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Domestic orders placed Monday - Friday by 6 p.m. Eastern Time will be packed and shipped the same day, pending verification of billing information and the shipping method selected. International orders and orders containing gift cards, out-of-stock items or refrigerated items will be processed as quickly as possible, but won't necessarily be shipped out the same day.
Excludes all orders placed on major US holidays (Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and New Year's Day).
Look for chuck steak that has a clear, red color. The normal color of beef is purplish-red, but it takes on a cherry-red hue known as the "bloom" when the meat is exposed to oxygen. While the exterior is bright red, the interior of the meat retains this darker color. Vacuum-packed chuck steak also shows the purplish color. Packaged chuck steak should be cold and the packaging free of punctures or tears; vacuum-packed steak should have its seal intact. The beef should be firm to the touch. Check the label for the "sell-by" date and make sure to buy it before or on that date.
The top blade cut is the most tender of the chuck steaks.
Also called beauty steak or chuck tender steak, boneless chuck eye is one of the more tender chuck steaks and can be grilled or broiled if it's marinated first.
The seven-bone or center chuck gets its name from its bone, which is shaped like the number seven. This steak lends itself well to braising.
Arm steak, sometimes called round bone chuck, is a less-tender cut that's good for braising.
Cut from behind the arm steak, the shoulder steak is suitable for braising.
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The information presented in the Food Guide is for informational purposes only and was created by a team of US-registered dietitians and food experts. Consult your doctor, practitioner, and/or pharmacist for any health problem and before using any supplements, making dietary changes, or before making any changes in prescribed medications. Information expires June 2016.
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When Panagiotis Nellas Was a Novice Under Saint Paisios
6 minutes ago
Reflections on the Orthodox faith and life in this crazy 21st century world by an Orthodox priest and a few of his friends.
Is there a need to clarify the use of the word "Catholic" in this post?
Yes. Here the word "Catholic" should be understood in the sense of "whole" and "universal" rather than as referring to the Roman Catholic Church.

subset: commoncrawl


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Certificate in Screenwriting
College of Arts, Social Sciences, & Celtic Studies
Course overview
The Certificate in Screenwriting offers a basic introduction to the theory and practice of screenwriting. The core objective of the programme is twofold: to verse students in the craft of screenwriting, and help them explore and express their own ideas in an encouraging, supportive and fun environment.
Who is this course intended for?
The Certificate programme is open to anyone with an interest in film and screenwriting
Key facts
Entry requirements
The Certificate programme is open to anyone with an interest in film and screen writing who wish to explore their ideas and writing skills. Candidates will be required to submit a creative writing sample as part of this application to demonstrate their writing ability.
Additional requirements
1 year, part-time
Next start date: Please contact the Programme Coordinator
ECTS weighting: 15
Average intake: Unlimited
Closing date: Applications have closed for 2014-2015
NFQ level: 7
Course outline
The course will comprise of 3 core modules:
1. Introduction to Screenwriting: Writing a Short Film
Aims & Objectives
To introduce students to the idea and reality of cinematic writing.
To help students explore and develop their own ideas and writing style.
Assessment: Short Film Script (5 ECTS)
2. Screenwriting Theory & Practice: Developing a Feature Film Idea
Aims & Objectives
To advance understanding of the fundamentals of screenwriting and the craft of story structure
To develop student's writing practice; to 'pitch' ideas and write synopses and treatments.
To analyse their own and classmate's work.
Assessment: Feature Film Synopsis and Treatment. (5 ECTS)
3. New Screen Stories: Writing for TV and Digital Narrative
Aims & Objectives
To expose students to the various outlets for screen narrative.
To develop ideas and writing style appropriate for different outlets.
To explore emerging opportunities for screen story; e.g animation & gaming.
