mild to moderate stress urinary incontinence. AMS also offers the UroLume^® endoprosthesis stent as a less invasive procedure for patients who may not be good surgical candidates, as well as for men suffering from bulbar urethral strictures.

AMS also supplies penile implants to treat erectile dysfunction, the inability to achieve or maintain an erection sufficient for sexual intercourse, with a series of semi-rigid malleable prostheses and a complete range of more naturally functioning inflatable prostheses, including the AMS 700^® MS. AMS has refined its implants over the years with improvements to the AMS 700^® series of inflatable prostheses, including the AMS 700 LGX^® and the MS Pump^®. Another key factor that distinguishes AMS’s products is the use of the InhibiZone^® antibiotic coating, which received U.S. Food and Drug Administration (FDA) approval in July 2009 for AMS’s product claim that InhibiZone^® reduces the rate of revision surgery due to surgical infections.

Women’s Health.

AMS offers a broad range of systems, led by Monarc^® and MiniArc^®, to treat female stress urinary incontinence, which generally results from a weakening of the tissue surrounding the bladder and urethra which can be a result of pregnancy, childbirth and aging. Monarc^® incorporates unique helical needles to place a self-fixating, sub-fascial hammock through the obturator foramin. AMS’s MiniArc^® Single-Incision Sling for stress incontinence was released in 2007 and requires just one incision to surgically place a small sling under the urethra, which minimizes tissue disruption and potential for blood loss, thereby allowing the procedure to be done with less anesthesia on an outpatient basis. In 2010, AMS launched the MiniArc^® Precise^TM, which is designed to enhance the ease and accuracy of placement of the MiniArc device.

AMS also offers solutions for pelvic floor prolapse and other pelvic floor disorders, which may be caused by pregnancy, labor, and childbirth. In 2008, AMS introduced the Elevate^® transvaginal pelvic floor repair system, with no external incisions. Using an anatomically designed needle and self-fixating tips, Elevate^® allows for safe, simple and precise mesh placement through a single vaginal incision. The posterior system was launched in 2008 and the anterior system was launched in 2009.

BPH Therapy.

AMS’s products can be used to relieve restrictions on the normal flow of urine from the bladder caused by bladder obstructions, generally the result of BPH or bulbar urethral strictures. AMS offers men experiencing a physical obstruction of the prostatic urethra an alternative to a transurethral resection of the prostate (TURP), with the GreenLight^TM photovaporization of the prostate. This laser therapy is designed to reduce the comorbidities associated with TURP. AMS’s GreenLight^TM XPS and MoXy^TM Liquid Cooled Fiber provide shorter treatment times with similar long-term results compared to other laser systems. The GreenLight^TM laser system offers an optimal laser beam that balances vaporization of tissue with coagulation to prevent blood loss and providing enhanced surgical control compared to other laser systems. AMS also offers the StoneLight^® laser and SureFlex^TM fiber optics for the treatment of urinary stones. StoneLight^® is a lightweight and portable 15-watt holmium laser that offers the right amount of power to effectively fragment most urinary stones. The SureFlex^TM fiber optic line is engineered to deliver more energy safely and effectively, even under maximum scope deflection, for high performance holmium laser lithotripsy.

AMS’s TherMatrx^® product is designed for those men not yet to the point of urethral obstruction, but for whom symptomatic relief is desired. It is a less-invasive tissue ablation technique that can be performed in a physician’s office using microwave energy delivered to the prostate.

13

The acquisition of AMS furthers Endo’s evolution from a pharmaceutical product-driven company to a healthcare solutions provider, strengthens our leading core urology franchise and expands our presence in the medical devices market. We believe the combination of AMS with Endo’s existing platform will provide additional cost-effective solutions across the entire urology spectrum.

The operating results of AMS from and including June 18, 2011 are included in the accompanying Condensed Consolidated Statements of Operations. The Condensed Consolidated Balance Sheet as of September 30, 2012 reflects the acquisition of AMS. The following table summarizes the fair values of the assets acquired and liabilities assumed at the AMS Acquisition Date (in thousands):

	June 17, 2011 (As adjusted)
Cash and cash equivalents	$	47,289
Commercial paper	71,000
Accounts receivable	73,868
Other receivables	630
Inventories	74,988
Prepaid expenses and other current assets	7,133
Income taxes receivable	9,154
Deferred income taxes	15,432
Property, plant and equipment	56,413
Other intangible assets	1,260,000
Other assets	4,581
Total identifiable assets	$	1,620,488
Accounts payable	$	10,327
Accrued expenses	45,835
Deferred income taxes	416,745
Long-term debt	520,375
Other liabilities	25,891
Total liabilities assumed	$	1,019,173
Net identifiable assets acquired	$	601,315
Goodwill	1,798,661
Net assets acquired	$	2,399,976

The above estimated fair values of assets acquired and liabilities assumed are based on the information that was available as of the AMS Acquisition Date to estimate the fair value of assets acquired and liabilities assumed. Our measurement period adjustments were complete as of June 30, 2012. Measurement period adjustments related primarily to revisions in estimated cash flows for certain products after obtaining additional information regarding facts and circumstances existing as of the AMS Acquisition Date.

14

The valuation of the intangible assets acquired and related amortization periods are as follows:

	Valuation (in millions)		Amortization Period (in years)
Customer Relationships:
Men’s Health	$	97.0	17
Women’s Health	37.0		15
BPH	26.0		13
Total	$	160.0	16
Developed Technology:
Men’s Health	$	690.0	18
Women’s Health	150.0		9
BPH	161.0		18
Total	$	1,001.0	16
Tradename:
AMS	$	45.0	30
GreenLight	12.0		15
Total	$	57.0	27
In Process Research & Development:
Oracle	$	12.0	n/a
Genesis	14.0		n/a
TOPAS	8.0		n/a
Other(1)	8.0		n/a
Total	$	42.0	n/a
Total other intangible assets	$	1,260.0	n/a

_____________

(1) A subsequent pre-tax non-cash impairment charge of $3.0 million was recorded in the second quarter of 2012. This impairment charge is further discussed in Note 9. Goodwill and Other Intangibles.

The fair value of the developed technology, IPR&D and customer relationship assets were estimated using a discounted present value income approach. Under this method, an intangible asset’s fair value is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To calculate fair value, the Company used cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company believes that the level and timing of cash flows appropriately reflect market participant assumptions. The fair value of the AMS and GreenLight tradenames were estimated using an income approach, specifically known as the relief from royalty method. The relief from royalty method is based on a hypothetical royalty stream that would be received if the Company were to license the AMS or GreenLight tradename. Thus, we derived the hypothetical royalty income from the projected revenues of AMS and GreenLight products, respectively. Cash flows were assumed to extend through the remaining economic useful life of each class of intangible asset.

The $1,798.7 million of goodwill has been assigned to our AMS segment (formerly our Devices segment). The goodwill recognized is attributable primarily to strategic and synergistic opportunities across the entire urology spectrum, expected corporate synergies, the assembled workforce of AMS and other factors. Approximately $16.5 million of goodwill is expected to be deductible for income tax purposes.

Deferred tax assets of $15.4 million are related primarily to federal net operating loss and credit carryforwards of AMS and its subsidiaries. Deferred tax liabilities of $416.7 million are related primarily to the difference between the book basis and tax basis of identifiable intangible assets.

15

The Company recognized $1.8 million and $4.1 million of AMS acquisition-related and integration costs that were expensed during the three months ended September 30, 2012 and 2011, respectively. These costs are included in Acquisition-related and integration items, net in the accompanying Condensed Consolidated Statements of Operations and are comprised of the following items (in thousands):

	Three Months Ended September 30,
	2012		2011
Bank fees	$	—	$	—
Legal, separation, integration, and other costs	1,848		4,069
Total	$	1,848	$	4,069

The Company recognized $5.2 million and $27.3 million of AMS acquisition-related and integration costs that were expensed during the nine months ended September 30, 2012 and 2011, respectively. These costs are included in Acquisition-related and integration items, net in the accompanying Condensed Consolidated Statements of Operations and are comprised of the following items (in thousands):

	Nine Months Ended September 30,
	2012		2011
Bank fees	$	—	$	16,070
Legal, separation, integration, and other costs	5,174		11,263
Total	$	5,174	$	27,333

The following supplemental pro forma information presents the financial results as if the acquisition of AMS had occurred on January 1, 2011 for the nine months ended September 30, 2011. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been made on January 1, 2011, nor are they indicative of any future results.

	Nine Months Ended September 30, 2011
Pro forma consolidated results (in thousands, except per share data):
Revenue	$	2,165,091
Net income attributable to Endo Health Solutions Inc.	$	130,389
Basic net income per share	$	1.12
Diluted net income per share	$	1.07

These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of AMS to reflect factually supportable adjustments that give effect to events that are directly attributable to the AMS Acquisition, including borrowings to finance the acquisition as well as the additional depreciation and amortization that would have been charged assuming the fair value adjustments primarily to property, plant and equipment, inventory, and intangible assets, had been applied on January 1, 2011, together with the consequential tax effects.

Other

In the second half of 2011, as part of our effort to increase and broaden the relationships within the urology community, we acquired two electronic medical records software companies, Intuitive Medical Software, LLC and meridianEMR, Inc., which individually and combined represent immaterial acquisitions. These acquisitions provide electronic medical records for urologists. Together, these acquisitions provide access to more than 2,000 urologists using data platforms that will enhance service offerings in urology practice management.

NOTE 6. SEGMENT RESULTS

In the fourth quarter of 2011, as a result of our strategic planning process, the Company’s executive leadership team reorganized the manner in which it views our various business activities. Management’s intention was to enhance its level of understanding of the entity’s performance, better assess its prospects and future cash flow potential and ultimately make more informed operating decisions about resource allocation and the enterprise as a whole. Based on this change, we reassessed our reporting structure under the applicable accounting guidance and determined that the Company now has four reportable segments. We have retrospectively revised the segment presentation for all periods presented reflecting the change from three to four reportable segments. Additionally, concurrent with the Company’s May 2012 enterprise-wide rebranding initiative and corporate name change, the Company changed the

16

names of its reportable segments to better align with these efforts. These changes to our segments have no impact on the Company’s Condensed Consolidated Financial Statements for all periods presented.

The four reportable business segments in which the Company now operates include: (1) Endo Pharmaceuticals (formerly Branded Pharmaceuticals), (2) Qualitest (formerly Generics), (3) AMS (formerly Devices) and (4) HealthTronics (formerly Services). Each segment derives revenue from the sales or licensing of their respective products or services and is discussed below.

We evaluate segment performance based on each segment’s adjusted income (loss) before income tax. We define adjusted income (loss) before income tax as income (loss) before income tax before certain upfront and milestone payments to partners, acquisition-related and integration items, net, cost reduction and integration-related initiatives, asset impairment charges, amortization of intangible assets related to marketed products and customer relationships, inventory step-up recorded as part of our acquisitions, non-cash interest expense, and certain other items that the Company believes do not reflect its core operating performance.

Certain corporate general and administrative expenses are not allocated and are therefore included within Corporate unallocated. We calculate consolidated adjusted income (loss) before income tax by adding the adjusted income (loss) before income tax of each of our reportable segments to corporate unallocated adjusted income (loss) before income tax.

Endo Pharmaceuticals

The Endo Pharmaceuticals segment includes a variety of branded prescription products related to treating and managing pain as well as our urology, endocrinology and oncology products. The marketed products that are included in this segment include Lidoderm^®, Opana^® ER, Percocet^®, Voltaren^® Gel, Frova^®, Supprelin^® LA, Vantas^®, Valstar^® and Fortesta^® Gel.

Qualitest

The Qualitest segment is comprised of our legacy Endo non-branded generics portfolio and the portfolio from the Qualitest Pharmaceuticals business, which we acquired in 2010. Our generics business has historically focused on selective generics related to pain that have one or more barriers to market entry, such as complex formulation, regulatory or legal challenges or difficulty in raw material sourcing. With the addition of Qualitest Pharmaceuticals, the segment’s product offerings now include products in the pain management, urology, central nervous system (CNS) disorders, immunosuppression, oncology, women’s health and hypertension markets, among others.

AMS

The AMS segment currently focuses on providing technology solutions to physicians treating men’s and women’s pelvic health conditions and operates in the following business lines: men’s health, women’s health, and BPH therapy. These business lines are discussed in greater detail within Note 5. Acquisitions. We distribute devices through our direct sales force and independent sales representatives in the U.S., Canada, Australia, Brazil, Japan and Western Europe. Additionally, we distribute devices through foreign independent distributors, primarily in Europe, Asia, and South America, who then sell the products to medical institutions. None of our devices customers or distributors accounted for ten percent or more of our total revenues during the three or nine months ended September 30, 2012 or 2011. Foreign subsidiary sales are predominantly to customers in Canada, Australia and Western Europe.

HealthTronics

The HealthTronics segment provides urological services, products and support systems to urologists, hospitals, surgery centers and clinics across the U.S. These services are sold through the following business lines: lithotripsy services, prostate treatment services, anatomical pathology services, medical products manufacturing, sales and maintenance and electronic medical records services.

17

The following represents selected information for the Company’s reportable segments for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net revenues to external customers
Endo Pharmaceuticals	$	416,645		$	425,511		$	1,223,005		$	1,199,292
Qualitest	166,070			147,975			471,310			415,431
AMS(1)	113,304			131,519			371,601			158,331
HealthTronics	54,463			54,073			160,387			153,661
Total consolidated net revenues to external customers	$	750,482		$	759,078		$	2,226,303		$	1,926,715
Adjusted income (loss) before income tax
Endo Pharmaceuticals	$	216,728		$	231,887		$	624,927		$	634,762
Qualitest	45,840			26,932			132,500			74,445
AMS	21,081			35,272			77,383			45,005
HealthTronics	16,639			19,483			42,053			49,665
Corporate unallocated	(73,854		)	(93,844		)	(249,934		)	(217,145		)
Total consolidated adjusted income before income tax	$	226,434		$	219,730		$	626,929		$	586,732

_____________

(1) The following table displays our AMS segment revenue by geography (in thousands). International revenues were not material to any of our other segments for any of the periods presented.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
AMS:
United States	$	75,480	$	91,807	$	246,385	$	107,378
International	37,824		39,712		125,216		50,953
Total AMS revenues	$	113,304	$	131,519	$	371,601	$	158,331

The table below provides reconciliations of our consolidated adjusted income before income tax to our consolidated income (loss) before income tax, which is determined in accordance with U.S. GAAP, for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Total consolidated adjusted income before income tax	$	226,434		$	219,730		$	626,929		$	586,732
Upfront and milestone payments to partners	(5,338		)	(2,355		)	(56,905		)	(27,346		)
Asset impairment charges	(11,163		)	(22,691		)	(54,163		)	(22,691		)
Acquisition-related and integration items, net	(5,776		)	(5,818		)	(16,580		)	(29,517		)
Separation benefits and other cost reduction initiatives	(11,590		)	(13,603		)	(26,958		)	(17,598		)
Amortization of intangible assets	(58,735		)	(58,846		)	(170,659		)	(136,501		)
Inventory step-up	—			(23,937		)	(880		)	(40,718		)
Non-cash interest expense	(5,209		)	(4,754		)	(15,354		)	(14,014		)
Net loss on extinguishment of debt	(1,789		)	—			(7,215		)	(8,548		)
Accrual for payment to Impax related to sales of Opana® ER	6,000			—			(104,000		)	—
Patent litigation settlement items, net	46,238			—			(85,123		)	—
Litigation-related contingencies	(82,600		)	—			(82,600		)	—
Other income (expense), net	—			2,636			—			2,636
Total consolidated income (loss) before income tax	$	96,472		$	90,362		$	6,492		$	292,435

18

The following represents additional selected financial information for our reportable segments three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Depreciation expense
Endo Pharmaceuticals	$	3,539	$	3,110	$	11,249	$	9,552
Qualitest	3,106		3,461		9,041		8,645
AMS	2,614		1,941		7,812		2,225
HealthTronics	2,905		3,059		9,230		9,164
Corporate unallocated	1,168		880		3,339		2,649
Total depreciation expense	$	13,332	$	12,451	$	40,671	$	32,235

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Amortization expense
Endo Pharmaceuticals	$	27,318	$	26,101	$	76,395	$	78,361
Qualitest	10,381		9,728		31,143		29,325
AMS	19,385		21,767		58,191		25,063
HealthTronics	1,801		1,401		5,380		4,203
Total amortization expense	$	58,885	$	58,997	$	171,109	$	136,952

Interest income and expense are considered corporate items and are not allocated to our segments. Asset information is not accounted for at the segment level and consequently is not reviewed or included within our internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment.

NOTE 7. INCOME TAXES

The effective income tax rate was 29.3% and (142.7)% for the three and nine months ended September 30, 2012, respectively, compared to 37.7% and 34.3% for the three and nine months ended September 30, 2011, respectively.

Income tax for the three months ended September 30, 2012decreased 17% to $28.3 million of expense from $34.1 million of expense during the three months ended September 30, 2011. This decrease was due to an increase in income before income tax and a decrease in the effective tax rate. The decrease in the effective tax rate was primarily driven by the establishment of an $8.5 million valuation allowance in the comparable 2011 period against an anticipated capital loss on our cost method investment in a privately held company. A benefit of $5.8 million was also recorded during the three months ended September 30, 2012 for the release of reserves established for uncertain tax positions due to the expiration of federal and state statute of limitations for assessments. A similar benefit of $4.2 million was recorded in the comparable prior period for the release of reserves on uncertain tax positions due to the expiration of federal and state statute of limitations.

Income tax for the nine months ended September 30, 2012 totaled $9.3 million of benefit compared to $100.3 million of expense during the nine months ended September 30, 2011. This fluctuation was primarily driven by a decrease in income before income tax, the establishment of an $8.5 million valuation allowance in the comparable 2011 period against an anticipated capital loss on our cost method investment in a privately held company and the recording of a $6.3 million benefit for a prior period adjustment during the second quarter of 2012 related to the reversal of a 2010 capital loss valuation allowance recorded in connection with our acquisition of HealthTronics, Inc. The valuation allowance was reversed because of a 2011 transaction that resulted in a realized ordinary loss for income tax purposes. A benefit of $5.8 million was also recorded during the nine months ended September 30, 2012 for the release of reserves established for uncertain tax positions due to the expiration of federal and state statute of limitations for assessments. A similar benefit of $7.9 million was recorded in the comparable prior period for the release of reserves on uncertain tax positions due to the expiration of statute of limitations and an IRS audit settlement for the tax years 2006 through 2008.

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NOTE 8. LICENSE AND COLLABORATION AGREEMENTS

Commercial Products

Novartis AG and Novartis Consumer Health, Inc.

On March 4, 2008, we entered into a License and Supply Agreement (the Voltaren^® Gel Agreement) with and among Novartis AG and Novartis Consumer Health, Inc. (Novartis) to obtain the exclusive U.S. marketing rights for the prescription medicine Voltaren^® Gel (Voltaren^® Gel or Licensed Product). Voltaren^® Gel received regulatory approval in October 2007 from the FDA, becoming the first topical prescription treatment for use in treating pain associated with osteoarthritis and the first new product approved in the U.S. for osteoarthritis since 2001. Voltaren^® Gel was granted marketing exclusivity in the U.S. as a prescription medicine until October 2010.

Under the terms of the five-year Voltaren^® Gel Agreement, Endo made an upfront cash payment of $85 million. Endo agreed to pay royalties to Novartis on annual Net Sales of the Licensed Product, subject to certain thresholds as defined in the Voltaren^® Gel Agreement. In addition, Endo agreed to make certain guaranteed minimum annual royalty payments of $30 million per year payable in the 4th and 5th year of the Voltaren^® Gel Agreement, which may be reduced under certain circumstances, including Novartis’s failure to supply the Licensed Product, subject to certain limitations including the launch of a generic to the Licensed Product in the U.S. These guaranteed minimum royalties will be creditable against royalty payments on an annual basis such that Endo’s obligation with respect to each year is to pay the greater of (i) royalties payable based on annual net sales of the Licensed Product or (ii) the guaranteed minimum royalty for such Voltaren^® Gel Agreement year. Novartis is also eligible to receive a one-time milestone payment of $25 million if annual net sales of Voltaren^® Gel exceed $300 million in the U.S. To date, annual net sales have not exceeded this threshold and, therefore, this milestone payment has not been paid.

The $85 million upfront payment and the present value of the guaranteed minimum royalties was initially capitalized as an intangible asset in the amount of $129 million, representing the fair value of the exclusive license to market Voltaren^® Gel. We are amortizing this intangible asset into Cost of revenues over an estimated five-year useful life. Due to Novartis’s failure to supply Voltaren^® Gel during the first quarter of 2012 resulting from the temporary shutdown of its Lincoln, Nebraska manufacturing facility, we were not obligated to make any first quarter royalty payment, including the $7.5 million minimum royalty. Accordingly, during the first quarter of 2012, we recorded a reduction to the associated liability and a decrease in the intangible asset.

As a result of the previously disclosed supply disruptions, and in accordance with the Voltaren^® Gel Agreement, the Company was not obligated to make any payment to Novartis for the first quarter of 2012. Subsequent to the first quarter, royalties in the amount of $11.9 million were incurred based on a percentage of actual net sales of Voltaren^® Gel during the second and third quarter of 2012. Voltaren^® Gel royalties incurred during the nine months ended September 30, 2011 were $10.2 million.

Endo is solely responsible to commercialize the Licensed Product during the term of the Voltaren^® Gel Agreement. With respect to each year during the term of the Voltaren^® Gel Agreement, subject to certain limitations, Endo is required to incur a minimum amount of annual advertising and promotional expenses on the commercialization of the Licensed Product, which may be reduced under certain circumstances including Novartis’s failure to supply the Licensed Product. In addition, Endo is required to perform a minimum number of face-to-face one-on-one discussions with physicians and other healthcare practitioners (Details) for the purpose of promoting the Licensed Product within its approved indication during each year of the Voltaren^® Gel Agreement which may be reduced under certain circumstances including Novartis’s failure to supply the Licensed Product. Further, during the term of the Voltaren^® Gel Agreement, Endo will share in the costs of certain clinical studies and development activities initiated at the request of the FDA or as considered appropriate by Novartis and Endo.

During the term of the Voltaren^® Gel Agreement, Endo has agreed to purchase all of its requirements for the Licensed Product from Novartis. The price was fixed for the first year and subject to annual changes based upon changes in the producer price index and raw materials.

Novartis has the exclusive right, at its sole discretion, to effect a switch of the Licensed Product from a prescription product to an over-the-counter (OTC) product in the U.S. (an OTC Switch) by filing an amendment or supplement to the Licensed Product New Drug Application or taking any other action necessary or advisable in connection therewith to effect the OTC Switch, and thereafter to commercialize such OTC product. Notwithstanding the foregoing, Novartis shall not launch an OTC equivalent product prior to a time specified in the Voltaren^® Gel Agreement, and Novartis shall not take any action that results in the loss of the prescription product status for the Licensed Product prior to such time. Novartis will notify Endo if it submits a filing to the FDA in respect of an OTC equivalent product. In the event that Novartis gains approval of an OTC equivalent product that results in the Licensed Product being declassified as a prescription product, then Novartis will make certain royalty payments to Endo on net sales of such OTC equivalent product in the U.S. by Novartis, its affiliates and their respective licensees or sublicensees as set forth in the Voltaren^® Gel Agreement.

20

As a condition to the payment of any and all such royalties, net sales of the Licensed Product in the U.S. must have exceeded a certain threshold prior to the launch of the OTC equivalent product by Novartis or its affiliates.

The initial term of the Voltaren^® Gel Agreement will expire on June 30, 2013, and we have the option to extend it for two successive one year terms. If renewed, the Voltaren^® Gel Agreement will remain in place unless either party provides written notice of non-renewal to the other party at least six months prior to the expiration of any renewal term after the first renewal term or the Voltaren^® Gel Agreement is otherwise terminated in accordance with its terms. Should the Voltaren^® Gel Agreement be extended, Endo will again be obligated to make certain guaranteed minimum annual royalty payments of $30 million per year during each successive one-year renewal term, subject to certain limitations including the launch of a generic to the Licensed Product in the U.S. These guaranteed minimum annual royalty payments may be reduced under certain circumstances, including Novartis’s failure to supply the Licensed Product, These guaranteed minimum royalties will be creditable against royalty payments on an annual basis such that Endo’s obligation with respect to each year is to pay the greater of (i) royalties payable based on annual net sales of the Licensed Product or (ii) the guaranteed minimum royalty for such Voltaren^® Gel Agreement year. Among other standard and customary termination rights granted under the Voltaren^® Gel Agreement, the Voltaren^® Gel Agreement can be terminated by either party upon reasonable written notice, if either party has committed a material breach that has not been remedied within 90 days from the giving of written notice. Endo may terminate the Voltaren^® Gel Agreement by written notice upon the occurrence of several events, including the launch in the U.S. of a generic to the Licensed Product. Novartis may terminate the Voltaren^® Gel Agreement upon reasonable written notice (1) if Endo fails to deliver a set percentage of the minimum Details in any given six-month period under the Voltaren^® Gel Agreement; or (2) on or after the launch in the U.S. of an OTC equivalent product by Novartis, its affiliates or any third party that does not result in the declassification of the Licensed Product as a prescription product, following which net sales in any six-month period under the Voltaren^® Gel Agreement are less than a certain defined dollar amount.

Hind Healthcare Inc.

In November 1998, Endo entered into a license agreement (the Hind License Agreement) with Hind Healthcare Inc. (Hind), for the sole and exclusive right to develop, use, market, promote and sell Lidoderm^® in the U.S. Under the terms of the Hind License Agreement, Endo paid Hind approximately $10 million based upon the achievement of certain milestones and capitalized this amount as an intangible asset representing the fair value of these exclusive rights. In addition, we were required to pay Hind nonrefundable royalties based on net sales of Lidoderm^® until this obligation expired on November 23, 2011 pursuant to the terms of the Hind License Agreement. Royalties were recorded as a reduction to net sales due to the nature of the license agreement and the characteristics of the license involvement by Hind in Lidoderm^®. The royalty rate was 10% of net sales including a minimum royalty of at least $500,000 per year. No royalties were recorded in 2012. During the nine months ended September 30, 2011, we recorded $64.5 million in royalties to Hind which we recorded as a reduction to net sales.

Vernalis Development Limited

In July 2004, we entered into a License Agreement with Vernalis Development Limited (Vernalis) under which Vernalis agreed to license, exclusively to us, rights to market frovatriptan succinate (Frova^®) in North America (the Vernalis License Agreement). Frova^® was launched June 2002 in the U.S. and indicated for the acute treatment of migraine headaches in adults. Under the terms of the Vernalis License Agreement, we paid Vernalis an upfront fee of $30 million and annual $15 million payments each in 2005 and 2006. We capitalized the $30 million up-front payment and the present value of the two$15 million anniversary payments. We are amortizing this intangible asset into Cost of revenues on a straight-line basis over its estimated life of 12.5 years.

In addition, Vernalis could receive one-time milestone payments for the achievement of defined annual net sales targets. These sales milestone payments increase based on increasing net sales targets ranging from a milestone of $10 million on $200 million in net sales to a milestone of $75 million on $1.2 billion in net sales. These sales milestones could total up to $255.0 million if all of the defined net sales targets are achieved. Beginning on January 1, 2007, we began paying royalties to Vernalis based on the net sales of Frova^®. The term of the license agreement is for the shorter of the time (i) that there are valid claims on the Vernalis patents covering Frova^® or there is market exclusivity granted by a regulatory authority, whichever is longer, or (ii) until the date on which a generic version of Frova^® is first offered, but in no event longer than 20 years. We can terminate the license agreement under certain circumstances, including upon one years’ written notice. In July 2007, Vernalis and Endo entered into an Amendment (Amendment No. 3) to the License Agreement dated July 14, 2004. Under Amendment No. 3, Vernalis granted an exclusive license to Endo to make, have made, use, commercialize and have commercialized Frova^® in Canada, under the Canadian Trademark.

In February 2008, we entered into Amendment No. 4 to the Vernalis License Agreement (Amendment No. 4). In addition to amending certain specific terms and conditions of the License Agreement, Amendment No. 4 sets forth an annual minimum net sales threshold such that no royalties will be due on annual U.S. net sales of Frova^® less than $85 million. Prior to this amendment, royalties were payable by us to Vernalis on all net sales of Frova^® in the U.S. Now, once the annual minimum net sales amount is reached, royalty payments will be due only on the portion of annual net sales that exceed the $85 million threshold. To date, annual net sales have not exceeded the $85 million threshold and, therefore, no royalties have been paid.

21

On August 15, 2011, the parties amended the Vernalis License Agreement (Amendment No. 5). Pursuant to Amendment No. 5, Vernalis assigned to the Company certain patents which were previously exclusively licensed by the Company. Amendment No. 5 did not alter the financial arrangement between the parties.

The Population Council

The Company markets certain of its products utilizing the hydrogel polymer technology pursuant to an agreement between Indevus (now, Endo Pharmaceuticals Solutions Inc.) and The Population Council. Unless earlier terminated by either party in the event of a material breach by the other party, the term of the agreement is the shorter of twenty-five years from October 1997 or until the date on which The Population Council receives approximately $40 million in payments from the Company. To date, we have made payments of $9.7 million to the Population Council. The Company is required to pay to The Population Council 3% of its net sales of Vantas^® and any polymer implant containing a luteinizing hormone-releasing hormone (LHRH) analog. We are also obligated to pay royalties to The Population Council ranging from 0.5% of net sales to 4% of net sales under certain conditions. We are also obligated to pay the Population Council 30% of certain profits and payments received in certain territories by the Company from the licensing of Vantas^® or any other polymer implant containing an LHRH analog and 5% for other implants.

Strakan International Limited

In August 2009, we entered into a License and Supply Agreement with Strakan International Limited, a subsidiary of ProStrakan Group plc. (ProStrakan), which was subsequently acquired by Kyowa Hakko Kirin Co. Ltd., for the exclusive right to commercialize Fortesta^® Gel in the U.S. (the ProStrakan Agreement). Fortesta^® Gel is a patented two percent testosterone transdermal gel for testosterone replacement therapy in male hypogonadism. A metered dose delivery system permits accurate dose adjustment to increase the ability to individualize patient treatment. Under the terms of the ProStrakan Agreement, Endo paid ProStrakan an up-front cash payment of $10 million, which was recorded as Research and development expense.

The Company received FDA approval for Fortesta^® Gel in December 2010, which triggered a one-time approval milestone to ProStrakan for $12.5 million. The approval milestone was recorded as an intangible asset and is being amortized into Cost of revenues on a straight-line basis over its estimated useful life. An additional milestone payment of $7.5 million was triggered during the second quarter of 2011 pursuant to the terms of the ProStrakan Agreement, at which time it was recorded to Cost of revenues. ProStrakan could potentially receive up to approximately $167.5 million in additional payments linked to the achievement of future commercial milestones related to Fortesta^® Gel.

ProStrakan will exclusively supply Fortesta^® Gel to Endo at a supply price based on a percentage of annual net sales subject to a minimum floor price as defined in the ProStrakan Agreement. Endo may terminate the ProStrakan Agreement upon six months’ prior written notice at no cost to the Company.

Grünenthal GMBH

In December 2007, we entered into a License, Development and Supply Agreement (the Grünenthal Oxymorphone Agreement) with Grünenthal for the exclusive clinical development and commercialization rights in Canada and the U.S. for a new oral formulation of Opana^® ER, which is designed to be crush-resistant. Under the terms of the Grünenthal Oxymorphone Agreement, we paid approximately $4.9 million for the successful completion of a clinical milestone in 2010, which was recorded as Research and development expense. In December 2011, the FDA approved a formulation of Opana^® ER designed to be crush-resistant, which will continue to be called Opana^® ER.

In the fourth quarter of 2011, the Company capitalized a one-time approval milestone to Grünenthal for $4.9 million. We are amortizing this intangible asset into Cost of revenues over its estimated useful life. We made an additional payment of $4.9 million in August 2012 related to a commercial milestone which was recorded as Cost of revenues. Additional payments of approximately 50.8 million euros (approximately $65.3 million at September 30, 2012) may become due upon achievement of additional future predetermined regulatory and commercial milestones. Endo will also make payments to Grünenthal based on net sales of any such product or products commercialized under this agreement, including the formulation of Opana^® ER approved by the FDA in December 2011. These payments are recorded in Cost of revenues in our Condensed Consolidated Financial Statements and must be paid in U.S. dollars within 45 days after each calendar quarter. We incurred $26.9 million during the nine months ended September 30, 2012 for these payments. We incurred no such costs during the nine months ended September 30, 2011.

Products in Development

Impax Laboratories, Inc.

In June 2010, the Company entered into a Development and Co-Promotion Agreement (the Impax Development Agreement) with Impax Laboratories, Inc. (Impax), whereby the Company was granted a royalty-free license for the co-exclusive rights to
co-promote a next generation Parkinson’s disease product. Under the terms of the Impax Development Agreement, Endo paid Impax

22

an upfront payment of $10 million in 2010, which was recorded as Research and development expense. The Company could be obligated to pay up to approximately $30.0 million in additional payments linked to the achievement of future clinical, regulatory, and commercial milestones related to the development product. Prior to the completion of phase III trials, Endo may only terminate the Impax Development Agreement upon a material breach.

Bioniche Life Sciences Inc.

In July 2009, the Company entered into a License, Development and Supply Agreement (the Bioniche Agreement) with Bioniche Life Sciences Inc. and Bioniche Urology Inc. (collectively, Bioniche), whereby the Company licensed from Bioniche the exclusive rights to develop and market Bioniche’s proprietary formulation of Mycobacterial Cell Wall-DNA Complex (MCC), known as Urocidin^TM, in the U.S. with an option for global rights. We exercised our option for global rights in the first quarter of 2010. Urocidin^TM is a patented formulation of MCC developed by Bioniche for the treatment of non-muscle-invasive bladder cancer that is currently undergoing phase III clinical testing. Under the terms of the Bioniche Agreement, Endo paid Bioniche an up-front cash payment of $20.0 million in July 2009 and milestone payments of $11.0 million in 2009 and $4.0 million in 2010 resulting from the achievement of contractual milestones, which were recorded as Research and development expense. In addition, Bioniche could potentially receive up to approximately $67.0 million and $26.0 million in additional payments linked to the achievement of future clinical, regulatory, and commercial milestones related to two separate indications for Urocidin^TM. Bioniche will manufacture Urocidin^TM and receive a transfer price for supply based on a percentage of Endo’s annual net sales of Urocidin^TM. Endo may terminate the Bioniche Agreement upon 180 days’ prior written notice.

As a result of recent discussions with the FDA regarding the current Urocidin^TM phase III clinical trial, the Company's subsidiary, Endo Pharmaceuticals, has decided to end the study before its scheduled completion. Endo Pharmaceuticals, and its partner Bioniche, are considering potential next steps for the program.

BayerSchering

In July 2005, Indevus (now, Endo Pharmaceuticals Solutions Inc.) licensed exclusive U.S. rights from Schering AG, Germany, now BayerSchering Pharma AG (BayerSchering) to market a long-acting injectable testosterone preparation for the treatment of male hypogonadism that we refer to as Aveed^TM (the BayerSchering Agreement). The Company is responsible for the development and commercialization of Aveed^TM in the U.S. BayerSchering is responsible for manufacturing and supplying the Company with finished product. As part of the BayerSchering Agreement, Indevus agreed to pay to BayerSchering up to $30.0 million in up-front, regulatory milestone, and commercialization milestone payments, including a $5.0 million payment due upon approval by the FDA to market Aveed^TM. Indevus also agreed to pay to BayerSchering 25% of net sales of Aveed^TM to cover both the cost of finished product and royalties. Either party may also terminate the BayerSchering Agreement in the event of a material breach by the other party.

In October 2006, Indevus entered into a supply agreement with BayerSchering pursuant to which BayerSchering agreed to manufacture and supply Indevus with all of its requirements for Aveed^TM for a supply price based on net sales of Aveed^TM. The supply price is applied against the 25% of net sales owed to BayerSchering pursuant to the BayerSchering Agreement. The BayerSchering Agreement expires ten years after the first commercial sale of Aveed^TM.

Hydron Technologies, Inc.

In November 1989, GP Strategies Corporation (GP Strategies), then known as National Patent Development Corporation, entered into an agreement (the Hydron Agreement) with Dento-Med Industries, Inc., now known as Hydron Technologies, Inc. In June 2000, Valera Pharmaceuticals, Inc. (Valera, now a wholly-owned, indirect subsidiary of the Company known as Endo Pharmaceuticals Valera Inc.) entered into a contribution agreement with GP Strategies, pursuant to which Valera acquired the assets of GP Strategies’ drug delivery business, including all intellectual property, and all of GP Strategies’ rights under the Hydron Agreement, and certain other agreements with The Population Council and Shire US, Inc.

Pursuant to the Hydron Agreement, the Company has the exclusive right to manufacture, sell and distribute any prescription drug or medical device and certain other products made with the hydrogel polymer technology. Hydron Technologies retained an exclusive, worldwide license to manufacture, market or use products composed of, or produced with the use of, the hydrogel polymer technology in certain consumer and oral health fields. Neither party is prohibited from manufacturing, exploiting, using or transferring the rights to any new non-prescription drug product containing the hydrogel polymer technology, subject to certain exceptions, for limited exclusivity periods. Subject to certain conditions and exceptions, the Company is obligated to supply certain types of polymer to Hydron Technologies and Hydron Technologies is obligated to purchase such products from the Company. Under the Hydron Agreement, the Company also had the title to the Hydron^® trademark. Recently, the Company decided to stop using the Hydron^® trademark and transferred the title to such trademark to Hydron Technologies pursuant to the Hydron Agreement. This agreement continues indefinitely, unless terminated earlier by the parties. Each party may owe royalties up to 5% to the other party on certain products under certain conditions.

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BioDelivery Sciences International, Inc.

In January 2012, the Company signed a worldwide license and development agreement (the BioDelivery Agreement) with BioDelivery Sciences International, Inc. (BioDelivery) for the exclusive rights to develop and commercialize BEMA^® Buprenorphine. BEMA^® Buprenorphine is a transmucosal form of buprenorphine, a partial mu-opiate receptor agonist, which incorporates a bioerodible mucoadhesive (BEMA^®) technology. BEMA^® Buprenorphine is currently in phase III trials for the treatment of moderate to severe chronic pain. The Company made an upfront payment to BioDelivery for $30.0 million, which was expensed as Research and development in the first quarter of 2012. During the first quarter of 2012, $15.0 million of additional costs were incurred related to the achievement of certain regulatory milestones and were recorded as Research and development expense. We paid this amount in the second quarter of 2012. In the future, Endo could be obligated to pay royalties based on net sales of BEMA^® Buprenorphine and commercial and regulatory milestone payments of up to approximately $135.0 million. Endo may terminate the BioDelivery Agreement at any time upon six months written notice. Unless terminated earlier, the BioDelivery Agreement shall expire, on a country by country basis, upon the later to occur of ten years from the date of first commercial sale in a particular country or the date on which the last valid claim of the applicable BioDelivery patents in a particular country has expired or been invalidated or found unenforceable.

Orion Corporation

In January 2011, the Company entered into a Discovery, Development and Commercialization Agreement (the 2011 Orion Agreement) with Orion Corporation (Orion) to exclusively co-develop products for the treatment of certain cancers and solid tumors. Under the terms of the 2011 Orion Agreement, Endo and Orion each contributed four research programs to the collaboration to be conducted pursuant to the agreement. The development of each research program shall initially be the sole responsibility of the contributing party. However, upon the achievement of certain milestones, the non-contribution party shall have the opportunity to, at its option, obtain a license to jointly develop and commercialize any research program contributed by the other party for amounts defined in the 2011 Orion Agreement. Subject to certain limitations, upon the first commercial sale of any successfully launched jointly developed product, Endo shall be obligated to pay royalties to Orion based on net sales of the corresponding product in North America (the Endo territory) and Orion shall be obligated to pay royalties to Endo on net sales of the corresponding product in certain European countries (the Orion territory). The 2011 Orion Agreement shall expire in January 2016, unless terminated early or extended pursuant to the terms of the agreement. In January 2011, Endo exercised its option to obtain a license to jointly develop and commercialize Orion’s Anti-Androgen program focused on castration-resistant prostate cancer, one of Orion’s four contributed research programs, and made a corresponding payment to Orion for $10 million, which was expensed as Research and development in the first quarter of 2011.

EpiCept Corp.

In December 2003, we entered into a license granting us exclusive, worldwide rights to certain patents of EpiCept Corp. (EpiCept) as well as exclusive, worldwide commercialization rights to EpiCept’s LidoPAIN^® BP product (EpiCept Agreement). The EpiCept Agreement provides for Endo to pay EpiCept milestones as well as royalties on the net sales of EpiCept’s LidoPAIN^® BP product. Under this Agreement, we made an upfront payment to EpiCept of $7.5 million which we capitalized as an intangible asset representing the fair value of the exclusive right and the patents. We are amortizing this intangible asset over its useful life of thirteen years. EpiCept has also retained an option to co-promote the LidoPAIN^® BP product. Milestone payments made by Endo under this agreement, including regulatory milestones and sales thresholds, could total up to $82.5 million. In addition, the EpiCept Agreement also contains terms and conditions customary for this type of arrangement, including representations, warranties, indemnities and termination rights. The EpiCept Agreement generally lasts until the underlying patents expire. In January 2009, EpiCept announced that it was discontinuing all drug discovery activities including the development of LidoPAIN^® BP. However, the Company intends to maintain its patent rights conveyed by the EpiCept Agreement.

Other

We have entered into certain other collaboration and discovery agreements with third parties for the development of pain management and other products. These agreements require us to share in the development costs of such products and grant marketing rights to us for such products.

We have also licensed from universities and other similar firms, rights to certain technologies or intellectual property, generally in the field of pain management. We are generally required to make upfront payments as well as other payments upon successful completion of regulatory or sales milestones. In addition, these agreements generally require us to pay royalties on sales of the products arising from these agreements. These agreements generally permit Endo to terminate the agreement with no significant continuing obligation.

24

NOTE 9. GOODWILL AND OTHER INTANGIBLES

Goodwill

Changes in the carrying amount of our goodwill for the nine months ended September 30, 2012, are as follows:

	Carrying Amount
December 31, 2011	$	2,558,041
Goodwill acquired during the period	7,717
Measurement period adjustments	3,379
Effect of currency translation	151
September 30, 2012	$	2,569,288

The goodwill acquired during the period relates to immaterial acquisitions. Of the $2.6 billion of goodwill recorded on our Condensed Consolidated Balance Sheet at September 30, 2012, $290.8 million is assigned to our Endo Pharmaceuticals segment, $275.2 million is assigned to our Qualitest segment, $1.8 billion is assigned to our AMS segment and $209.0 million is assigned to our HealthTronics segment.

Other Intangible Assets

Our other intangible assets consist of the following at September 30, 2012 and December 31, 2011, respectively (in thousands):

	September 30, 2012			December 31, 2011
Indefinite-lived intangibles:
In-process research and development	$	179,400		$	221,400
Total indefinite-lived intangibles	$	179,400		$	221,400
Definite-lived intangibles:
Licenses (weighted average life of 9 years)	$	590,193		$	647,239
Less accumulated amortization	(308,026		)	(256,903		)
Licenses, net	$	282,167		$	390,336
Customer relationships (weighted average life of 16 years)	159,789			159,632
Less accumulated amortization	(13,097		)	(5,460		)
Customer relationships, net	$	146,692		$	154,172
Tradenames (weighted average life of 22 years)	91,600			91,600
Less accumulated amortization	(7,592		)	(4,142		)
Tradenames, net	$	84,008		$	87,458
Developed technology (weighted average life of 16 years)	1,825,375			1,774,300
Less accumulated amortization	(234,412		)	(125,695		)
Developed technology, net	$	1,590,963		$	1,648,605
Other (weighted average life of 11 years)	2,200			2,200
Less accumulated amortization	(243		)	(47		)
Other, net	$	1,957		$	2,153
Total definite-lived intangibles, net (weighted average life of 14 years)	$	2,105,787		$	2,282,724
Other intangibles, net	$	2,285,187		$	2,504,124

Amortization expense for the nine month periods ended September 30, 2012 and 2011 was $171.1 million and $137.0 million, respectively. As of September 30, 2012, the weighted average amortization period for our definite-lived intangible assets in total was approximately 14 years. Changes in the gross carrying amount of our other intangible assets for the nine months ended September 30, 2012 are as follows:

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	Gross Carrying Amount
December 31, 2011	$	2,896,371
Patents acquired	12,075
Asset impairment charges	(54,163		)
Effect of currency translation	158
Other	(5,884		)
September 30, 2012	$	2,848,557

AMS IPR&D Impairment

As a result of market and potential regulatory changes affecting the commercial potential in the United States for one of the AMS IPR&D assets, the Company determined that the asset's carrying value was no longer fully recoverable. Accordingly, in the second quarter of 2012, we recorded a pre-tax non-cash impairment charge of $3.0 million, which was assigned to our AMS segment and was recorded in the Asset impairment charges line of our Condensed Consolidated Statements of Operations. The fair value of this asset was determined using a discounted cash flow model, or income approach. This fair value measurement technique is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. Changes in any of the assumptions used in determining the fair value of this asset may result in a further reduction to its estimated fair value and could result in additional and potentially full future impairment charges of up to $1.0 million.

Sanctura XR^® Impairment

Pursuant to the Sanctura XR^® Amended and Restated License, Commercialization and Supply Agreement with Allergan USA, Inc. (Allergan), the Company receives royalties based on net sales of Sanctura XR^® made by Allergan. In March 2009, Watson Pharmaceutical Inc. (Watson) filed an Abbreviated New Drug Application (ANDA) seeking FDA approval to market generic versions of Sanctura XR^® before the expiration of Allergan’s patents listed in the Orange Book. Subsequent to Watson’s ANDA filing, Sandoz Inc. and Paddock Laboratories, Inc. (acquired by Perrigo Company in August 2011) also filed ANDAs for a generic version of Sanctura XR^®. In April 2012, the U.S. District Court for the District of Delaware ruled that five patents covering Allergan’s Sanctura XR^® (trospium chloride) extended-release capsules were invalid. The Company appealed this ruling, and subsequently in June 2012, our appeal was dismissed.

As part of our first quarter 2012 Form 10-Q filing, the Company concluded that an impairment assessment was required to evaluate the recoverability of the indefinite-lived intangible asset. In accordance with the applicable accounting guidance, the Company assessed the recoverability of this asset by comparing its carrying amount to its forecasted undiscounted future cash flows and determined that its carrying value exceeded its undiscounted future cash flows, indicating an impairment existed. The Company then determined the fair value of the Sanctura XR^® intangible asset to be $21.6 million at March 31, 2012. Accordingly, the Company recorded a pre-tax non-cash impairment charge of $40.0 million in March 2012, representing the difference between the carrying value of the intangible asset and its estimated fair value.

To estimate fair value, we assessed the estimates of the amount and timing of future cash flows from royalties and milestones received from Allergan related to net sales of the product. To calculate the fair value of the Sanctura XR^® intangible asset during the first quarter of 2012, the Company used an income approach using a discounted cash flow model considering management’s current evaluation of the above mentioned factors. The Company utilized probability-weighted cash flow models using a present value discount factor commensurate with the overall risk associated with this particular product. The cash-flow models included our best estimates of future royalties from Allergan related to sales of Sanctura XR^® in light of generic competition. At the time of this assessment, the Company believed that the level and timing of cash flows assumed, discount rate and probabilities used in the model appropriately reflected market participant assumptions.

In October 2012, Watson announced that it had received FDA approval for its generic version of Sanctura XR^® and that it intended to begin shipping its product immediately. As a result of this announcement, the Company concluded that an additional impairment assessment was required. Accordingly, the Company again evaluated the recoverability of the asset and determined that an impairment existed. Using a valuation model similar to that described above, and assumptions that we presently believe reflect market participant assumptions, the fair value of the Sanctura XR^® intangible asset was determined to be $5.0 million at September 30, 2012. Accordingly, the Company recorded an additional pre-tax non-cash impairment charge of $11.2 million in September 2012, representing the difference between the carrying value of the intangible asset and its estimated fair value. The remaining net book value will be amortized over a shortened useful life commensurate with the expected rate of erosion due to generic competition. The above mentioned impairment charges, which were assigned to our Endo Pharmaceuticals segment, were recognized in earnings and included in the Asset impairment charges line item in the Condensed Consolidated Statements of Operations. Changes in any of our

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assumptions may result in a further reduction to the estimated fair value of the Sanctura XR^® intangible asset and could result in additional and potentially full future impairment charges.

Future Amortization

Estimated amortization of intangibles for the five fiscal years subsequent to December 31, 2011 is as follows (in thousands):

2012	$	229,788
2013	$	186,610
2014	$	171,083
2015	$	169,910
2016	$	167,931

Annual Impairment Testing

Goodwill represents the excess of purchase price over the fair value of net assets acquired. Other indefinite-lived intangible assets consist primarily of the fair value of in-process research and development assets acquired in a business combination. We assess goodwill and other indefinite-lived intangible assets for impairment annually, or more frequently whenever events or changes in circumstance indicate that the asset may be impaired. For goodwill, the assessment considers if the carrying amount of a reporting unit exceeds its fair value. If so, an impairment charge is recognized for the excess of the carrying amount of the reporting unit's goodwill over its implied fair value. For indefinite-lived intangible assets, the assessment considers if the carrying amount of the asset exceeds its fair value. If so, an impairment charge is recognized for the excess.

During the three months ended September 30, 2012, we changed our annual goodwill impairment test date from January 1 to October 1. The change in the annual date for impairment testing will necessitate completing a test as of October 1, 2012 to ensure that no more than 12 months elapse between annual tests. We will complete this test in the fourth quarter ending December 31, 2012 and expect that the new date will not have the effect of delaying, accelerating or avoiding an impairment charge. The selection of October 1 as the annual testing date for the impairment of goodwill is preferable as it aligns the timing of the annual impairment test with the completion of our planning and budgeting process, which will allow us to utilize the updated business plans that result from the budget process to estimate the fair value of our reporting units and do so on a more timely basis. The selection of October 1 as the annual testing date will also move the testing outside of our annual financial reporting process when our resources are more constrained. During the three months ended September 30, 2012, we also changed our annual indefinite lived intangible asset test date to October 1. In the fourth quarter ending December 31, 2012, we will also complete our annual testing of indefinite lived intangible assets of this new date.

Due to significant judgments and estimates that are utilized in an impairment analysis, we determined it was impracticable to objectively determine, without the use of hindsight, the assumptions that would have been used as of each October 1 for periods before October 1, 2012. As such, we will prospectively apply the changes in the annual goodwill and indefinite-lived intangible asset impairment testing dates beginning on October 1, 2012 in future filings.

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NOTE 10. OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the tax effects allocated to each component of Other comprehensive income (loss) for the three months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,
	2012									2011
	Before- Tax Amount			Tax (Expense) Benefit			Net-of-Tax Amount			Before-Tax Amount			Tax Benefit (Expense)			Net-of- Tax Amount
Net unrealized gain (loss) on securities:
Unrealized gains (losses) arising during the period	$	940		$	(351	)	$	589		$	(809	)	$	269		$	(540	)
Less: reclassification adjustments for gains (losses) realized in net income (loss)	—			—			—			—			—			—
Net unrealized gains (losses)	940			(351		)	589			(809		)	269			(540		)
Foreign currency translation gain (loss)	4,049			(15		)	4,034			(5,451		)	125			(5,326		)
Fair value adjustment on derivatives designated as cash flow hedges:
Fair value adjustment on derivatives designated as cash flow hedges arising during the period	(1,249		)	448			(801		)	—			—			—
Less: reclassification adjustments for cash flow hedges settled and included in net income (loss)	216			(78		)	138			426			(315		)	111
Net unrealized fair value adjustment on derivatives designated as cash flow hedges	(1,033		)	370			(663		)	426			(315		)	111
Other comprehensive income (loss)	$	3,956		$	4		$	3,960		$	(5,834	)	$	79		$	(5,755	)

The following table presents the tax effects allocated to each component of Other comprehensive income (loss) for the nine months ended September 30, 2012 and 2011 (in thousands):

	Nine Months Ended September 30,
	2012									2011
	Before- Tax Amount			Tax (Expense) Benefit			Net-of-Tax Amount			Before-Tax Amount			Tax Benefit (Expense)			Net-of- Tax Amount
Net unrealized gain (loss) on securities:
Unrealized gains (losses) arising during the period	$	2,326		$	(368	)	$	1,958		$	(3,113	)	$	1,191		$	(1,922	)
Less: reclassification adjustments for gains (losses) realized in net income (loss)	—			—			—			—			—			—
Net unrealized gains (losses)	2,326			(368		)	1,958			(3,113		)	1,191			(1,922		)
Foreign currency translation gain (loss)	409			57			466			(4,420		)	94			(4,326		)
Fair value adjustment on derivatives designated as cash flow hedges:
Fair value adjustment on derivatives designated as cash flow hedges arising during the period	(945		)	339			(606		)	—			—			—
Less: reclassification adjustments for cash flow hedges settled and included in net income (loss)	178			(64		)	114			426			(315		)	111
Net unrealized fair value adjustment on derivatives designated as cash flow hedges	(767		)	275			(492		)	426			(315		)	111
Other comprehensive income (loss)	$	1,968		$	(36	)	$	1,932		$	(7,107	)	$	970		$	(6,137	)

NOTE 11. STOCKHOLDERS’ EQUITY

Stock-Based Compensation

Endo Health Solutions Inc. 2000, 2004, 2007, and 2010 Stock Incentive Plans and the American Medical Systems Holdings, Inc. 2005 Stock Incentive Plan

On August 11, 2000, we established the Endo Health Solutions Inc. 2000 Stock Incentive Plan. The 2000 Stock Incentive Plan reserved an aggregate of 4,000,000 shares of common stock of the Company for issuance to employees, officers, directors and

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consultants. The 2000 Stock Incentive Plan provided for the issuance of stock options, restricted stock, stock bonus awards, stock appreciation rights or performance awards. The 2000 Stock incentive Plan expired in 2010.

In May 2004, our stockholders approved the Endo Health Solutions Inc. 2004 Stock Incentive Plan. The maximum number of shares of Company stock reserved for issuance under the 2004 Stock Incentive Plan is 4,000,000 shares. The 2004 Plan provides for the grant of stock options, stock appreciation rights, shares of restricted stock, performance shares, performance units or other share-based awards that may be granted to executive officers and other employees of the Company, including officers and directors who are employees, to non-employee directors and to consultants to the Company.

In May 2007, our stockholders approved the Endo Health Solutions Inc. 2007 Stock Incentive Plan. The maximum number of shares of Company stock reserved for issuance under the 2007 Stock Incentive Plan is 7,000,000 shares (subject to adjustment for certain transactions), but in no event may the total number of shares of Company stock subject to awards awarded to any one participant during any tax year of the Company exceed 750,000 shares (subject to adjustment for certain transactions).

In May 2010, our stockholders approved the Endo Health Solutions Inc. 2010 Stock Incentive Plan. The maximum number of shares of Company stock reserved for issuance under the Plan includes 8,000,000 shares plus the number of shares of Company stock reserved but unissued under the Company’s 2004 and 2007 Stock Incentive Plans as of April 28, 2010 and may be increased to include the number of shares of Company stock that become available for reuse under these plans following April 28, 2010, subject to adjustment for certain transactions. Notwithstanding the foregoing, of the 8,000,000 shares originally reserved for issuance under this Plan, no more than 4,000,000 of such shares shall be issued as awards, other than options, that are settled in the Company’s stock. In no event may the total number of shares of Company stock subject to awards awarded to any one participant during any tax year of the Company, exceed 1,000,000 shares (subject to adjustment for certain transactions).

In June 2011, in connection with our acquisition of AMS, we assumed the AMS 2005 Stock Incentive Plan. As of the AMS Acquisition Date, the number of shares of Company stock reserved for issuance under the Plan was 5,269,152.

At September 30, 2012, approximately 20.3 million shares were reserved for future issuance upon exercise of options granted or to be granted under the Endo 2000, 2004, 2007, and 2010 Stock Incentive Plans and the AMS 2005 Stock Incentive Plan. As of September 30, 2012, stock options, restricted stock awards, performance stock units and restricted stock units have been granted under the Stock Incentive Plans.

The Company accounts for its stock-based compensation plans in accordance with the applicable accounting guidance. Accordingly, all stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense in the income statement over the requisite service period.

The Company recognized stock-based compensation expense of $11.2 million and $44.5 million during the three and nine months ended September 30, 2012 and $15.5 million and $34.2 million during the three and nine months ended September 30, 2011, respectively. As of September 30, 2012, the total remaining unrecognized compensation cost related to all non-vested stock-based compensation awards amounted to $97.7 million. This expected cost does not include the impact of any future stock-based compensation awards.

Stock Options

For all of the Company’s stock-based compensation plans, the fair value of each option grant was estimated at the date of grant using the Black-Scholes option-pricing model. Black-Scholes utilizes assumptions related to volatility, the risk-free interest rate, the dividend yield (which is assumed to be zero, as the Company has not paid cash dividends to date and does not currently expect to pay cash dividends) and the expected term of the option. Expected volatilities utilized in the model are based mainly on the historical volatility of the Company’s stock price over a period commensurate with the expected life of the share option as well as other factors. The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant. We estimate the expected term of options granted based on our historical experience with our employees’ exercise of stock options and other factors.

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A summary of the activity under the Endo 2000, 2004, 2007, and 2010 Stock Incentive Plans and the AMS 2005 Stock Incentive Plan for the nine months ended September 30, 2012 is presented below:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding as of January 1, 2012	8,115,467		$	25.79
Granted	2,227,481		$	34.60
Exercised	(668,024	)	$	22.95
Forfeited	(468,564	)	$	31.22
Expired	(30,332	)	$	26.79
Outstanding as of September 30, 2012	9,176,028		$	27.85	6.88	$	45,806,834
Vested and expected to vest, September 30, 2012	8,584,159		$	27.56	6.77	$	44,678,198
Exercisable, September 30, 2012	3,990,964		$	24.60	5.19	$	29,050,676

The total intrinsic value of options exercised during the nine months ended September 30, 2012 and 2011 was $15.3 million and $14.3 million, respectively. The weighted average grant date fair value of the stock options granted in the nine months ended September 30, 2012 and 2011 was $10.50 per option and $14.69 per option, respectively, determined using the following assumptions:

	September 30, 2012		September 30, 2011
Average expected term (years)	5.0		5.0
Risk-free interest rate	0.9	%	2.0	%
Dividend yield	—		—
Expected volatility	33	%	32	%

As of September 30, 2012, the weighted average remaining requisite service period of the non-vested stock options was 2.2 years. As of September 30, 2012, the total remaining unrecognized compensation cost related to non-vested stock options amounted to $43.7 million. This unrecognized compensation cost does not include the impact of any future stock-based compensation awards.

Restricted Stock Units

During the nine months ended September 30, 2012 and 2011, the Company granted restricted stock units to employees and non-employee directors of the Company as part of their annual stock compensation award. We recognize expense for our restricted stock units using the straight-line method over the requisite service period. The total value of compensation expense for restricted stock units is equal to the closing price of Endo shares on the date of grant.

A summary of our restricted stock units as of September 30, 2012 is presented below:

	Number of Shares		Aggregate Intrinsic Value
Outstanding as of January 1, 2012	2,629,782
Granted	999,294
Forfeited	(300,044	)
Vested	(682,859	)
Outstanding as of September 30, 2012	2,646,173		$	83,343,319
Vested and expected to vest, September 30, 2012	2,372,779		$	73,093,716

As of September 30, 2012, the weighted average remaining requisite service period of the non-vested restricted stock units was 1.8 years. The weighted average grant date fair value of the restricted stock units granted during the nine months ended September 30, 2012 and 2011 was $34.81 per unit and $34.71 per unit, respectively. As of September 30, 2012, the total remaining unrecognized compensation cost related to non-vested restricted stock units amounted to $47.4 million. This unrecognized compensation cost does not include the impact of any future stock-based compensation awards.

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Restricted Stock Awards

We recognize expense for our restricted stock using the straight-line method over the requisite service period. The total value of compensation expense for restricted stock is equal to the closing price of Endo shares on the date of grant.

A summary of our restricted stock awards as of September 30, 2012 is presented below:

	Number of Shares		Weighted Average Fair Value Per Share		Aggregate Intrinsic Value
Outstanding as of January 1, 2012	173,617		$	30.27
Granted	—		$	—
Forfeited	(14,554	)	$	29.16
Vested	(59,220	)	$	29.41	$	1,878,458
Non-vested, September 30, 2012	99,843		$	30.94

As of September 30, 2012, the weighted average remaining requisite service period of the non-vested restricted stock awards was approximately 1.8 years.

Performance Shares

Beginning in the first quarter ended March 31, 2010, the Company began to award performance stock units (PSU) to certain key employees. These PSUs are tied to both Endo’s overall financial performance and Endo’s financial performance relative to the

financial performance of a selected industry group. Awards are granted annually, with each award covering a three-year performance cycle. Each PSU is convertible to one share of Endo common stock. Performance measures used to determine the actual number of performance shares issuable upon vesting include an equal weighting of Endo’s total shareholder return (TSR) performance compared to the performance group over the three-year performance cycle and Endo’s three-year cumulative revenue performance as compared to a three-year revenue target. TSR relative to peers is considered a market condition while cumulative revenue performance is considered a performance condition under applicable authoritative guidance. PSUs granted for the nine months ended September 30, 2012 and 2011 totaled approximately 193,000 and 160,000, respectively. As of September 30, 2012, there was approximately $6.7 million of total unrecognized compensation costs related to PSUs. That cost is expected to be recognized over a weighted average period of 3.0 years.

Share Repurchase Programs

In April 2008, our Board of Directors approved a share repurchase program (the 2008 Share Repurchase Program), authorizing the Company to repurchase in the aggregate up to $750 million of shares of its outstanding common stock. In August 2012, our Board of Directors resolved to cancel and terminate the 2008 Share Repurchase Program, effective immediately, and approve a new share repurchase program (the 2012 Share Repurchase Program). The 2012 Share Repurchase Program authorizes the Company to repurchase in the aggregate up to $450 million of shares of its outstanding common stock. Purchases under this program may be made from time to time in open market purchases, pre-set purchase programs, privately-negotiated transactions, and accelerated stock buyback agreements. This program does not obligate Endo to acquire any particular amount of common stock. Future repurchases, if any, will depend on factors such as levels of cash generation from operations, cash requirements for investment in the Company’s business, repayment of future debt, if any, then current stock price, market conditions, securities law limitations and other factors. The share repurchase program may be suspended, modified or discontinued at any time. The 2012 Share Repurchase Program is set to expire on March 31, 2015.

Pursuant to our share repurchase programs, we purchased approximately 4.7 million shares of our common stock during the nine month period ended September 30, 2012 totaling $156.0 million and approximately 0.9 million shares of our common stock during the nine month period ended September 30, 2011 totaling $34.7 million.

Employee Stock Purchase Plan

At our Annual Meeting of Stockholders held in May of 2011, our shareholders approved the Endo Health Solutions Inc. Employee Stock Purchase Plan (the ESPP). The ESPP is a Company-sponsored plan that enables employees to voluntarily elect, in advance of any of the four quarterly offering periods ending March 31, June 30, September 30 and December 31 of each year, to contribute up to 10% of their eligible compensation, subject to certain limitations, to purchase shares of common stock at 85% of the lower of the closing price of Endo common stock on the first or last trading day of each offering period. The maximum number of shares that a participant may purchase in any calendar year is equal to $25,000 divided by the closing selling price per share of our common stock on the first day of the offering period, subject to certain adjustments. Compensation expense is calculated in

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accordance with the applicable accounting guidance and is based on the share price at the beginning or end of each offering period and the purchase discount. Obligations under the ESPP may be satisfied by the reissuance of treasury stock, by the Company’s purchase of shares on the open market or by the authorization of new shares. The maximum number of shares available under the ESPP, pursuant to the terms of the ESPP plan document, is one percent of the common shares outstanding on April 15, 2011 or approximately 1.2 million shares. The ESPP shall continue in effect until the earlier of (i) the date when no shares of Stock are available for issuance under the ESPP, at which time the ESPP shall be suspended pursuant to the terms of the ESPP plan document, or (ii) December 31, 2022, unless earlier terminated. Compensation expense related to the ESPP totaled $1.1 million during the nine months ended September 30, 2012. The Company issued 170,124 shares from treasury totaling $4.6 million during the nine months ended September 30, 2012 pursuant to the ESPP.

Changes in Stockholders’ Equity

The following table displays a reconciliation of our beginning and ending balances in stockholders’ equity for the nine months ended September 30, 2012 (dollars in thousands):

	Attributable to:
	Endo Health Solutions Inc.			Noncontrolling interests			Total Stockholders’ Equity
Stockholders’ equity at January 1, 2012	$	1,977,690		$	61,901		$	2,039,591
Net (loss) income	(24,071		)	39,826			15,755
Other comprehensive income	1,932			—			1,932
Compensation related to stock-based awards	44,532			—			44,532
Exercise of options	18,220			—			18,220
Common stock purchased, net of common stock issued from treasury	(151,394		)	—			(151,394		)
Distributions to noncontrolling interests	—			(39,234		)	(39,234		)
Buy-out of noncontrolling interests, net of contributions	—			(176		)	(176		)
Other	1,291			—			1,291
Stockholders’ equity at September 30, 2012	$	1,868,200		$	62,317		$	1,930,517

NOTE 12. COMMITMENTS AND CONTINGENCIES

Manufacturing, Supply and Other Service Agreements

We contract with various third party manufacturers, suppliers and service providers to provide us with raw materials used in our products and semi-finished and finished goods, as well as certain packaging and labeling and sales and marketing services. Our most significant agreements are with Novartis Consumer Health, Inc. and Novartis AG (collectively, Novartis), Teikoku Seiyaku Co., Ltd., Mallinckrodt Inc., Noramco, Inc., Grünenthal GMBH, Sharp Corporation, and Ventiv Commercial Services, LLC. If for any reason we are unable to obtain sufficient quantities of any of the finished goods or raw materials or components required for our products or services needed to conduct our business, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Novartis Manufacturing Agreement

On May 3, 2001, we entered into a long-term manufacturing and development agreement with Novartis Consumer Health, Inc. whereby Novartis Consumer Health, Inc. agreed to manufacture certain of our commercial products and products in development. We are required to purchase, on an annual basis, a minimum amount of product from Novartis Consumer Health, Inc. The purchase price per product is equal to a predetermined amount per unit, subject to periodic adjustments. This agreement had a five-year initial term, with automatic five-year renewals thereafter. In August 2005, we extended this agreement until 2011. On February 23, 2011, we gave notice to Novartis Consumer Health, Inc. that we would terminate this agreement effective February 2014. At September 30, 2012, based on the products contracted for manufacture at Novartis Consumer Health, Inc., we are required to purchase a minimum of approximately $11.2 million of product from Novartis Consumer Health, Inc. per year, or pro rata portion thereof, until the effective date of the termination of this agreement, provided that Novartis Consumer Health, Inc. is able to supply such products.

In December 2011, Novartis Consumer Health, Inc.’s Lincoln, Nebraska manufacturing facility was temporarily shut down to facilitate its implementation of certain manufacturing process improvements. These improvements are intended to address the possibility of rare instances of errors in the packaging of the tablets, potentially resulting in product mix-ups. The temporary supply disruption is not related to the efficacy or safety of Endo’s products. As a result, throughout the first half of 2012, we experienced

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short-term supply constraints of certain Endo analgesic products which had been manufactured at this facility prior to the shutdown, including Opana^®, Voltaren^® Gel, oxymorphone hydrochloride, Percodan^®, Endodan^®, morphine sulfate ER and Zydone^®.

In the first quarter of 2012, Endo began production of the formulation of Opana^® ER, designed to be crush-resistant, at a third party manufacturing facility managed by Endo’s development partner, Grünenthal. The Company began shipping this formulation in March 2012 and completed the transition to this formulation in the second quarter of 2012. Endo also began production of Voltaren^® Gel at an alternative Novartis manufacturing source and resumed sales of Voltaren^® Gel in April 2012. Endo had already initiated the manufacturing of Percocet^® and Endocet^® at its Huntsville, Alabama facility as a result of its acquisition of Qualitest Pharmaceuticals in 2010 and, as a result, there was minimal disruption to patients on these products. Separately, Endo also has plans to put additional procedures in place to assist Novartis Consumer Health, Inc. in restarting production at the Lincoln, Nebraska manufacturing facility.

Novartis License and Supply Agreement

Pursuant to the March 2008 Voltaren^® Gel License and Supply Agreement (the Voltaren^® Gel Agreement) with Novartis AG and Novartis Consumer Health, Inc. Endo has agreed to purchase from Novartis all of its requirements for Voltaren^® Gel during the entire term of the Voltaren^® Gel Agreement. The price of product purchased under the Voltaren^® Gel Agreement is fixed for the first year and subject to annual changes based upon changes in the producer price index and raw materials.

As part of the Voltaren^® Gel Agreement, we also agreed to undertake advertising and promotion of Voltaren^® Gel (A&P Expenditures), subject to certain thresholds set forth in the Voltaren^® Gel Agreement. During the third Voltaren^® Gel Agreement Year beginning on July 1, 2010 and extending through June 30, 2011, we agreed to spend 15% of prior year sales or approximately $13 million on A&P Expenditures. During the fourth Voltaren^® Gel Agreement Year beginning on July 1, 2011 and extending through June 30, 2012, we agreed to spend 13% of prior year sales or approximately $16 million on A&P Expenditures. During the fifth Agreement Year beginning on July 1, 2012 and extending through June 30, 2013 we agreed to spend 6% of prior year sales or approximately $7.1 million on A&P Expenditures; however, this amount may be reduced pursuant to the Voltaren^® Gel Agreement due to Novartis’s failure to supply Voltaren^® Gel. In subsequent Agreement Years, the minimum A&P Expenditures set forth in the Voltaren^® Gel Agreement are determined based on a percentage of net sales of Voltaren^® Gel, which may be reduced under certain circumstances, including Novartis’s failure to supply Voltaren^® Gel.

Amounts incurred by Endo for such A&P Expenditures were $7.9 million and $15.1 million for the nine months ended September 30, 2012 and 2011, respectively.

Teikoku Seiyaku Co., Ltd.

Under the terms of our agreement (the Teikoku Agreement) with Teikoku Seiyaku Co. Ltd. (Teikoku), a Japanese manufacturer, Teikoku manufactures Lidoderm^® at its two Japanese facilities, located on adjacent properties, for commercial sale by us in the U.S. We also have an option to extend the supply area to other territories. On April 24, 2007, we amended the Teikoku agreement (the Amended Agreement). The material components of the Amended Agreement are as follows:

• We agreed to purchase a minimum number of patches per year through 2012, representing the noncancelable portion of the Amended Agreement.

• Teikoku agreed to fix the supply price of Lidoderm^® for a period of time after which the price will be adjusted at future dates certain based on a price index defined in the Amended Agreement. Since future price changes are unknown, we have used prices currently existing under the Amended Agreement, and estimated our minimum purchase requirement to be approximately $34.0 million per year through 2012. The minimum purchase requirement shall remain in effect subsequent to 2012, except that Endo has the right to terminate the Amended Agreement after 2012, if we fail to meet the annual minimum requirement.

• Following cessation of our obligation to pay royalties to Hind Healthcare Inc. (Hind) under the Sole and Exclusive License Agreement dated as of November 23, 1998, as amended, between Hind and Endo (the Hind Agreement), we began to pay to Teikoku annual royalties based on our annual net sales of Lidoderm^®.

• The Amended Agreement will expire on December 31, 2021, unless terminated in accordance with its terms. Either party may terminate this Agreement, upon 30 days' written notice, in the event that Endo fails to purchase the annual minimum quantity for each year after 2012 (e.g., 2013 through 2021) upon 30 days’ written notice. Notwithstanding the foregoing, after December 31, 2021, the Amended Agreement shall be automatically renewed on the first day of January each year unless (i) we and Teikoku agree to terminate the Amended Agreement upon mutual written agreement or (ii) either we or Teikoku terminates the Amended Agreement with 180-day written notice to the other party, which notice shall not in any event be effective prior to July 1, 2022.

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On January 6, 2010, the parties amended the Teikoku Agreement, effective December 16, 2009. Pursuant to the amendment, Teikoku has agreed to supply Lidoderm^® at a fixed price for a period of time after which the price will be adjusted at certain future dates based on a price index defined in the amendment.

Effective November 1, 2010, the parties amended the Teikoku Agreement. Pursuant to this amendment, Teikoku agreed to supply additional Lidoderm^® at no cost to Endo in each of 2012 and 2013 in the event Endo’s firm orders of Product exceed certain thresholds in those years.

On November 23, 2011, our obligation to pay royalties to Hind under Hind Agreement ceased. Accordingly, on November 23, 2011, pursuant to the terms of the Teikoku Agreement, we began to incur royalties to Teikoku based on annual net sales of Lidoderm^®. The royalty rate is 6% of branded Lidoderm^® net sales. During the nine months ended September 30, 2012, we recorded $39.9 million for these royalties to Teikoku, which we recorded in our Consolidated Financial Statements as Cost of revenues. At September 30, 2012, $39.9 million is recorded as a royalty payable and included in accounts payable in the accompanying Condensed Consolidated Balance Sheets.

On August 3, 2012, Teikoku agreed to provide to Endo, at a discount, any branded Lidoderm^® product that is required to be provided to the wholesaler affiliates of Watson Laboratories, Inc. pursuant to the Watson Settlement Agreement (discussed below). The discount will be equal to a 50% reduction to the regular prices that Endo would otherwise be obligated to pay for this product.

Mallinckrodt Inc.

Under the terms of our agreement (the Mallinckrodt Agreement) with Mallinckrodt Inc. (Mallinckrodt), Mallinckrodt manufactures and supplies to us certain narcotic active drug substances, in bulk form, and raw materials for inclusion in our controlled substance pharmaceutical products. There is no minimum annual purchase commitment under the Mallinckrodt Agreement. However, we are required to purchase a fixed percentage of our annual requirements of each narcotic active drug substance covered by the Mallinckrodt Agreement from Mallinckrodt. The purchase price for these substances is equal to a fixed amount, adjusted on an annual basis. The initial term of this agreement was July 1, 1998 until September 30, 2013, with an automatic renewal provision for unlimited successive one-year periods. On September 30, 2011, we provided written notice to Mallinckrodt that the Company intends to let the Mallinckrodt Agreement expire effective September 30, 2013. The Company chose to allow the Mallinckrodt Agreement to expire in connection with its ongoing initiatives relating to the sourcing of active pharmaceutical ingredients. In April 2012, the Company entered into an agreement with Noramco, Inc. as described below. The Company will continue to purchase certain narcotic active drug substances, in bulk form, under the terms of the Mallinckrodt Agreement through the expiration date.

Noramco, Inc.

Under the terms of our agreement (the Noramco Agreement) with Noramco, Inc. (Noramco), Noramco manufactured and supplied to us certain narcotic active drug substances, in bulk form, and raw materials for inclusion in our controlled substance pharmaceutical products. There were no minimum annual purchase commitments under the Noramco Agreement. However, we were required to purchase a fixed percentage of our annual requirements of each narcotic active drug substance covered by the Noramco Agreement from Noramco. The purchase price for these substances was equal to a fixed amount, adjusted on an annual basis. Originally, the Noramco Agreement was to expire on December 31, 2011, with automatic renewal provisions for unlimited successive one-year periods. In September 2011, we extended the Noramco Agreement through early 2012. On April 27, 2012, we entered into a new supply agreement with Noramco. Under the terms of this supply agreement (the 2012 Noramco Agreement), Noramco manufactures and supplies to us certain narcotic active drug substances, in bulk form, for inclusion in our controlled substance pharmaceutical products. There are no minimum annual purchase commitments under the 2012 Noramco Agreement. However, we are required to purchase from Noramco a fixed percentage of our annual requirements of each narcotic active drug substance covered by the 2012 Noramco Agreement. The purchase price for these substances is equal to a fixed amount, adjusted on an annual basis based on volume. The term of the 2012 Noramco Agreement is for four years with automatic renewal provisions for unlimited successive one-year periods.

Grünenthal GMBH

Under the terms of our December 2007 License, Development and Supply Agreement with Grünenthal (the Grünenthal Agreement), Grünenthal agreed to manufacture and supply to Endo a crush-resistant formulation of Opana^® ER based on a supply price equal to a certain percentage of net sales of Opana^® ER, subject to a floor price. In the first quarter of 2012, Endo began production of the crush-resistant formulation of Opana^® ER at a third party manufacturing facility managed by Grünenthal. The Grünenthal Agreement will expire on the later of (i) the 15th anniversary of the date of first commercial sale of the product, (ii) the expiration of the last issued patent in the territory claiming or covering products, or (iii) the expiration of exclusivity granted by the FDA for the last product developed under the Grünenthal Agreement.

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Sharp Corporation

Under the terms of our agreement (the Sharp Agreement) with Sharp Corporation (Sharp), a U.S. manufacturer, Sharp performs certain packaging and labeling services for Endo, including the packaging and labeling of Lidoderm^® at its facility in Allentown, Pennsylvania, for commercial sale by us in the U.S. Effective June 1, 2012, the parties amended the Sharp Agreement to include several new products that Sharp will package and label. These products include our formulation of Opana^® ER designed to be crush-resistant, Vantas^®, Supprelin^® LA, Valstar^® and several SKUs of generic prednisone and methylprednisolone. The Sharp Agreement is effective until March 1, 2015 and is subject to renewal for additional one-year periods upon mutual agreement by both parties. Endo has the right to terminate the Sharp Agreement at any time upon 90 days’ written notice to Sharp.

