Stockholders' Equity

3 Months Ended

Mar. 31, 2013

Stockholders' Equity Note [Abstract]

Stockholders' equity

NOTE 11. STOCKHOLDERS’ EQUITY

Stock-Based Compensation

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 $15.3 million and $14.5 million during the three months ended March 31, 2013 and 2012, respectively. As of March 31, 2013, the total remaining unrecognized compensation cost related to all non-vested stock-based compensation awards amounted to $93.5 million.

Stock Options

During the three months ended March 31, 2013 and 2012, the Company granted stock options to employees of the Company as part of their annual stock compensation award and, in certain circumstances, upon their commencement of service with the Company. 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.

A summary of the activity under the Endo 2000, 2004, 2007, and 2010 Stock Incentive Plans and the Endo Health Solutions Inc. Assumed Stock Incentive Plan for the three months ended March 31, 2013 is presented below:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding as of January 1, 2013	8,824,705		$	27.92
Granted	583,045		$	30.70
Exercised	(552,072	)	$	23.21
Forfeited	(398,373	)	$	32.85
Expired	(19,770	)	$	29.83
Outstanding as of March 31, 2013	8,437,535		$	28.24	5.72	$	33,933,099
Vested and expected to vest as of March 31, 2013	7,990,187		$	28.01	5.60	$	33,587,010
Exercisable as of March 31, 2013	4,909,164		$	25.78	4.47	$	28,552,541

The total intrinsic value of options exercised during the three months ended March 31, 2013 and 2012 was $12.8 million and $9.5 million, respectively. The weighted average grant date fair value of the stock options granted in the three months ended March 31, 2013 and 2012 was $9.33 and $10.57 per option, respectively, determined using the following assumptions:

	March 31, 2013		March 31, 2012
Average expected term (years)	5.0		5.0
Risk-free interest rate	0.8	%	0.9	%
Dividend yield	—		—
Expected volatility	33	%	33	%

As of March 31, 2013, the weighted average remaining requisite service period of the non-vested stock options was 2.5 years. As of March 31, 2013, the total remaining unrecognized compensation cost related to non-vested stock options amounted to $28.5 million.

Restricted Stock Units

During the three months ended March 31, 2013 and 2012, the Company granted restricted stock units to employees and non-employee directors of the Company as part of their annual stock compensation award and, in certain circumstances, upon their commencement of service with the Company.

A summary of our restricted stock units for the three months ended March 31, 2013 is presented below:

	Number of Shares		Aggregate Intrinsic Value
Outstanding as of January 1, 2013	2,423,612
Granted	1,306,003
Forfeited	(150,843	)
Vested	(676,149	)
Outstanding as of March 31, 2013	2,902,623		$	88,740,451
Vested and expected to vest as of March 31, 2013	2,473,162		$	72,812,016

As of March 31, 2013, the weighted average remaining requisite service period of the non-vested restricted stock units was 2.7 years. The weighted average grant date fair value of the restricted stock units granted during the three months ended March 31, 2013 and 2012 was $29.53 and $34.93 per unit, respectively. As of March 31, 2013, the total remaining unrecognized compensation cost related to non-vested restricted stock units amounted to $52.6 million.

Restricted Stock Awards

A summary of our restricted stock awards for the three months ended March 31, 2013 is presented below:

	Number of Shares		Weighted Average Fair Value Per Share		Aggregate Intrinsic Value
Non-vested as of January 1, 2013	81,651		$	31.45
Granted	—		$	—
Forfeited	(4,294	)	$	31.52
Vested	(17,424	)	$	31.77	$	535,962
Non-vested as of March 31, 2013	59,933		$	31.35

As of March 31, 2013, the weighted average remaining requisite service period of the non-vested restricted stock awards was approximately 1.4 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 as part of their annual stock compensation award. For grants prior to the first quarter of 2013, PSUs are tied to both Endo’s overall financial performance and Endo’s total shareholder return relative to the total shareholder return of a selected industry group. Beginning in the first quarter of 2013, PSUs are tied primarily to Endo’s total shareholder return relative to the total shareholder return of a selected industry group. PSUs granted during the three months ended March 31, 2013 and 2012 totaled approximately 336,330 and 193,000, respectively. As of March 31, 2013, there was approximately $12.4 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

Pursuant to our share repurchase programs, we did not purchase any shares of our common stock during the three months ended March 31, 2013. We purchased approximately 0.9 million shares of our common stock during the three months ended March 31, 2012 totaling $33.0 million.

Employee Stock Purchase Plan

Compensation expense during the three months ended March 31, 2013 and 2012 related to the Employee Stock Purchase Plan (ESPP) totaled $0.6 million and $0.4 million, respectively. The Company issued 69,846 shares from treasury with a cost totaling $1.6 million during the three months ended March 31, 2013 pursuant to the ESPP and 47,581 shares with a cost totaling $1.4 million during the three months ended March 31, 2012.

Changes in Stockholders’ Equity

The following table displays a reconciliation of our beginning and ending balances in stockholders’ equity for the three months ended March 31, 2013 (dollars in thousands):

	Attributable to:
	Endo Health Solutions Inc.			Noncontrolling interests			Total Stockholders’ Equity
Stockholders’ equity at January 1, 2013	$	1,072,856		$	60,350		$	1,133,206
Net income	15,349			11,254			26,603
Other comprehensive loss	(2,364		)	—			(2,364		)
Compensation related to stock-based awards	15,331			—			15,331
Exercise of options	12,826			—			12,826
Common stock issued from treasury, net of common stock purchased	1,557			—			1,557
Distributions to noncontrolling interests	—			(12,832		)	(12,832		)
Buy-out of noncontrolling interests, net of contributions	—			(1,406		)	(1,406		)
Other	(1,184		)	—			(1,184		)
Stockholders’ equity at March 31, 2013	$	1,114,371		$	57,366		$	1,171,737

The following table displays a reconciliation of our beginning and ending balances in stockholders’ equity for the three months ended March 31, 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	(87,345		)	12,820			(74,525		)
Other comprehensive income	2,242			—			2,242
Compensation related to stock-based awards	14,518			—			14,518
Exercise of options	12,232			—			12,232
Common stock purchased, net of common stock issued from treasury	(31,588		)	—			(31,588		)
Distributions to noncontrolling interests	—			(13,120		)	(13,120		)
Buy-out of noncontrolling interests, net of contributions	—			(849		)	(849		)
Other	1,384			—			1,384
Stockholders’ equity at March 31, 2012	$	1,889,133		$	60,752		$	1,949,885