Assessment: TV Drama or Web Drama Proposal and Outline (5 ECTS)
Applications and selections
Applications have closed for 2014-2015
A fees scholarship of up to 30% may be available for students who wish to upskill for the purposes of re-employment. Students must be registered as unemployed and in receipt of one of the following:
- Job Seekers Benefit
- Job Seekers Allowance
- One-Parent Family Allowance
- Disability Allowance
- Social Insurance Contribution Credits
- Community Employment Scheme
Requirements and assessment
Find out more
Ms Jenny Roche
Huston School of Film & Digital Media
NUI Galway
Tel: 091 494182
Email: email@example.com
Fees for this course
EU (Total): €970 per year
Non-EU (Total): €1,470 per year
A fees scholarship of up to 30% may be available for students who wish to upskill for the purposes of re-employment - see section titled "Applications and selections" below for further details.
Fees for all Adult Learning and Professional Development courses
Past students
Jamie Sweeney
I cannot recommend this course highly enough. It gave me a much clearer understanding of how to write a script as well as recognising the fundamental principles that make a story "work". The modules focused on the core values of screenwriting and were brilliantly taught by experienced writers and film-makers with a love and passion for the craft. Along with the fantastic teaching staff I met a group of like-minded, talented people who all gained a great deal from the classes and projects. Through this course I managed to develop two short scripts which are currently under option with a production company. Anyone with a genuine interest in screenwriting should do this course.


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Innosilicon Technology Ltd IP Catalog
Innosilicon Technology Ltd
INNOSILICON is a world class innovative fabless IP design company focusing on high performance PHYs, HD mixed signal IP product with stellar KK production record with leading market shares. Our IPs are available in SMIC, TSMC and GF process from 0.18um to 28nm. With especially strong production presence in 0.11um, 55nm, 40nm and 28nm.Innosilicon Technology Ltd IP Listing
46 Products Listed in the following categories
Corporate Headquarters
Innosilicon Technology Ltd
10th Floor, Building A2, #77 Optical Valley Ave, Optical Valley Financial Harbor JiangXia District, Wuhan, Hubei China Help Desk
Have a Innosilicon Technology Ltd representative
contact me


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Event Listing
Multiple Days: 03/12/2014, 04/09/2014, 05/14/2014, 09/10/2014, 10/08/2014, 11/12/2014
Channel Islands National Park
From Shore to Sea Lecture Series
The "From Shore to Sea" lecture series is sponsored by Channel Islands National Park. The purpose of the series is to further the understanding of current research on the Channel Islands and surrounding waters.
The lectures occur six times a year at 7:00 p.m. on the second Wednesday of the month at the Channel Islands National Park Robert J. Lagomarsino Visitor Center, 1901 Spinnaker Drive in the Ventura Harbor. The programs are free and open to the public.
March 12
The Songbirds of the Channel Islands, Scott SilletApril 9
Research at the New Santa Rosa Island Field Station, Cause HannaMay 14
The Channel Islands Biological Survey 1939-1941, Corinne Heyning
September 10
A History of Aviation in the Northern Channel Islands, Chuck Rennie
October 8
Peregrine Falcons on the Channel Islands, Peter SharpeNovember 12
Location: The Robert J. Lagomarsino Visitor Center, Channel Islands National Park | Map Time: 7:00 PM to 8:30 PM Fee Information: Free Contact Name: Visitor Center Contact Email: firstname.lastname@example.com Contact Phone Number: (805) 658-5730
Flora of the Northern Channel Islands, Steve Junak
More »


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From Wikipedia, the free encyclopedia - View original article
Pepsi One logo 2005-2012 | |
Type | Diet Cola |
Manufacturer | PepsiCo |
Country of origin | USA |
Introduced | 1998 |
Related products | Pepsi Max, Pepsi X, Diet Pepsi, Diet Coke, Coca-Cola Zero |
This article includes a list of references, related reading or external links, but its sources remain unclear because it lacks inline citations. (March 2013) |
Pepsi One logo 2005-2012 | |
Type | Diet Cola |
Manufacturer | PepsiCo |
Country of origin | USA |
Introduced | 1998 |
Related products | Pepsi Max, Pepsi X, Diet Pepsi, Diet Coke, Coca-Cola Zero |
Pepsi One, corporately styled PEPSI ONE (so named because it contains one calorie per eight-fluid ounce [230 ml] serving), is a sugar-free cola, marketed by PepsiCo in the United States as an alternative to regular Pepsi and Diet Pepsi.