Ventiv Commercial Services, LLC

On December 27, 2011, we entered into a Sales and Promotional Services Agreement (the Ventiv Agreement) with Ventiv, effective as of December 30, 2011. Under the terms of the Ventiv Agreement, Ventiv provided to Endo certain sales and promotional services through a contracted field force of 228 sales representatives, 24 district managers, one project manager, one trainer and one national sales director, collectively referred to as the Ventiv Field Force. The Ventiv Field Force promotes Voltaren^® Gel, Lidoderm^®, Frova^®, Opana^® ER, Fortesta^® Gel and any additional products added by Endo. The sales representatives are required to perform face-to-face, one-on-one discussions with physicians and other health care practitioners promoting these products.

Endo pays to Ventiv a monthly fixed fee during the term of the Ventiv Agreement based on a budget that has been approved by both Endo and Ventiv. During the term of the Ventiv Agreement, Ventiv will also be eligible to earn, in addition to the fixed management fee, an at-risk management fee. This at-risk management fee is payable upon the achievement of certain performance metrics that have been mutually agreed upon by the parties.

On September 26, 2012, the Ventiv Agreement was amended to decrease the Ventiv Field Force from 228 to 170 sales representatives and decrease the number of district managers from 24 to 17, as well as to retain one project manager, one trainer and one national sales director, starting on October 5, 2012. In addition, the amendment decreased the fees payable to Ventiv as a result of the decrease in the Ventiv Field Force.

The Ventiv Agreement shall continue until December 30, 2013. Endo may extend the current term for an additional period by written notice delivered to Ventiv prior to the expiration of the then current term.

The expenses incurred with respect to Ventiv were $29.2 million and $27.7 million for the nine months ended September 30, 2012 and 2011, respectively. These amounts were included within Selling, general and administrative expense in the accompanying Condensed Consolidated Statements of Operations.

UPS Supply Chain Solutions

Under the terms of this agreement, we utilize UPS Supply Chain Solutions to provide customer service support, chargeback processing, accounts receivables management and warehouse, freight and distribution services for certain of our products in the U.S. The initial term of the agreement will extend to March 31, 2015. The agreement may be terminated by either party (1) without cause upon prior written notice to the other party; (2) with cause in the event of an uncured material breach by the other party and (3) if the other party become insolvent or bankrupt. In the event of termination of services provided under the Warehouse Distribution Services Schedule to the agreement (i) by Endo without cause or (ii) by UPS due to Endo’s breach, failure by Endo to make payments when due, or Endo’s insolvency, we would be required to pay UPS certain termination costs. Such termination costs would not exceed $1.0 million. On February 21, 2012, we amended this agreement to provide for a reduced pricing structure, which includes new monthly fees, new variable fees and new termination fees. During the second quarter of 2012, we notified UPS that we will no longer require them to provide chargeback processing and accounts receivable management, effective September 2012.

General

In addition to the manufacturing and supply agreements described above, we have agreements with various companies for clinical development services. Although we have no reason to believe that the parties to these agreements will not meet their obligations, failure by any of these third parties to honor their contractual obligations may have a materially adverse effect on our business, financial condition, results of operations and cash flows.

Milestones and Royalties

See Note 8. License and Collaboration Agreements for a complete description of future milestone and royalty commitments pursuant to our acquisitions, license and collaboration agreements.

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Employment Agreements

We have entered into employment agreements with certain members of management.

Research Contracts

We routinely contract with universities, medical centers, contract research organizations and other institutions for the conduct of research and clinical studies on our behalf. These agreements are generally for the duration of the contracted study and contain provisions that allow us to terminate prior to completion.

Legal Proceedings

We and certain of our subsidiaries are involved in various claims, legal proceedings and governmental investigations that arise from time to time in the ordinary course of our business, including relating to product liability, intellectual property, regulatory compliance and commercial matters. While we cannot predict the outcome of our ongoing legal proceedings and we intend to vigorously defend our position, an adverse outcome in any of these proceedings could have a material adverse effect on our current and future financial position, results of operations and cash flows.

In view of the inherent difficulty of predicting the outcome of our various claims, legal proceedings and governmental investigations, particularly where there are many claimants, each with their own unique circumstances that give rise to their alleged claims, and the claimants seek indeterminate damages and particularly given the various stages of our proceedings, unless specified otherwise below, we are unable to predict the outcome of these matters or the ultimate legal and financial liability, and at this time cannot reasonably estimate the possible loss or range of loss. Accordingly, there are claims, legal proceedings and governmental investigations in which we are involved where a loss is reasonably possible in future periods and for which we have not accrued a related liability. Likewise, it is reasonably possible that a future loss could exceed the related accrued liability.

Department of Health and Human Services Subpoena

As previously reported, in January 2007 and April 2011, the Company received subpoenas issued by the United States Department of Health and Human Services, Office of Inspector General (OIG) and the United States Department of Justice, respectively. The subpoenas request documents relating to Lidoderm^® (lidocaine patch 5%), focused primarily on the sale, marketing and promotion of Lidoderm^®.

In October 2012, preliminary discussions to resolve potential claims arising from this matter advanced to a point where the Company believes a loss is probable. Endo recorded a charge of $53.0 million in the third quarter of 2012, which the company believes is the minimum possible settlement; no better estimate is available at this time, and the ultimate loss, if any, could include a multiplier and be substantially in excess of this amount. The Company continues to cooperate with the government and to discuss resolution of the matters to which the investigation relates, but at this time, the Company cannot estimate the range of loss. These discussions are ongoing, but there is no assurance that a resolution will occur. Settlements of these investigations have commonly resulted in the payment of substantial damages and fines to the government for alleged civil and criminal violations, including a corresponding plea agreement or deferred prosecution agreement, and entry into a Corporate Integrity Agreement with the federal government.

Pricing Litigation

A number of cases were brought by state government entities that allege generally that our wholly-owned subsidiary, Endo Pharmaceuticals Inc. (EPI), and numerous other pharmaceutical companies reported false pricing information in connection with certain drugs that are reimbursable under Medicaid. These cases generally seek damages, treble damages, disgorgement of profits, restitution and attorneys’ fees.

As previously reported, there is a case pending in the 19th Judicial District, Parish of East Baton Rouge, Louisiana against EPI and numerous other pharmaceutical companies: State of Louisiana v. Abbott Laboratories, Inc., et al. This case contains allegations similar to the allegations described above. Without admitting any liability or wrongdoing, in the third quarter of 2012, EPI and the State of Louisiana have reached a tentative agreement to resolve this case for a total of approximately $4.6 million. On July 1, 2011, the Texas Attorney General's Office issued a Civil Investigative Demand (CID) to Qualitest Pharmaceuticals, Inc. and to EPI inquiring into activities in Texas that are similar to those contained in the allegations described above. Without admitting any liability or wrongdoing, in the third quarter of 2012, Qualitest, EPI and the State of Texas have reached a tentative agreement to resolve this matter for a total of $25.0 million. 

Additionally, there is a previously reported case pending in the Third Judicial District Court of Salt Lake County, Utah against EPI and numerous other pharmaceutical companies: State of Utah v. Actavis US, Inc., et al.

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EPI intends to contest the above unresolved case vigorously and to explore other options as appropriate in the best interests of the Company. Litigation similar to that described above may also be brought by other plaintiffs in various jurisdictions. However, we cannot predict the timing or outcome of any such litigation, or whether any such litigation will be brought against the Company or its subsidiaries.

Paragraph IV Certifications on Lidoderm^® 

As previously reported, on January 15, 2010, the Company's subsidiary, Endo Pharmaceuticals Inc. (EPI or Endo) and the holders of the Lidoderm^® NDA and relevant patents, Teikoku Seiyaku Co., Ltd., and Teikoku Pharma USA, Inc. (collectively, Teikoku) received a Paragraph IV Certification Notice under 21 U.S.C. 355(j) (a Paragraph IV Notice) from Watson Laboratories, Inc. (Watson) advising of its filing of an Abbreviated New Drug Application (ANDA) for a generic version of Lidoderm^® (lidocaine topical patch 5%). The Paragraph IV Notice refers to U.S. Patent No. 5,827,529, which covers the formulation of Lidoderm^®, a topical patch to relieve the pain of post herpetic neuralgia launched in 1999. This patent is listed in the FDA’s Orange Book and expires in October 2015. As a result of this Notice, on February 19, 2010, EPI and Teikoku filed a lawsuit against Watson in the United States District Court of the District of Delaware. This lawsuit was heard by the court and the trial concluded on February 14, 2012. In October 2010, Teikoku Pharma USA listed U.S. Patent No. 5,741,510 in the FDA Orange Book, and this patent expires in March 2014. On June 30, 2011, EPI and Teikoku filed a second lawsuit against Watson in the United States District Court of the District of Delaware alleging infringement of U.S. Patent Nos. 5,741,510, 6,096,333, and 6,096,334 which cover lidocaine patch formulations and manufacturing processes.

On May 28, 2012, EPI entered into a Settlement and License Agreement (the Watson Settlement Agreement) among EPI and Teikoku, on the one hand, and Watson, on the other hand. The Watson Settlement Agreement settled all ongoing patent litigation among the parties relating to Watson’s generic version of Lidoderm^®. Under the terms of the Watson Settlement Agreement, the parties dismissed their respective claims and counterclaims without prejudice. As part of the settlement, Watson agreed not to challenge the validity or enforceability of Endo’s and Teikoku’s patents relating to Lidoderm^® with respect to Watson’s generic version of Lidoderm^®. Watson also agreed not to sell its generic version of Lidoderm^® until it received FDA approval and, in any event, no sooner than September 15, 2013, except in limited specific circumstances (such date being the Start Date). Endo and Teikoku agreed to grant Watson a license permitting the sale of generic Lidoderm^® upon the Start Date in the United States. The license to Watson is exclusive as to Endo’s launch of an authorized generic version of Lidoderm^® until the earlier of 1) the introduction of a generic version of Lidoderm^® by a company other than Watson, or 2) seven and a half months after Watson launches its generic version of Lidoderm^®. Endo will receive an at market royalty equal to 25% of the gross profit generated on Watson's sales of its generic version of Lidoderm^® during Watson's period of exclusivity.

Additionally, the Watson Settlement Agreement provides that Endo and Teikoku will provide, at no cost, to Watson’s wholesaler affiliate branded Lidoderm^® product for Watson’s wholesaler affiliate’s distribution, subject to certain terms and conditions as follows:

• Beginning on January 1, 2013 through August 1, 2013, Endo and Teikoku will provide branded Lidoderm^® of value totaling $12.0 million each month ($96.0 million in total for 2013) (valued at the then-prevailing wholesale acquisition cost). The obligation of Endo and Teikoku to provide this branded product at no cost terminates immediately upon the launch of a third party’s generic version of Lidoderm^® in the United States, including its territories, possessions and the Commonwealth of Puerto Rico (the Territory).

• In the event Watson does not receive final FDA approval of its generic version of Lidoderm^® by January 1, 2014, then beginning on January 1, 2014 through December 1, 2014, Endo and Teikoku will provide branded Lidoderm^® product of value totaling $6.7 million each month ($80.0 million in total for 2014) (valued at the then-prevailing wholesale acquisition cost). The obligation of Endo and Teikoku to provide this branded product at no cost terminates immediately upon the earlier of (a) the final FDA approval of Watson’s generic version of Lidoderm^® or (b) the launch of a third party’s generic version of Lidoderm^® in the Territory.

• In the event Watson does not receive final FDA approval of its generic version of Lidoderm^® by January 1, 2015, then beginning on January 1, 2015 through September 1, 2015, Endo and Teikoku will provide branded Lidoderm^® product of value totaling $7.1 million each month ($64.0 million in total for 2015) (valued at the then-prevailing wholesale acquisition cost). The obligation of Endo and Teikoku to provide this branded product at no cost terminates immediately upon the earlier of (a) the final FDA approval of Watson’s generic version of Lidoderm^® or (b) the launch of a third party’s generic version of Lidoderm^® in the Territory.

Endo will be responsible for the payment of all gross to net adjustments arising from Watson's sale of the branded Lidoderm^® product.

In contemplation of the Watson Settlement Agreement, Teikoku has agreed to provide a rebate to Endo equal to 50% of the cost of branded Lidoderm^® product that is required to be provided to Watson's wholesaler affiliate pursuant to Section 3(b), 3(c) and 3(d) of the Watson Settlement Agreement.

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The Company has concluded that the Watson Settlement Agreement is a multiple-element arrangement and during the second quarter of 2012 recognized a liability and corresponding charge of $131.4 million in Patent litigation settlement, net in the Condensed Consolidated Statements of Operations, representing the initial estimated fair value of the settlement component. Fair value of the settlement component was estimated using the probability adjusted expected value of branded Lidoderm^® product to be provided to Watson at the anticipated wholesaler acquisition cost (WAC) expected to be in place at the time of shipment, less a reasonable estimate of Watson's selling costs. The resultant probability-weighted values were then discounted using a discount rate of 5.1%.

The Company believes that the level and timing of branded Lidoderm^® product to be shipped, discount rate, and probabilities used in the model appropriately reflect market participant assumptions. Because the liability is recorded at fair value using WAC, the net charge recognized in 2012 is comprised of several elements, including our cost of product to be shipped, estimated gross-to-net deductions to be paid by the Company and the estimated product profit margin. We believe this is the most appropriate measure of fair value as these components combined represent the value accruing to Watson. As a result of using a fair value measurement, the charge will be greater than the actual cost to the Company. As such, relief of the liability in subsequent periods through shipments of branded Lidoderm^® product will result in income, which we expect to record as a component of Other (income) expense, net, net in the Company's Condensed Consolidated Statements of Operations. We intend to reclassify the portion of the settlement liability related to the gross-to-net component into our gross-to-net reserves as product is shipped to Watson, the effect of which will be to offset a portion of the income that will be recognized into Other (income) expense, net in the Company's Condensed Consolidated Statements of Operations, as the settlement liability is relieved. The rebate arrangement with Teikoku will also be accounted for prospectively as product purchased from Teikoku will be recorded into inventory at the discounted purchase price and relieved as shipments are made to Watson. The benefit associated with this rebate will be recorded as a component of Other (income) expense, net in the Company's Condensed Consolidated Statements of Operations. Future changes, if any, resulting from revisions to the timing or the amount of the original estimate will be recognized as an increase or a decrease in the carrying amount of the litigation settlement liability and the related Patent litigation settlement, net during the period of change. Future changes in estimates to the settlement liability could have a material impact on our results of operations.

On August 23, 2012, Watson announced it received FDA approval on its ANDA for its lidocaine patch 5%, a generic version of Lidoderm^®. The Company anticipates Watson will launch its generic version of Lidoderm^® on September 15, 2013 pursuant to the terms of the Watson Settlement Agreement. In light of Watson's anticipated September 2013 launch, the Company reassessed its obligation to Watson and believes it will not be obligated to provide to Watson’s wholesaler affiliate branded Lidoderm^® product beyond September 2013. Accordingly, in the third quarter of 2012, the Company recognized a change in estimate with respect to its obligation and reduced its liability associated with the Watson Settlement Agreement by $46.2 million to $85.1 million. The corresponding gain of $46.2 million was recorded in Patent litigation settlement, net in the Condensed Consolidated Statements of Operations.

As previously reported, in January 2011, EPI and Teikoku received a Paragraph IV Notice from Mylan Technologies Inc. (Mylan) advising of its filing of an ANDA for a generic version of Lidoderm^®. The Paragraph IV Notice refers to U.S. Patent Nos. 5,827,529 and 5,741,510, which cover the formulation of Lidoderm^®. These patents are listed in the FDA’s Orange Book and expire in October 2015 and March 2014, respectively. On March 14, 2011, EPI filed a lawsuit against Mylan in the United States District Court for the District of Delaware, claiming that the Paragraph IV Notice served by Mylan failed to comply with the requirements of 21 U.S.C. sec. 355(b)(3)(C)(1) and 21 C.F.R. 214.95(a). In that suit, EPI sought a declaration that Mylan’s Paragraph IV Notice is null, void and without legal effect, and that as a result, Mylan has failed to properly trigger the ANDA litigation process. In the alternative, EPI alleged that Mylan’s submission of its ANDA constitutes infringement of the ‘510 patent under 35 U.S.C. sec. 271(e)(2)(A). On March 30, 2012, the Court dismissed this complaint without prejudice. On April 13, 2012, Endo and Teikoku filed a motion to amend this Complaint and reinstate the suit. That motion is currently pending before the court.

On May 16, 2012, EPI and Teikoku received a Paragraph IV Notice from Noven Pharmaceuticals, Inc. (Noven) advising of its filing of an ANDA for a generic version of Lidoderm^® (lidocaine topical patch 5%). The Paragraph IV Notice refers to U.S. Patent No. 5,827,529, which covers the formulation of Lidoderm^®. This patent is listed in the FDA's Orange Book and expires in October 2015. On June 29, 2012, EPI filed a lawsuit against Noven in the United States District Court for the District of Delaware. Because the suit was filed within the 45-day period under the Hatch-Waxman Act for filing a patent infringement action, we believe that it triggered an automatic 30-month stay of approval under the Act.

On May 24, 2012, EPI and Teikoku received a Paragraph IV Notice from TWi Pharmaceuticals, Inc. (TWi) advising of its filing of an ANDA for a generic version of Lidoderm^® (lidocaine topical patch 5%). The Paragraph IV Notice refers to U.S. Patent Nos. 5,827,529 and 5,741,510, which cover the formulation of Lidoderm^®. These patents are listed in the FDA's Orange Book and expire in October 2015 and March 2014, respectively. On July 5, 2012, EPI filed a lawsuit against TWi in the United States District Court for the District of Delaware. Because the suit was filed within the 45-day period under the Hatch-Waxman Act for filing a patent infringement action, we believe that it triggered an automatic 30-month stay of approval under the Act.

Endo intends, and has been advised by Teikoku that they too intend, to vigorously defend the intellectual property rights relating to Lidoderm^® and to pursue all available remaining legal and regulatory avenues in defense of Lidoderm^®, including enforcement of the product’s intellectual property rights and approved labeling. However, there can be no assurance that we will be successful. If we are unsuccessful and any one of the above generic manufacturers is able to obtain FDA approval of its product, that generic

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manufacturer may be able to launch its generic version of Lidoderm^® prior to the applicable patents’ expirations in 2014 and 2015. Additionally, we cannot predict or determine the timing or outcome of ongoing litigation but will explore all options as appropriate in the best interests of the Company. In addition to the above litigation, it is possible that another generic manufacturer may also seek to launch a generic version of Lidoderm^® and challenge the applicable patents.

Paragraph IV Certifications on Opana^® ER

As previously reported, starting in December 2007 through December 2011, EPI received Paragraph IV Notices from various generic drug manufacturers, including Impax Laboratories, Inc. (Impax), Actavis South Atlantic LLC (Actavis), Sandoz, Inc. (Sandoz), Barr Laboratories, Inc. (Teva), Watson Laboratories, Inc. (Watson), Roxane Laboratories, Inc. (Roxane) and most recently, Ranbaxy Inc. (Ranbaxy) advising of the filing by each such company of an ANDA for a generic version of the non-crush resistant formulation of Opana^® ER (oxymorphone hydrochloride extended-release tablets CII). To date, except for the Ranbaxy litigation, EPI settled all of the Paragraph IV litigation relating to the non-crush resistant formulation of Opana^® ER. Under the terms of the settlements, each generic manufacturer agreed not to challenge the validity or enforceability of patents relating to the non-crush resistant formulation of Opana^® ER. As a result, Actavis launched its generic non-crush resistant Opana^® ER 7.5 and 15 mg tablets on July 15, 2011. We expect Impax to launch production and sale of its generic non-crush resistant Opana^® ER for 5, 10, 20, 30 and 40 mg tablets during the first quarter of 2013. We expect Sandoz, Teva, Watson, Roxane and Actavis to launch production and sale of all strengths of their respective versions of generic non-crush resistant Opana^® ER during the third quarter of 2013. We evaluated Ranbaxy’s Paragraph IV Notice and concluded that we will not sue Ranbaxy at this time. As a result, and because Ranbaxy filed a Paragraph III notice against two patents expiring September 9, 2013, we expect Ranbaxy to launch all strengths of its generic non-crush resistant Opana^® ER on September 9, 2013.

Pursuant to the June 2010 Settlement and License Agreement (the Impax Settlement Agreement) with Impax, EPI agreed to provide a payment to Impax should prescription sales of the non-crush resistant formulation of Opana^® ER, as defined in the Impax Settlement Agreement, fall below a predetermined contractual threshold in the quarter immediately prior to Impax launching a generic version of the non-crush resistant formulation of Opana^® ER, expected to be in January 2013. During the first quarter of 2012, the Novartis shut-down of its Lincoln, Nebraska manufacturing facility and resulting lack of 2012 oxymorphone active pharmaceutical ingredient (API) quota granted by the Drug Enforcement Agency (DEA) caused EPI to attempt an accelerated launch of the crush-resistant formulation of Opana^® ER. While significant uncertainties existed throughout the first quarter of 2012 about our ability to rapidly ramp up production of the formulation designed to be crush-resistant and produce finished goods at a new, untested manufacturing facility in a very short period of time, we were able to do so in March 2012. Accordingly, the Company recognized a liability under the Impax Settlement Agreement upon the Company’s sale of the formulation designed to be crush-resistant, which occurred in March 2012. As a result, we believe it is probable that prescription sales of the original formulation of Opana^® ER in the quarter prior to the expected generic launch by Impax (which is expected during the first quarter 2013), will be less than the predetermined contractual threshold, thus triggering a liability to Impax of approximately $110.0 million, to be paid in 2013 if certain conditions are met. This amount was recorded in our Condensed Consolidated Financial Statements as a charge to Cost of revenues in March 2012. As a result of recent third party prescription sales data, we changed our estimate of prescription sales of the non-crush resistant formulation of Opana^® ER expected to occur during the quarter immediately prior to Impax launching a generic version of this formulation. As a result of this change in estimate by $6.0 million to $104.0 million. This amount was recorded as a reduction to Cost of revenues in our Condensed Consolidated Financial Statements during the three months ended September 30, 2012.

In July 2012, the Company received a purported Paragraph IV Notice from Par Pharmaceuticals (Par) referencing Opana^® ER. This Notice did not identify a reference-listed drug, and therefore we could not be certain whether it was based on the new (designed to be crush-resistant) or old (non-crush resistant) formulation of Opana^® ER. Additionally, this Notice did not identify that the FDA had, in fact, received Par's ANDA. Accordingly, the Company requested the FDA confirm that the Par ANDA had not been received by the FDA for substantive review and accordingly, that the Par Notice was sent wrongfully. On August 20, 2012, Endo received a letter from the FDA stating that FDA considers Par's Notice invalid and essentially that such notice is of no force and effect.

From September 21, 2012 through November 1, 2012, EPI and its partner Grünenthal received Paragraph IV Notices from each of Teva Pharmaceuticals USA, Inc. (Teva), Amneal Pharmaceuticals, LLC, Sandoz Inc. and ThoRx Laboratories, Inc. (ThoRx), advising of the filing by each such company of an ANDA for a generic version of the formulation of Opana^® ER designed to be crush-resistant. These Paragraph IV Notices refer to U.S. Patent Nos. 8,075,872, 8,114,383, 8,192,722 and 7,851,482 which cover the formulation of Opana^® ER and a highly pure version of the active pharmaceutical ingredient. EPI is currently evaluating these Notices and will take appropriate action. EPI intends, and has been advised by Grünenthal that they too intend, to vigorously defend the intellectual property rights covering Opana^® ER and to pursue all available legal and regulatory avenues in defense of Opana^® ER, including enforcement of the product's intellectual property rights and approved labeling. However, there can be no assurance that we will be successful. If we are unsuccessful and Teva, Amneal, Sandoz or ThoRx is able to obtain FDA approval of its product, it may be able to launch a generic version of Opana^® ER prior to the applicable patents' expirations in 2023, 2024, 2025 and 2029 respectively. Additionally, we cannot predict or determine the timing or outcome of this defense but will explore all options as appropriate in the best interests of the Company. In addition to the above litigation, it is possible that another generic manufacturer may also seek to

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launch a generic version of Opana^® ER and challenge the applicable patents.

Paragraph IV Certification on Frova^®

As previously reported, in July 2011, EPI and its licensor, Vernalis Development Limited received a notice from Mylan Technologies Inc. (Mylan) advising of the filing by Mylan of an ANDA for a generic version of Frova^® (frovatriptan succinate) 2.5 mg tablets. Mylan’s notice included a Paragraph IV Notice with respect to U.S. Patent Nos. 5,464,864, 5,561,603, 5,637,611, 5,827,871 and 5,962,501, which cover Frova^®. These patents are listed in the FDA’s Orange Book and expire between 2013 and 2015. As a result of this Paragraph IV Notice, on August 16, 2011, EPI filed a lawsuit against Mylan in the United States District Court for the District of Delaware alleging infringement of U.S. Patent Nos. 5,464,864, 5,637,611 and 5,827,871. Because the suit was filed within the 45-day period under the Hatch-Waxman Act for filing a patent infringement action, we believe that it triggered an automatic 30-month stay of approval under the Act. On September 22, 2011, Mylan filed an Answer and Counterclaims, claiming the asserted patents are invalid or not infringed.

Endo intends to vigorously defend Frova^®’s intellectual property rights and to pursue all available legal and regulatory avenues in defense of Frova^®, including enforcement of the product’s intellectual property rights and approved labeling. However, there can be no assurance that we will be successful. If we are unsuccessful and Mylan is able to obtain FDA approval of its product, Mylan may be able to launch its generic version of Frova^® prior to the applicable patents’ expirations in 2014 and 2015. Additionally, we cannot predict or determine the timing or outcome of this litigation but will explore all options as appropriate in the best interests of the Company. In addition to the above litigation, it is possible that another generic manufacturer may also seek to launch a generic version of Frova^® and challenge the applicable patents.

MCP Cases

Qualitest Pharmaceuticals, and in certain cases the Company or certain of its subsidiaries, along with several other pharmaceutical manufacturers, have been named as defendants in numerous lawsuits in various federal and state courts alleging personal injury resulting from the use of the prescription medicine metoclopramide. Plaintiffs in these suits allege various personal injuries including tardive dyskinesia, other movement disorders, and death. The Company intends to contest these cases vigorously and to explore other options as appropriate in the best interests of the Company. Litigation similar to that described above may also be brought by other plaintiffs in various jurisdictions. However, we cannot predict the timing or outcome of any such litigation, or whether any additional litigation will be brought against the Company or its subsidiaries. Subject to certain terms and conditions, we will be indemnified by the former owners of Qualitest Pharmaceuticals with respect to metoclopramide litigation arising out of the sales of the product by Qualitest Pharmaceuticals between January 1, 2006 and the date on which the acquisition was completed, subject to an overall liability cap for all claims arising out of or related to the acquisition, including the claims described above. As of October 30, 2012, approximately 830 MCP cases are currently pending with Qualitest and/or the Company.

Propoxyphene Cases

Qualitest Pharmaceuticals and, in certain cases, the Company or certain of its subsidiaries, along with several other pharmaceutical manufacturers, have been named as defendants in several lawsuits originally filed in various federal and state courts alleging personal injury resulting from the use of prescription pain medicines containing propoxyphene. Plaintiffs in these suits allege various personal injuries including cardiac impairment and damage. In August 2011, a multidistrict litigation (MDL) was formed, and cases pending in federal court are now coordinated in the Eastern District of Kentucky as part of MDL No. 2226. On March 5, 2012 and June 22, 2012, the MDL Judge issued orders dismissing with prejudice certain claims against generic manufacturers, including Qualitest Pharmaceuticals and the Company. Certain plaintiffs have appealed those decisions to the United States Court of Appeals for the Sixth Circuit. A consolidated appeal is pending before the Sixth Circuit in certain of these cases. The Company intends to contest all of these cases vigorously and to explore other options as appropriate in the best interests of the Company. Litigation similar to that described above may also be brought by other plaintiffs in various jurisdictions. However, we cannot predict the timing or outcome of any such litigation, or whether any additional litigation will be brought against the Company or its subsidiaries. Subject to certain terms and conditions, we will be indemnified by the former owners of Qualitest Pharmaceuticals with respect to propoxyphene litigation arising out of the sales of the product by Qualitest Pharmaceuticals between January 1, 2006 and the date on which the acquisition was completed, subject to an overall liability cap for all claims arising out of or related to the acquisition, including the claims described above. As of October 30, 2012, approximately 10 propoxyphene cases are currently pending with Qualitest and/or the Company. There are also approximately 45 propoxyphene cases on appeal to the Sixth Circuit.

Vaginal Mesh Cases

On October 20, 2008, the FDA issued a Public Health Notification regarding potential complications associated with transvaginal placement of surgical mesh to treat pelvic organ prolapse (POP) and stress urinary incontinence (SUI). The notification

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provides recommendations and encourages physicians to seek specialized training in mesh procedures, to advise their patients about the risks associated with these procedures and to be diligent in diagnosing and reporting complications.

In July 2011, FDA issued an update to the October 2008 Public Health Notification regarding mesh to further advise the public and the medical community of the potential complications associated with transvaginal placement of surgical mesh to treat POP and SUI. In this July 2011 update, the FDA maintained that adverse events are not rare, as previously reported, and questioned the relative effectiveness of transvaginal mesh as a treatment for POP as compared to non-mesh surgical repair. The July 2011 notification continued to encourage physicians to seek specialized training in mesh procedures, to consider and to advise their patients about the risks associated with these procedures and to be diligent in diagnosing and reporting complications. FDA also convened an advisory panel which met on September 8-9, 2011 to further address the safety and effectiveness of transvaginal surgical mesh used to treat POP and SUI. At the conclusion of the meetings, the advisory panel recommended reclassifying transvaginal mesh products used to treat POP to Class III devices (premarket approval) and recommended that manufacturers of these products be required to conduct additional post-market surveillance studies. The advisory panel recommended that transvaginal surgical mesh products used to treat SUI remain as Class II devices. Regarding retropubic and transobturator (TOT) slings, the advisory panel recommended that no additional post-market surveillance studies are necessary. Regarding mini-slings, the advisory panel recommended premarket study for new devices and additional post-market surveillance studies. The advisory panel’s recommendations are now under consideration by FDA.

On January 3, 2012, the FDA ordered manufacturers of transvaginal surgical mesh used for pelvic organ prolapse and of single incision mini-slings for urinary incontinence, such as AMS, to conduct post-market safety studies and to monitor adverse event rates relating to the use of these products. These class-wide post-market study orders apply to eighteen AMS pelvic floor repair and mini-sling products. AMS is in the process of complying with these orders. In these orders, the FDA also noted that it is still considering the recommendation of the September 9, 2011 advisory committee that urogynecological surgical mesh for transvaginal repair of pelvic organ prolapse be reclassified from Class II to Class III.

Since 2008, AMS, and more recently, in certain cases the Company or certain of its subsidiaries, have been named as defendants in multiple lawsuits in various federal and state courts, as well as in Canada, alleging personal injury resulting from use of transvaginal surgical mesh products designed to treat pelvic organ prolapse and stress urinary incontinence. Plaintiffs in these suits allege various personal injuries including chronic pain, incontinence and inability to control bowel function, and permanent deformities. On February 7, 2012, a multidistrict litigation (MDL) was formed, and cases pending in federal courts are now consolidated in the Southern District of West Virginia as part of MDL No. 2325. Similar cases in various state courts around the country are also currently pending. More specifically, as of October 30, 2012, approximately 2,960 mesh cases are currently pending against AMS and/or the Company or certain of its subsidiaries. Litigation similar to that described above may also be brought by other plaintiffs in various jurisdictions. The majority of the currently pending cases are in the MDL.

In addition, we have been contacted regarding a civil investigation that has been initiated by a number of state attorneys general into mesh products, including transvaginal surgical mesh products designed to treat pelvic organ prolapse and stress urinary incontinence. We have not yet received a subpoena relating to this investigation, and at this time, we cannot predict or determine the outcome of this investigation or reasonably estimate the amount or range of amounts of fines or penalties, if any, that might result from a settlement or an adverse outcome from this investigation.

AMS and the Company intend to vigorously contest all currently pending cases and any future cases that may be brought, if any, and to explore other options as appropriate in the best interests of AMS and the Company. Nevertheless, we believe it is reasonably possible that the outcomes of such cases could result in losses in excess of insurance reimbursement levels that could have a material adverse effect on our business, financial condition, results of operations and cash flows. However, we are unable to estimate an amount of possible loss or range of possible loss in excess of the insurance reimbursement levels.

Other Legal Proceedings

In addition to the above proceedings, we are involved in, or have been involved in, arbitrations or various other legal proceedings that arise from the normal course of our business. We cannot predict the timing or outcome of these claims and other proceedings. Currently, we are not involved in any arbitration and/or other legal proceeding that we expect to have a material effect on our business, financial condition, results of operations and cash flows.

Corporate Headquarters Lease

On October 28, 2011, our subsidiary Endo Pharmaceuticals Inc. entered into a lease agreement with RT/TC Atwater LP, a Delaware limited partnership, for a new Company headquarters to consist of approximately 300,000 square feet of office space located at 1400 Atwater Boulevard, Malvern, Pennsylvania. The term of this triple net lease is 12 years and includes three renewal options, each for an additional sixty-month period. The lease is expected to commence early in 2013 with a monthly lease rate for the initial

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year of $0.5 million, increasing by 2.25% each year thereafter. Under the terms of this lease, we will have a continuous and recurring right throughout the initial 4 years of the lease term to lease up to approximately 150,000 additional square feet. We are responsible for all tenant improvement costs, less a tenant improvement allowance of $45 per square foot.

This lease is accounted for as a direct financing arrangement whereby the Company will record, over the construction period, the full cost of the asset in Property, plant and equipment, net. At September 30, 2012, the Company has capitalized $44.3 million as Property, plant and equipment related to this arrangement. The building and leasehold improvements will be depreciated over the initial lease term. A corresponding liability is also being recorded, net of leasehold improvements paid for by the Company and will be amortized over the expected lease term through monthly rental payments using an effective interest method. At September 30, 2012, the Company has recorded a liability of $22.9 million related to this arrangement.

NOTE 13. NET INCOME (LOSS) PER SHARE

The following is a reconciliation of the numerator and denominator of basic and diluted net income (loss) per share (in thousands, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012			2011
Numerator:
Net income (loss) attributable to Endo Health Solutions Inc. common stockholders	$	53,809	$	40,649	$	(24,071	)	$	151,019
Denominator:
For basic per share data—weighted average shares	116,022		116,816		116,688			116,611
Dilutive effect of common stock equivalents	2,628		2,281		—			2,328
Dilutive effect of 1.75% Convertible Senior Subordinated Notes and warrants	929		1,750		—			2,493
For diluted per share data—weighted average shares	119,579		120,847		116,688			121,432
Basic net income (loss) per share attributable to Endo Health Solutions Inc.	$	0.46	$	0.35	$	(0.21	)	$	1.30
Diluted net income (loss) per share attributable to Endo Health Solutions Inc.	$	0.45	$	0.34	$	(0.21	)	$	1.24

Basic net income (loss) per share is computed based on the weighted average number of common shares outstanding during the period. Diluted income per common share is computed based on the weighted average number of common shares outstanding and, if there is net income during the period, the dilutive impact of common stock equivalents outstanding during the period. Common stock equivalents are measured under the treasury stock method.

The 1.75% Convertible Senior Subordinated Notes due April 15, 2015 (the Convertible Notes) are only included in the dilutive net income per share calculation using the treasury stock method during periods in which the average market price of our common stock was above the applicable conversion price of the Convertible Notes, or $29.20 per share. In these periods, under the treasury stock method, we calculated the number of shares issuable under the terms of these notes based on the average market price of the stock during the period, and included that number in the total diluted shares outstanding for the period.

We have entered into convertible note hedge and warrant agreements that, in combination, have the economic effect of reducing the dilutive impact of the Convertible Notes. However, we separately analyze the impact of the convertible note hedge and the warrant agreements on diluted weighted average shares outstanding. As a result, the purchases of the convertible note hedges are excluded because their impact would be anti-dilutive. The treasury stock method is applied when the warrants are in-the-money with the proceeds from the exercise of the warrant used to repurchase shares based on the average stock price in the calculation of diluted weighted average shares. Until the warrants are in-the-money, they have no impact to the diluted weighted average share calculation. The total number of shares that could potentially be included if the warrants were exercised is approximately 13.0 million at September 30, 2012.

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The following reconciliation shows the maximum potential dilution of shares currently excluded from the calculation of diluted net income per share for the nine months ended September 30 (in thousands):

	2012	2011
Weighted average shares excluded:
1.75% Convertible senior subordinated notes due 2015 and warrants(1)	25,993	23,500
Employee stock-based awards	4,106	2,007
	30,099	25,507

_____________

(1) Amounts represent the incremental potential total dilution that could occur if our Convertible Notes and warrants were converted to shares of our common stock.

NOTE 14. COST OF REVENUES

The components of Cost of revenues for the three and nine months ended September 30 (in thousands) were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Cost of net pharmaceutical product sales	$	222,830	$	208,666	$	735,359	$	609,878
Cost of device revenues	40,886		64,011		121,972		75,541
Cost of service and other revenues	30,551		29,495		96,326		85,008
Total cost of revenues	$	294,267	$	302,172	$	953,657	$	770,427

NOTE 15. DEBT

The components of our total indebtedness at September 30, 2012 and December 31, 2011 (in thousands), were as follows:

	September 30, 2012			December 31, 2011
1.75% Convertible Senior Subordinated Notes due 2015	$	379,500		$	379,500
Unamortized discount on 1.75% Convertible Senior Subordinated Notes due 2015	(63,915		)	(80,278		)
1.75% Convertible Senior Subordinated Notes due 2015, net	$	315,585		$	299,222
7.00% Senior Notes due 2019	$	500,000		$	500,000
7.00% Senior Notes due 2020	$	400,000		$	400,000
Unamortized initial purchaser’s discount	(3,172		)	(3,382		)
7.00% Senior Notes due 2020, net	$	396,828		$	396,618
7.25% Senior Notes due 2022	$	400,000		$	400,000
3.25% AMS Convertible Notes due 2036	$	795		$	841
4.00% AMS Convertible Notes due 2041	$	111		$	131
Term Loan A Facility Due 2016	$	1,415,625		$	1,471,875
Term Loan B Facility Due 2018	$	160,550		$	438,250
Other long-term debt	$	4,971		$	5,657
Total long-term debt, net	$	3,194,465		$	3,512,594
Less current portion	$	124,947		$	88,265
Total long-term debt, less current portion, net	$	3,069,518		$	3,424,329

Credit Facility

On June 17, 2011, we established a $1,500 million, five-year senior secured term loan facility (the Term Loan A Facility), a $700 million, seven-year senior secured term loan facility (the Term Loan B Facility, and, together with the Term Loan A Facility, the Term Loan Facilities), and a $500 million, five-year senior secured revolving credit facility (the 2011 Revolving Credit Facility and, together with the Term Loan Facilities, the 2011 Credit Facility) with Morgan Stanley Senior Funding, Inc., as administrative agent, Bank of America, N.A., as Syndication Agent, and certain other lenders. The 2011 Credit Facility was established primarily to finance our acquisition of AMS and is available for working capital, general corporate purposes and lines of credit. The agreement governing

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the 2011 Credit Facility (the 2011 Credit Agreement) also permits up to $500 million of additional revolving or term loan commitments from one or more of the existing lenders or other lenders with the consent of Morgan Stanley Senior Funding, Inc. (the administrative agent) without the need for consent from any of the existing lenders under the 2011 Credit Facility.

The obligations of the Company under the 2011 Credit Facility are guaranteed by certain of the Company’s domestic subsidiaries and are secured by substantially all of the assets of the Company and the subsidiary guarantors. The 2011 Credit Facility contains certain usual and customary covenants, including, but not limited to covenants to maintain maximum leverage and minimum interest coverage ratios. Borrowings under the 2011 Credit Facility bear interest at an amount equal to a rate calculated based on the type of borrowing and the Company’s Leverage Ratio. For term A loans and revolving loans (other than Swing Line Loans), the Company is permitted to elect to pay interest based on an adjusted LIBOR rate plus between 1.75% and 2.50% or an Alternate Base Rate (as defined in the 2011 Credit Agreement) plus between 0.75% and 1.50%. For term B loans, the Company may elect to pay interest based on an adjusted LIBOR rate plus 3.00% or an Alternate Base Rate plus 2.00%. The Company will pay a commitment fee of between 37.5 to 50 basis points, payable quarterly, on the average daily unused amount of the Revolving Credit Facility.

Financing costs of $56.2 million paid to establish the 2011 Credit Facility, including $43.4 million paid to investment bankers that also helped structure the AMS acquisition, as well as financing costs of $6.2 million associated with prior credit facilities, were deferred and are being amortized to interest expense over the life of the 2011 Credit Facility. Approximately $8.5 million of the deferred financing costs associated with prior credit facilities was also written off at this time in accordance with the applicable accounting guidance for debt modifications and extinguishments and was included in the Condensed Consolidated Statements of Operations as a Net loss on extinguishment of debt.

In February 2012, we made a prepayment of $205.0 million on our Term Loan B Facility. We made additional prepayments of $33.0 million and $39.7 million in July 2012 and September 2012, respectively. In accordance with the applicable accounting guidance for debt modifications and extinguishments, approximately $5.4 million of the remaining unamortized financing costs were written off in connection with our February 2012 prepayment and additional $1.8 million was written off in connection with the third quarter 2012 prepayments. These amounts were included in the Condensed Consolidated Statements of Operations as a Net loss on extinguishment of debt.

During the nine months ended September 30, 2012 and 2011, we recognized $45.0 million and $32.3 million, respectively, of interest expense related to our Credit Facilities.

7.00% Senior Notes Due 2019

On June 8, 2011, we issued $500 million in aggregate principal amount of 7.00% Notes due 2019 (the 2019 Notes) at an issue price of par. The 2019 Notes were issued in a private offering for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2019 Notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries. Interest on the 2019 Notes is payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2012. The 2019 Notes will mature on July 15, 2019, subject to earlier repurchase or redemption in accordance with the terms of the Indenture incorporated by reference herein. We received proceeds of approximately $485.9 million from the issuance, net of certain costs of the offering, including $9.9 million of costs paid to investment bankers that also helped structure the AMS acquisition.

On or after July 15, 2015, the Company may on any one or more occasions redeem all or a part of the 2019 Notes, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and additional interest, if any, if redeemed during the twelve-month period beginning on July 15 of the years indicated below:

Payment Dates (between indicated dates)	Redemption Percentage
From July 15, 2015 to and including July 14, 2016	103.500	%
From July 15, 2016 to and including July 14, 2017	101.750	%
From July 15, 2017 and thereafter	100.000	%

In addition, at any time prior to July 15, 2015, Endo may on any one or more occasions redeem all or a part of the 2019 Notes at a specified redemption price set forth in the Indenture, plus accrued and unpaid interest and additional interest, if any.

At any time prior to July 15, 2014, the Company may redeem up to 35% of the aggregate principal amount of the 2019 Notes at a specified redemption price set forth in the Indenture, plus accrued and unpaid interest and additional interest, if any, with the net cash proceeds of an equity offering subject to certain provisions. If the Company experiences certain change of control events, it must offer to repurchase the 2019 Notes at 101% of their principal amount, plus accrued and unpaid interest and additional interest, if any.

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The Indenture contains covenants that, among other things, restrict the Company’s ability and the ability of its restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make restricted payments, sell certain assets, agree to any restrictions on the ability of restricted subsidiaries to make payments to the Company, create certain liens, merge, consolidate, or sell substantially all of the Company’s assets, or enter into certain transactions with affiliates. These covenants are subject to a number of important exceptions and qualifications, including the fall away or revision of certain of these covenants upon the 2019 Notes receiving investment grade credit ratings.

During the nine months ended September 30, 2012 and 2011, we recognized $27.3 million and $11.3 million, respectively, of interest expense related to our 2019 Notes.

7.00% Senior Notes Due 2020

In November 2010, we issued $400 million in aggregate principal amount of 7.00% Senior Notes due 2020 (the 2020 Notes) at an issue price of 99.105%. The 2020 Notes were issued in a private offering for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2020 Notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries. Interest on the 2020 Notes is payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2011. The 2020 Notes will mature on December 15, 2020, subject to earlier repurchase or redemption in accordance with the terms of the Indenture incorporated by reference herein. We received proceeds of approximately $386.6 million from the issuance, net of the initial purchaser’s discount and certain other costs of the offering.

On or after December 15, 2015, the Company may on any one or more occasions redeem all or a part of the 2020 Notes, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and additional interest, if any, if redeemed during the twelve-month period beginning on December 15 of the years indicated below:

Payment Dates (between indicated dates)	Redemption Percentage
From December 15, 2015 to and including December 14, 2016	103.500	%
From December 15, 2016 to and including December 14, 2017	102.333	%
From December 15, 2017 to and including December 14, 2018	101.167	%
From December 15, 2018 and thereafter	100.000	%

In addition, at any time prior to December 15, 2013, the Company may redeem up to 35% of the aggregate principal amount of the 2020 Notes at a specified redemption price set forth in the Indenture, plus accrued and unpaid interest and additional interest, if any, with the net cash proceeds of an equity offering subject to certain provisions. If the Company experiences certain change of control events, it must offer to repurchase the 2020 Notes at 101% of their principal amount, plus accrued and unpaid interest and additional interest, if any.

The Indenture contains covenants that, among other things, restrict the Company’s ability and the ability of its restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make restricted payments, sell certain assets, agree to any restrictions on the ability of restricted subsidiaries to make payments to the Company, create certain liens, merge, consolidate, or sell substantially all of the Company’s assets, or enter into certain transactions with affiliates. These covenants are subject to a number of important exceptions and qualifications, including the fall away or revision of certain of these covenants upon the 2020 Notes receiving investment grade credit ratings.

During the nine months ended September 30, 2012 and 2011, we recognized $21.8 million and $21.7 million, respectively, of interest expense related to our 2020 Notes.

7.25% Senior Notes Due 2022

On June 8, 2011, we issued $400 million in aggregate principal amount of 7.25% Senior Notes due 2022 (the 2022 Notes) at an issue price of par. The 2022 Notes were issued in a private offering for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2022 Notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries. Interest on the 2022 Notes is payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2012. The 2022 Notes will mature on January 15, 2022, subject to earlier repurchase or redemption in accordance with the terms of the Indenture incorporated by reference herein. We received proceeds of approximately $388.7 million from the issuance, net of certain costs of the offering, including $7.9 million of costs paid to investment bankers that also helped structure the AMS acquisition.

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On or after July 15, 2016, the Company may on any one or more occasions redeem all or a part of the 2022 Notes, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and additional interest, if any, if redeemed during the twelve-month period beginning on July 15 of the years indicated below:

Payment Dates (between indicated dates)	Redemption Percentage
From July 15, 2016 to and including July 14, 2017	103.625	%
From July 15, 2017 to and including July 14, 2018	102.417	%
From July 15, 2018 to and including July 14, 2019	101.208	%
From July 15, 2019 and thereafter	100.000	%

In addition, at any time prior to July 15, 2016, Endo may on any one or more occasions redeem all or a part of the 2022 notes at a specified redemption price set forth in the Indenture, plus accrued and unpaid interest and additional interest, if any.

At any time prior to July 15, 2014, the Company may redeem up to 35% of the aggregate principal amount of the 2022 Notes at a specified redemption price set forth in the Indenture, plus accrued and unpaid interest and additional interest, if any, with the net cash proceeds of an equity offering subject to certain provisions. If the Company experiences certain change of control events, it must offer to repurchase the 2022 Notes at 101% of their principal amount, plus accrued and unpaid interest and additional interest, if any.

The Indenture contains covenants that, among other things, restrict the Company’s ability and the ability of its restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make restricted payments, sell certain assets, agree to any restrictions on the ability of restricted subsidiaries to make payments to the Company, create certain liens, merge, consolidate, or sell substantially all of the Company’s assets, or enter into certain transactions with affiliates. These covenants are subject to a number of important exceptions and qualifications, including the fall away or revision of certain of these covenants upon the 2022 Notes receiving investment grade credit ratings.

During the nine months ended September 30, 2012 and 2011, we recognized $22.3 million and $9.4 million, respectively, of interest expense related to our 2022 Notes.

2011 Exchange Offer

On October 14, 2011, the Company filed a Form S-4 Registration Statement with the Securities and Exchange Commission. On October 31, 2011, it filed a prospectus pursuant to Rule 424(b)(3). Pursuant to both filings, the Company offered to exchange the 2019 Notes, 2020 Notes and 2022 Notes for a like principal amount of new notes having identical terms that have been registered under the Securities Act of 1933, as amended. On November 30, 2011, all of the 2019 Notes, 2020 Notes and 2022 Notes had been properly tendered in the exchange offer and not withdrawn.

1.75% Convertible Senior Subordinated Notes Due 2015

In April 2008, we issued $379.5 million in aggregate principal amount of 1.75% Convertible Senior Subordinated Notes due April 15, 2015 (the Convertible Notes) in a private offering for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

We received proceeds of approximately $370.7 million from the issuance, net of the initial purchaser’s discount and certain other costs of the offering. Interest is payable semiannually in arrears on each April 15 and October 15 with the first interest payment being made on October 15, 2008. The Convertible Notes will mature on April 15, 2015, unless earlier converted or repurchased by us.

Holders of the Convertible Notes may convert their notes based on a conversion rate of 34.2466 shares of our common stock per $1,000 principal amount of notes (the equivalent of $29.20 per share), subject to adjustment upon certain events, only under the following circumstances as described in the indenture for the Convertible Notes: (1) during specified periods, if the price of our common stock reaches specified thresholds; (2) if the trading price of the Convertible Notes is below a specified threshold; (3) at any time after October 15, 2014; or (4) upon the occurrence of certain corporate transactions. We will be permitted to deliver cash, shares of Endo common stock or a combination of cash and shares, at our election, to satisfy any future conversions of the Convertible Notes. It is our current intention to settle the principal amount of any conversion consideration in cash.

Concurrently with the issuance of the Convertible Notes, we entered into a privately negotiated convertible note hedge transaction with affiliates of the initial purchasers. Pursuant to the hedge transaction we purchased common stock call options intended to reduce the potential dilution to our common stock upon conversion of the Convertible Notes by effectively increasing the initial conversion price of the Convertible Notes to $40.00 per share, representing a 61.1% conversion premium over the closing price of our

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common stock on April 9, 2008 of $24.85 per share. The call options allow us to purchase up to approximately 13.0 million shares of our common stock at an initial strike price of $29.20 per share. The call options expires on April 15, 2015 and must be net-share settled. The cost of the call option was approximately $107.6 million. In addition, we sold warrants to affiliates of certain of the initial purchasers whereby they have the option to purchase up to approximately 13.0 million shares of our common stock at an initial strike price of $40.00 per share. The warrants expire on various dates from July 14, 2015 through October 6, 2015 and must be net-share settled. We received approximately $50.4 million in cash proceeds from the sale of these warrants. The warrant transaction could have a dilutive effect on our net income per share to the extent that the price of our common stock exceeds the strike price of the warrants at exercise.

As discussed in Note 13. Net Income (Loss) Per Share, in periods in which our common stock price exceeds the conversion price of the Convertible Notes or the strike price of the warrants, we include the effects of the additional shares that may be issued in our diluted net income per share calculation using the treasury stock method.

The carrying values of the debt and equity components of our Convertible Notes are as follows (in thousands):

	September 30, 2012			December 31, 2011
Principal amount of Convertible Notes	$	379,500		$	379,500
Unamortized discount related to the debt component(1)	(63,915		)	(80,278		)
Net carrying amount of the debt component	$	315,585		$	299,222
Carrying amount of the equity component	$	142,199		$	142,199

_____________

(1) Represents the unamortized portion of the original purchaser’s discount and certain other costs of the offering as well as the unamortized portion of the discount created from the separation of the debt portion of our Convertible Notes from the equity portion. This discount will be amortized to interest expense over the term of the Convertible Notes.

For the nine months ended September 30, 2012, we recognized $21.3 million of interest expense related to our Convertible Notes, of which $5.0 million related to the contractual interest payments and $16.3 million related to the amortization of the debt discount and certain other costs of the offering. For the nine months ended September 30, 2011, we recognized $20.0 million of interest expense related to our Convertible Notes, of which $5.0 million related to the contractual interest payments and $15.0 million related to the amortization of the debt discount and certain other costs of the offering.

3.25% Convertible AMS Notes Due 2036 and 4.00% Convertible AMS Notes Due 2041

As a result of our acquisition of AMS, the Company assumed AMS’s 3.25% Convertible Notes due 2036 (the 2036 Notes) and 4.00% Convertible Notes due 2041 (the 2041 Notes and, together with the 2036 Notes, the AMS Notes). In accordance with the indentures governing the AMS Notes, the AMS Notes were immediately convertible upon the closing of Endo’s acquisition of AMS. From the AMS Acquisition Date until the make whole premium on the 2036 Notes expired on August 9, 2011, we paid $95.7 million to redeem $61.4 million of the 2036 Notes at a stated premium of 1.5571. From the AMS Acquisition Date until the make whole premium on the 2041 Notes expired on August 1, 2011, we paid $423.4 million to redeem $249.9 million of the 2041 Notes at a stated premium of 1.6940. Our obligation remaining related to the AMS Notes is less than $1.0 million at September 30, 2012, excluding accrued interest.

NOTE 16. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We are exposed to certain risks relating to our ongoing business operations. With our June 2011 acquisition of AMS, we began using derivative instruments to mitigate a portion of our exposure to volatility in foreign currency exchange rates. Foreign currency exchange forward contracts are used to manage the currency risk associated with forecasted sales to and receivables from certain subsidiaries, denominated in their local currencies. We hedge only exposures in the ordinary course of business. We account for our derivative instruments at fair value, which is determined based on quoted prices for similar contracts.

We account for certain of our derivative instruments under hedge accounting provided we meet designation, documentary and analytic requirements. Hedge accounting creates the potential for a Condensed Consolidated Statement of Operations match between the changes in fair value of derivatives and the changes in the cost of the associated underlying transactions, in this case translation gain or loss. The effective portion of the change in the fair value of these foreign currency exchange contracts is reported in Accumulated other comprehensive loss, a component of stockholders’ equity, and is recognized as an adjustment to Other (income) expense, net, in the same period the related expenses are recognized in earnings. Ineffectiveness would occur when changes in the market value of the hedged transactions are not completely offset by changes in the market value of the derivatives. The ineffective portion of contracts designated for hedge accounting, the gain or loss from changes in the fair value of contracts not designated for

47

hedge accounting and contracts where hedge accounting is discontinued when it is determined the underlying transaction is not going to occur, are recognized currently in the Condensed Consolidated Statements of Operations. Amounts due from counterparties (unrealized hedge gains) or due to counterparties (unrealized hedge losses) are included in Prepaid expenses and other current assets or other accrued expenses, respectively. Cash receipts or payments related to our derivatives are classified in the Condensed Consolidated Statements of Cash Flows as cash flows from operating activities, consistent with the related items being hedged, unless the derivative is not designated or does not qualify for hedge accounting, in which case the receipts or payments are classified in cash flows from investing activities.

At September 30, 2012, we have foreign currency exchange forward contracts outstanding which are designated as cash flow accounting hedges of currency fluctuations for a portion of our forecasted sales to certain subsidiaries, denominated in euros, British pounds, Canadian dollars, Australian dollars, and Swedish krona. These derivative instruments have remaining terms between one and twelve months. The notional amount of these foreign currency exchange forward contracts in U.S. dollars was $32.9 million at September 30, 2012.

We have also entered into foreign currency exchange forward contracts to manage a portion of our exposure to foreign exchange rate fluctuations on certain inter-company receivables denominated in euros, British pounds, Canadian dollars, Australian dollars and Swedish krona. These contracts are not designated as accounting hedges and the associated underlying transactions are expected to occur within the next month. There were no such contracts outstanding at September 30, 2012.

At September 30, 2012, $0.5 million of the fair value of derivatives designated for hedge accounting was included in Prepaid expenses and other current assets and $0.4 million was included in Accrued expenses in the Condensed Consolidated Balance Sheets. At September 30, 2012, $0.1 million of the existing net gain from contracts designated for hedge accounting, which is included in Accumulated other comprehensive loss, is expected to be reclassified into earnings within the next twelve months. During the three and nine months ended September 30, 2012, a loss of $0.2 million and a loss of $0.2 million, respectively, were recognized in Other (income) expense, net in the Condensed Consolidated Statements of Operations from contracts not designated for hedge accounting. During the three and nine months ended September 30, 2011 a gain of $3.2 million and a gain of $2.6 million, respectively, were recognized in Other (income) expense, net in the Condensed Consolidated Statements of Operations from contracts not designated for hedge accounting.

NOTE 17. SUPPLEMENTAL GUARANTOR INFORMATION

In connection with the 2019 Notes, 2020 Notes and 2022 Notes, we have included this supplemental guarantor disclosure in accordance with Rule 3-10(g) of Regulation S-X. The 2019 Notes, 2020 Notes, and 2022 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the following nineteen subsidiaries (together, the Guarantor Subsidiaries):

Ÿ    Endo Pharmaceuticals Inc.  Ÿ    Endo Pharmaceuticals Valera Inc. Ÿ    American Medical Systems Holdings, Inc.  Ÿ    AMS Research Corporation  Ÿ    AMS Sales Corporation  Ÿ    Generics International (US Midco), Inc.  Ÿ    Generics International (US), Inc.  Ÿ    Generics Bidco II, LLC  Ÿ    Wood Park Properties LLC  Ÿ    Quartz Specialty Pharmaceuticals, LLC Ÿ    Endo Pharmaceuticals Solutions Inc. Ÿ    Ledgemont Royalty Sub LLC Ÿ    American Medical Systems, Inc. Ÿ    Laserscope Ÿ    Generics International (US Parent), Inc. Ÿ    Generics International (US Holdco), Inc. Ÿ    Generics Bidco I, LLC Ÿ    Moores Mill Properties LLC Ÿ    Vintage Pharmaceuticals, LLC

Each of the Guarantor Subsidiaries is 100 percent owned by us.

The following supplemental consolidating financial information presents the Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011, the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and 2011, the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2012 and 2011 and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, for the Guarantor Subsidiaries as a group, and separately for our non-Guarantor Subsidiaries as a group.

The Condensed Consolidating Financial Statements are presented using the equity method of accounting for investments in 100% owned subsidiaries. Under the equity method, the investments in subsidiaries are recorded at cost and adjusted for our share of the subsidiaries' cumulative results of operations, capital contributions, distributions and other equity changes. The elimination entries

48

principally eliminate investments in subsidiaries and intercompany balances and transactions. The financial information in this footnote should be read in conjunction with the Condensed Consolidated Financial Statements presented and other notes related thereto contained in this Form 10-Q for the three and nine months ended September 30, 2012 and 2011.   

49

CONDENSED CONSOLIDATING BALANCE SHEET

(In thousands)

	September 30, 2012
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	187		$	217,901		$	38,829		$	—		$	256,917
Accounts receivable, net	—			677,494			74,169			7,931			759,594
Inventories, net	—			351,785			25,047			(13,085		)	363,747
Prepaid expenses and other current assets	—			14,405			8,644			5,106			28,155
Income taxes receivable	36,121			(26,157		)	29,106			108			39,178
Deferred income taxes	—			252,404			12,504			—			264,908
Total current assets	36,308			1,487,832			188,299			60			1,712,499
INTERCOMPANY RECEIVABLES	1,987,450			8,047,237			192,550			(10,227,237		)	—
MARKETABLE SECURITIES	—			2,631			—			—			2,631
PROPERTY, PLANT AND EQUIPMENT, NET	—			302,931			30,484			(296		)	333,119
GOODWILL	—			2,306,021			263,267			—			2,569,288
OTHER INTANGIBLES, NET	—			2,202,494			82,693			—			2,285,187
INVESTMENT IN SUBSIDIARIES	5,870,780			316,379			—			(6,187,159		)	—
OTHER ASSETS	69,165			27,430			40,914			(19,442		)	118,067
TOTAL ASSETS	$	7,963,703		$	14,692,955		$	798,207		$	(16,434,074	)	$	7,020,791
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	90		$	253,157		$	5,943		$	(230	)	$	258,960
Accrued expenses	24,633			898,255			42,815			(5		)	965,698
Current portion of long-term debt	121,875			906			2,166			—			124,947
Acquisition-related contingent consideration	—			6,027			—			—			6,027
Total current liabilities	146,598			1,158,345			50,924			(235		)	1,355,632
INTERCOMPANY PAYABLES	2,876,243			7,271,069			79,925			(10,227,237		)	—
DEFERRED INCOME TAXES	5,949			568,871			7,155			—			581,975
ACQUISITION-RELATED CONTINGENT CONSIDERATION	—			2,688			—			—			2,688
LONG-TERM DEBT, LESS CURRENT PORTION, NET	3,066,713			—			2,805			—			3,069,518
OTHER LIABILITIES	—			89,995			9,909			(19,443		)	80,461
STOCKHOLDERS’ EQUITY:
Preferred Stock	—			—			—			—			—
Common Stock	1,397			—			30,430			(30,430		)	1,397
Additional paid-in capital	1,016,353			4,200,076			573,559			(4,773,635		)	1,016,353
Retained earnings (deficit)	1,527,839			1,408,188			(18,811		)	(1,389,377		)	1,527,839
Accumulated other comprehensive loss	(7,504		)	(6,277		)	(6		)	6,283			(7,504		)
Treasury stock	(669,885		)	—			—			—			(669,885		)
Total Endo Health Solutions Inc. stockholders’ equity	1,868,200			5,601,987			585,172			(6,187,159		)	1,868,200
Noncontrolling interests	—			—			62,317			—			62,317
Total stockholders’ equity	1,868,200			5,601,987			647,489			(6,187,159		)	1,930,517
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,963,703		$	14,692,955		$	798,207		$	(16,434,074	)	$	7,020,791

50

CONDENSED CONSOLIDATING BALANCE SHEET

(In thousands)

	December 31, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	48,318		$	455,756		$	43,546		$	—		$	547,620
Accounts receivable, net	—			656,265			74,584			2,373			733,222
Inventories, net	—			248,128			19,918			(5,627		)	262,419
Prepaid expenses and other current assets	—			19,274			7,004			3,454			29,732
Deferred income taxes	—			205,606			9,497			—			215,103
Total current assets	48,318			1,585,029			154,549			200			1,788,096
INTERCOMPANY RECEIVABLES	1,777,233			7,322,603			193,223			(9,293,059		)	—
MARKETABLE SECURITIES	—			19,105			—			—			19,105
PROPERTY, PLANT AND EQUIPMENT, NET	—			268,572			29,469			(310		)	297,731
GOODWILL	—			2,303,940			254,101			—			2,558,041
OTHER INTANGIBLES, NET	—			2,415,531			88,593			—			2,504,124
INVESTMENT IN SUBSIDIARIES	5,860,570			317,544			—			(6,178,114		)	—
OTHER ASSETS	87,099			27,338			31,049			(20,000		)	125,486
TOTAL ASSETS	$	7,773,220		$	14,259,662		$	750,984		$	(15,491,283	)	$	7,292,583
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	—		$	251,715		$	8,667		$	3		$	260,385
Accrued expenses	38,623			651,653			42,558			(3		)	732,831
Current portion of long-term debt	84,376			972			2,917			—			88,265
Acquisition-related contingent consideration	—			4,925			—			—			4,925
Income taxes payable	(23,204		)	71,900			(13,214		)	(110		)	35,372
Total current liabilities	99,795			981,165			40,928			(110		)	1,121,778
INTERCOMPANY PAYABLES	2,267,572			6,978,697			46,790			(9,293,059		)	—
DEFERRED INCOME TAXES	6,573			611,625			(521		)	—			617,677
ACQUISITION-RELATED CONTINGENT CONSIDERATION	—			3,762			—			—			3,762
LONG-TERM DEBT, LESS CURRENT PORTION, NET	3,421,590			—			2,739			—			3,424,329
OTHER LIABILITIES	—			94,915			10,531			(20,000		)	85,446
STOCKHOLDERS’ EQUITY:
Preferred Stock	—			—			—			—			—
Common Stock	1,383			—			30,430			(30,430		)	1,383
Additional paid-in capital	952,325			4,198,625			574,218			(4,772,843		)	952,325
Retained earnings (deficit)	1,551,910			1,398,613			(15,364		)	(1,383,249		)	1,551,910
Accumulated other comprehensive loss	(9,436		)	(7,740		)	(668		)	8,408			(9,436		)
Treasury stock	(518,492		)	—			—			—			(518,492		)
Total Endo Health Solutions Inc. stockholders’ equity	1,977,690			5,589,498			588,616			(6,178,114		)	1,977,690
Noncontrolling interests	—			—			61,901			—			61,901
Total stockholders’ equity	1,977,690			5,589,498			650,517			(6,178,114		)	2,039,591
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,773,220		$	14,259,662		$	750,984		$	(15,491,283	)	$	7,292,583

51

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

	Three Months Ended September 30, 2012
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
TOTAL REVENUES	$	—		$	687,675		$	85,496		$	(22,689	)	$	750,482
COSTS AND EXPENSES:
Cost of revenues	—			259,967			54,695			(20,395		)	294,267
Selling, general and administrative	—			191,540			18,938			(32		)	210,446
Research and development	—			47,128			1,824			—			48,952
Patent litigation settlement, net	—			(46,238		)	—			—			(46,238		)
Litigation-related contingencies	—			82,600			—			—			82,600
Asset impairment charges	—			11,163			—			—			11,163
Acquisition-related and integration items, net	—			4,764			1,012			—			5,776
OPERATING INCOME	—			136,751			9,027			(2,262		)	143,516
INTEREST EXPENSE, NET	10,573			34,932			—			—			45,505
NET LOSS ON EXTINGUISHMENT OF DEBT	1,789			—			—			—			1,789
OTHER INCOME, NET	—			(249		)	(2,749		)	2,748			(250		)
(LOSS) INCOME BEFORE INCOME TAX	(12,362		)	102,068			11,776			(5,010		)	96,472
INCOME TAX	(4,442		)	36,147			(2,099		)	(1,319		)	28,287
EQUITY FROM INCOME IN SUBSIDIARIES	61,729			745			—			(62,474		)	—
CONSOLIDATED NET INCOME	53,809			66,666			13,875			(66,165		)	68,185
Less: Net income attributable to noncontrolling interests	—			—			14,376			—			14,376
NET INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	53,809		$	66,666		$	(501	)	$	(66,165	)	$	53,809

52

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

	Nine Months Ended September 30, 2012
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
TOTAL REVENUES	$	—		$	2,034,768		$	259,412		$	(67,877	)	$	2,226,303
COSTS AND EXPENSES:
Cost of revenues	—			855,418			161,724			(63,485		)	953,657
Selling, general and administrative	—			632,202			66,368			(48		)	698,522
Research and development	—			179,695			3,372			—			183,067
Patent litigation settlement, net	—			85,123			—			—			85,123
Litigation-related contingencies	—			82,600			—			—			82,600
Asset impairment charges	—			54,163			—			—			54,163
Acquisition-related and integration items, net	—			14,294			2,286			—			16,580
OPERATING INCOME	—			131,273			25,662			(4,344		)	152,591
INTEREST EXPENSE, NET	33,320			105,039			27			—			138,386
NET LOSS ON EXTINGUISHMENT OF DEBT	7,215			—			—			—			7,215
OTHER EXPENSE (INCOME), NET	—			5			(2,418		)	2,911			498
(LOSS) INCOME BEFORE INCOME TAX	(40,535		)	26,229			28,053			(7,255		)	6,492
INCOME TAX	(14,562		)	15,487			(8,326		)	(1,862		)	(9,263		)
EQUITY FROM INCOME (LOSS) IN SUBSIDIARIES	1,902			(1,167		)	—			(735		)	—
CONSOLIDATED NET (LOSS) INCOME	(24,071		)	9,575			36,379			(6,128		)	15,755
Less: Net income attributable to noncontrolling interests	—			—			39,826			—			39,826
NET (LOSS) INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	(24,071	)	$	9,575		$	(3,447	)	$	(6,128	)	$	(24,071	)

53

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

	Three Months Ended September 30, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
TOTAL REVENUES	$	—		$	706,337		$	86,045		$	(33,304	)	$	759,078
COSTS AND EXPENSES:
Cost of revenues	—			287,446			49,830			(35,104		)	302,172
Selling, general and administrative	24			221,033			23,302			—			244,359
Research and development	—			43,606			278			—			43,884
Asset impairment charges	—			22,691			—			—			22,691
Acquisition-related and integration items, net	—			6,060			(242		)	—			5,818
OPERATING (LOSS) INCOME	(24		)	125,501			12,877			1,800			140,154
INTEREST EXPENSE, NET	1,963			50,818			11			—			52,792
OTHER (INCOME) EXPENSE, NET	—			(3,525		)	455			70			(3,000		)
(LOSS) INCOME BEFORE INCOME TAX	(1,987		)	78,208			12,411			1,730			90,362
INCOME TAX	(1,143		)	35,099			(637		)	738			34,057
EQUITY FROM INCOME (LOSS) IN SUBSIDIARIES	41,493			(98		)	—			(41,395		)	—
CONSOLIDATED NET INCOME	$	40,649		$	43,011		$	13,048		$	(40,403	)	$	56,305
Less: Net income attributable to noncontrolling interests	—			—			15,656			—			15,656
NET INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	40,649		$	43,011		$	(2,608	)	$	(40,403	)	$	40,649

54

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

	Nine Months Ended September 30, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
TOTAL REVENUES	$	—		$	1,809,956		$	193,661		$	(76,902	)	$	1,926,715
COSTS AND EXPENSES:
Cost of revenues	—			738,961			110,320			(78,854		)	770,427
Selling, general and administrative	58			540,457			41,363			—			581,878
Research and development	—			126,576			278			—			126,854
Asset impairment charges	—			22,691			—			—			22,691
Acquisition-related and integration items, net	(7,050		)	35,288			1,279			—			29,517
OPERATING INCOME	6,992			345,983			40,421			1,952			395,348
INTEREST EXPENSE, NET	28,226			68,905			11			—			97,142
NET LOSS ON EXTINGUISHMENT OF DEBT	8,548			—			—			—			8,548
OTHER (INCOME) EXPENSE, NET	—			(3,024		)	88			159			(2,777		)
(LOSS) INCOME BEFORE INCOME TAX	(29,782		)	280,102			40,322			1,793			292,435
INCOME TAX	(13,431		)	112,156			757			801			100,283
EQUITY FROM INCOME IN SUBSIDIARIES	167,370			954			—			(168,324		)	—
CONSOLIDATED NET INCOME	$	151,019		$	168,900		$	39,565		$	(167,332	)	$	192,152
Less: Net income attributable to noncontrolling interests	—			—			41,133			—			41,133
NET INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	151,019		$	168,900		$	(1,568	)	$	(167,332	)	$	151,019

55

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Three Months Ended September 30, 2012
	Endo Health Solutions Inc.		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated Total
CONSOLIDATED NET INCOME	$	53,809	$	66,666		$	13,875	$	(66,165	)	$	68,185
OTHER COMPREHENSIVE INCOME (LOSS)	3,960		(79		)	4,397		(4,318		)	3,960
CONSOLIDATED COMPREHENSIVE INCOME	57,769		66,587			18,272		(70,483		)	72,145
Less: Comprehensive income attributable to noncontrolling interests	—		—			14,376		—			14,376
COMPREHENSIVE INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	57,769	$	66,587		$	3,896	$	(70,483	)	$	57,769

56

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Nine Months Ended September 30, 2012
	Endo Health Solutions Inc.			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
CONSOLIDATED NET (LOSS) INCOME	$	(24,071	)	$	9,575	$	36,379		$	(6,128	)	$	15,755
OTHER COMPREHENSIVE INCOME	1,932			1,463		662			(2,125		)	1,932
CONSOLIDATED COMPREHENSIVE (LOSS) INCOME	(22,139		)	11,038		37,041			(8,253		)	17,687
Less: Comprehensive income attributable to noncontrolling interests	—			—		39,826			—			39,826
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	(22,139	)	$	11,038	$	(2,785	)	$	(8,253	)	$	(22,139	)

57

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Three Months Ended September 30, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
CONSOLIDATED NET INCOME	$	40,649		$	43,011	$	13,048		$	(40,403	)	$	56,305
OTHER COMPREHENSIVE (LOSS) INCOME	(5,755		)	875		(5,130		)	4,255			(5,755		)
CONSOLIDATED COMPREHENSIVE INCOME	34,894			43,886		7,918			(36,148		)	50,550
Less: Comprehensive income attributable to noncontrolling interests	—			—		15,656			—			15,656
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	34,894		$	43,886	$	(7,738	)	$	(36,148	)	$	34,894

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CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Nine Months Ended September 30, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
CONSOLIDATED NET INCOME	$	151,019		$	168,900		$	39,565		$	(167,332	)	$	192,152
OTHER COMPREHENSIVE LOSS	(6,137		)	(507		)	(5,130		)	5,637			(6,137		)
CONSOLIDATED COMPREHENSIVE INCOME	144,882			168,393			34,435			(161,695		)	186,015
Less: Comprehensive income attributable to noncontrolling interests	—			—			41,133			—			41,133
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	144,882		$	168,393		$	(6,698	)	$	(161,695	)	$	144,882

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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In thousands)

	Nine Months Ended September 30, 2012
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated Total
OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	421,896		$	(159,009	)	$	34,245		$	—	$	297,132
INVESTING ACTIVITIES:
Purchases of property, plant and equipment	—			(79,310		)	(10,818		)	—		(90,128		)
Proceeds from sale of property, plant and equipment	—			17			1,064			—		1,081
Acquisitions, net of cash acquired	—			—			(3,210		)	—		(3,210		)
Proceeds from sale of marketable securities	—			18,800			—			—		18,800
License fees	—			(5,000		)	(700		)	—		(5,700		)
Net cash used in investing activities	—			(65,493		)	(13,664		)	—		(79,157		)
FINANCING ACTIVITIES:
Capital lease obligations repayments	—			(615		)	(150		)	—		(765		)
Principal payments on Term Loans	(333,950		)	—			—			—		(333,950		)
Payment on AMS Convertible Notes	—			(66		)	—			—		(66		)
Principal payments on other indebtedness	—			—			(685		)	—		(685		)
Tax benefits of stock awards	—			4,268			—			—		4,268
Exercise of Endo Health Solutions Inc. stock options	15,317			—			—			—		15,317
Purchase of common stock	(156,000		)	—			—			—		(156,000		)
Issuance of common stock from treasury	4,606			—			—			—		4,606
Cash distributions to noncontrolling interests	—			—			(39,234		)	—		(39,234		)
Cash buy-out of noncontrolling interests, net of cash contributions	—			—			(2,264		)	—		(2,264		)
Intercompany activity	—			(16,940		)	16,940			—		—
Net cash used in financing activities	(470,027		)	(13,353		)	(25,393		)	—		(508,773		)
Effect of foreign exchange rate	—			—			95			—		95
NET DECREASE IN CASH AND CASH EQUIVALENTS	(48,131		)	(237,855		)	(4,717		)	—		(290,703		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	48,318			455,756			43,546			—		547,620
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	187		$	217,901		$	38,829		$	—	$	256,917

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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In thousands)

	Nine Months Ended September 30, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated Total
OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities	$	(51,709	)	$	301,150		$	169,090		$	—	$	418,531
INVESTING ACTIVITIES:
Purchases of property, plant and equipment	—			(34,176		)	(5,433		)	—		(39,609		)
Proceeds from sale of property, plant and equipment	—			340			807			—		1,147
Acquisitions, net of cash acquired	—			(2,243,486		)	(124,871		)	—		(2,368,357		)
Proceeds from investments	—			36,000			—			—		36,000
Purchases of investments	—			(6,009		)	—			—		(6,009		)
Other investments	—			436			(824		)	—		(388		)
Payment on contingent consideration	—			—			(662		)	—		(662		)
License fees	—			(2,300		)	—			—		(2,300		)
Proceeds from sale of business	—			—			12,990			—		12,990
Net cash used in investing activities	—			(2,249,195		)	(117,993		)	—		(2,367,188		)
FINANCING ACTIVITIES:
Proceeds from issuance of 2019 and 2022 Notes	900,000			—			—			—		900,000
Proceeds from issuance of Term Loans	2,200,000			—			—			—		2,200,000
Proceeds from other indebtedness	—			—			302			—		302
Principal payments on Term Loans	(550,813		)	—			—			—		(550,813		)
Payment on AMS Convertible Notes	—			(519,040		)	—			—		(519,040		)
Deferred financing fees	(81,535		)	—			—			—		(81,535		)
Tax benefits of stock awards	—			5,519			—			—		5,519
Exercise of Endo Health Solutions Inc. stock options	21,780			—			—			—		21,780
Purchase of common stock	(34,702		)	—			—			—		(34,702		)
Cash distributions to noncontrolling interests	—			—			(39,392		)	—		(39,392		)
Cash buy-out of noncontrolling interests, net of cash contributions	—			—			(402		)	—		(402		)
Intercompany activity	(2,407,354		)	2,394,706			12,648			—		—
Net cash provided by (used in) financing activities	47,376			1,881,185			(26,844		)	—		1,901,717
Effect of foreign exchange rate	—			—			397			—		397
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(4,333		)	(66,860		)	24,650			—		(46,543		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	45,400			404,169			16,645			—		466,214
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	41,067		$	337,309		$	41,295		$	—	$	419,671

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NOTE 18. SUBSEQUENT EVENTS

Effective October 17, 2012, Apax Quartz (Cayman) L.P. (Apax), Endo Pharmaceuticals Inc., Endo Health Solutions Inc, and Generics International (US Parent) Inc. entered into an amendment to the Stock Purchase Agreement among the parties, dated September 28, 2010 (the Stock Purchase Agreement), whereby the parties agreed that within five business days of the execution of such amendment, 1) $52.0 million would be released to Apax from the Indemnity Escrow Fund (as defined in the Stock Purchase Agreement) established in connection with the Stock Purchase Agreement and 2) approximately $2.5 million would be released from the Indemnity Escrow Fund to the Company. Accordingly, following the release of these amounts, the total value of the Indemnity Escrow Fund will be reduced by $54.5 million and will equal $45.5 million. The Indemnity Escrow Fund was previously treated as a component of the Qualitest Pharmaceuticals purchase price and therefore this amendment does not have any impact on our cash or cash equivalents balances.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations describes the principal factors affecting the results of operations, liquidity and capital resources, and critical accounting estimates of Endo. This discussion should be read in conjunction with the accompanying quarterly unaudited Condensed Consolidated Financial Statements and our Annual Report on Form 10-K, for the year ended December 31, 2011 (Annual Report). Our Annual Report includes additional information about our significant accounting policies, practices and the transactions that underlie our financial results, as well as a detailed discussion of the most significant risks and uncertainties associated with our financial and operating results. Except for the historical information contained in this Report, this Report, including the following discussion, contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements” beginning on page i of this Report.