On June 30, 1998, the artificial sweetener acesulfame potassium (Ace-K) was approved for use by the Food and Drug Administration. PepsiCo responded within one hour, announcing the introduction of Pepsi One (which reached store shelves the following October). This new variety was based upon an earlier product (sold in other countries) called Pepsi Max, but it featured a formula and flavor profile developed specifically for the U.S. market.
The launch of Pepsi One included an advertising campaign featuring the slogan "just one calorie." Subsequently, comedian Tom Green appeared as the spokesperson.
Before 2012, Pepsi One was the last Pepsi variant to include the old logo used from 2003 to 2008, while all the other Pepsi variants had been using the current logo used since late 2008. However, Pepsi One's logo was later modernized with the current logo to be in line with the other flavors.
In the 1980s and early 1990s, Diet Pepsi was also marketed as having one calorie per serving.
On April 7, 2010, it was announced that Pepsi One would be the title sponsor of Toyota Speedway at Irwindale's Super Late Models, the track's top division. The series will be called the NASCAR Pepsi One Super Late Models.


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During Engineers Week, Keisha Christian, a junior chemical engineering student demonstrates the effect of different catalysts on the rate of Hydrogen Peroxide decomposition.
John McNeese Park officially opened on October 25, 2012
John McNeese Park officially opened on October 25, 2012. John McNeese is the namesake of the university and was the first superintendent of schools in Imperial Calcasieu Parish. During his 25 years as superintendent, he directed the construction of elementary and high school buildings, increased student enrollment and improved teacher qualifications.
Located near the center of campus, the area features a statue of the renowned educator and university namesake as well as new sidewalks, seating areas, landscaping and lighting.
McNeese Spring Preview Day is Saturday, March 23.
The 2013 McNeese Spring Preview Day is Saturday, March 23.
High school, transfer and graduate students, parents and guests are invited to attend McNeese's High School Preview Day called "Cowboy Q & A Day" from 10 a.m. to 12 p.m. on March 23, 2013.
Order of Omega Greek Honor Society recognizes the top performing Greek students on McNeese's campus.
Order of Omega Greek Honor Society recognizes the top performing Greek students on McNeese's campus. The newest class was recently inducted, pictured below.
The first annual University of Louisiana System Academic Summit will be held on Thursday, April 19 and Friday, April 20, 2012 on the campus of McNeese State University.
Andrew Armand of Lake Charles is the Campus Life Student of the Month for January.
The McNeese State University Cowgirl Kickers will conduct a Kicker Kuties dance clinic from 11:30 a.m. to 4:30 p.m. Saturday, Feb. 25, at Burton Coliseum.
The McNeese State University Department of Performing Arts will present a faculty recital featuring Jan Scott on clarinet, with Lina Morita on piano and guest artist Lin He on violin, at 7:30 p.m. Tuesday, Jan. 24, in Ralph Squires Recital Hall.
The theme of this spring's McNeese State University Senior Adult Group Encounter program is "Louisiana Potpourri."
A contribution of $30,000 has been made to the McNeese State University Foundation for the Ray A. Todd Jr. Scholarship.
McNeese President Dr. Philip C. Williams, from left, accepts the donation from the Todd children: Elizabeth Todd Martel, Barham Todd and Louis Todd.