EXECUTIVE SUMMARY

About the Company

At our Annual Meeting of Stockholders on May 23, 2012, our stockholders approved the proposal to amend and restate our Amended and Restated Certificate of Incorporation to change our name from Endo Pharmaceuticals Holdings Inc. to Endo Health Solutions Inc, which we refer to herein as “Endo”, “we”, “us”, or the “Company”. This change became effective on May 23, 2012. Concurrently with this change, the Company also changed the names of its business segments. Effective May 23, 2012, the names of our business segments are Endo Pharmaceuticals (formerly Branded Pharmaceuticals), Qualitest (formerly Generics), AMS (formerly Devices) and HealthTronics (formerly Services).

Endo Health Solutions Inc. is a U.S. based, specialty healthcare solutions company with a diversified business model, operating in four key business segments—Endo Pharmaceuticals, Qualitest, AMS and HealthTronics. Our Endo Pharmaceuticals and Qualitest segments offer a variety of branded and generic pharmaceutical products in multiple therapeutic areas. AMS provides technology solutions to physicians treating men's and women's pelvic health conditions. Finally, HealthTronics provides urological services, products and support systems to urologists, hospitals, surgery centers and clinics. As a combined entity, we deliver comprehensive healthcare solutions across our diversified businesses in key therapeutic areas, including pain and urology, and believe we are positioned to address the changing economics that are driving the continued transformation of the U.S. healthcare environment.

We believe our diversified business model enables us to strengthen our partnerships with providers, payers and patients by offering multiple products and platforms to deliver healthcare solutions. We have a portfolio of branded pharmaceuticals that includes established brand names such as Lidoderm^®, Opana^® ER, Voltaren^® Gel, Percocet^®, Frova^®, Supprelin^® LA, Vantas^®, Valstar^® and Fortesta^® Gel. Endo Pharmaceuticals comprised approximately 56% and 55% of our revenues for the three and nine months ended September 30, 2012, respectively, compared to 56% and 62%, respectively, in the comparable 2011 periods. Lidoderm^® comprised approximately 32% and 30% of our revenues for the three and nine months ended September 30, 2012, respectively, compared to 27% and 31%, respectively, for the three and nine months ended September 30, 2011. Our non-branded Qualitest portfolio, which accounted for 22% and 21%, respectively, of our revenues for the three and nine months ended September 30, 2012 and 19% and 22%, respectively, of our revenues for the three and nine months ended September 30, 2011, currently consists of products primarily focused on pain management. We generally focus on selective generics that have one or more barriers to market entry, such as complex formulation, regulatory or legal challenges or difficulty in raw material sourcing. AMS accounted for 15% and 17% of our revenues for the three and nine months ended September 30, 2012, respectively, compared to 17% and 8%, respectively, for the three and nine months ended September 30, 2011. HealthTronics accounted for the remaining revenue for the three and nine months ended September 30, 2012 and 2011.

As of September 30, 2012, we have a dedicated pharmaceutical products sales force consisting of 481 sales representatives and 228 contracted sales representatives (subsequently reduced to 170 effective October 5, 2012 pursuant to a September 2012 amendment to our agreement with our partner, Ventiv Commercial Services, LLC) focusing primarily on pain products, 78 Endo sales representatives focusing primarily on bladder and prostate cancer products, 35 Endo medical center representatives focusing on the treatment of central precocious puberty and 17 Endo account executives focusing on managed markets customers. We also have 324 sales representatives focusing primarily on devices and 54 on services. We market our products and services to primary care physicians and specialty physicians, including those specializing in pain management, orthopedics, neurology, rheumatology, surgery, anesthesiology, urology and pediatric endocrinology. Our sales force also targets retail pharmacies and other healthcare professionals throughout the United States.

Watson Litigation Settlement

On May 28, 2012, Endo Pharmaceuticals Inc. (EPI) entered into a Settlement and License Agreement (the Watson Settlement Agreement) among EPI and Teikoku, on the one hand, and Watson, on the other hand. The Watson Settlement Agreement settled all ongoing patent litigation among the parties relating to Watson’s generic version of Lidoderm^®.

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On August 23, 2012, Watson announced it received FDA approval on its Abbreviated New Drug Application (ANDA) for its lidocaine patch 5%, a generic version of Lidoderm^®. The Company anticipates Watson will launch its generic version of Lidoderm^® on September 15, 2013 pursuant to the terms of the Watson Settlement Agreement.

For further details, see Note 12. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Litigation-Related Contingencies

During the third quarter of 2012, we recorded an accrual in the amount of $82.6 million for certain of our legal proceedings, with respect to certain pricing litigation matters and the ongoing investigation by the United States Department of Health and Human Services, Office of Inspector General and the United States Department of Justice relating primarily to the sale, marketing and promotion of Lidoderm^®. These matters are described in more detail in Note 12. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Impax

Pursuant to the June 2010 Settlement and License Agreement (the Impax Settlement Agreement), with Impax Laboratories Inc. (Impax), the Company agreed to provide a payment to Impax should prescription sales of the non-crush resistant formulation of Opana^® ER, as defined in the Impax Settlement Agreement, fall below a predetermined contractual threshold in the quarter immediately prior to Impax launching a generic version of Opana^® ER, expected to be in January 2013. During the first quarter of 2012, the Novartis shut-down of its Lincoln, Nebraska manufacturing facility and resulting lack of 2012 oxymorphone active pharmaceutical ingredient (API) quota granted by the Drug Enforcement Agency (DEA) caused EPI to attempt an accelerated launch of the crush-resistant formulation of Opana^® ER. While significant uncertainties existed throughout the first quarter of 2012 about our ability to rapidly ramp up production of the formulation designed to be crush-resistant and produce finished goods at a new, untested manufacturing facility in a very short period of time, we were able to do so in March 2012, triggering a $110.0 million liability under the Impax Settlement Agreement, which was subsequently reduced to $104.0 million based on a third quarter 2012 change in estimate with respect to this liability.

Pipeline Developments

BEMA^® Buprenorphine

In January 2012, the Company signed a worldwide license and development agreement with BioDelivery Sciences International, Inc. (BioDelivery) for the exclusive rights to develop and commercialize BEMA^® Buprenorphine, a transmucosal form of buprenorphine which incorporates a bioerodible mucoadhesive (BEMA^®) technology and is currently in phase III trials for the treatment of moderate to severe chronic pain. At this time, the Company made an upfront payment to BioDelivery for $30.0 million, which was expensed as Research and development in the first quarter of 2012. An additional $15.0 million payment related to the achievement of certain regulatory milestones was triggered and recorded as Research and development expense during the first quarter of 2012. We paid this amount in the second quarter of 2012. In August 2012, the Company and BioDelivery announced the initiation of the Phase 3 clinical program for BEMA^® Buprenorphine for the treatment of moderate to severe chronic pain. Both studies are anticipated to be completed by late 2013 or early 2014.

JetTouch^TM / Botox^® Co-Development Program

In June 2012, our AMS business announced a co-development agreement with Allergan, Inc. to jointly develop and seek regulatory approval for the delivery of Botox^® (onabotulinumtoxinA) using the JetTouch^TM system for treatment of overactive bladder.

Recent Business Activity

Lidoderm^® 

In August 2012, the Company received a letter from the FDA, noting that it had denied our Citizen Petition (CP) related to the approval requirements for generic versions of Lidoderm^®. Also on August 23, 2012, Watson announced it received FDA approval on its ANDA for its lidocaine patch 5%, a generic version of Lidoderm^®. We anticipate Watson will launch its generic version of Lidoderm^® in September of 2013 pursuant to the terms of the Company's settlement agreement with Watson.

Opana^® ER

In December 2011, the FDA approved a formulation of Opana^® ER designed to be crush-resistant, which will continue to be called Opana^® ER with the same dosage strengths, color and packaging and similar tablet size. Endo transitioned to the crush-resistant formulation in March 2012 upon successfully accelerating production of this formulation. In June 2012, we announced the FDA had moved the old formulation of Opana^® ER to the Orange Book Discontinued List in connection with our transition to the crush-

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resistant formulation and in September 2012, we announced that, according to IMS Health data estimates, the crush-resistant formulation of Opana^® ER now accounts for more than 90 percent of the Opana^® ER total prescription volume.

On August 13 2012, EPI submitted a Citizen Petition with the FDA requesting that it (1) determine that the discontinued, non-crush-resistant version of Opana^® ER approved under NDA No. 021610 was discontinued for safety and can no longer serve as a Reference List Drug (RLD) for an ANDA or generic applicant; (2) refuse to approve any pending ANDA for a generic version of the non-crush resistant version of Opana^® ER approved under NDA No. 021610; and (3) suspend and withdraw the approval of any ANDA referencing Opana^® ER approved under NDA No. 021610 as the RLD.

On August 31, 2012, EPI submitted an additional Citizen Petition requesting that the FDA (1) require that any ANDA referencing the crush-resistant formulation of Opana^® ER contain data and information demonstrating that the proposed ANDA product is similarly crush-resistant; (2) classify extended-release opioid formulations incorporating crush-resistant technologies, such as the new Opana^® ER, as new dosage forms in Appendix C of FDA's Orange Book; and (3) confirm that any ANDA referencing Opana^® ER approved under NDA No. 021610 will not be identified in the Orange Book as therapeutically equivalent to the crush-resistant formulation of Opana^® ER.

From September 21, 2012 through November 1, 2012, EPI and its partner Grünenthal received Paragraph IV Notices from each of Teva Pharmaceuticals USA, Inc. (Teva), Amneal Pharmaceuticals, LLC (Amneal), Sandoz Inc. (Sandoz) and ThoRx Laboratories, Inc. (ThoRx) advising of the filing by each such company of an ANDA for a generic version of the formulation of Opana^® ER designed to be crush-resistant.

MoXy^® Fiber

In August 2012, the Company introduced the new 650kJ MoXy^® fiber for our GreenLight XPS^® system for photoselective vaporization of the prostate, which provides more than 50 percent more energy than the previous fiber for the same price. The new MoXy^® fiber will enable physicians to treat larger glands with a single fiber, offering improved overall value and greater cost efficiency.

Montelukast Sodium Tablets

In August 2012, the Company announced it had launched its montelukast sodium tablets and chewable tablets, generic versions of Singulair^®, following the expiration of the last patent that provides Merck U.S. market exclusivity. The Company began shipping the product immediately. Montelukast sodium tablets are labeled for use in treating symptoms of asthma and allergic rhinitis. The total combined branded and generic sales for montelukast sodium tablets and chewable tablets in the U.S. for the twelve months ending June 30, 2012 were approximately $4.9 billion, according to IMS Health.

Levetiracetam

In April 2012, Qualitest Pharmaceuticals announced it had received FDA approval on its ANDA for levetiracetam oral solution 100 mg/mL, a generic version of Keppra^®. to begin distribution in late 2012. The total sales for levetiracetam oral solution 100 mg/mL in the U.S. for the twelve months ending December 31, 2011 were approximately $62.2 million, according to IMS Health. Subsequently, in July 2012, Qualitest Pharmaceuticals announced it had received FDA approval on its ANDA for levetiracetam extended-release 500 and 750 mg tablets, a generic version of Keppra XR^®. The total sales for levetiracetam extended-release 500 and 750 mg tablets in the U.S. for the 12 months ending May 31, 2012 were approximately $124.8 million, according to IMS Health.

Other

In October, our Qualitest business received, through its partner Alembic Pharmaceuticals Limited, FDA approval for irbesartan tablets, a generic version of Avapro^®, irbesartan/HCTZ tablets, a generic version of Avalide^® and modafinil tablets, a generic version of Provigil^®. Total combined branded and generic sales for irbesartan tablets, irbesartan/HCTZ tablets and modafinil tablets in the U.S. for the 12 months ended September 30, 2012 were approximately $1.7 billion, according to IMS Health.

Goodwill and Indefinite-Lived Intangible Assets Impairment Testing

During the three months ended September 30, 2012, we changed our annual goodwill and indefinite-lived intangible assets impairment test date from January 1 to October 1. The change in the annual date for impairment testing will necessitate completing a test as of October 1, 2012 to ensure that no more than 12 months elapse between annual tests. We will complete this test in the fourth quarter ending December 31, 2012. We will prospectively apply the changes in the annual goodwill and indefinite-lived intangible asset impairment testing dates beginning on October 1, 2012 in future filings.

Changes in Directors & Officers and Other Related Matters

On July 18, 2012, Endo announced the appointment of Camille Farhat as President of American Medical Systems, a wholly owned subsidiary of Endo Health Solutions Inc. Prior to joining AMS, Mr. Farhat served in a variety of senior leadership positions within the healthcare industry; most recently as General Manager of Baxter Pharmaceuticals and Technologies. As General Manager, Mr. Farhat significantly enhanced the performance and improved the operating efficiency of the business while focusing on the needs

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of patients. During his time at Baxter, he also held the role of General Manager for Baxter Global Infusion Systems. Before that, Mr. Farhat provided executive leadership at Medtronic, including roles in Business Development, as well as Global General Manager, Gastroenterology and Urology. In addition, he held a variety of positions at GE Healthcare, including roles as a Global General Manager of the Computed Tomography Business. He also held leadership positions in strategic planning and global sourcing at General Electric.

On September 27, 2012, the Company increased the size of its Board of Directors from nine to ten and appointed Jill D. Smith to fill this new vacancy. Ms. Smith currently serves on the board of SoundBite Communications and is a member of the executive committee for the Women's Cancer Program at Dana Farber Hospital, and a member of the board of trustees for The Rashi School. Previously, Ms. Smith served as the chairman of the board of directors and chief executive officer of DigitalGlobe, Inc., and prior to DigitalGlobe, Ms. Smith was president and chief executive officer of eDial, chief executive officer of SRDS, L.P., as well as chief operating officer of Micron Electronics, Inc. Ms. Smith also has served on the corporate boards of Elster Group and Smith & Hawken. Ms. Smith's earlier professional experience includes co-founding Treacy & Company, LLC, a consulting and boutique investment business and holding executive positions at Sara Lee Corporation and Bain & Company.

Government Regulations

EPI and Qualitest sell products that are “controlled substances” as defined in the Controlled Substances Act of 1970 (CSA), which establishes certain security and record keeping requirements administered by the DEA. The DEA is concerned with the control of registered handlers of controlled substances, and with the equipment and raw materials used in their manufacture and packaging, in order to prevent loss and diversion into illicit channels of commerce. The DEA regulates controlled substances as Schedule I, II, III, IV or V substances, with Schedule I and II substances considered to present the highest risk of substance abuse and Schedule V substances the lowest risk. Hydrocodone is currently regulated as a Schedule III substance. Pursuant to the Food and Drug Administration Innovation Safety Act FDASIA), Congress has required the FDA to convene a meeting to solicit advice and recommendations to assist in conducting a scientific and medical evaluation on whether to reschedule combination products containing hydrocodone. Our Qualitest business sells a significant amount of hydrocodone-containing products. Congress is acting in response to continued reports of misuse, abuse and addiction of products containing hydrocodone. An advisory committee to take public comments on the proposed rescheduling was originally planned for October 29-30, 2012. It was postponed due to weather conditions and we expect will be rescheduled in the near future. A change from a Schedule III substance to a Schedule II substance could restrict patient access to needed medication. It would also require significant changes to the entire industry's supply chain from manufacturers, to wholesalers and retailers. We believe the increased burden and cost to the healthcare system would be substantial. On October 25, 2012, the FDA published a briefing document that indicates that it will likely recommend to DEA that hydrocodone products remain in Schedule III. It did, however, acknowledge that the question still remains on how to reduce levels of abuse of hydrocodone combination products. As part of our expansion of our Huntsville site, we have factored in the potential for hydrocodone being rescheduled, which we believe puts our subsidiary, Qualitest Pharmaceuticals, in a very good position to comply quickly should hydrocodone be rescheduled.

Healthcare Reform

On March 23, 2010, President Obama signed into law H.R. 3590, the Patient Protection and Affordable Care Act (PPACA), which will make major changes to the U.S. healthcare system. On March 30, 2010, the President signed H.R. 4872, the Health Care and Education Reconciliation Act of 2010 (Reconciliation Act), which included a package of changes to the PPACA, as well as additional elements to reform health care in the U.S.

While some provisions of the new healthcare reform law have already taken effect, most of the provisions to expand access to health care coverage will not be implemented until 2014 and beyond. Since implementation is incremental to the enactment date of the law, there are still many challenges and uncertainties ahead. Such a comprehensive reform measure will require expanded implementation efforts on the part of federal and state agencies embarking on rule-making to develop the specific components of their new authority. The Company will monitor closely the implementation and any attempts to repeal, replace, or remove funding of the new health care reform law. This effort will primarily take place on two fronts: 1) in Congress through attempts to pass legislation to overturn all or specific sections of the law and 2) in the Courts through attempts to have the law declared unconstitutional.

In March 2012, the U.S. Supreme Court heard oral arguments challenging the constitutionality of the health care reform law. In the following months, the Court considered the constitutionality of the individual mandate, as well as whether the overall health care law could still stand even if the individual mandate was ruled unconstitutional. On June 28, 2012, the Supreme Court upheld the individual mandate. By virtue of ruling that the individual mandate is constitutional, the entire law remains constitutional. In its ruling, the Court did address the expansion of Medicaid required under the law, a provision that requires states to expand Medicaid to approximately 17 million additional low-income individuals up to 133 percent of the federal poverty level. Under the law, the federal government would pay the additional costs for the expansion of Medicaid for the years 2014 to 2016 and then the federal share would phase down to 90 percent by 2020. The law provided that if a state did not expand its Medicaid program eligibility to 133 percent, they would risk losing the federal share for all its Medicaid funding and not just the funding for the expansion. On this matter, the

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Supreme Court upheld the constitutionality of the Medicaid expansion but ruled that the punitive aspects of the provision are unconstitutional meaning that the federal government does not have the authority to terminate existing federal funding for Medicaid if the states do not expand Medicaid. This aspect of the ruling may cause some states to refuse to expand its Medicaid eligibility thereby limiting the number of individuals with access to health insurance.

The passage of the PPACA and the Reconciliation Act will result in a transformation of the delivery and payment for health care services in the U.S. The combination of these measures will expand health insurance coverage to an estimated 32 million Americans. In addition, there are significant health insurance reforms that are expected to improve patients’ ability to obtain and maintain health insurance. Such measures include: the elimination of lifetime caps; no rescission of policies; and no denial of coverage due to preexisting conditions. The expansion of healthcare insurance and these additional market reforms should result in greater access to the Company’s products.

Our estimate of the overall impact of healthcare reform reflects a number of uncertainties. However, we believe that the impact to our business will be largely attributable to changes in the Medicare Part D Coverage Gap, the imposition of an annual fee on branded prescription pharmaceutical manufacturers, and increased rebates in the Medicaid Fee-For-Service Program and Medicaid Managed Care plans. There are a number of other provisions in the legislation that collectively are expected to have a small impact, including originator average manufacturers’ price (AMP) for new formulations, and the expansion of 340B pricing to new entities. Certain elements of healthcare reform reduced total revenues by approximately $40 million in 2011 and will continue to have a similar impact in future years.

In the U.S., the Medicare Prescription Drug Improvement and Modernization Act of 2003 continues to provide an effective prescription drug benefit to seniors and individuals with disabilities in the Medicare program (Medicare Part D). Uncertainty will continue to exist due to Congressional proposals that have the potential to impose new costs and increase pricing pressures on the pharmaceutical industry.

In response to the U.S. debt-ceiling crisis, Congress passed the Budget Control Act of 2011 on August 2, 2011. Within the Act, Congress created the Joint Select Committee on Deficit Reduction (JSC), which was charged with issuing a formal recommendation on how to reduce the federal deficit by $1.2 trillion to $1.5 trillion over the next ten years. The Budget Control Act provided that if Congress failed to pass a deficit reduction plan by December 23, 2011, a process of sequestration would occur on January 1, 2013 which will result in across-the-board spending cuts to certain government programs, including Medicare, in order to meet the deficit reduction goal. Since the JSC failed to put forth a proposal and Congress ultimately failed to pass a deficit reduction plan, the sequestration process is scheduled to be triggered in 2013. The automatic spending cuts that would occur as a result of the sequestration process are unpalatable for many lawmakers and Congress may use the 2012 session to consider repealing the cuts by finding savings in other programs, such as Medicaid.

RESULTS OF OPERATIONS

Our quarterly results have fluctuated in the past, and may continue to fluctuate. These fluctuations are primarily due to (1) the timing of mergers, acquisitions and other business development activity, (2) the timing of new product launches, (3) purchasing patterns of our customers, (4) market acceptance of our products, (5) the impact of competitive products and products we recently acquired and (6) pricing. These fluctuations are also attributable to charges incurred for compensation related to stock compensation, amortization of intangible assets, asset impairment charges, and certain upfront, milestone and other payments made or accrued pursuant to acquisition or licensing agreements.

Consolidated Results Review

Revenues. Revenues for the three months ended September 30, 2012decreased 1% to $750.5 million. This decrease was primarily driven by reduced revenues from our AMS and Endo Pharmaceuticals segments. This fluctuation was partially offset by revenue growth from our Qualitest segment. For the nine months ended September 30, 2012, total revenues increased 16% to $2,226.3 million from the comparable 2011 period. This increase in revenues was primarily driven by revenue growth from our Endo Pharmaceuticals, Qualitest and HealthTronics segments as well as the timing of our acquisition of AMS during the second quarter of 2011, from which we derived a full period's revenue during the nine months ended September 30, 2012 compared to less than four months during the comparable 2011 period.

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The following table displays our revenues by category and as a percentage of total revenues for the three and nine months ended September 30, 2012 and 2011 (dollars in thousands). We have retrospectively revised the segment presentation for all periods presented reflecting a change from three to four reportable segments:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	$		%	$		%	$		%	$		%
Lidoderm®	$	238,282	32	$	207,364	27	$	676,302	30	$	592,929	31
Opana® ER	62,232		8	97,753		13	236,731		11	275,221		14
Voltaren® Gel	35,483		5	36,260		5	79,173		4	104,213		5
Percocet®	24,209		3	28,130		4	73,413		3	82,765		4
Frova®	15,706		2	14,815		2	45,352		2	42,186		2
Supprelin® LA	14,534		2	12,695		2	42,777		2	36,432		2
Other brands	26,199		3	28,494		4	69,257		3	65,546		3
Total Endo Pharmaceuticals*	416,645		56	425,511		56	1,223,005		55	1,199,292		62
Qualitest	166,070		22	147,975		19	471,310		21	415,431		22
AMS	113,304		15	131,519		17	371,601		17	158,331		8
HealthTronics	54,463		7	54,073		7	160,387		7	153,661		8
Total revenues*	$	750,482	100	$	759,078	100	$	2,226,303	100	$	1,926,715	100

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* – Percentages may not add due to rounding.

Lidoderm^®. Net sales of Lidoderm^® for the three and nine months ended September 30, 2012increased 15% to $238.3 million and 14% to $676.3 million, respectively, from the comparable 2011 periods. We were required to pay Hind royalties based on net sales of Lidoderm^® until this obligation expired on November 23, 2011. Hind royalties were recorded as a reduction to net sales due to the nature of the license agreement and the characteristics of the license involvement by Hind in Lidoderm^®. Due to the expiration of the Hind royalty, net sales were $22.5 million and $64.5 million higher during the three and nine months ended September 30, 2012, respectively, compared to the same periods in 2011. Lidoderm^® had solid performance this year, reflected by its double-digit growth and increase in scripts from the comparable 2011 periods, and continues to generate strong cash flow that we can use to invest in our business to continue to further diversify our revenue base. Pursuant to the Watson Settlement Agreement, we expect Watson to launch its lidocaine patch 5%, a generic version of Lidoderm^®, on September 15, 2013, negatively impacting future net sales of Lidoderm^®.

Opana^® ER. Net Sales of Opana^® ER for the three and nine months ended September 30, 2012decreased 36% to $62.2 million and 14% to $236.7 million, respectively, from the comparable 2011 periods. The revenue decrease during the three months ended September 30, 2012 was primarily related to decreased volumes associated with our transition to our formulation of Opana^® ER, designed to be crush-resistant, which we began selling in March 2012 after our first quarter supply disruption associated with the temporary shutdown of Novartis's Lincoln, Nebraska manufacturing facility. While we believe our ongoing commercial efforts, which include direct and indirect sales efforts, coupon programs, education and promotion within targeted customer channels, have contributed positively to the uptake of our crush-resistant formulation, revenues during the three months ended September 30, 2012 have not returned to historical pre-transition levels. The decrease during the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011, was driven by a combination of the reduced volumes associated with our previously discussed transition efforts as well as the direct impact of the first quarter 2012 supply disruption.

Voltaren^® Gel. Net sales of Voltaren^® Gel for the three and nine months ended September 30, 2012decreased 2% to $35.5 million and 24% to $79.2 million, respectively, from the comparable 2011 periods. Due to short-term Voltaren^® Gel supply constraints resulting from the temporary shutdown of Novartis's Lincoln, Nebraska manufacturing facility, there were no sales of Voltaren^® Gel during the three months ended March 31, 2012. In April 2012, production and sale of Voltaren^® Gel resumed. As a result of the first quarter 2012 supply constraints, sales during the second quarter of 2012 included the effects of wholesaler restocking efforts, which did not reoccur during the third quarter of 2012. On a full-year basis, we believe the supply of Voltaren^® Gel in the marketplace is returning to historical pre-shortage levels at September 30, 2012. The sales decrease during the nine months ended September 30, 2012 from the comparable 2011 period was primarily driven by the fact that we sold no Voltaren^® Gel during the first quarter of 2012. This decline was partially offset by the net effect of the market's efforts to return stock of Voltaren^® Gel to normal levels during the second quarter of 2012.

Percocet^®. Net sales of Percocet^® for the three and nine months ended September 30, 2012decreased 14% to $24.2 million and 11% to $73.4 million, respectively, from the comparable 2011 periods. These decreases were primarily attributable to reduced volumes.

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Frova^®. Net sales of Frova^® for the three and nine months ended September 30, 2012increased 6% to $15.7 million and 8% to $45.4 million from the comparable 2011 periods. These increases were primarily attributable to price increases, partially offset by reduced volumes.

Supprelin^® LA. Net sales of Supprelin^® LA for the three and nine months ended September 30, 2012increased 14% to $14.5 million and 17% to $42.8 million, respectively, from the comparable 2011 periods. These increases were driven by increases to both price and volume, resulting primarily from an increase in new patient starts and a growing base of continued care patients. We believe this growth is largely due to a strong base of national opinion leader support and ongoing efforts to streamline the treatment initiation process.

Other brands. Net sales of our other branded products for the three and nine months ended September 30, 2012decreased 8% to $26.2 million and increased 6% to $69.3 million, respectively, from the comparable 2011 periods. For the three months ended September 30, 2012, the decrease was primarily driven by decreased sales of Opana^® as demand continues to shift to Opana^® ER, partially offset by increased revenues from Valstar^® and Fortesta^® Gel. For the nine months ended September 30, 2012, the increase was primarily driven by sales growth of Vantas^®, Valstar^® and Fortesta^® Gel, partially offset by decreased sales of Opana^®.

Qualitest. Net sales of our generic products for the three and nine months ended September 30, 2012increased 12% to $166.1 million and 13% to $471.3 million, respectively, from the comparable 2011 periods. These increases were primarily driven by strong demand for Qualitest's diversified product portfolio and favorable pricing as a result of market opportunities, which drove gross profit of nearly 40%. During the three and nine months ended September 30, 2012, Qualitest's top 15 products represented approximately $97.2 million and $288.1 million, respectively, representing increases of 5% and 15%, respectively, from the comparable 2011 periods. These increases, which were largely driven by increased volumes and pricing upside, were partially offset by reduced revenues from products impacted by the supply disruption associated with the previously disclosed temporary shutdown of Novartis Consumer Health's Lincoln, Nebraska manufacturing facility.

AMS. Revenues from our AMS segment during the three months ended September 30, 2012decreased 14% to $113.3 million from the comparable 2011 period. This fluctuation was primarily due to revenues from AMS's women's and men's health lines, which decreased $8.8 million and $8.2 million, respectively, from the comparable 2011 period. The decrease in women's health revenues related primarily to a reduction in mesh procedural volumes, particularly as to pelvic organ prolapse (POP) repair procedures, which may be in response to a July 2011 update to the October 2008 Public Health Notification issued by the FDA to further advise the public and medical community regarding potential complications associated with transvaginal placement of surgical mesh to treat POP and SUI, as well as to the attorney advertising associated with the transvaginal mesh litigation. The decrease in the men's health revenues related primarily to unusually high sales volume of the AMS^® 800 artificial urinary sphincter during the three months ended September 30, 2011 as well as the impact of fluctuations in foreign currencies. The unusually high level of third quarter 2011 sales resulted from a May 2011 recall which prevented AMS from selling the AMS^® 800 leading into the third quarter of 2011 and favorably impacted third quarter 2011 sales as a result of the market's efforts to return supply of the AMS^® 800 to normal levels. AMS revenues for the nine months ended September 30, 2012increased 135% to $371.6 million from the comparable 2011 period. This increase is attributable to the timing of our acquisition of AMS, which contributed revenue during the full nine months ended September 30, 2012 compared to less than four months of revenue during the comparable 2011 period.

HealthTronics. Revenues from our HealthTronics segment for the three and nine months ended September 30, 2012increased 1% to $54.5 million and 4% to $160.4 million, respectively, from the comparable 2011 periods. These increases were primarily attributable to the revenues from the electronic medical records software companies, Intuitive Medical Software, LLC and meridianEMR, Inc. which we acquired in the second half of 2011, partially offset by the loss of sales from our IGRT business, which was sold in August 2011.

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Gross Margin, Costs and Expenses. The following table sets forth costs and expenses for the three and nine months ended September 30, 2012 and 2011 (dollars in thousands):

	Three Months Ended September 30,								Nine Months Ended September 30,
	2012					2011			2012			2011
	$			% of Revenue		$		% of Revenue	$		% of Revenue	$		% of Revenue
Cost of revenues	$	294,267		39		$	302,172	40	$	953,657	43	$	770,427	40
Selling, general and administrative	210,446			28		244,359		32	698,522		31	581,878		30
Research and development	48,952			7		43,884		6	183,067		8	126,854		7
Patent litigation settlement, net	(46,238		)	(6	)	—		—	85,123		4	—		—
Litigation-related contingencies	82,600			11		—		—	82,600		4	—		—
Asset impairment charges	11,163			1		22,691		3	54,163		2	22,691		1
Acquisition-related and integration items, net	5,776			1		5,818		1	16,580		1	29,517		2
Total costs and expenses*	$	606,966		81		$	618,924	82	$	2,073,712	93	$	1,531,367	79

_____________

* – Percentages may not add due to rounding.

Cost of Revenues and Gross Margin. For the nine months ended September 30, 2012, Cost of revenues increased 24% to $953.7 million from the comparable 2011 period. The increase during the nine months ended September 30, 2012 was primarily driven by increased revenues and our June 2011 acquisition of AMS, which contributed approximately $122.0 million to our Cost of revenues during the nine months ended September 30, 2012 compared to $75.5 million during the nine months ended September 30, 2011. Our full year 2012 Cost of revenues amount was also impacted by the first quarter charge of $110.0 million related to the 2010 Impax Settlement Agreement and the offsetting $6.0 million of income recognized in the third quarter of 2012 resulting from a subsequent change in estimate with respect to this liability. Cost of revenues for the three months ended September 30, 2012decreased 3% to $294.3 million when compared to the three months ended September 30, 2011. This decrease was primarily driven by the $6.0 million of income related to the change in estimate recognized with respect to the Impax Settlement Agreement liability. Gross profit margins for the three and nine months ended September 30, 2012 were 61% and 57%, respectively, compared to 60% during both the three and nine months ended September 30, 2011. The increase in gross profit margin for the three months ended September 30, 2012 was also primarily driven by the change in estimate recognized with respect to the Impax Settlement Agreement liability. The decrease in gross profit margin for the nine months ended September 30, 2012 was primarily due to changes in the mix of revenues and the corresponding margins.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three and nine months ended September 30, 2012decreased 14% to $210.4 million and increased 20% to $698.5 million, respectively, from the comparable 2011 periods. The decrease during the three months ended September 30, 2012 was primarily driven by the results of ongoing, company-wide efforts to reduce costs. Additionally, during the three months ended September 30, 2012, we incurred expenses of $7.7 million related to certain integration costs and separation benefits incurred in connection with continued efforts to enhance the Company’s operations, which was down from $12.3 million during the three months ended September 30, 2011. The increase during the nine months ended September 30, 2012 was primarily attributable to the timing of our acquisition of AMS and the inclusion, during the nine months ended September 30, 2012, of $204.0 million of AMSSelling, general and administrative expense, representing a full nine months of AMS expense, compared to $89.3 million in the comparable 2011 periods, representing less than four months of AMSSelling, general and administrative expense.

Research and Development Expenses. Research and development expenses for the three and nine months ended September 30, 2012increased 12% to $49.0 million and 44% to $183.1 million, respectively, from the comparable 2011 periods. The increase during the nine months ended September 30, 2012 relates primarily to the addition of AMS's research and development portfolio upon our June 2011 acquisition of AMS. Due to the timing of our AMS acquisition, AMS incurred Research and development expenses during the entire nine month period ended September 30, 2012, as compared to a partial period's expense during the nine months ended September 30, 2011. The remaining increases during both the three and nine months ended September 30, 2012 are primarily attributable to the inclusion of $2.5 million of certain integration costs and separation benefits, classified as Research and development expense, that were incurred during the three months ended September 30, 2012 in connection with continued efforts to enhance the Company’s operations, as well as the progress of our portfolio’s development and the expansion of our efforts in the pharmaceutical discovery and device research and development areas. During the three and nine months ended September 30, 2012 we incurred $3.9 million and $53.7 million, respectively, in expense related to milestones classified as Research and development expense compared to $2.4 million and $18.3 million, respectively, in the comparable 2011 periods.

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Patent Litigation Settlement, net. On May 28, 2012, Endo Pharmaceuticals Inc. (EPI) entered into a Settlement and License Agreement (the Watson Settlement Agreement) among EPI and Teikoku, on the one hand, and Watson, on the other hand. The Watson Settlement Agreement settled all ongoing patent litigation among the parties relating to Watson’s generic version of Lidoderm^®. Under the terms of the Watson Settlement Agreement, the parties dismissed their respective claims and counterclaims without prejudice. As part of the settlement, Watson agreed not to challenge the validity or enforceability of Endo’s and Teikoku’s patents relating to Lidoderm^® with respect to Watson’s generic version of Lidoderm^®. Watson also agreed not to sell its generic version of Lidoderm^® until it received FDA approval and, in any event, no sooner than September 15, 2013, except in limited specific circumstances (such date being the Start Date). Endo and Teikoku agreed to grant Watson a license permitting the sale of generic Lidoderm^® upon the Start Date in the United States. The license to Watson is exclusive as to Endo’s launch of an authorized generic version of Lidoderm^® until the earlier of 1) the introduction of a generic version of Lidoderm^® by a company other than Watson, or 2) seven and a half months after Watson launches its generic version of Lidoderm^®. Endo will receive an at market royalty equal to 25% of the gross profit generated on Watson's sales of its generic version of Lidoderm^® during Watson's period of exclusivity.

Additionally, the Watson Settlement Agreement provides that Endo and Teikoku will provide, at no cost, to Watson’s wholesaler affiliate branded Lidoderm^® product for Watson’s wholesaler affiliate’s distribution, subject to certain terms and conditions as follows:

• Beginning on January 1, 2013 through August 1, 2013, Endo and Teikoku will provide branded Lidoderm^® of value totaling $12.0 million each month ($96.0 million in total for 2013) (valued at the then-prevailing wholesale acquisition cost). The obligation of Endo and Teikoku to provide this branded product at no cost terminates immediately upon the launch of a third party’s generic version of Lidoderm^® in the United States, including its territories, possessions and the Commonwealth of Puerto Rico (the Territory).

• In the event Watson does not receive final FDA approval of its generic version of Lidoderm^® by January 1, 2014, then beginning on January 1, 2014 through December 1, 2014, Endo and Teikoku will provide branded Lidoderm^® product of value totaling $6.7 million each month ($80.0 million in total for 2014) (valued at the then-prevailing wholesale acquisition cost). The obligation of Endo and Teikoku to provide this branded product at no cost terminates immediately upon the earlier of (a) the final FDA approval of Watson’s generic version of Lidoderm^® or (b) the launch of a third party’s generic version of Lidoderm^® in the Territory.

• In the event Watson does not receive final FDA approval of its generic version of Lidoderm^® by January 1, 2015, then beginning on January 1, 2015 through September 1, 2015, Endo and Teikoku will provide branded Lidoderm^® product of value totaling $7.1 million each month ($64.0 million in total for 2015) (valued at the then-prevailing wholesale acquisition cost). The obligation of Endo and Teikoku to provide this branded product at no cost terminates immediately upon the earlier of (a) the final FDA approval of Watson’s generic version of Lidoderm^® or (b) the launch of a third party’s generic version of Lidoderm^® in the Territory.

Endo will be responsible for the payment of all gross to net adjustments arising from Watson's sale of the branded Lidoderm^® product.

In contemplation of the Watson Settlement Agreement, Teikoku has agreed to provide a rebate to Endo equal to 50% of the cost of branded Lidoderm^® product that is required to be provided to Watson's wholesaler affiliate pursuant to Section 3(b), 3(c) and 3(d) of the Watson Settlement Agreement.

The Company has concluded that the Watson Settlement Agreement is a multiple-element arrangement and during the second quarter of 2012 recognized a liability and corresponding charge of $131.4 million in Patent litigation settlement, net in the Condensed Consolidated Statements of Operations representing the initial estimated fair value of the settlement component. Fair value of the settlement component was estimated using the probability adjusted expected value of branded Lidoderm^® product to be provided to Watson at the anticipated wholesaler acquisition cost (WAC) expected to be in place at the time of shipment, less a reasonable estimate of Watson's selling costs. The resultant probability-weighted values were then discounted using a discount rate of 5.1%.

The Company believes that the level and timing of branded Lidoderm^® product to be shipped, discount rate, and probabilities used in the model appropriately reflect market participant assumptions. Because the liability is recorded at fair value using WAC, the net charge recognized in 2012 is comprised of several elements, including our cost of product to be shipped, estimated gross-to-net deductions to be paid by the Company and the estimated product profit margin. We believe this is the most appropriate measure of fair value as these components combined represent the value accruing to Watson. As a result of using a fair value measurement, the charge will be greater than the actual cost to the Company. As such, relief of the liability in subsequent periods through shipments of branded Lidoderm^® product will result in income, which we expect to record as a component of Other (income) expense, net in the Company's Condensed Consolidated Statements of Operations. We intend to reclassify the portion of the settlement liability related to the gross-to-net component into our gross-to-net reserves as product is shipped to Watson, the effect of which will be to offset a portion of the income that will be recognized into Other (income) expense, net in the Company's Condensed Consolidated Statements of Operations, as the settlement liability is relieved. The rebate arrangement with Teikoku will also be accounted for prospectively as product purchased from Teikoku will be recorded into inventory at the discounted purchase price and relieved as shipments are made to Watson. The benefit associated with this rebate will be recorded as a component of Other (income) expense, net in the Company's Condensed Consolidated Statements of Operations. Future changes, if any, resulting from revisions to the timing or the amount of the

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original estimate will be recognized as an increase or a decrease in the carrying amount of the litigation settlement liability and the related Patent litigation settlement, net during the period of change. Future changes in estimates to the settlement liability could have a material impact on our results of operations.

On August 23, 2012, Watson announced it received FDA approval on its ANDA for its lidocaine patch 5%, a generic version of Lidoderm^®. The Company anticipates Watson will launch its generic version of Lidoderm^® on September 15, 2013 pursuant to the terms of the Watson Settlement Agreement. In light of Watson's anticipated September 2013 launch, the Company reassessed its obligation to Watson and believes it will not be obligated to provide to Watson’s wholesaler affiliate branded Lidoderm^® product beyond September 2013. Accordingly, in the third quarter of 2012, the Company recognized a change in estimate with respect to its obligation and reduced its liability associated with the Watson Settlement Agreement by $46.2 million to $85.1 million. The corresponding gain of $46.2 million was recorded in Patent litigation settlement, net in the Condensed Consolidated Statements of Operations.

Litigation-Related Contingencies.Litigation-related contingencies for both the three and nine months ended September 30, 2012 totaled $82.6 million in expense. This amount relates to charges associated with certain of our legal proceedings as described in more detail in Note 12. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Asset Impairment Charges. Asset impairment charges for the three and nine months ended September 30, 2012 were $11.2 million and $54.2 million, respectively, compared to $22.7 million in the each of the comparable 2011 periods. These impairment charges, as well as an assessment for an additional potential impairment charge, are further discussed below.

AMS IPR&D Impairment

As a result of market and potential regulatory changes affecting the commercial potential in the United States for one of the AMS IPR&D assets, the Company determined that the asset's carrying value was no longer fully recoverable. Accordingly, in the second quarter of 2012, we recorded a pre-tax non-cash impairment charge of $3.0 million, which was assigned to our AMS segment and was recorded in the Asset impairment charges line of our Condensed Consolidated Statements of Operations. The fair value of this asset was determined using a discounted cash flow model, or income approach. This fair value measurement technique is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. Changes in any of the assumptions used in determining the fair value of this asset may result in a further reduction to its estimated fair value and could result in additional and potentially full future impairment charges of up to $1.0 million.

Sanctura XR^® Impairment

Pursuant to the Sanctura XR^® Amended and Restated License, Commercialization and Supply Agreement with Allergan USA, Inc. (Allergan), the Company receives royalties based on net sales of Sanctura XR^® made by Allergan. In March 2009, Watson Pharmaceutical Inc. (Watson) filed an Abbreviated New Drug Application (ANDA) seeking FDA approval to market generic versions of Sanctura XR^® before the expiration of Allergan’s patents listed in the Orange Book. Subsequent to Watson’s ANDA filing, Sandoz Inc. and Paddock Laboratories, Inc. (acquired by Perrigo Company in August 2011) also filed ANDAs for a generic version of Sanctura XR^®. In April 2012, the U.S. District Court for the District of Delaware ruled that five patents covering Allergan’s Sanctura XR^® (trospium chloride) extended-release capsules were invalid. The Company appealed this ruling, and subsequently in June 2012, our appeal was dismissed.

As part of our first quarter 2012 Form 10-Q filing, the Company concluded that an impairment assessment was required to evaluate the recoverability of the indefinite-lived intangible asset. In accordance with the applicable accounting guidance, the Company assessed the recoverability of this asset by comparing its carrying amount to its forecasted undiscounted future cash flows and determined that its carrying value exceeded its undiscounted future cash flows, indicating an impairment existed. The Company then determined the fair value of the Sanctura XR^® intangible asset to be $21.6 million at March 31, 2012. Accordingly, the Company recorded a pre-tax non-cash impairment charge of $40.0 million in March 2012, representing the difference between the carrying value of the intangible asset and its estimated fair value.

To estimate fair value, we assessed the estimates of the amount and timing of future cash flows from royalties and milestones received from Allergan related to net sales of the product. To calculate the fair value of the Sanctura XR^® intangible asset during the first quarter of 2012, the Company used an income approach using a discounted cash flow model considering management’s current evaluation of the above mentioned factors. The Company utilized probability-weighted cash flow models using a present value discount factor commensurate with the overall risk associated with this particular product. The cash-flow models included our best estimates of future royalties from Allergan related to sales of Sanctura XR^® in light of generic competition. At the time of this assessment, the Company believed that the level and timing of cash flows assumed, discount rate and probabilities used in the model appropriately reflected market participant assumptions.

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In October 2012, Watson announced that it had received FDA approval for its generic version of Sanctura XR^® and that it intended to begin shipping its product immediately. As a result of this announcement, the Company concluded that an additional impairment assessment was required. Accordingly, the Company again evaluated the recoverability of the asset and determined that an impairment existed. Using a valuation model similar to that described above, and assumptions that we presently believe reflect market participant assumptions, the fair value of the Sanctura XR^® intangible asset was determined to be $5.0 million at September 30, 2012. Accordingly, the Company recorded an additional pre-tax non-cash impairment charge of $11.2 million in September 2012, representing the difference between the carrying value of the intangible asset and its estimated fair value. The remaining net book value will be amortized over a shortened useful life commensurate with the expected rate of erosion due to generic competition. The above mentioned impairment charges, which were assigned to our Endo Pharmaceuticals segment, were recognized in earnings and included in the Asset impairment charges line item in the Condensed Consolidated Statements of Operations. Changes in any of our assumptions may result in a further reduction to the estimated fair value of the Sanctura XR^® intangible asset and could result in additional and potentially full future impairment charges.

Opana^® ER Impairment Assessment

From September 21, 2012 through November 1, 2012, EPI and its partner Grünenthal received Paragraph IV Notices from each of Teva, Amneal, Sandoz and ThoRx advising of the filing by each such company of an ANDA for a generic version of the formulation of Opana^® ER designed to be crush-resistant. EPI intends, and has been advised by Grünenthal that they too intend, to vigorously defend the intellectual property rights covering Opana^® ER and to pursue all available legal and regulatory avenues in defense of Opana^® ER, including enforcement of the product's intellectual property rights and approved labeling. However, there can be no assurance that we will be successful. If we are unsuccessful and Teva, Amneal, Sandoz or ThoRx is able to obtain FDA approval of its product, it may be able to launch a generic version of Opana^® ER prior to the applicable patents' expirations in 2023, 2024, 2025 and 2029 respectively.

While the original formulation of Opana^® ER is safe and effective when taken as prescribed, it was nevertheless subject to abuse, misuse and diversion. Consequently, our subsidiary, EPI discontinued from sale for safety reasons all strengths of Opana^® ER approved under New Drug Application (NDA) No. 021610 and notified the FDA of this discontinuation. As a result, the FDA moved Opana^® ER to the Discontinued List section of the Agency's Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book). On August 13, 2012, EPI submitted a Citizen Petition with the FDA requesting that it (1) determine that the discontinued, non-crush-resistant version of Opana^® ER approved under NDA No. 021610 was discontinued for safety and can no longer serve as a Reference List Drug (RLD) for an ANDA or generic applicant; (2) refuse to approve any pending ANDA for a generic version of the non-crush resistant version of Opana^® ER approved under NDA No. 021610; and (3) suspend and withdraw the approval of any ANDA referencing Opana^® ER approved under NDA No. 021610 as the RLD. The petition emphasizes the potential widespread availability of non-crush resistant generics of all strengths of Opana^® ER in early 2013 and calls into question whether generics can properly be marketed in view of the discontinuation of Opana^® ER for safety reasons.

On August 31, 2012, EPI submitted an additional Citizen Petition requesting that the FDA (1) require that any ANDA referencing the crush-resistant formulation of Opana^® ER contain data and information demonstrating that the proposed ANDA product is similarly crush resistant; (2) classify extended-release opioid formulations incorporating crush-resistant technologies, such as the new Opana^® ER, as new dosage forms in Appendix C of the FDA's Orange Book; and (3) confirm that any ANDA referencing Opana^® ER approved under NDA No. 021610 will not be identified in the Orange Book as therapeutically equivalent to the crush-resistant formulation of Opana^® ER. The petition emphasizes that the abuse of prescription opioid analgesics is at the center of a major public health crisis of addiction, misuse, abuse, overdose and death and that objective criteria are required to evaluate whether a formulation is truly crush-resistant. Other than an acknowledgment of receipt, we have received no response from the FDA to either Citizen Petition.

In light of the recent receipt of the Paragraph IV Notices on the crush-resistant formulation of Opana^® ER, we concluded that an impairment assessment was required to evaluate the recoverability of the Opana^® ER indefinite-lived intangible assets and performed this analysis in conjunction with our third quarter 2012 10-Q filing. In performing this assessment, we calculated the anticipated undiscounted cash flows related to Opana^® ER on a probability-weighted basis, considering the potential outcomes that could result from the recent regulatory developments discussed in the above paragraphs, and concluded that no impairment charge was required at September 30, 2012. Changes in any of the assumptions used in determining the fair value of this asset may result in the need for future impairment testing, which could result in future impairment charges.

Other Impairment Charges

In July 2008, the Company made a $20 million investment in a privately-held company focused on the development of an innovative treatment for certain types of cancer. In September 2011, we impaired our investment in this privately-held company due to the negative clinical trial results related to its lead asset. Accordingly, we wrote off our investment in its entirety and recorded an impairment charge of $22.7 million.

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Acquisition-Related and Integration Items, net. Acquisition-related and integration items, net for the three and nine months ended September 30, 2012 were $5.8 million in expense and $16.6 million in expense, respectively, compared to $5.8 million in expense and $29.5 million in expense, respectively, in the comparable 2011 periods. Acquisition-related and integration items, net for the three and nine months ended September 30, 2012 and 2011 primarily consisted of transaction fees including legal, separation, integration, and other expenses for our acquisitions as well as changes in the fair value of acquisition-related contingent consideration.

Interest Expense, net. The components of interest expense, net for the three and nine months ended September 30, 2012 and 2011 are as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Interest expense	$	45,620		$	52,939		$	138,706		$	97,587
Interest income	(115		)	(147		)	(320		)	(445		)
Interest expense, net	$	45,505		$	52,792		$	138,386		$	97,142

Interest expense during the three and nine months ended September 30, 2012 was $45.6 million and $138.7 million, respectively, compared with $52.9 million and $97.6 million, respectively, in the comparable 2011 periods. The decrease during the three months ended September 30, 2012 was primarily attributable to decreases in our average total indebtedness resulting from continued repayments of the term loan indebtedness that originated in June 2011. The increase during the nine months ended September 30, 2012 was primarily attributable to increases in our average total indebtedness resulting from our June 2011 borrowings of $900.0 million of senior notes and $2.2 billion of term loan indebtedness in connection with our June 2011 acquisition of AMS.

Net Loss on Extinguishment of Debt. In February 2012, we made a prepayment of $205.0 million on our Term Loan B Facility. We made additional prepayments of $33.0 million and $39.7 million in July 2012 and September 2012, respectively. In accordance with the applicable accounting guidance for debt modifications and extinguishments, approximately $5.4 million of the remaining unamortized financing costs were written off in connection with our February 2012 prepayment and additional $1.8 million was written off in connection with the third quarter 2012 prepayments. These amounts were included in the Condensed Consolidated Statements of Operations as a Net loss on extinguishment of debt.

In June 2011, upon establishing our 2011 Credit Facility, we terminated our then existing credit facility. Unamortized financing costs associated with the prior credit facility totaled approximately $14.7 million on June 17, 2011. In accordance with the applicable accounting guidance for debt modifications and extinguishments, approximately $8.5 million of this amount was written off in June 2011 and included in the Condensed Consolidated Statements of Operations as a Net loss on extinguishment of debt.

Other (Income) Expense, Net.Other (income) expense, net for the three and nine months ended September 30, 2012 was $0.3 million in income and $0.5 million in expense, respectively, which compares to $3.0 million in income and $2.8 million in income, respectively, in the comparable 2011 periods.

Income Tax. The effective income tax rate was 29.3% and (142.7)% for the three and nine months ended September 30, 2012, respectively, compared to 37.7% and 34.3% for the three and nine months ended September 30, 2011, respectively.

Income tax for the three months ended September 30, 2012decreased 17% to $28.3 million of expense from $34.1 million of expense during the three months ended September 30, 2011. This decrease was due to an increase in income before income tax and a decrease in the effective tax rate. The decrease in the effective tax rate was primarily driven by the establishment of an $8.5 million valuation allowance in the comparable 2011 period against an anticipated capital loss on our cost method investment in a privately held company. A benefit of $5.8 million was also recorded during the three months ended September 30, 2012 for the release of reserves established for uncertain tax positions due to the expiration of federal and state statute of limitations for assessments. A similar benefit of $4.2 million was recorded in the comparable prior period for the release of reserves on uncertain tax positions due to the expiration of federal and state statute of limitations.

Income tax for the nine months ended September 30, 2012 totaled $9.3 million of benefit compared to $100.3 million of expense during the nine months ended September 30, 2011. This fluctuation was primarily driven by a decrease in income before income tax, the establishment of an $8.5 million valuation allowance in the comparable 2011 period against an anticipated capital loss on our cost method investment in a privately held company and the recording of a $6.3 million benefit for a prior period adjustment during the second quarter of 2012 related to the reversal of a 2010 capital loss valuation allowance recorded in connection with our acquisition of HealthTronics, Inc. The valuation allowance was reversed because of a 2011 transaction that resulted in a realized ordinary loss for income tax purposes. A benefit of $5.8 million was also recorded during the nine months ended September 30, 2012 for the release of reserves established for uncertain tax positions due to the expiration of federal and state statute of limitations for

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assessments. A similar benefit of $7.9 million was recorded in the comparable prior period for the release of reserves on uncertain tax positions due to the expiration of statute of limitations and an IRS audit settlement for the tax years 2006 through 2008.

2012 Outlook. We estimate that our 2012 total revenues will be approximately $3.05 billion. Our estimate is based on the continued growth of both our Qualitest and Endo Pharmaceuticals portfolios—driven by ongoing prescription demand for our key inline products, including Lidoderm^®, Opana^® ER, and Voltaren^® Gel—and the full-year effect of the AMS acquisition. Cost of revenues as a percent of total revenues is expected to increase when compared to 2011. This increase is expected due to a full year of amortization expense associated with the intangible assets acquired with AMS as well as growth in lower margin generic and branded pharmaceutical products in 2012, partially offset by a full year’s revenues from the AMS acquisition. Selling, general and administrative expenses as a percentage of revenues are expected to decline in 2012 relative to 2011, reflecting new approaches to customer segmentation and marketing, annualized effects of the prior year’s cost reduction efforts, forecasted synergies associated with our AMS acquisition, as well as 2012 operating efficiency improvements and redeployment of flexible spending. The total amount of selling, general and administrative expenses will increase year over year, however, reflecting the full year effects of our acquisitions. Research and development expenses are expected to increase due to the addition of AMS’s research and development portfolio to our existing programs, the progress of our branded pharmaceutical portfolio’s development, as well as the expansion of our efforts in the pharmaceutical discovery and device research and development areas. Of course, there can be no assurance that the Company will achieve these results.

Business Segment Results Review

In the fourth quarter of 2011, as a result of our strategic planning process, the Company’s executive leadership team reorganized the manner in which it views our various business activities. Management’s intention was to enhance its level of understanding of the entity’s performance, better assess its prospects and future cash flow potential and ultimately make more informed operating decisions about resource allocation and the enterprise as a whole. Based on this change, we reassessed our reporting structure under the applicable accounting guidance and determined that the Company now has four reportable segments: (1) Endo Pharmaceuticals, (2) Qualitest, (3) AMS and (4) HealthTronics. We have retrospectively revised the segment presentation for all periods presented reflecting the change from three to four reportable segments. Additionally, concurrent with the Company’s May 2012 enterprise-wide rebranding initiative and corporate name change, the Company changed the names of its reportable segments to better align with these efforts. These changes to our segments have no impact on the Company’s Condensed Consolidated Financial Statements for all periods presented. Each segment derives revenue from the sales or licensing of their respective products or services and is discussed below.

We evaluate segment performance based on each segment’s adjusted income (loss) before income tax, a financial measure not determined in accordance with GAAP. We define adjusted income (loss) before income tax as income (loss) before income tax before certain upfront and milestone payments to partners, acquisition-related and integration items, net, cost reduction and integration-related initiatives, asset impairment charges , amortization of intangible assets related to marketed products and customer relationships, inventory step-up recorded as part of our acquisitions, non-cash interest expense, and certain other items that the Company believes do not reflect its core operating performance.

Certain corporate general and administrative expenses are not allocated and are therefore included within Corporate unallocated. We calculate consolidated adjusted income (loss) before income tax by adding the adjusted income (loss) before income tax of each of our reportable segments to corporate unallocated adjusted income (loss) before income tax.

We refer to adjusted income (loss) before income tax in making operating decisions because we believe it provides meaningful supplemental information regarding the Company’s operational performance. For instance, we believe that this measure facilitates its internal comparisons to its historical operating results and comparisons to competitors’ results. The Company believes this measure is useful to investors in allowing for greater transparency related to supplemental information used by us in our financial and operational decision-making. In addition, we have historically reported similar financial measures to our investors and believe that the inclusion of comparative numbers provides consistency in our financial reporting at this time. Further, we believe that adjusted income (loss) before income tax may be useful to investors as we are aware that certain of our significant stockholders utilize adjusted income (loss) before income tax to evaluate our financial performance. Finally, adjusted income (loss) before income tax is utilized in the calculation of adjusted diluted net income per share, which is used by the Compensation Committee of Endo’s Board of Directors in assessing the performance and compensation of substantially all of our employees, including our executive officers.

There are limitations to using financial measures such as adjusted income (loss) before income tax. Other companies in our industry may define adjusted income (loss) before income tax differently than we do. As a result, it may be difficult to use adjusted income (loss) before income tax or similarly named adjusted financial measures that other companies may use to compare the performance of those companies to our performance. Because of these limitations, adjusted income (loss) before income tax should not be considered as a measure of the income generated by our business or discretionary cash available to us to invest in the growth of our business. The Company compensates for these limitations by providing reconciliations of our consolidated adjusted income (loss) before income tax to our consolidated income before income tax, which is determined in accordance with U.S. GAAP and included in our Condensed Consolidated Statements of Operations

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Endo Pharmaceuticals

The Endo Pharmaceuticals segment includes a variety of branded prescription products related to treating and managing pain as well as our urology, endocrinology and oncology products. The marketed products that are included in this segment include Lidoderm^®, Opana^® ER, Percocet^®, Voltaren^® Gel, Frova^®, Supprelin^® LA, Vantas^®, Valstar^® and Fortesta^® Gel.

Qualitest

The Qualitest segment is comprised of our legacy Endo non-branded generics portfolio and the portfolio from the Qualitest Pharmaceuticals business, which we acquired in 2010. Our generics business has historically focused on selective generics related to pain that have one or more barriers to market entry, such as complex formulation, regulatory or legal challenges or difficulty in raw material sourcing. With the addition of Qualitest Pharmaceuticals, the segment’s product offerings now include products in the pain management, urology, central nervous system (CNS) disorders, immunosuppression, oncology, women’s health and hypertension markets, among others.

AMS

The AMS segment currently focuses on providing technology solutions to physicians treating men’s and women’s pelvic health conditions and operates in the following business lines: men’s health, women’s health, and BPH therapy. These business lines are discussed in greater detail within Note 5. Acquisitions in the Condensed Consolidated Financial Statements. We distribute devices through our direct sales force and independent sales representatives in the U.S., Canada, Australia, and Western Europe. Additionally, we distribute devices through foreign independent distributors, primarily in Europe, Asia, and South America, who then sell the products to medical institutions. None of our devices customers or distributors accounted for ten percent or more of our total revenues during the three or nine months ended September 30, 2012 or 2011. Foreign subsidiary sales are predominantly to customers in Canada, Australia and Western Europe.

HealthTronics

The HealthTronics segment provides urological services, products and support systems to urologists, hospitals, surgery centers and clinics across the U.S. These services are sold through the following business lines: lithotripsy services, prostate treatment services, anatomical pathology services, medical products manufacturing, sales and maintenance and electronic medical records services.

Revenues. The following table displays our revenue by reportable segment for the three and nine months ended September 30, 2012 and 2011 (dollars in thousands):  

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Net revenues to external customers
Endo Pharmaceuticals	$	416,645	$	425,511	$	1,223,005	$	1,199,292
Qualitest	166,070		147,975		471,310		415,431
AMS(1)	113,304		131,519		371,601		158,331
HealthTronics	54,463		54,073		160,387		153,661
Total consolidated net revenues to external customers	$	750,482	$	759,078	$	2,226,303	$	1,926,715

_____________

(1) The following table displays our AMS segment revenue by geography (in thousands). International revenues were not material to any of our other segments for any of the periods presented.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
AMS:
United States	$	75,480	$	91,807	$	246,385	$	107,378
International	37,824		39,712		125,216		50,953
Total AMS revenues	$	113,304	$	131,519	$	371,601	$	158,331

Endo Pharmaceuticals. Revenues from our Endo Pharmaceuticals segment for the three and nine months ended September 30, 2012decreased 2% to $416.6 million and increased 2% to $1,223.0 million, respectively, from the comparable 2011 periods. The decrease during the three months ended September 30, 2012 was primarily attributable to decreased revenue from Opana^® ER, partially offset by an increase from Lidoderm^®. The increase during the nine months ended September 30, 2012 was primarily driven by increased revenues from Lidoderm^®, partially offset by decreases from Voltaren^® Gel and Opana^® ER.

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Qualitest. Net sales of our generic products for the three and nine months ended September 30, 2012increased 12% to $166.1 million and 13% to $471.3 million, respectively, from the comparable 2011 periods. These increases were primarily driven by strong demand for Qualitest's diversified product portfolio and favorable pricing as a result of market opportunities, which drove gross profit of nearly 40%. During the three and nine months ended September 30, 2012, Qualitest's top 15 products represented approximately $97.2 million and $288.1 million, respectively, representing increases of 5% and 15%, respectively, from the comparable 2011 periods. These increases, which were largely driven by increased volumes and pricing upside, were partially offset by reduced revenues from products impacted by the supply disruption associated with the previously disclosed temporary shutdown of Novartis Consumer Health's Lincoln, Nebraska manufacturing facility.

AMS. Revenues from our AMS segment during the three months ended September 30, 2012decreased 14% to $113.3 million from the comparable 2011 period. This fluctuation was primarily due to revenues from AMS's women's and men's health lines, which decreased $8.8 million and $8.2 million, respectively, from the comparable 2011 period. The decrease in women's health revenues related primarily to a reduction in mesh procedural volumes, particularly as to pelvic organ prolapse (POP) repair procedures, which may be in response to a July 2011 update to the October 2008 Public Health Notification issued by the FDA to further advise the public and medical community regarding potential complications associated with transvaginal placement of surgical mesh to treat POP and SUI, as well as to the attorney advertising associated with the transvaginal mesh litigation. The decrease in the men's health revenues related primarily to unusually high sales volume of the AMS^® 800 artificial urinary sphincter during the three months ended September 30, 2011 as well as the impact of fluctuations in foreign currencies. The unusually high level of third quarter 2011 sales resulted from a May 2011 recall which prevented AMS from selling the AMS^® 800 leading into the third quarter of 2011 and favorably impacted third quarter 2011 sales as a result of the market's efforts to return supply of the AMS^® 800 to normal levels. AMS revenues for the nine months ended September 30, 2012increased 135% to $371.6 million from the comparable 2011 period. This increase is attributable to the timing of our acquisition of AMS, which contributed revenue during the full nine months ended September 30, 2012 compared to less than four months of revenue during the comparable 2011 period.

HealthTronics. Revenues from our HealthTronics segment for the three and nine months ended September 30, 2012increased 1% to $54.5 million and 4% to $160.4 million, respectively, from the comparable 2011 periods. These increases were primarily attributable to the revenues from the electronic medical records software companies, Intuitive Medical Software, LLC and meridianEMR, Inc. which we acquired in the second half of 2011, partially offset by the loss of sales from our IGRT business, which was sold in August 2011.

Adjusted income before income tax. The following table displays our adjusted income (loss) before income tax by reportable segment for the three and nine months ended September 30, 2012 and 2011 (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Adjusted income (loss) before income tax
Endo Pharmaceuticals	$	216,728		$	231,887		$	624,927		$	634,762
Qualitest	45,840			26,932			132,500			74,445
AMS	21,081			35,272			77,383			45,005
HealthTronics	16,639			19,483			42,053			49,665
Corporate unallocated	(73,854		)	(93,844		)	(249,934		)	(217,145		)
Total consolidated adjusted income before income tax	$	226,434		$	219,730		$	626,929		$	586,732

Endo Pharmaceuticals. Adjusted income before income tax during the three and nine months ended September 30, 2012decreased 7% to $216.7 million and 2% to $624.9 million, respectively, from the comparable 2011 periods. The decrease for the three months ended September 30, 2012 was primarily attributable to decreased sales of Opana^® ER, partially offset by increased sales of Lidoderm^®. The decrease for the nine months ended September 30, 2012 was primarily driven by decreased expense associated with our company-wide efforts to reduce costs. Additionally, despite the increase in total revenues for the segment, total gross margin decreased due to the revenue mix during the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011.

Qualitest. Adjusted income before income tax during the three and nine months ended September 30, 2012increased 70% to $45.8 million and 78% to $132.5 million, respectively, from the comparable 2011 periods. These increases were primarily driven by the continued revenue growth of our generics business. Additionally, price increases on certain of our generics products resulted in higher overall margins in our Qualitest segment.

AMS. Adjusted income before income tax during the three and nine months ended September 30, 2012decreased 40% to $21.1 million and increased 72% to $77.4 million, respectively, from the comparable 2011 periods. The decrease for the three months ended September 30, 2012 was primarily attributable to reduced revenues from AMS's men's and women's health lines. The increase for the

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nine months ended September 30, 2012 was primarily driven by the timing of our June 2011 acquisition of AMS, which contributed a full period's results during the nine months ended September 30, 2012, compared to less than four months in the comparable 2011 period.

HealthTronics. Adjusted income before income tax during the three and nine months ended September 30, 2012decreased 15% to $16.6 million and 15% to $42.1 million, respectively, from the comparable 2011 periods. These decreases were primarily driven by costs incurred associated with the two electronic medical records software companies, Intuitive Medical Software, LLC and meridianEMR, Inc., that we acquired in the second half of 2011.

Corporate unallocated. Corporate unallocated adjusted loss before income tax during the three and nine months ended September 30, 2012decreased 21% to $73.9 million and increased 15% to $249.9 million, respectively, from the comparable 2011 periods. The decrease for the three months ended September 30, 2012 was primarily attributable to the previously discussed decrease in interest expense as well as company-wide reductions to Selling, general and administrative expense. The increase for the nine months ended September 30, 2012 was primarily driven by the previously discussed increase in interest expense.

Reconciliation to GAAP. The table below provides reconciliations of our consolidated adjusted income before income tax to our consolidated income (loss) before income tax, which is determined in accordance with U.S. GAAP, for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Total consolidated adjusted income before income tax	$	226,434		$	219,730		$	626,929		$	586,732
Upfront and milestone payments to partners	(5,338		)	(2,355		)	(56,905		)	(27,346		)
Asset impairment charges	(11,163		)	(22,691		)	(54,163		)	(22,691		)
Acquisition-related and integration items, net	(5,776		)	(5,818		)	(16,580		)	(29,517		)
Separation benefits and other cost reduction initiatives	(11,590		)	(13,603		)	(26,958		)	(17,598		)
Amortization of intangible assets	(58,735		)	(58,846		)	(170,659		)	(136,501		)
Inventory step-up	—			(23,937		)	(880		)	(40,718		)
Non-cash interest expense	(5,209		)	(4,754		)	(15,354		)	(14,014		)
Net loss on extinguishment of debt	(1,789		)	—			(7,215		)	(8,548		)
Accrual for payment to Impax related to sales of Opana® ER	6,000			—			(104,000		)	—
Patent litigation settlement items, net	46,238			—			(85,123		)	—
Litigation-related contingencies	(82,600		)	—			(82,600		)	—
Other income (expense), net	—			2,636			—			2,636
Total consolidated income (loss) before income tax	$	96,472		$	90,362		$	6,492		$	292,435

LIQUIDITY AND CAPITAL RESOURCES

Our principal source of liquidity is cash generated from operations. Our principal liquidity requirements are for working capital for operations, licenses, milestone payments, capital expenditures and debt service payments. The Company continues to maintain a sufficient level of working capital, which was approximately $356.9 million at September 30, 2012 compared to $666.3 million at December 31, 2011. Historically, we have generated positive cash flow from operating activities and have had broad access to financial markets that provide liquidity. Cash, cash equivalents and current marketable securities were approximately $256.9 million at September 30, 2012 compared to $547.6 million at December 31, 2011. Cash and cash equivalents at September 30, 2012 and December 31, 2011 primarily consisted of bank deposits, time deposits and money market funds.

In 2012, we expect that sales of our currently marketed branded and generic products as well as our devices and our services will allow us to continue to generate positive cash flow from operations. We expect cash generated from operations together with our cash, cash equivalents and current marketable securities to be sufficient to cover cash needs for working capital, general corporate expenses, the payment of contractual obligations including scheduled principal and interest payments on our outstanding borrowings, capital expenditures, common stock repurchases and any regulatory and/or sales milestones that may become due.

Beyond 2012, we expect cash generated from operations together with our cash, cash equivalents and marketable securities to continue to be sufficient to cover cash needs for working capital and general corporate purposes, certain acquisitions of other businesses, including the potential payments related to contingent cash consideration obligations, litigation contingencies, the Impax Settlement Agreement, products, product rights, or technologies, the payment of contractual obligations including principal and

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interest payments on our indebtedness and our Revolving Credit Facility (defined below), and certain minimum royalties due to Novartis and the regulatory or sales milestones that may become due. At this time, we cannot accurately predict the effect of certain developments on the rate of sales growth, such as the degree of market acceptance, patent protection and exclusivity of our products, the impact of competition, the effectiveness of our sales and marketing efforts and the outcome of our current efforts to develop, receive approval for and successfully launch our near-term product candidates. Any of the above could adversely affect our future cash flows. We may need to obtain additional funding for future strategic transactions, to repay our outstanding indebtedness, or for our future operational needs, and we cannot be certain that funding will be available on terms acceptable to us, or at all.

We may also elect to incur additional debt or issue equity or convertible securities to finance ongoing operations, acquisitions or to meet our other liquidity needs. Any issuances of equity securities or convertible securities could have a dilutive effect on the ownership interest of our current shareholders and may adversely impact net income per share in future periods. An acquisition may be accretive or dilutive and by its nature, involves numerous risks and uncertainties.

A description of our current debt agreements is below.

Credit Facility. On June 17, 2011, we established a $1,500 million, five-year senior secured term loan facility (the Term Loan A Facility), a $700 million, seven-year senior secured term loan facility (the Term Loan B Facility, and, together with the Term Loan A Facility, the Term Loan Facilities), and a $500 million, five-year senior secured revolving credit facility (the 2011 Revolving Credit Facility and, together with the Term Loan Facilities, the 2011 Credit Facility) with Morgan Stanley Senior Funding, Inc., as administrative agent, Bank of America, N.A., as Syndication Agent, and certain other lenders. The 2011 Credit Facility was established primarily to finance our acquisition of AMS and is available for working capital, general corporate purposes and lines of credit. The agreement governing the 2011 Credit Facility (the 2011 Credit Agreement) also permits up to $500 million of additional revolving or term loan commitments from one or more of the existing lenders or other lenders with the consent of Morgan Stanley Senior Funding, Inc. (the administrative agent) without the need for consent from any of the existing lenders under the 2011 Credit Facility.

The obligations of the Company under the 2011 Credit Facility are guaranteed by certain of the Company’s domestic subsidiaries and are secured by substantially all of the assets of the Company and the subsidiary guarantors. The 2011 Credit Facility contains certain usual and customary covenants, including, but not limited to covenants to maintain maximum leverage and minimum interest coverage ratios. Borrowings under the 2011 Credit Facility bear interest at an amount equal to a rate calculated based on the type of borrowing and the Company’s Leverage Ratio. For term A loans and revolving loans (other than Swing Line Loans), the Company is permitted to elect to pay interest based on an adjusted LIBOR rate plus between 1.75% and 2.50% or an Alternate Base Rate (as defined in the 2011 Credit Agreement) plus between 0.75% and 1.50%. For term B loans, the Company may elect to pay interest based on an adjusted LIBOR rate plus 3.00% or an Alternate Base Rate plus 2.00%. The Company will pay a commitment fee of between 37.5 to 50 basis points, payable quarterly, on the average daily unused amount of the Revolving Credit Facility.

In February 2012, we made a prepayment of $205.0 million on our Term Loan B Facility. We made additional prepayments of $33.0 million and $39.7 million in July 2012 and September 2012, respectively.

7.00% Senior Notes Senior Notes due 2019. On June 8, 2011, we entered into an indenture among the Company, the guarantors named therein and Wells Fargo Bank, National Association, as trustee, which governs the terms of the Company’s $500.0 million aggregate principal amount of 7.00% Senior Notes due 2019 (the 2019 Notes). The 2019 Notes were issued in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the Securities Act) to qualified institutional buyers in accordance with Rule 144A and to persons outside of the United States pursuant to Regulation S under the Securities Act. The 2019 Notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries. The Company used the net proceeds of the 2019 Notes offering to partially finance the acquisition of AMS, and to pay related fees and expenses.

The 2019 Notes bear interest at a rate of 7.00% per year, accruing from June 8, 2011. Interest on the 2019 Notes is payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2012. The 2019 Notes will mature on July 15, 2019, subject to earlier repurchase or redemption in accordance with the terms of the indenture governing the 2019 Notes. The indenture governing the 2019 Notes contains covenants that, among other things, restrict the Company’s ability and the ability of certain of its restricted subsidiaries to incur certain additional indebtedness and issue preferred stock; make certain dividends, distributions, investments and other restricted payments; sell certain assets; agree to any restrictions on the ability of restricted subsidiaries to make payments to the Company; create certain liens; enter into transactions with affiliates; designate subsidiaries as unrestricted subsidiaries; and consolidate, merge or sell substantially all of the Company’s assets. These covenants are subject to a number of important exceptions and qualifications, including the fall away or revision of certain of these covenants upon the 2019 Notes receiving investment grade credit ratings.

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7.00% Senior Notes Senior Notes due 2020. On November 23, 2010, we entered into an indenture among the Company, the guarantors named therein and Wells Fargo Bank, National Association, as trustee, which governs the terms of the Company’s $400.0 million aggregate principal amount of 7.00% Senior Notes due 2020 (the 2020 Notes). The 2020 Notes were issued in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the Securities Act) to qualified institutional buyers in accordance with Rule 144A and to persons outside of the United States pursuant to Regulation S under the Securities Act. The 2020 Notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries. The Company used the net proceeds of the 2020 Notes offering to partially finance the acquisition of Qualitest Pharmaceuticals, and to pay related fees and expenses.

The 2020 Notes bear interest at a rate of 7.00% per year, accruing from November 23, 2010. Interest on the 2020 Notes is payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2011. The 2020 Notes will mature on December 15, 2020, subject to earlier repurchase or redemption in accordance with the terms of the indenture governing the 2020 Notes. The indenture governing the 2020 Notes contains covenants that, among other things, restrict the Company’s ability and the ability of certain of its restricted subsidiaries to incur certain additional indebtedness and issue preferred stock; make certain dividends, distributions, investments and other restricted payments; sell certain assets; agree to any restrictions on the ability of restricted subsidiaries to make payments to the Company; create certain liens; enter into transactions with affiliates; designate subsidiaries as unrestricted subsidiaries; and consolidate, merge or sell substantially all of the Company’s assets. These covenants are subject to a number of important exceptions and qualifications, including the fall away or revision of certain of these covenants upon the 2020 Notes receiving investment grade credit ratings.

7.25% Senior Notes Senior Notes due 2022. On June 8, 2011, we entered into an indenture among the Company, the guarantors named therein and Wells Fargo Bank, National Association, as trustee, which governs the terms of the Company’s $400.0 million aggregate principal amount of 7.25% Senior Notes due 2022 (the 2022 Notes). The 2022 Notes were issued in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the Securities Act) to qualified institutional buyers in accordance with Rule 144A and to persons outside of the United States pursuant to Regulation S under the Securities Act. The 2022 Notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries. The Company used the net proceeds of the 2022 Notes offering to partially finance the acquisition of AMS, and to pay related fees and expenses.

The 2022 Notes bear interest at a rate of 7.25% per year, accruing from June 8, 2011. Interest on the 2022 Notes is payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2012. The 2022 Notes will mature on January 15, 2022, subject to earlier repurchase or redemption in accordance with the terms of the indenture governing the 2022 Notes. The indenture governing the 2022 Notes contains covenants that, among other things, restrict the Company’s ability and the ability of certain of its restricted subsidiaries to incur certain additional indebtedness and issue preferred stock; make certain dividends, distributions, investments and other restricted payments; sell certain assets; agree to any restrictions on the ability of restricted subsidiaries to make payments to the Company; create certain liens; enter into transactions with affiliates; designate subsidiaries as unrestricted subsidiaries; and consolidate, merge or sell substantially all of the Company’s assets. These covenants are subject to a number of important exceptions and qualifications, including the fall away or revision of certain of these covenants upon the 2022 Notes receiving investment grade credit ratings.