McNeese Photo


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Human-powered device "unknits" old clothes to reclaim yarn
Just last week, we told you about the Rocking-Knit chair, a student-designed device that utilizes the user's rocking motion to knit a hat. After lots of use, needless to say, such a hat would eventually get worn out. Instead of just throwing it away, however, you could recycle it – using another student-designed contraption, the unknitting machine. Read More
It's reckoned that most of the 22 million tons of rubber that is processed every year worldwide goes into making vehicle tires and that once rubber products reach the end of their useful lives, for the most part they end up being incinerated. Even when the rubber residues are reclaimed and re-used to make new products, the lack of techniques for producing high-quality materials means that the recyclables are relegated to secondary products such as arena or playground floor coverings or padded doormats. Looking for new ways to optimize the recycling of rubber waste, researchers have developed a material called EPMT that has the desired material properties and characteristics for use in the manufacture of high quality products such as wheel and splashguard covers, handles, knobs and steerable casters. Read More
As our smartphones and computers continue to become obsolete and get discarded, the environmental problem of electronic waste gets worse. Needless to say, the greater the number of electronic components that can be reclaimed and reused, the better. That's why scientists from the UK's National Physical Laboratory (NPL) have developed a printed circuit board that falls apart when immersed in hot water. Read More
There are many subjects more interesting than concrete. But the substance is key to structures all over the world. Present concrete recycling methods yield degraded – and inefficient – results. A group of German researchers have taken it upon themselves to dramatically improve on those methods, and the secret to their approach is truly electric. Read More
Abus Ecolution folding bike lock is compact and recyclable
The new Abus Bordo 6000 Ecolution is a folding bike lock with an environmental twist. At the end of the lock's usable life, it can be broken down and fully recycled. The lock makes the already eco-friendly activity of cycling that much friendlier. Read More
ecoATM kiosk gives cash for electrical trash
As the old adage says, "one man's trash is another man's treasure." And in an age when technology is changing at an unprecedented rate, that old saying is truer than ever. Looking to give consumers an easy way to recycle their unwanted mobile phones and MP3 players while also providing a cash incentive, ecoATM has developed an automated kiosk that can differentiate between various devices and provide monetary compensation on the spot. Read More
Sprout ... a living plant from a dying pencil
We live in a throwaway society, where even large and expensive products are merely trashed when they reach the end of their life and/or usefulness. It's a rather sad state of affairs, with waste that could be recycled or reused extensively placed in the ground to rot ... or, in the case of non-biodegradable materials, not rot. It's against this rather depressing backdrop that one group of product designers have created Sprout, an ordinary, everyday pencil which hides a rather special trick up its sleeve. Read More
Although optical drives in consumer notebooks are becoming less common nowadays and we are storing more and more of our digital information on hard drives instead of optical discs, CD/DVD players are still a mainstay of desktop computers and business laptops and new systems often come bundled with discs containing all sorts of never-to-be-used software. With the help of its Laboratories Division, Fujitsu has developed a new recycling system to make new front panels for notebook computers from all the discarded CDs and DVDs collected, sorted and recycled by its five recycling centers across Japan. Read More
You may have heard about the huge floating islands of garbage swirling around in the middle of the Earth's oceans. Much of that waterlogged rubbish is made up of plastic and, like Electrolux with its concept vacuum cleaners, U.K.-based Studio Swine and Kieren Jones are looking to put that waste to good use. As part of an ambitious project, they've come up with a system to collect plastic debris and convert it into furniture. Read More
We have seen wooden-framed computers before, although those have generally been off-the-shelf machines that have simply received a steampunk makeover. A team of engineers from Ireland's MicroPro Computers and Germany's Fraunhofer Institute for Reliability and Microintegration have gone considerably farther, however. Their wood-bodied iameco ("I am eco") v3 touchscreen computer reportedly has 70 percent less carbon footprint than a regular desktop PC with a monitor. Read More
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Network Rail plan to ease Cardiff & valleys congestion
Details of a £200m plan to ease railway congestion in Cardiff and the south Wales valleys have been revealed.
Network Rail says its improvements to stations, lines and signalling equipment could double the rail capacity of the region by 2015.
Passenger demand in Cardiff and the valleys is increasing at 8% on average each year, it said.
Consumer group Passenger Focus hailed the plan as good news for rail travellers in Wales.
Network Rail, which owns and operates Britain's rail infrastructure, predicted that the number of passengers travelling in Cardiff and the valleys would exceed 12m per year by the end of 2015.
It said some 900 trains already travelled daily through the Cardiff area, but the railway needed more capacity by the end of the decade.
The changes would remove the rail bottleneck on the Cardiff city line, said Network Rail, allowing an extra four trains an hour to run through the area.
"Start Quote
End Quote Anthony Smith Passenger FocusThis initiative will help the railway manage the increasing numbers of passengers longer-term"
This would allow for more and longer trains to run on the valley lines, with 600 more seats during rush hours.