1.75% Convertible Senior Subordinated Notes due 2015. As discussed in Note 15. Debt to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Report, in April 2008, we issued $379.5 million in aggregate principal amount of 1.75% Convertible Senior Subordinated Notes due April 15, 2015 (the Convertible Notes) in a private offering for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

We received proceeds of approximately $370.7 million from the issuance, net of the initial purchaser’s discount and certain other costs of the offering. Interest is payable semiannually in arrears on each April 15 and October 15 with the first interest payment being made on October 15, 2008. The Convertible Notes will mature on April 15, 2015, unless earlier converted or repurchased by us.

Holders of the Convertible Notes may convert their notes based on a conversion rate of 34.2466 shares of our common stock per $1,000 principal amount of notes (the equivalent of $29.20 per share), subject to adjustment upon certain events, only under the following circumstances as described in the indenture for the Convertible Notes: (1) during specified periods, if the price of our common stock reaches specified thresholds; (2) if the trading price of the Convertible Notes is below a specified threshold; (3) at any time after October 15, 2014; or (4) upon the occurrence of certain corporate transactions. We will be permitted to deliver cash, shares of Endo common stock or a combination of cash and shares, at our election, to satisfy any future conversions of the notes. It is our current intention to settle the principal amount of any conversion consideration in cash.

The Convertible Notes are only included in the dilutive net income per share calculation using the treasury stock method during periods in which the average market price of our common stock was above the applicable conversion price of the Convertible Notes, or $29.20 per share. In these periods, under the treasury stock method, we calculated the number of shares issuable under the terms of

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these notes based on the average market price of the stock during the period, and included that number in the total diluted shares outstanding for the period.

We have entered into convertible note hedge and warrant agreements that, in combination, have the economic effect of reducing the dilutive impact of the Convertible Notes. However, we separately analyze the impact of the convertible note hedge and the warrant agreements on diluted weighted average shares outstanding. As a result, the purchases of the convertible note hedges are excluded because their impact would be anti-dilutive. The treasury stock method is applied when the warrants are in-the-money with the proceeds from the exercise of the warrant used to repurchase shares based on the average stock price in the calculation of diluted weighted average shares. Until the warrants are in-the-money, they have no impact to the diluted weighted average share calculation. The total number of shares that could potentially be included if the warrants were exercised is approximately 13.0 million.

The following table provides the range of shares that would be included in the dilutive net income per share calculation for the Convertible Notes and warrants based on share price sensitivity (in thousands except per share data):

	Three Months Ended March 31, 2012							(1)		Three Months Ended June 30, 2012
	-5%		Actual			+5%		+10%		-5%		Actual			+5%		+10%
Average market price of Endo common stock:	$	34.66	$	36.48		$	38.30	$	40.13	$	31.58	$	33.24		$	34.90	$	36.56
Impact on dilutive shares:
Convertible Notes	2,047		2,594			3,088		3,540		979		1,581			2,123		2,616
Warrants	—		—			—		42		—		—			—		—
	2,047		2,594		(2)	3,088		3,582		979		1,581		(3)	2,123		2,616
	Three Months Ended September 30, 2012
	-5%		Actual			+5%		+10%
Average market price of Endo common stock:	$	29.88	$	31.45		$	33.02	$	34.60
Impact on dilutive shares:
Convertible Notes	296		929			1,504		2,028
Warrants	—		—			—		—
	296		929		(3)	1,504		2,028

_____________

(1) Because the Company reported a Net loss attributable to Endo Health Solutions Inc. during the three months ended March 31, 2012, the Convertible Notes and Warrants had no dilutive impact during the three months ended March 31, 2012 and would not have had a dilutive impact given any of the assumed share prices above. Therefore, these amounts are included for informational purposes only and are not indicative of actual results or results that would have occurred given the assumed share prices above.

(2) Represents, for the three months ended March 31, 2012, the amount that would have been included in total diluted shares outstanding of 117.1 million had the Company reported Net income attributable to Endo Health Solutions Inc. as opposed to a Net loss attributable to Endo Health Solutions Inc.

(3) Amount included in total diluted shares outstanding of 121.1 million and 119.6 million for the three months ended June 30, 2012 and September 30, 2012, respectively.

3.25% Convertible AMS Notes Due 2036 and 4.00% Convertible AMS Notes Due 2041. As a result of our acquisition of AMS, the Company assumed AMS’s 3.25% Convertible Notes due 2036 (the 2036 Notes) and 4.00% Convertible Notes due 2041 (the 2041 Notes and, together with the 2036 Notes, the AMS Notes). In accordance with the indentures governing the AMS Notes, the AMS Notes were immediately convertible upon the closing of Endo’s acquisition of AMS. From the AMS Acquisition Date until the make whole premium on the 2036 Notes expired on August 9, 2011, we paid $95.7 million to redeem $61.4 million of the 2036 Notes at a stated premium of 1.5571. From the AMS Acquisition Date until the make whole premium on the 2041 Notes expired on August 1, 2011, we paid $423.4 million to redeem $249.9 million of the 2041 Notes at a stated premium of 1.6940. Our obligation remaining related to the AMS Notes is less than $1.0 million at September 30, 2012, excluding accrued interest.

Share Repurchase Programs. In April 2008, our Board of Directors approved a share repurchase program (the 2008 Share Repurchase Program), authorizing the Company to repurchase in the aggregate up to $750 million of shares of its outstanding common stock. In August 2012, our Board of Directors resolved to cancel and terminate the 2008 Share Repurchase Program, effective immediately, and approve a new share repurchase program (the 2012 Share Repurchase Program). The 2012 Share Repurchase Program authorizes the Company to repurchase in the aggregate up to $450 million of shares of its outstanding common stock. Purchases under this program may be made from time to time in open market purchases, pre-set purchase programs, privately-negotiated transactions, and accelerated stock buyback agreements. This program does not obligate Endo to acquire any particular

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amount of common stock. Future repurchases, if any, will depend on factors such as levels of cash generation from operations, cash requirements for investment in the Company’s business, repayment of future debt, if any, then current stock price, market conditions, securities law limitations and other factors. The share repurchase program may be suspended, modified or discontinued at any time. The 2012 Share Repurchase Program is set to expire on March 31, 2015.

Pursuant to our share repurchase programs, we purchased approximately 4.7 million shares of our common stock during the nine month period ended September 30, 2012 totaling $156.0 million and approximately 0.9 million shares of our common stock during the nine month period ended September 30, 2011 totaling $34.7 million.

Employee Stock Purchase Plan. At our Annual Meeting of Stockholders held in May of 2011, our shareholders approved the Endo Health Solutions Inc. Employee Stock Purchase Plan (the ESPP). The ESPP is a Company-sponsored plan that enables employees to voluntarily elect, in advance of any of the four quarterly offering periods ending March 31, June 30, September 30 and December 31 of each year, to contribute up to 10% of their eligible compensation, subject to certain limitations, to purchase shares of common stock at 85% of the lower of the closing price of Endo common stock on the first or last trading day of each offering period. The maximum number of shares that a participant may purchase in any calendar year is equal to $25,000 divided by the closing selling price per share of our common stock on the first day of the offering period, subject to certain adjustments. Compensation expense is calculated in accordance with the applicable accounting guidance and is based on the share price at the beginning or end of each offering period and the purchase discount. Obligations under the ESPP may be satisfied by the reissuance of treasury stock, by the Company’s purchase of shares on the open market or by the authorization of new shares. The maximum number of shares available under the ESPP, pursuant to the terms of the ESPP plan document, is one percent of the common shares outstanding on April 15, 2011 or approximately 1.2 million shares. The ESPP shall continue in effect until the earlier of (i) the date when no shares of Stock are available for issuance under the ESPP, at which time the ESPP shall be suspended pursuant to the terms of the ESPP plan document, or (ii) December 31, 2022, unless earlier terminated. Compensation expense related to the ESPP totaled $1.1 million during the nine months ended September 30, 2012. The Company issued 170,124 shares from treasury totaling $4.6 million during the nine months ended September 30, 2012 pursuant to the ESPP.

Marketable Securities. In June 2012, our remaining auction-rate securities were called at par and we received proceeds of $18.8 million. Prior to being sold, these auction-rate securities had been classified as available-for-sale securities and had therefore been maintained at their fair value, with changes in value being recorded as part of Other comprehensive income (loss), net. Due to the fact that we received proceeds equal to par, the auction-rate securities were adjusted to their fair value of $18.8 million, with a corresponding gain to Other comprehensive income (loss), net. The previously recognized cumulative unrealized holding loss associated with these securities of $1.5 million was reversed in its entirety. As a result, no gain or loss was realized.

Working Capital. Working capital decreased to $356.9 million as of September 30, 2012 from $666.3 million as of December 31, 2011. The components of our working capital as of September 30, 2012 and December 31, 2011 are below (in thousands):

	September 30, 2012			December 31, 2011
Total current assets	$	1,712,499		$	1,788,096
Less: total current liabilities	(1,355,632		)	(1,121,778		)
Working Capital	$	356,867		$	666,318

Working capital decreased primarily due to the use of cash to prepay $277.7 million of our Term Loan indebtedness that had been classified as a non-current liability, the $85.1 million accrual for payments to Watson related to the Lidoderm^® litigation settlement, all of which was accrued as a current liability, net repurchases of Common stock totaling $151.4 million and net purchases of Property, plant and equipment of $89.0 million. These decreases were offset by Net cash provided by operating activities of $297.1 million, cash received for the settlement of non-current marketable securities during the nine months ended September 30, 2012 totaling $18.8 million and the fluctuation in income taxes payable/receivable, which totaled a $39.2 million receivable at September 30, 2012 compared to a $35.4 million payable at December 31, 2011.

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The following table summarizes our Condensed Consolidated Statements of Cash Flows and liquidity for the nine months ended September 30, 2012 and 2011 (dollars in thousands):

	Nine Months Ended September 30,
	2012			2011
Net cash flow provided by (used in):
Operating activities	$	297,132		$	418,531
Investing activities	(79,157		)	(2,367,188		)
Financing activities	(508,773		)	1,901,717
Effect of foreign exchange rate	95			397
Net increase in cash and cash equivalents	$	(290,703	)	$	(46,543	)
Cash and cash equivalents, beginning of period	$	547,620		$	466,214
Cash and cash equivalents, end of period	$	256,917		$	419,671
Current ratio	1.3:1			1.7:1
Days sales outstanding	49			46

Net cash provided by operating activities. Net cash provided by operating activities was $297.1 million for the nine months ended September 30, 2012 compared to $418.5 millionprovided by operating activities for the nine months ended September 30, 2011. Significant components of our operating cash flows for the nine months ended September 30, 2012 and 2011 are as follows (in thousands):

	Nine Months Ended September 30,
	2012			2011
Cash Flow Data-Operating Activities:
Consolidated net income	$	15,755		$	192,152
Depreciation and amortization	211,780			169,187
Stock-based compensation	44,532			34,224
Amortization of debt issuance costs and premium / discount	27,101			24,283
Deferred income taxes	(87,379		)	(13,847		)
Change in fair value of acquisition-related contingent consideration	28			(7,458		)
Net loss on extinguishment of debt	7,215			8,548
Asset impairment charges	54,163			22,691
Changes in assets and liabilities which provided (used) cash	23,735			(11,748		)
Other, net	202			499
Net cash provided by operating activities	$	297,132		$	418,531

The fluctuation in Net cash provided by operating activities was primarily attributable to our overall results of operations during the first nine months of 2012, which were negatively impacted by the previously disclosed supply disruptions related to the temporary shutdown of Novartis Consumer Health Inc.'s Lincoln, Nebraska manufacturing facility, compared to the first nine months of 2011. During the nine months ended September 30, 2012, we recorded Consolidated net income of $15.8 million compared to Consolidated net income of $192.2 million in the comparable 2011 period. The fluctuation in Net cash provided by operating activities was also impacted by timing of cash receipts and payments affecting working capital.

Net cash used in investing activities. Net cash used in investing activities was $79.2 million for the nine months ended September 30, 2012 compared to net cash used in investing activities of $2.4 billion during the same period of 2011. The change is primarily related to the June 2011 acquisition of AMS which used net cash of $2.4 billion during the nine months ended September 30, 2011.

Net cash (used in) provided by financing activities. Net cash used in financing activities was $508.8 million for the nine months ended September 30, 2012 compared to net cash provided by financing activities of $1.9 billion during the nine months ended September 30, 2011. The change was primarily a result of our June 2011 debt restructuring, which provided net cash of $1.9 billion during the nine months ended September 30, 2011. During the nine months ended September 30, 2012, we made repayments of $334.0 million on our Term Loan indebtedness and repurchased common stock totaling $156.0 million,

Research and Development. Over the past few years, we have incurred significant expenditures related to conducting clinical studies to develop new products and exploring the value of our existing products in treating disorders beyond those currently approved

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in their respective labels. We may seek to mitigate the risk in, and expense of, our research and development programs by entering into collaborative arrangements with third parties. However, we intend to retain a portion of the commercial rights to these programs and, as a result, we still expect to spend significant funds on our share of the cost of these programs, including the costs of research, preclinical development, clinical research and manufacturing.

We expect to continue to incur significant levels of research and development expenditures as we focus on the development and advancement of our product pipeline. There can be no assurance that results of any ongoing or future pre-clinical or clinical trials related to these projects will be successful, that additional trials will not be required, that any drug or product under development will receive FDA approval in a timely manner or at all, or that such drug or product could be successfully manufactured in accordance with U.S. current Good Manufacturing Practices, or successfully marketed in a timely manner, or at all, or that we will have sufficient funds to develop or commercialize any of our products.

As of December 31, 2011, Aveed^TM (testosterone undecanoate) represents the primary development product from the Indevus acquisition. Aveed^TM is expected to be the first long-acting injectable testosterone preparation available in the U.S. for the treatment of male hypogonadism in the growing market for testosterone replacement therapies. Aveed^TM had historically been referred to as Nebido^®. On May 6, 2009, we received notice from the FDA that Nebido^® was unacceptable as a proprietary name for testosterone undecanoate. In August 2009, we received approval from FDA to use the name Aveed^TM. On May 18, 2010, a new patent covering Aveed^TM was issued by the U.S. Patent and Trademark Office. The patent's expiration date is March 14, 2027. The Company acquired U.S. rights to Aveed^TM from Schering AG, Germany, in July 2005. In June 2008, Indevus (now Endo Pharmaceuticals Solutions Inc.) received an approvable letter from the FDA indicating that the NDA may be approved if the Company is able to adequately respond to certain clinical deficiencies related to the product. In September 2008, agreement was reached with the FDA with regard to the additional data and risk management strategy. In March 2009, the FDA accepted for review the complete response submission to the new drug application for Aveed^TM intramuscular injection. On December 2, 2009, we received a complete response letter from the FDA regarding Aveed^TM in response to our March 2009 complete response submission. In the complete response letter, the FDA requested information from Endo to address the agency's concerns regarding very rare but serious adverse events, including post-injection anaphylactic reaction and pulmonary oily microembolism. In 2010 and 2011, we met with the FDA to discuss the existing clinical data provided to the FDA as well as the potential path-forward. As a follow up to our meeting with FDA in 2011, The Company has now had the opportunity to conduct an extensive review of all clinical study and post-marketing data and intends to submit a complete response to FDA by the end of 2012. The outcome of future communications with the FDA could have a material impact on (1) management's assessment of the overall probability of approval, (2) the timing of such approval, (3) the targeted indication or patient population and (4) the likelihood of additional clinical trials.

Urocidin^TM is a patented formulation of Mycobacterial Cell Wall-DNA Complex (MCC) developed by Bioniche Life Sciences Inc. (Bioniche) for the treatment of non-muscle-invasive bladder cancer. In July 2009, the Company entered into a License, Development and Supply Agreement with Bioniche, whereby the Company licensed from Bioniche the exclusive rights to develop and market Urocidin^TM in the U.S. with an option for global rights. We exercised our option for global rights in the first quarter of 2010. As a result of recent discussions with the FDA regarding the current Urocidin^TM phase III clinical trial, the Company's subsidiary, Endo Pharmaceuticals, has decided to end the study before its scheduled completion. Endo Pharmaceuticals, and its partner Bioniche, are considering potential next steps for the program.

Manufacturing, Supply and Other Service Agreements. We contract with various third-party manufacturers and suppliers to provide us with raw materials used in our products, finished goods and certain services. Our most significant agreements are with Novartis Consumer Health, Inc., Novartis AG, Teikoku Seiyaku Co., Ltd., Mallinckrodt Inc., Noramco, Inc., Grünenthal GMBH, Sharp Corporation, and Ventiv Commercial Services, LLC. If, for any reason, we are unable to obtain sufficient quantities of any of the finished goods or raw materials or components required for our products, it could have a material adverse effect on our business, financial condition, results of operations and cash flows. For a complete description of commitments under manufacturing, supply and other service agreements, Note 12. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

License and Collaboration Agreements. We have agreed to certain contingent payments in certain of our license, collaboration and other agreements. Payments under these agreements generally become due and payable only upon the achievement of certain developmental, regulatory, commercial and/or other milestones. Due to the fact that it is uncertain if and when these milestones will be achieved, such contingencies have not been recorded in our Condensed Consolidated Balance Sheets. In addition, under certain arrangements, we may have to make royalty payments based on a percentage of future sales of the products in the event regulatory approval for marketing is obtained. From a business perspective, we view these payments favorably as they signify that the products are moving successfully through the development phase toward commercialization. For a complete description of our contingent payments involving our license and collaboration agreements, see Note 8. License and Collaboration Agreements and Note 12. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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Corporate Headquarters Lease. On October 28, 2011, our subsidiary Endo Pharmaceuticals Inc. entered into a lease agreement with RT/TC Atwater LP, a Delaware limited partnership, for a new Company headquarters to consist of approximately 300,000 square feet of office space located at 1400 Atwater Boulevard, Malvern, Pennsylvania. The term of this triple net lease is 12 years and includes three renewal options, each for an additional sixty-month period. The lease is expected to commence early in 2013 with a monthly lease rate for the initial year of $0.5 million, increasing by 2.25% each year thereafter. Under the terms of this lease, we will have a continuous and recurring right throughout the initial 4 years of the lease term to lease up to approximately 150,000 additional square feet. We are responsible for all tenant improvement costs, less a tenant improvement allowance of $45 per square foot.

This lease is accounted for as a direct financing arrangement whereby the Company will record, over the construction period, the full cost of the asset in Property, plant and equipment, net. At September 30, 2012, the Company has capitalized $44.3 million as Property, plant and equipment related to this arrangement. The building and leasehold improvements will be depreciated over the initial lease term. A corresponding liability is also being recorded, net of leasehold improvements paid for by the Company and will be amortized over the expected lease term through monthly rental payments using an effective interest method. At September 30, 2012, the Company has recorded a liability of $22.9 million related to this arrangement.

In connection with the relocation of our corporate headquarters from Chadds Ford, Pennsylvania to Malvern, Pennsylvania, we anticipate incurring ongoing costs of $12.8 million related to our existing lease obligations, including remaining rent and certain other related costs. We expect to record a liability for these costs upon the effective cease use date of the lease early in 2013.

Acquisitions. As part of our business strategy, we plan to consider and, as appropriate, make acquisitions of other businesses, products, product rights or technologies. Our cash reserves and other liquid assets may be inadequate to consummate such acquisitions and it may be necessary for us to issue stock or raise substantial additional funds in the future to complete future transactions. In addition, as a result of our acquisition efforts, we are likely to experience significant charges to earnings for merger and related expenses (whether or not our efforts are successful) that may include transaction costs, closure costs or costs of restructuring activities.

American Medical Systems Holdings, Inc. (AMS)

On June 17, 2011 (the AMS Acquisition Date), the Company completed its acquisition of all outstanding shares of common stock of AMS for approximately $2.4 billion in aggregate consideration, including $70.8 million related to existing AMS stock-based compensation awards and certain other amounts, at which time AMS became a wholly-owned, indirect subsidiary of the Company. AMS’s shares were purchased at a price of $30.00 per share.

AMS is a worldwide developer and provider of technology solutions to physicians treating men’s and women’s pelvic health conditions. The AMS business and applicable services include:

Men’s Health.

AMS supplies surgical solutions for the treatment of male urinary incontinence, the involuntary release of urine from the body. The fully implantable AMS 800^® system includes an inflatable urethral cuff to restrict flow through the urethra and a control pump that allows the patient to discreetly open the cuff when he wishes to urinate. Since 2000, AMS has also been selling the InVance^® sling system, a less-invasive procedure for men with moderate incontinence, and in 2007, AMS released the AdVance^® sling system for the treatment of mild to moderate stress urinary incontinence. AMS also offers the UroLume^® endoprosthesis stent as a less invasive procedure for patients who may not be good surgical candidates, as well as for men suffering from bulbar urethral strictures.

AMS also supplies penile implants to treat erectile dysfunction, the inability to achieve or maintain an erection sufficient for sexual intercourse, with a series of semi-rigid malleable prostheses and a complete range of more naturally functioning inflatable prostheses, including the AMS 700^® MS. AMS has refined its implants over the years with improvements to the AMS 700^® series of inflatable prostheses, including the AMS 700 LGX^® and the MS Pump^®. Another key factor that distinguishes AMS’s products is the use of the InhibiZone^® antibiotic coating, which received U.S. Food and Drug Administration (FDA) approval in July 2009 for AMS’s product claim that InhibiZone^® reduces the rate of revision surgery due to surgical infections.

Women’s Health.

AMS offers a broad range of systems, led by Monarc^® and MiniArc^®, to treat female stress urinary incontinence, which generally results from a weakening of the tissue surrounding the bladder and urethra which can be a result of pregnancy, childbirth and aging. Monarc^® incorporates unique helical needles to place a self-fixating, sub-fascial hammock through the obturator foramin. AMS’s MiniArc^® Single-Incision Sling for stress incontinence was released in 2007 and requires just one incision to surgically place a small sling under the urethra, which minimizes tissue disruption and potential for blood loss, thereby allowing the procedure to be done with less anesthesia on an outpatient basis. In 2010, AMS launched the MiniArc^® Precise^TM, which is designed to enhance the ease and accuracy of placement of the MiniArc device.

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AMS also offers solutions for pelvic floor prolapse and other pelvic floor disorders, which may be caused by pregnancy, labor, and childbirth. In 2008, AMS introduced the Elevate^® transvaginal pelvic floor repair system, with no external incisions. Using an anatomically designed needle and self-fixating tips, Elevate^® allows for safe, simple and precise mesh placement through a single vaginal incision. The posterior system was launched in 2008 and the anterior system was launched in 2009.

BPH Therapy.

AMS’s products can be used to relieve restrictions on the normal flow of urine from the bladder caused by bladder obstructions, generally the result of BPH or bulbar urethral strictures. AMS offers men experiencing a physical obstruction of the prostatic urethra an alternative to a transurethral resection of the prostate (TURP), with the GreenLight^TM photovaporization of the prostate. This laser therapy is designed to reduce the comorbidities associated with TURP. AMS’s GreenLight^TM XPS and MoXy^TM Liquid Cooled Fiber provide shorter treatment times with similar long-term results compared to other laser systems. The GreenLight^TM laser system offers an optimal laser beam that balances vaporization of tissue with coagulation to prevent blood loss and providing enhanced surgical control compared to other laser systems. AMS also offers the StoneLight^® laser and SureFlex^TM fiber optics for the treatment of urinary stones. StoneLight^® is a lightweight and portable 15-watt holmium laser that offers the right amount of power to effectively fragment most urinary stones. The SureFlex^TM fiber optic line is engineered to deliver more energy safely and effectively, even under maximum scope deflection, for high performance holmium laser lithotripsy.

AMS’s TherMatrx^® product is designed for those men not yet to the point of urethral obstruction, but for whom symptomatic relief is desired. It is a less-invasive tissue ablation technique that can be performed in a physician’s office using microwave energy delivered to the prostate.

The acquisition of AMS furthers Endo’s evolution from a pharmaceutical product-driven company to a healthcare solutions provider, strengthens our leading core urology franchise and expands our presence in the medical devices market. We believe the combination of AMS with Endo’s existing platform will provide additional cost-effective solutions across the entire urology spectrum.

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The operating results of AMS from and including June 18, 2011 are included in the accompanying Condensed Consolidated Statements of Operations. The Condensed Consolidated Balance Sheet as of September 30, 2012 reflects the acquisition of AMS. The following table summarizes the fair values of the assets acquired and liabilities assumed at the AMS Acquisition Date (in thousands):

	June 17, 2011 (As adjusted)
Cash and cash equivalents	$	47,289
Commercial paper	71,000
Accounts receivable	73,868
Other receivables	630
Inventories	74,988
Prepaid expenses and other current assets	7,133
Income taxes receivable	9,154
Deferred income taxes	15,432
Property, plant and equipment	56,413
Other intangible assets	1,260,000
Other assets	4,581
Total identifiable assets	$	1,620,488
Accounts payable	$	10,327
Accrued expenses	45,835
Deferred income taxes	416,745
Long-term debt	520,375
Other liabilities	25,891
Total liabilities assumed	$	1,019,173
Net identifiable assets acquired	$	601,315
Goodwill	1,798,661
Net assets acquired	$	2,399,976

The above estimated fair values of assets acquired and liabilities assumed are based on the information that was available as of the AMS Acquisition Date to estimate the fair value of assets acquired and liabilities assumed. Our measurement period adjustments were complete as of June 30, 2012. Measurement period adjustments related primarily to revisions in estimated cash flows for certain products after obtaining additional information regarding facts and circumstances existing as of the AMS Acquisition Date.

87

The valuation of the intangible assets acquired and related amortization periods are as follows:

	Valuation (in millions)		Amortization Period (in years)
Customer Relationships:
Men’s Health	$	97.0	17
Women’s Health	37.0		15
BPH	26.0		13
Total	$	160.0	16
Developed Technology:
Men’s Health	$	690.0	18
Women’s Health	150.0		9
BPH	161.0		18
Total	$	1,001.0	16
Tradename:
AMS	$	45.0	30
GreenLight	12.0		15
Total	$	57.0	27
In Process Research & Development:
Oracle	$	12.0	n/a
Genesis	14.0		n/a
TOPAS	8.0		n/a
Other(1)	8.0		n/a
Total	$	42.0	n/a
Total other intangible assets	$	1,260.0	n/a

_____________

(1) A subsequent pre-tax non-cash impairment charge of $3.0 million was recorded in the second quarter of 2012. This impairment charge is further discussed in Note 9. Goodwill and Other Intangibles.

The fair value of the developed technology, IPR&D and customer relationship assets were estimated using a discounted present value income approach. Under this method, an intangible asset’s fair value is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To calculate fair value, the Company used cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company believes that the level and timing of cash flows appropriately reflect market participant assumptions. The fair value of the AMS and GreenLight tradenames were estimated using an income approach, specifically known as the relief from royalty method. The relief from royalty method is based on a hypothetical royalty stream that would be received if the Company were to license the AMS or GreenLight tradename. Thus, we derived the hypothetical royalty income from the projected revenues of AMS and GreenLight products, respectively. Cash flows were assumed to extend through the remaining economic useful life of each class of intangible asset.

The $1,798.7 million of goodwill has been assigned to our AMS segment (formerly our Devices segment). The goodwill recognized is attributable primarily to strategic and synergistic opportunities across the entire urology spectrum, expected corporate synergies, the assembled workforce of AMS and other factors. Approximately $16.5 million of goodwill is expected to be deductible for income tax purposes.

Deferred tax assets of $15.4 million are related primarily to federal net operating loss and credit carryforwards of AMS and its subsidiaries. Deferred tax liabilities of $416.7 million are related primarily to the difference between the book basis and tax basis of identifiable intangible assets.

88

The Company recognized $1.8 million and $4.1 million of AMS acquisition-related and integration costs that were expensed during the three months ended September 30, 2012 and 2011, respectively. These costs are included in Acquisition-related and integration items, net in the accompanying Condensed Consolidated Statements of Operations and are comprised of the following items (in thousands):

	Three Months Ended September 30,
	2012		2011
Bank fees	$	—	$	—
Legal, separation, integration, and other costs	1,848		4,069
Total	$	1,848	$	4,069

The Company recognized $5.2 million and $27.3 million of AMS acquisition-related and integration costs that were expensed during the nine months ended September 30, 2012 and 2011, respectively. These costs are included in Acquisition-related and integration items, net in the accompanying Condensed Consolidated Statements of Operations and are comprised of the following items (in thousands):

	Nine Months Ended September 30,
	2012		2011
Bank fees	$	—	$	16,070
Legal, separation, integration, and other costs	5,174		11,263
Total	$	5,174	$	27,333

The following supplemental pro forma information presents the financial results as if the acquisition of AMS had occurred on January 1, 2011 for the nine months ended September 30, 2011. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been made on January 1, 2011, nor are they indicative of any future results.

	Nine Months Ended September 30, 2011
Pro forma consolidated results (in thousands, except per share data):
Revenue	$	2,165,091
Net income attributable to Endo Health Solutions Inc.	$	130,389
Basic net income per share	$	1.12
Diluted net income per share	$	1.07

These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of AMS to reflect factually supportable adjustments that give effect to events that are directly attributable to the AMS Acquisition, including borrowings to finance the acquisition as well as the additional depreciation and amortization that would have been charged assuming the fair value adjustments primarily to property, plant and equipment, inventory, and intangible assets, had been applied on January 1, 2011, together with the consequential tax effects.

Other

In the second half of 2011, as part of our effort to increase and broaden the relationships within the urology community, we acquired two electronic medical records software companies, Intuitive Medical Software, LLC and meridianEMR, Inc., which individually and combined represent immaterial acquisitions. These acquisitions provide electronic medical records for urologists. Together, these acquisitions provide access to more than 2,000 urologists using data platforms that will enhance service offerings in urology practice management.

Acquisition-Related Contingent Consideration. On November 30, 2010, Endo acquired Qualitest Pharmaceuticals, which was party to an asset purchase agreement with Teva Pharmaceutical Industries Ltd (Teva) (the Teva Agreement). Pursuant to this agreement, Qualitest Pharmaceuticals purchased certain pipeline generic products from Teva and could be obligated to pay consideration to Teva upon the achievement of certain future regulatory milestones (the Teva Contingent Consideration).

The range of the undiscounted amounts the Company could pay under the Teva Agreement is between zero and $12.5 million. The Company is accounting for the Teva Contingent Consideration in the same manner as if it had entered into that arrangement with respect to its acquisition of Qualitest Pharmaceuticals. Accordingly, the fair value was estimated based on a probability-weighted discounted cash flow model, or income approach. The resultant probability-weighted cash flows were then discounted using a discount rate of U.S. Prime plus 300 basis points. This fair value measurement is based on significant inputs not observable in the market and

89

thus represents a Level 3 measurement within the fair value hierarchy. Using this valuation technique, the fair value of the contractual obligation to pay the Teva Contingent Consideration was determined to be $8.7 million at September 30, 2012 and $8.7 millionDecember 31, 2011, respectively.

Legal Proceedings. We are subject to various patent, product liability, government investigations and other legal proceedings in the ordinary course of business. Contingent accruals are recorded when we determine that a loss related to a litigation matter is both probable and reasonably estimable. Due to the fact that legal proceedings and other contingencies are inherently unpredictable, our assessments involve significant judgments regarding future events. For a complete description of legal proceedings, see Note 12. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Enterprise Resource Planning System Project. As part of our integration efforts, we have decided to implement our historical enterprise resource planning (ERP) system, SAP, at certain of our key subsidiaries which currently use a variety of ERP systems. We expect this ERP system to be implemented during 2013 and 2014. During the implementation process, management will review and evaluate the design and operating effectiveness of key controls within SAP, as well as the accuracy of the data conversion process.

Fluctuations. Our quarterly results have fluctuated in the past, and may continue to fluctuate. These fluctuations may be due to the timing of new product launches, purchasing patterns of our customers, market acceptance of our products, the impact of competitive products and pricing, asset impairment charges, separation benefits, business combination transaction costs, upfront, milestone and certain other payments made or accrued pursuant to licensing agreements and changes in the fair value of financial instruments and contingent assets and liabilities recorded as part of a business combination. Further, a substantial portion of our total revenues are through three wholesale drug distributors who in turn supply our products to pharmacies, hospitals and physicians. Accordingly, we are potentially subject to a concentration of credit risk with respect to our trade receivables.

Growth Opportunities. We continue to evaluate growth opportunities including strategic investments, licensing arrangements, acquisitions of businesses, product rights or technologies, and strategic alliances and promotional arrangements which could require significant capital resources. We intend to continue to focus our business development activities on further diversifying our revenue base through product licensing and company acquisitions, as well as other opportunities to enhance stockholder value. Through execution of our business strategy we intend to focus on developing new products through both an internal and a virtual research and development organization with greater scientific and clinical capabilities; expanding the Company’s product line by acquiring new products and technologies in existing therapeutic and complementary areas; increasing revenues and earnings through sales and marketing programs for our innovative product offerings and effectively using the Company’s resources; and providing additional resources to support our generics business.

Non-U.S. Operations. Our operations outside of the United States were not material during the three or nine months ended September 30, 2012. As a result, fluctuations in foreign currency exchange rates did not have a material effect on our Condensed Consolidated Financial Statements.

Inflation. We do not believe that inflation had a material adverse effect on our financial statements for the periods presented.

Off-Balance Sheet Arrangements. We have no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

CRITICAL ACCOUNTING ESTIMATES

Our critical accounting estimates have not changed materially since December 31, 2011. For a complete discussion of the Company’s critical accounting estimates, see “Critical Accounting Estimates” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission on February 29, 2012.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2011, the Financial Accounting Standards Board (FASB or the Board) issued Accounting Standards Update (ASU) 2011-05 on the presentation of comprehensive income. This ASU amends FASB Codification Topic 220, Comprehensive Income, to require an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2011 and early adoption is permitted. In December 2011, the FASB issued ASU 2011-12 which amends ASU 2011-05 to defer only those changes in ASU 2011-05 that relate to the presentation of reclassification adjustments to allow the Board time to re-deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. The Company has adopted all current required provisions of ASU 2011-05 and ASU 2011-12.

90

In July 2012, the FASB issued ASU 2012-02 on impairment testing for indefinite-lived intangible assets. This ASU amends FASB Codification Topic 350, Intangibles-Goodwill and Other to allow, but not require, an entity, when performing its annual or more frequent indefinite-lived intangible asset impairment test, to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The Company is currently evaluating ASU 2012-02. The adoption of this ASU is not expected to have a significant impact on the Company’s Consolidated Financial Statements.

Item 3.     Quantitative and Qualitative Disclosures about Market Risk.

For quantitative and qualitative disclosures about market risk, see Item 7A, “Quantitative and Qualitative Disclosures about Market Risk.” of our annual report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission on February 29, 2012. Our exposures to market risk have not changed materially since December 31, 2011.

Item 4.    Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of September 30, 2012. Based on that evaluation, the Company’s Chief Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2012.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the first nine months of 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. However, during the third quarter of 2012, the Company established a global shared services center in Austin, Texas as part of its ongoing efforts to integrate the operations of its various subsidiaries. At this time, certain transaction-processing activities were moved to this newly-established shared services center. The establishment of this shared services center was not in response to any identified deficiency or weakness in our internal control over financial reporting. This initiative is expected to continue to enhance our internal control over financial reporting, but in the short term may increase our risk.

PART II

OTHER INFORMATION

Item  1.    Legal Proceedings.

The disclosures under Note 12. Commitments and Contingencies-Legal Proceedings included in Part I, Item 1 of this Report is incorporated in this Part II, Item 1 by reference.

Item  1A. Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. Risk factors disclosed in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 are incorporated into this document by reference.

91

Item  2.    Unregistered Sale of Equity Securities and Use of Proceeds.

The following table sets forth information with respect to purchases made by or on behalf of the Company of shares of common stock of the Company during the indicated periods.

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plan	Approximate Dollar Value of Shares that  May Yet be Purchased Under the Plan (1)
July 1, 2012 to July 31, 2012	—	$	—	—	$	175,509,029
August 1, 2012 to August 31, 2012	1,751,360	$	32.24	1,751,360	$	119,046,389
September 1, 2012 to September 30, 2012	1,327,191	$	32.80	1,327,191	$	75,509,052
Total	3,078,551	$	32.48	3,078,551

 _____________

(1) All shares were repurchased under the Company’s announced repurchase programs. On April 9, 2008, the Company announced a program to repurchase in the aggregate up to $750 million of shares of its outstanding common stock (the 2008 Share Repurchase Program). In August 2012, our Board of Directors resolved to cancel and terminate the 2008 Share Repurchase Program, effective immediately, and approve a new share repurchase program (the 2012 Share Repurchase Program). The 2012 Share Repurchase Program authorizes the Company to repurchase in the aggregate of up to $450 million of shares of its outstanding common stock and is set to expire on March 31, 2015. The amounts above reflect shares remaining under the 2008 Share Repurchase Plan at September 30, 2012. All shares are to be purchased in the open market or in privately negotiated transactions, as in the opinion of management, market conditions warrant.

(2) Average price paid per share is calculated on a settlement basis and excludes commission.

Item  3.    Defaults Upon Senior Securities.

None.

Item 4.    Mine Safety Disclosures.

Not applicable.

Item  5.    Other Information.

None.

Item  6.    Exhibits.

The information called for by this item is incorporated by reference to the Exhibit Index of this Report.

92

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ENDO HEALTH SOLUTIONS INC. (Registrant)
	/S/    DAVID P. HOLVECK
Name:		David P. Holveck
Title:		President and Chief Executive Officer (Principal Executive Officer)
	/S/     ALAN G. LEVIN
Name:		Alan G. Levin
Title:		Executive Vice President, Chief Financial Officer (Principal Financial Officer)
	/S/     DANIEL A. RUDIO
Name:		Daniel A. Rudio
Title:		Vice President, Controller and Principal Accounting Officer (Principal Accounting Officer)

Date: November 5, 2012

93

Exhibit Index

Exhibit No.	Title
21	Subsidiaries of the Registrant
31.1	Certification of the President and Chief Executive Officer of Endo pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Chief Financial Officer of Endo pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the President and Chief Executive Officer of Endo pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Chief Financial Officer of Endo pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
10.32.1*	First Amendment, effective September 26, 2012, to the Sales and Promotional Services Agreement by and between Ventiv Commercial Services, LLC and Endo Pharmaceuticals Inc.
10.143	Preferability letter regarding change in accounting policy related to Goodwill
10.144	Amendment to Stock Purchase Agreement, effective October 17, 2012, by and among Endo Pharmaceuticals Inc., Endo Health Solutions Inc., Generics International (US Parent), Inc., and Apax Quartz (Cayman) L.P.
101	The following materials from Endo Health Solutions Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, and (v) the Notes to the Condensed Consolidated Financial Statements.
*	Confidential portions of this exhibit (indicated by asterisks) have been redacted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

94

EX-10.143

Exhibit 10.143

November 5, 2012

Endo Health Solutions Inc.

100 Endo Boulevard

Chadds Ford, Pennsylvania

Dear Sirs/Madams:

At your request, we have read the description included in your Quarterly Report on Form 10-Q to the Securities and Exchange Commission for the quarter ended September 30, 2012, of the facts relating to the change in the annual goodwill impairment testing date under ASC 350 - Intangibles, Goodwill and Other, from January 1 to October 1. We believe, on the basis of the facts so set forth and other information furnished to us by appropriate officials of Endo Health Solutions Inc. (the “Company”), that the accounting change described in your Form 10-Q is to an alternative accounting principle that is preferable under the circumstances.

We have not audited any consolidated financial statements of the Company and its consolidated subsidiaries as of any date or for any period subsequent to December 31, 2011. Therefore, we are unable to express, and we do not express, an opinion on the facts set forth in the above-mentioned Form 10-Q, on the related information furnished to us by officials of the Company, or on the financial position, results of operations, or cash flows of Endo Health Solutions Inc. and its consolidated subsidiaries as of any date or for any period subsequent to December 31, 2011.

Yours truly,

/s/ Deloitte & Touche LLP

Philadelphia, Pennsylvania

EX-10.144

Exhibit 10.144

AMENDMENT TO STOCK PURCHASE AGREEMENT

THIS AMENDMENT TO STOCK PURCHASE AGREEMENT (“Amendment”) is made and entered into on October 17, 2012, by and among APAX QUARTZ (CAYMAN) L.P. (“Apax”) and ENDO PHARMACEUTICALS INC., ENDO HEALTH SOLUTIONS INC. (formerly known as ENDO PHARMACEUTICALS HOLDINGS INC.), and GENERICS INTERNATIONAL (US PARENT) INC. (collectively, “Endo”). Apax and Endo together are referred to herein as the “Parties.” Capitalized terms used but not defined herein shall have the meanings set forth in the Stock Purchase Agreement.

WHEREAS, Apax and Endo are parties to a Stock Purchase Agreement, dated September 28, 2010 (the “SPA”), pursuant to which Endo acquired the issued and outstanding shares of Company Stock from Apax;

WHEREAS, under the terms of the SPA, Apax paid, by wire transfer of immediately available funds, to a separate account specified by the Escrow Agent in the amount of one hundred million dollars ($100,000,000) (the “Indemnity Escrow Fund”);

WHEREAS, on March 30, 2012, Endo sent a notice to Apax that it was seeking indemnification pursuant to its rights under the SPA (the “March Indemnification Notice”);

WHEREAS, on July 6, 2012, Apax initiated the arbitration captioned Apax Quartz (Cayman) L.P. v. Endo Pharmaceuticals, Inc. and Endo Pharmaceuticals Holdings, Inc., 13 122 Y 01616 12, before the American Arbitration Association (the “Arbitration”), seeking an assessment of the Fair Value of PL Claims in order to obtain release of certain portions of the Indemnity Escrow Fund;

WHEREAS, on July 30, 2012, Apax initiated the lawsuit captioned Apax Quartz (Cayman) L.P. v. Endo Pharmaceuticals Inc., Index No. 652635/12, in the Supreme Court for the State of New York, County of New York, challenging the claims made in the March Indemnification Notice (the “New York Litigation”); and

Exhibit 10.144

WHEREAS, on even date herewith, the Parties have entered into a Settlement Agreement and Release (the “Settlement Agreement”) concerning, among other things, the March Indemnification Notice, the Arbitration, and the New York Litigation;

NOW, THEREFORE, in consideration of the acts, promises, releases and other consideration described herein, the receipt and sufficiency of which are acknowledged by each Party hereto, the Parties agree as follows:

1.Payment from Escrow Account to Apax. Within five (5) business days of the full execution of this Amendment, Endo shall execute and deliver to the Escrow Agent a Certificate of Instructions substantially in the form annexed hereto as Appendix A, directing the Escrow Agent to release $52,000,000 from the Indemnity Escrow Fund to Apax.

2.    Payment from Escrow Account to Endo. Within five (5) business days of the full execution of this Amendment, Apax shall execute and deliver to the Escrow Agent a Certificate of Instructions substantially in the form annexed hereto as Appendix B, directing the Escrow Agent to release $2,512,182.60 from the Indemnity Escrow Fund to Endo. Endo shall seek no further indemnification from Apax for any additional legal fees or expenses for the time period prior to July 31, 2012, except as otherwise provided in Paragraph 1 of the Settlement Agreement.

3.    Amendment to SPA Section 2.7(b). The sentence found in Section 2.7(b) of the SPA that reads:

“The fees and expenses of the arbitration panel with respect to (A) the Initial Valuation Date and the Final Valuation Date shall be paid one-half (1/2) by Buyer and one-half (1/2) by Seller, and (B) the Optional Valuation Date, to the extent applicable, shall be paid entirely by Seller.”

Shall be amended and restated to read as follows:

“The fees and expenses of the arbitration panel with respect to the Initial Valuation Date and the Final Valuation Date shall be paid one-half (1/2) by Buyer and one-half (1/2) by Seller; and with respect to the Optional Valuation Date, to the extent applicable, the fees and

2

Exhibit 10.144

expenses of the chair of the arbitration panel and the administrative charges of the AAA shall be paid one-half (1/2) by Buyer and one-half (1/2) by Seller and the fees and expenses of each party appointed arbitrator shall be paid by the respective party that appointed the arbitrator.”

4.    Entire Understanding. This Amendment, along with the SPA, the Escrow Agreement and the Settlement Agreement, constitute the entire agreement between the Parties, and is entered into by the Parties without reliance upon any statement, representation, promise, inducement, or agreement not expressly contained herein or therein. Other than the claims that are released in Paragraphs 2 and 3 of the Settlement Agreement or as otherwise expressly set forth in this Amendment or in the Settlement Agreement, Apax and Endo retain any and all other rights and privileges they may have arising out of or in connection with the SPA and the Escrow Agreement.

5.    Confidentiality. The terms and conditions of this Amendment shall be kept confidential except as reasonably necessary: (a) to obtain legal or accounting advice; (b) to comply with a court order or lawfully issued subpoena; (c) for any Party to seek to enforce the terms of this Amendment; (d) to comply with any securities laws or financial reporting requirements; (e) to inform the Parties’ affiliates; and (f) to conduct future fund-raising; but in all such events, the Parties will seek to protect the confidentiality of the terms of this Amendment, including by protective order, confidentiality agreement, or any other reasonable means available.

6.    No Admission of Wrongdoing. Neither this Amendment nor any negotiations, discussions, or proceedings connected with it shall be construed as, or be deemed to be evidence of, (i) an admission of any wrongdoing or liability by either Party, or (ii) a waiver by either Party of their respective positions with respect to the construction or interpretation of the SPA.

7.    Incorporation of SPA Article XII. The Parties expressly incorporate the following sections of Article XII of the SPA into this Amendment: Section 12.1 (Notices); Section 12.3 (Amendment); Section 12.5 (No Third Party Beneficiaries); Section 12.6 (Assignment); Section 12.7 (Severability); Section 12.8 (Counterparts and Signature); Section 12.9

3

Exhibit 10.144

(Interpretation); Section 12.10 (Governing Law); Section 12.11 (Remedies); and Section 12.12 (Submission to Jurisdiction; Waiver of Jury Trial).

8.    Waiver. No breach of any provision of this Amendment can be waived unless such waiver is in writing and signed by the party waiving same. The waiver of a breach of any provision of this Amendment shall not be deemed to be a waiver of any other provision hereof.

9.    Binding on Successors. This Amendment shall be binding on, and inure to the benefit of, the respective legal representatives, heirs, successors and permitted assigns of each party hereto.

10.    Costs and Expenses. Each Party shall bear its own costs and expenses associated with this Amendment and the New York Litigation. The Parties agree to split equally all American Arbitration Association administrative costs and arbitrator fees related to the Arbitration.

[Remainder of this page intentionally left blank. Signature page follows.]

4

Exhibit 10.144

IN WITNESS WHEREOF, the individuals signing this Amendment represent that this Amendment has been finally executed as of the Effective Date and that they have full authority to execute this Amendment on behalf of the entities for whom they have executed this Amendment.

APAX QUARTZ (CAYMAN) L.P.		ENDO PHARMACEUTICALS INC.
By:	/s/ A W GUILLE	By:	/s/ JULIE H. MCHUGH
Its:	Director of General Partner	Name:	Julie H. McHugh
		Its:	Chief Operating Officer
		ENDO HEALTH SOLUTIONS INC.
		By:	/s/ DAVID P. HOLVECK
		Name:	David P. Holveck
		Its:	President and Chief Executive Officer
		GENERICS INTERNATIONAL (US PARENT) INC.
		By:	/s/ JULIE H. MCHUGH
		Name:	Julie H. McHugh
		Its:	Chief Operating Officer

5

Exhibit 10.144

Appendix A

October ___, 2012

JPMorgan Chase Bank, National Association

[ADDRESS]

[ADDRESS]

[CITY, STATE ZIP CODE]

Attn: [INSERT]

Re:    Escrow Account No. [_______] among Endo Pharmaceuticals Inc. and                 Apax Quartz (Cayman) L.P., and JPMorgan Chase Bank, National                     Association, as Escrow Agent (the “Escrow Agent”)

Upon receipt of executed signature pages for both parties identified below, please distribute $52,000,000.00 by wire transfer to Apax Quartz (Cayman) L.P. or as Apax Quartz (Cayman) L.P. shall otherwise direct.

Very truly yours,

ENDO PHARMACEUTICALS INC.

By:

Name:

Its:

APAX QUARTZ (CAYMAN) L.P.

By:

Name:

Its:

6

Exhibit 10.144

Appendix B

October ___, 2012

JPMorgan Chase Bank, National Association

[ADDRESS]

[ADDRESS]

[CITY, STATE ZIP CODE]

Attn: [INSERT]

Re:    Escrow Account No. [_______] among Endo Pharmaceuticals Inc. and                 Apax Quartz (Cayman) L.P., and JPMorgan Chase Bank, National                     Association, as Escrow Agent (the “Escrow Agent”)

Upon receipt of executed signature pages for both parties identified below, please distribute $2,512,182.60 by wire transfer to Endo Pharmaceuticals Inc. or as Endo Pharmaceuticals Inc. shall otherwise direct.

Very truly yours,

ENDO PHARMACEUTICALS INC.

By:

Name:

Its:

APAX QUARTZ (CAYMAN) L.P.

By:

Name:

Its:

7

EX-10.32.1

Exhibit 10.32.1

The confidential portions of this exhibit have been filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities and Exchange Act of 1934, as amended. 

REDACTED PORTIONS OF THIS EXHIBIT ARE MARKED BY AN ***.

FIRST AMENDMENT TO SALES AND PROMOTIONAL SERVICES AGREEMENT

This First Amendment (“First Amendment") to the Sales and Promotional Services Agreement dated December 30, 2011 (the “Agreement”), by and between ENDO PHARMACEUTICALS INC., a Delaware corporation ("CLIENT") and VENTIV COMMERCIAL SERVICES, LLC, a New Jersey limited liability company ("VCS"), is entered into as of September 21, 2012 (the “Effective Date”). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement.

WITNESSETH:

WHEREAS, pursuant to the Agreement, Article III, Section 3.2(b) allows for CLIENT in its sole discretion to increase or decrease the number of Sales Representatives and/or District Managers in the VCS Field Force by ***;

WHEREAS, CLIENT desires to decrease the VCS Field Force by ***; and

WHEREAS, the Parties desire to amend the Agreement to reflect certain modifications (defined below) as set forth herein.

NOW THEREFORE, in consideration of the premises and other good and valuable

consideration, the receipt and adequacy of which is hereby acknowledged, the Parties hereto agree as follows:

1. Article III, Section 3.2(b) of the Agreement is amended to provide that the Initial Total Headcount shall consist of 170 Sales Representatives, 17 District Managers, one Project Manager, one VCS Trainer and one National Sales Director.

2.Schedule B of the Agreement shall be deleted in its entirety and replaced and restated with Schedule B attached hereto and made a part hereof.

3.Schedule B-Y to the Agreement shall be deleted in its entirety and replaced and restated with Schedule B-Y attached hereto and made a part hereof.

4.The Parties agree that the implementation of Sections 1 of this First Amendment shall commence on October 5, 2012 and Sections 2 and 3 of this First Amendment shall commence on October 1, 2012.

5.As a result of the changes set forth in Section 1 of this First Amendment, VCS shall be required to reduce the number of Fleet Vehicles provided under the Agreement by approximately *** vehicles. Sections 3.3(f), 3.3(g), and 11.4 of the Agreement shall apply to VCS's disposal of these Fleet Vehicles.

6.All terms and conditions of the Agreement not specifically amended herein shall remain unchanged and in full force and effect.

7. This First Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which shall constitute the same agreement.

[Signature page to follow]

Exhibit 10.32.1

IN WITNESS WHEREOF, the Parties hereto have caused this First Amendment to be executed by their duly authorized representatives.

ENDO PHARMACEUTICALS INC.		VENTIV COMMERCIAL SERVICES, LLC
By:	/s/ David P. Holveck	By:	/s/ Paul Mignon
Name:	David P. Holveck	Name:	Paul Mignon
Title	President and CEO	Title	President, Selling Solutions

Exhibit 10.32.1

AMENDED AND RESTATED

Schedule B

COMPENSATION - FEES PAYABLE TO VCS

I. Reconciled Pass-through Expenses

VCS shall invoice CLIENT monthly for all fees and costs payable by CLIENT for Services as set forth in the Budget included as Schedule B-Y, and shall bill to CLIENT Reconciled Pass-through Expenses, which shall include:

- ***

- ***

- ***

- District Manager Bonuses (plus applicable employer portion of taxes)

- Sales Representative Bonuses (plus applicable employer portion of taxes)

- Sales Representative travel subject to compliance with Client travel policies as amended from time to time

- Direct Marketing Expense (DME) Funds in accordance with specified budget

- Ordinary and reasonable office expenses

- ***

- ***

- ***

Reconciled Pass-through Expenses are subject to the provisions of Section 4.3 of the Agreement.

II. Fixed Management Fee and At-Risk Management Fee

***

Exhibit 10.32.1

AMENDED AND RESTATED

Schedule B-Y

***

EX-21

Exhibit 21

SUBSIDIARIES OF THE REGISTRANT

The following is a list of subsidiaries of the Company as of September 30, 2012, omitting some subsidiaries which, considered in the aggregate, would not constitute a significant subsidiary.

Subsidiary	Jurisdiction of Incorporation or Organization	Ownership by Endo Health Solutions Inc.
Endo Pharmaceuticals Inc.	Delaware	Direct
Endo Inc.	Delaware	Direct
Endo Pharmaceuticals Solutions Inc.	Delaware	Indirect
HealthTronics, Inc.	Georgia	Direct
HealthTronics Information Technology Solutions, Inc.	Delaware	Indirect
UroCare, Inc.	Delaware	Indirect
Urosource Mobile Medical Solutions, Inc.	Texas	Indirect
Generics International (US Parent), Inc.	Delaware	Indirect
Generics Bidco I, LLC	Delaware	Indirect
Generics Bidco II, LLC	Delaware	Indirect
Quartz Specialty Pharmaceuticals, LLC	Delaware	Indirect
Endo Pharma Canada Inc.	New Brunswick	Indirect
Endo Pharma Ireland Limited	Dublin	Indirect
CPEC LLC	Delaware	Indirect
IPI Management Corp.	Massachusetts	Indirect
Endo Pharmaceuticals Valera Inc.	Delaware	Indirect
Ledgemont Royalty Sub LLC	Delaware	Indirect
Generics International (US Holdco), Inc.	Delaware	Indirect
Generics International (US Midco), Inc.	Delaware	Indirect
Generics International (US), Inc.	Delaware	Indirect
Moores Mill Properties LLC	Delaware	Indirect
Wood Park Properties LLC	Delaware	Indirect
Vintage Pharmaceuticals, LLC	Delaware	Indirect
American Medical Systems Holdings, Inc.	Delaware	Indirect
American Medical Systems, Inc.	Delaware	Indirect
American Medical Systems Australia PTY LTD.	Australia	Indirect
American Medical Systems Benelux B.V.B.A.	Belgium	Indirect
American Medical Systems Canada Inc.	Canada	Indirect
American Medical Systems Deutschland GmbH	Germany	Indirect
American Medical Systems Europe B.V.	The Netherlands	Indirect
American Medical Systems France S.A.S	France	Indirect
American Medical Systems Iberica S.L.	Spain	Indirect
American Medical Systems Luxembourg S.à.r.l.	Luxembourg	Indirect
American Medical Systems UK Limited	United Kingdom	Indirect
AMS - American Medical Systems do Brasil Produtos Urológicos e Ginecológicos Ltda.	Brazil	Indirect
AMS Japan Inc.	Japan	Indirect
AMS Research Corporation	Delaware	Indirect
AMS Sales Corporation	Delaware	Indirect
AMS Sverige A.B.	Sweden	Indirect
Laserscope	California	Indirect
AMS Bermuda ULC	Bermuda	Indirect
AMS Medical Technologies ULC	Ireland	Indirect
AMS Medical Systems Ireland Limited	Ireland	Indirect
AMS India, Inc.	Delaware	Indirect

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, David P. Holveck, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Endo Health Solutions Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/S/ DAVID P. HOLVECK
David P. Holveck
President and Chief Executive Officer (Principal Executive Officer)
Date:	November 5, 2012

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Alan G. Levin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Endo Health Solutions Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/S/ ALAN G. LEVIN
Alan G. Levin
Executive Vice President, Chief Financial Officer (Principal Financial Officer)
Date:	November 5, 2012

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, David P. Holveck, as President and Chief Executive Officer of Endo Health Solutions Inc. (the Company), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2012 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/S/ DAVID P. HOLVECK
Name:	David P. Holveck
Title:	President & Chief Executive Officer (Principal Executive Officer)

Date: November 5, 2012

A signed original of this written statement required by Section 906 has been provided to, and will be retained by, Endo Health Solutions Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Alan G. Levin, as Chief Financial Officer of Endo Health Solutions Inc. (the Company), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2012 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/S/ ALAN G. LEVIN
Name:	Alan G. Levin
Title:	Executive Vice President, Chief Financial Officer (Principal Financial Officer)

Date: November 5, 2012

A signed original of this written statement required by Section 906 has been provided to, and will be retained by, Endo Health Solutions Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Fair Value Measurements (Financial Assets Measured At Fair Value On Recurring Basis Using Significant Unobservable Inputs) (Details) (Significant unobservable inputs (Level 3) [Member], Auction-rate securities [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Significant unobservable inputs (Level 3) [Member] | Auction-rate securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance	$ 17,505	$ 17,463	$ 17,332
Securities sold or redeemed	0	(18,800)	0
Securities purchase or acquired		0
Transfers in and/or (out) of Level 3	0	0	0
Changes in fair value recorded in earnings	0	0	0
Unrealized gains included in other comprehensive income	(89)	1,337	84
Ending balance	$ 17,416	$ 0	$ 17,416

XML

License And Collaboration Agreements (Products In Development) (Narrative 2) (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended	12 Months Ended	1 Months Ended	9 Months Ended	12 Months Ended		9 Months Ended	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2010 Impax agreement [Member]	Jul. 31, 2009 Bioniche agreement [Member]	Sep. 30, 2012 Bioniche agreement [Member] D	Dec. 31, 2010 Bioniche agreement [Member]	Dec. 31, 2009 Bioniche agreement [Member]	Sep. 30, 2012 BayerSchering agreement [Member] Y	Mar. 31, 2012 BioDelivery [Member]	Sep. 30, 2012 BioDelivery [Member] Y M	Mar. 31, 2011 Orion agreement [Member]	Sep. 30, 2012 Orion agreement [Member] research_programs	Sep. 30, 2012 EpiCept agreement [Member]	Sep. 30, 2012 AveedTM [Member] BayerSchering agreement [Member]	Sep. 30, 2012 Clinical, regulatory, and commercial milestones [Member] Impax agreement [Member]	Sep. 30, 2012 Clinical, regulatory, and commercial milestones [Member] Urocidin indication one [Member] Bioniche agreement [Member]	Sep. 30, 2012 Clinical, regulatory, and commercial milestones [Member] Urocidin indication two [Member] Bioniche agreement [Member]	Sep. 30, 2012 Buprenorphine and commercial and regulatory milestone [Member] BioDelivery [Member]	Sep. 30, 2012 Maximum [Member] Hydron agreement [Member]
License And Collaboration Agreements [Line Items]
Up-front cash payment		$ 10.0	$ 20.0				$ 30.0		$ 30.0			$ 7.5
Additional milestone payment	4.9							15.0						30.0	67.0	26.0	135.0
Conditional milestone payment					4.0	11.0						82.5
Indications for Urocidin				2
Expiration of agreement, time period				180			10		10
Milestone payment due upon approval by the FDA													5.0
Percentage of net sales applied for supply price													25.00%
Royalties owed, maximum																		5.00%
Agreement termination, written notice, months									6
Number of research programs											4
Agreement expiration date											January 2016
Contingent payment based on additional marketing authorizations										$ 10
Estimated life of license agreement (years)	14 years											13 years

XML

Acquisitions (Schedule Of Pro Forma Consolidated Results) (Details) (AMS [Member], USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2011
AMS [Member]
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Revenue	$ 2,165,091
Net income attributable to Endo Health Solutions Inc.	$ 130,389
Basic net income per share (usd per share)	$ 1.12
Diluted net income per share (usd per share)	$ 1.07

XML

Net (Loss) Income Per Share (Reconciliation Of Maximum Potential Dilution Of Shares Currently Excluded From The Calculation Of Diluted Net Income Per Share) (Details) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average shares excluded from the calculation of diluted income per share	30,099		25,507
Employee Stock-Based Awards [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average shares excluded from the calculation of diluted income per share	4,106		2,007
1.75% Convertible Senior Subordinated Notes Due April 15, 2015 [Member] | Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average shares excluded from the calculation of diluted income per share	25,993	[1]	23,500	[1]

[1] Amounts represent the incremental potential total dilution that could occur if our Convertible Notes and warrants were converted to shares of our common stock.

XML

Goodwill And Other Intangibles (Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended					9 Months Ended		3 Months Ended	9 Months Ended	3 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011	Sep. 30, 2012 Endo Pharmaceuticals [Member]	Sep. 30, 2012 Qualitest [Member]	Sep. 30, 2012 AMS [Member]	Sep. 30, 2012 HealthTronics [Member]	Mar. 31, 2012 Sanctura Xr [Member]	Sep. 30, 2012 Sanctura Xr [Member]	Jun. 30, 2012 AMS [Member]
Segment Reporting Information [Line Items]
Goodwill	$ 2,569,288,000		$ 2,569,288,000		$ 2,558,041,000	$ 290,800,000	$ 275,200,000	$ 1,800,000,000	$ 209,000,000
Amortization Of Intangible Assets, Finite Lived			171,100,000	137,000,000
Weighted average amortization period, years			14 years
Asset impairment charges	11,163,000	22,691,000	54,163,000	22,691,000						40,000,000	11,200,000	3,000,000
Indefinite lived intangible assets, potential impairment losses								1,000,000
Intangible assets	$ 2,285,187,000		$ 2,285,187,000		$ 2,504,124,000					$ 21,600,000	$ 5,000,000

XML

Derivative Instruments And Hedging Activities (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Designated As Cash Flow Accounting Hedges [Member]
Derivative [Line Items]
Notional amount of foreign currency exchange forward contracts	$ 32.9		$ 32.9
Reclassification from other comprehensive loss into earnings	0.1		0.1
Not Designated As Accounting Hedges [Member]
Derivative [Line Items]
Notional amount of foreign currency exchange forward contracts	0		0
Amount of gain (loss) from derivative contracts	0.2	3.2	0.2	2.6
Prepaid expenses and other current assets [Member]
Derivative [Line Items]
Fair value of derivatives designated for hedge accounting	0.5		0.5
Accrued Expenses [Member]
Derivative [Line Items]
Fair value of derivatives designated for hedge accounting	$ 0.4		$ 0.4
Minimum [Member] | Designated As Cash Flow Accounting Hedges [Member]
Derivative [Line Items]
Remaining maturity			1 month
Maximum [Member] | Designated As Cash Flow Accounting Hedges [Member]
Derivative [Line Items]
Remaining maturity			12 months

XML

Acquisitions (Schedule Of Valuation Of The Intangible Assets Acquired And Related Amortization Periods) (Details) (USD $)	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Jun. 30, 2012 AMS [Member]	Sep. 30, 2012 AMS [Member]	Sep. 30, 2012 Customer relationships [Member] AMS [Member]	Sep. 30, 2012 Customer relationships [Member] AMS [Member] Men's health [Member]	Sep. 30, 2012 Customer relationships [Member] AMS [Member] Women's health [Member]	Sep. 30, 2012 Customer relationships [Member] AMS [Member] BPH [Member]	Sep. 30, 2012 Developed technology [Member] AMS [Member]	Sep. 30, 2012 Developed technology [Member] AMS [Member] Men's health [Member]	Sep. 30, 2012 Developed technology [Member] AMS [Member] Women's health [Member]	Sep. 30, 2012 Developed technology [Member] AMS [Member] BPH [Member]	Sep. 30, 2012 Tradenames [Member] AMS [Member]	Sep. 30, 2012 Tradenames [Member] AMS [Member]	Sep. 30, 2012 Tradenames [Member] AMS [Member] GreenLight [Member]	Sep. 30, 2012 In process research & development [Member] AMS [Member]	Sep. 30, 2012 In process research & development [Member] AMS [Member] Oracle [Member]	Sep. 30, 2012 In process research & development [Member] AMS [Member] Genesis [Member]	Sep. 30, 2012 In process research & development [Member] AMS [Member] TOPAS [Member]	Sep. 30, 2012 In process research & development [Member] AMS [Member] Other [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Valuation						$ 1,260,000,000	$ 160,000,000	$ 97,000,000	$ 37,000,000	$ 26,000,000	$ 1,001,000,000	$ 690,000,000	$ 150,000,000	$ 161,000,000	$ 57,000,000	$ 45,000,000	$ 12,000,000	$ 42,000,000	$ 12,000,000	$ 14,000,000	$ 8,000,000	$ 8,000,000	[1]
Amortization Period (in years)							16 years	17 years	15 years	13 years	16 years	18 years	9 years	18 years	27 years	30 years	15 years
Asset impairment charges	$ 11,163,000	$ 22,691,000	$ 54,163,000	$ 22,691,000	$ 3,000,000

[1] A subsequent pre-tax non-cash impairment charge of $3.0 million was recorded in the second quarter of 2012. This impairment charge is further discussed in Note 9. Goodwill and Other Intangibles.

XML

Cost Of Revenues (Tables)

9 Months Ended

Sep. 30, 2012

Other Cost and Expense Disclosure, Operating [Abstract]

Components Of Cost Of Revenues

The components of Cost of revenues for the three and nine months ended September 30 (in thousands) were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Cost of net pharmaceutical product sales	$	222,830	$	208,666	$	735,359	$	609,878
Cost of device revenues	40,886		64,011		121,972		75,541
Cost of service and other revenues	30,551		29,495		96,326		85,008
Total cost of revenues	$	294,267	$	302,172	$	953,657	$	770,427

XML

Supplemental Guarantor Information (Narrative) (Details) (Guarantor Subsidiaries [Member])	Sep. 30, 2012
Guarantor Subsidiaries [Member]
Percentage of equity method of investments in subsidiaries	100.00%

XML

Debt (Percentage Of Outstanding Principal Balance Of Non-Recourse Notes) (Details)	9 Months Ended
	Sep. 30, 2012
7.25% Senior Notes Due 2022 [Member]
Debt Instrument [Line Items]
Redemption Percentage	35.00%
Percentage of principal amount	101.00%
7.00% Senior Notes Due 2020 [Member]
Debt Instrument [Line Items]
Redemption Percentage	35.00%
7.00% Senior Notes Due 2019 [Member]
Debt Instrument [Line Items]
Percentage of principal amount	101.00%
From July 15, 2015 To And Including July 14, 2016 [Member]
Debt Instrument [Line Items]
Payment Dates (between indicated dates)	From July 15, 2015 to and including July 14, 2016
From July 15, 2015 To And Including July 14, 2016 [Member] | 7.00% Senior Notes Due 2019 [Member]
Debt Instrument [Line Items]
Redemption Percentage	103.50%
From July 15, 2016 To And Including July 14, 2017 [Member]
Debt Instrument [Line Items]
Payment Dates (between indicated dates)	From July 15, 2016 to and including July 14, 2017
From July 15, 2016 To And Including July 14, 2017 [Member] | 7.25% Senior Notes Due 2022 [Member]
Debt Instrument [Line Items]
Redemption Percentage	103.625%
From July 15, 2016 To And Including July 14, 2017 [Member] | 7.00% Senior Notes Due 2019 [Member]
Debt Instrument [Line Items]
Redemption Percentage	101.75%
From July 15, 2017 And Thereafter [Member]
Debt Instrument [Line Items]
Payment Dates (between indicated dates)	From July 15, 2017 and thereafter
From July 15, 2017 And Thereafter [Member] | 7.00% Senior Notes Due 2019 [Member]
Debt Instrument [Line Items]
Redemption Percentage	100.00%
From December 15, 2015 To And Including December 14, 2016 [Member]
Debt Instrument [Line Items]
Payment Dates (between indicated dates)	From December 15, 2015 to and including December 14, 2016
From December 15, 2015 To And Including December 14, 2016 [Member] | 7.00% Senior Notes Due 2020 [Member]
Debt Instrument [Line Items]
Redemption Percentage	103.50%
From December 15, 2016 To And Including December 14, 2017 [Member]
Debt Instrument [Line Items]
Payment Dates (between indicated dates)	From December 15, 2016 to and including December 14, 2017
From December 15, 2016 To And Including December 14, 2017 [Member] | 7.00% Senior Notes Due 2020 [Member]
Debt Instrument [Line Items]
Redemption Percentage	102.333%
From December 15, 2017 To And Including December 14, 2018 [Member]
Debt Instrument [Line Items]
Payment Dates (between indicated dates)	From December 15, 2017 to and including December 14, 2018
From December 15, 2017 To And Including December 14, 2018 [Member] | 7.00% Senior Notes Due 2020 [Member]
Debt Instrument [Line Items]
Redemption Percentage	101.167%
From December 15, 2018 And Thereafter [Member]
Debt Instrument [Line Items]
Payment Dates (between indicated dates)	From December 15, 2018 and thereafter
From December 15, 2018 And Thereafter [Member] | 7.00% Senior Notes Due 2020 [Member]
Debt Instrument [Line Items]
Redemption Percentage	100.00%
From July 15, 2017 To And Including July 14, 2018 [Member]
Debt Instrument [Line Items]
Payment Dates (between indicated dates)	From July 15, 2017 to and including July 14, 2018
From July 15, 2017 To And Including July 14, 2018 [Member] | 7.25% Senior Notes Due 2022 [Member]
Debt Instrument [Line Items]
Redemption Percentage	102.417%
From July 15, 2018 To And Including July 14, 2019 [Member]
Debt Instrument [Line Items]
Payment Dates (between indicated dates)	From July 15, 2018 to and including July 14, 2019
From July 15, 2018 To And Including July 14, 2019 [Member] | 7.25% Senior Notes Due 2022 [Member]
Debt Instrument [Line Items]
Redemption Percentage	101.208%
From July 15, 2019 And Thereafter [Member]
Debt Instrument [Line Items]
Payment Dates (between indicated dates)	From July 15, 2019 and thereafter
From July 15, 2019 And Thereafter [Member] | 7.25% Senior Notes Due 2022 [Member]
Debt Instrument [Line Items]
Redemption Percentage	100.00%

XML

Goodwill And Other Intangibles (Schedule Of Other Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Other Intangible Assets [Line Items]
Indefinite-lived intangibles	$ 179,400	$ 221,400
Other	5,884
Total definite-lived intangibles, net	2,105,787	2,282,724
Other intangibles, net	2,285,187	2,504,124
Weighted average life, in years	14 years
Licenses [Member]
Other Intangible Assets [Line Items]
Licenses	590,193	647,239
Less accumulated amortization	(308,026)	(256,903)
Total definite-lived intangibles, net	282,167	390,336
Weighted average life, in years	9 years
Customer relationships [Member]
Other Intangible Assets [Line Items]
Customer relationships	159,789	159,632
Less accumulated amortization	(13,097)	(5,460)
Total definite-lived intangibles, net	146,692	154,172
Weighted average life, in years	16 years
Tradenames [Member]
Other Intangible Assets [Line Items]
Tradenames	91,600	91,600
Less accumulated amortization	(7,592)	(4,142)
Total definite-lived intangibles, net	84,008	87,458
Weighted average life, in years	22 years
Developed technology [Member]
Other Intangible Assets [Line Items]
Developed technology	1,825,375	1,774,300
Less accumulated amortization	(234,412)	(125,695)
Total definite-lived intangibles, net	1,590,963	1,648,605
Weighted average life, in years	16 years
Other definite-lived intangibles [Member]
Other Intangible Assets [Line Items]
Other	2,200	2,200
Less accumulated amortization	(243)	(47)
Total definite-lived intangibles, net	1,957	2,153
Weighted average life, in years	11 years
In process research & development [Member]
Other Intangible Assets [Line Items]
Indefinite-lived intangibles	$ 179,400	$ 221,400

XML

Debt (Convertible Senior Subordinated Notes Due) (Narrative) (Details) (USD $)	9 Months Ended						0 Months Ended	9 Months Ended	0 Months Ended	9 Months Ended				9 Months Ended				1 Months Ended	9 Months Ended			9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 1.75% Convertible Senior Subordinated Notes Due April 15, 2015 [Member]	Sep. 30, 2011 1.75% Convertible Senior Subordinated Notes Due April 15, 2015 [Member]	Apr. 09, 2009 1.75% Convertible Senior Subordinated Notes Due April 15, 2015 [Member]	Apr. 30, 2008 1.75% Convertible Senior Subordinated Notes Due April 15, 2015 [Member]	Apr. 09, 2009 1.75% Convertible Senior Subordinated Notes Due April 15, 2015 [Member] Call Options Purchased [Member]	Sep. 30, 2012 1.75% Convertible Senior Subordinated Notes Due April 15, 2015 [Member] Call Options Purchased [Member]	Apr. 09, 2009 1.75% Convertible Senior Subordinated Notes Due April 15, 2015 [Member] Warrants [Member]	Sep. 30, 2012 7.25% Senior Notes Due 2022 [Member]	Sep. 30, 2011 7.25% Senior Notes Due 2022 [Member]	Dec. 31, 2011 7.25% Senior Notes Due 2022 [Member]	Jun. 08, 2011 7.25% Senior Notes Due 2022 [Member]	Sep. 30, 2012 7.00% Senior Notes Due 2019 [Member]	Sep. 30, 2011 7.00% Senior Notes Due 2019 [Member]	Dec. 31, 2011 7.00% Senior Notes Due 2019 [Member]	Jun. 08, 2011 7.00% Senior Notes Due 2019 [Member]	Nov. 30, 2010 7.00% Senior Notes Due 2020 [Member]	Sep. 30, 2012 7.00% Senior Notes Due 2020 [Member]	Sep. 30, 2011 7.00% Senior Notes Due 2020 [Member]	Dec. 31, 2011 7.00% Senior Notes Due 2020 [Member]	Sep. 30, 2012 Change Of Control Events [Member] 7.00% Senior Notes Due 2020 [Member]	Sep. 30, 2012 2011 Credit Facility [Member]	Sep. 30, 2012 Prior To July 15, 2014 [Member] 7.00% Senior Notes Due 2019 [Member]
Subsidiary, Sale of Stock [Line Items]
Principal amount of Convertible Notes						$ 379,500,000				$ 400,000,000		$ 400,000,000	$ 400,000,000	$ 500,000,000		$ 500,000,000	$ 500,000,000	$ 400,000,000	$ 400,000,000		$ 400,000,000
Notes, interest rate			1.75%			1.75%				7.25%			7.25%	7.00%			7.00%	7.00%	7.00%
Notes, maturity year										2022				2019					2020
Net proceeds from issuance of debt	0	2,200,000,000	370,700,000							388,700,000				485,900,000					386,600,000
Cost paid to investment bankers										7,900,000				9,900,000									43,400,000
Redemption percentage										35.00%									35.00%					35.00%
Percentage of principal amount										101.00%				101.00%								101.00%
Interest expense			21,300,000	20,000,000						22,300,000	9,400,000			27,300,000	11,300,000				21,800,000	21,700,000
Issue price percentage																		99.105%
Convertible Notes, maturity date			Apr. 15, 2015					Apr. 15, 2015
Convertible Notes, conversion rate			34.2466
Convertible Notes, principal amount convertible			1,000
Convertible Notes, convertible amount per share			$ 29.20		$ 24.85
Convertible Notes, increased initial conversion price			40.00
Convertible Notes, conversion premium over the closing price					61.10%
Option to purchase, shares	13,000,000						13,000,000		13,000,000
Call option strike price per share							29.20		40.00
Cost of the call option							107,600,000
Proceeds from issuance of warrants			50,400,000
Contractual interest payments			5,000,000	5,000,000
Amortization of debt discount			$ 16,300,000	$ 15,000,000