More freight trains would run in Cardiff, boosting the business sector, and more robust and efficient signalling equipment would improve reliability of services.
Mike Gallop of Network Rail said the plan would help unlock the untapped potential of the area, meeting a growing demand and paving the way for electrification.
"Wales relies on rail - a reliable and robust railway forms a key pillar for a healthy economy and this scheme will help Wales continue to thrive," he said.
- Extra platform at Cardiff Central
- Refurbished southern entrance at Cardiff Central
- Two extra platforms at Queen Street
- Extra bay platform at Queen Street for Cardiff Bay shuttle service
- Refurbished Queen Street station with new entrance (pictured above)
- Doubling of the Treforest Curve (Cardiff West Junction to Ninian Park) to enable improved frequency of trains onto/from the City lines
- Extra platform at Barry station
- Upgraded freight line at Cogan Junction to enable passenger trains
- Extra platform and passing loop at Tir-phil
- Extra platform at Caerphilly
- Extra platform and passing loop at Pontypridd
- Source: Network Rail
The main engineering work will begin by autumn 2011 and is planned to be completed within three years and in time for new trains to be introduced to the valleys by 2018.
Network Rail is currently tendering for different contractors, including signalling, buildings and track, to help deliver the scheme.
Anthony Smith, Passenger Focus chief executive, welcomed the investment.
"This is a good news story for passengers travelling in Wales," he said.
"Passengers tell us that frequent services and getting a seat are among their top priorities for improvement.
"Forecasts show that the railway is getting busier and this initiative will help the railway manage the increasing numbers of passengers longer-term."
Plans to electrify the Great Western main line between Cardiff and London were announced by the UK government last month.
In February proposals were published for the Cardiff Metro, a system of electrified rail and tram services providing a faster link between Cardiff, Newport and the valleys.
We asked you for your commuting experiences in Cardiff and the valleys.
So the Maesteg line loses out again. The track is so bad on this line that, in parts, the speed limit is still 5 mph. It is single track which linits the service to just about a single train every hour.
I regularly travel between North Wales and Cardiff. I'm pleased that work is being done to improve the Valleys lines, but we desperately need improvement to the North/South infrastructure. It takes around 4 hours to travel between Colwyn Bay and Cardiff, meaning journeys often start at 5.30am. It would be good to know that the powers that be recognise the existence of North Wales and the need for people up here to be able to commute south. It is generally expected that we will travel south rather than those in the south travelling north.
Having recently stopped commuting into Cardiff from Taffs Well for over thirty years, all I can say is "here we go again". From the replacement of old rolling stock with old Sprinters,three coaches to two, to the fairly recent new signalling works and even more recent extension of platform length, there has been no real or sustainable improvement in the Valley Lines service. Anyone who had to wait over three hours at Cathays/Queen Street station because of a fault somewhere during the winter snow can testify to this.
Any investment is excellent news,but they need to remove the bottleneck on the mainline to the east of Cardiff Central. There is little more frustrating than being able to see the station but standing for up to 15 minutes outside it while waiting for a platform. Also, a message to anyone responsible for transport planning in South Wales - we need a multi-modal travel card which can be used on all buses (regardless of operator) and on trains. That might make commuting on public transport a little more affordable.
I travel daily into Cardiff. It would be nice to see 4 carriages on every journey instead of 2, reducing the number of passengers standing, before huge amounts of funding are poured into the upgrading work at the rear of Cardiff Central Station
What really needs to be done is for the line from Porth to Ystrad Rhondda to be doubled again, this is one of the biggest obstacles to recovering from delays on the network. All platforms on the Valleys have been extended to accomodate six car trains but unfortunately the government ensured First Great Western got all the extra units that were due to be sent to Arriva to provide the extra capacity during rush hour.
There really needs to be a train station in the east of Cardiff, like Newport Road or St Mellons. People who want to take the train have to get a bus into the city.
Nice to see some investment in the area at last. However I have to agree with the idea posted here to double the Rhondda line. Not just to Ystrad though, but all to way to Treherbert. Also, I may be wrong, but I am sure Pontypridd had a passing loop until around 10 years ago anyway. So why was it taken away only for a new one to be put in now?
I would like to see a breakdown of the costs for these plans. Judging by the picture for Cardiff Central there's going to be a fair amount of cosmetic work going on for the outside - is it necessary? No point having a pretty, arty exterior when the inside is nothing to shout about.
I'm a regular user of the Coryton service, and apart from the very occasional catastrophes, like the signal failure last month,and the snow problems around Christmas the service is good and well used. But we don't have trains on Sundays, and with the increase of passenger numbers we've seen in the last 5 years it must be financially viable to provide at least an hourly schedule. Currently we're isolated from the Bay and mainline trains on Sundays. So please planners, give us a 7 day service.
It still amazes me the time it takes to complete these works. Are we supposed to be excited about changes completing in seven years time!? More piecemeal approaches by an inefficient monopoly that is Network Rail.
Wouldn't it be a better idea to focus on getting trains to run to the timetable first before throwing cash at expensive exteriors that wont solve anything. I catch the train daily from Porth and it's a miracle when they turn up on time.
Yet another waste of money like the new proposal for Port Talbot. We do NOT need a multimillion pound space station look, all we want is a seat, and fast efficient services as a priority. The space age look can follow when the service matches. Having travelled on the fastest train in the world (in China at 351kmh = 218mph) I see how far behind we are.
Yes what about the Maesteg line. Most of the time it's 2 carriage and only once an hour.


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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 _______________________________ FORM 10-Q _______________________________ (Mark One)
FOR THE TRANSITION PERIOD FROM TO . Commission file number: 001-15989 _______________________________ ENDO HEALTH SOLUTIONS INC. (Exact Name of Registrant as Specified in Its Charter) _______________________________
(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 s 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):
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.
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)
1 ENDO HEALTH SOLUTIONS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except per share data)
See Notes to Condensed Consolidated Financial Statements. 2 ENDO HEALTH SOLUTIONS INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (In thousands)
See Notes to Condensed Consolidated Financial Statements. 3 ENDO HEALTH SOLUTIONS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)
See Notes to Condensed Consolidated Financial Statements. 5 ENDO HEALTH SOLUTIONS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 NOTE 1. BASIS OF PRESENTATION At the Company's 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 June 30, 2012 and the results of our operations and our cash flows for the periods presented. Operating results for the three and six months ended June 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 redeliberate 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. The adoption of this standard, as amended, will not have a significant impact on the Company's Consolidated Financial Statements. 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 will not 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, 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 and accounts payable approximate their fair values. 6 The following table presents the carrying amounts and estimated fair values of certain assets and liabilities as of June 30, 2012 and December 31, 2011 (in thousands):
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 June 30, 2012 and 33% at December 31, 2011 that were based on historic volatility of the Company's common stock and other factors. 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. 7 The fair values of 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 June 30, 2012 includes assets of $1.1 million reported in Prepaid expenses and other current assets and liabilities of less than $0.1 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 amount of $45.0 million, less payments made to date. We believe the carrying amount of this minimum royalty guarantee at June 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 June 30, 2012 and December 31, 2011. The patent litigation settlement liability is discussed in Note 12. Commitments and Contingencies. 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 June 30, 2012 and December 31, 2011. As of June 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:
The Company's financial assets and liabilities measured at fair value on a recurring basis at June 30, 2012 and December 31, 2011, were as follows (in thousands):
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 loss. 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. 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 $8.6 million at June 30, 2012, $8.7 million at December 31, 2011 and $9.0 million on the Qualitest Pharmaceuticals Acquisition Date. The decrease from December 31, 2011 to June 30, 2012 primarily reflects changes of our present value assumptions associated with our valuation model. The decrease in the liability was recorded as a gain and is included in Acquisition-related and integration items, net in the accompanying Condensed Consolidated Statements of Operations. 9 Fair Value Measurements Using Significant Unobservable Inputs 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 June 30, 2012 (in thousands):
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 June 30, 2011 (in thousands):
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 six months ended June 30, 2012 (in thousands):
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 six months ended June 30, 2011 (in thousands):
11 The following is a summary of available-for-sale securities held by the Company as of June 30, 2012 and December 31, 2011 (in thousands):
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. As previously discussed, 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 June 30, 2012 and December 31, 2011, our equity securities consisted of investments in the stock of three publicly traded companies. As of June 30, 2012, one 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. As of December 31, 2011, two of these 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 June 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. 12 Nonrecurring Fair Value Measurements The Company's financial assets measured at fair value on a nonrecurring basis at June 30, 2012 were as follows (in thousands):