XML

Supplemental Guarantor Information (Condensed Consolidating Statement Of Operations) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
TOTAL REVENUES	$ 750,482	$ 759,078	$ 2,226,303	$ 1,926,715
Cost of revenues	294,267	302,172	953,657	770,427
Selling, general and administrative	210,446	244,359	698,522	581,878
Research and development	48,952	43,884	183,067	126,854
Litigation settlement expense	(46,238)	0	85,123	0
Litigation-related contingencies	82,600	0	82,600	0
Asset impairment charges	11,163	22,691	54,163	22,691
Acquisition-related items, net	5,776	5,818	16,580	29,517
OPERATING (LOSS) INCOME	143,516	140,154	152,591	395,348
INTEREST EXPENSE, NET	45,505	52,792	138,386	97,142
LOSS ON EXTINGUISHMENT OF DEBT	1,789	0	7,215	8,548
OTHER EXPENSE (INCOME), NET	(250)	(3,000)	498	(2,777)
(LOSS) INCOME BEFORE INCOME TAX	96,472	90,362	6,492	292,435
INCOME TAX	28,287	34,057	(9,263)	100,283
EQUITY FROM EARNINGS (LOSS) IN SUBSIDIARIES	0	0	0	0
CONSOLIDATED NET (LOSS) INCOME	68,185	56,305	15,755	192,152
Less: Net income attributable to noncontrolling interests	14,376	15,656	39,826	41,133
NET INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	53,809	40,649	(24,071)	151,019
Endo Health Solutions Inc. [Member]
TOTAL REVENUES
Cost of revenues
Selling, general and administrative		24		58
Research and development
Litigation settlement expense	0		0
Litigation-related contingencies
Asset impairment charges		0		0
Acquisition-related items, net				(7,050)
OPERATING (LOSS) INCOME		(24)		6,992
INTEREST EXPENSE, NET	10,573	1,963	33,320	28,226
LOSS ON EXTINGUISHMENT OF DEBT	1,789		7,215	8,548
OTHER EXPENSE (INCOME), NET
(LOSS) INCOME BEFORE INCOME TAX	(12,362)	(1,987)	(40,535)	(29,782)
INCOME TAX	(4,442)	(1,143)	(14,562)	(13,431)
EQUITY FROM EARNINGS (LOSS) IN SUBSIDIARIES	61,729	41,493	1,902	167,370
CONSOLIDATED NET (LOSS) INCOME	53,809	40,649	(24,071)	151,019
Less: Net income attributable to noncontrolling interests
NET INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	53,809	40,649	(24,071)	151,019
Guarantor Subsidiaries [Member]
TOTAL REVENUES	687,675	706,337	2,034,768	1,809,956
Cost of revenues	259,967	287,446	855,418	738,961
Selling, general and administrative	191,540	221,033	632,202	540,457
Research and development	47,128	43,606	179,695	126,576
Litigation settlement expense	(46,238)		85,123
Litigation-related contingencies	82,600		82,600
Asset impairment charges	11,163	22,691	54,163	22,691
Acquisition-related items, net	4,764	6,060	14,294	35,288
OPERATING (LOSS) INCOME	136,751	125,501	131,273	345,983
INTEREST EXPENSE, NET	34,932	50,818	105,039	68,905
LOSS ON EXTINGUISHMENT OF DEBT
OTHER EXPENSE (INCOME), NET	(249)	(3,525)	5	(3,024)
(LOSS) INCOME BEFORE INCOME TAX	102,068	78,208	26,229	280,102
INCOME TAX	36,147	35,099	15,487	112,156
EQUITY FROM EARNINGS (LOSS) IN SUBSIDIARIES	745	(98)	(1,167)	954
CONSOLIDATED NET (LOSS) INCOME	66,666	43,011	9,575	168,900
Less: Net income attributable to noncontrolling interests
NET INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	66,666	43,011	9,575	168,900
Non-Guarantor Subsidiaries [Member]
TOTAL REVENUES	85,496	86,045	259,412	193,661
Cost of revenues	54,695	49,830	161,724	110,320
Selling, general and administrative	18,938	23,302	66,368	41,363
Research and development	1,824	278	3,372	278
Litigation settlement expense	0		0
Litigation-related contingencies
Asset impairment charges		0		0
Acquisition-related items, net	1,012	(242)	2,286	1,279
OPERATING (LOSS) INCOME	9,027	12,877	25,662	40,421
INTEREST EXPENSE, NET		11	27	11
LOSS ON EXTINGUISHMENT OF DEBT
OTHER EXPENSE (INCOME), NET	(2,749)	455	(2,418)	88
(LOSS) INCOME BEFORE INCOME TAX	11,776	12,411	28,053	40,322
INCOME TAX	(2,099)	(637)	(8,326)	757
EQUITY FROM EARNINGS (LOSS) IN SUBSIDIARIES
CONSOLIDATED NET (LOSS) INCOME	13,875	13,048	36,379	39,565
Less: Net income attributable to noncontrolling interests	14,376	15,656	39,826	41,133
NET INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	(501)	(2,608)	(3,447)	(1,568)
Eliminations [Member]
TOTAL REVENUES	(22,689)	(33,304)	(67,877)	(76,902)
Cost of revenues	(20,395)	(35,104)	(63,485)	(78,854)
Selling, general and administrative	(32)		(48)
Research and development
Litigation settlement expense	0		0
Litigation-related contingencies
Asset impairment charges		0		0
Acquisition-related items, net
OPERATING (LOSS) INCOME	(2,262)	1,800	(4,344)	1,952
INTEREST EXPENSE, NET
LOSS ON EXTINGUISHMENT OF DEBT
OTHER EXPENSE (INCOME), NET	2,748	70	2,911	159
(LOSS) INCOME BEFORE INCOME TAX	(5,010)	1,730	(7,255)	1,793
INCOME TAX	(1,319)	738	(1,862)	801
EQUITY FROM EARNINGS (LOSS) IN SUBSIDIARIES	(62,474)	(41,395)	(735)	(168,324)
CONSOLIDATED NET (LOSS) INCOME	(66,165)	(40,403)	(6,128)	(167,332)
Less: Net income attributable to noncontrolling interests
NET INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$ (66,165)	$ (40,403)	$ (6,128)	$ (167,332)

XML

Debt (Convertible AMS Notes Due 2036 And 2041) (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
3.25% AMS Convertible Notes Due 2036 [Member]
Debt Instrument [Line Items]
Notes, interest rate	3.25%
Debt Instrument Maturity Year	2036
Amount paid for redemption	$ 95,700,000
Convertible Notes, principal amount convertible	61,400,000
Stated conversion premium	1.5571
4.00% AMS Convertible Notes Due 2041 [Member]
Debt Instrument [Line Items]
Notes, interest rate	4.00%
Debt Instrument Maturity Year	2041
Amount paid for redemption	423,400,000
Convertible Notes, principal amount convertible	249,900,000
Stated conversion premium	1.6940
AMS Notes [Member]
Debt Instrument [Line Items]
Remaining principal amount, maximum	$ 1,000,000

XML

Cost Of Revenues (Components Of Cost Of Revenues) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Other Cost and Expense Disclosure, Operating [Abstract]
Cost of net pharmaceutical product sales	$ 222,830	$ 208,666	$ 735,359	$ 609,878
Cost of devices revenues	40,886	64,011	121,972	75,541
Cost of service and other revenues	30,551	29,495	96,326	85,008
Total Cost of revenues	$ 294,267	$ 302,172	$ 953,657	$ 770,427

XML

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Carrying amounts and estimated fair values of other financial instruments

The following table presents the carrying amounts and estimated fair values of our other financial instruments as of September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012				December 31, 2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Current assets:
Derivative instruments	$	467	$	467	$	1,471	$	1,471
	$	467	$	467	$	1,471	$	1,471
Long-term assets:
Auction-rate securities	$	—	$	—	$	17,463	$	17,463
Equity securities	2,631		2,631		1,642		1,642
Equity and cost method investments	14,794		N/A		20,661		N/A
	$	17,425			$	39,766
Current liabilities:
Acquisition-related contingent consideration—short-term	$	6,027	$	6,027	$	4,925	$	4,925
Current portion of Term Loan A Facility Due 2016	121,875		121,875		84,375		84,375
3.25% AMS Convertible Notes due 2036	795		795		841		841
4.00% AMS Convertible Notes due 2041	111		111		131		131
Current portion of other long-term debt	2,166		2,166		2,918		2,918
Derivative instruments	358		358		119		119
Minimum Voltaren® Gel royalties due to Novartis—short-term	24,037		24,037		30,000		30,000
Other	1,000		1,000		—		—
	$	156,369	$	156,369	$	123,309	$	123,309
Long-term liabilities:
Acquisition-related contingent consideration—long-term	$	2,688	$	2,688	$	3,762	$	3,762
1.75% Convertible Senior Subordinated Notes Due 2015, net	315,585		350,878		299,222		330,950
Term Loan A Facility Due 2016, less current portion	1,293,750		1,293,396		1,387,500		1,372,119
Term Loan B Facility Due 2018	160,550		161,272		438,250		439,017
7.00% Senior Notes Due 2019	500,000		544,063		500,000		532,500
7.00% Senior Notes Due 2020, net	396,828		434,000		396,618		424,750
7.25% Senior Notes Due 2022	400,000		436,000		400,000		422,500
Other long-term debt, less current portion	2,805		2,805		2,739		2,739
Minimum Voltaren® Gel royalties due to Novartis—long-term	—		—		20,100		20,100
Other	5,375		5,375		—		—
	$	3,077,581	$	3,230,477	$	3,448,191	$	3,548,437

Financial assets and liabilities measured at fair value on recurring basis

The Company’s financial assets and liabilities measured at fair value on a recurring basis at September 30, 2012 and December 31, 2011, were as follows (in thousands):

	Fair Value Measurements at Reporting Date using
September 30, 2012	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Equity securities	$	2,631	$	—	$	—	$	2,631
Derivative instruments	—		467		—		467
Total	$	2,631	$	467	$	—	$	3,098
Liabilities:
Derivative instruments	$	—	$	358	$	—	$	358
Acquisition-related contingent consideration—short-term	—		—		6,027		6,027
Acquisition-related contingent consideration—long-term	—		—		2,688		2,688
Total	$	—	$	358	$	8,715	$	9,073

	Fair Value Measurements at Reporting Date using
December 31, 2011	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Money market funds	$	110,816	$	—	$	—	$	110,816
Equity securities	1,642		—		—		1,642
Derivative instruments	—		1,471		—		1,471
Auction-rate securities	—		—		17,463		17,463
Total	$	112,458	$	1,471	$	17,463	$	131,392
Liabilities:
Derivative instruments	$	—	$	119	$	—	$	119
Acquisition-related contingent consideration—short-term	—		—		4,925		4,925
Acquisition-related contingent consideration—long-term	—		—		3,762		3,762
Total	$	—	$	119	$	8,687	$	8,806

Financial assets measured at fair value on recurring basis using significant unobservable inputs

The following table presents changes to the Company’s financial liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended September 30, 2012 (in thousands):

	Acquisition- related Contingent Consideration
Liabilities:
July 1, 2012	$	(8,619	)
Amounts (acquired) sold or (issued) settled, net	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	(96		)
September 30, 2012	$	(8,715	)

	Auction-rate Securities
Assets:
January 1, 2012	$	17,463
Securities sold or redeemed	(18,800		)
Securities purchase or acquired	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	—
Unrealized gains included in Other comprehensive income (loss), net	1,337
September 30, 2012	$	—

	Auction-rate Securities
Assets:
January 1, 2011	$	17,332
Securities sold or redeemed	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	—
Unrealized gains included in Other comprehensive income (loss), net	84
September 30, 2011	$	17,416

	Auction-rate Securities
Assets:
July 1, 2011	$	17,505
Securities sold or redeemed	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	—
Unrealized losses included in Other comprehensive income (loss), net	(89		)
September 30, 2011	$	17,416

Financial liabilities measured at fair value on recurring basis using significant unobservable inputs

	Acquisition- related Contingent Consideration
Liabilities:
January 1, 2012	$	(8,687	)
Amounts (acquired) sold or (issued) settled, net	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	(28		)
September 30, 2012	$	(8,715	)

	Acquisition-related Contingent  Consideration
Liabilities:
January 1, 2011	$	(16,050	)
Amounts (acquired) sold / (issued) settled, net	(165		)
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	7,458
September 30, 2011	$	(8,757	)

	Acquisition- related Contingent Consideration
Liabilities:
July 1, 2012	$	(8,619	)
Amounts (acquired) sold or (issued) settled, net	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	(96		)
September 30, 2012	$	(8,715	)

	Acquisition-related Contingent  Consideration
Liabilities:
July 1, 2011	$	(9,233	)
Amounts (acquired) sold / (issued) settled, net	248
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	228
September 30, 2011	$	(8,757	)

Summary of available-for-sale securities

The following is a summary of available-for-sale securities held by the Company as of September 30, 2012 and December 31, 2011 (in thousands):

	Available-for-sale
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
September 30, 2012
Equity securities	$	1,766	$	865	$	—	$	2,631
Long-term available-for-sale securities	$	1,766	$	865	$	—	$	2,631
Total available-for-sale securities	$	1,766	$	865	$	—	$	2,631

	Available-for-sale
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
December 31, 2011
Money market funds	$	110,816	$	—	$	—		$	110,816
Total included in cash and cash equivalents	$	110,816	$	—	$	—		$	110,816
Auction-rate securities	18,800		—		(1,337		)	17,463
Equity securities	1,766		—		(124		)	1,642
Long-term available-for-sale securities	$	20,566	$	—	$	(1,461	)	$	19,105
Total available-for-sale securities	$	131,382	$	—	$	(1,461	)	$	129,921

Schedule of financial assets measured at fair value on a nonrecurring basis

	Fair Value Measurements at Reporting Date using						Total Expense for the Three Months Ended September 30, 2012
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Sanctura XR® developed technology intangible asset	$	—	$	—	$	5,000	$	(11,163	)
Total	$	—	$	—	$	5,000	$	(11,163	)

The Company's financial assets measured at fair value on a nonrecurring basis during the nine months ended September 30, 2012 were as follows (in thousands):

	Fair Value Measurements at Reporting Date using						Total Expense for the Nine Months Ended September 30, 2012
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Sanctura XR® developed technology intangible asset	$	—	$	—	$	5,000	$	(51,163	)
AMS IPR&D intangible asset	—		—		1,000		(3,000		)
Total	$	—	$	—	$	6,000	$	(54,163	)
Liabilities:
Patent litigation settlement liability(1)	—		—		131,361		(131,361		)
Total	$	—	$	—	$	131,361	$	(131,361	)

_____________

(1) As a result of a subsequent change in estimate with respect to this obligation, the Company reduced its liability associated with the Watson Settlement Agreement by $46.2 million to $85.1 million during the third quarter of 2012.

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Segment Results (Schedule Of Reconciliations Of Consolidated Adjusted Income (Loss) Before Income Tax) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Segment Reporting [Abstract]
Total consolidated adjusted income before income tax	$ 226,434	$ 219,730	$ 626,929	$ 586,732
Upfront and milestone payments to partners	(5,338)	(2,355)	(56,905)	(27,346)
Asset impairment charges	(11,163)	(22,691)	(54,163)	(22,691)
Acquisition-related and integration items, net	(5,776)	(5,818)	(16,580)	(29,517)
Seperation benefits and other cost reduction initiatives	(11,590)	(13,603)	(26,958)	(17,598)
Amortization of intangible assets	(58,735)	(58,846)	(170,659)	(136,501)
Inventory step-up	0	(23,937)	(880)	(40,718)
Non-cash interest expense	(5,209)	(4,754)	(15,354)	(14,014)
Loss on extinguishment of debt	(1,789)	0	(7,215)	(8,548)
Accrual for payment to Impax related to sales of Opana ER	6,000	0	(104,000)	0
Gain (loss) related to litigation settlement	46,238	0	(85,123)	0
Litigation-related contingencies	(82,600)	0	(82,600)	0
Other Non-operating Income (Expense), Nonrecurring	0	2,636	0	2,636
Other Nonoperating Income (Expense)	250	3,000	(498)	2,777
(LOSS) INCOME BEFORE INCOME TAX	$ 96,472	$ 90,362	$ 6,492	$ 292,435

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Fair Value Measurements (Schedule of Financial Assets Measured At Fair Value On A Nonrecurring Basis) (Details) (USD $)	3 Months Ended		9 Months Ended			9 Months Ended						9 Months Ended		3 Months Ended	9 Months Ended				3 Months Ended	9 Months Ended				3 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011	Sep. 30, 2012 Fair value, measurements, nonrecurring [Member]		Sep. 30, 2012 Fair value, measurements, nonrecurring [Member] Quoted prices In active markets for identical assets (Level 1) [Member]		Sep. 30, 2012 Fair value, measurements, nonrecurring [Member] Significant other observable inputs (Level 2) [Member]		Sep. 30, 2012 Fair value, measurements, nonrecurring [Member] Significant unobservable inputs (Level 3) [Member]		Mar. 31, 2012 Sanctura Xr [Member]	Sep. 30, 2012 Sanctura Xr [Member]	Sep. 30, 2012 Sanctura Xr [Member] Fair value, measurements, nonrecurring [Member] Unclassified indefinite lived intangible assets [Member]	Sep. 30, 2012 Sanctura Xr [Member] Fair value, measurements, nonrecurring [Member] Unclassified indefinite lived intangible assets [Member] Quoted prices In active markets for identical assets (Level 1) [Member]	Sep. 30, 2012 Sanctura Xr [Member] Fair value, measurements, nonrecurring [Member] Unclassified indefinite lived intangible assets [Member] Significant other observable inputs (Level 2) [Member]	Sep. 30, 2012 Sanctura Xr [Member] Fair value, measurements, nonrecurring [Member] Unclassified indefinite lived intangible assets [Member] Significant unobservable inputs (Level 3) [Member]	Sep. 30, 2012 AMS IPR&D [Member] Fair value, measurements, nonrecurring [Member] Unclassified indefinite lived intangible assets [Member]	Sep. 30, 2012 AMS IPR&D [Member] Fair value, measurements, nonrecurring [Member] Unclassified indefinite lived intangible assets [Member] Quoted prices In active markets for identical assets (Level 1) [Member]	Sep. 30, 2012 AMS IPR&D [Member] Fair value, measurements, nonrecurring [Member] Unclassified indefinite lived intangible assets [Member] Significant other observable inputs (Level 2) [Member]	Sep. 30, 2012 AMS IPR&D [Member] Fair value, measurements, nonrecurring [Member] Unclassified indefinite lived intangible assets [Member] Significant unobservable inputs (Level 3) [Member]	Sep. 30, 2012 Watson Laboratories, Inc [Member]	Sep. 30, 2012 Watson Laboratories, Inc [Member] Fair value, measurements, nonrecurring [Member] Unclassified indefinite lived intangible assets [Member] As adjusted [Member]		Sep. 30, 2012 Watson Laboratories, Inc [Member] Fair value, measurements, nonrecurring [Member] Unclassified indefinite lived intangible assets [Member] Amended amount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Intangible assets	$ 2,285,187,000		$ 2,285,187,000		$ 2,504,124,000			$ 0		$ 0		$ 6,000,000		$ 21,600,000	$ 5,000,000		$ 0	$ 0	$ 5,000,000		$ 0	$ 0	$ 1,000,000
Asset impairment charges	(11,163,000)	(22,691,000)	(54,163,000)	(22,691,000)								(54,163,000)		(40,000,000)	(11,200,000)	(51,163,000)			(11,163,000)	(3,000,000)
Patent litigation settlement liability								0	[1]	0	[1]	131,361,000	[1]
Loss related to litigation settlement						(131,361,000)	[1]
Change in estimate of litigation liability	46,238,000	0	(85,123,000)	0																				46,200,000	46,200,000	[1]
Estimated litigation liability																											$ 85,100,000	[1]

[1] As a result of a subsequent change in estimate with respect to this obligation, the Company reduced its liability associated with the Watson Settlement Agreement by $46.2 million to $85.1 million during the third quarter of 2012.

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Debt (Credit Facility) (Narrative) (Details) (USD $)	9 Months Ended			0 Months Ended	9 Months Ended	12 Months Ended	9 Months Ended			1 Months Ended			3 Months Ended	9 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Jun. 17, 2011 Revolving Credit Facility And Together With Term Loan Facilities2011 Credit Facility [Member]	Jun. 17, 2011 2011 Credit Facility [Member]	Sep. 30, 2012 2011 Credit Facility [Member]	Dec. 31, 2011 2011 Credit Facility [Member]	Sep. 30, 2012 Credit Facilities [Member]	Sep. 30, 2011 Credit Facilities [Member]	Jun. 17, 2011 Term Loan A Due 2016 [Member]	Sep. 30, 2012 Term Loan B Due 2018 [Member]	Jul. 31, 2012 Term Loan B Due 2018 [Member]	Feb. 29, 2012 Term Loan B Due 2018 [Member]	Sep. 30, 2012 Term Loan B Due 2018 [Member]	Sep. 30, 2012 Term Loan B Due 2018 [Member]	Jun. 17, 2011 Term Loan B Due 2018 [Member]	Sep. 30, 2012 Minimum [Member] 2011 Credit Facility [Member]	Sep. 30, 2012 Maximum [Member] 2011 Credit Facility [Member]	Sep. 30, 2012 LIBOR Rate [Member] Term Loan B Due 2018 [Member] 2011 Credit Facility [Member]	Sep. 30, 2012 LIBOR Rate [Member] Minimum [Member] Term Loan A Due 2016 [Member] 2011 Credit Facility [Member]	Sep. 30, 2012 LIBOR Rate [Member] Maximum [Member] Term Loan A Due 2016 [Member] 2011 Credit Facility [Member]	Sep. 30, 2012 Alternate Base Rate [Member] Term Loan B Due 2018 [Member] 2011 Credit Facility [Member]	Sep. 30, 2012 Alternate Base Rate [Member] Minimum [Member] Term Loan A Due 2016 [Member] 2011 Credit Facility [Member]	Sep. 30, 2012 Alternate Base Rate [Member] Maximum [Member] Term Loan A Due 2016 [Member] 2011 Credit Facility [Member]
Line of Credit Facility [Line Items]
Revolving credit facility, borrowing capacity			$ 500,000,000						$ 1,500,000,000						$ 700,000,000
Additional revolving or term loan commitments				500,000,000
Additional Revolving or Term Loan Commitments																1
Debt Instrument, Description of Variable Rate Basis																	LIBOR
Margin rate over base rate																			1.75%	2.50%	2.00%	0.75%	1.50%
LIBOR margin																		3.00%
Commitment fee basis points																37.5	50
Payments of financing costs	0	81,535,000			56,200,000
Cost paid to investment bankers					43,400,000
Financing costs deferred and amortized to interest expense					6,200,000
Write off of Deferred Debt Issuance Cost						8,500,000
Prepayment of term loan facility										39,700,000	33,000,000	205,000,000
Unamortized finance costs written off													1,800,000	5,400,000
Interest expense							$ 45,000,000	$ 32,300,000

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Fair Value Measurements (Carrying Amounts And Estimated Fair Values Of Other Financial Instruments) (Details) (USD $) In Thousands, unless otherwise specified									9 Months Ended		9 Months Ended		9 Months Ended		9 Months Ended				9 Months Ended		9 Months Ended		9 Months Ended		9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Auction-rate securities [Member]	Dec. 31, 2011 Auction-rate securities [Member]	Sep. 30, 2012 Equity securities [Member]	Dec. 31, 2011 Equity securities [Member]	Sep. 30, 2012 Equity and cost method investment [Member]	Dec. 31, 2011 Equity and cost method investment [Member]	Sep. 30, 2012 Term loan A facility due 2016 [Member]	Dec. 31, 2011 Term loan A facility due 2016 [Member]	Sep. 30, 2012 Term loan B facility due 2018 [Member]	Dec. 31, 2011 Term loan B facility due 2018 [Member]	Sep. 30, 2012 3.25% AMS convertible notes due 2036 [Member]	Dec. 31, 2011 3.25% AMS convertible notes due 2036 [Member]	Sep. 30, 2012 4.00% AMS convertible notes due 2041 [Member]	Dec. 31, 2011 4.00% AMS convertible notes due 2041 [Member]	Sep. 30, 2012 1.75% Convertible Senior Subordinated Notes Due 2015 [Member]	Dec. 31, 2011 1.75% Convertible Senior Subordinated Notes Due 2015 [Member]	Sep. 30, 2012 1.75% Convertible Senior Subordinated Notes Due April 15, 2015 [Member]	Apr. 30, 2008 1.75% Convertible Senior Subordinated Notes Due April 15, 2015 [Member]	Sep. 30, 2012 7.00% senior notes due 2019 [Member]	Dec. 31, 2011 7.00% senior notes due 2019 [Member]	Sep. 30, 2012 7.00% senior notes due 2020 [Member]	Dec. 31, 2011 7.00% senior notes due 2020 [Member]	Sep. 30, 2012 7.25% senior notes due 2022 [Member]	Dec. 31, 2011 7.25% senior notes due 2022 [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Derivative instruments, Carrying Amount	$ 467	$ 1,471
Derivative instruments, Fair Value	467	1,471
Current assets, Carrying amount	467	1,471
Current Assets, Fair Value	467	1,471
Auction-rate securities, Carrying Amount			0	17,463
Auction-rate securities, Fair Value			0	17,463
Equity securities, Carrying Amount	2,631	19,105			2,631	1,642
Equity securities, Fair Value					2,631	1,642
Equity and cost method investments, Carrying Amount							14,794	20,661
Assets, Carrying Amount	17,425	39,766
Acquisition-related contingent consideration - short-term, Carrying Amount	6,027	4,925
Acquisition-related contingent consideration - short-term, Fair Value	6,027	4,925
Current portion of Term Loan, Carrying Amount									121,875	84,375
Current portion of Term Loan, Fair Value									121,875	84,375
Convertible Notes, Carrying Amount													795	841	111	131
Convertible Notes, Fair Value													795	841	111	131
Current portion of other long-term debt, Carrying Amount	2,166	2,918
Current portion of other long-term debt, Fair Value	2,166	2,918
Derivative instruments, Carrying Amount	358	119
Derivative instruments, Fair Value	358	119
Minimum Voltaren Gel royalties due to Novartis-short-term, Carrying Amount	24,037	30,000
Minimum Voltaren Gel royalties due to Novartis-short-term, Fair Values	24,037	30,000
Other, Carrying amount	1,000	0
Other, Fair value	1,000	0
Current liabilities, Carrying Amount	156,369	123,309
Current liabilities, Fair Value	156,369	123,309
Acquisition-related contingent consideration - long-term, Carrying Amount	2,688	3,762
Acquisition-related contingent consideration - long-term, Fair Value	2,688	3,762
1.75% Convertible Senior Subordinated Notes Due 2015, net, Carrying Amount																	315,585	299,222
1.75% Convertible Senior Subordinated Notes Due 2015, net, Fair value																	350,878	330,950
Term Loan Facility Due, less current portion, Carrying Amount									1,293,750	1,387,500	160,550	438,250
Term Loan Facility Due, less current portion, Fair Value									1,293,396	1,372,119	161,272	439,017
Senior Notes, Carrying Amount																					500,000	500,000	396,828	396,618	400,000	400,000
Senior Notes, Fair Value																					544,063	532,500	434,000	424,750	436,000	422,500
Other long-term debt, less current portion, Carrying Amount	2,805	2,739
Other long-term debt, less current portion, Fair Value	2,805	2,739
Minimum Voltaren Gel royalties due to Novartis-long-term, Carrying Amount	0	20,100
Minimum Voltaren Gel royalties due to Novartis-long-term, Fair Value	0	20,100
Other Liabilities, Long-Term, Carrying Amount	5,375	0
Other Liabilities, Long-Term, Fair Value	5,375	0
Liabilities, Carrying Amount	3,077,581	3,448,191
Liabilities, Fair Value	$ 3,230,477	$ 3,548,437
Interest Rate													3.25%		4.00%		1.75%		1.75%	1.75%	7.00%		7.00%		7.25%
Maturity									2016		2018		2036		2041				2015		2019		2020		2022

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Income Taxes (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income Tax Disclosure [Abstract]
Effective income tax rate on earnings from continuing operations before income taxes	29.30%	37.70%	(142.70%)	34.30%
Increase in the effective income tax rate	17.00%
Income tax benefit, resulting from lapse of applicable statute of limitations	$ 5,800,000	$ 4,200,000	$ 5,800,000	$ 7,900,000
Income tax expense (benefit)	(28,287,000)	(34,057,000)	9,263,000	(100,283,000)
Valuation allowance		8,500,000		8,500,000
Benefit for a prior period adjustment	$ 6,300,000

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Commitments And Contingencies (Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended				9 Months Ended	12 Months Ended		9 Months Ended			3 Months Ended	9 Months Ended		9 Months Ended		9 Months Ended		0 Months Ended			9 Months Ended					9 Months Ended			3 Months Ended	0 Months Ended				9 Months Ended					3 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 sqft M renewal_options	Sep. 30, 2011	Dec. 31, 2011	May 03, 2011 Novartis Consumer Health, Inc. [Member] Y	Sep. 30, 2012 Teikoku Seiyaku Co., Ltd. [Member] Japanese_Facilities	Dec. 31, 2011 Teikoku Seiyaku Co., Ltd. [Member]	Sep. 30, 2012 Mallinckrodt Inc. [Member]	Sep. 30, 2012 Noramco, Inc. [Member]	Sep. 30, 2012 Sharp Corporation [Member]	Sep. 30, 2012 UPS Supply Chain Solutions [Member]	Sep. 30, 2012 Watson Laboratories, Inc [Member]	Sep. 30, 2012 Watson Laboratories, Inc [Member]	Aug. 03, 2012 Watson Laboratories, Inc [Member]	Sep. 30, 2012 Impax Laboratories, Inc. [Member]	Mar. 31, 2012 Impax Laboratories, Inc. [Member]	Sep. 30, 2012 Manufacturing agreement [Member] Novartis Consumer Health, Inc. [Member]	Sep. 30, 2012 Voltaren Gel Agreement Extending Through June Two Thousand Eleven [Member] [Member] Novartis Consumer Health, Inc. [Member]	Nov. 24, 2010 Ventiv agreement [Member] Project manager [Member] field_force	Nov. 24, 2010 Ventiv agreement [Member] Trainer [Member] field_force	Nov. 24, 2010 Ventiv agreement [Member] National sales director [Member] field_force	Sep. 30, 2012 Voltaren gel agreement extending through June 30, 2012 [Member] Novartis Consumer Health, Inc. [Member]	Sep. 30, 2012 Voltaren Gel Agreement Extending Through June Two Thousand Thirteen [Member] [Member] Novartis Consumer Health, Inc. [Member]	Sep. 30, 2012 MCP cases [Member] Pending_Cases	Sep. 30, 2012 Propoxyphene cases [Member] Pending_Cases	Sep. 30, 2012 Vaginal mesh cases [Member] Pending_Cases	Sep. 30, 2012 Maximum [Member] UPS Supply Chain Solutions [Member]	Sep. 30, 2012 Maximum [Member] Paragraph IV certification on frova [Member]	Sep. 30, 2012 Minimum [Member] Paragraph IV certification on frova [Member]	Jun. 30, 2012 Previously reported [Member] Watson Laboratories, Inc [Member]	Nov. 24, 2010 Previously reported [Member] Ventiv agreement [Member] Sales representatives [Member] field_force	Nov. 24, 2010 Previously reported [Member] Ventiv agreement [Member] District managers [Member] field_force	Nov. 24, 2010 Amended amount [Member] Ventiv agreement [Member] Sales representatives [Member] field_force	Nov. 24, 2010 Amended amount [Member] Ventiv agreement [Member] District managers [Member] field_force	Sep. 30, 2012 2013 Payments [Member] Watson Laboratories, Inc [Member]	Sep. 30, 2012 2014 Payments, pending FDA approval [Member] Watson Laboratories, Inc [Member]	Sep. 30, 2012 2015 Payments, pending FDA approval [Member] Watson Laboratories, Inc [Member]	Sep. 30, 2012 State of Louisiana v. Abbott Laboratories, Inc [Member]	Sep. 30, 2012 State of Texas v. Abbott Laboratories, Inc [Member]	Sep. 30, 2012 Fair value, measurements, nonrecurring [Member] AMS [Member] As adjusted [Member] Watson Laboratories, Inc [Member]		Sep. 30, 2012 Fair value, measurements, nonrecurring [Member] AMS [Member] Amended amount [Member] Watson Laboratories, Inc [Member]
Commitments And Contingencies [Line Items]
Purchase commitment term (in years)						5
Purchase commitment, renewal term (in years)						5 years			1 year	1 year
Required minimum purchase							$ 34,000,000											$ 11,200,000	$ 13,000,000				$ 16,000,000	$ 7,100,000
Required minimum spending percentage of prior year sales																			15.00%				13.00%	6.00%
Amounts incurred by Endo for A&P Expenditures			7,900,000	15,100,000
Japanese facilities for commercial sale in the United States							2
Termination of agreement notice period (days)							30 days				90 days
Termination of agreement written notice after expiration date, (in days)							180 days
Percentage of royalty rate of net sales								6.00%
Payments for royalties							39,900,000
Royalty payable							39,900,000
Wholesaler price discount percentage															50.00%
Noramco agreement term (years)										4 years
Automatic renewal provision for unlimited successive periods, (in years)										1 year	1 year
Sales and promotional services employees																				1	1	1										228	24	170	17
Expenses incurred with respect to Ventiv under the Ventiv Agreement			29,200,000	27,700,000
Initial term of agreement extended date, UPS Supply Chain Solutions											March 1, 2015	March 31, 2015
Termination costs maximum, UPS Supply Chain Solutions																												1,000,000
Range of possible loss, minimum	53,000,000		53,000,000
Litigation settlement expense	82,600,000	0	82,600,000	0																																			4,600,000	25,000,000
Settlement agreement terms														seven and a half months after Watson launches its generic version of Lidoderm®. Endo will receive a 25% royalty of Watson’s gross profit of its generic version of Lidoderm® during any period during which Watson is the exclusive generic on the market.
Percentage of royalty rate of gross sales (percent)														25.00%
Other Commitment, Due In Second Year, Periodic Payment																																				12,000,000
Other commitment, due in second year													96,000,000	96,000,000
Other commitment, due In third year																																					6,700,000
Other commitment, due in third year													80,000,000	80,000,000
Other Commitment, Due In Fourth Year, Periodic Payment																																						7,100,000
Other commitment, due in fourth year													64,000,000	64,000,000
Rebate percent														50.00%
Estimated litigation liability																															131,400,000												85,100,000	[1]
Gain (loss) related to litigation settlement	46,238,000	0	(85,123,000)	0									46,200,000																		131,400,000										46,200,000	[1]
Discount rate													5.10%
Increase (decrease) in accounts payable			1,132,000	21,656,000												(6,000,000)
Accounts payable	258,960,000		258,960,000		260,385,000											104,000,000	110,000,000
Patents expiration date																													2015	2014
Pending claims, number																									830	10	2,960
Loss Contingency, Cases on Appeal, Number																										45
New headquarters office space, square feet			300,000
Term of triple net lease (years)			12 years
Number of triple net lease renewal options			3
Additional lease term period (months)			60
Monthly lease rate for the initial year, 2013	500,000		500,000
Percentage increase in lease rate			2.25%
Lease initial term			4 years
Additional office space, square feet			150,000
Tenant improvement allowance per square foot			45
Capitalized property, plant and equipment related to corporate headquarters lease			44,300,000
Corporate headquarter lease liability recorded	$ 22,900,000		$ 22,900,000
Loss Contingency, Lawsuit Filing Period			45 days
Loss Contingency, Stay Of Approval Period, Hatch-Waxman Act			30 months

[1] As a result of a subsequent change in estimate with respect to this obligation, the Company reduced its liability associated with the Watson Settlement Agreement by $46.2 million to $85.1 million during the third quarter of 2012.

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Stockholders' Equity (Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended					9 Months Ended			9 Months Ended				9 Months Ended				9 Months Ended					9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 Y	Sep. 30, 2011	Dec. 31, 2011	Sep. 30, 2012 2000 Stock incentive plan [Member]	Sep. 30, 2012 2004 Stock incentive plan [Member]	Sep. 30, 2012 2007 Stock incentive plan [Member]	Sep. 30, 2012 2010 Stock incentive plan [Member]	Jun. 30, 2011 2005 AMS stock incentive plan [Member]	Sep. 30, 2012 2008 Share repurchase program [Member]	Sep. 30, 2012 2012 Share repurchase program [Member]	Sep. 30, 2012 Employee stock purchase plan [Member]	Apr. 15, 2011 Employee stock purchase plan [Member]	Sep. 30, 2012 Performance stock units [Member]	Sep. 30, 2011 Performance stock units [Member]	Sep. 30, 2012 Restricted stock [Member]	Dec. 31, 2011 Restricted stock [Member]	Sep. 30, 2012 Restricted stock units (RSUs) [Member]	Sep. 30, 2012 Non vested stock options [Member] Y	Sep. 30, 2011 Non vested stock options [Member]	Sep. 30, 2012 Non vested restricted stock units [Member] Y	Jun. 30, 2011 Non vested restricted stock units [Member]	Sep. 30, 2012 Non vested restricted stock [Member] Y	Sep. 30, 2012 Maximum [Member] 2010 Stock incentive plan [Member]
Shareholders Equity [Line Items]
Maximum number of shares reserved for issuance						4,000,000	4,000,000	7,000,000	8,000,000	5,269,152
Maximum number of shares per participant								750,000
Shares reserved for future issuance	20,300,000		20,300,000						8,000,000
Number of shares issued to be settled in Company's stock																									4,000,000
Number of shares exceeding total number of shares of Company stock subject to awards awarded to a participant																									1,000,000
Stock-based compensation expense	$ 11,200,000	$ 15,500,000	$ 44,500,000	$ 34,200,000									$ 1,100,000
Unrecognized compensation cost	97,700,000		97,700,000												6,700,000					43,700,000		47,400,000
Assumptions related to volatility, dividend yield			0.00%	0.00%
Total intrinsic value of options exercised			15,300,000	14,300,000
Weighted-average grant date fair value of stock options, per option																				$ 10.50	$ 14.69
Weighted average remaining requisite service period of non-vested stock awards, years																				2.2				1.8
Weighted average remaining requisite service period of non-vested restricted stock units, years																						1.8
Weighted-average grant date fair value of restricted stock units, per unit																	$ 30.94	$ 30.27				$ 34.81	$ 34.71
Performance cycle, in years			3 years
Conversion of performance stock units to common shares			1
Cumulative revenue performance, in years			3
Target revenue period, in years			3 years
Restricted stock units and performance shares granted to employees															193,000	160,000	0		999,294
Weighted-average period over which unrecognized compensation costs will be recognized, years															3 years
Stock Repurchase Program, Authorized Amount											750,000,000	450,000,000
Share repurchase plan extension period			2 years
Repurchase of common stock, shares			4,700,000	900,000
Repurchase of common stock, value			156,000,000	34,702,000
Percentage of contribution by the employees													10.00%
Non-qualified stock options granted to executive officer			2,227,481
Percentage of price per common stock													85.00%
Numerator to calculate maximum number of shares a participant may purchase in a calendar year													25,000
Common shares outstanding	9,176,028		9,176,028		8,115,467									1,200,000
Percentage of common shares outstanding													1.00%
Shares issued pursuant to the ESPP			170,124
Proceeds from issuance of treasury stock			$ 4,606,000	$ 0

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Acquisitions (Schedule Of Acquisition-Related Items In The Accompanying Consolidated Statements Of Operations) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Acquired Indefinite-lived Intangible Assets [Line Items]
Total	$ 5,776	$ 5,818	$ 16,580	$ 29,517
AMS [Member]
Acquired Indefinite-lived Intangible Assets [Line Items]
Bank fees	0	0	0	16,070
Legal, separation, integration, and other costs	1,848	4,069	5,174	11,263
Total	$ 1,848	$ 4,069	$ 5,174	$ 27,333

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Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair value measurements

NOTE 3. FAIR VALUE MEASUREMENTS

The financial instruments recorded in our Condensed Consolidated Balance Sheets include cash and cash equivalents, accounts receivable, marketable securities, equity and cost method investments, accounts payable and accrued expenses, acquisition-related contingent consideration, debt obligations, and derivative instruments. Included in cash and cash equivalents are money market funds representing a type of mutual fund required by law to invest in low-risk securities (for example, U.S. government bonds, U.S. Treasury Bills and commercial paper). Money market funds are structured to maintain the fund’s net asset value at $1 per unit, which assists in ensuring adequate liquidity upon demand by the holder. Money market funds pay dividends that generally reflect short-term interest rates. Thus, only the dividend yield fluctuates. Due to their short-term maturity, the carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair values.

The following table presents the carrying amounts and estimated fair values of our other financial instruments as of September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012				December 31, 2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Current assets:
Derivative instruments	$	467	$	467	$	1,471	$	1,471
	$	467	$	467	$	1,471	$	1,471
Long-term assets:
Auction-rate securities	$	—	$	—	$	17,463	$	17,463
Equity securities	2,631		2,631		1,642		1,642
Equity and cost method investments	14,794		N/A		20,661		N/A
	$	17,425			$	39,766
Current liabilities:
Acquisition-related contingent consideration—short-term	$	6,027	$	6,027	$	4,925	$	4,925
Current portion of Term Loan A Facility Due 2016	121,875		121,875		84,375		84,375
3.25% AMS Convertible Notes due 2036	795		795		841		841
4.00% AMS Convertible Notes due 2041	111		111		131		131
Current portion of other long-term debt	2,166		2,166		2,918		2,918
Derivative instruments	358		358		119		119
Minimum Voltaren® Gel royalties due to Novartis—short-term	24,037		24,037		30,000		30,000
Other	1,000		1,000		—		—
	$	156,369	$	156,369	$	123,309	$	123,309
Long-term liabilities:
Acquisition-related contingent consideration—long-term	$	2,688	$	2,688	$	3,762	$	3,762
1.75% Convertible Senior Subordinated Notes Due 2015, net	315,585		350,878		299,222		330,950
Term Loan A Facility Due 2016, less current portion	1,293,750		1,293,396		1,387,500		1,372,119
Term Loan B Facility Due 2018	160,550		161,272		438,250		439,017
7.00% Senior Notes Due 2019	500,000		544,063		500,000		532,500
7.00% Senior Notes Due 2020, net	396,828		434,000		396,618		424,750
7.25% Senior Notes Due 2022	400,000		436,000		400,000		422,500
Other long-term debt, less current portion	2,805		2,805		2,739		2,739
Minimum Voltaren® Gel royalties due to Novartis—long-term	—		—		20,100		20,100
Other	5,375		5,375		—		—
	$	3,077,581	$	3,230,477	$	3,448,191	$	3,548,437

Equity securities consist of publicly traded common stock, the value of which is based on a quoted market price. These securities are not held to support current operations and are therefore classified as non-current assets.

The acquisition-related contingent consideration, which is required to be measured at fair value on a recurring basis, consists primarily of contingent cash consideration related to the November 2010 acquisition of Generics International (US Parent), Inc. (doing business as Qualitest Pharmaceuticals). The fair value of our acquisition-related contingent consideration is determined using an income approach (present value technique), which is discussed in more detail below. The fair value of our 1.75% Convertible Senior Subordinated Notes (Convertible Notes) is based on an income approach known as the binomial lattice model which incorporated certain inputs and assumptions, including scheduled coupon and principal payments, the conversion feature inherent in the Convertible Notes, the put feature inherent in the Convertible Notes, and stock price volatility assumptions of 32% at September 30, 2012 and 33% at December 31, 2011 that were based on historic volatility of the Company’s common stock and other factors. These fair value measurements are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy.

The fair values of the Term Loan Facilities and 2019, 2020, and 2022 Notes were based on market quotes and transactions proximate to the valuation date. The Company had previously used an income approach to value these debt instruments; however, the valuation methodology was subsequently transitioned to a market-based approach given the volume of observable market transactions and quoted prices for these debt instruments. Based on this valuation methodology, we determined these debt instruments represent Level 2 measurements within the fair value hierarchy.

The total fair value of various foreign exchange forward contracts as of September 30, 2012 includes assets of $0.5 million reported in Prepaid expenses and other current assets and liabilities of $0.4 million, reported in Accrued expenses. We measure our derivative instruments at fair value on a recurring basis using significant observable inputs. Refer to Note 16. Derivative Instruments and Hedging Activities for more information regarding our derivative instruments.

The minimum Voltaren^® Gel royalty due to Novartis AG was recorded at fair value at inception during 2008 using an income approach (present value technique) and is being accreted up to the maximum potential minimum payments, less payments made to date. We believe the carrying amount of this minimum royalty guarantee at September 30, 2012 and December 31, 2011 represents a reasonable approximation of the price that would be paid to transfer the liability in an orderly transaction between market participants at the measurement date. Accordingly, the carrying value approximates fair value as of September 30, 2012 and December 31, 2011.

The fair value of equity method and cost method investments is not readily available nor have we estimated the fair value of these investments and disclosure is not required. The Company is not aware of any identified events or changes in circumstances that would have a significant adverse effect on the carrying value of any of our equity or cost method investments included in our Condensed Consolidated Balance Sheet at September 30, 2012 and December 31, 2011.

As of September 30, 2012, the Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis. Fair value guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

• Level 1—Quoted prices in active markets for identical assets or liabilities.

• Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s financial assets and liabilities measured at fair value on a recurring basis at September 30, 2012 and December 31, 2011, were as follows (in thousands):

	Fair Value Measurements at Reporting Date using
September 30, 2012	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Equity securities	$	2,631	$	—	$	—	$	2,631
Derivative instruments	—		467		—		467
Total	$	2,631	$	467	$	—	$	3,098
Liabilities:
Derivative instruments	$	—	$	358	$	—	$	358
Acquisition-related contingent consideration—short-term	—		—		6,027		6,027
Acquisition-related contingent consideration—long-term	—		—		2,688		2,688
Total	$	—	$	358	$	8,715	$	9,073

	Fair Value Measurements at Reporting Date using
December 31, 2011	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Money market funds	$	110,816	$	—	$	—	$	110,816
Equity securities	1,642		—		—		1,642
Derivative instruments	—		1,471		—		1,471
Auction-rate securities	—		—		17,463		17,463
Total	$	112,458	$	1,471	$	17,463	$	131,392
Liabilities:
Derivative instruments	$	—	$	119	$	—	$	119
Acquisition-related contingent consideration—short-term	—		—		4,925		4,925
Acquisition-related contingent consideration—long-term	—		—		3,762		3,762
Total	$	—	$	119	$	8,687	$	8,806

Auction-Rate Securities

In June 2012, our remaining auction-rate securities were called at par and we received proceeds of $18.8 million. Prior to being sold, these auction-rate securities had been classified as available-for-sale securities and had therefore been maintained at their fair value, with changes in value being recorded as part of Other comprehensive income (loss), net. Due to the fact that we received proceeds equal to par, the auction-rate securities were adjusted to their fair value of $18.8 million, with a corresponding gain to Other comprehensive income (loss), net. The previously recognized cumulative unrealized holding loss associated with these securities of $1.5 million was reversed in its entirety. As a result, no gain or loss was realized.

Acquisition-Related Contingent Consideration

On November 30, 2010 (the Qualitest Pharmaceuticals Acquisition Date), Endo acquired Qualitest Pharmaceuticals, which was party to an asset purchase agreement with Teva Pharmaceutical Industries Ltd (Teva) (the Teva Agreement). Pursuant to this agreement, Qualitest Pharmaceuticals purchased certain pipeline generic products from Teva and could be obligated to pay consideration to Teva upon the achievement of certain future regulatory milestones (the Teva Contingent Consideration).

The range of the undiscounted amounts the Company could pay under the Teva Agreement is between zero and $12.5 million. The Company is accounting for the Teva Contingent Consideration in the same manner as if it had entered into that arrangement with respect to its acquisition of Qualitest Pharmaceuticals. Accordingly, the fair value was estimated based on a probability-weighted discounted cash flow model, or income approach. The resultant probability-weighted cash flows were then discounted using a discount rate of U.S. Prime plus 300 basis points. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. Using this valuation technique, the fair value of the contractual obligation to pay the Teva Contingent Consideration was determined to be $8.7 million at September 30, 2012 and $8.7 million at December 31, 2011, respectively.

Fair Value Measurements Using Significant Unobservable Inputs

The following table presents changes to the Company’s financial liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended September 30, 2012 (in thousands):

	Acquisition- related Contingent Consideration
Liabilities:
July 1, 2012	$	(8,619	)
Amounts (acquired) sold or (issued) settled, net	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	(96		)
September 30, 2012	$	(8,715	)

The following table presents changes to the Company’s financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended September 30, 2011 (in thousands):

	Auction-rate Securities
Assets:
July 1, 2011	$	17,505
Securities sold or redeemed	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	—
Unrealized losses included in Other comprehensive income (loss), net	(89		)
September 30, 2011	$	17,416

	Acquisition-related Contingent  Consideration
Liabilities:
July 1, 2011	$	(9,233	)
Amounts (acquired) sold / (issued) settled, net	248
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	228
September 30, 2011	$	(8,757	)

The following table presents changes to the Company’s financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2012 (in thousands):

	Auction-rate Securities
Assets:
January 1, 2012	$	17,463
Securities sold or redeemed	(18,800		)
Securities purchase or acquired	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	—
Unrealized gains included in Other comprehensive income (loss), net	1,337
September 30, 2012	$	—

	Acquisition- related Contingent Consideration
Liabilities:
January 1, 2012	$	(8,687	)
Amounts (acquired) sold or (issued) settled, net	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	(28		)
September 30, 2012	$	(8,715	)

The following table presents changes to the Company’s financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2011 (in thousands):

	Auction-rate Securities
Assets:
January 1, 2011	$	17,332
Securities sold or redeemed	—
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	—
Unrealized gains included in Other comprehensive income (loss), net	84
September 30, 2011	$	17,416

	Acquisition-related Contingent  Consideration
Liabilities:
January 1, 2011	$	(16,050	)
Amounts (acquired) sold / (issued) settled, net	(165		)
Transfers in and/or (out) of Level 3	—
Changes in fair value recorded in earnings	7,458
September 30, 2011	$	(8,757	)

The following is a summary of available-for-sale securities held by the Company as of September 30, 2012 and December 31, 2011 (in thousands):

	Available-for-sale
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
September 30, 2012
Equity securities	$	1,766	$	865	$	—	$	2,631
Long-term available-for-sale securities	$	1,766	$	865	$	—	$	2,631
Total available-for-sale securities	$	1,766	$	865	$	—	$	2,631

	Available-for-sale
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
December 31, 2011
Money market funds	$	110,816	$	—	$	—		$	110,816
Total included in cash and cash equivalents	$	110,816	$	—	$	—		$	110,816
Auction-rate securities	18,800		—		(1,337		)	17,463
Equity securities	1,766		—		(124		)	1,642
Long-term available-for-sale securities	$	20,566	$	—	$	(1,461	)	$	19,105
Total available-for-sale securities	$	131,382	$	—	$	(1,461	)	$	129,921

At December 31, 2011, our investments in auction-rate securities consisted of two securities which, as of that date, had been in unrealized loss positions for more than twelve months. The Company had determined that, as of December 31, 2011, the gross unrealized losses associated with the auction-rate securities were not other-than-temporary.

At September 30, 2012 and December 31, 2011, our equity securities consisted of investments in the stock of three publicly traded companies. As of September 30, 2012, one investment had been in an unrealized loss position for more than twelve months. As of December 31, 2011, two investments had been in an unrealized loss position for less than twelve months and one had been in an unrealized loss position for more than twelve months. The Company does not believe the remaining unrealized losses are other-than-temporary at September 30, 2012 or December 31, 2011 primarily because the Company has both the ability and intent to hold these investments for a period of time we believe will be sufficient to recover such losses.

Nonrecurring Fair Value Measurements

The Company's financial assets measured at fair value on a nonrecurring basis during the three months ended September 30, 2012 were as follows (in thousands):

	Fair Value Measurements at Reporting Date using						Total Expense for the Three Months Ended September 30, 2012
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Sanctura XR® developed technology intangible asset	$	—	$	—	$	5,000	$	(11,163	)
Total	$	—	$	—	$	5,000	$	(11,163	)

The Company's financial assets measured at fair value on a nonrecurring basis during the nine months ended September 30, 2012 were as follows (in thousands):

	Fair Value Measurements at Reporting Date using						Total Expense for the Nine Months Ended September 30, 2012
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Sanctura XR® developed technology intangible asset	$	—	$	—	$	5,000	$	(51,163	)
AMS IPR&D intangible asset	—		—		1,000		(3,000		)
Total	$	—	$	—	$	6,000	$	(54,163	)
Liabilities:
Patent litigation settlement liability(1)	—		—		131,361		(131,361		)
Total	$	—	$	—	$	131,361	$	(131,361	)

_____________

(1) As a result of a subsequent change in estimate with respect to this obligation, the Company reduced its liability associated with the Watson Settlement Agreement by $46.2 million to $85.1 million during the third quarter of 2012.

See Note 9. Goodwill and Other Intangibles for a discussion of asset impairment charges. See Note 12. Commitments and Contingencies for a discussion of the patent litigation settlement liability.

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Stockholders' Equity (Summary Of Activity Under Stock Incentive Plans) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Stockholders' Equity Note [Abstract]
Outstanding, Number of Shares, January 1, 2012	8,115,467
Granted, Number of Shares	2,227,481
Exercised, Number of Shares	(668,024)
Forfeited, Number of Shares	(468,564)
Expired, Number of Shares	(30,332)
Outstanding, Number of Shares, June 30, 2012	9,176,028
Vested and expected to vest, June 30, 2012, Number of Shares	8,584,159
Exercisable, June 30, 2012, Number of Shares	3,990,964
Outstanding, Weighted Average Exercise Price, January 1, 2012	$ 25.79
Granted, Weighted Average Exercise Price	$ 34.60
Exercised, Weighted Average Exercise Price	$ 22.95
Forfeited, Weighted Average Exercise Price	$ 31.22
Expired, Weighted Average Exercise Price	$ 26.79
Outstanding, Weighted Average Exercise Price, June 30, 2012	$ 27.85
Vested and expected to vest, June 30, 2012, Weighted Average Exercise Price	$ 27.56
Exercisable, June 30, 2012, Weighted Average Exercise Price	$ 24.60
Outstanding, June 30, 2012, Weighted Average Remaining Contractual Term	6 years 10 months 17 days
Vested and expected to vest, June 30, 2012, Weighted Average Remaining Contractual Term	6 years 9 months 7 days
Exercisable, June 30, 2012, Weighted Average Remaining Contractual Term	5 years 2 months 9 days
Outstanding, June 30, 2012, Aggregate Intrinsic Value	$ 45,806,834
Vested and expected to vest, June 30, 2012, Aggregate Intrinsic Value	44,678,198
Exercisable, June 30, 2012, Aggregate Intrinsic Value	$ 29,050,676

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Inventories (Schedule Of Inventories) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Inventory, Net [Abstract]
Raw materials	$ 111,916	$ 103,064
Work-in-process	61,825	51,063
Finished goods	190,006	108,292
Total	$ 363,747	$ 262,419

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Goodwill And Other Intangibles (Tables)

9 Months Ended

Sep. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of changes in the carrying amount of goodwill

Changes in the carrying amount of our goodwill for the nine months ended September 30, 2012, are as follows:

	Carrying Amount
December 31, 2011	$	2,558,041
Goodwill acquired during the period	7,717
Measurement period adjustments	3,379
Effect of currency translation	151
September 30, 2012	$	2,569,288

Schedule of other intangible assets

Our other intangible assets consist of the following at September 30, 2012 and December 31, 2011, respectively (in thousands):

	September 30, 2012			December 31, 2011
Indefinite-lived intangibles:
In-process research and development	$	179,400		$	221,400
Total indefinite-lived intangibles	$	179,400		$	221,400
Definite-lived intangibles:
Licenses (weighted average life of 9 years)	$	590,193		$	647,239
Less accumulated amortization	(308,026		)	(256,903		)
Licenses, net	$	282,167		$	390,336
Customer relationships (weighted average life of 16 years)	159,789			159,632
Less accumulated amortization	(13,097		)	(5,460		)
Customer relationships, net	$	146,692		$	154,172
Tradenames (weighted average life of 22 years)	91,600			91,600
Less accumulated amortization	(7,592		)	(4,142		)
Tradenames, net	$	84,008		$	87,458
Developed technology (weighted average life of 16 years)	1,825,375			1,774,300
Less accumulated amortization	(234,412		)	(125,695		)
Developed technology, net	$	1,590,963		$	1,648,605
Other (weighted average life of 11 years)	2,200			2,200
Less accumulated amortization	(243		)	(47		)
Other, net	$	1,957		$	2,153
Total definite-lived intangibles, net (weighted average life of 14 years)	$	2,105,787		$	2,282,724
Other intangibles, net	$	2,285,187		$	2,504,124

Schedule of changes in gross carrying amount of other intangible assets

Changes in the gross carrying amount of our other intangible assets for the nine months ended September 30, 2012 are as follows:

	Gross Carrying Amount
December 31, 2011	$	2,896,371
Patents acquired	12,075
Asset impairment charges	(54,163		)
Effect of currency translation	158
Other	(5,884		)
September 30, 2012	$	2,848,557

Schedule of estimated amortization of intangibles

Estimated amortization of intangibles for the five fiscal years subsequent to December 31, 2011 is as follows (in thousands):

2012	$	229,788
2013	$	186,610
2014	$	171,083
2015	$	169,910
2016	$	167,931

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Segment Results (Tables)

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

Schedule of reportable segments information

The following represents selected information for the Company’s reportable segments for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net revenues to external customers
Endo Pharmaceuticals	$	416,645		$	425,511		$	1,223,005		$	1,199,292
Qualitest	166,070			147,975			471,310			415,431
AMS(1)	113,304			131,519			371,601			158,331
HealthTronics	54,463			54,073			160,387			153,661
Total consolidated net revenues to external customers	$	750,482		$	759,078		$	2,226,303		$	1,926,715
Adjusted income (loss) before income tax
Endo Pharmaceuticals	$	216,728		$	231,887		$	624,927		$	634,762
Qualitest	45,840			26,932			132,500			74,445
AMS	21,081			35,272			77,383			45,005
HealthTronics	16,639			19,483			42,053			49,665
Corporate unallocated	(73,854		)	(93,844		)	(249,934		)	(217,145		)
Total consolidated adjusted income before income tax	$	226,434		$	219,730		$	626,929		$	586,732

_____________

(1) The following table displays our AMS segment revenue by geography (in thousands). International revenues were not material to any of our other segments for any of the periods presented.

Schedule of revenue by reportable segment

The following table displays our AMS segment revenue by geography (in thousands). International revenues were not material to any of our other segments for any of the periods presented.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
AMS:
United States	$	75,480	$	91,807	$	246,385	$	107,378
International	37,824		39,712		125,216		50,953
Total AMS revenues	$	113,304	$	131,519	$	371,601	$	158,331

Schedule of reconciliations of consolidated adjusted income (loss) before income tax

The table below provides reconciliations of our consolidated adjusted income before income tax to our consolidated income (loss) before income tax, which is determined in accordance with U.S. GAAP, for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Total consolidated adjusted income before income tax	$	226,434		$	219,730		$	626,929		$	586,732
Upfront and milestone payments to partners	(5,338		)	(2,355		)	(56,905		)	(27,346		)
Asset impairment charges	(11,163		)	(22,691		)	(54,163		)	(22,691		)
Acquisition-related and integration items, net	(5,776		)	(5,818		)	(16,580		)	(29,517		)
Separation benefits and other cost reduction initiatives	(11,590		)	(13,603		)	(26,958		)	(17,598		)
Amortization of intangible assets	(58,735		)	(58,846		)	(170,659		)	(136,501		)
Inventory step-up	—			(23,937		)	(880		)	(40,718		)
Non-cash interest expense	(5,209		)	(4,754		)	(15,354		)	(14,014		)
Net loss on extinguishment of debt	(1,789		)	—			(7,215		)	(8,548		)
Accrual for payment to Impax related to sales of Opana® ER	6,000			—			(104,000		)	—
Patent litigation settlement items, net	46,238			—			(85,123		)	—
Litigation-related contingencies	(82,600		)	—			(82,600		)	—
Other income (expense), net	—			2,636			—			2,636
Total consolidated income (loss) before income tax	$	96,472		$	90,362		$	6,492		$	292,435

Additional selected financial information for reportable segments

The following represents additional selected financial information for our reportable segments three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Depreciation expense
Endo Pharmaceuticals	$	3,539	$	3,110	$	11,249	$	9,552
Qualitest	3,106		3,461		9,041		8,645
AMS	2,614		1,941		7,812		2,225
HealthTronics	2,905		3,059		9,230		9,164
Corporate unallocated	1,168		880		3,339		2,649
Total depreciation expense	$	13,332	$	12,451	$	40,671	$	32,235

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Amortization expense
Endo Pharmaceuticals	$	27,318	$	26,101	$	76,395	$	78,361
Qualitest	10,381		9,728		31,143		29,325
AMS	19,385		21,767		58,191		25,063
HealthTronics	1,801		1,401		5,380		4,203
Total amortization expense	$	58,885	$	58,997	$	171,109	$	136,952

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Goodwill And Other Intangibles (Schedule Of Changes In The Carrying Amount Of Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Goodwill [Roll Forward]
Balance at December 31, 2011	$ 2,558,041
Goodwill acquired during the period	7,717
Measurement period adjustments	3,379
Goodwill, Other Changes	151
Balance at September 30, 2012	$ 2,569,288

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Acquisitions (Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended		3 Months Ended					3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 urologist Medical_Records_Software_Companies	Sep. 30, 2011	Jun. 30, 2012 AMS [Member]	Sep. 30, 2012 AMS [Member]	Jun. 17, 2011 AMS [Member]	Jun. 17, 2011 As adjusted [Member] AMS [Member]	Jun. 17, 2011 As Initially Reported [Member] AMS [Member]	Sep. 30, 2012 AMS [Member]	Sep. 30, 2011 AMS [Member]	Sep. 30, 2012 AMS [Member]	Sep. 30, 2011 AMS [Member]
Business Acquisition [Line Items]
Total purchase price of acquired entity							$ 2,400,000,000
Aggregate consideration, related to stock-based compensation awards and certain other amounts							70,800,000
Acquisition of subsidiary, purchase price per share							$ 30.00
Asset impairment charges	11,163,000	22,691,000	54,163,000	22,691,000	3,000,000
Goodwill assigned to segment								1,798,661,000
Goodwill expected to be deductible for income tax purposes						16,500,000
Business Acquisition Purchase Price Allocation Deferred Income Taxes Assets									15,432,000
Deferred tax liabilities									416,745,000
Acquisition-related costs	$ 5,776,000	$ 5,818,000	$ 16,580,000	$ 29,517,000						$ 1,848,000	$ 4,069,000	$ 5,174,000	$ 27,333,000
Businesses acquired			2
Number of urologists			2,000

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Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2012

Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of tax effects allocated to each component of other comprehensive income

The following table presents the tax effects allocated to each component of Other comprehensive income (loss) for the three months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,
	2012									2011
	Before- Tax Amount			Tax (Expense) Benefit			Net-of-Tax Amount			Before-Tax Amount			Tax Benefit (Expense)			Net-of- Tax Amount
Net unrealized gain (loss) on securities:
Unrealized gains (losses) arising during the period	$	940		$	(351	)	$	589		$	(809	)	$	269		$	(540	)
Less: reclassification adjustments for gains (losses) realized in net income (loss)	—			—			—			—			—			—
Net unrealized gains (losses)	940			(351		)	589			(809		)	269			(540		)
Foreign currency translation gain (loss)	4,049			(15		)	4,034			(5,451		)	125			(5,326		)
Fair value adjustment on derivatives designated as cash flow hedges:
Fair value adjustment on derivatives designated as cash flow hedges arising during the period	(1,249		)	448			(801		)	—			—			—
Less: reclassification adjustments for cash flow hedges settled and included in net income (loss)	216			(78		)	138			426			(315		)	111
Net unrealized fair value adjustment on derivatives designated as cash flow hedges	(1,033		)	370			(663		)	426			(315		)	111
Other comprehensive income (loss)	$	3,956		$	4		$	3,960		$	(5,834	)	$	79		$	(5,755	)

The following table presents the tax effects allocated to each component of Other comprehensive income (loss) for the nine months ended September 30, 2012 and 2011 (in thousands):

	Nine Months Ended September 30,
	2012									2011
	Before- Tax Amount			Tax (Expense) Benefit			Net-of-Tax Amount			Before-Tax Amount			Tax Benefit (Expense)			Net-of- Tax Amount
Net unrealized gain (loss) on securities:
Unrealized gains (losses) arising during the period	$	2,326		$	(368	)	$	1,958		$	(3,113	)	$	1,191		$	(1,922	)
Less: reclassification adjustments for gains (losses) realized in net income (loss)	—			—			—			—			—			—
Net unrealized gains (losses)	2,326			(368		)	1,958			(3,113		)	1,191			(1,922		)
Foreign currency translation gain (loss)	409			57			466			(4,420		)	94			(4,326		)
Fair value adjustment on derivatives designated as cash flow hedges:
Fair value adjustment on derivatives designated as cash flow hedges arising during the period	(945		)	339			(606		)	—			—			—
Less: reclassification adjustments for cash flow hedges settled and included in net income (loss)	178			(64		)	114			426			(315		)	111
Net unrealized fair value adjustment on derivatives designated as cash flow hedges	(767		)	275			(492		)	426			(315		)	111
Other comprehensive income (loss)	$	1,968		$	(36	)	$	1,932		$	(7,107	)	$	970		$	(6,137	)

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2012

Stockholders' Equity Note [Abstract]

Summary of activity under stock incentive plans

A summary of the activity under the Endo 2000, 2004, 2007, and 2010 Stock Incentive Plans and the AMS 2005 Stock Incentive Plan for the nine months ended September 30, 2012 is presented below:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding as of January 1, 2012	8,115,467		$	25.79
Granted	2,227,481		$	34.60
Exercised	(668,024	)	$	22.95
Forfeited	(468,564	)	$	31.22
Expired	(30,332	)	$	26.79
Outstanding as of September 30, 2012	9,176,028		$	27.85	6.88	$	45,806,834
Vested and expected to vest, September 30, 2012	8,584,159		$	27.56	6.77	$	44,678,198
Exercisable, September 30, 2012	3,990,964		$	24.60	5.19	$	29,050,676

Stock option assumption

The weighted average grant date fair value of the stock options granted in the nine months ended September 30, 2012 and 2011 was $10.50 per option and $14.69 per option, respectively, determined using the following assumptions:

	September 30, 2012		September 30, 2011
Average expected term (years)	5.0		5.0
Risk-free interest rate	0.9	%	2.0	%
Dividend yield	—		—
Expected volatility	33	%	32	%

Summary of restricted stock units activity

A summary of our restricted stock units as of September 30, 2012 is presented below:

	Number of Shares		Aggregate Intrinsic Value
Outstanding as of January 1, 2012	2,629,782
Granted	999,294
Forfeited	(300,044	)
Vested	(682,859	)
Outstanding as of September 30, 2012	2,646,173		$	83,343,319
Vested and expected to vest, September 30, 2012	2,372,779		$	73,093,716

Summary of restricted stock activity

A summary of our restricted stock awards as of September 30, 2012 is presented below:

	Number of Shares		Weighted Average Fair Value Per Share		Aggregate Intrinsic Value
Outstanding as of January 1, 2012	173,617		$	30.27
Granted	—		$	—
Forfeited	(14,554	)	$	29.16
Vested	(59,220	)	$	29.41	$	1,878,458
Non-vested, September 30, 2012	99,843		$	30.94

Schedule of changes in stockholders' equity

The following table displays a reconciliation of our beginning and ending balances in stockholders’ equity for the nine months ended September 30, 2012 (dollars in thousands):

	Attributable to:
	Endo Health Solutions Inc.			Noncontrolling interests			Total Stockholders’ Equity
Stockholders’ equity at January 1, 2012	$	1,977,690		$	61,901		$	2,039,591
Net (loss) income	(24,071		)	39,826			15,755
Other comprehensive income	1,932			—			1,932
Compensation related to stock-based awards	44,532			—			44,532
Exercise of options	18,220			—			18,220
Common stock purchased, net of common stock issued from treasury	(151,394		)	—			(151,394		)
Distributions to noncontrolling interests	—			(39,234		)	(39,234		)
Buy-out of noncontrolling interests, net of contributions	—			(176		)	(176		)
Other	1,291			—			1,291
Stockholders’ equity at September 30, 2012	$	1,868,200		$	62,317		$	1,930,517

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2012

Recent Accounting Pronouncements [Abstract]

Recent accounting pronouncements

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2011, the Financial Accounting Standards Board (FASB or the Board) issued Accounting Standards Update (ASU) 2011-05 on the presentation of comprehensive income. This ASU amends FASB Codification Topic 220, Comprehensive Income, to require an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2011 and early adoption is permitted. In December 2011, the FASB issued ASU 2011-12 which amends ASU 2011-05 to defer only those changes in ASU 2011-05 that relate to the presentation of reclassification adjustments to allow the Board time to re-deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. The Company has adopted all current required provisions of ASU 2011-05 and ASU 2011-12.

In July 2012, the FASB issued ASU 2012-02 on impairment testing for indefinite-lived intangible assets. This ASU amends FASB Codification Topic 350, Intangibles-Goodwill and Other to allow, but not require, an entity, when performing its annual or more frequent indefinite-lived intangible asset impairment test, to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The Company is currently evaluating ASU 2012-02. The adoption of this ASU is not expected to have a significant impact on the Company’s Consolidated Financial Statements.

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Net (Loss) Income Per Share (Tables)

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Reconciliation Of The Numerator And Denominator Of Basic And Diluted Net (Loss) Income Per Share

The following is a reconciliation of the numerator and denominator of basic and diluted net income (loss) per share (in thousands, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012			2011
Numerator:
Net income (loss) attributable to Endo Health Solutions Inc. common stockholders	$	53,809	$	40,649	$	(24,071	)	$	151,019
Denominator:
For basic per share data—weighted average shares	116,022		116,816		116,688			116,611
Dilutive effect of common stock equivalents	2,628		2,281		—			2,328
Dilutive effect of 1.75% Convertible Senior Subordinated Notes and warrants	929		1,750		—			2,493
For diluted per share data—weighted average shares	119,579		120,847		116,688			121,432
Basic net income (loss) per share attributable to Endo Health Solutions Inc.	$	0.46	$	0.35	$	(0.21	)	$	1.30
Diluted net income (loss) per share attributable to Endo Health Solutions Inc.	$	0.45	$	0.34	$	(0.21	)	$	1.24

Reconciliation Of Maximum Potential Dilution Of Shares Currently Excluded From The Calculation Of Diluted Net Income Per Share

The following reconciliation shows the maximum potential dilution of shares currently excluded from the calculation of diluted net income per share for the nine months ended September 30 (in thousands):

	2012	2011
Weighted average shares excluded:
1.75% Convertible senior subordinated notes due 2015 and warrants(1)	25,993	23,500
Employee stock-based awards	4,106	2,007
	30,099	25,507

_____________

(1) Amounts represent the incremental potential total dilution that could occur if our Convertible Notes and warrants were converted to shares of our common stock.