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 June 30, 2012 and December 31, 2011, respectively (in thousands):
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. 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. 13 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 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® PreciseTM, 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 GreenLightTM photovaporization of the prostate. This laser therapy is designed to reduce the comorbidities associated with TURP. AMS's GreenLightTM XPS and MoXyTM Liquid Cooled Fiber provide shorter treatment times with similar long-term results compared to other laser systems. The GreenLightTM 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 SureFlexTM 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 SureFlexTM 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 June 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): 14
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. At June 30, 2012, our measurement period adjustments are complete. 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. 15 The valuation of the intangible assets acquired and related amortization periods are as follows:
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 $1.6 million and $21.1 million of AMS acquisition-related and integration costs that were expensed during the three months ended June 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): 16
The Company recognized $3.3 million and $23.3 million of AMS acquisition-related and integration costs that were expensed during the six months ended June 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):
The following supplemental pro forma information presents the financial results as if the acquisition of AMS had occurred on January 1, 2011 for the three and six months ended June 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.
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, consistent 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). 17 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 our recently acquired Qualitest Pharmaceuticals business. 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 six months ended June 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 six months ended June 30, 2012 and 2011 (in thousands): 18
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 six months ended June 30, 2012 and 2011 (in thousands):
The following represents additional selected financial information for our reportable segments three and six months ended June 30, 2012 and 2011 (in thousands): 19
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 on earnings from continuing operations before income taxes was 7.4% and 41.7% for the three and six months ended June 30, 2012, respectively, compared to 32.7% and 32.8% for the three and six months ended June 30, 2011, respectively. Income tax expense for the three months ended June 30, 2012 decreased 95% from the three months ended June 30, 2011. For the six months ended June 30, 2012 an income tax benefit of $37.6 million was recorded as compared to tax expense of $66.2 million for the six months ended June 30, 2011. These fluctuations are due to decreases in income before income tax and the recording of a $6.3 million benefit for a prior period adjustment during the three months ended June 30, 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. 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. 20 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. 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 our first and second quarter 2012 minimum royalty payments of $7.5 million to Novartis. Accordingly, during the first quarter of 2012, we recorded a reduction to the associated liability and a decrease in the intangible asset. We are amortizing this intangible asset into Cost of revenues over an estimated five-year useful life. Although no minimum royalty was due during the second quarter of 2012, sales of Voltaren® Gel did re-commence in the second quarter and therefore required us to record royalties on actual net sales of Voltaren® Gel in the amount of $6.6 million. These royalties have been expensed as a component of Cost of revenues during the three and six months ended June 30, 2012. 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. 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 six months ended June 30, 2011, we recorded $42.1 million in royalties to Hind which we recorded as a reduction to net sales. 21 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 1 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 $9.0 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. 22 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 new 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, which was settled in early 2012 for $4.9 million. We are amortizing this intangible asset into Cost of revenues over its estimated useful life. Additional payments of approximately 55.4 million euros (approximately $69.7 million at June 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 new 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. 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 UrocidinTM, in the U.S. with an option for global rights. We exercised our option for global rights in the first quarter of 2010. UrocidinTM 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 UrocidinTM. Bioniche will manufacture UrocidinTM and receive a transfer price for supply based on a percentage of Endo's annual net sales of UrocidinTM. Endo may terminate the Bioniche Agreement upon 180 days' prior written notice. 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 AveedTM (the BayerSchering Agreement). The Company is responsible for the development and commercialization of AveedTM 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 AveedTM. Indevus also agreed to pay to BayerSchering 25% of net sales of AveedTM 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 AveedTM for a supply price based on net sales of AveedTM. The supply price is applied against the 25% of net sales owed to Bayer |


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