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Supplemental Guarantor Information (Condensed Consolidating Statement Of Cash Flows) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Net cash (used in) provided by operating activities	$ 297,132	$ 418,531
Purchases of property, plant and equipment	(90,128)	(39,609)
Proceeds from sale of property, plant and equipment	1,081	1,147
Acquisitions, net of cash acquired	(3,210)	(2,368,357)
Proceeds from investments	18,800	36,000
Purchases of investments	0	(6,009)
Other investments	0	(388)
Payment on contingent consideration	0	(662)
Other investments	18,800
License fees	(5,700)	(2,300)
Proceeds from sale of business	0	12,990
Net cash used in investing activities	(79,157)	(2,367,188)
Proceeds from issuance of 2019 and 2022 Notes		900,000
Proceeds from issuance of Term Loans	0	2,200,000
Capital lease obligation repayments	(765)	0
Principal payments on Term Loans, net	(333,950)	(550,813)
Proceeds from other indebtedness	0	302
Payment on AMS Convertible Notes	(66)	(519,040)
Deferred financing fees	0	(81,535)
Principal payments on other indebtedness	(685)	0
Tax benefits of stock awards	4,268	5,519
Exercise of Endo Health Solutions Inc. stock options	15,317	21,780
Purchase of common stock	(156,000)	(34,702)
Issuance of common stock from treasury	4,606	0
Distributions to noncontrolling interests	(39,234)	(39,392)
Buy-out of noncontrolling interests, net of contributions	(2,264)	(402)
Intercompany activity	0	0
Net cash used in financing activities	(508,773)	1,901,717
Effect of foreign exchange rate	95	397
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(290,703)	(46,543)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	547,620	466,214
CASH AND CASH EQUIVALENTS, END OF PERIOD	256,917	419,671
Endo Health Solutions Inc. [Member]
Net cash (used in) provided by operating activities	421,896	(51,709)
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Acquisitions, net of cash acquired
Proceeds from investments		0
Purchases of investments		0
Other investments		0
Payment on contingent consideration
Other investments
License fees
Proceeds from sale of business		0
Net cash used in investing activities
Proceeds from issuance of 2019 and 2022 Notes		900,000
Proceeds from issuance of Term Loans		2,200,000
Capital lease obligation repayments
Principal payments on Term Loans, net	(333,950)	(550,813)
Proceeds from other indebtedness
Payment on AMS Convertible Notes	0
Deferred financing fees		(81,535)
Principal payments on other indebtedness
Tax benefits of stock awards
Exercise of Endo Health Solutions Inc. stock options	15,317	21,780
Purchase of common stock	(156,000)	(34,702)
Issuance of common stock from treasury	4,606
Distributions to noncontrolling interests
Buy-out of noncontrolling interests, net of contributions
Intercompany activity	0	(2,407,354)
Net cash used in financing activities	(470,027)	47,376
Effect of foreign exchange rate
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(48,131)	(4,333)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	48,318	45,400
CASH AND CASH EQUIVALENTS, END OF PERIOD	187	41,067
Guarantor Subsidiaries [Member]
Net cash (used in) provided by operating activities	(159,009)	301,150
Purchases of property, plant and equipment	(79,310)	(34,176)
Proceeds from sale of property, plant and equipment	17	340
Acquisitions, net of cash acquired		(2,243,486)
Proceeds from investments		36,000
Purchases of investments		(6,009)
Other investments		436
Payment on contingent consideration
Other investments	18,800
License fees	(5,000)	(2,300)
Proceeds from sale of business		0
Net cash used in investing activities	(65,493)	(2,249,195)
Proceeds from issuance of 2019 and 2022 Notes
Proceeds from issuance of Term Loans
Capital lease obligation repayments	(615)
Principal payments on Term Loans, net
Proceeds from other indebtedness
Payment on AMS Convertible Notes	(66)	(519,040)
Deferred financing fees
Principal payments on other indebtedness
Tax benefits of stock awards	4,268	5,519
Exercise of Endo Health Solutions Inc. stock options
Purchase of common stock
Issuance of common stock from treasury
Distributions to noncontrolling interests
Buy-out of noncontrolling interests, net of contributions
Intercompany activity	(16,940)	2,394,706
Net cash used in financing activities	(13,353)	1,881,185
Effect of foreign exchange rate
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(237,855)	(66,860)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	455,756	404,169
CASH AND CASH EQUIVALENTS, END OF PERIOD	217,901	337,309
Non-Guarantor Subsidiaries [Member]
Net cash (used in) provided by operating activities	34,245	169,090
Purchases of property, plant and equipment	(10,818)	(5,433)
Proceeds from sale of property, plant and equipment	1,064	807
Acquisitions, net of cash acquired	(3,210)	(124,871)
Proceeds from investments		0
Purchases of investments		0
Other investments		(824)
Payment on contingent consideration		(662)
Other investments	0
License fees	(700)
Proceeds from sale of business		12,990
Net cash used in investing activities	(13,664)	(117,993)
Proceeds from issuance of 2019 and 2022 Notes
Proceeds from issuance of Term Loans
Capital lease obligation repayments	(150)
Principal payments on Term Loans, net	0
Proceeds from other indebtedness		302
Payment on AMS Convertible Notes	0
Deferred financing fees
Principal payments on other indebtedness	(685)
Tax benefits of stock awards	0
Exercise of Endo Health Solutions Inc. stock options	0
Purchase of common stock	0
Issuance of common stock from treasury	0
Distributions to noncontrolling interests	(39,234)	(39,392)
Buy-out of noncontrolling interests, net of contributions	(2,264)	(402)
Intercompany activity	16,940	12,648
Net cash used in financing activities	(25,393)	(26,844)
Effect of foreign exchange rate	95	397
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(4,717)	24,650
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	43,546	16,645
CASH AND CASH EQUIVALENTS, END OF PERIOD	38,829	41,295
Eliminations [Member]
Net cash (used in) provided by operating activities
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Acquisitions, net of cash acquired
Proceeds from investments
Purchases of investments
Other investments
Payment on contingent consideration
Other investments
License fees
Proceeds from sale of business
Net cash used in investing activities
Proceeds from issuance of 2019 and 2022 Notes
Proceeds from issuance of Term Loans
Capital lease obligation repayments
Principal payments on Term Loans, net
Proceeds from other indebtedness
Payment on AMS Convertible Notes
Deferred financing fees
Principal payments on other indebtedness
Tax benefits of stock awards
Exercise of Endo Health Solutions Inc. stock options
Purchase of common stock
Issuance of common stock from treasury
Distributions to noncontrolling interests
Buy-out of noncontrolling interests, net of contributions
Intercompany activity
Net cash used in financing activities
Effect of foreign exchange rate
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD

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Fair Value Measurements (Financial Liabilities Measured At Fair Value On Recurring Basis Using Significant Unobservable Inputs) (Details) (Acquisition-related contingent consideration [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Acquisition-related contingent consideration [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	$ (8,619)	$ (9,233)	$ (8,687)	$ (16,050)
Amounts (acquired) sold/ or (issued) settled, net	0	(248)	0	(165)
Transfers in and/or (out) of Level 3	0	0	0	0
Changes in fair value recorded in earnings	(96)	228	(28)	7,458
Ending Balance	$ (8,715)	$ (8,757)	$ (8,715)	$ (8,757)

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License And Collaboration Agreements (Commercial Products) (Narrative 1) (Details)	9 Months Ended					3 Months Ended	9 Months Ended				9 Months Ended		1 Months Ended	9 Months Ended	12 Months Ended			1 Months Ended	3 Months Ended	12 Months Ended	9 Months Ended	3 Months Ended	12 Months Ended	9 Months Ended
	Sep. 30, 2012 USD ($)	Sep. 30, 2012 Population council [Member] Y	Sep. 30, 2012 Voltaren Gel [Member] Y	Sep. 30, 2012 Frova [Member] USD ($)	Sep. 30, 2012 Vantas [Member] Population council [Member] USD ($)	Sep. 30, 2012 Voltaren gel agreement [Member] USD ($)	Sep. 30, 2012 Voltaren gel agreement [Member] USD ($)	Sep. 30, 2011 Voltaren gel agreement [Member] USD ($)	Sep. 30, 2012 Voltaren gel agreement [Member] Voltaren Gel [Member] USD ($)	Sep. 30, 2012 Hind license agreement [Member] USD ($)	Sep. 30, 2012 Hind license agreement [Member] Lidoderm [Member] USD ($)	Sep. 30, 2011 Hind license agreement [Member] Lidoderm [Member] USD ($)	Jul. 31, 2004 Vernalis license agreement [Member] USD ($)	Sep. 30, 2012 Vernalis license agreement [Member] USD ($) Y	Dec. 31, 2011 Vernalis license agreement [Member]	Dec. 31, 2006 Vernalis license agreement [Member] USD ($)	Dec. 31, 2005 Vernalis license agreement [Member] USD ($)	Aug. 31, 2009 ProStrakan agreement [Member] USD ($)	Sep. 30, 2011 ProStrakan agreement [Member] USD ($) M	Dec. 31, 2010 ProStrakan agreement [Member] USD ($)	Sep. 30, 2012 ProStrakan agreement [Member] Fortesta [Member] Regulatory and commercial milestone [Member] USD ($)	Dec. 31, 2011 Grunenthal Agreement [Member] Completion of clinical milestone [Member] USD ($)	Dec. 31, 2010 Grunenthal Agreement [Member] Completion of clinical milestone [Member] USD ($)	Sep. 30, 2012 Grunenthal Agreement [Member] Regulatory and commercial milestone [Member] USD ($)	Sep. 30, 2012 Grunenthal Agreement [Member] Regulatory and commercial milestone [Member] EUR (€)	Sep. 30, 2011 Grunenthal Agreement [Member] Regulatory and commercial milestone [Member] USD ($)	Sep. 30, 2012 Minimum [Member] Frova [Member] USD ($)	Sep. 30, 2012 Minimum [Member] Vantas [Member] Population council [Member]	Sep. 30, 2012 Minimum [Member] Vernalis license agreement [Member] USD ($)	Sep. 30, 2012 Maximum [Member] Vantas [Member] Population council [Member]	Sep. 30, 2012 Maximum [Member] Vernalis license agreement [Member] USD ($)
License And Collaboration Agreements [Line Items]
License agreement term (years)			5
Upfront cash payment						$ 85,000,000							$ 30,000,000					$ 10,000,000
Guaranteed minimum annual royalty payments in the fourth year						30,000,000
Fourth year of agreement	4
Fifth year of agreement	5
Guaranteed minimum annual royalty payments in the fifth year						30,000,000
Conditional milestone payment									25,000,000		10,000,000			255,000,000								4,900,000							10,000,000		75,000,000
Sales thresholds									300,000,000																		85,000,000		200,000,000		1,200,000,000
Fair value of exclusive license									129,000,000
Guaranteed minimum royalty payment							7,500,000
Estimated life of license agreement (years)	14 years						5 years								12 years 6 months
Payments for royalties				0			11,900,000	10,200,000
Agreement expiration date							June 30, 2013
Option to extend agreement, number of terms			2
Option to extend agreement, length of successive terms			1 year
Number of months required for cancellation in renewal period							6 months
Termination of agreement notice period (days)			90 days																												1 year
Percentage of net sales applied for supply price											10.00%																	0.50%		4.00%
Minimum royalty per year in addition to royalty rate on net sales										500,000
Royalties on the net sales												64,500,000
Annual payments																15,000,000	15,000,000
Up-front fee capitalized														30,000,000
Number of anniversary payments														2
Annual payment capitalized														15,000,000
Maximum number of years for royalty payments														20
Expiration of agreement (years)		25																	6
Conditional milestone payment capitalized																				12,500,000
Additional milestone payment recognized																			7,500,000					26,900,000		0
Additional milestone payment	4,900,000																				167,500,000		4,900,000	65,300,000	50,800,000
Payment deadline, days after quarter end																								45 days	45 days
Payment required for termination of agreement					40,000,000
Payments made under product utilization agreement to date					$ 9,700,000
Rate of net sales of Vantas and any polymer implant containing an LHRH analog required to be paid (percent)					3.00%
Rate of profits and payments received from the licensing of Vantas or any other polymer implant containing an LHRH analog required to be paid (percent)					30.00%
Rate of other implants required to be paid (percent)					5.00%
Patent (percentage)																		2.00%

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Debt (Components Of Total Indebtedness) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		9 Months Ended			9 Months Ended		9 Months Ended		9 Months Ended		9 Months Ended		9 Months Ended			9 Months Ended			9 Months Ended			9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Term Loan A Due 2016 [Member]	Sep. 30, 2012 3.25% AMS Convertible Notes Due 2036 [Member]	Dec. 31, 2011 3.25% AMS Convertible Notes Due 2036 [Member]	Sep. 30, 2012 4.00% AMS Convertible Notes Due 2041 [Member]	Dec. 31, 2011 4.00% AMS Convertible Notes Due 2041 [Member]	Sep. 30, 2012 1.75% Convertible Senior Subordinated Notes Due 2015 [Member]	Dec. 31, 2011 1.75% Convertible Senior Subordinated Notes Due 2015 [Member]	Sep. 30, 2012 Term Loan A Facility Due 2016 [Member]	Dec. 31, 2011 Term Loan A Facility Due 2016 [Member]	Sep. 30, 2012 Term Loan B Facility Due 2018 [Member]	Dec. 31, 2011 Term Loan B Facility Due 2018 [Member]	Sep. 30, 2012 7.00% Senior Notes Due 2019 [Member]	Dec. 31, 2011 7.00% Senior Notes Due 2019 [Member]	Jun. 08, 2011 7.00% Senior Notes Due 2019 [Member]	Sep. 30, 2012 7.00% Senior Notes Due 2020 [Member]	Dec. 31, 2011 7.00% Senior Notes Due 2020 [Member]	Nov. 30, 2010 7.00% Senior Notes Due 2020 [Member]	Sep. 30, 2012 7.25% Senior Notes Due 2022 [Member]	Dec. 31, 2011 7.25% Senior Notes Due 2022 [Member]	Jun. 08, 2011 7.25% Senior Notes Due 2022 [Member]	Sep. 30, 2012 Revolving Credit Facility And Together With Term Loan Facilities2011 Credit Facility [Member]
Debt Instrument [Line Items]
Long Term Debt, Term	7 years		5 years																				5 years
Convertible note, gross								$ 379,500	$ 379,500
Unamortized discount								(63,915)	(80,278)
Convertible debt				795	841	111	131	315,585	299,222
Senior notes, Gross														500,000	500,000	500,000	400,000	400,000	400,000	400,000	400,000	400,000
Unamortized initial purchaser's discount																	(3,172)	(3,382)
Senior notes																	396,828	396,618
Face value of debt instrument										1,415,625	1,471,875	160,550	438,250
Other long-term debt	4,971	5,657
Total long-term debt, net	3,194,465	3,512,594
Current portion of long-term debt	124,947	88,265
Total long-term debt, less current portion, net	$ 3,069,518	$ 3,424,329
Notes, interest rate				3.25%		4.00%		1.75%						7.00%		7.00%	7.00%		7.00%	7.25%		7.25%
Notes, maturity year				2036		2041		2015						2019			2020			2022
Line of Credit Facility, Expiration Date										Jun. 17, 2016		Jun. 17, 2018

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
CURRENT ASSETS:
Cash and cash equivalents	$ 256,917	$ 547,620
Accounts receivable, net	759,594	733,222
Inventories, net	363,747	262,419
Prepaid expenses and other current assets	28,155	29,732
Income taxes receivable	39,178	0
Deferred income taxes	264,908	215,103
Total current assets	1,712,499	1,788,096
MARKETABLE SECURITIES	2,631	19,105
PROPERTY, PLANT AND EQUIPMENT, NET	333,119	297,731
GOODWILL	2,569,288	2,558,041
OTHER INTANGIBLES, NET	2,285,187	2,504,124
OTHER ASSETS	118,067	125,486
TOTAL ASSETS	7,020,791	7,292,583
CURRENT LIABILITIES:
Accounts payable	258,960	260,385
Accrued expenses	965,698	732,831
Current portion of long-term debt	124,947	88,265
Acquisition-related contingent consideration	6,027	4,925
Income taxes payable	0	35,372
Total current liabilities	1,355,632	1,121,778
DEFERRED INCOME TAXES	581,975	617,677
ACQUISITION-RELATED CONTINGENT CONSIDERATION	2,688	3,762
LONG-TERM DEBT, LESS CURRENT PORTION, NET	3,069,518	3,424,329
OTHER LIABILITIES	80,461	85,446
COMMITMENTS AND CONTINGENCIES (NOTE 12)
STOCKHOLDERS' EQUITY:
Preferred Stock, $0.01 par value; 40,000,000 shares authorized; none issued	0	0
Common Stock, $0.01 par value; 350,000,000 shares authorized; 139,673,311 and 138,337,002 shares issued; 113,991,489 and 117,158,880 shares outstanding at September 30, 2012 and December 31, 2011, respectively	1,397	1,383
Additional paid-in capital	1,016,353	952,325
Retained earnings	1,527,839	1,551,910
Accumulated other comprehensive loss	(7,504)	(9,436)
Treasury stock, 25,681,822 and 21,178,122 shares at September 30, 2012 and December 31, 2011, respectively	(669,885)	(518,492)
Total Endo Health Solutions Inc. stockholders' equity	1,868,200	1,977,690
Noncontrolling interests	62,317	61,901
Total stockholders' equity	1,930,517	2,039,591
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 7,020,791	$ 7,292,583

XML

Acquisitions (Schedule Of Fair Values Of The Assets Acquired And Liabilities Assumed At The Acquisition Date) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Jun. 17, 2011 AMS [Member] As Initially Reported [Member]	Jun. 17, 2011 AMS [Member] As adjusted [Member]
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Cash and cash equivalents		$ 47,289
Commercial paper		71,000
Accounts receivable		73,868
Other receivables		630
Inventories		74,988
Prepaid expenses and other current assets		7,133
Income taxes receivable		9,154
Deferred income taxes		15,432
Property, plant and equipment		56,413
Other intangible assets	12,075	1,260,000
Other assets		4,581
Total identifiable assets		1,620,488
Accounts payable		10,327
Accrued expenses		45,835
Deferred income taxes		416,745
Long-term debt		520,375
Other liabilities		25,891
Total liabilities assumed		1,019,173
Net identifiable assets acquired		601,315
Goodwill			1,798,661
Net assets acquired		$ 2,399,976

XML

Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
OPERATING ACTIVITIES [Abstract]
CONSOLIDATED NET (LOSS) INCOME	$ 15,755	$ 192,152
Adjustments to reconcile consolidated net (loss) income to net cash [provided by] operating activities: [Abstract]
Depreciation and amortization	211,780	169,187
Stock-based compensation	44,532	34,224
Amortization of debt issuance costs and premium / discount	27,101	24,283
Selling, general and administrative expenses paid in shares of common stock	358	180
Deferred income taxes	(87,379)	(13,847)
Gain (loss) on disposal of property, plant and equipment	(156)	319
Change in fair value of acquisition-related contingent consideration	28	(7,458)
Loss on extinguishment of debt	7,215	8,548
Asset impairment charges	54,163	22,691
Changes in assets and liabilities which provided (used) cash: [Abstract]
Accounts receivable	(24,666)	(96,409)
Inventories	(101,453)	(28,879)
Prepaid and other assets	3,037	(9,055)
Accounts payable	(1,132)	(21,656)
Accrued expenses	240,880	134,834
Other liabilities	(18,081)	(15,693)
Income taxes payable/receivable	(74,850)	25,110
Net cash provided by operating activities	297,132	418,531
INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(90,128)	(39,609)
Proceeds from sale of property, plant and equipment	1,081	1,147
Acquisitions, net of cash acquired	(3,210)	(2,368,357)
Proceeds from investments	18,800	36,000
Purchases of investments	0	(6,009)
Other investments	0	(388)
Payment on contingent consideration	0	(662)
License fees	(5,700)	(2,300)
Proceeds from sale of business	0	12,990
Net cash used in investing activities	(79,157)	(2,367,188)
FINANCING ACTIVITIES:
Capital lease obligation repayments	(765)	0
Proceeds from issuance of 2019 and 2022 Notes	0	900,000
Proceeds from issuance of Term Loans	0	2,200,000
Proceeds from other indebtedness	0	302
Principal payments on Term Loans	(333,950)	(550,813)
Payment on AMS Convertible Notes	(66)	(519,040)
Principal payments on other indebtedness	(685)	0
Deferred financing fees	0	(81,535)
Tax benefits of stock awards	4,268	5,519
Exercise of Endo Health Solutions Inc. stock options	15,317	21,780
Purchase of common stock	(156,000)	(34,702)
Issuance of common stock from treasury	4,606	0
Distributions to noncontrolling interests	(39,234)	(39,392)
Buy-out of noncontrolling interests, net of contributions	(2,264)	(402)
Net cash provided by (used in) financing activities	(508,773)	1,901,717
Effect of foreign exchange rate	95	397
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(290,703)	(46,543)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	547,620	466,214
CASH AND CASH EQUIVALENTS, END OF PERIOD	256,917	419,671
SUPPLEMENTAL INFORMATION [Abstract]
Cash paid for interest	124,723	32,299
Cash paid for income taxes	151,924	95,551
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES [Abstract]
Purchases of property, plant and equipment financed by capital leases	1,360	119
Accrual for purchases of property, plant and equipment	$ 3,160	$ 2,849

XML

Goodwill And Other Intangibles (Schedule Of Estimated Amortization Of Intangibles) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012 Y
Goodwill and Intangible Assets Disclosure [Abstract]
Estimated amortization of intangible assets, subsequent years	5
2012	$ 229,788
2013	186,610
2014	171,083
2015	169,910
2016	$ 167,931

XML

Supplemental Guarantor Information (Tables)

9 Months Ended

Sep. 30, 2012

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Balance Sheet

CONDENSED CONSOLIDATING BALANCE SHEET

(In thousands)

	December 31, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	48,318		$	455,756		$	43,546		$	—		$	547,620
Accounts receivable, net	—			656,265			74,584			2,373			733,222
Inventories, net	—			248,128			19,918			(5,627		)	262,419
Prepaid expenses and other current assets	—			19,274			7,004			3,454			29,732
Deferred income taxes	—			205,606			9,497			—			215,103
Total current assets	48,318			1,585,029			154,549			200			1,788,096
INTERCOMPANY RECEIVABLES	1,777,233			7,322,603			193,223			(9,293,059		)	—
MARKETABLE SECURITIES	—			19,105			—			—			19,105
PROPERTY, PLANT AND EQUIPMENT, NET	—			268,572			29,469			(310		)	297,731
GOODWILL	—			2,303,940			254,101			—			2,558,041
OTHER INTANGIBLES, NET	—			2,415,531			88,593			—			2,504,124
INVESTMENT IN SUBSIDIARIES	5,860,570			317,544			—			(6,178,114		)	—
OTHER ASSETS	87,099			27,338			31,049			(20,000		)	125,486
TOTAL ASSETS	$	7,773,220		$	14,259,662		$	750,984		$	(15,491,283	)	$	7,292,583
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	—		$	251,715		$	8,667		$	3		$	260,385
Accrued expenses	38,623			651,653			42,558			(3		)	732,831
Current portion of long-term debt	84,376			972			2,917			—			88,265
Acquisition-related contingent consideration	—			4,925			—			—			4,925
Income taxes payable	(23,204		)	71,900			(13,214		)	(110		)	35,372
Total current liabilities	99,795			981,165			40,928			(110		)	1,121,778
INTERCOMPANY PAYABLES	2,267,572			6,978,697			46,790			(9,293,059		)	—
DEFERRED INCOME TAXES	6,573			611,625			(521		)	—			617,677
ACQUISITION-RELATED CONTINGENT CONSIDERATION	—			3,762			—			—			3,762
LONG-TERM DEBT, LESS CURRENT PORTION, NET	3,421,590			—			2,739			—			3,424,329
OTHER LIABILITIES	—			94,915			10,531			(20,000		)	85,446
STOCKHOLDERS’ EQUITY:
Preferred Stock	—			—			—			—			—
Common Stock	1,383			—			30,430			(30,430		)	1,383
Additional paid-in capital	952,325			4,198,625			574,218			(4,772,843		)	952,325
Retained earnings (deficit)	1,551,910			1,398,613			(15,364		)	(1,383,249		)	1,551,910
Accumulated other comprehensive loss	(9,436		)	(7,740		)	(668		)	8,408			(9,436		)
Treasury stock	(518,492		)	—			—			—			(518,492		)
Total Endo Health Solutions Inc. stockholders’ equity	1,977,690			5,589,498			588,616			(6,178,114		)	1,977,690
Noncontrolling interests	—			—			61,901			—			61,901
Total stockholders’ equity	1,977,690			5,589,498			650,517			(6,178,114		)	2,039,591
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,773,220		$	14,259,662		$	750,984		$	(15,491,283	)	$	7,292,583

CONDENSED CONSOLIDATING BALANCE SHEET

(In thousands)

	September 30, 2012
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	187		$	217,901		$	38,829		$	—		$	256,917
Accounts receivable, net	—			677,494			74,169			7,931			759,594
Inventories, net	—			351,785			25,047			(13,085		)	363,747
Prepaid expenses and other current assets	—			14,405			8,644			5,106			28,155
Income taxes receivable	36,121			(26,157		)	29,106			108			39,178
Deferred income taxes	—			252,404			12,504			—			264,908
Total current assets	36,308			1,487,832			188,299			60			1,712,499
INTERCOMPANY RECEIVABLES	1,987,450			8,047,237			192,550			(10,227,237		)	—
MARKETABLE SECURITIES	—			2,631			—			—			2,631
PROPERTY, PLANT AND EQUIPMENT, NET	—			302,931			30,484			(296		)	333,119
GOODWILL	—			2,306,021			263,267			—			2,569,288
OTHER INTANGIBLES, NET	—			2,202,494			82,693			—			2,285,187
INVESTMENT IN SUBSIDIARIES	5,870,780			316,379			—			(6,187,159		)	—
OTHER ASSETS	69,165			27,430			40,914			(19,442		)	118,067
TOTAL ASSETS	$	7,963,703		$	14,692,955		$	798,207		$	(16,434,074	)	$	7,020,791
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	90		$	253,157		$	5,943		$	(230	)	$	258,960
Accrued expenses	24,633			898,255			42,815			(5		)	965,698
Current portion of long-term debt	121,875			906			2,166			—			124,947
Acquisition-related contingent consideration	—			6,027			—			—			6,027
Total current liabilities	146,598			1,158,345			50,924			(235		)	1,355,632
INTERCOMPANY PAYABLES	2,876,243			7,271,069			79,925			(10,227,237		)	—
DEFERRED INCOME TAXES	5,949			568,871			7,155			—			581,975
ACQUISITION-RELATED CONTINGENT CONSIDERATION	—			2,688			—			—			2,688
LONG-TERM DEBT, LESS CURRENT PORTION, NET	3,066,713			—			2,805			—			3,069,518
OTHER LIABILITIES	—			89,995			9,909			(19,443		)	80,461
STOCKHOLDERS’ EQUITY:
Preferred Stock	—			—			—			—			—
Common Stock	1,397			—			30,430			(30,430		)	1,397
Additional paid-in capital	1,016,353			4,200,076			573,559			(4,773,635		)	1,016,353
Retained earnings (deficit)	1,527,839			1,408,188			(18,811		)	(1,389,377		)	1,527,839
Accumulated other comprehensive loss	(7,504		)	(6,277		)	(6		)	6,283			(7,504		)
Treasury stock	(669,885		)	—			—			—			(669,885		)
Total Endo Health Solutions Inc. stockholders’ equity	1,868,200			5,601,987			585,172			(6,187,159		)	1,868,200
Noncontrolling interests	—			—			62,317			—			62,317
Total stockholders’ equity	1,868,200			5,601,987			647,489			(6,187,159		)	1,930,517
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,963,703		$	14,692,955		$	798,207		$	(16,434,074	)	$	7,020,791

Condensed Consolidating Statement Of Operations

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

	Three Months Ended September 30, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
TOTAL REVENUES	$	—		$	706,337		$	86,045		$	(33,304	)	$	759,078
COSTS AND EXPENSES:
Cost of revenues	—			287,446			49,830			(35,104		)	302,172
Selling, general and administrative	24			221,033			23,302			—			244,359
Research and development	—			43,606			278			—			43,884
Asset impairment charges	—			22,691			—			—			22,691
Acquisition-related and integration items, net	—			6,060			(242		)	—			5,818
OPERATING (LOSS) INCOME	(24		)	125,501			12,877			1,800			140,154
INTEREST EXPENSE, NET	1,963			50,818			11			—			52,792
OTHER (INCOME) EXPENSE, NET	—			(3,525		)	455			70			(3,000		)
(LOSS) INCOME BEFORE INCOME TAX	(1,987		)	78,208			12,411			1,730			90,362
INCOME TAX	(1,143		)	35,099			(637		)	738			34,057
EQUITY FROM INCOME (LOSS) IN SUBSIDIARIES	41,493			(98		)	—			(41,395		)	—
CONSOLIDATED NET INCOME	$	40,649		$	43,011		$	13,048		$	(40,403	)	$	56,305
Less: Net income attributable to noncontrolling interests	—			—			15,656			—			15,656
NET INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	40,649		$	43,011		$	(2,608	)	$	(40,403	)	$	40,649

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

	Three Months Ended September 30, 2012
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
TOTAL REVENUES	$	—		$	687,675		$	85,496		$	(22,689	)	$	750,482
COSTS AND EXPENSES:
Cost of revenues	—			259,967			54,695			(20,395		)	294,267
Selling, general and administrative	—			191,540			18,938			(32		)	210,446
Research and development	—			47,128			1,824			—			48,952
Patent litigation settlement, net	—			(46,238		)	—			—			(46,238		)
Litigation-related contingencies	—			82,600			—			—			82,600
Asset impairment charges	—			11,163			—			—			11,163
Acquisition-related and integration items, net	—			4,764			1,012			—			5,776
OPERATING INCOME	—			136,751			9,027			(2,262		)	143,516
INTEREST EXPENSE, NET	10,573			34,932			—			—			45,505
NET LOSS ON EXTINGUISHMENT OF DEBT	1,789			—			—			—			1,789
OTHER INCOME, NET	—			(249		)	(2,749		)	2,748			(250		)
(LOSS) INCOME BEFORE INCOME TAX	(12,362		)	102,068			11,776			(5,010		)	96,472
INCOME TAX	(4,442		)	36,147			(2,099		)	(1,319		)	28,287
EQUITY FROM INCOME IN SUBSIDIARIES	61,729			745			—			(62,474		)	—
CONSOLIDATED NET INCOME	53,809			66,666			13,875			(66,165		)	68,185
Less: Net income attributable to noncontrolling interests	—			—			14,376			—			14,376
NET INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	53,809		$	66,666		$	(501	)	$	(66,165	)	$	53,809

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

	Nine Months Ended September 30, 2012
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
TOTAL REVENUES	$	—		$	2,034,768		$	259,412		$	(67,877	)	$	2,226,303
COSTS AND EXPENSES:
Cost of revenues	—			855,418			161,724			(63,485		)	953,657
Selling, general and administrative	—			632,202			66,368			(48		)	698,522
Research and development	—			179,695			3,372			—			183,067
Patent litigation settlement, net	—			85,123			—			—			85,123
Litigation-related contingencies	—			82,600			—			—			82,600
Asset impairment charges	—			54,163			—			—			54,163
Acquisition-related and integration items, net	—			14,294			2,286			—			16,580
OPERATING INCOME	—			131,273			25,662			(4,344		)	152,591
INTEREST EXPENSE, NET	33,320			105,039			27			—			138,386
NET LOSS ON EXTINGUISHMENT OF DEBT	7,215			—			—			—			7,215
OTHER EXPENSE (INCOME), NET	—			5			(2,418		)	2,911			498
(LOSS) INCOME BEFORE INCOME TAX	(40,535		)	26,229			28,053			(7,255		)	6,492
INCOME TAX	(14,562		)	15,487			(8,326		)	(1,862		)	(9,263		)
EQUITY FROM INCOME (LOSS) IN SUBSIDIARIES	1,902			(1,167		)	—			(735		)	—
CONSOLIDATED NET (LOSS) INCOME	(24,071		)	9,575			36,379			(6,128		)	15,755
Less: Net income attributable to noncontrolling interests	—			—			39,826			—			39,826
NET (LOSS) INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	(24,071	)	$	9,575		$	(3,447	)	$	(6,128	)	$	(24,071	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

	Nine Months Ended September 30, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
TOTAL REVENUES	$	—		$	1,809,956		$	193,661		$	(76,902	)	$	1,926,715
COSTS AND EXPENSES:
Cost of revenues	—			738,961			110,320			(78,854		)	770,427
Selling, general and administrative	58			540,457			41,363			—			581,878
Research and development	—			126,576			278			—			126,854
Asset impairment charges	—			22,691			—			—			22,691
Acquisition-related and integration items, net	(7,050		)	35,288			1,279			—			29,517
OPERATING INCOME	6,992			345,983			40,421			1,952			395,348
INTEREST EXPENSE, NET	28,226			68,905			11			—			97,142
NET LOSS ON EXTINGUISHMENT OF DEBT	8,548			—			—			—			8,548
OTHER (INCOME) EXPENSE, NET	—			(3,024		)	88			159			(2,777		)
(LOSS) INCOME BEFORE INCOME TAX	(29,782		)	280,102			40,322			1,793			292,435
INCOME TAX	(13,431		)	112,156			757			801			100,283
EQUITY FROM INCOME IN SUBSIDIARIES	167,370			954			—			(168,324		)	—
CONSOLIDATED NET INCOME	$	151,019		$	168,900		$	39,565		$	(167,332	)	$	192,152
Less: Net income attributable to noncontrolling interests	—			—			41,133			—			41,133
NET INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	151,019		$	168,900		$	(1,568	)	$	(167,332	)	$	151,019

Condensed Consolidating Statement Of Comprehensive Income (Loss)

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Nine Months Ended September 30, 2012
	Endo Health Solutions Inc.			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
CONSOLIDATED NET (LOSS) INCOME	$	(24,071	)	$	9,575	$	36,379		$	(6,128	)	$	15,755
OTHER COMPREHENSIVE INCOME	1,932			1,463		662			(2,125		)	1,932
CONSOLIDATED COMPREHENSIVE (LOSS) INCOME	(22,139		)	11,038		37,041			(8,253		)	17,687
Less: Comprehensive income attributable to noncontrolling interests	—			—		39,826			—			39,826
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	(22,139	)	$	11,038	$	(2,785	)	$	(8,253	)	$	(22,139	)

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Three Months Ended September 30, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
CONSOLIDATED NET INCOME	$	40,649		$	43,011	$	13,048		$	(40,403	)	$	56,305
OTHER COMPREHENSIVE (LOSS) INCOME	(5,755		)	875		(5,130		)	4,255			(5,755		)
CONSOLIDATED COMPREHENSIVE INCOME	34,894			43,886		7,918			(36,148		)	50,550
Less: Comprehensive income attributable to noncontrolling interests	—			—		15,656			—			15,656
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	34,894		$	43,886	$	(7,738	)	$	(36,148	)	$	34,894

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Three Months Ended September 30, 2012
	Endo Health Solutions Inc.		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated Total
CONSOLIDATED NET INCOME	$	53,809	$	66,666		$	13,875	$	(66,165	)	$	68,185
OTHER COMPREHENSIVE INCOME (LOSS)	3,960		(79		)	4,397		(4,318		)	3,960
CONSOLIDATED COMPREHENSIVE INCOME	57,769		66,587			18,272		(70,483		)	72,145
Less: Comprehensive income attributable to noncontrolling interests	—		—			14,376		—			14,376
COMPREHENSIVE INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	57,769	$	66,587		$	3,896	$	(70,483	)	$	57,769

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Nine Months Ended September 30, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
CONSOLIDATED NET INCOME	$	151,019		$	168,900		$	39,565		$	(167,332	)	$	192,152
OTHER COMPREHENSIVE LOSS	(6,137		)	(507		)	(5,130		)	5,637			(6,137		)
CONSOLIDATED COMPREHENSIVE INCOME	144,882			168,393			34,435			(161,695		)	186,015
Less: Comprehensive income attributable to noncontrolling interests	—			—			41,133			—			41,133
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	144,882		$	168,393		$	(6,698	)	$	(161,695	)	$	144,882

Condensed Consolidating Statement Of Cash Flows

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In thousands)

	Nine Months Ended September 30, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated Total
OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities	$	(51,709	)	$	301,150		$	169,090		$	—	$	418,531
INVESTING ACTIVITIES:
Purchases of property, plant and equipment	—			(34,176		)	(5,433		)	—		(39,609		)
Proceeds from sale of property, plant and equipment	—			340			807			—		1,147
Acquisitions, net of cash acquired	—			(2,243,486		)	(124,871		)	—		(2,368,357		)
Proceeds from investments	—			36,000			—			—		36,000
Purchases of investments	—			(6,009		)	—			—		(6,009		)
Other investments	—			436			(824		)	—		(388		)
Payment on contingent consideration	—			—			(662		)	—		(662		)
License fees	—			(2,300		)	—			—		(2,300		)
Proceeds from sale of business	—			—			12,990			—		12,990
Net cash used in investing activities	—			(2,249,195		)	(117,993		)	—		(2,367,188		)
FINANCING ACTIVITIES:
Proceeds from issuance of 2019 and 2022 Notes	900,000			—			—			—		900,000
Proceeds from issuance of Term Loans	2,200,000			—			—			—		2,200,000
Proceeds from other indebtedness	—			—			302			—		302
Principal payments on Term Loans	(550,813		)	—			—			—		(550,813		)
Payment on AMS Convertible Notes	—			(519,040		)	—			—		(519,040		)
Deferred financing fees	(81,535		)	—			—			—		(81,535		)
Tax benefits of stock awards	—			5,519			—			—		5,519
Exercise of Endo Health Solutions Inc. stock options	21,780			—			—			—		21,780
Purchase of common stock	(34,702		)	—			—			—		(34,702		)
Cash distributions to noncontrolling interests	—			—			(39,392		)	—		(39,392		)
Cash buy-out of noncontrolling interests, net of cash contributions	—			—			(402		)	—		(402		)
Intercompany activity	(2,407,354		)	2,394,706			12,648			—		—
Net cash provided by (used in) financing activities	47,376			1,881,185			(26,844		)	—		1,901,717
Effect of foreign exchange rate	—			—			397			—		397
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(4,333		)	(66,860		)	24,650			—		(46,543		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	45,400			404,169			16,645			—		466,214
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	41,067		$	337,309		$	41,295		$	—	$	419,671

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In thousands)

	Nine Months Ended September 30, 2012
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated Total
OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	421,896		$	(159,009	)	$	34,245		$	—	$	297,132
INVESTING ACTIVITIES:
Purchases of property, plant and equipment	—			(79,310		)	(10,818		)	—		(90,128		)
Proceeds from sale of property, plant and equipment	—			17			1,064			—		1,081
Acquisitions, net of cash acquired	—			—			(3,210		)	—		(3,210		)
Proceeds from sale of marketable securities	—			18,800			—			—		18,800
License fees	—			(5,000		)	(700		)	—		(5,700		)
Net cash used in investing activities	—			(65,493		)	(13,664		)	—		(79,157		)
FINANCING ACTIVITIES:
Capital lease obligations repayments	—			(615		)	(150		)	—		(765		)
Principal payments on Term Loans	(333,950		)	—			—			—		(333,950		)
Payment on AMS Convertible Notes	—			(66		)	—			—		(66		)
Principal payments on other indebtedness	—			—			(685		)	—		(685		)
Tax benefits of stock awards	—			4,268			—			—		4,268
Exercise of Endo Health Solutions Inc. stock options	15,317			—			—			—		15,317
Purchase of common stock	(156,000		)	—			—			—		(156,000		)
Issuance of common stock from treasury	4,606			—			—			—		4,606
Cash distributions to noncontrolling interests	—			—			(39,234		)	—		(39,234		)
Cash buy-out of noncontrolling interests, net of cash contributions	—			—			(2,264		)	—		(2,264		)
Intercompany activity	—			(16,940		)	16,940			—		—
Net cash used in financing activities	(470,027		)	(13,353		)	(25,393		)	—		(508,773		)
Effect of foreign exchange rate	—			—			95			—		95
NET DECREASE IN CASH AND CASH EQUIVALENTS	(48,131		)	(237,855		)	(4,717		)	—		(290,703		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	48,318			455,756			43,546			—		547,620
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	187		$	217,901		$	38,829		$	—	$	256,917

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Stockholders' Equity (Summary Of Restricted Stock Activity) (Details) (Restricted stock [Member], USD $)	9 Months Ended
	Sep. 30, 2012
Restricted stock [Member]
Restricted Stock Awards [Line Items]
Outstanding, Number of Shares, January 1, 2012	173,617
Granted, Number of Shares	0
Forfeited, Number of Shares	(14,554)
Vested, number of shares	(59,220)
Outstanding, Number of Shares, June 30, 2012	99,843
Outstanding, weighted average fair value per share, January 1, 2012	$ 30.27
Granted, weighted average fair value per share	$ 0.00
Forfeited, Weighted Average Fair Value Per Share	$ 29.16
Vested, Weighted Average Fair Value Per Share	$ 29.41
Non-vested, weighted average fair value per share, June 30, 2012	$ 30.94
Vested, aggregate intrinsic value	$ 1,878,458

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Derivative Instruments And Hedging Activities

9 Months Ended

Sep. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments And Hedging Activities

NOTE 16. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We are exposed to certain risks relating to our ongoing business operations. With our June 2011 acquisition of AMS, we began using derivative instruments to mitigate a portion of our exposure to volatility in foreign currency exchange rates. Foreign currency exchange forward contracts are used to manage the currency risk associated with forecasted sales to and receivables from certain subsidiaries, denominated in their local currencies. We hedge only exposures in the ordinary course of business. We account for our derivative instruments at fair value, which is determined based on quoted prices for similar contracts.

We account for certain of our derivative instruments under hedge accounting provided we meet designation, documentary and analytic requirements. Hedge accounting creates the potential for a Condensed Consolidated Statement of Operations match between the changes in fair value of derivatives and the changes in the cost of the associated underlying transactions, in this case translation gain or loss. The effective portion of the change in the fair value of these foreign currency exchange contracts is reported in Accumulated other comprehensive loss, a component of stockholders’ equity, and is recognized as an adjustment to Other (income) expense, net, in the same period the related expenses are recognized in earnings. Ineffectiveness would occur when changes in the market value of the hedged transactions are not completely offset by changes in the market value of the derivatives. The ineffective portion of contracts designated for hedge accounting, the gain or loss from changes in the fair value of contracts not designated for hedge accounting and contracts where hedge accounting is discontinued when it is determined the underlying transaction is not going to occur, are recognized currently in the Condensed Consolidated Statements of Operations. Amounts due from counterparties (unrealized hedge gains) or due to counterparties (unrealized hedge losses) are included in Prepaid expenses and other current assets or other accrued expenses, respectively. Cash receipts or payments related to our derivatives are classified in the Condensed Consolidated Statements of Cash Flows as cash flows from operating activities, consistent with the related items being hedged, unless the derivative is not designated or does not qualify for hedge accounting, in which case the receipts or payments are classified in cash flows from investing activities.

At September 30, 2012, we have foreign currency exchange forward contracts outstanding which are designated as cash flow accounting hedges of currency fluctuations for a portion of our forecasted sales to certain subsidiaries, denominated in euros, British pounds, Canadian dollars, Australian dollars, and Swedish krona. These derivative instruments have remaining terms between one and twelve months. The notional amount of these foreign currency exchange forward contracts in U.S. dollars was $32.9 million at September 30, 2012.

We have also entered into foreign currency exchange forward contracts to manage a portion of our exposure to foreign exchange rate fluctuations on certain inter-company receivables denominated in euros, British pounds, Canadian dollars, Australian dollars and Swedish krona. These contracts are not designated as accounting hedges and the associated underlying transactions are expected to occur within the next month. There were no such contracts outstanding at September 30, 2012.

At September 30, 2012, $0.5 million of the fair value of derivatives designated for hedge accounting was included in Prepaid expenses and other current assets and $0.4 million was included in Accrued expenses in the Condensed Consolidated Balance Sheets. At September 30, 2012, $0.1 million of the existing net gain from contracts designated for hedge accounting, which is included in Accumulated other comprehensive loss, is expected to be reclassified into earnings within the next twelve months. During the three and nine months ended September 30, 2012, a loss of $0.2 million and a loss of $0.2 million, respectively, were recognized in Other (income) expense, net in the Condensed Consolidated Statements of Operations from contracts not designated for hedge accounting. During the three and nine months ended September 30, 2011 a gain of $3.2 million and a gain of $2.6 million, respectively, were recognized in Other (income) expense, net in the Condensed Consolidated Statements of Operations from contracts not designated for hedge accounting.

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Fair Value Measurements (Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended	0 Months Ended	9 Months Ended				9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011	Jun. 30, 2012 Auction-rate securities [Member]	Sep. 30, 2012 Auction-rate securities [Member]	Dec. 31, 2011 Auction-rate securities [Member] securities	Sep. 30, 2012 Equity securities [Member] entity securities	Dec. 31, 2011 Equity securities [Member]	Sep. 30, 2012 Qualitest [Member]	Dec. 31, 2011 Qualitest [Member]	Sep. 30, 2012 Maximum [Member] Qualitest [Member]	Sep. 30, 2012 Minimum [Member] Qualitest [Member]	Sep. 30, 2012 Prepaid expenses and other current assets [Member]	Sep. 30, 2012 Accrued Expenses [Member]	Dec. 31, 2011 Less than tweleve months [Member] Equity securities [Member] securities	Dec. 31, 2011 More than tweleve months [Member] Equity securities [Member] securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Net asset value required to be maintained by money market funds (per unit)	1		1
Stock price volatility			32.00%		33.00%
Fair value of foreign exchange forward contracts, assets															$ 500,000
Fair Value of foreign exchange forward contracts, liabilities																400,000
Proceeds from called auction-rate securities							18,800,000
Gross unrealized losses	940,000	(809,000)	2,326,000	(3,113,000)		1,500,000
Contingent cash consideration agreement	6,027,000		6,027,000		4,925,000								12,500,000	0
Basis points											300
Acquisition related contingent consideration fair value	$ 6,027,000		$ 6,027,000		$ 4,925,000						$ 8,700,000	$ 8,700,000
Number of securities in an unrealized loss position								2	1								2	1
Number of investment in publically traded companies									3	3

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Subsequent Events (Notes)

9 Months Ended

Sep. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

NOTE 18. SUBSEQUENT EVENTS

Effective October 17, 2012, Apax Quartz (Cayman) L.P. (Apax), Endo Pharmaceuticals Inc., Endo Health Solutions Inc, and Generics International (US Parent) Inc. entered into an amendment to the Stock Purchase Agreement among the parties, dated September 28, 2010 (the Stock Purchase Agreement), whereby the parties agreed that within five business days of the execution of such amendment, 1) $52.0 million would be released to Apax from the Indemnity Escrow Fund (as defined in the Stock Purchase Agreement) established in connection with the Stock Purchase Agreement and 2) approximately $2.5 million would be released from the Indemnity Escrow Fund to the Company. Accordingly, following the release of these amounts, the total value of the Indemnity Escrow Fund will be reduced by $54.5 million and will equal $45.5 million. The Indemnity Escrow Fund was previously treated as a component of the Qualitest Pharmaceuticals purchase price and therefore this amendment does not have any impact on our cash or cash equivalents balances.

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Net (Loss) Income Per Share (Narrative) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Apr. 09, 2009	Apr. 30, 2008
Net (Loss) Income Per Share [Line Items]
Number of shares that could potentially be anti-dilutive if warrants were exercised	13.0
1.75% Convertible Senior Subordinated Notes Due April 15, 2015 [Member]
Net (Loss) Income Per Share [Line Items]
Notes, interest rate	1.75%		1.75%
Convertible Notes, maturity date	Apr. 15, 2015
Convertible Notes, convertible amount per share	$ 29.20	$ 24.85

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Basis Of Presentation

9 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of presentation

NOTE 1. BASIS OF PRESENTATION

At our Annual Meeting of Stockholders on May 23, 2012, the Company’s stockholders approved the proposal to amend and restate the Company’s Amended and Restated Certificate of Incorporation to change the name of the Company from Endo Pharmaceuticals Holdings Inc. to Endo Health Solutions Inc., which we refer to herein as the Company or we, our, us, or Endo.

The accompanying unaudited Condensed Consolidated Financial Statements of Endo Health Solutions Inc. have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying Condensed Consolidated Financial Statements of Endo and its subsidiaries, which are unaudited, include all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of September 30, 2012 and the results of our operations and our cash flows for the periods presented. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Statement of Financial Position [Abstract]
Preferred Stock, par value (usd per share)	$ 0.01	$ 0.01
Preferred Stock, shares authorized	40,000,000	40,000,000
Preferred Stock, shares issued	0	0
Common Stock, par value (usd per share)	$ 0.01	$ 0.01
Common Stock, shares authorized	350,000,000	350,000,000
Common Stock, shares issued	139,673,311	138,337,002
Common Stock, shares outstanding	113,991,489	117,158,880
Treasury Stock, shares	25,681,822	21,178,122

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Stockholders' Equity

9 Months Ended

Sep. 30, 2012

Stockholders' Equity Note [Abstract]

Stockholders' equity

NOTE 11. STOCKHOLDERS’ EQUITY

Stock-Based Compensation

Endo Health Solutions Inc. 2000, 2004, 2007, and 2010 Stock Incentive Plans and the American Medical Systems Holdings, Inc. 2005 Stock Incentive Plan

On August 11, 2000, we established the Endo Health Solutions Inc. 2000 Stock Incentive Plan. The 2000 Stock Incentive Plan reserved an aggregate of 4,000,000 shares of common stock of the Company for issuance to employees, officers, directors and consultants. The 2000 Stock Incentive Plan provided for the issuance of stock options, restricted stock, stock bonus awards, stock appreciation rights or performance awards. The 2000 Stock incentive Plan expired in 2010.

In May 2004, our stockholders approved the Endo Health Solutions Inc. 2004 Stock Incentive Plan. The maximum number of shares of Company stock reserved for issuance under the 2004 Stock Incentive Plan is 4,000,000 shares. The 2004 Plan provides for the grant of stock options, stock appreciation rights, shares of restricted stock, performance shares, performance units or other share-based awards that may be granted to executive officers and other employees of the Company, including officers and directors who are employees, to non-employee directors and to consultants to the Company.

In May 2007, our stockholders approved the Endo Health Solutions Inc. 2007 Stock Incentive Plan. The maximum number of shares of Company stock reserved for issuance under the 2007 Stock Incentive Plan is 7,000,000 shares (subject to adjustment for certain transactions), but in no event may the total number of shares of Company stock subject to awards awarded to any one participant during any tax year of the Company exceed 750,000 shares (subject to adjustment for certain transactions).

In May 2010, our stockholders approved the Endo Health Solutions Inc. 2010 Stock Incentive Plan. The maximum number of shares of Company stock reserved for issuance under the Plan includes 8,000,000 shares plus the number of shares of Company stock reserved but unissued under the Company’s 2004 and 2007 Stock Incentive Plans as of April 28, 2010 and may be increased to include the number of shares of Company stock that become available for reuse under these plans following April 28, 2010, subject to adjustment for certain transactions. Notwithstanding the foregoing, of the 8,000,000 shares originally reserved for issuance under this Plan, no more than 4,000,000 of such shares shall be issued as awards, other than options, that are settled in the Company’s stock. In no event may the total number of shares of Company stock subject to awards awarded to any one participant during any tax year of the Company, exceed 1,000,000 shares (subject to adjustment for certain transactions).

In June 2011, in connection with our acquisition of AMS, we assumed the AMS 2005 Stock Incentive Plan. As of the AMS Acquisition Date, the number of shares of Company stock reserved for issuance under the Plan was 5,269,152.

At September 30, 2012, approximately 20.3 million shares were reserved for future issuance upon exercise of options granted or to be granted under the Endo 2000, 2004, 2007, and 2010 Stock Incentive Plans and the AMS 2005 Stock Incentive Plan. As of September 30, 2012, stock options, restricted stock awards, performance stock units and restricted stock units have been granted under the Stock Incentive Plans.

The Company accounts for its stock-based compensation plans in accordance with the applicable accounting guidance. Accordingly, all stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense in the income statement over the requisite service period.

The Company recognized stock-based compensation expense of $11.2 million and $44.5 million during the three and nine months ended September 30, 2012 and $15.5 million and $34.2 million during the three and nine months ended September 30, 2011, respectively. As of September 30, 2012, the total remaining unrecognized compensation cost related to all non-vested stock-based compensation awards amounted to $97.7 million. This expected cost does not include the impact of any future stock-based compensation awards.

Stock Options

For all of the Company’s stock-based compensation plans, the fair value of each option grant was estimated at the date of grant using the Black-Scholes option-pricing model. Black-Scholes utilizes assumptions related to volatility, the risk-free interest rate, the dividend yield (which is assumed to be zero, as the Company has not paid cash dividends to date and does not currently expect to pay cash dividends) and the expected term of the option. Expected volatilities utilized in the model are based mainly on the historical volatility of the Company’s stock price over a period commensurate with the expected life of the share option as well as other factors. The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant. We estimate the expected term of options granted based on our historical experience with our employees’ exercise of stock options and other factors.

A summary of the activity under the Endo 2000, 2004, 2007, and 2010 Stock Incentive Plans and the AMS 2005 Stock Incentive Plan for the nine months ended September 30, 2012 is presented below:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding as of January 1, 2012	8,115,467		$	25.79
Granted	2,227,481		$	34.60
Exercised	(668,024	)	$	22.95
Forfeited	(468,564	)	$	31.22
Expired	(30,332	)	$	26.79
Outstanding as of September 30, 2012	9,176,028		$	27.85	6.88	$	45,806,834
Vested and expected to vest, September 30, 2012	8,584,159		$	27.56	6.77	$	44,678,198
Exercisable, September 30, 2012	3,990,964		$	24.60	5.19	$	29,050,676

The total intrinsic value of options exercised during the nine months ended September 30, 2012 and 2011 was $15.3 million and $14.3 million, respectively. The weighted average grant date fair value of the stock options granted in the nine months ended September 30, 2012 and 2011 was $10.50 per option and $14.69 per option, respectively, determined using the following assumptions:

	September 30, 2012		September 30, 2011
Average expected term (years)	5.0		5.0
Risk-free interest rate	0.9	%	2.0	%
Dividend yield	—		—
Expected volatility	33	%	32	%

As of September 30, 2012, the weighted average remaining requisite service period of the non-vested stock options was 2.2 years. As of September 30, 2012, the total remaining unrecognized compensation cost related to non-vested stock options amounted to $43.7 million. This unrecognized compensation cost does not include the impact of any future stock-based compensation awards.

Restricted Stock Units

During the nine months ended September 30, 2012 and 2011, the Company granted restricted stock units to employees and non-employee directors of the Company as part of their annual stock compensation award. We recognize expense for our restricted stock units using the straight-line method over the requisite service period. The total value of compensation expense for restricted stock units is equal to the closing price of Endo shares on the date of grant.

A summary of our restricted stock units as of September 30, 2012 is presented below:

	Number of Shares		Aggregate Intrinsic Value
Outstanding as of January 1, 2012	2,629,782
Granted	999,294
Forfeited	(300,044	)
Vested	(682,859	)
Outstanding as of September 30, 2012	2,646,173		$	83,343,319
Vested and expected to vest, September 30, 2012	2,372,779		$	73,093,716

As of September 30, 2012, the weighted average remaining requisite service period of the non-vested restricted stock units was 1.8 years. The weighted average grant date fair value of the restricted stock units granted during the nine months ended September 30, 2012 and 2011 was $34.81 per unit and $34.71 per unit, respectively. As of September 30, 2012, the total remaining unrecognized compensation cost related to non-vested restricted stock units amounted to $47.4 million. This unrecognized compensation cost does not include the impact of any future stock-based compensation awards.

Restricted Stock Awards

We recognize expense for our restricted stock using the straight-line method over the requisite service period. The total value of compensation expense for restricted stock is equal to the closing price of Endo shares on the date of grant.

A summary of our restricted stock awards as of September 30, 2012 is presented below:

	Number of Shares		Weighted Average Fair Value Per Share		Aggregate Intrinsic Value
Outstanding as of January 1, 2012	173,617		$	30.27
Granted	—		$	—
Forfeited	(14,554	)	$	29.16
Vested	(59,220	)	$	29.41	$	1,878,458
Non-vested, September 30, 2012	99,843		$	30.94

As of September 30, 2012, the weighted average remaining requisite service period of the non-vested restricted stock awards was approximately 1.8 years.

Performance Shares

Beginning in the first quarter ended March 31, 2010, the Company began to award performance stock units (PSU) to certain key employees. These PSUs are tied to both Endo’s overall financial performance and Endo’s financial performance relative to the

financial performance of a selected industry group. Awards are granted annually, with each award covering a three-year performance cycle. Each PSU is convertible to one share of Endo common stock. Performance measures used to determine the actual number of performance shares issuable upon vesting include an equal weighting of Endo’s total shareholder return (TSR) performance compared to the performance group over the three-year performance cycle and Endo’s three-year cumulative revenue performance as compared to a three-year revenue target. TSR relative to peers is considered a market condition while cumulative revenue performance is considered a performance condition under applicable authoritative guidance. PSUs granted for the nine months ended September 30, 2012 and 2011 totaled approximately 193,000 and 160,000, respectively. As of September 30, 2012, there was approximately $6.7 million of total unrecognized compensation costs related to PSUs. That cost is expected to be recognized over a weighted average period of 3.0 years.

Share Repurchase Programs

In April 2008, our Board of Directors approved a share repurchase program (the 2008 Share Repurchase Program), authorizing the Company to repurchase in the aggregate up to $750 million of shares of its outstanding common stock. In August 2012, our Board of Directors resolved to cancel and terminate the 2008 Share Repurchase Program, effective immediately, and approve a new share repurchase program (the 2012 Share Repurchase Program). The 2012 Share Repurchase Program authorizes the Company to repurchase in the aggregate up to $450 million of shares of its outstanding common stock. Purchases under this program may be made from time to time in open market purchases, pre-set purchase programs, privately-negotiated transactions, and accelerated stock buyback agreements. This program does not obligate Endo to acquire any particular amount of common stock. Future repurchases, if any, will depend on factors such as levels of cash generation from operations, cash requirements for investment in the Company’s business, repayment of future debt, if any, then current stock price, market conditions, securities law limitations and other factors. The share repurchase program may be suspended, modified or discontinued at any time. The 2012 Share Repurchase Program is set to expire on March 31, 2015.

Pursuant to our share repurchase programs, we purchased approximately 4.7 million shares of our common stock during the nine month period ended September 30, 2012 totaling $156.0 million and approximately 0.9 million shares of our common stock during the nine month period ended September 30, 2011 totaling $34.7 million.

Employee Stock Purchase Plan

At our Annual Meeting of Stockholders held in May of 2011, our shareholders approved the Endo Health Solutions Inc. Employee Stock Purchase Plan (the ESPP). The ESPP is a Company-sponsored plan that enables employees to voluntarily elect, in advance of any of the four quarterly offering periods ending March 31, June 30, September 30 and December 31 of each year, to contribute up to 10% of their eligible compensation, subject to certain limitations, to purchase shares of common stock at 85% of the lower of the closing price of Endo common stock on the first or last trading day of each offering period. The maximum number of shares that a participant may purchase in any calendar year is equal to $25,000 divided by the closing selling price per share of our common stock on the first day of the offering period, subject to certain adjustments. Compensation expense is calculated in accordance with the applicable accounting guidance and is based on the share price at the beginning or end of each offering period and the purchase discount. Obligations under the ESPP may be satisfied by the reissuance of treasury stock, by the Company’s purchase of shares on the open market or by the authorization of new shares. The maximum number of shares available under the ESPP, pursuant to the terms of the ESPP plan document, is one percent of the common shares outstanding on April 15, 2011 or approximately 1.2 million shares. The ESPP shall continue in effect until the earlier of (i) the date when no shares of Stock are available for issuance under the ESPP, at which time the ESPP shall be suspended pursuant to the terms of the ESPP plan document, or (ii) December 31, 2022, unless earlier terminated. Compensation expense related to the ESPP totaled $1.1 million during the nine months ended September 30, 2012. The Company issued 170,124 shares from treasury totaling $4.6 million during the nine months ended September 30, 2012 pursuant to the ESPP.

Changes in Stockholders’ Equity

The following table displays a reconciliation of our beginning and ending balances in stockholders’ equity for the nine months ended September 30, 2012 (dollars in thousands):

	Attributable to:
	Endo Health Solutions Inc.			Noncontrolling interests			Total Stockholders’ Equity
Stockholders’ equity at January 1, 2012	$	1,977,690		$	61,901		$	2,039,591
Net (loss) income	(24,071		)	39,826			15,755
Other comprehensive income	1,932			—			1,932
Compensation related to stock-based awards	44,532			—			44,532
Exercise of options	18,220			—			18,220
Common stock purchased, net of common stock issued from treasury	(151,394		)	—			(151,394		)
Distributions to noncontrolling interests	—			(39,234		)	(39,234		)
Buy-out of noncontrolling interests, net of contributions	—			(176		)	(176		)
Other	1,291			—			1,291
Stockholders’ equity at September 30, 2012	$	1,868,200		$	62,317		$	1,930,517

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2012	Oct. 30, 2012
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Trading Symbol	ENDP
Entity Registrant Name	ENDO HEALTH SOLUTIONS INC.
Entity Central Index Key	0001100962
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		114,095,441

XML

Commitments And Contingencies

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

NOTE 12. COMMITMENTS AND CONTINGENCIES

Manufacturing, Supply and Other Service Agreements

We contract with various third party manufacturers, suppliers and service providers to provide us with raw materials used in our products and semi-finished and finished goods, as well as certain packaging and labeling and sales and marketing services. Our most significant agreements are with Novartis Consumer Health, Inc. and Novartis AG (collectively, Novartis), Teikoku Seiyaku Co., Ltd., Mallinckrodt Inc., Noramco, Inc., Grünenthal GMBH, Sharp Corporation, and Ventiv Commercial Services, LLC. If for any reason we are unable to obtain sufficient quantities of any of the finished goods or raw materials or components required for our products or services needed to conduct our business, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Novartis Manufacturing Agreement

On May 3, 2001, we entered into a long-term manufacturing and development agreement with Novartis Consumer Health, Inc. whereby Novartis Consumer Health, Inc. agreed to manufacture certain of our commercial products and products in development. We are required to purchase, on an annual basis, a minimum amount of product from Novartis Consumer Health, Inc. The purchase price per product is equal to a predetermined amount per unit, subject to periodic adjustments. This agreement had a five-year initial term, with automatic five-year renewals thereafter. In August 2005, we extended this agreement until 2011. On February 23, 2011, we gave notice to Novartis Consumer Health, Inc. that we would terminate this agreement effective February 2014. At September 30, 2012, based on the products contracted for manufacture at Novartis Consumer Health, Inc., we are required to purchase a minimum of approximately $11.2 million of product from Novartis Consumer Health, Inc. per year, or pro rata portion thereof, until the effective date of the termination of this agreement, provided that Novartis Consumer Health, Inc. is able to supply such products.

In December 2011, Novartis Consumer Health, Inc.’s Lincoln, Nebraska manufacturing facility was temporarily shut down to facilitate its implementation of certain manufacturing process improvements. These improvements are intended to address the possibility of rare instances of errors in the packaging of the tablets, potentially resulting in product mix-ups. The temporary supply disruption is not related to the efficacy or safety of Endo’s products. As a result, throughout the first half of 2012, we experienced short-term supply constraints of certain Endo analgesic products which had been manufactured at this facility prior to the shutdown, including Opana^®, Voltaren^® Gel, oxymorphone hydrochloride, Percodan^®, Endodan^®, morphine sulfate ER and Zydone^®.

In the first quarter of 2012, Endo began production of the formulation of Opana^® ER, designed to be crush-resistant, at a third party manufacturing facility managed by Endo’s development partner, Grünenthal. The Company began shipping this formulation in March 2012 and completed the transition to this formulation in the second quarter of 2012. Endo also began production of Voltaren^® Gel at an alternative Novartis manufacturing source and resumed sales of Voltaren^® Gel in April 2012. Endo had already initiated the manufacturing of Percocet^® and Endocet^® at its Huntsville, Alabama facility as a result of its acquisition of Qualitest Pharmaceuticals in 2010 and, as a result, there was minimal disruption to patients on these products. Separately, Endo also has plans to put additional procedures in place to assist Novartis Consumer Health, Inc. in restarting production at the Lincoln, Nebraska manufacturing facility.

Novartis License and Supply Agreement

Pursuant to the March 2008 Voltaren^® Gel License and Supply Agreement (the Voltaren^® Gel Agreement) with Novartis AG and Novartis Consumer Health, Inc. Endo has agreed to purchase from Novartis all of its requirements for Voltaren^® Gel during the entire term of the Voltaren^® Gel Agreement. The price of product purchased under the Voltaren^® Gel Agreement is fixed for the first year and subject to annual changes based upon changes in the producer price index and raw materials.

As part of the Voltaren^® Gel Agreement, we also agreed to undertake advertising and promotion of Voltaren^® Gel (A&P Expenditures), subject to certain thresholds set forth in the Voltaren^® Gel Agreement. During the third Voltaren^® Gel Agreement Year beginning on July 1, 2010 and extending through June 30, 2011, we agreed to spend 15% of prior year sales or approximately $13 million on A&P Expenditures. During the fourth Voltaren^® Gel Agreement Year beginning on July 1, 2011 and extending through June 30, 2012, we agreed to spend 13% of prior year sales or approximately $16 million on A&P Expenditures. During the fifth Agreement Year beginning on July 1, 2012 and extending through June 30, 2013 we agreed to spend 6% of prior year sales or approximately $7.1 million on A&P Expenditures; however, this amount may be reduced pursuant to the Voltaren^® Gel Agreement due to Novartis’s failure to supply Voltaren^® Gel. In subsequent Agreement Years, the minimum A&P Expenditures set forth in the Voltaren^® Gel Agreement are determined based on a percentage of net sales of Voltaren^® Gel, which may be reduced under certain circumstances, including Novartis’s failure to supply Voltaren^® Gel.

Amounts incurred by Endo for such A&P Expenditures were $7.9 million and $15.1 million for the nine months ended September 30, 2012 and 2011, respectively.

Teikoku Seiyaku Co., Ltd.

Under the terms of our agreement (the Teikoku Agreement) with Teikoku Seiyaku Co. Ltd. (Teikoku), a Japanese manufacturer, Teikoku manufactures Lidoderm^® at its two Japanese facilities, located on adjacent properties, for commercial sale by us in the U.S. We also have an option to extend the supply area to other territories. On April 24, 2007, we amended the Teikoku agreement (the Amended Agreement). The material components of the Amended Agreement are as follows:

• We agreed to purchase a minimum number of patches per year through 2012, representing the noncancelable portion of the Amended Agreement.

• Teikoku agreed to fix the supply price of Lidoderm^® for a period of time after which the price will be adjusted at future dates certain based on a price index defined in the Amended Agreement. Since future price changes are unknown, we have used prices currently existing under the Amended Agreement, and estimated our minimum purchase requirement to be approximately $34.0 million per year through 2012. The minimum purchase requirement shall remain in effect subsequent to 2012, except that Endo has the right to terminate the Amended Agreement after 2012, if we fail to meet the annual minimum requirement.

• Following cessation of our obligation to pay royalties to Hind Healthcare Inc. (Hind) under the Sole and Exclusive License Agreement dated as of November 23, 1998, as amended, between Hind and Endo (the Hind Agreement), we began to pay to Teikoku annual royalties based on our annual net sales of Lidoderm^®.

• The Amended Agreement will expire on December 31, 2021, unless terminated in accordance with its terms. Either party may terminate this Agreement, upon 30 days' written notice, in the event that Endo fails to purchase the annual minimum quantity for each year after 2012 (e.g., 2013 through 2021) upon 30 days’ written notice. Notwithstanding the foregoing, after December 31, 2021, the Amended Agreement shall be automatically renewed on the first day of January each year unless (i) we and Teikoku agree to terminate the Amended Agreement upon mutual written agreement or (ii) either we or Teikoku terminates the Amended Agreement with 180-day written notice to the other party, which notice shall not in any event be effective prior to July 1, 2022.

On January 6, 2010, the parties amended the Teikoku Agreement, effective December 16, 2009. Pursuant to the amendment, Teikoku has agreed to supply Lidoderm^® at a fixed price for a period of time after which the price will be adjusted at certain future dates based on a price index defined in the amendment.

Effective November 1, 2010, the parties amended the Teikoku Agreement. Pursuant to this amendment, Teikoku agreed to supply additional Lidoderm^® at no cost to Endo in each of 2012 and 2013 in the event Endo’s firm orders of Product exceed certain thresholds in those years.

On November 23, 2011, our obligation to pay royalties to Hind under Hind Agreement ceased. Accordingly, on November 23, 2011, pursuant to the terms of the Teikoku Agreement, we began to incur royalties to Teikoku based on annual net sales of Lidoderm^®. The royalty rate is 6% of branded Lidoderm^® net sales. During the nine months ended September 30, 2012, we recorded $39.9 million for these royalties to Teikoku, which we recorded in our Consolidated Financial Statements as Cost of revenues. At September 30, 2012, $39.9 million is recorded as a royalty payable and included in accounts payable in the accompanying Condensed Consolidated Balance Sheets.

On August 3, 2012, Teikoku agreed to provide to Endo, at a discount, any branded Lidoderm^® product that is required to be provided to the wholesaler affiliates of Watson Laboratories, Inc. pursuant to the Watson Settlement Agreement (discussed below). The discount will be equal to a 50% reduction to the regular prices that Endo would otherwise be obligated to pay for this product.

Mallinckrodt Inc.

Under the terms of our agreement (the Mallinckrodt Agreement) with Mallinckrodt Inc. (Mallinckrodt), Mallinckrodt manufactures and supplies to us certain narcotic active drug substances, in bulk form, and raw materials for inclusion in our controlled substance pharmaceutical products. There is no minimum annual purchase commitment under the Mallinckrodt Agreement. However, we are required to purchase a fixed percentage of our annual requirements of each narcotic active drug substance covered by the Mallinckrodt Agreement from Mallinckrodt. The purchase price for these substances is equal to a fixed amount, adjusted on an annual basis. The initial term of this agreement was July 1, 1998 until September 30, 2013, with an automatic renewal provision for unlimited successive one-year periods. On September 30, 2011, we provided written notice to Mallinckrodt that the Company intends to let the Mallinckrodt Agreement expire effective September 30, 2013. The Company chose to allow the Mallinckrodt Agreement to expire in connection with its ongoing initiatives relating to the sourcing of active pharmaceutical ingredients. In April 2012, the Company entered into an agreement with Noramco, Inc. as described below. The Company will continue to purchase certain narcotic active drug substances, in bulk form, under the terms of the Mallinckrodt Agreement through the expiration date.

Noramco, Inc.

Under the terms of our agreement (the Noramco Agreement) with Noramco, Inc. (Noramco), Noramco manufactured and supplied to us certain narcotic active drug substances, in bulk form, and raw materials for inclusion in our controlled substance pharmaceutical products. There were no minimum annual purchase commitments under the Noramco Agreement. However, we were required to purchase a fixed percentage of our annual requirements of each narcotic active drug substance covered by the Noramco Agreement from Noramco. The purchase price for these substances was equal to a fixed amount, adjusted on an annual basis. Originally, the Noramco Agreement was to expire on December 31, 2011, with automatic renewal provisions for unlimited successive one-year periods. In September 2011, we extended the Noramco Agreement through early 2012. On April 27, 2012, we entered into a new supply agreement with Noramco. Under the terms of this supply agreement (the 2012 Noramco Agreement), Noramco manufactures and supplies to us certain narcotic active drug substances, in bulk form, for inclusion in our controlled substance pharmaceutical products. There are no minimum annual purchase commitments under the 2012 Noramco Agreement. However, we are required to purchase from Noramco a fixed percentage of our annual requirements of each narcotic active drug substance covered by the 2012 Noramco Agreement. The purchase price for these substances is equal to a fixed amount, adjusted on an annual basis based on volume. The term of the 2012 Noramco Agreement is for four years with automatic renewal provisions for unlimited successive one-year periods.

Grünenthal GMBH

Under the terms of our December 2007 License, Development and Supply Agreement with Grünenthal (the Grünenthal Agreement), Grünenthal agreed to manufacture and supply to Endo a crush-resistant formulation of Opana^® ER based on a supply price equal to a certain percentage of net sales of Opana^® ER, subject to a floor price. In the first quarter of 2012, Endo began production of the crush-resistant formulation of Opana^® ER at a third party manufacturing facility managed by Grünenthal. The Grünenthal Agreement will expire on the later of (i) the 15th anniversary of the date of first commercial sale of the product, (ii) the expiration of the last issued patent in the territory claiming or covering products, or (iii) the expiration of exclusivity granted by the FDA for the last product developed under the Grünenthal Agreement.

Sharp Corporation

Under the terms of our agreement (the Sharp Agreement) with Sharp Corporation (Sharp), a U.S. manufacturer, Sharp performs certain packaging and labeling services for Endo, including the packaging and labeling of Lidoderm^® at its facility in Allentown, Pennsylvania, for commercial sale by us in the U.S. Effective June 1, 2012, the parties amended the Sharp Agreement to include several new products that Sharp will package and label. These products include our formulation of Opana^® ER designed to be crush-resistant, Vantas^®, Supprelin^® LA, Valstar^® and several SKUs of generic prednisone and methylprednisolone. The Sharp Agreement is effective until March 1, 2015 and is subject to renewal for additional one-year periods upon mutual agreement by both parties. Endo has the right to terminate the Sharp Agreement at any time upon 90 days’ written notice to Sharp.

Ventiv Commercial Services, LLC

On December 27, 2011, we entered into a Sales and Promotional Services Agreement (the Ventiv Agreement) with Ventiv, effective as of December 30, 2011. Under the terms of the Ventiv Agreement, Ventiv provided to Endo certain sales and promotional services through a contracted field force of 228 sales representatives, 24 district managers, one project manager, one trainer and one national sales director, collectively referred to as the Ventiv Field Force. The Ventiv Field Force promotes Voltaren^® Gel, Lidoderm^®, Frova^®, Opana^® ER, Fortesta^® Gel and any additional products added by Endo. The sales representatives are required to perform face-to-face, one-on-one discussions with physicians and other health care practitioners promoting these products.

Endo pays to Ventiv a monthly fixed fee during the term of the Ventiv Agreement based on a budget that has been approved by both Endo and Ventiv. During the term of the Ventiv Agreement, Ventiv will also be eligible to earn, in addition to the fixed management fee, an at-risk management fee. This at-risk management fee is payable upon the achievement of certain performance metrics that have been mutually agreed upon by the parties.

On September 26, 2012, the Ventiv Agreement was amended to decrease the Ventiv Field Force from 228 to 170 sales representatives and decrease the number of district managers from 24 to 17, as well as to retain one project manager, one trainer and one national sales director, starting on October 5, 2012. In addition, the amendment decreased the fees payable to Ventiv as a result of the decrease in the Ventiv Field Force.

The Ventiv Agreement shall continue until December 30, 2013. Endo may extend the current term for an additional period by written notice delivered to Ventiv prior to the expiration of the then current term.

The expenses incurred with respect to Ventiv were $29.2 million and $27.7 million for the nine months ended September 30, 2012 and 2011, respectively. These amounts were included within Selling, general and administrative expense in the accompanying Condensed Consolidated Statements of Operations.

UPS Supply Chain Solutions

Under the terms of this agreement, we utilize UPS Supply Chain Solutions to provide customer service support, chargeback processing, accounts receivables management and warehouse, freight and distribution services for certain of our products in the U.S. The initial term of the agreement will extend to March 31, 2015. The agreement may be terminated by either party (1) without cause upon prior written notice to the other party; (2) with cause in the event of an uncured material breach by the other party and (3) if the other party become insolvent or bankrupt. In the event of termination of services provided under the Warehouse Distribution Services Schedule to the agreement (i) by Endo without cause or (ii) by UPS due to Endo’s breach, failure by Endo to make payments when due, or Endo’s insolvency, we would be required to pay UPS certain termination costs. Such termination costs would not exceed $1.0 million. On February 21, 2012, we amended this agreement to provide for a reduced pricing structure, which includes new monthly fees, new variable fees and new termination fees. During the second quarter of 2012, we notified UPS that we will no longer require them to provide chargeback processing and accounts receivable management, effective September 2012.

General

In addition to the manufacturing and supply agreements described above, we have agreements with various companies for clinical development services. Although we have no reason to believe that the parties to these agreements will not meet their obligations, failure by any of these third parties to honor their contractual obligations may have a materially adverse effect on our business, financial condition, results of operations and cash flows.

Milestones and Royalties

See Note 8. License and Collaboration Agreements for a complete description of future milestone and royalty commitments pursuant to our acquisitions, license and collaboration agreements.

Employment Agreements

We have entered into employment agreements with certain members of management.

Research Contracts

We routinely contract with universities, medical centers, contract research organizations and other institutions for the conduct of research and clinical studies on our behalf. These agreements are generally for the duration of the contracted study and contain provisions that allow us to terminate prior to completion.

Legal Proceedings

We and certain of our subsidiaries are involved in various claims, legal proceedings and governmental investigations that arise from time to time in the ordinary course of our business, including relating to product liability, intellectual property, regulatory compliance and commercial matters. While we cannot predict the outcome of our ongoing legal proceedings and we intend to vigorously defend our position, an adverse outcome in any of these proceedings could have a material adverse effect on our current and future financial position, results of operations and cash flows.

In view of the inherent difficulty of predicting the outcome of our various claims, legal proceedings and governmental investigations, particularly where there are many claimants, each with their own unique circumstances that give rise to their alleged claims, and the claimants seek indeterminate damages and particularly given the various stages of our proceedings, unless specified otherwise below, we are unable to predict the outcome of these matters or the ultimate legal and financial liability, and at this time cannot reasonably estimate the possible loss or range of loss. Accordingly, there are claims, legal proceedings and governmental investigations in which we are involved where a loss is reasonably possible in future periods and for which we have not accrued a related liability. Likewise, it is reasonably possible that a future loss could exceed the related accrued liability.

Department of Health and Human Services Subpoena

As previously reported, in January 2007 and April 2011, the Company received subpoenas issued by the United States Department of Health and Human Services, Office of Inspector General (OIG) and the United States Department of Justice, respectively. The subpoenas request documents relating to Lidoderm^® (lidocaine patch 5%), focused primarily on the sale, marketing and promotion of Lidoderm^®.

In October 2012, preliminary discussions to resolve potential claims arising from this matter advanced to a point where the Company believes a loss is probable. Endo recorded a charge of $53.0 million in the third quarter of 2012, which the company believes is the minimum possible settlement; no better estimate is available at this time, and the ultimate loss, if any, could include a multiplier and be substantially in excess of this amount. The Company continues to cooperate with the government and to discuss resolution of the matters to which the investigation relates, but at this time, the Company cannot estimate the range of loss. These discussions are ongoing, but there is no assurance that a resolution will occur. Settlements of these investigations have commonly resulted in the payment of substantial damages and fines to the government for alleged civil and criminal violations, including a corresponding plea agreement or deferred prosecution agreement, and entry into a Corporate Integrity Agreement with the federal government.

Pricing Litigation

A number of cases were brought by state government entities that allege generally that our wholly-owned subsidiary, Endo Pharmaceuticals Inc. (EPI), and numerous other pharmaceutical companies reported false pricing information in connection with certain drugs that are reimbursable under Medicaid. These cases generally seek damages, treble damages, disgorgement of profits, restitution and attorneys’ fees.

As previously reported, there is a case pending in the 19th Judicial District, Parish of East Baton Rouge, Louisiana against EPI and numerous other pharmaceutical companies: State of Louisiana v. Abbott Laboratories, Inc., et al. This case contains allegations similar to the allegations described above. Without admitting any liability or wrongdoing, in the third quarter of 2012, EPI and the State of Louisiana have reached a tentative agreement to resolve this case for a total of approximately $4.6 million. On July 1, 2011, the Texas Attorney General's Office issued a Civil Investigative Demand (CID) to Qualitest Pharmaceuticals, Inc. and to EPI inquiring into activities in Texas that are similar to those contained in the allegations described above. Without admitting any liability or wrongdoing, in the third quarter of 2012, Qualitest, EPI and the State of Texas have reached a tentative agreement to resolve this matter for a total of $25.0 million. 

Additionally, there is a previously reported case pending in the Third Judicial District Court of Salt Lake County, Utah against EPI and numerous other pharmaceutical companies: State of Utah v. Actavis US, Inc., et al.

EPI intends to contest the above unresolved case vigorously and to explore other options as appropriate in the best interests of the Company. Litigation similar to that described above may also be brought by other plaintiffs in various jurisdictions. However, we cannot predict the timing or outcome of any such litigation, or whether any such litigation will be brought against the Company or its subsidiaries.

Paragraph IV Certifications on Lidoderm^® 

As previously reported, on January 15, 2010, the Company's subsidiary, Endo Pharmaceuticals Inc. (EPI or Endo) and the holders of the Lidoderm^® NDA and relevant patents, Teikoku Seiyaku Co., Ltd., and Teikoku Pharma USA, Inc. (collectively, Teikoku) received a Paragraph IV Certification Notice under 21 U.S.C. 355(j) (a Paragraph IV Notice) from Watson Laboratories, Inc. (Watson) advising of its filing of an Abbreviated New Drug Application (ANDA) for a generic version of Lidoderm^® (lidocaine topical patch 5%). The Paragraph IV Notice refers to U.S. Patent No. 5,827,529, which covers the formulation of Lidoderm^®, a topical patch to relieve the pain of post herpetic neuralgia launched in 1999. This patent is listed in the FDA’s Orange Book and expires in October 2015. As a result of this Notice, on February 19, 2010, EPI and Teikoku filed a lawsuit against Watson in the United States District Court of the District of Delaware. This lawsuit was heard by the court and the trial concluded on February 14, 2012. In October 2010, Teikoku Pharma USA listed U.S. Patent No. 5,741,510 in the FDA Orange Book, and this patent expires in March 2014. On June 30, 2011, EPI and Teikoku filed a second lawsuit against Watson in the United States District Court of the District of Delaware alleging infringement of U.S. Patent Nos. 5,741,510, 6,096,333, and 6,096,334 which cover lidocaine patch formulations and manufacturing processes.

On May 28, 2012, EPI entered into a Settlement and License Agreement (the Watson Settlement Agreement) among EPI and Teikoku, on the one hand, and Watson, on the other hand. The Watson Settlement Agreement settled all ongoing patent litigation among the parties relating to Watson’s generic version of Lidoderm^®. Under the terms of the Watson Settlement Agreement, the parties dismissed their respective claims and counterclaims without prejudice. As part of the settlement, Watson agreed not to challenge the validity or enforceability of Endo’s and Teikoku’s patents relating to Lidoderm^® with respect to Watson’s generic version of Lidoderm^®. Watson also agreed not to sell its generic version of Lidoderm^® until it received FDA approval and, in any event, no sooner than September 15, 2013, except in limited specific circumstances (such date being the Start Date). Endo and Teikoku agreed to grant Watson a license permitting the sale of generic Lidoderm^® upon the Start Date in the United States. The license to Watson is exclusive as to Endo’s launch of an authorized generic version of Lidoderm^® until the earlier of 1) the introduction of a generic version of Lidoderm^® by a company other than Watson, or 2) seven and a half months after Watson launches its generic version of Lidoderm^®. Endo will receive an at market royalty equal to 25% of the gross profit generated on Watson's sales of its generic version of Lidoderm^® during Watson's period of exclusivity.

Additionally, the Watson Settlement Agreement provides that Endo and Teikoku will provide, at no cost, to Watson’s wholesaler affiliate branded Lidoderm^® product for Watson’s wholesaler affiliate’s distribution, subject to certain terms and conditions as follows:

• Beginning on January 1, 2013 through August 1, 2013, Endo and Teikoku will provide branded Lidoderm^® of value totaling $12.0 million each month ($96.0 million in total for 2013) (valued at the then-prevailing wholesale acquisition cost). The obligation of Endo and Teikoku to provide this branded product at no cost terminates immediately upon the launch of a third party’s generic version of Lidoderm^® in the United States, including its territories, possessions and the Commonwealth of Puerto Rico (the Territory).

• In the event Watson does not receive final FDA approval of its generic version of Lidoderm^® by January 1, 2014, then beginning on January 1, 2014 through December 1, 2014, Endo and Teikoku will provide branded Lidoderm^® product of value totaling $6.7 million each month ($80.0 million in total for 2014) (valued at the then-prevailing wholesale acquisition cost). The obligation of Endo and Teikoku to provide this branded product at no cost terminates immediately upon the earlier of (a) the final FDA approval of Watson’s generic version of Lidoderm^® or (b) the launch of a third party’s generic version of Lidoderm^® in the Territory.

• In the event Watson does not receive final FDA approval of its generic version of Lidoderm^® by January 1, 2015, then beginning on January 1, 2015 through September 1, 2015, Endo and Teikoku will provide branded Lidoderm^® product of value totaling $7.1 million each month ($64.0 million in total for 2015) (valued at the then-prevailing wholesale acquisition cost). The obligation of Endo and Teikoku to provide this branded product at no cost terminates immediately upon the earlier of (a) the final FDA approval of Watson’s generic version of Lidoderm^® or (b) the launch of a third party’s generic version of Lidoderm^® in the Territory.

Endo will be responsible for the payment of all gross to net adjustments arising from Watson's sale of the branded Lidoderm^® product.

In contemplation of the Watson Settlement Agreement, Teikoku has agreed to provide a rebate to Endo equal to 50% of the cost of branded Lidoderm^® product that is required to be provided to Watson's wholesaler affiliate pursuant to Section 3(b), 3(c) and 3(d) of the Watson Settlement Agreement.

The Company has concluded that the Watson Settlement Agreement is a multiple-element arrangement and during the second quarter of 2012 recognized a liability and corresponding charge of $131.4 million in Patent litigation settlement, net in the Condensed Consolidated Statements of Operations, representing the initial estimated fair value of the settlement component. Fair value of the settlement component was estimated using the probability adjusted expected value of branded Lidoderm^® product to be provided to Watson at the anticipated wholesaler acquisition cost (WAC) expected to be in place at the time of shipment, less a reasonable estimate of Watson's selling costs. The resultant probability-weighted values were then discounted using a discount rate of 5.1%.

The Company believes that the level and timing of branded Lidoderm^® product to be shipped, discount rate, and probabilities used in the model appropriately reflect market participant assumptions. Because the liability is recorded at fair value using WAC, the net charge recognized in 2012 is comprised of several elements, including our cost of product to be shipped, estimated gross-to-net deductions to be paid by the Company and the estimated product profit margin. We believe this is the most appropriate measure of fair value as these components combined represent the value accruing to Watson. As a result of using a fair value measurement, the charge will be greater than the actual cost to the Company. As such, relief of the liability in subsequent periods through shipments of branded Lidoderm^® product will result in income, which we expect to record as a component of Other (income) expense, net, net in the Company's Condensed Consolidated Statements of Operations. We intend to reclassify the portion of the settlement liability related to the gross-to-net component into our gross-to-net reserves as product is shipped to Watson, the effect of which will be to offset a portion of the income that will be recognized into Other (income) expense, net in the Company's Condensed Consolidated Statements of Operations, as the settlement liability is relieved. The rebate arrangement with Teikoku will also be accounted for prospectively as product purchased from Teikoku will be recorded into inventory at the discounted purchase price and relieved as shipments are made to Watson. The benefit associated with this rebate will be recorded as a component of Other (income) expense, net in the Company's Condensed Consolidated Statements of Operations. Future changes, if any, resulting from revisions to the timing or the amount of the original estimate will be recognized as an increase or a decrease in the carrying amount of the litigation settlement liability and the related Patent litigation settlement, net during the period of change. Future changes in estimates to the settlement liability could have a material impact on our results of operations.

On August 23, 2012, Watson announced it received FDA approval on its ANDA for its lidocaine patch 5%, a generic version of Lidoderm^®. The Company anticipates Watson will launch its generic version of Lidoderm^® on September 15, 2013 pursuant to the terms of the Watson Settlement Agreement. In light of Watson's anticipated September 2013 launch, the Company reassessed its obligation to Watson and believes it will not be obligated to provide to Watson’s wholesaler affiliate branded Lidoderm^® product beyond September 2013. Accordingly, in the third quarter of 2012, the Company recognized a change in estimate with respect to its obligation and reduced its liability associated with the Watson Settlement Agreement by $46.2 million to $85.1 million. The corresponding gain of $46.2 million was recorded in Patent litigation settlement, net in the Condensed Consolidated Statements of Operations.

As previously reported, in January 2011, EPI and Teikoku received a Paragraph IV Notice from Mylan Technologies Inc. (Mylan) advising of its filing of an ANDA for a generic version of Lidoderm^®. The Paragraph IV Notice refers to U.S. Patent Nos. 5,827,529 and 5,741,510, which cover the formulation of Lidoderm^®. These patents are listed in the FDA’s Orange Book and expire in October 2015 and March 2014, respectively. On March 14, 2011, EPI filed a lawsuit against Mylan in the United States District Court for the District of Delaware, claiming that the Paragraph IV Notice served by Mylan failed to comply with the requirements of 21 U.S.C. sec. 355(b)(3)(C)(1) and 21 C.F.R. 214.95(a). In that suit, EPI sought a declaration that Mylan’s Paragraph IV Notice is null, void and without legal effect, and that as a result, Mylan has failed to properly trigger the ANDA litigation process. In the alternative, EPI alleged that Mylan’s submission of its ANDA constitutes infringement of the ‘510 patent under 35 U.S.C. sec. 271(e)(2)(A). On March 30, 2012, the Court dismissed this complaint without prejudice. On April 13, 2012, Endo and Teikoku filed a motion to amend this Complaint and reinstate the suit. That motion is currently pending before the court.

On May 16, 2012, EPI and Teikoku received a Paragraph IV Notice from Noven Pharmaceuticals, Inc. (Noven) advising of its filing of an ANDA for a generic version of Lidoderm^® (lidocaine topical patch 5%). The Paragraph IV Notice refers to U.S. Patent No. 5,827,529, which covers the formulation of Lidoderm^®. This patent is listed in the FDA's Orange Book and expires in October 2015. On June 29, 2012, EPI filed a lawsuit against Noven in the United States District Court for the District of Delaware. Because the suit was filed within the 45-day period under the Hatch-Waxman Act for filing a patent infringement action, we believe that it triggered an automatic 30-month stay of approval under the Act.

On May 24, 2012, EPI and Teikoku received a Paragraph IV Notice from TWi Pharmaceuticals, Inc. (TWi) advising of its filing of an ANDA for a generic version of Lidoderm^® (lidocaine topical patch 5%). The Paragraph IV Notice refers to U.S. Patent Nos. 5,827,529 and 5,741,510, which cover the formulation of Lidoderm^®. These patents are listed in the FDA's Orange Book and expire in October 2015 and March 2014, respectively. On July 5, 2012, EPI filed a lawsuit against TWi in the United States District Court for the District of Delaware. Because the suit was filed within the 45-day period under the Hatch-Waxman Act for filing a patent infringement action, we believe that it triggered an automatic 30-month stay of approval under the Act.

Endo intends, and has been advised by Teikoku that they too intend, to vigorously defend the intellectual property rights relating to Lidoderm^® and to pursue all available remaining legal and regulatory avenues in defense of Lidoderm^®, including enforcement of the product’s intellectual property rights and approved labeling. However, there can be no assurance that we will be successful. If we are unsuccessful and any one of the above generic manufacturers is able to obtain FDA approval of its product, that generic manufacturer may be able to launch its generic version of Lidoderm^® prior to the applicable patents’ expirations in 2014 and 2015. Additionally, we cannot predict or determine the timing or outcome of ongoing litigation but will explore all options as appropriate in the best interests of the Company. In addition to the above litigation, it is possible that another generic manufacturer may also seek to launch a generic version of Lidoderm^® and challenge the applicable patents.

Paragraph IV Certifications on Opana^® ER

As previously reported, starting in December 2007 through December 2011, EPI received Paragraph IV Notices from various generic drug manufacturers, including Impax Laboratories, Inc. (Impax), Actavis South Atlantic LLC (Actavis), Sandoz, Inc. (Sandoz), Barr Laboratories, Inc. (Teva), Watson Laboratories, Inc. (Watson), Roxane Laboratories, Inc. (Roxane) and most recently, Ranbaxy Inc. (Ranbaxy) advising of the filing by each such company of an ANDA for a generic version of the non-crush resistant formulation of Opana^® ER (oxymorphone hydrochloride extended-release tablets CII). To date, except for the Ranbaxy litigation, EPI settled all of the Paragraph IV litigation relating to the non-crush resistant formulation of Opana^® ER. Under the terms of the settlements, each generic manufacturer agreed not to challenge the validity or enforceability of patents relating to the non-crush resistant formulation of Opana^® ER. As a result, Actavis launched its generic non-crush resistant Opana^® ER 7.5 and 15 mg tablets on July 15, 2011. We expect Impax to launch production and sale of its generic non-crush resistant Opana^® ER for 5, 10, 20, 30 and 40 mg tablets during the first quarter of 2013. We expect Sandoz, Teva, Watson, Roxane and Actavis to launch production and sale of all strengths of their respective versions of generic non-crush resistant Opana^® ER during the third quarter of 2013. We evaluated Ranbaxy’s Paragraph IV Notice and concluded that we will not sue Ranbaxy at this time. As a result, and because Ranbaxy filed a Paragraph III notice against two patents expiring September 9, 2013, we expect Ranbaxy to launch all strengths of its generic non-crush resistant Opana^® ER on September 9, 2013.

Pursuant to the June 2010 Settlement and License Agreement (the Impax Settlement Agreement) with Impax, EPI agreed to provide a payment to Impax should prescription sales of the non-crush resistant formulation of Opana^® ER, as defined in the Impax Settlement Agreement, fall below a predetermined contractual threshold in the quarter immediately prior to Impax launching a generic version of the non-crush resistant formulation of Opana^® ER, expected to be in January 2013. During the first quarter of 2012, the Novartis shut-down of its Lincoln, Nebraska manufacturing facility and resulting lack of 2012 oxymorphone active pharmaceutical ingredient (API) quota granted by the Drug Enforcement Agency (DEA) caused EPI to attempt an accelerated launch of the crush-resistant formulation of Opana^® ER. While significant uncertainties existed throughout the first quarter of 2012 about our ability to rapidly ramp up production of the formulation designed to be crush-resistant and produce finished goods at a new, untested manufacturing facility in a very short period of time, we were able to do so in March 2012. Accordingly, the Company recognized a liability under the Impax Settlement Agreement upon the Company’s sale of the formulation designed to be crush-resistant, which occurred in March 2012. As a result, we believe it is probable that prescription sales of the original formulation of Opana^® ER in the quarter prior to the expected generic launch by Impax (which is expected during the first quarter 2013), will be less than the predetermined contractual threshold, thus triggering a liability to Impax of approximately $110.0 million, to be paid in 2013 if certain conditions are met. This amount was recorded in our Condensed Consolidated Financial Statements as a charge to Cost of revenues in March 2012. As a result of recent third party prescription sales data, we changed our estimate of prescription sales of the non-crush resistant formulation of Opana^® ER expected to occur during the quarter immediately prior to Impax launching a generic version of this formulation. As a result of this change in estimate by $6.0 million to $104.0 million. This amount was recorded as a reduction to Cost of revenues in our Condensed Consolidated Financial Statements during the three months ended September 30, 2012.

In July 2012, the Company received a purported Paragraph IV Notice from Par Pharmaceuticals (Par) referencing Opana^® ER. This Notice did not identify a reference-listed drug, and therefore we could not be certain whether it was based on the new (designed to be crush-resistant) or old (non-crush resistant) formulation of Opana^® ER. Additionally, this Notice did not identify that the FDA had, in fact, received Par's ANDA. Accordingly, the Company requested the FDA confirm that the Par ANDA had not been received by the FDA for substantive review and accordingly, that the Par Notice was sent wrongfully. On August 20, 2012, Endo received a letter from the FDA stating that FDA considers Par's Notice invalid and essentially that such notice is of no force and effect.

From September 21, 2012 through November 1, 2012, EPI and its partner Grünenthal received Paragraph IV Notices from each of Teva Pharmaceuticals USA, Inc. (Teva), Amneal Pharmaceuticals, LLC, Sandoz Inc. and ThoRx Laboratories, Inc. (ThoRx), advising of the filing by each such company of an ANDA for a generic version of the formulation of Opana^® ER designed to be crush-resistant. These Paragraph IV Notices refer to U.S. Patent Nos. 8,075,872, 8,114,383, 8,192,722 and 7,851,482 which cover the formulation of Opana^® ER and a highly pure version of the active pharmaceutical ingredient. EPI is currently evaluating these Notices and will take appropriate action. EPI intends, and has been advised by Grünenthal that they too intend, to vigorously defend the intellectual property rights covering Opana^® ER and to pursue all available legal and regulatory avenues in defense of Opana^® ER, including enforcement of the product's intellectual property rights and approved labeling. However, there can be no assurance that we will be successful. If we are unsuccessful and Teva, Amneal, Sandoz or ThoRx is able to obtain FDA approval of its product, it may be able to launch a generic version of Opana^® ER prior to the applicable patents' expirations in 2023, 2024, 2025 and 2029 respectively. Additionally, we cannot predict or determine the timing or outcome of this defense but will explore all options as appropriate in the best interests of the Company. In addition to the above litigation, it is possible that another generic manufacturer may also seek to launch a generic version of Opana^® ER and challenge the applicable patents.

Paragraph IV Certification on Frova^®

As previously reported, in July 2011, EPI and its licensor, Vernalis Development Limited received a notice from Mylan Technologies Inc. (Mylan) advising of the filing by Mylan of an ANDA for a generic version of Frova^® (frovatriptan succinate) 2.5 mg tablets. Mylan’s notice included a Paragraph IV Notice with respect to U.S. Patent Nos. 5,464,864, 5,561,603, 5,637,611, 5,827,871 and 5,962,501, which cover Frova^®. These patents are listed in the FDA’s Orange Book and expire between 2013 and 2015. As a result of this Paragraph IV Notice, on August 16, 2011, EPI filed a lawsuit against Mylan in the United States District Court for the District of Delaware alleging infringement of U.S. Patent Nos. 5,464,864, 5,637,611 and 5,827,871. Because the suit was filed within the 45-day period under the Hatch-Waxman Act for filing a patent infringement action, we believe that it triggered an automatic 30-month stay of approval under the Act. On September 22, 2011, Mylan filed an Answer and Counterclaims, claiming the asserted patents are invalid or not infringed.

Endo intends to vigorously defend Frova^®’s intellectual property rights and to pursue all available legal and regulatory avenues in defense of Frova^®, including enforcement of the product’s intellectual property rights and approved labeling. However, there can be no assurance that we will be successful. If we are unsuccessful and Mylan is able to obtain FDA approval of its product, Mylan may be able to launch its generic version of Frova^® prior to the applicable patents’ expirations in 2014 and 2015. Additionally, we cannot predict or determine the timing or outcome of this litigation but will explore all options as appropriate in the best interests of the Company. In addition to the above litigation, it is possible that another generic manufacturer may also seek to launch a generic version of Frova^® and challenge the applicable patents.

MCP Cases

Qualitest Pharmaceuticals, and in certain cases the Company or certain of its subsidiaries, along with several other pharmaceutical manufacturers, have been named as defendants in numerous lawsuits in various federal and state courts alleging personal injury resulting from the use of the prescription medicine metoclopramide. Plaintiffs in these suits allege various personal injuries including tardive dyskinesia, other movement disorders, and death. The Company intends to contest these cases vigorously and to explore other options as appropriate in the best interests of the Company. Litigation similar to that described above may also be brought by other plaintiffs in various jurisdictions. However, we cannot predict the timing or outcome of any such litigation, or whether any additional litigation will be brought against the Company or its subsidiaries. Subject to certain terms and conditions, we will be indemnified by the former owners of Qualitest Pharmaceuticals with respect to metoclopramide litigation arising out of the sales of the product by Qualitest Pharmaceuticals between January 1, 2006 and the date on which the acquisition was completed, subject to an overall liability cap for all claims arising out of or related to the acquisition, including the claims described above. As of October 30, 2012, approximately 830 MCP cases are currently pending with Qualitest and/or the Company.

Propoxyphene Cases

Qualitest Pharmaceuticals and, in certain cases, the Company or certain of its subsidiaries, along with several other pharmaceutical manufacturers, have been named as defendants in several lawsuits originally filed in various federal and state courts alleging personal injury resulting from the use of prescription pain medicines containing propoxyphene. Plaintiffs in these suits allege various personal injuries including cardiac impairment and damage. In August 2011, a multidistrict litigation (MDL) was formed, and cases pending in federal court are now coordinated in the Eastern District of Kentucky as part of MDL No. 2226. On March 5, 2012 and June 22, 2012, the MDL Judge issued orders dismissing with prejudice certain claims against generic manufacturers, including Qualitest Pharmaceuticals and the Company. Certain plaintiffs have appealed those decisions to the United States Court of Appeals for the Sixth Circuit. A consolidated appeal is pending before the Sixth Circuit in certain of these cases. The Company intends to contest all of these cases vigorously and to explore other options as appropriate in the best interests of the Company. Litigation similar to that described above may also be brought by other plaintiffs in various jurisdictions. However, we cannot predict the timing or outcome of any such litigation, or whether any additional litigation will be brought against the Company or its subsidiaries. Subject to certain terms and conditions, we will be indemnified by the former owners of Qualitest Pharmaceuticals with respect to propoxyphene litigation arising out of the sales of the product by Qualitest Pharmaceuticals between January 1, 2006 and the date on which the acquisition was completed, subject to an overall liability cap for all claims arising out of or related to the acquisition, including the claims described above. As of October 30, 2012, approximately 10 propoxyphene cases are currently pending with Qualitest and/or the Company. There are also approximately 45 propoxyphene cases on appeal to the Sixth Circuit.

Vaginal Mesh Cases

On October 20, 2008, the FDA issued a Public Health Notification regarding potential complications associated with transvaginal placement of surgical mesh to treat pelvic organ prolapse (POP) and stress urinary incontinence (SUI). The notification provides recommendations and encourages physicians to seek specialized training in mesh procedures, to advise their patients about the risks associated with these procedures and to be diligent in diagnosing and reporting complications.

In July 2011, FDA issued an update to the October 2008 Public Health Notification regarding mesh to further advise the public and the medical community of the potential complications associated with transvaginal placement of surgical mesh to treat POP and SUI. In this July 2011 update, the FDA maintained that adverse events are not rare, as previously reported, and questioned the relative effectiveness of transvaginal mesh as a treatment for POP as compared to non-mesh surgical repair. The July 2011 notification continued to encourage physicians to seek specialized training in mesh procedures, to consider and to advise their patients about the risks associated with these procedures and to be diligent in diagnosing and reporting complications. FDA also convened an advisory panel which met on September 8-9, 2011 to further address the safety and effectiveness of transvaginal surgical mesh used to treat POP and SUI. At the conclusion of the meetings, the advisory panel recommended reclassifying transvaginal mesh products used to treat POP to Class III devices (premarket approval) and recommended that manufacturers of these products be required to conduct additional post-market surveillance studies. The advisory panel recommended that transvaginal surgical mesh products used to treat SUI remain as Class II devices. Regarding retropubic and transobturator (TOT) slings, the advisory panel recommended that no additional post-market surveillance studies are necessary. Regarding mini-slings, the advisory panel recommended premarket study for new devices and additional post-market surveillance studies. The advisory panel’s recommendations are now under consideration by FDA.

On January 3, 2012, the FDA ordered manufacturers of transvaginal surgical mesh used for pelvic organ prolapse and of single incision mini-slings for urinary incontinence, such as AMS, to conduct post-market safety studies and to monitor adverse event rates relating to the use of these products. These class-wide post-market study orders apply to eighteen AMS pelvic floor repair and mini-sling products. AMS is in the process of complying with these orders. In these orders, the FDA also noted that it is still considering the recommendation of the September 9, 2011 advisory committee that urogynecological surgical mesh for transvaginal repair of pelvic organ prolapse be reclassified from Class II to Class III.

Since 2008, AMS, and more recently, in certain cases the Company or certain of its subsidiaries, have been named as defendants in multiple lawsuits in various federal and state courts, as well as in Canada, alleging personal injury resulting from use of transvaginal surgical mesh products designed to treat pelvic organ prolapse and stress urinary incontinence. Plaintiffs in these suits allege various personal injuries including chronic pain, incontinence and inability to control bowel function, and permanent deformities. On February 7, 2012, a multidistrict litigation (MDL) was formed, and cases pending in federal courts are now consolidated in the Southern District of West Virginia as part of MDL No. 2325. Similar cases in various state courts around the country are also currently pending. More specifically, as of October 30, 2012, approximately 2,960 mesh cases are currently pending against AMS and/or the Company or certain of its subsidiaries. Litigation similar to that described above may also be brought by other plaintiffs in various jurisdictions. The majority of the currently pending cases are in the MDL.

In addition, we have been contacted regarding a civil investigation that has been initiated by a number of state attorneys general into mesh products, including transvaginal surgical mesh products designed to treat pelvic organ prolapse and stress urinary incontinence. We have not yet received a subpoena relating to this investigation, and at this time, we cannot predict or determine the outcome of this investigation or reasonably estimate the amount or range of amounts of fines or penalties, if any, that might result from a settlement or an adverse outcome from this investigation.

AMS and the Company intend to vigorously contest all currently pending cases and any future cases that may be brought, if any, and to explore other options as appropriate in the best interests of AMS and the Company. Nevertheless, we believe it is reasonably possible that the outcomes of such cases could result in losses in excess of insurance reimbursement levels that could have a material adverse effect on our business, financial condition, results of operations and cash flows. However, we are unable to estimate an amount of possible loss or range of possible loss in excess of the insurance reimbursement levels.

Other Legal Proceedings

In addition to the above proceedings, we are involved in, or have been involved in, arbitrations or various other legal proceedings that arise from the normal course of our business. We cannot predict the timing or outcome of these claims and other proceedings. Currently, we are not involved in any arbitration and/or other legal proceeding that we expect to have a material effect on our business, financial condition, results of operations and cash flows.

Corporate Headquarters Lease

On October 28, 2011, our subsidiary Endo Pharmaceuticals Inc. entered into a lease agreement with RT/TC Atwater LP, a Delaware limited partnership, for a new Company headquarters to consist of approximately 300,000 square feet of office space located at 1400 Atwater Boulevard, Malvern, Pennsylvania. The term of this triple net lease is 12 years and includes three renewal options, each for an additional sixty-month period. The lease is expected to commence early in 2013 with a monthly lease rate for the initial year of $0.5 million, increasing by 2.25% each year thereafter. Under the terms of this lease, we will have a continuous and recurring right throughout the initial 4 years of the lease term to lease up to approximately 150,000 additional square feet. We are responsible for all tenant improvement costs, less a tenant improvement allowance of $45 per square foot.

This lease is accounted for as a direct financing arrangement whereby the Company will record, over the construction period, the full cost of the asset in Property, plant and equipment, net. At September 30, 2012, the Company has capitalized $44.3 million as Property, plant and equipment related to this arrangement. The building and leasehold improvements will be depreciated over the initial lease term. A corresponding liability is also being recorded, net of leasehold improvements paid for by the Company and will be amortized over the expected lease term through monthly rental payments using an effective interest method. At September 30, 2012, the Company has recorded a liability of $22.9 million related to this arrangement.

XML

Supplemental Guarantor Information (Condensed Consolidating Balance Sheet) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
Cash and cash equivalents	$ 256,917	$ 547,620	$ 419,671	$ 466,214
Accounts receivable, net	759,594	733,222
Inventories, net	363,747	262,419
Prepaid expenses and other current assets	28,155	29,732
Income taxes receivable	39,178	0
Deferred income taxes	264,908	215,103
Total current assets	1,712,499	1,788,096
INTERCOMPANY RECEIVABLES	0	0
MARKETABLE SECURITIES	2,631	19,105
PROPERTY, PLANT AND EQUIPMENT, NET	333,119	297,731
GOODWILL	2,569,288	2,558,041
OTHER INTANGIBLES, NET	2,285,187	2,504,124
INVESTMENT IN SUBSIDIARIES	0	0
OTHER ASSETS	118,067	125,486
TOTAL ASSETS	7,020,791	7,292,583
Accounts payable	258,960	260,385
Accrued expenses	965,698	732,831
Current portion of long-term debt	124,947	88,265
Acquisition-related contingent consideration	6,027	4,925
Income taxes payable	0	35,372
Total current liabilities	1,355,632	1,121,778
INTERCOMPANY PAYABLES	0	0
DEFERRED INCOME TAXES	581,975	617,677
ACQUISITION-RELATED CONTINGENT CONSIDERATION	2,688	3,762
LONG-TERM DEBT, LESS CURRENT PORTION, NET	3,069,518	3,424,329
OTHER LIABILITIES	80,461	85,446
Preferred Stock	0	0
Common Stock	1,397	1,383
Additional paid-in capital	1,016,353	952,325
Retained earnings (deficit)	1,527,839	1,551,910
Accumulated other comprehensive (loss) income	(7,504)	(9,436)
Treasury stock	(669,885)	(518,492)
Total Endo Health Solutions Inc. stockholders' equity	1,868,200	1,977,690
Noncontrolling interests	62,317	61,901
Total stockholders' equity	1,930,517	2,039,591
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	7,020,791	7,292,583
Endo Health Solutions Inc. [Member]
Cash and cash equivalents	187	48,318	41,067	45,400
Accounts receivable, net
Inventories, net
Prepaid expenses and other current assets
Income taxes receivable	36,121
Deferred income taxes
Total current assets	36,308	48,318
INTERCOMPANY RECEIVABLES	1,987,450	1,777,233
MARKETABLE SECURITIES
PROPERTY, PLANT AND EQUIPMENT, NET
GOODWILL
OTHER INTANGIBLES, NET
INVESTMENT IN SUBSIDIARIES	5,870,780	5,860,570
OTHER ASSETS	69,165	87,099
TOTAL ASSETS	7,963,703	7,773,220
Accounts payable	90
Accrued expenses	24,633	38,623
Current portion of long-term debt	121,875	84,376
Acquisition-related contingent consideration
Income taxes payable		(23,204)
Total current liabilities	146,598	99,795
INTERCOMPANY PAYABLES	2,876,243	2,267,572
DEFERRED INCOME TAXES	5,949	6,573
ACQUISITION-RELATED CONTINGENT CONSIDERATION
LONG-TERM DEBT, LESS CURRENT PORTION, NET	3,066,713	3,421,590
OTHER LIABILITIES
Preferred Stock
Common Stock	1,397	1,383
Additional paid-in capital	1,016,353	952,325
Retained earnings (deficit)	1,527,839	1,551,910
Accumulated other comprehensive (loss) income	(7,504)	(9,436)
Treasury stock	(669,885)	(518,492)
Total Endo Health Solutions Inc. stockholders' equity	1,868,200	1,977,690
Noncontrolling interests
Total stockholders' equity	1,868,200	1,977,690
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	7,963,703	7,773,220
Guarantor Subsidiaries [Member]
Cash and cash equivalents	217,901	455,756	337,309	404,169
Accounts receivable, net	677,494	656,265
Inventories, net	351,785	248,128
Prepaid expenses and other current assets	14,405	19,274
Income taxes receivable	(26,157)
Deferred income taxes	252,404	205,606
Total current assets	1,487,832	1,585,029
INTERCOMPANY RECEIVABLES	8,047,237	7,322,603
MARKETABLE SECURITIES	2,631	19,105
PROPERTY, PLANT AND EQUIPMENT, NET	302,931	268,572
GOODWILL	2,306,021	2,303,940
OTHER INTANGIBLES, NET	2,202,494	2,415,531
INVESTMENT IN SUBSIDIARIES	316,379	317,544
OTHER ASSETS	27,430	27,338
TOTAL ASSETS	14,692,955	14,259,662
Accounts payable	253,157	251,715
Accrued expenses	898,255	651,653
Current portion of long-term debt	906	972
Acquisition-related contingent consideration	6,027	4,925
Income taxes payable		71,900
Total current liabilities	1,158,345	981,165
INTERCOMPANY PAYABLES	7,271,069	6,978,697
DEFERRED INCOME TAXES	568,871	611,625
ACQUISITION-RELATED CONTINGENT CONSIDERATION	2,688	3,762
LONG-TERM DEBT, LESS CURRENT PORTION, NET
OTHER LIABILITIES	89,995	94,915
Preferred Stock
Common Stock
Additional paid-in capital	4,200,076	4,198,625
Retained earnings (deficit)	1,408,188	1,398,613
Accumulated other comprehensive (loss) income	(6,277)	(7,740)
Treasury stock
Total Endo Health Solutions Inc. stockholders' equity	5,601,987	5,589,498
Noncontrolling interests
Total stockholders' equity	5,601,987	5,589,498
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	14,692,955	14,259,662
Non-Guarantor Subsidiaries [Member]
Cash and cash equivalents	38,829	43,546	41,295	16,645
Accounts receivable, net	74,169	74,584
Inventories, net	25,047	19,918
Prepaid expenses and other current assets	8,644	7,004
Income taxes receivable	29,106
Deferred income taxes	12,504	9,497
Total current assets	188,299	154,549
INTERCOMPANY RECEIVABLES	192,550	193,223
MARKETABLE SECURITIES
PROPERTY, PLANT AND EQUIPMENT, NET	30,484	29,469
GOODWILL	263,267	254,101
OTHER INTANGIBLES, NET	82,693	88,593
INVESTMENT IN SUBSIDIARIES
OTHER ASSETS	40,914	31,049
TOTAL ASSETS	798,207	750,984
Accounts payable	5,943	8,667
Accrued expenses	42,815	42,558
Current portion of long-term debt	2,166	2,917
Acquisition-related contingent consideration
Income taxes payable		(13,214)
Total current liabilities	50,924	40,928
INTERCOMPANY PAYABLES	79,925	46,790
DEFERRED INCOME TAXES	7,155	(521)
ACQUISITION-RELATED CONTINGENT CONSIDERATION
LONG-TERM DEBT, LESS CURRENT PORTION, NET	2,805	2,739
OTHER LIABILITIES	9,909	10,531
Preferred Stock
Common Stock	30,430	30,430
Additional paid-in capital	573,559	574,218
Retained earnings (deficit)	(18,811)	(15,364)
Accumulated other comprehensive (loss) income	(6)	(668)
Treasury stock
Total Endo Health Solutions Inc. stockholders' equity	585,172	588,616
Noncontrolling interests	62,317	61,901
Total stockholders' equity	647,489	650,517
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	798,207	750,984
Eliminations [Member]
Cash and cash equivalents
Accounts receivable, net	7,931	2,373
Inventories, net	(13,085)	(5,627)
Prepaid expenses and other current assets	5,106	3,454
Income taxes receivable	108
Deferred income taxes
Total current assets	60	200
INTERCOMPANY RECEIVABLES	(10,227,237)	(9,293,059)
MARKETABLE SECURITIES
PROPERTY, PLANT AND EQUIPMENT, NET	(296)	(310)
GOODWILL
OTHER INTANGIBLES, NET
INVESTMENT IN SUBSIDIARIES	(6,187,159)	(6,178,114)
OTHER ASSETS	(19,442)	(20,000)
TOTAL ASSETS	(16,434,074)	(15,491,283)
Accounts payable	(230)	3
Accrued expenses	(5)	(3)
Current portion of long-term debt
Acquisition-related contingent consideration
Income taxes payable		(110)
Total current liabilities	(235)	(110)
INTERCOMPANY PAYABLES	(10,227,237)	(9,293,059)
DEFERRED INCOME TAXES
ACQUISITION-RELATED CONTINGENT CONSIDERATION
LONG-TERM DEBT, LESS CURRENT PORTION, NET
OTHER LIABILITIES	(19,443)	(20,000)
Preferred Stock
Common Stock	(30,430)	(30,430)
Additional paid-in capital	(4,773,635)	(4,772,843)
Retained earnings (deficit)	(1,389,377)	(1,383,249)
Accumulated other comprehensive (loss) income	6,283	8,408
Treasury stock
Total Endo Health Solutions Inc. stockholders' equity	(6,187,159)	(6,178,114)
Noncontrolling interests
Total stockholders' equity	(6,187,159)	(6,178,114)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ (16,434,074)	$ (15,491,283)

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Condensed Consolidated Statements Of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
REVENUES:
Net pharmaceutical product sales	$ 578,780	$ 569,657	$ 1,681,441	$ 1,603,004
Devices revenues	113,304	131,519	371,601	158,331
Service and other revenues	58,398	57,902	173,261	165,380
TOTAL REVENUES	750,482	759,078	2,226,303	1,926,715
COSTS AND EXPENSES:
Cost of revenues	294,267	302,172	953,657	770,427
Selling, general and administrative	210,446	244,359	698,522	581,878
Research and development	48,952	43,884	183,067	126,854
Litigation settlement expense	(46,238)	0	85,123	0
Litigation-related contingencies	82,600	0	82,600	0
Asset impairment charges	11,163	22,691	54,163	22,691
Acquisition-related items, net	5,776	5,818	16,580	29,517
OPERATING (LOSS) INCOME	143,516	140,154	152,591	395,348
INTEREST EXPENSE, NET	45,505	52,792	138,386	97,142
LOSS ON EXTINGUISHMENT OF DEBT	1,789	0	7,215	8,548
OTHER EXPENSE, NET	(250)	(3,000)	498	(2,777)
(LOSS) INCOME BEFORE INCOME TAX	96,472	90,362	6,492	292,435
INCOME TAX	28,287	34,057	(9,263)	100,283
CONSOLIDATED NET (LOSS) INCOME	68,185	56,305	15,755	192,152
Less: Net income attributable to noncontrolling interests	14,376	15,656	39,826	41,133
NET INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$ 53,809	$ 40,649	$ (24,071)	$ 151,019
NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.:
Basic (usd per share)	$ 0.46	$ 0.35	$ (0.21)	$ 1.30
Diluted (usd per share)	$ 0.45	$ 0.34	$ (0.21)	$ 1.24
WEIGHTED AVERAGE SHARES:
Basic	116,022	116,816	116,688	116,611
Diluted	119,579	120,847	116,688	121,432

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Segment Results

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

Segment results

NOTE 6. SEGMENT RESULTS

In the fourth quarter of 2011, as a result of our strategic planning process, the Company’s executive leadership team reorganized the manner in which it views our various business activities. Management’s intention was to enhance its level of understanding of the entity’s performance, better assess its prospects and future cash flow potential and ultimately make more informed operating decisions about resource allocation and the enterprise as a whole. Based on this change, we reassessed our reporting structure under the applicable accounting guidance and determined that the Company now has four reportable segments. We have retrospectively revised the segment presentation for all periods presented reflecting the change from three to four reportable segments. Additionally, concurrent with the Company’s May 2012 enterprise-wide rebranding initiative and corporate name change, the Company changed the names of its reportable segments to better align with these efforts. These changes to our segments have no impact on the Company’s Condensed Consolidated Financial Statements for all periods presented.

The four reportable business segments in which the Company now operates include: (1) Endo Pharmaceuticals (formerly Branded Pharmaceuticals), (2) Qualitest (formerly Generics), (3) AMS (formerly Devices) and (4) HealthTronics (formerly Services). Each segment derives revenue from the sales or licensing of their respective products or services and is discussed below.

We evaluate segment performance based on each segment’s adjusted income (loss) before income tax. We define adjusted income (loss) before income tax as income (loss) before income tax before certain upfront and milestone payments to partners, acquisition-related and integration items, net, cost reduction and integration-related initiatives, asset impairment charges, amortization of intangible assets related to marketed products and customer relationships, inventory step-up recorded as part of our acquisitions, non-cash interest expense, and certain other items that the Company believes do not reflect its core operating performance.

Certain corporate general and administrative expenses are not allocated and are therefore included within Corporate unallocated. We calculate consolidated adjusted income (loss) before income tax by adding the adjusted income (loss) before income tax of each of our reportable segments to corporate unallocated adjusted income (loss) before income tax.

Endo Pharmaceuticals

The Endo Pharmaceuticals segment includes a variety of branded prescription products related to treating and managing pain as well as our urology, endocrinology and oncology products. The marketed products that are included in this segment include Lidoderm^®, Opana^® ER, Percocet^®, Voltaren^® Gel, Frova^®, Supprelin^® LA, Vantas^®, Valstar^® and Fortesta^® Gel.

Qualitest

The Qualitest segment is comprised of our legacy Endo non-branded generics portfolio and the portfolio from the Qualitest Pharmaceuticals business, which we acquired in 2010. Our generics business has historically focused on selective generics related to pain that have one or more barriers to market entry, such as complex formulation, regulatory or legal challenges or difficulty in raw material sourcing. With the addition of Qualitest Pharmaceuticals, the segment’s product offerings now include products in the pain management, urology, central nervous system (CNS) disorders, immunosuppression, oncology, women’s health and hypertension markets, among others.

AMS

The AMS segment currently focuses on providing technology solutions to physicians treating men’s and women’s pelvic health conditions and operates in the following business lines: men’s health, women’s health, and BPH therapy. These business lines are discussed in greater detail within Note 5. Acquisitions. We distribute devices through our direct sales force and independent sales representatives in the U.S., Canada, Australia, Brazil, Japan and Western Europe. Additionally, we distribute devices through foreign independent distributors, primarily in Europe, Asia, and South America, who then sell the products to medical institutions. None of our devices customers or distributors accounted for ten percent or more of our total revenues during the three or nine months ended September 30, 2012 or 2011. Foreign subsidiary sales are predominantly to customers in Canada, Australia and Western Europe.

HealthTronics

The HealthTronics segment provides urological services, products and support systems to urologists, hospitals, surgery centers and clinics across the U.S. These services are sold through the following business lines: lithotripsy services, prostate treatment services, anatomical pathology services, medical products manufacturing, sales and maintenance and electronic medical records services.

The following represents selected information for the Company’s reportable segments for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net revenues to external customers
Endo Pharmaceuticals	$	416,645		$	425,511		$	1,223,005		$	1,199,292
Qualitest	166,070			147,975			471,310			415,431
AMS(1)	113,304			131,519			371,601			158,331
HealthTronics	54,463			54,073			160,387			153,661
Total consolidated net revenues to external customers	$	750,482		$	759,078		$	2,226,303		$	1,926,715
Adjusted income (loss) before income tax
Endo Pharmaceuticals	$	216,728		$	231,887		$	624,927		$	634,762
Qualitest	45,840			26,932			132,500			74,445
AMS	21,081			35,272			77,383			45,005
HealthTronics	16,639			19,483			42,053			49,665
Corporate unallocated	(73,854		)	(93,844		)	(249,934		)	(217,145		)
Total consolidated adjusted income before income tax	$	226,434		$	219,730		$	626,929		$	586,732

_____________

(1) The following table displays our AMS segment revenue by geography (in thousands). International revenues were not material to any of our other segments for any of the periods presented.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
AMS:
United States	$	75,480	$	91,807	$	246,385	$	107,378
International	37,824		39,712		125,216		50,953
Total AMS revenues	$	113,304	$	131,519	$	371,601	$	158,331

The table below provides reconciliations of our consolidated adjusted income before income tax to our consolidated income (loss) before income tax, which is determined in accordance with U.S. GAAP, for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Total consolidated adjusted income before income tax	$	226,434		$	219,730		$	626,929		$	586,732
Upfront and milestone payments to partners	(5,338		)	(2,355		)	(56,905		)	(27,346		)
Asset impairment charges	(11,163		)	(22,691		)	(54,163		)	(22,691		)
Acquisition-related and integration items, net	(5,776		)	(5,818		)	(16,580		)	(29,517		)
Separation benefits and other cost reduction initiatives	(11,590		)	(13,603		)	(26,958		)	(17,598		)
Amortization of intangible assets	(58,735		)	(58,846		)	(170,659		)	(136,501		)
Inventory step-up	—			(23,937		)	(880		)	(40,718		)
Non-cash interest expense	(5,209		)	(4,754		)	(15,354		)	(14,014		)
Net loss on extinguishment of debt	(1,789		)	—			(7,215		)	(8,548		)
Accrual for payment to Impax related to sales of Opana® ER	6,000			—			(104,000		)	—
Patent litigation settlement items, net	46,238			—			(85,123		)	—
Litigation-related contingencies	(82,600		)	—			(82,600		)	—
Other income (expense), net	—			2,636			—			2,636
Total consolidated income (loss) before income tax	$	96,472		$	90,362		$	6,492		$	292,435

The following represents additional selected financial information for our reportable segments three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Depreciation expense
Endo Pharmaceuticals	$	3,539	$	3,110	$	11,249	$	9,552
Qualitest	3,106		3,461		9,041		8,645
AMS	2,614		1,941		7,812		2,225
HealthTronics	2,905		3,059		9,230		9,164
Corporate unallocated	1,168		880		3,339		2,649
Total depreciation expense	$	13,332	$	12,451	$	40,671	$	32,235

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Amortization expense
Endo Pharmaceuticals	$	27,318	$	26,101	$	76,395	$	78,361
Qualitest	10,381		9,728		31,143		29,325
AMS	19,385		21,767		58,191		25,063
HealthTronics	1,801		1,401		5,380		4,203
Total amortization expense	$	58,885	$	58,997	$	171,109	$	136,952

Interest income and expense are considered corporate items and are not allocated to our segments. Asset information is not accounted for at the segment level and consequently is not reviewed or included within our internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment.

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Acquisitions

9 Months Ended

Sep. 30, 2012

Business Combination, Description [Abstract]

Acquisitions

NOTE 5. ACQUISITIONS

American Medical Systems Holdings, Inc. (AMS)

On June 17, 2011 (the AMS Acquisition Date), the Company completed its acquisition of all outstanding shares of common stock of AMS for approximately $2.4 billion in aggregate consideration, including $70.8 million related to existing AMS stock-based compensation awards and certain other amounts, at which time AMS became a wholly-owned, indirect subsidiary of the Company. AMS’s shares were purchased at a price of $30.00 per share.

AMS is a worldwide developer and provider of technology solutions to physicians treating men’s and women’s pelvic health conditions. The AMS business and applicable services include:

Men’s Health.

AMS supplies surgical solutions for the treatment of male urinary incontinence, the involuntary release of urine from the body. The fully implantable AMS 800^® system includes an inflatable urethral cuff to restrict flow through the urethra and a control pump that allows the patient to discreetly open the cuff when he wishes to urinate. Since 2000, AMS has also been selling the InVance^® sling system, a less-invasive procedure for men with moderate incontinence, and in 2007, AMS released the AdVance^® sling system for the treatment of mild to moderate stress urinary incontinence. AMS also offers the UroLume^® endoprosthesis stent as a less invasive procedure for patients who may not be good surgical candidates, as well as for men suffering from bulbar urethral strictures.

AMS also supplies penile implants to treat erectile dysfunction, the inability to achieve or maintain an erection sufficient for sexual intercourse, with a series of semi-rigid malleable prostheses and a complete range of more naturally functioning inflatable prostheses, including the AMS 700^® MS. AMS has refined its implants over the years with improvements to the AMS 700^® series of inflatable prostheses, including the AMS 700 LGX^® and the MS Pump^®. Another key factor that distinguishes AMS’s products is the use of the InhibiZone^® antibiotic coating, which received U.S. Food and Drug Administration (FDA) approval in July 2009 for AMS’s product claim that InhibiZone^® reduces the rate of revision surgery due to surgical infections.

Women’s Health.

AMS offers a broad range of systems, led by Monarc^® and MiniArc^®, to treat female stress urinary incontinence, which generally results from a weakening of the tissue surrounding the bladder and urethra which can be a result of pregnancy, childbirth and aging. Monarc^® incorporates unique helical needles to place a self-fixating, sub-fascial hammock through the obturator foramin. AMS’s MiniArc^® Single-Incision Sling for stress incontinence was released in 2007 and requires just one incision to surgically place a small sling under the urethra, which minimizes tissue disruption and potential for blood loss, thereby allowing the procedure to be done with less anesthesia on an outpatient basis. In 2010, AMS launched the MiniArc^® Precise^TM, which is designed to enhance the ease and accuracy of placement of the MiniArc device.

AMS also offers solutions for pelvic floor prolapse and other pelvic floor disorders, which may be caused by pregnancy, labor, and childbirth. In 2008, AMS introduced the Elevate^® transvaginal pelvic floor repair system, with no external incisions. Using an anatomically designed needle and self-fixating tips, Elevate^® allows for safe, simple and precise mesh placement through a single vaginal incision. The posterior system was launched in 2008 and the anterior system was launched in 2009.

BPH Therapy.

AMS’s products can be used to relieve restrictions on the normal flow of urine from the bladder caused by bladder obstructions, generally the result of BPH or bulbar urethral strictures. AMS offers men experiencing a physical obstruction of the prostatic urethra an alternative to a transurethral resection of the prostate (TURP), with the GreenLight^TM photovaporization of the prostate. This laser therapy is designed to reduce the comorbidities associated with TURP. AMS’s GreenLight^TM XPS and MoXy^TM Liquid Cooled Fiber provide shorter treatment times with similar long-term results compared to other laser systems. The GreenLight^TM laser system offers an optimal laser beam that balances vaporization of tissue with coagulation to prevent blood loss and providing enhanced surgical control compared to other laser systems. AMS also offers the StoneLight^® laser and SureFlex^TM fiber optics for the treatment of urinary stones. StoneLight^® is a lightweight and portable 15-watt holmium laser that offers the right amount of power to effectively fragment most urinary stones. The SureFlex^TM fiber optic line is engineered to deliver more energy safely and effectively, even under maximum scope deflection, for high performance holmium laser lithotripsy.

AMS’s TherMatrx^® product is designed for those men not yet to the point of urethral obstruction, but for whom symptomatic relief is desired. It is a less-invasive tissue ablation technique that can be performed in a physician’s office using microwave energy delivered to the prostate.

The acquisition of AMS furthers Endo’s evolution from a pharmaceutical product-driven company to a healthcare solutions provider, strengthens our leading core urology franchise and expands our presence in the medical devices market. We believe the combination of AMS with Endo’s existing platform will provide additional cost-effective solutions across the entire urology spectrum.

The operating results of AMS from and including June 18, 2011 are included in the accompanying Condensed Consolidated Statements of Operations. The Condensed Consolidated Balance Sheet as of September 30, 2012 reflects the acquisition of AMS. The following table summarizes the fair values of the assets acquired and liabilities assumed at the AMS Acquisition Date (in thousands):

	June 17, 2011 (As adjusted)
Cash and cash equivalents	$	47,289
Commercial paper	71,000
Accounts receivable	73,868
Other receivables	630
Inventories	74,988
Prepaid expenses and other current assets	7,133
Income taxes receivable	9,154
Deferred income taxes	15,432
Property, plant and equipment	56,413
Other intangible assets	1,260,000
Other assets	4,581
Total identifiable assets	$	1,620,488
Accounts payable	$	10,327
Accrued expenses	45,835
Deferred income taxes	416,745
Long-term debt	520,375
Other liabilities	25,891
Total liabilities assumed	$	1,019,173
Net identifiable assets acquired	$	601,315
Goodwill	1,798,661
Net assets acquired	$	2,399,976

The above estimated fair values of assets acquired and liabilities assumed are based on the information that was available as of the AMS Acquisition Date to estimate the fair value of assets acquired and liabilities assumed. Our measurement period adjustments were complete as of June 30, 2012. Measurement period adjustments related primarily to revisions in estimated cash flows for certain products after obtaining additional information regarding facts and circumstances existing as of the AMS Acquisition Date.

The valuation of the intangible assets acquired and related amortization periods are as follows:

	Valuation (in millions)		Amortization Period (in years)
Customer Relationships:
Men’s Health	$	97.0	17
Women’s Health	37.0		15
BPH	26.0		13
Total	$	160.0	16
Developed Technology:
Men’s Health	$	690.0	18
Women’s Health	150.0		9
BPH	161.0		18
Total	$	1,001.0	16
Tradename:
AMS	$	45.0	30
GreenLight	12.0		15
Total	$	57.0	27
In Process Research & Development:
Oracle	$	12.0	n/a
Genesis	14.0		n/a
TOPAS	8.0		n/a
Other(1)	8.0		n/a
Total	$	42.0	n/a
Total other intangible assets	$	1,260.0	n/a

_____________

(1) A subsequent pre-tax non-cash impairment charge of $3.0 million was recorded in the second quarter of 2012. This impairment charge is further discussed in Note 9. Goodwill and Other Intangibles.

The fair value of the developed technology, IPR&D and customer relationship assets were estimated using a discounted present value income approach. Under this method, an intangible asset’s fair value is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To calculate fair value, the Company used cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company believes that the level and timing of cash flows appropriately reflect market participant assumptions. The fair value of the AMS and GreenLight tradenames were estimated using an income approach, specifically known as the relief from royalty method. The relief from royalty method is based on a hypothetical royalty stream that would be received if the Company were to license the AMS or GreenLight tradename. Thus, we derived the hypothetical royalty income from the projected revenues of AMS and GreenLight products, respectively. Cash flows were assumed to extend through the remaining economic useful life of each class of intangible asset.

The $1,798.7 million of goodwill has been assigned to our AMS segment (formerly our Devices segment). The goodwill recognized is attributable primarily to strategic and synergistic opportunities across the entire urology spectrum, expected corporate synergies, the assembled workforce of AMS and other factors. Approximately $16.5 million of goodwill is expected to be deductible for income tax purposes.

Deferred tax assets of $15.4 million are related primarily to federal net operating loss and credit carryforwards of AMS and its subsidiaries. Deferred tax liabilities of $416.7 million are related primarily to the difference between the book basis and tax basis of identifiable intangible assets.

The Company recognized $1.8 million and $4.1 million of AMS acquisition-related and integration costs that were expensed during the three months ended September 30, 2012 and 2011, respectively. These costs are included in Acquisition-related and integration items, net in the accompanying Condensed Consolidated Statements of Operations and are comprised of the following items (in thousands):

	Three Months Ended September 30,
	2012		2011
Bank fees	$	—	$	—
Legal, separation, integration, and other costs	1,848		4,069
Total	$	1,848	$	4,069

The Company recognized $5.2 million and $27.3 million of AMS acquisition-related and integration costs that were expensed during the nine months ended September 30, 2012 and 2011, respectively. These costs are included in Acquisition-related and integration items, net in the accompanying Condensed Consolidated Statements of Operations and are comprised of the following items (in thousands):

	Nine Months Ended September 30,
	2012		2011
Bank fees	$	—	$	16,070
Legal, separation, integration, and other costs	5,174		11,263
Total	$	5,174	$	27,333

The following supplemental pro forma information presents the financial results as if the acquisition of AMS had occurred on January 1, 2011 for the nine months ended September 30, 2011. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been made on January 1, 2011, nor are they indicative of any future results.

	Nine Months Ended September 30, 2011
Pro forma consolidated results (in thousands, except per share data):
Revenue	$	2,165,091
Net income attributable to Endo Health Solutions Inc.	$	130,389
Basic net income per share	$	1.12
Diluted net income per share	$	1.07

These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of AMS to reflect factually supportable adjustments that give effect to events that are directly attributable to the AMS Acquisition, including borrowings to finance the acquisition as well as the additional depreciation and amortization that would have been charged assuming the fair value adjustments primarily to property, plant and equipment, inventory, and intangible assets, had been applied on January 1, 2011, together with the consequential tax effects.

Other

In the second half of 2011, as part of our effort to increase and broaden the relationships within the urology community, we acquired two electronic medical records software companies, Intuitive Medical Software, LLC and meridianEMR, Inc., which individually and combined represent immaterial acquisitions. These acquisitions provide electronic medical records for urologists. Together, these acquisitions provide access to more than 2,000 urologists using data platforms that will enhance service offerings in urology practice management.

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Supplemental Guarantor Information

9 Months Ended

Sep. 30, 2012

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Supplemental Guarantor Information

NOTE 17. SUPPLEMENTAL GUARANTOR INFORMATION

In connection with the 2019 Notes, 2020 Notes and 2022 Notes, we have included this supplemental guarantor disclosure in accordance with Rule 3-10(g) of Regulation S-X. The 2019 Notes, 2020 Notes, and 2022 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the following nineteen subsidiaries (together, the Guarantor Subsidiaries):

Ÿ    Endo Pharmaceuticals Inc.  Ÿ    Endo Pharmaceuticals Valera Inc. Ÿ    American Medical Systems Holdings, Inc.  Ÿ    AMS Research Corporation  Ÿ    AMS Sales Corporation  Ÿ    Generics International (US Midco), Inc.  Ÿ    Generics International (US), Inc.  Ÿ    Generics Bidco II, LLC  Ÿ    Wood Park Properties LLC  Ÿ    Quartz Specialty Pharmaceuticals, LLC Ÿ    Endo Pharmaceuticals Solutions Inc. Ÿ    Ledgemont Royalty Sub LLC Ÿ    American Medical Systems, Inc. Ÿ    Laserscope Ÿ    Generics International (US Parent), Inc. Ÿ    Generics International (US Holdco), Inc. Ÿ    Generics Bidco I, LLC Ÿ    Moores Mill Properties LLC Ÿ    Vintage Pharmaceuticals, LLC

Each of the Guarantor Subsidiaries is 100 percent owned by us.

The following supplemental consolidating financial information presents the Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011, the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2012 and 2011, the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2012 and 2011 and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, for the Guarantor Subsidiaries as a group, and separately for our non-Guarantor Subsidiaries as a group.

The Condensed Consolidating Financial Statements are presented using the equity method of accounting for investments in 100% owned subsidiaries. Under the equity method, the investments in subsidiaries are recorded at cost and adjusted for our share of the subsidiaries' cumulative results of operations, capital contributions, distributions and other equity changes. The elimination entries principally eliminate investments in subsidiaries and intercompany balances and transactions. The financial information in this footnote should be read in conjunction with the Condensed Consolidated Financial Statements presented and other notes related thereto contained in this Form 10-Q for the three and nine months ended September 30, 2012 and 2011.   

CONDENSED CONSOLIDATING BALANCE SHEET

(In thousands)

	September 30, 2012
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	187		$	217,901		$	38,829		$	—		$	256,917
Accounts receivable, net	—			677,494			74,169			7,931			759,594
Inventories, net	—			351,785			25,047			(13,085		)	363,747
Prepaid expenses and other current assets	—			14,405			8,644			5,106			28,155
Income taxes receivable	36,121			(26,157		)	29,106			108			39,178
Deferred income taxes	—			252,404			12,504			—			264,908
Total current assets	36,308			1,487,832			188,299			60			1,712,499
INTERCOMPANY RECEIVABLES	1,987,450			8,047,237			192,550			(10,227,237		)	—
MARKETABLE SECURITIES	—			2,631			—			—			2,631
PROPERTY, PLANT AND EQUIPMENT, NET	—			302,931			30,484			(296		)	333,119
GOODWILL	—			2,306,021			263,267			—			2,569,288
OTHER INTANGIBLES, NET	—			2,202,494			82,693			—			2,285,187
INVESTMENT IN SUBSIDIARIES	5,870,780			316,379			—			(6,187,159		)	—
OTHER ASSETS	69,165			27,430			40,914			(19,442		)	118,067
TOTAL ASSETS	$	7,963,703		$	14,692,955		$	798,207		$	(16,434,074	)	$	7,020,791
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	90		$	253,157		$	5,943		$	(230	)	$	258,960
Accrued expenses	24,633			898,255			42,815			(5		)	965,698
Current portion of long-term debt	121,875			906			2,166			—			124,947
Acquisition-related contingent consideration	—			6,027			—			—			6,027
Total current liabilities	146,598			1,158,345			50,924			(235		)	1,355,632
INTERCOMPANY PAYABLES	2,876,243			7,271,069			79,925			(10,227,237		)	—
DEFERRED INCOME TAXES	5,949			568,871			7,155			—			581,975
ACQUISITION-RELATED CONTINGENT CONSIDERATION	—			2,688			—			—			2,688
LONG-TERM DEBT, LESS CURRENT PORTION, NET	3,066,713			—			2,805			—			3,069,518
OTHER LIABILITIES	—			89,995			9,909			(19,443		)	80,461
STOCKHOLDERS’ EQUITY:
Preferred Stock	—			—			—			—			—
Common Stock	1,397			—			30,430			(30,430		)	1,397
Additional paid-in capital	1,016,353			4,200,076			573,559			(4,773,635		)	1,016,353
Retained earnings (deficit)	1,527,839			1,408,188			(18,811		)	(1,389,377		)	1,527,839
Accumulated other comprehensive loss	(7,504		)	(6,277		)	(6		)	6,283			(7,504		)
Treasury stock	(669,885		)	—			—			—			(669,885		)
Total Endo Health Solutions Inc. stockholders’ equity	1,868,200			5,601,987			585,172			(6,187,159		)	1,868,200
Noncontrolling interests	—			—			62,317			—			62,317
Total stockholders’ equity	1,868,200			5,601,987			647,489			(6,187,159		)	1,930,517
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,963,703		$	14,692,955		$	798,207		$	(16,434,074	)	$	7,020,791

CONDENSED CONSOLIDATING BALANCE SHEET

(In thousands)

	December 31, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated Total
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	48,318		$	455,756		$	43,546		$	—		$	547,620
Accounts receivable, net	—			656,265			74,584			2,373			733,222
Inventories, net	—			248,128			19,918			(5,627		)	262,419
Prepaid expenses and other current assets	—			19,274			7,004			3,454			29,732
Deferred income taxes	—			205,606			9,497			—			215,103
Total current assets	48,318			1,585,029			154,549			200			1,788,096
INTERCOMPANY RECEIVABLES	1,777,233			7,322,603			193,223			(9,293,059		)	—
MARKETABLE SECURITIES	—			19,105			—			—			19,105
PROPERTY, PLANT AND EQUIPMENT, NET	—			268,572			29,469			(310		)	297,731
GOODWILL	—			2,303,940			254,101			—			2,558,041
OTHER INTANGIBLES, NET	—			2,415,531			88,593			—			2,504,124
INVESTMENT IN SUBSIDIARIES	5,860,570			317,544			—			(6,178,114		)	—
OTHER ASSETS	87,099			27,338			31,049			(20,000		)	125,486
TOTAL ASSETS	$	7,773,220		$	14,259,662		$	750,984		$	(15,491,283	)	$	7,292,583
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	—		$	251,715		$	8,667		$	3		$	260,385
Accrued expenses	38,623			651,653			42,558			(3		)	732,831
Current portion of long-term debt	84,376			972			2,917			—			88,265
Acquisition-related contingent consideration	—			4,925			—			—			4,925
Income taxes payable	(23,204		)	71,900			(13,214		)	(110		)	35,372
Total current liabilities	99,795			981,165			40,928			(110		)	1,121,778
INTERCOMPANY PAYABLES	2,267,572			6,978,697			46,790			(9,293,059		)	—
DEFERRED INCOME TAXES	6,573			611,625			(521		)	—			617,677
ACQUISITION-RELATED CONTINGENT CONSIDERATION	—			3,762			—			—			3,762
LONG-TERM DEBT, LESS CURRENT PORTION, NET	3,421,590			—			2,739			—			3,424,329
OTHER LIABILITIES	—			94,915			10,531			(20,000		)	85,446
STOCKHOLDERS’ EQUITY:
Preferred Stock	—			—			—			—			—
Common Stock	1,383			—			30,430			(30,430		)	1,383
Additional paid-in capital	952,325			4,198,625			574,218			(4,772,843		)	952,325
Retained earnings (deficit)	1,551,910			1,398,613			(15,364		)	(1,383,249		)	1,551,910
Accumulated other comprehensive loss	(9,436		)	(7,740		)	(668		)	8,408			(9,436		)
Treasury stock	(518,492		)	—			—			—			(518,492		)
Total Endo Health Solutions Inc. stockholders’ equity	1,977,690			5,589,498			588,616			(6,178,114		)	1,977,690
Noncontrolling interests	—			—			61,901			—			61,901
Total stockholders’ equity	1,977,690			5,589,498			650,517			(6,178,114		)	2,039,591
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,773,220		$	14,259,662		$	750,984		$	(15,491,283	)	$	7,292,583

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

	Three Months Ended September 30, 2012
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
TOTAL REVENUES	$	—		$	687,675		$	85,496		$	(22,689	)	$	750,482
COSTS AND EXPENSES:
Cost of revenues	—			259,967			54,695			(20,395		)	294,267
Selling, general and administrative	—			191,540			18,938			(32		)	210,446
Research and development	—			47,128			1,824			—			48,952
Patent litigation settlement, net	—			(46,238		)	—			—			(46,238		)
Litigation-related contingencies	—			82,600			—			—			82,600
Asset impairment charges	—			11,163			—			—			11,163
Acquisition-related and integration items, net	—			4,764			1,012			—			5,776
OPERATING INCOME	—			136,751			9,027			(2,262		)	143,516
INTEREST EXPENSE, NET	10,573			34,932			—			—			45,505
NET LOSS ON EXTINGUISHMENT OF DEBT	1,789			—			—			—			1,789
OTHER INCOME, NET	—			(249		)	(2,749		)	2,748			(250		)
(LOSS) INCOME BEFORE INCOME TAX	(12,362		)	102,068			11,776			(5,010		)	96,472
INCOME TAX	(4,442		)	36,147			(2,099		)	(1,319		)	28,287
EQUITY FROM INCOME IN SUBSIDIARIES	61,729			745			—			(62,474		)	—
CONSOLIDATED NET INCOME	53,809			66,666			13,875			(66,165		)	68,185
Less: Net income attributable to noncontrolling interests	—			—			14,376			—			14,376
NET INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	53,809		$	66,666		$	(501	)	$	(66,165	)	$	53,809

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

	Nine Months Ended September 30, 2012
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
TOTAL REVENUES	$	—		$	2,034,768		$	259,412		$	(67,877	)	$	2,226,303
COSTS AND EXPENSES:
Cost of revenues	—			855,418			161,724			(63,485		)	953,657
Selling, general and administrative	—			632,202			66,368			(48		)	698,522
Research and development	—			179,695			3,372			—			183,067
Patent litigation settlement, net	—			85,123			—			—			85,123
Litigation-related contingencies	—			82,600			—			—			82,600
Asset impairment charges	—			54,163			—			—			54,163
Acquisition-related and integration items, net	—			14,294			2,286			—			16,580
OPERATING INCOME	—			131,273			25,662			(4,344		)	152,591
INTEREST EXPENSE, NET	33,320			105,039			27			—			138,386
NET LOSS ON EXTINGUISHMENT OF DEBT	7,215			—			—			—			7,215
OTHER EXPENSE (INCOME), NET	—			5			(2,418		)	2,911			498
(LOSS) INCOME BEFORE INCOME TAX	(40,535		)	26,229			28,053			(7,255		)	6,492
INCOME TAX	(14,562		)	15,487			(8,326		)	(1,862		)	(9,263		)
EQUITY FROM INCOME (LOSS) IN SUBSIDIARIES	1,902			(1,167		)	—			(735		)	—
CONSOLIDATED NET (LOSS) INCOME	(24,071		)	9,575			36,379			(6,128		)	15,755
Less: Net income attributable to noncontrolling interests	—			—			39,826			—			39,826
NET (LOSS) INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	(24,071	)	$	9,575		$	(3,447	)	$	(6,128	)	$	(24,071	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

	Three Months Ended September 30, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
TOTAL REVENUES	$	—		$	706,337		$	86,045		$	(33,304	)	$	759,078
COSTS AND EXPENSES:
Cost of revenues	—			287,446			49,830			(35,104		)	302,172
Selling, general and administrative	24			221,033			23,302			—			244,359
Research and development	—			43,606			278			—			43,884
Asset impairment charges	—			22,691			—			—			22,691
Acquisition-related and integration items, net	—			6,060			(242		)	—			5,818
OPERATING (LOSS) INCOME	(24		)	125,501			12,877			1,800			140,154
INTEREST EXPENSE, NET	1,963			50,818			11			—			52,792
OTHER (INCOME) EXPENSE, NET	—			(3,525		)	455			70			(3,000		)
(LOSS) INCOME BEFORE INCOME TAX	(1,987		)	78,208			12,411			1,730			90,362
INCOME TAX	(1,143		)	35,099			(637		)	738			34,057
EQUITY FROM INCOME (LOSS) IN SUBSIDIARIES	41,493			(98		)	—			(41,395		)	—
CONSOLIDATED NET INCOME	$	40,649		$	43,011		$	13,048		$	(40,403	)	$	56,305
Less: Net income attributable to noncontrolling interests	—			—			15,656			—			15,656
NET INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	40,649		$	43,011		$	(2,608	)	$	(40,403	)	$	40,649

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

(In thousands)

	Nine Months Ended September 30, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
TOTAL REVENUES	$	—		$	1,809,956		$	193,661		$	(76,902	)	$	1,926,715
COSTS AND EXPENSES:
Cost of revenues	—			738,961			110,320			(78,854		)	770,427
Selling, general and administrative	58			540,457			41,363			—			581,878
Research and development	—			126,576			278			—			126,854
Asset impairment charges	—			22,691			—			—			22,691
Acquisition-related and integration items, net	(7,050		)	35,288			1,279			—			29,517
OPERATING INCOME	6,992			345,983			40,421			1,952			395,348
INTEREST EXPENSE, NET	28,226			68,905			11			—			97,142
NET LOSS ON EXTINGUISHMENT OF DEBT	8,548			—			—			—			8,548
OTHER (INCOME) EXPENSE, NET	—			(3,024		)	88			159			(2,777		)
(LOSS) INCOME BEFORE INCOME TAX	(29,782		)	280,102			40,322			1,793			292,435
INCOME TAX	(13,431		)	112,156			757			801			100,283
EQUITY FROM INCOME IN SUBSIDIARIES	167,370			954			—			(168,324		)	—
CONSOLIDATED NET INCOME	$	151,019		$	168,900		$	39,565		$	(167,332	)	$	192,152
Less: Net income attributable to noncontrolling interests	—			—			41,133			—			41,133
NET INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	151,019		$	168,900		$	(1,568	)	$	(167,332	)	$	151,019

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Three Months Ended September 30, 2012
	Endo Health Solutions Inc.		Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminations			Consolidated Total
CONSOLIDATED NET INCOME	$	53,809	$	66,666		$	13,875	$	(66,165	)	$	68,185
OTHER COMPREHENSIVE INCOME (LOSS)	3,960		(79		)	4,397		(4,318		)	3,960
CONSOLIDATED COMPREHENSIVE INCOME	57,769		66,587			18,272		(70,483		)	72,145
Less: Comprehensive income attributable to noncontrolling interests	—		—			14,376		—			14,376
COMPREHENSIVE INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	57,769	$	66,587		$	3,896	$	(70,483	)	$	57,769

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Nine Months Ended September 30, 2012
	Endo Health Solutions Inc.			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
CONSOLIDATED NET (LOSS) INCOME	$	(24,071	)	$	9,575	$	36,379		$	(6,128	)	$	15,755
OTHER COMPREHENSIVE INCOME	1,932			1,463		662			(2,125		)	1,932
CONSOLIDATED COMPREHENSIVE (LOSS) INCOME	(22,139		)	11,038		37,041			(8,253		)	17,687
Less: Comprehensive income attributable to noncontrolling interests	—			—		39,826			—			39,826
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	(22,139	)	$	11,038	$	(2,785	)	$	(8,253	)	$	(22,139	)

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Three Months Ended September 30, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
CONSOLIDATED NET INCOME	$	40,649		$	43,011	$	13,048		$	(40,403	)	$	56,305
OTHER COMPREHENSIVE (LOSS) INCOME	(5,755		)	875		(5,130		)	4,255			(5,755		)
CONSOLIDATED COMPREHENSIVE INCOME	34,894			43,886		7,918			(36,148		)	50,550
Less: Comprehensive income attributable to noncontrolling interests	—			—		15,656			—			15,656
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	34,894		$	43,886	$	(7,738	)	$	(36,148	)	$	34,894

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Nine Months Ended September 30, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated Total
CONSOLIDATED NET INCOME	$	151,019		$	168,900		$	39,565		$	(167,332	)	$	192,152
OTHER COMPREHENSIVE LOSS	(6,137		)	(507		)	(5,130		)	5,637			(6,137		)
CONSOLIDATED COMPREHENSIVE INCOME	144,882			168,393			34,435			(161,695		)	186,015
Less: Comprehensive income attributable to noncontrolling interests	—			—			41,133			—			41,133
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	144,882		$	168,393		$	(6,698	)	$	(161,695	)	$	144,882

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In thousands)

	Nine Months Ended September 30, 2012
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated Total
OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities	$	421,896		$	(159,009	)	$	34,245		$	—	$	297,132
INVESTING ACTIVITIES:
Purchases of property, plant and equipment	—			(79,310		)	(10,818		)	—		(90,128		)
Proceeds from sale of property, plant and equipment	—			17			1,064			—		1,081
Acquisitions, net of cash acquired	—			—			(3,210		)	—		(3,210		)
Proceeds from sale of marketable securities	—			18,800			—			—		18,800
License fees	—			(5,000		)	(700		)	—		(5,700		)
Net cash used in investing activities	—			(65,493		)	(13,664		)	—		(79,157		)
FINANCING ACTIVITIES:
Capital lease obligations repayments	—			(615		)	(150		)	—		(765		)
Principal payments on Term Loans	(333,950		)	—			—			—		(333,950		)
Payment on AMS Convertible Notes	—			(66		)	—			—		(66		)
Principal payments on other indebtedness	—			—			(685		)	—		(685		)
Tax benefits of stock awards	—			4,268			—			—		4,268
Exercise of Endo Health Solutions Inc. stock options	15,317			—			—			—		15,317
Purchase of common stock	(156,000		)	—			—			—		(156,000		)
Issuance of common stock from treasury	4,606			—			—			—		4,606
Cash distributions to noncontrolling interests	—			—			(39,234		)	—		(39,234		)
Cash buy-out of noncontrolling interests, net of cash contributions	—			—			(2,264		)	—		(2,264		)
Intercompany activity	—			(16,940		)	16,940			—		—
Net cash used in financing activities	(470,027		)	(13,353		)	(25,393		)	—		(508,773		)
Effect of foreign exchange rate	—			—			95			—		95
NET DECREASE IN CASH AND CASH EQUIVALENTS	(48,131		)	(237,855		)	(4,717		)	—		(290,703		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	48,318			455,756			43,546			—		547,620
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	187		$	217,901		$	38,829		$	—	$	256,917

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(In thousands)

	Nine Months Ended September 30, 2011
	Endo Health Solutions Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations		Consolidated Total
OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities	$	(51,709	)	$	301,150		$	169,090		$	—	$	418,531
INVESTING ACTIVITIES:
Purchases of property, plant and equipment	—			(34,176		)	(5,433		)	—		(39,609		)
Proceeds from sale of property, plant and equipment	—			340			807			—		1,147
Acquisitions, net of cash acquired	—			(2,243,486		)	(124,871		)	—		(2,368,357		)
Proceeds from investments	—			36,000			—			—		36,000
Purchases of investments	—			(6,009		)	—			—		(6,009		)
Other investments	—			436			(824		)	—		(388		)
Payment on contingent consideration	—			—			(662		)	—		(662		)
License fees	—			(2,300		)	—			—		(2,300		)
Proceeds from sale of business	—			—			12,990			—		12,990
Net cash used in investing activities	—			(2,249,195		)	(117,993		)	—		(2,367,188		)
FINANCING ACTIVITIES:
Proceeds from issuance of 2019 and 2022 Notes	900,000			—			—			—		900,000
Proceeds from issuance of Term Loans	2,200,000			—			—			—		2,200,000
Proceeds from other indebtedness	—			—			302			—		302
Principal payments on Term Loans	(550,813		)	—			—			—		(550,813		)
Payment on AMS Convertible Notes	—			(519,040		)	—			—		(519,040		)
Deferred financing fees	(81,535		)	—			—			—		(81,535		)
Tax benefits of stock awards	—			5,519			—			—		5,519
Exercise of Endo Health Solutions Inc. stock options	21,780			—			—			—		21,780
Purchase of common stock	(34,702		)	—			—			—		(34,702		)
Cash distributions to noncontrolling interests	—			—			(39,392		)	—		(39,392		)
Cash buy-out of noncontrolling interests, net of cash contributions	—			—			(402		)	—		(402		)
Intercompany activity	(2,407,354		)	2,394,706			12,648			—		—
Net cash provided by (used in) financing activities	47,376			1,881,185			(26,844		)	—		1,901,717
Effect of foreign exchange rate	—			—			397			—		397
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(4,333		)	(66,860		)	24,650			—		(46,543		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	45,400			404,169			16,645			—		466,214
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	41,067		$	337,309		$	41,295		$	—	$	419,671

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Net (Loss) Income Per Share

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Net (Loss) Income Per Share

NOTE 13. NET INCOME (LOSS) PER SHARE

The following is a reconciliation of the numerator and denominator of basic and diluted net income (loss) per share (in thousands, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012			2011
Numerator:
Net income (loss) attributable to Endo Health Solutions Inc. common stockholders	$	53,809	$	40,649	$	(24,071	)	$	151,019
Denominator:
For basic per share data—weighted average shares	116,022		116,816		116,688			116,611
Dilutive effect of common stock equivalents	2,628		2,281		—			2,328
Dilutive effect of 1.75% Convertible Senior Subordinated Notes and warrants	929		1,750		—			2,493
For diluted per share data—weighted average shares	119,579		120,847		116,688			121,432
Basic net income (loss) per share attributable to Endo Health Solutions Inc.	$	0.46	$	0.35	$	(0.21	)	$	1.30
Diluted net income (loss) per share attributable to Endo Health Solutions Inc.	$	0.45	$	0.34	$	(0.21	)	$	1.24

Basic net income (loss) per share is computed based on the weighted average number of common shares outstanding during the period. Diluted income per common share is computed based on the weighted average number of common shares outstanding and, if there is net income during the period, the dilutive impact of common stock equivalents outstanding during the period. Common stock equivalents are measured under the treasury stock method.

The 1.75% Convertible Senior Subordinated Notes due April 15, 2015 (the Convertible Notes) are only included in the dilutive net income per share calculation using the treasury stock method during periods in which the average market price of our common stock was above the applicable conversion price of the Convertible Notes, or $29.20 per share. In these periods, under the treasury stock method, we calculated the number of shares issuable under the terms of these notes based on the average market price of the stock during the period, and included that number in the total diluted shares outstanding for the period.

We have entered into convertible note hedge and warrant agreements that, in combination, have the economic effect of reducing the dilutive impact of the Convertible Notes. However, we separately analyze the impact of the convertible note hedge and the warrant agreements on diluted weighted average shares outstanding. As a result, the purchases of the convertible note hedges are excluded because their impact would be anti-dilutive. The treasury stock method is applied when the warrants are in-the-money with the proceeds from the exercise of the warrant used to repurchase shares based on the average stock price in the calculation of diluted weighted average shares. Until the warrants are in-the-money, they have no impact to the diluted weighted average share calculation. The total number of shares that could potentially be included if the warrants were exercised is approximately 13.0 million at September 30, 2012.

The following reconciliation shows the maximum potential dilution of shares currently excluded from the calculation of diluted net income per share for the nine months ended September 30 (in thousands):

	2012	2011
Weighted average shares excluded:
1.75% Convertible senior subordinated notes due 2015 and warrants(1)	25,993	23,500
Employee stock-based awards	4,106	2,007
	30,099	25,507

_____________

(1) Amounts represent the incremental potential total dilution that could occur if our Convertible Notes and warrants were converted to shares of our common stock.

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Subsequent Events (Details) (Subsequent event [Member], USD $) In Millions, unless otherwise specified	9 Months Ended		0 Months Ended
	Sep. 30, 2012	Oct. 17, 2012	Oct. 17, 2012 Apax Quartz [Member]	Oct. 17, 2012 Endo Pharmaceuticals [Member]
Subsequent Event [Line Items]
Release after execution of amendment, duration		5 days
Escrow deposit disbursements related to stock purchase agreement	$ 54.5		$ 52.0	$ 2.5
Indemnity escrow fund		$ 45.5

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Goodwill And Other Intangibles

9 Months Ended

Sep. 30, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and other intangibles

NOTE 9. GOODWILL AND OTHER INTANGIBLES

Goodwill

Changes in the carrying amount of our goodwill for the nine months ended September 30, 2012, are as follows:

	Carrying Amount
December 31, 2011	$	2,558,041
Goodwill acquired during the period	7,717
Measurement period adjustments	3,379
Effect of currency translation	151
September 30, 2012	$	2,569,288

The goodwill acquired during the period relates to immaterial acquisitions. Of the $2.6 billion of goodwill recorded on our Condensed Consolidated Balance Sheet at September 30, 2012, $290.8 million is assigned to our Endo Pharmaceuticals segment, $275.2 million is assigned to our Qualitest segment, $1.8 billion is assigned to our AMS segment and $209.0 million is assigned to our HealthTronics segment.

Other Intangible Assets

Our other intangible assets consist of the following at September 30, 2012 and December 31, 2011, respectively (in thousands):

	September 30, 2012			December 31, 2011
Indefinite-lived intangibles:
In-process research and development	$	179,400		$	221,400
Total indefinite-lived intangibles	$	179,400		$	221,400
Definite-lived intangibles:
Licenses (weighted average life of 9 years)	$	590,193		$	647,239
Less accumulated amortization	(308,026		)	(256,903		)
Licenses, net	$	282,167		$	390,336
Customer relationships (weighted average life of 16 years)	159,789			159,632
Less accumulated amortization	(13,097		)	(5,460		)
Customer relationships, net	$	146,692		$	154,172
Tradenames (weighted average life of 22 years)	91,600			91,600
Less accumulated amortization	(7,592		)	(4,142		)
Tradenames, net	$	84,008		$	87,458
Developed technology (weighted average life of 16 years)	1,825,375			1,774,300
Less accumulated amortization	(234,412		)	(125,695		)
Developed technology, net	$	1,590,963		$	1,648,605
Other (weighted average life of 11 years)	2,200			2,200
Less accumulated amortization	(243		)	(47		)
Other, net	$	1,957		$	2,153
Total definite-lived intangibles, net (weighted average life of 14 years)	$	2,105,787		$	2,282,724
Other intangibles, net	$	2,285,187		$	2,504,124

Amortization expense for the nine month periods ended September 30, 2012 and 2011 was $171.1 million and $137.0 million, respectively. As of September 30, 2012, the weighted average amortization period for our definite-lived intangible assets in total was approximately 14 years. Changes in the gross carrying amount of our other intangible assets for the nine months ended September 30, 2012 are as follows:

	Gross Carrying Amount
December 31, 2011	$	2,896,371
Patents acquired	12,075
Asset impairment charges	(54,163		)
Effect of currency translation	158
Other	(5,884		)
September 30, 2012	$	2,848,557

AMS IPR&D Impairment

As a result of market and potential regulatory changes affecting the commercial potential in the United States for one of the AMS IPR&D assets, the Company determined that the asset's carrying value was no longer fully recoverable. Accordingly, in the second quarter of 2012, we recorded a pre-tax non-cash impairment charge of $3.0 million, which was assigned to our AMS segment and was recorded in the Asset impairment charges line of our Condensed Consolidated Statements of Operations. The fair value of this asset was determined using a discounted cash flow model, or income approach. This fair value measurement technique is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. Changes in any of the assumptions used in determining the fair value of this asset may result in a further reduction to its estimated fair value and could result in additional and potentially full future impairment charges of up to $1.0 million.

Sanctura XR^® Impairment

Pursuant to the Sanctura XR^® Amended and Restated License, Commercialization and Supply Agreement with Allergan USA, Inc. (Allergan), the Company receives royalties based on net sales of Sanctura XR^® made by Allergan. In March 2009, Watson Pharmaceutical Inc. (Watson) filed an Abbreviated New Drug Application (ANDA) seeking FDA approval to market generic versions of Sanctura XR^® before the expiration of Allergan’s patents listed in the Orange Book. Subsequent to Watson’s ANDA filing, Sandoz Inc. and Paddock Laboratories, Inc. (acquired by Perrigo Company in August 2011) also filed ANDAs for a generic version of Sanctura XR^®. In April 2012, the U.S. District Court for the District of Delaware ruled that five patents covering Allergan’s Sanctura XR^® (trospium chloride) extended-release capsules were invalid. The Company appealed this ruling, and subsequently in June 2012, our appeal was dismissed.

As part of our first quarter 2012 Form 10-Q filing, the Company concluded that an impairment assessment was required to evaluate the recoverability of the indefinite-lived intangible asset. In accordance with the applicable accounting guidance, the Company assessed the recoverability of this asset by comparing its carrying amount to its forecasted undiscounted future cash flows and determined that its carrying value exceeded its undiscounted future cash flows, indicating an impairment existed. The Company then determined the fair value of the Sanctura XR^® intangible asset to be $21.6 million at March 31, 2012. Accordingly, the Company recorded a pre-tax non-cash impairment charge of $40.0 million in March 2012, representing the difference between the carrying value of the intangible asset and its estimated fair value.

To estimate fair value, we assessed the estimates of the amount and timing of future cash flows from royalties and milestones received from Allergan related to net sales of the product. To calculate the fair value of the Sanctura XR^® intangible asset during the first quarter of 2012, the Company used an income approach using a discounted cash flow model considering management’s current evaluation of the above mentioned factors. The Company utilized probability-weighted cash flow models using a present value discount factor commensurate with the overall risk associated with this particular product. The cash-flow models included our best estimates of future royalties from Allergan related to sales of Sanctura XR^® in light of generic competition. At the time of this assessment, the Company believed that the level and timing of cash flows assumed, discount rate and probabilities used in the model appropriately reflected market participant assumptions.

In October 2012, Watson announced that it had received FDA approval for its generic version of Sanctura XR^® and that it intended to begin shipping its product immediately. As a result of this announcement, the Company concluded that an additional impairment assessment was required. Accordingly, the Company again evaluated the recoverability of the asset and determined that an impairment existed. Using a valuation model similar to that described above, and assumptions that we presently believe reflect market participant assumptions, the fair value of the Sanctura XR^® intangible asset was determined to be $5.0 million at September 30, 2012. Accordingly, the Company recorded an additional pre-tax non-cash impairment charge of $11.2 million in September 2012, representing the difference between the carrying value of the intangible asset and its estimated fair value. The remaining net book value will be amortized over a shortened useful life commensurate with the expected rate of erosion due to generic competition. The above mentioned impairment charges, which were assigned to our Endo Pharmaceuticals segment, were recognized in earnings and included in the Asset impairment charges line item in the Condensed Consolidated Statements of Operations. Changes in any of our assumptions may result in a further reduction to the estimated fair value of the Sanctura XR^® intangible asset and could result in additional and potentially full future impairment charges.

Future Amortization

Estimated amortization of intangibles for the five fiscal years subsequent to December 31, 2011 is as follows (in thousands):

2012	$	229,788
2013	$	186,610
2014	$	171,083
2015	$	169,910
2016	$	167,931

Annual Impairment Testing

Goodwill represents the excess of purchase price over the fair value of net assets acquired. Other indefinite-lived intangible assets consist primarily of the fair value of in-process research and development assets acquired in a business combination. We assess goodwill and other indefinite-lived intangible assets for impairment annually, or more frequently whenever events or changes in circumstance indicate that the asset may be impaired. For goodwill, the assessment considers if the carrying amount of a reporting unit exceeds its fair value. If so, an impairment charge is recognized for the excess of the carrying amount of the reporting unit's goodwill over its implied fair value. For indefinite-lived intangible assets, the assessment considers if the carrying amount of the asset exceeds its fair value. If so, an impairment charge is recognized for the excess.

During the three months ended September 30, 2012, we changed our annual goodwill impairment test date from January 1 to October 1. The change in the annual date for impairment testing will necessitate completing a test as of October 1, 2012 to ensure that no more than 12 months elapse between annual tests. We will complete this test in the fourth quarter ending December 31, 2012 and expect that the new date will not have the effect of delaying, accelerating or avoiding an impairment charge. The selection of October 1 as the annual testing date for the impairment of goodwill is preferable as it aligns the timing of the annual impairment test with the completion of our planning and budgeting process, which will allow us to utilize the updated business plans that result from the budget process to estimate the fair value of our reporting units and do so on a more timely basis. The selection of October 1 as the annual testing date will also move the testing outside of our annual financial reporting process when our resources are more constrained. During the three months ended September 30, 2012, we also changed our annual indefinite lived intangible asset test date to October 1. In the fourth quarter ending December 31, 2012, we will also complete our annual testing of indefinite lived intangible assets of this new date.

Due to significant judgments and estimates that are utilized in an impairment analysis, we determined it was impracticable to objectively determine, without the use of hindsight, the assumptions that would have been used as of each October 1 for periods before October 1, 2012. As such, we will prospectively apply the changes in the annual goodwill and indefinite-lived intangible asset impairment testing dates beginning on October 1, 2012 in future filings.

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Other Comprehensive Income (Schedule Of Tax Effects Allocated To Each Component Of Other Comprehensive Income) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Other Comprehensive Income (Loss), Net of Tax [Abstract]
Unrealized (losses) gains arising during the period, Before-Tax Amount	$ 940	$ (809)	$ 2,326	$ (3,113)
Unrealized (losses) gains arising during the period, Tax Benefit (Expense)	(351)	269	(368)	1,191
Unrealized (losses) gains arising during the period, Net-of-Tax Amount	589	(540)	1,958	(1,922)
Less: reclassification adjustments for (losses) gains realized in net (loss) income, Before-Tax Amount
Less: reclassification adjustments for (losses) gains realized in net (loss) income, Tax Benefit (Expense)
Less: reclassification adjustments for (losses) gains realized in net (loss) income, Net-of-Tax Amount
Net unrealized (losses) gains, Before-Tax Amount	940	(809)	2,326	(3,113)
Net unrealized (losses) gains, Tax Benefit (Expense)	(351)	269	(368)	1,191
Net unrealized (losses) gains, Net-of-Tax Amount	589	(540)	1,958	(1,922)
Foreign currency translation gain, Before-Tax Amount	4,049	(5,451)	409	(4,420)
Foreign currency translation gain, Tax Benefit (Expense)	(15)	125	57	94
Foreign currency translation gain, Net-of-Tax amount	4,034	(5,326)	466	(4,326)
Fair value adjustment on derivatives designated as cash flow hedges arising during the period, Before-Tax Amount	(1,249)		(945)
Fair value adjustment on derivatives designated as cash flow hedges arising during the period, Tax Benefit (Expense)	448		339
Fair value adjustment on derivatives designated as cash flow hedges, Total	(801)		(606)
Less: reclassification adjustments for cash flow hedges settled and included in net (loss) income, Before-Tax Amount	216	426	178	426
Less: reclassification adjustments for cash flow hedges settled and included in net (loss) income, Tax Benefit (Expense)	(78)	(315)	(64)	(315)
Less: reclassification adjustments for cash flow hedges settled and included in net (loss) income, Net-of-Tax Amount	138	111	114	111
Net unrealized fair value adjustment on derivatives designated as cash flow hedges, Before-Tax Amount	(1,033)	426	(767)	426
Net unrealized fair value adjustment on derivatives designated as cash flow hedges, Tax Benefit (Expense)	370	(315)	275	(315)
Fair value adjustment on derivatives designated as cash flow hedges, Total	(663)	111	(492)	111
Other comprehensive income, Before-Tax Amount	3,956	(5,834)	1,968	(7,107)
Other comprehensive income, Tax Benefit (Expense)	4	79	(36)	970
OTHER COMPREHENSIVE INCOME	$ 3,960	$ (5,755)	$ 1,932	$ (6,137)

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Income Taxes

9 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 7. INCOME TAXES

The effective income tax rate was 29.3% and (142.7)% for the three and nine months ended September 30, 2012, respectively, compared to 37.7% and 34.3% for the three and nine months ended September 30, 2011, respectively.

Income tax for the three months ended September 30, 2012decreased 17% to $28.3 million of expense from $34.1 million of expense during the three months ended September 30, 2011. This decrease was due to an increase in income before income tax and a decrease in the effective tax rate. The decrease in the effective tax rate was primarily driven by the establishment of an $8.5 million valuation allowance in the comparable 2011 period against an anticipated capital loss on our cost method investment in a privately held company. A benefit of $5.8 million was also recorded during the three months ended September 30, 2012 for the release of reserves established for uncertain tax positions due to the expiration of federal and state statute of limitations for assessments. A similar benefit of $4.2 million was recorded in the comparable prior period for the release of reserves on uncertain tax positions due to the expiration of federal and state statute of limitations.

Income tax for the nine months ended September 30, 2012 totaled $9.3 million of benefit compared to $100.3 million of expense during the nine months ended September 30, 2011. This fluctuation was primarily driven by a decrease in income before income tax, the establishment of an $8.5 million valuation allowance in the comparable 2011 period against an anticipated capital loss on our cost method investment in a privately held company and the recording of a $6.3 million benefit for a prior period adjustment during the second quarter of 2012 related to the reversal of a 2010 capital loss valuation allowance recorded in connection with our acquisition of HealthTronics, Inc. The valuation allowance was reversed because of a 2011 transaction that resulted in a realized ordinary loss for income tax purposes. A benefit of $5.8 million was also recorded during the nine months ended September 30, 2012 for the release of reserves established for uncertain tax positions due to the expiration of federal and state statute of limitations for assessments. A similar benefit of $7.9 million was recorded in the comparable prior period for the release of reserves on uncertain tax positions due to the expiration of statute of limitations and an IRS audit settlement for the tax years 2006 through 2008.

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License And Collaboration Agreements

9 Months Ended

Sep. 30, 2012

License And Collaboration Agreements [Abstract]

License and collaboration agreements

NOTE 8. LICENSE AND COLLABORATION AGREEMENTS

Commercial Products

Novartis AG and Novartis Consumer Health, Inc.

On March 4, 2008, we entered into a License and Supply Agreement (the Voltaren^® Gel Agreement) with and among Novartis AG and Novartis Consumer Health, Inc. (Novartis) to obtain the exclusive U.S. marketing rights for the prescription medicine Voltaren^® Gel (Voltaren^® Gel or Licensed Product). Voltaren^® Gel received regulatory approval in October 2007 from the FDA, becoming the first topical prescription treatment for use in treating pain associated with osteoarthritis and the first new product approved in the U.S. for osteoarthritis since 2001. Voltaren^® Gel was granted marketing exclusivity in the U.S. as a prescription medicine until October 2010.

Under the terms of the five-year Voltaren^® Gel Agreement, Endo made an upfront cash payment of $85 million. Endo agreed to pay royalties to Novartis on annual Net Sales of the Licensed Product, subject to certain thresholds as defined in the Voltaren^® Gel Agreement. In addition, Endo agreed to make certain guaranteed minimum annual royalty payments of $30 million per year payable in the 4th and 5th year of the Voltaren^® Gel Agreement, which may be reduced under certain circumstances, including Novartis’s failure to supply the Licensed Product, subject to certain limitations including the launch of a generic to the Licensed Product in the U.S. These guaranteed minimum royalties will be creditable against royalty payments on an annual basis such that Endo’s obligation with respect to each year is to pay the greater of (i) royalties payable based on annual net sales of the Licensed Product or (ii) the guaranteed minimum royalty for such Voltaren^® Gel Agreement year. Novartis is also eligible to receive a one-time milestone payment of $25 million if annual net sales of Voltaren^® Gel exceed $300 million in the U.S. To date, annual net sales have not exceeded this threshold and, therefore, this milestone payment has not been paid.

The $85 million upfront payment and the present value of the guaranteed minimum royalties was initially capitalized as an intangible asset in the amount of $129 million, representing the fair value of the exclusive license to market Voltaren^® Gel. We are amortizing this intangible asset into Cost of revenues over an estimated five-year useful life. Due to Novartis’s failure to supply Voltaren^® Gel during the first quarter of 2012 resulting from the temporary shutdown of its Lincoln, Nebraska manufacturing facility, we were not obligated to make any first quarter royalty payment, including the $7.5 million minimum royalty. Accordingly, during the first quarter of 2012, we recorded a reduction to the associated liability and a decrease in the intangible asset.

As a result of the previously disclosed supply disruptions, and in accordance with the Voltaren^® Gel Agreement, the Company was not obligated to make any payment to Novartis for the first quarter of 2012. Subsequent to the first quarter, royalties in the amount of $11.9 million were incurred based on a percentage of actual net sales of Voltaren^® Gel during the second and third quarter of 2012. Voltaren^® Gel royalties incurred during the nine months ended September 30, 2011 were $10.2 million.

Endo is solely responsible to commercialize the Licensed Product during the term of the Voltaren^® Gel Agreement. With respect to each year during the term of the Voltaren^® Gel Agreement, subject to certain limitations, Endo is required to incur a minimum amount of annual advertising and promotional expenses on the commercialization of the Licensed Product, which may be reduced under certain circumstances including Novartis’s failure to supply the Licensed Product. In addition, Endo is required to perform a minimum number of face-to-face one-on-one discussions with physicians and other healthcare practitioners (Details) for the purpose of promoting the Licensed Product within its approved indication during each year of the Voltaren^® Gel Agreement which may be reduced under certain circumstances including Novartis’s failure to supply the Licensed Product. Further, during the term of the Voltaren^® Gel Agreement, Endo will share in the costs of certain clinical studies and development activities initiated at the request of the FDA or as considered appropriate by Novartis and Endo.

During the term of the Voltaren^® Gel Agreement, Endo has agreed to purchase all of its requirements for the Licensed Product from Novartis. The price was fixed for the first year and subject to annual changes based upon changes in the producer price index and raw materials.

Novartis has the exclusive right, at its sole discretion, to effect a switch of the Licensed Product from a prescription product to an over-the-counter (OTC) product in the U.S. (an OTC Switch) by filing an amendment or supplement to the Licensed Product New Drug Application or taking any other action necessary or advisable in connection therewith to effect the OTC Switch, and thereafter to commercialize such OTC product. Notwithstanding the foregoing, Novartis shall not launch an OTC equivalent product prior to a time specified in the Voltaren^® Gel Agreement, and Novartis shall not take any action that results in the loss of the prescription product status for the Licensed Product prior to such time. Novartis will notify Endo if it submits a filing to the FDA in respect of an OTC equivalent product. In the event that Novartis gains approval of an OTC equivalent product that results in the Licensed Product being declassified as a prescription product, then Novartis will make certain royalty payments to Endo on net sales of such OTC equivalent product in the U.S. by Novartis, its affiliates and their respective licensees or sublicensees as set forth in the Voltaren^® Gel Agreement. As a condition to the payment of any and all such royalties, net sales of the Licensed Product in the U.S. must have exceeded a certain threshold prior to the launch of the OTC equivalent product by Novartis or its affiliates.

The initial term of the Voltaren^® Gel Agreement will expire on June 30, 2013, and we have the option to extend it for two successive one year terms. If renewed, the Voltaren^® Gel Agreement will remain in place unless either party provides written notice of non-renewal to the other party at least six months prior to the expiration of any renewal term after the first renewal term or the Voltaren^® Gel Agreement is otherwise terminated in accordance with its terms. Should the Voltaren^® Gel Agreement be extended, Endo will again be obligated to make certain guaranteed minimum annual royalty payments of $30 million per year during each successive one-year renewal term, subject to certain limitations including the launch of a generic to the Licensed Product in the U.S. These guaranteed minimum annual royalty payments may be reduced under certain circumstances, including Novartis’s failure to supply the Licensed Product, These guaranteed minimum royalties will be creditable against royalty payments on an annual basis such that Endo’s obligation with respect to each year is to pay the greater of (i) royalties payable based on annual net sales of the Licensed Product or (ii) the guaranteed minimum royalty for such Voltaren^® Gel Agreement year. Among other standard and customary termination rights granted under the Voltaren^® Gel Agreement, the Voltaren^® Gel Agreement can be terminated by either party upon reasonable written notice, if either party has committed a material breach that has not been remedied within 90 days from the giving of written notice. Endo may terminate the Voltaren^® Gel Agreement by written notice upon the occurrence of several events, including the launch in the U.S. of a generic to the Licensed Product. Novartis may terminate the Voltaren^® Gel Agreement upon reasonable written notice (1) if Endo fails to deliver a set percentage of the minimum Details in any given six-month period under the Voltaren^® Gel Agreement; or (2) on or after the launch in the U.S. of an OTC equivalent product by Novartis, its affiliates or any third party that does not result in the declassification of the Licensed Product as a prescription product, following which net sales in any six-month period under the Voltaren^® Gel Agreement are less than a certain defined dollar amount.

Hind Healthcare Inc.

In November 1998, Endo entered into a license agreement (the Hind License Agreement) with Hind Healthcare Inc. (Hind), for the sole and exclusive right to develop, use, market, promote and sell Lidoderm^® in the U.S. Under the terms of the Hind License Agreement, Endo paid Hind approximately $10 million based upon the achievement of certain milestones and capitalized this amount as an intangible asset representing the fair value of these exclusive rights. In addition, we were required to pay Hind nonrefundable royalties based on net sales of Lidoderm^® until this obligation expired on November 23, 2011 pursuant to the terms of the Hind License Agreement. Royalties were recorded as a reduction to net sales due to the nature of the license agreement and the characteristics of the license involvement by Hind in Lidoderm^®. The royalty rate was 10% of net sales including a minimum royalty of at least $500,000 per year. No royalties were recorded in 2012. During the nine months ended September 30, 2011, we recorded $64.5 million in royalties to Hind which we recorded as a reduction to net sales.

Vernalis Development Limited

In July 2004, we entered into a License Agreement with Vernalis Development Limited (Vernalis) under which Vernalis agreed to license, exclusively to us, rights to market frovatriptan succinate (Frova^®) in North America (the Vernalis License Agreement). Frova^® was launched June 2002 in the U.S. and indicated for the acute treatment of migraine headaches in adults. Under the terms of the Vernalis License Agreement, we paid Vernalis an upfront fee of $30 million and annual $15 million payments each in 2005 and 2006. We capitalized the $30 million up-front payment and the present value of the two$15 million anniversary payments. We are amortizing this intangible asset into Cost of revenues on a straight-line basis over its estimated life of 12.5 years.

In addition, Vernalis could receive one-time milestone payments for the achievement of defined annual net sales targets. These sales milestone payments increase based on increasing net sales targets ranging from a milestone of $10 million on $200 million in net sales to a milestone of $75 million on $1.2 billion in net sales. These sales milestones could total up to $255.0 million if all of the defined net sales targets are achieved. Beginning on January 1, 2007, we began paying royalties to Vernalis based on the net sales of Frova^®. The term of the license agreement is for the shorter of the time (i) that there are valid claims on the Vernalis patents covering Frova^® or there is market exclusivity granted by a regulatory authority, whichever is longer, or (ii) until the date on which a generic version of Frova^® is first offered, but in no event longer than 20 years. We can terminate the license agreement under certain circumstances, including upon one years’ written notice. In July 2007, Vernalis and Endo entered into an Amendment (Amendment No. 3) to the License Agreement dated July 14, 2004. Under Amendment No. 3, Vernalis granted an exclusive license to Endo to make, have made, use, commercialize and have commercialized Frova^® in Canada, under the Canadian Trademark.

In February 2008, we entered into Amendment No. 4 to the Vernalis License Agreement (Amendment No. 4). In addition to amending certain specific terms and conditions of the License Agreement, Amendment No. 4 sets forth an annual minimum net sales threshold such that no royalties will be due on annual U.S. net sales of Frova^® less than $85 million. Prior to this amendment, royalties were payable by us to Vernalis on all net sales of Frova^® in the U.S. Now, once the annual minimum net sales amount is reached, royalty payments will be due only on the portion of annual net sales that exceed the $85 million threshold. To date, annual net sales have not exceeded the $85 million threshold and, therefore, no royalties have been paid.

On August 15, 2011, the parties amended the Vernalis License Agreement (Amendment No. 5). Pursuant to Amendment No. 5, Vernalis assigned to the Company certain patents which were previously exclusively licensed by the Company. Amendment No. 5 did not alter the financial arrangement between the parties.

The Population Council

The Company markets certain of its products utilizing the hydrogel polymer technology pursuant to an agreement between Indevus (now, Endo Pharmaceuticals Solutions Inc.) and The Population Council. Unless earlier terminated by either party in the event of a material breach by the other party, the term of the agreement is the shorter of twenty-five years from October 1997 or until the date on which The Population Council receives approximately $40 million in payments from the Company. To date, we have made payments of $9.7 million to the Population Council. The Company is required to pay to The Population Council 3% of its net sales of Vantas^® and any polymer implant containing a luteinizing hormone-releasing hormone (LHRH) analog. We are also obligated to pay royalties to The Population Council ranging from 0.5% of net sales to 4% of net sales under certain conditions. We are also obligated to pay the Population Council 30% of certain profits and payments received in certain territories by the Company from the licensing of Vantas^® or any other polymer implant containing an LHRH analog and 5% for other implants.

Strakan International Limited

In August 2009, we entered into a License and Supply Agreement with Strakan International Limited, a subsidiary of ProStrakan Group plc. (ProStrakan), which was subsequently acquired by Kyowa Hakko Kirin Co. Ltd., for the exclusive right to commercialize Fortesta^® Gel in the U.S. (the ProStrakan Agreement). Fortesta^® Gel is a patented two percent testosterone transdermal gel for testosterone replacement therapy in male hypogonadism. A metered dose delivery system permits accurate dose adjustment to increase the ability to individualize patient treatment. Under the terms of the ProStrakan Agreement, Endo paid ProStrakan an up-front cash payment of $10 million, which was recorded as Research and development expense.

The Company received FDA approval for Fortesta^® Gel in December 2010, which triggered a one-time approval milestone to ProStrakan for $12.5 million. The approval milestone was recorded as an intangible asset and is being amortized into Cost of revenues on a straight-line basis over its estimated useful life. An additional milestone payment of $7.5 million was triggered during the second quarter of 2011 pursuant to the terms of the ProStrakan Agreement, at which time it was recorded to Cost of revenues. ProStrakan could potentially receive up to approximately $167.5 million in additional payments linked to the achievement of future commercial milestones related to Fortesta^® Gel.

ProStrakan will exclusively supply Fortesta^® Gel to Endo at a supply price based on a percentage of annual net sales subject to a minimum floor price as defined in the ProStrakan Agreement. Endo may terminate the ProStrakan Agreement upon six months’ prior written notice at no cost to the Company.

Grünenthal GMBH

In December 2007, we entered into a License, Development and Supply Agreement (the Grünenthal Oxymorphone Agreement) with Grünenthal for the exclusive clinical development and commercialization rights in Canada and the U.S. for a new oral formulation of Opana^® ER, which is designed to be crush-resistant. Under the terms of the Grünenthal Oxymorphone Agreement, we paid approximately $4.9 million for the successful completion of a clinical milestone in 2010, which was recorded as Research and development expense. In December 2011, the FDA approved a formulation of Opana^® ER designed to be crush-resistant, which will continue to be called Opana^® ER.

In the fourth quarter of 2011, the Company capitalized a one-time approval milestone to Grünenthal for $4.9 million. We are amortizing this intangible asset into Cost of revenues over its estimated useful life. We made an additional payment of $4.9 million in August 2012 related to a commercial milestone which was recorded as Cost of revenues. Additional payments of approximately 50.8 million euros (approximately $65.3 million at September 30, 2012) may become due upon achievement of additional future predetermined regulatory and commercial milestones. Endo will also make payments to Grünenthal based on net sales of any such product or products commercialized under this agreement, including the formulation of Opana^® ER approved by the FDA in December 2011. These payments are recorded in Cost of revenues in our Condensed Consolidated Financial Statements and must be paid in U.S. dollars within 45 days after each calendar quarter. We incurred $26.9 million during the nine months ended September 30, 2012 for these payments. We incurred no such costs during the nine months ended September 30, 2011.

Products in Development

Impax Laboratories, Inc.

In June 2010, the Company entered into a Development and Co-Promotion Agreement (the Impax Development Agreement) with Impax Laboratories, Inc. (Impax), whereby the Company was granted a royalty-free license for the co-exclusive rights to
co-promote a next generation Parkinson’s disease product. Under the terms of the Impax Development Agreement, Endo paid Impax an upfront payment of $10 million in 2010, which was recorded as Research and development expense. The Company could be obligated to pay up to approximately $30.0 million in additional payments linked to the achievement of future clinical, regulatory, and commercial milestones related to the development product. Prior to the completion of phase III trials, Endo may only terminate the Impax Development Agreement upon a material breach.

Bioniche Life Sciences Inc.

In July 2009, the Company entered into a License, Development and Supply Agreement (the Bioniche Agreement) with Bioniche Life Sciences Inc. and Bioniche Urology Inc. (collectively, Bioniche), whereby the Company licensed from Bioniche the exclusive rights to develop and market Bioniche’s proprietary formulation of Mycobacterial Cell Wall-DNA Complex (MCC), known as Urocidin^TM, in the U.S. with an option for global rights. We exercised our option for global rights in the first quarter of 2010. Urocidin^TM is a patented formulation of MCC developed by Bioniche for the treatment of non-muscle-invasive bladder cancer that is currently undergoing phase III clinical testing. Under the terms of the Bioniche Agreement, Endo paid Bioniche an up-front cash payment of $20.0 million in July 2009 and milestone payments of $11.0 million in 2009 and $4.0 million in 2010 resulting from the achievement of contractual milestones, which were recorded as Research and development expense. In addition, Bioniche could potentially receive up to approximately $67.0 million and $26.0 million in additional payments linked to the achievement of future clinical, regulatory, and commercial milestones related to two separate indications for Urocidin^TM. Bioniche will manufacture Urocidin^TM and receive a transfer price for supply based on a percentage of Endo’s annual net sales of Urocidin^TM. Endo may terminate the Bioniche Agreement upon 180 days’ prior written notice.

As a result of recent discussions with the FDA regarding the current Urocidin^TM phase III clinical trial, the Company's subsidiary, Endo Pharmaceuticals, has decided to end the study before its scheduled completion. Endo Pharmaceuticals, and its partner Bioniche, are considering potential next steps for the program.

BayerSchering

In July 2005, Indevus (now, Endo Pharmaceuticals Solutions Inc.) licensed exclusive U.S. rights from Schering AG, Germany, now BayerSchering Pharma AG (BayerSchering) to market a long-acting injectable testosterone preparation for the treatment of male hypogonadism that we refer to as Aveed^TM (the BayerSchering Agreement). The Company is responsible for the development and commercialization of Aveed^TM in the U.S. BayerSchering is responsible for manufacturing and supplying the Company with finished product. As part of the BayerSchering Agreement, Indevus agreed to pay to BayerSchering up to $30.0 million in up-front, regulatory milestone, and commercialization milestone payments, including a $5.0 million payment due upon approval by the FDA to market Aveed^TM. Indevus also agreed to pay to BayerSchering 25% of net sales of Aveed^TM to cover both the cost of finished product and royalties. Either party may also terminate the BayerSchering Agreement in the event of a material breach by the other party.

In October 2006, Indevus entered into a supply agreement with BayerSchering pursuant to which BayerSchering agreed to manufacture and supply Indevus with all of its requirements for Aveed^TM for a supply price based on net sales of Aveed^TM. The supply price is applied against the 25% of net sales owed to BayerSchering pursuant to the BayerSchering Agreement. The BayerSchering Agreement expires ten years after the first commercial sale of Aveed^TM.

Hydron Technologies, Inc.

In November 1989, GP Strategies Corporation (GP Strategies), then known as National Patent Development Corporation, entered into an agreement (the Hydron Agreement) with Dento-Med Industries, Inc., now known as Hydron Technologies, Inc. In June 2000, Valera Pharmaceuticals, Inc. (Valera, now a wholly-owned, indirect subsidiary of the Company known as Endo Pharmaceuticals Valera Inc.) entered into a contribution agreement with GP Strategies, pursuant to which Valera acquired the assets of GP Strategies’ drug delivery business, including all intellectual property, and all of GP Strategies’ rights under the Hydron Agreement, and certain other agreements with The Population Council and Shire US, Inc.

Pursuant to the Hydron Agreement, the Company has the exclusive right to manufacture, sell and distribute any prescription drug or medical device and certain other products made with the hydrogel polymer technology. Hydron Technologies retained an exclusive, worldwide license to manufacture, market or use products composed of, or produced with the use of, the hydrogel polymer technology in certain consumer and oral health fields. Neither party is prohibited from manufacturing, exploiting, using or transferring the rights to any new non-prescription drug product containing the hydrogel polymer technology, subject to certain exceptions, for limited exclusivity periods. Subject to certain conditions and exceptions, the Company is obligated to supply certain types of polymer to Hydron Technologies and Hydron Technologies is obligated to purchase such products from the Company. Under the Hydron Agreement, the Company also had the title to the Hydron^® trademark. Recently, the Company decided to stop using the Hydron^® trademark and transferred the title to such trademark to Hydron Technologies pursuant to the Hydron Agreement. This agreement continues indefinitely, unless terminated earlier by the parties. Each party may owe royalties up to 5% to the other party on certain products under certain conditions.

BioDelivery Sciences International, Inc.

In January 2012, the Company signed a worldwide license and development agreement (the BioDelivery Agreement) with BioDelivery Sciences International, Inc. (BioDelivery) for the exclusive rights to develop and commercialize BEMA^® Buprenorphine. BEMA^® Buprenorphine is a transmucosal form of buprenorphine, a partial mu-opiate receptor agonist, which incorporates a bioerodible mucoadhesive (BEMA^®) technology. BEMA^® Buprenorphine is currently in phase III trials for the treatment of moderate to severe chronic pain. The Company made an upfront payment to BioDelivery for $30.0 million, which was expensed as Research and development in the first quarter of 2012. During the first quarter of 2012, $15.0 million of additional costs were incurred related to the achievement of certain regulatory milestones and were recorded as Research and development expense. We paid this amount in the second quarter of 2012. In the future, Endo could be obligated to pay royalties based on net sales of BEMA^® Buprenorphine and commercial and regulatory milestone payments of up to approximately $135.0 million. Endo may terminate the BioDelivery Agreement at any time upon six months written notice. Unless terminated earlier, the BioDelivery Agreement shall expire, on a country by country basis, upon the later to occur of ten years from the date of first commercial sale in a particular country or the date on which the last valid claim of the applicable BioDelivery patents in a particular country has expired or been invalidated or found unenforceable.

Orion Corporation

In January 2011, the Company entered into a Discovery, Development and Commercialization Agreement (the 2011 Orion Agreement) with Orion Corporation (Orion) to exclusively co-develop products for the treatment of certain cancers and solid tumors. Under the terms of the 2011 Orion Agreement, Endo and Orion each contributed four research programs to the collaboration to be conducted pursuant to the agreement. The development of each research program shall initially be the sole responsibility of the contributing party. However, upon the achievement of certain milestones, the non-contribution party shall have the opportunity to, at its option, obtain a license to jointly develop and commercialize any research program contributed by the other party for amounts defined in the 2011 Orion Agreement. Subject to certain limitations, upon the first commercial sale of any successfully launched jointly developed product, Endo shall be obligated to pay royalties to Orion based on net sales of the corresponding product in North America (the Endo territory) and Orion shall be obligated to pay royalties to Endo on net sales of the corresponding product in certain European countries (the Orion territory). The 2011 Orion Agreement shall expire in January 2016, unless terminated early or extended pursuant to the terms of the agreement. In January 2011, Endo exercised its option to obtain a license to jointly develop and commercialize Orion’s Anti-Androgen program focused on castration-resistant prostate cancer, one of Orion’s four contributed research programs, and made a corresponding payment to Orion for $10 million, which was expensed as Research and development in the first quarter of 2011.

EpiCept Corp.

In December 2003, we entered into a license granting us exclusive, worldwide rights to certain patents of EpiCept Corp. (EpiCept) as well as exclusive, worldwide commercialization rights to EpiCept’s LidoPAIN^® BP product (EpiCept Agreement). The EpiCept Agreement provides for Endo to pay EpiCept milestones as well as royalties on the net sales of EpiCept’s LidoPAIN^® BP product. Under this Agreement, we made an upfront payment to EpiCept of $7.5 million which we capitalized as an intangible asset representing the fair value of the exclusive right and the patents. We are amortizing this intangible asset over its useful life of thirteen years. EpiCept has also retained an option to co-promote the LidoPAIN^® BP product. Milestone payments made by Endo under this agreement, including regulatory milestones and sales thresholds, could total up to $82.5 million. In addition, the EpiCept Agreement also contains terms and conditions customary for this type of arrangement, including representations, warranties, indemnities and termination rights. The EpiCept Agreement generally lasts until the underlying patents expire. In January 2009, EpiCept announced that it was discontinuing all drug discovery activities including the development of LidoPAIN^® BP. However, the Company intends to maintain its patent rights conveyed by the EpiCept Agreement.

Other

We have entered into certain other collaboration and discovery agreements with third parties for the development of pain management and other products. These agreements require us to share in the development costs of such products and grant marketing rights to us for such products.

We have also licensed from universities and other similar firms, rights to certain technologies or intellectual property, generally in the field of pain management. We are generally required to make upfront payments as well as other payments upon successful completion of regulatory or sales milestones. In addition, these agreements generally require us to pay royalties on sales of the products arising from these agreements. These agreements generally permit Endo to terminate the agreement with no significant continuing obligation.

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Other Comprehensive Income

9 Months Ended

Sep. 30, 2012

Other Comprehensive Income (Loss), Net of Tax [Abstract]

Other comprehensive income

NOTE 10. OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the tax effects allocated to each component of Other comprehensive income (loss) for the three months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,
	2012									2011
	Before- Tax Amount			Tax (Expense) Benefit			Net-of-Tax Amount			Before-Tax Amount			Tax Benefit (Expense)			Net-of- Tax Amount
Net unrealized gain (loss) on securities:
Unrealized gains (losses) arising during the period	$	940		$	(351	)	$	589		$	(809	)	$	269		$	(540	)
Less: reclassification adjustments for gains (losses) realized in net income (loss)	—			—			—			—			—			—
Net unrealized gains (losses)	940			(351		)	589			(809		)	269			(540		)
Foreign currency translation gain (loss)	4,049			(15		)	4,034			(5,451		)	125			(5,326		)
Fair value adjustment on derivatives designated as cash flow hedges:
Fair value adjustment on derivatives designated as cash flow hedges arising during the period	(1,249		)	448			(801		)	—			—			—
Less: reclassification adjustments for cash flow hedges settled and included in net income (loss)	216			(78		)	138			426			(315		)	111
Net unrealized fair value adjustment on derivatives designated as cash flow hedges	(1,033		)	370			(663		)	426			(315		)	111
Other comprehensive income (loss)	$	3,956		$	4		$	3,960		$	(5,834	)	$	79		$	(5,755	)

The following table presents the tax effects allocated to each component of Other comprehensive income (loss) for the nine months ended September 30, 2012 and 2011 (in thousands):

	Nine Months Ended September 30,
	2012									2011
	Before- Tax Amount			Tax (Expense) Benefit			Net-of-Tax Amount			Before-Tax Amount			Tax Benefit (Expense)			Net-of- Tax Amount
Net unrealized gain (loss) on securities:
Unrealized gains (losses) arising during the period	$	2,326		$	(368	)	$	1,958		$	(3,113	)	$	1,191		$	(1,922	)
Less: reclassification adjustments for gains (losses) realized in net income (loss)	—			—			—			—			—			—
Net unrealized gains (losses)	2,326			(368		)	1,958			(3,113		)	1,191			(1,922		)
Foreign currency translation gain (loss)	409			57			466			(4,420		)	94			(4,326		)
Fair value adjustment on derivatives designated as cash flow hedges:
Fair value adjustment on derivatives designated as cash flow hedges arising during the period	(945		)	339			(606		)	—			—			—
Less: reclassification adjustments for cash flow hedges settled and included in net income (loss)	178			(64		)	114			426			(315		)	111
Net unrealized fair value adjustment on derivatives designated as cash flow hedges	(767		)	275			(492		)	426			(315		)	111
Other comprehensive income (loss)	$	1,968		$	(36	)	$	1,932		$	(7,107	)	$	970		$	(6,137	)

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Stockholders' Equity (Summary Of Restricted Stock Units Activity) (Details) (Restricted stock units (RSUs) [Member], USD $)	9 Months Ended
	Sep. 30, 2012
Restricted stock units (RSUs) [Member]
Restricted Stock Units [Line Items]
Outstanding, Number of Shares, January 1, 2012	2,629,782
Granted, Number of Shares	999,294
Forfeited, Number of Shares	(300,044)
Vested, Number of Shares	(682,859)
Outstanding, Number of Shares, June 30, 2012	2,646,173
Vested and expected to vest, June 30, 2012, Number of Shares	2,372,779
Outstanding, Aggregate Intrinsic Value, June 30, 2012	$ 83,343,319
Vested and expected to vest, June 30, 2012, Aggregate Intrinsic Value	$ 73,093,716

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Stockholders' Equity (Schedule Of Changes In Stockholders' Equity) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Stockholders' Equity [Line Items]
Stockholders' equity at January 1, 2012			$ 2,039,591
Net (loss) income	68,185	56,305	15,755	192,152
Other comprehensive income	3,960	(5,755)	1,932	(6,137)
Compensation related to stock-based awards			44,532
Exercise of options			18,220
Common stock purchased, net of common stock issued from treasury			(151,394)
Distributions to noncontrolling interests			39,234
Buy-out of noncontrolling interests, net of contributions			(176)
Other			1,291
Stockholders' equity at June 30, 2012	1,930,517		1,930,517
Endo Health Solutions Inc [Member]
Stockholders' Equity [Line Items]
Stockholders' equity at January 1, 2012			1,977,690
Net (loss) income			(24,071)
Other comprehensive income			1,932
Compensation related to stock-based awards			44,532
Exercise of options			18,220
Common stock purchased, net of common stock issued from treasury			(151,394)
Distributions to noncontrolling interests			0
Buy-out of noncontrolling interests, net of contributions			0
Other			1,291
Stockholders' equity at June 30, 2012	1,868,200		1,868,200
Noncontrolling Interests [Member]
Stockholders' Equity [Line Items]
Stockholders' equity at January 1, 2012			61,901
Net (loss) income			39,826
Other comprehensive income			0
Compensation related to stock-based awards			0
Exercise of options			0
Common stock purchased, net of common stock issued from treasury			0
Distributions to noncontrolling interests			39,234
Buy-out of noncontrolling interests, net of contributions			(176)
Other			0
Stockholders' equity at June 30, 2012	$ 62,317		$ 62,317

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Stockholders' Equity (Stock Option Assumption) (Details)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Stockholders' Equity Note [Abstract]
Average expected term (years)	5 years	5 years
Risk-free interest rate	0.90%	2.00%
Dividend yield	0.00%	0.00%
Expected volatility	33.00%	32.00%

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Debt (Tables)

9 Months Ended

Sep. 30, 2012

Debt Instrument [Line Items]

Components Of Total Indebtedness

The components of our total indebtedness at September 30, 2012 and December 31, 2011 (in thousands), were as follows:

	September 30, 2012			December 31, 2011
1.75% Convertible Senior Subordinated Notes due 2015	$	379,500		$	379,500
Unamortized discount on 1.75% Convertible Senior Subordinated Notes due 2015	(63,915		)	(80,278		)
1.75% Convertible Senior Subordinated Notes due 2015, net	$	315,585		$	299,222
7.00% Senior Notes due 2019	$	500,000		$	500,000
7.00% Senior Notes due 2020	$	400,000		$	400,000
Unamortized initial purchaser’s discount	(3,172		)	(3,382		)
7.00% Senior Notes due 2020, net	$	396,828		$	396,618
7.25% Senior Notes due 2022	$	400,000		$	400,000
3.25% AMS Convertible Notes due 2036	$	795		$	841
4.00% AMS Convertible Notes due 2041	$	111		$	131
Term Loan A Facility Due 2016	$	1,415,625		$	1,471,875
Term Loan B Facility Due 2018	$	160,550		$	438,250
Other long-term debt	$	4,971		$	5,657
Total long-term debt, net	$	3,194,465		$	3,512,594
Less current portion	$	124,947		$	88,265
Total long-term debt, less current portion, net	$	3,069,518		$	3,424,329

Carrying Values Of Components Of Convertible Notes

The carrying values of the debt and equity components of our Convertible Notes are as follows (in thousands):

	September 30, 2012			December 31, 2011
Principal amount of Convertible Notes	$	379,500		$	379,500
Unamortized discount related to the debt component(1)	(63,915		)	(80,278		)
Net carrying amount of the debt component	$	315,585		$	299,222
Carrying amount of the equity component	$	142,199		$	142,199

_____________

(1) Represents the unamortized portion of the original purchaser’s discount and certain other costs of the offering as well as the unamortized portion of the discount created from the separation of the debt portion of our Convertible Notes from the equity portion. This discount will be amortized to interest expense over the term of the Convertible Notes.

7.00% Senior Notes Due 2019 [Member]

Debt Instrument [Line Items]

Percentage Of Outstanding Principal Balance Of Non-Recourse Notes

On or after July 15, 2015, the Company may on any one or more occasions redeem all or a part of the 2019 Notes, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and additional interest, if any, if redeemed during the twelve-month period beginning on July 15 of the years indicated below:

Payment Dates (between indicated dates)	Redemption Percentage
From July 15, 2015 to and including July 14, 2016	103.500	%
From July 15, 2016 to and including July 14, 2017	101.750	%
From July 15, 2017 and thereafter	100.000	%

7.00% Senior Notes Due 2020 [Member]

Debt Instrument [Line Items]

Percentage Of Outstanding Principal Balance Of Non-Recourse Notes

On or after December 15, 2015, the Company may on any one or more occasions redeem all or a part of the 2020 Notes, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and additional interest, if any, if redeemed during the twelve-month period beginning on December 15 of the years indicated below:

Payment Dates (between indicated dates)	Redemption Percentage
From December 15, 2015 to and including December 14, 2016	103.500	%
From December 15, 2016 to and including December 14, 2017	102.333	%
From December 15, 2017 to and including December 14, 2018	101.167	%
From December 15, 2018 and thereafter	100.000	%

7.25% Senior Notes Due 2022 [Member]

Debt Instrument [Line Items]

Percentage Of Outstanding Principal Balance Of Non-Recourse Notes

On or after July 15, 2016, the Company may on any one or more occasions redeem all or a part of the 2022 Notes, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and additional interest, if any, if redeemed during the twelve-month period beginning on July 15 of the years indicated below:

Payment Dates (between indicated dates)	Redemption Percentage
From July 15, 2016 to and including July 14, 2017	103.625	%
From July 15, 2017 to and including July 14, 2018	102.417	%
From July 15, 2018 to and including July 14, 2019	101.208	%
From July 15, 2019 and thereafter	100.000	%

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Segment Results (Additional Selected Financial Information For Reportable Segments) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Segment Reporting Information [Line Items]
Depreciation expense	$ 13,332	$ 12,451	$ 40,671	$ 32,235
Amortization expense	58,885	58,997	171,109	136,952
Endo Pharmaceuticals [Member]
Segment Reporting Information [Line Items]
Depreciation expense	3,539	3,110	11,249	9,552
Amortization expense	27,318	26,101	76,395	78,361
Qualitest [Member]
Segment Reporting Information [Line Items]
Depreciation expense	3,106	3,461	9,041	8,645
Amortization expense	10,381	9,728	31,143	29,325
AMS [Member]
Segment Reporting Information [Line Items]
Depreciation expense	2,614	1,941	7,812	2,225
Amortization expense	19,385	21,767	58,191	25,063
Healthtronics [Member]
Segment Reporting Information [Line Items]
Depreciation expense	2,905	3,059	9,230	9,164
Amortization expense	1,801	1,401	5,380	4,203
Corporate Unallocated [Member]
Segment Reporting Information [Line Items]
Depreciation expense	$ 1,168	$ 880	$ 3,339	$ 2,649

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Debt

9 Months Ended

Sep. 30, 2012

Debt Instruments [Abstract]

Debt

NOTE 15. DEBT

The components of our total indebtedness at September 30, 2012 and December 31, 2011 (in thousands), were as follows:

	September 30, 2012			December 31, 2011
1.75% Convertible Senior Subordinated Notes due 2015	$	379,500		$	379,500
Unamortized discount on 1.75% Convertible Senior Subordinated Notes due 2015	(63,915		)	(80,278		)
1.75% Convertible Senior Subordinated Notes due 2015, net	$	315,585		$	299,222
7.00% Senior Notes due 2019	$	500,000		$	500,000
7.00% Senior Notes due 2020	$	400,000		$	400,000
Unamortized initial purchaser’s discount	(3,172		)	(3,382		)
7.00% Senior Notes due 2020, net	$	396,828		$	396,618
7.25% Senior Notes due 2022	$	400,000		$	400,000
3.25% AMS Convertible Notes due 2036	$	795		$	841
4.00% AMS Convertible Notes due 2041	$	111		$	131
Term Loan A Facility Due 2016	$	1,415,625		$	1,471,875
Term Loan B Facility Due 2018	$	160,550		$	438,250
Other long-term debt	$	4,971		$	5,657
Total long-term debt, net	$	3,194,465		$	3,512,594
Less current portion	$	124,947		$	88,265
Total long-term debt, less current portion, net	$	3,069,518		$	3,424,329

Credit Facility

On June 17, 2011, we established a $1,500 million, five-year senior secured term loan facility (the Term Loan A Facility), a $700 million, seven-year senior secured term loan facility (the Term Loan B Facility, and, together with the Term Loan A Facility, the Term Loan Facilities), and a $500 million, five-year senior secured revolving credit facility (the 2011 Revolving Credit Facility and, together with the Term Loan Facilities, the 2011 Credit Facility) with Morgan Stanley Senior Funding, Inc., as administrative agent, Bank of America, N.A., as Syndication Agent, and certain other lenders. The 2011 Credit Facility was established primarily to finance our acquisition of AMS and is available for working capital, general corporate purposes and lines of credit. The agreement governing the 2011 Credit Facility (the 2011 Credit Agreement) also permits up to $500 million of additional revolving or term loan commitments from one or more of the existing lenders or other lenders with the consent of Morgan Stanley Senior Funding, Inc. (the administrative agent) without the need for consent from any of the existing lenders under the 2011 Credit Facility.

The obligations of the Company under the 2011 Credit Facility are guaranteed by certain of the Company’s domestic subsidiaries and are secured by substantially all of the assets of the Company and the subsidiary guarantors. The 2011 Credit Facility contains certain usual and customary covenants, including, but not limited to covenants to maintain maximum leverage and minimum interest coverage ratios. Borrowings under the 2011 Credit Facility bear interest at an amount equal to a rate calculated based on the type of borrowing and the Company’s Leverage Ratio. For term A loans and revolving loans (other than Swing Line Loans), the Company is permitted to elect to pay interest based on an adjusted LIBOR rate plus between 1.75% and 2.50% or an Alternate Base Rate (as defined in the 2011 Credit Agreement) plus between 0.75% and 1.50%. For term B loans, the Company may elect to pay interest based on an adjusted LIBOR rate plus 3.00% or an Alternate Base Rate plus 2.00%. The Company will pay a commitment fee of between 37.5 to 50 basis points, payable quarterly, on the average daily unused amount of the Revolving Credit Facility.

Financing costs of $56.2 million paid to establish the 2011 Credit Facility, including $43.4 million paid to investment bankers that also helped structure the AMS acquisition, as well as financing costs of $6.2 million associated with prior credit facilities, were deferred and are being amortized to interest expense over the life of the 2011 Credit Facility. Approximately $8.5 million of the deferred financing costs associated with prior credit facilities was also written off at this time in accordance with the applicable accounting guidance for debt modifications and extinguishments and was included in the Condensed Consolidated Statements of Operations as a Net loss on extinguishment of debt.

In February 2012, we made a prepayment of $205.0 million on our Term Loan B Facility. We made additional prepayments of $33.0 million and $39.7 million in July 2012 and September 2012, respectively. In accordance with the applicable accounting guidance for debt modifications and extinguishments, approximately $5.4 million of the remaining unamortized financing costs were written off in connection with our February 2012 prepayment and additional $1.8 million was written off in connection with the third quarter 2012 prepayments. These amounts were included in the Condensed Consolidated Statements of Operations as a Net loss on extinguishment of debt.

During the nine months ended September 30, 2012 and 2011, we recognized $45.0 million and $32.3 million, respectively, of interest expense related to our Credit Facilities.

7.00% Senior Notes Due 2019

On June 8, 2011, we issued $500 million in aggregate principal amount of 7.00% Notes due 2019 (the 2019 Notes) at an issue price of par. The 2019 Notes were issued in a private offering for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2019 Notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries. Interest on the 2019 Notes is payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2012. The 2019 Notes will mature on July 15, 2019, subject to earlier repurchase or redemption in accordance with the terms of the Indenture incorporated by reference herein. We received proceeds of approximately $485.9 million from the issuance, net of certain costs of the offering, including $9.9 million of costs paid to investment bankers that also helped structure the AMS acquisition.

On or after July 15, 2015, the Company may on any one or more occasions redeem all or a part of the 2019 Notes, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and additional interest, if any, if redeemed during the twelve-month period beginning on July 15 of the years indicated below:

Payment Dates (between indicated dates)	Redemption Percentage
From July 15, 2015 to and including July 14, 2016	103.500	%
From July 15, 2016 to and including July 14, 2017	101.750	%
From July 15, 2017 and thereafter	100.000	%

In addition, at any time prior to July 15, 2015, Endo may on any one or more occasions redeem all or a part of the 2019 Notes at a specified redemption price set forth in the Indenture, plus accrued and unpaid interest and additional interest, if any.

At any time prior to July 15, 2014, the Company may redeem up to 35% of the aggregate principal amount of the 2019 Notes at a specified redemption price set forth in the Indenture, plus accrued and unpaid interest and additional interest, if any, with the net cash proceeds of an equity offering subject to certain provisions. If the Company experiences certain change of control events, it must offer to repurchase the 2019 Notes at 101% of their principal amount, plus accrued and unpaid interest and additional interest, if any.

The Indenture contains covenants that, among other things, restrict the Company’s ability and the ability of its restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make restricted payments, sell certain assets, agree to any restrictions on the ability of restricted subsidiaries to make payments to the Company, create certain liens, merge, consolidate, or sell substantially all of the Company’s assets, or enter into certain transactions with affiliates. These covenants are subject to a number of important exceptions and qualifications, including the fall away or revision of certain of these covenants upon the 2019 Notes receiving investment grade credit ratings.

During the nine months ended September 30, 2012 and 2011, we recognized $27.3 million and $11.3 million, respectively, of interest expense related to our 2019 Notes.

7.00% Senior Notes Due 2020

In November 2010, we issued $400 million in aggregate principal amount of 7.00% Senior Notes due 2020 (the 2020 Notes) at an issue price of 99.105%. The 2020 Notes were issued in a private offering for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2020 Notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries. Interest on the 2020 Notes is payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2011. The 2020 Notes will mature on December 15, 2020, subject to earlier repurchase or redemption in accordance with the terms of the Indenture incorporated by reference herein. We received proceeds of approximately $386.6 million from the issuance, net of the initial purchaser’s discount and certain other costs of the offering.

On or after December 15, 2015, the Company may on any one or more occasions redeem all or a part of the 2020 Notes, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and additional interest, if any, if redeemed during the twelve-month period beginning on December 15 of the years indicated below:

Payment Dates (between indicated dates)	Redemption Percentage
From December 15, 2015 to and including December 14, 2016	103.500	%
From December 15, 2016 to and including December 14, 2017	102.333	%
From December 15, 2017 to and including December 14, 2018	101.167	%
From December 15, 2018 and thereafter	100.000	%

In addition, at any time prior to December 15, 2013, the Company may redeem up to 35% of the aggregate principal amount of the 2020 Notes at a specified redemption price set forth in the Indenture, plus accrued and unpaid interest and additional interest, if any, with the net cash proceeds of an equity offering subject to certain provisions. If the Company experiences certain change of control events, it must offer to repurchase the 2020 Notes at 101% of their principal amount, plus accrued and unpaid interest and additional interest, if any.

The Indenture contains covenants that, among other things, restrict the Company’s ability and the ability of its restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make restricted payments, sell certain assets, agree to any restrictions on the ability of restricted subsidiaries to make payments to the Company, create certain liens, merge, consolidate, or sell substantially all of the Company’s assets, or enter into certain transactions with affiliates. These covenants are subject to a number of important exceptions and qualifications, including the fall away or revision of certain of these covenants upon the 2020 Notes receiving investment grade credit ratings.

During the nine months ended September 30, 2012 and 2011, we recognized $21.8 million and $21.7 million, respectively, of interest expense related to our 2020 Notes.

7.25% Senior Notes Due 2022

On June 8, 2011, we issued $400 million in aggregate principal amount of 7.25% Senior Notes due 2022 (the 2022 Notes) at an issue price of par. The 2022 Notes were issued in a private offering for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2022 Notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by certain of the Company’s domestic subsidiaries. Interest on the 2022 Notes is payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2012. The 2022 Notes will mature on January 15, 2022, subject to earlier repurchase or redemption in accordance with the terms of the Indenture incorporated by reference herein. We received proceeds of approximately $388.7 million from the issuance, net of certain costs of the offering, including $7.9 million of costs paid to investment bankers that also helped structure the AMS acquisition.

On or after July 15, 2016, the Company may on any one or more occasions redeem all or a part of the 2022 Notes, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and additional interest, if any, if redeemed during the twelve-month period beginning on July 15 of the years indicated below:

Payment Dates (between indicated dates)	Redemption Percentage
From July 15, 2016 to and including July 14, 2017	103.625	%
From July 15, 2017 to and including July 14, 2018	102.417	%
From July 15, 2018 to and including July 14, 2019	101.208	%
From July 15, 2019 and thereafter	100.000	%

In addition, at any time prior to July 15, 2016, Endo may on any one or more occasions redeem all or a part of the 2022 notes at a specified redemption price set forth in the Indenture, plus accrued and unpaid interest and additional interest, if any.

At any time prior to July 15, 2014, the Company may redeem up to 35% of the aggregate principal amount of the 2022 Notes at a specified redemption price set forth in the Indenture, plus accrued and unpaid interest and additional interest, if any, with the net cash proceeds of an equity offering subject to certain provisions. If the Company experiences certain change of control events, it must offer to repurchase the 2022 Notes at 101% of their principal amount, plus accrued and unpaid interest and additional interest, if any.

The Indenture contains covenants that, among other things, restrict the Company’s ability and the ability of its restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make restricted payments, sell certain assets, agree to any restrictions on the ability of restricted subsidiaries to make payments to the Company, create certain liens, merge, consolidate, or sell substantially all of the Company’s assets, or enter into certain transactions with affiliates. These covenants are subject to a number of important exceptions and qualifications, including the fall away or revision of certain of these covenants upon the 2022 Notes receiving investment grade credit ratings.

During the nine months ended September 30, 2012 and 2011, we recognized $22.3 million and $9.4 million, respectively, of interest expense related to our 2022 Notes.

2011 Exchange Offer

On October 14, 2011, the Company filed a Form S-4 Registration Statement with the Securities and Exchange Commission. On October 31, 2011, it filed a prospectus pursuant to Rule 424(b)(3). Pursuant to both filings, the Company offered to exchange the 2019 Notes, 2020 Notes and 2022 Notes for a like principal amount of new notes having identical terms that have been registered under the Securities Act of 1933, as amended. On November 30, 2011, all of the 2019 Notes, 2020 Notes and 2022 Notes had been properly tendered in the exchange offer and not withdrawn.

1.75% Convertible Senior Subordinated Notes Due 2015

In April 2008, we issued $379.5 million in aggregate principal amount of 1.75% Convertible Senior Subordinated Notes due April 15, 2015 (the Convertible Notes) in a private offering for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

We received proceeds of approximately $370.7 million from the issuance, net of the initial purchaser’s discount and certain other costs of the offering. Interest is payable semiannually in arrears on each April 15 and October 15 with the first interest payment being made on October 15, 2008. The Convertible Notes will mature on April 15, 2015, unless earlier converted or repurchased by us.

Holders of the Convertible Notes may convert their notes based on a conversion rate of 34.2466 shares of our common stock per $1,000 principal amount of notes (the equivalent of $29.20 per share), subject to adjustment upon certain events, only under the following circumstances as described in the indenture for the Convertible Notes: (1) during specified periods, if the price of our common stock reaches specified thresholds; (2) if the trading price of the Convertible Notes is below a specified threshold; (3) at any time after October 15, 2014; or (4) upon the occurrence of certain corporate transactions. We will be permitted to deliver cash, shares of Endo common stock or a combination of cash and shares, at our election, to satisfy any future conversions of the Convertible Notes. It is our current intention to settle the principal amount of any conversion consideration in cash.

Concurrently with the issuance of the Convertible Notes, we entered into a privately negotiated convertible note hedge transaction with affiliates of the initial purchasers. Pursuant to the hedge transaction we purchased common stock call options intended to reduce the potential dilution to our common stock upon conversion of the Convertible Notes by effectively increasing the initial conversion price of the Convertible Notes to $40.00 per share, representing a 61.1% conversion premium over the closing price of our common stock on April 9, 2008 of $24.85 per share. The call options allow us to purchase up to approximately 13.0 million shares of our common stock at an initial strike price of $29.20 per share. The call options expires on April 15, 2015 and must be net-share settled. The cost of the call option was approximately $107.6 million. In addition, we sold warrants to affiliates of certain of the initial purchasers whereby they have the option to purchase up to approximately 13.0 million shares of our common stock at an initial strike price of $40.00 per share. The warrants expire on various dates from July 14, 2015 through October 6, 2015 and must be net-share settled. We received approximately $50.4 million in cash proceeds from the sale of these warrants. The warrant transaction could have a dilutive effect on our net income per share to the extent that the price of our common stock exceeds the strike price of the warrants at exercise.

As discussed in Note 13. Net Income (Loss) Per Share, in periods in which our common stock price exceeds the conversion price of the Convertible Notes or the strike price of the warrants, we include the effects of the additional shares that may be issued in our diluted net income per share calculation using the treasury stock method.

The carrying values of the debt and equity components of our Convertible Notes are as follows (in thousands):

	September 30, 2012			December 31, 2011
Principal amount of Convertible Notes	$	379,500		$	379,500
Unamortized discount related to the debt component(1)	(63,915		)	(80,278		)
Net carrying amount of the debt component	$	315,585		$	299,222
Carrying amount of the equity component	$	142,199		$	142,199

_____________

(1) Represents the unamortized portion of the original purchaser’s discount and certain other costs of the offering as well as the unamortized portion of the discount created from the separation of the debt portion of our Convertible Notes from the equity portion. This discount will be amortized to interest expense over the term of the Convertible Notes.

For the nine months ended September 30, 2012, we recognized $21.3 million of interest expense related to our Convertible Notes, of which $5.0 million related to the contractual interest payments and $16.3 million related to the amortization of the debt discount and certain other costs of the offering. For the nine months ended September 30, 2011, we recognized $20.0 million of interest expense related to our Convertible Notes, of which $5.0 million related to the contractual interest payments and $15.0 million related to the amortization of the debt discount and certain other costs of the offering.

3.25% Convertible AMS Notes Due 2036 and 4.00% Convertible AMS Notes Due 2041

As a result of our acquisition of AMS, the Company assumed AMS’s 3.25% Convertible Notes due 2036 (the 2036 Notes) and 4.00% Convertible Notes due 2041 (the 2041 Notes and, together with the 2036 Notes, the AMS Notes). In accordance with the indentures governing the AMS Notes, the AMS Notes were immediately convertible upon the closing of Endo’s acquisition of AMS. From the AMS Acquisition Date until the make whole premium on the 2036 Notes expired on August 9, 2011, we paid $95.7 million to redeem $61.4 million of the 2036 Notes at a stated premium of 1.5571. From the AMS Acquisition Date until the make whole premium on the 2041 Notes expired on August 1, 2011, we paid $423.4 million to redeem $249.9 million of the 2041 Notes at a stated premium of 1.6940. Our obligation remaining related to the AMS Notes is less than $1.0 million at September 30, 2012, excluding accrued interest.

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Inventories (Tables)

9 Months Ended

Sep. 30, 2012

Inventory, Net [Abstract]

Schedule of inventories

Inventories are comprised of the following at September 30, 2012 and December 31, 2011, respectively (in thousands):

	September 30, 2012		December 31, 2011
Raw materials	$	111,916	$	103,064
Work-in-process	61,825		51,063
Finished goods	190,006		108,292
Total	$	363,747	$	262,419

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Segment Results (Schedule Of Reportable Segments Information) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011	Sep. 30, 2012 Reportable_Business_Segments	Sep. 30, 2011 Reportable_Business_Segments
Segment Reporting Information [Line Items]
Number of reportable segments				4	3
Total consolidated net revenues to external customers	$ 750,482		$ 759,078	$ 2,226,303	$ 1,926,715
Total consolidated adjusted income before income tax	226,434		219,730	626,929	586,732
Endo Pharmaceuticals [Member]
Segment Reporting Information [Line Items]
Total consolidated net revenues to external customers	416,645		425,511	1,223,005	1,199,292
Total consolidated adjusted income before income tax	216,728		231,887	624,927	634,762
Qualitest [Member]
Segment Reporting Information [Line Items]
Total consolidated net revenues to external customers	166,070		147,975	471,310	415,431
Total consolidated adjusted income before income tax	45,840		26,932	132,500	74,445
AMS [Member]
Segment Reporting Information [Line Items]
Total consolidated net revenues to external customers	113,304	[1]	131,519	371,601	158,331
Total consolidated adjusted income before income tax	21,081		35,272	77,383	45,005
Healthtronics [Member]
Segment Reporting Information [Line Items]
Total consolidated net revenues to external customers	54,463		54,073	160,387	153,661
Total consolidated adjusted income before income tax	16,639		19,483	42,053	49,665
Corporate Unallocated [Member]
Segment Reporting Information [Line Items]
Total consolidated adjusted income before income tax	(73,854)		(93,844)	(249,934)	(217,145)
United States [Member] | AMS [Member]
Segment Reporting Information [Line Items]
Total consolidated net revenues to external customers	75,480		91,807	246,385	107,378
International [Member] | AMS [Member]
Segment Reporting Information [Line Items]
Total consolidated net revenues to external customers	$ 37,824		$ 39,712	$ 125,216	$ 50,953
Minimum [Member]
Segment Reporting Information [Line Items]
Barriers to market entry				1
Concentration risk percentage				10.00%

[1] (1)The following table displays our AMS segment revenue by geography (in thousands). International revenues were not material to any of our other segments for any of the periods presented.

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Fair Value Measurements (Summary Of Available-For-Sale Securities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 1,766	$ 131,382
Gross Unrealized Gains	865	0
Gross Unrealized (Losses)	0	(1,461)
Fair Value	2,631	129,921
Money market funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		110,816
Gross Unrealized Gains		0
Gross Unrealized (Losses)		0
Fair Value		110,816
Auction-rate securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		18,800
Gross Unrealized Gains		0
Gross Unrealized (Losses)		(1,337)
Fair Value		17,463
Equity securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,766	1,766
Gross Unrealized Gains	865	0
Gross Unrealized (Losses)	0	(124)
Fair Value	2,631	1,642
Total included in cash and cash equivalents [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		110,816
Gross Unrealized Gains		0
Gross Unrealized (Losses)		0
Fair Value		110,816
Long-term available-for-sale securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,766	20,566
Gross Unrealized Gains	865	0
Gross Unrealized (Losses)	0	(1,461)
Fair Value	$ 2,631	$ 19,105

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Condensed Consolidated Statements Of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
CONSOLIDATED NET (LOSS) INCOME	$ 68,185	$ 56,305	$ 15,755	$ 192,152
Net unrealized (loss) gain on securities:
Unrealized (losses) gains arising during the period	589	(540)	1,958	(1,922)
Less: reclassification adjustments for (losses) gains realized in net (loss) income
Net unrealized (loss) gain on securities, Total	589	(540)	1,958	(1,922)
Foreign currency translation [gain]	4,034	(5,326)	466	(4,326)
Fair value adjustment on derivatives designated as cash flow hedges:
Fair value adjustment on derivatives designated as cash flow hedges arising during the period	(801)		(606)
Less: reclassification adjustments for cash flow hedges settled and included in net (loss) income	138	111	114	111
Fair value adjustment on derivatives designated as cash flow hedges, Total	(663)	111	(492)	111
OTHER COMPREHENSIVE INCOME	3,960	(5,755)	1,932	(6,137)
CONSOLIDATED COMPREHENSIVE (LOSS) INCOME	72,145	50,550	17,687	186,015
Less: Comprehensive income attributable to noncontrolling interests	14,376	15,656	39,826	41,133
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$ 57,769	$ 34,894	$ (22,139)	$ 144,882

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Inventories

9 Months Ended

Sep. 30, 2012

Inventory, Net [Abstract]

Inventories

NOTE 4. INVENTORIES

Inventories are comprised of the following at September 30, 2012 and December 31, 2011, respectively (in thousands):

	September 30, 2012		December 31, 2011
Raw materials	$	111,916	$	103,064
Work-in-process	61,825		51,063
Finished goods	190,006		108,292
Total	$	363,747	$	262,419

Inventory amounts in the table above are shown net of obsolescence. Our reserve for obsolescence is not material to the Condensed Consolidated Balance Sheets for any of the periods presented and therefore has not been separately disclosed.

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Goodwill And Other Intangibles (Schedule Of Changes In Gross Carrying Amount Of Other Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Finite-lived Intangible Assets [Roll Forward]
Balance at December 31, 2011	$ 2,896,371
Patent acquired	12,075
Asset impairment charges	(54,163)
Effect of currency translation	158
Other	(5,884)
Balance at September 30, 2012	$ 2,848,557

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Supplemental Guarantor Information (Condensed Consolidating Statement Of Comprehensive Income (Loss)) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
CONSOLIDATED NET (LOSS) INCOME	$ 68,185	$ 56,305	$ 15,755	$ 192,152
OTHER COMPREHENSIVE INCOME (LOSS)	3,960	(5,755)	1,932	(6,137)
CONSOLIDATED COMPREHENSIVE (LOSS) INCOME	72,145	50,550	17,687	186,015
Less: Comprehensive income attributable to noncontrolling interests	14,376	15,656	39,826	41,133
COMPREHENSIVE (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	57,769	34,894	(22,139)	144,882
Endo Health Solutions Inc. [Member]
CONSOLIDATED NET (LOSS) INCOME	53,809	40,649	(24,071)	151,019
OTHER COMPREHENSIVE INCOME (LOSS)	3,960	(5,755)	1,932	(6,137)
CONSOLIDATED COMPREHENSIVE (LOSS) INCOME	57,769	34,894	(22,139)	144,882
Less: Comprehensive income attributable to noncontrolling interests	0	0	0	0
COMPREHENSIVE (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	57,769	34,894	(22,139)	144,882
Guarantor Subsidiaries [Member]
CONSOLIDATED NET (LOSS) INCOME	66,666	43,011	9,575	168,900
OTHER COMPREHENSIVE INCOME (LOSS)	(79)	875	1,463	(507)
CONSOLIDATED COMPREHENSIVE (LOSS) INCOME	66,587	43,886	11,038	168,393
Less: Comprehensive income attributable to noncontrolling interests	0	0	0	0
COMPREHENSIVE (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	66,587	43,886	11,038	168,393
Non-Guarantor Subsidiaries [Member]
CONSOLIDATED NET (LOSS) INCOME	13,875	13,048	36,379	39,565
OTHER COMPREHENSIVE INCOME (LOSS)	4,397	(5,130)	662	(5,130)
CONSOLIDATED COMPREHENSIVE (LOSS) INCOME	18,272	7,918	37,041	34,435
Less: Comprehensive income attributable to noncontrolling interests	14,376	15,656	39,826	41,133
COMPREHENSIVE (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	3,896	(7,738)	(2,785)	(6,698)
Eliminations [Member]
CONSOLIDATED NET (LOSS) INCOME	(66,165)	(40,403)	(6,128)	(167,332)
OTHER COMPREHENSIVE INCOME (LOSS)	(4,318)	4,255	(2,125)	5,637
CONSOLIDATED COMPREHENSIVE (LOSS) INCOME	(70,483)	(36,148)	(8,253)	(161,695)
Less: Comprehensive income attributable to noncontrolling interests	0	0	0	0
COMPREHENSIVE (LOSS) ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$ (70,483)	$ (36,148)	$ (8,253)	$ (161,695)

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Net (Loss) Income Per Share (Reconciliation Of The Numerator And Denominator Of Basic And Diluted Net (Loss) Income Per Share) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Earnings Per Share [Abstract]
Net (loss) income attributable to Endo Pharmaceuticals Holdings Inc. common stockholders	$ 53,809	$ 40,649	$ (24,071)	$ 151,019
For basic per share data-weighted average shares	116,022	116,816	116,688	116,611
Dilutive effect of common stock equivalents	2,628	2,281	0	2,328
Dilutive effect of 1.75% Convertible Senior Subordinated Notes and warrants	929	1,750	0	2,493
For diluted per share data-weighted average shares	119,579	120,847	116,688	121,432
Basic net (loss) income per share attributable to Endo Health Solutions Inc	$ 0.46	$ 0.35	$ (0.21)	$ 1.30
Diluted net (loss) income per share attributable to Endo Health Solutions Inc	$ 0.45	$ 0.34	$ (0.21)	$ 1.24

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Acquisitions (Tables) (AMS [Member])

9 Months Ended

Sep. 30, 2012

AMS [Member]

Business Acquisition [Line Items]

Schedule of fair values of the assets acquired and liabilities assumed at the acquisition date

The following table summarizes the fair values of the assets acquired and liabilities assumed at the AMS Acquisition Date (in thousands):

	June 17, 2011 (As adjusted)
Cash and cash equivalents	$	47,289
Commercial paper	71,000
Accounts receivable	73,868
Other receivables	630
Inventories	74,988
Prepaid expenses and other current assets	7,133
Income taxes receivable	9,154
Deferred income taxes	15,432
Property, plant and equipment	56,413
Other intangible assets	1,260,000
Other assets	4,581
Total identifiable assets	$	1,620,488
Accounts payable	$	10,327
Accrued expenses	45,835
Deferred income taxes	416,745
Long-term debt	520,375
Other liabilities	25,891
Total liabilities assumed	$	1,019,173
Net identifiable assets acquired	$	601,315
Goodwill	1,798,661
Net assets acquired	$	2,399,976

Schedule of valuation of the intangible assets acquired and related amortization periods

The valuation of the intangible assets acquired and related amortization periods are as follows:

	Valuation (in millions)		Amortization Period (in years)
Customer Relationships:
Men’s Health	$	97.0	17
Women’s Health	37.0		15
BPH	26.0		13
Total	$	160.0	16
Developed Technology:
Men’s Health	$	690.0	18
Women’s Health	150.0		9
BPH	161.0		18
Total	$	1,001.0	16
Tradename:
AMS	$	45.0	30
GreenLight	12.0		15
Total	$	57.0	27
In Process Research & Development:
Oracle	$	12.0	n/a
Genesis	14.0		n/a
TOPAS	8.0		n/a
Other(1)	8.0		n/a
Total	$	42.0	n/a
Total other intangible assets	$	1,260.0	n/a

_____________

(1) A subsequent pre-tax non-cash impairment charge of $3.0 million was recorded in the second quarter of 2012. This impairment charge is further discussed in Note 9. Goodwill and Other Intangibles.

Schedule of acquisition-related items in the accompanying consolidated statements of operations

These costs are included in Acquisition-related and integration items, net in the accompanying Condensed Consolidated Statements of Operations and are comprised of the following items (in thousands):

	Nine Months Ended September 30,
	2012		2011
Bank fees	$	—	$	16,070
Legal, separation, integration, and other costs	5,174		11,263
Total	$	5,174	$	27,333

These costs are included in Acquisition-related and integration items, net in the accompanying Condensed Consolidated Statements of Operations and are comprised of the following items (in thousands):

	Three Months Ended September 30,
	2012		2011
Bank fees	$	—	$	—
Legal, separation, integration, and other costs	1,848		4,069
Total	$	1,848	$	4,069

Schedule of pro forma consolidated results

	Nine Months Ended September 30, 2011
Pro forma consolidated results (in thousands, except per share data):
Revenue	$	2,165,091
Net income attributable to Endo Health Solutions Inc.	$	130,389
Basic net income per share	$	1.12
Diluted net income per share	$	1.07

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Debt (Carrying Values Of Components Of Convertible Notes) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Carrying amount of the equity component	$ 142,199	$ 142,199
1.75% Convertible Senior Subordinated Notes Due 2015 [Member]
Debt Instrument [Line Items]
Convertible note, gross	379,500	379,500
Unamortized discount related to the debt component	(63,915)	(80,278)
Convertible debt	$ 315,585	$ 299,222

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Fair Value Measurements (Financial Assets And Liabilities Measured At Fair Value On Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis	$ 3,098	$ 131,392
Fair value of financial liabilities measured on recurring basis	9,073	8,806
Quoted prices In active markets for identical assets (Level 1) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis	2,631	112,458
Fair value of financial liabilities measured on recurring basis		0
Significant other observable inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis	467	1,471
Fair value of financial liabilities measured on recurring basis	358	119
Significant unobservable inputs (Level 3) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis		17,463
Fair value of financial liabilities measured on recurring basis	8,715	8,687
Money market funds [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis		110,816
Money market funds [Member] | Quoted prices In active markets for identical assets (Level 1) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis		110,816
Money market funds [Member] | Significant other observable inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis		0
Money market funds [Member] | Significant unobservable inputs (Level 3) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis		0
Equity securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis	2,631	1,642
Equity securities [Member] | Quoted prices In active markets for identical assets (Level 1) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis	2,631	1,642
Equity securities [Member] | Significant other observable inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis		0
Equity securities [Member] | Significant unobservable inputs (Level 3) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis		0
Derivative instruments [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis	467	1,471
Fair value of financial liabilities measured on recurring basis	358	119
Derivative instruments [Member] | Quoted prices In active markets for identical assets (Level 1) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis		0
Fair value of financial liabilities measured on recurring basis		0
Derivative instruments [Member] | Significant other observable inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis	467	1,471
Fair value of financial liabilities measured on recurring basis	358	119
Derivative instruments [Member] | Significant unobservable inputs (Level 3) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis		0
Fair value of financial liabilities measured on recurring basis		0
Auction-rate securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis		17,463
Auction-rate securities [Member] | Quoted prices In active markets for identical assets (Level 1) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis		0
Auction-rate securities [Member] | Significant other observable inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis		0
Auction-rate securities [Member] | Significant unobservable inputs (Level 3) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value of financial assets measured on recurring basis		17,463
Acquisition-related contingent consideration - short-term [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Acquisition-related contingent consideration - short-term	6,027	4,925
Acquisition-related contingent consideration - short-term [Member] | Quoted prices In active markets for identical assets (Level 1) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Acquisition-related contingent consideration - short-term		0
Acquisition-related contingent consideration - short-term [Member] | Significant other observable inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Acquisition-related contingent consideration - short-term		0
Acquisition-related contingent consideration - short-term [Member] | Significant unobservable inputs (Level 3) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Acquisition-related contingent consideration - short-term	6,027	4,925
Acquisition-related contingent consideration - long-term [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Acquisition-related contingent consideration - long-term	2,688	3,762
Acquisition-related contingent consideration - long-term [Member] | Quoted prices In active markets for identical assets (Level 1) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Acquisition-related contingent consideration - long-term		0
Acquisition-related contingent consideration - long-term [Member] | Significant other observable inputs (Level 2) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Acquisition-related contingent consideration - long-term		0
Acquisition-related contingent consideration - long-term [Member] | Significant unobservable inputs (Level 3) [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Acquisition-related contingent consideration - long-term	$ 2,688	$ 3,762

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Cost Of Revenues

9 Months Ended

Sep. 30, 2012

Other Cost and Expense Disclosure, Operating [Abstract]

Cost Of Revenues

NOTE 14. COST OF REVENUES

The components of Cost of revenues for the three and nine months ended September 30 (in thousands) were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Cost of net pharmaceutical product sales	$	222,830	$	208,666	$	735,359	$	609,878
Cost of device revenues	40,886		64,011		121,972		75,541
Cost of service and other revenues	30,551		29,495		96,326		85,008
Total cost of revenues	$	294,267	$	302,172	$	953,657	$	770,427