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SECURITIES AND EXCHANGE COMMISSION

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, 2002

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: 39040

ENDO PHARMACEUTICALS HOLDINGS INC.

Delaware		13-4022871
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

        Indicate by check ü 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 þ NO o

        The aggregate number of shares of the Registrant’s common stock outstanding as of November 14, 2002 was 102,064,450.

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ENDO PHARMACEUTICALS HOLDINGS INC.

REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

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				Page
PART I.   FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets (Unaudited)
			September 30, 2002 and December 31, 2001		1
	Consolidated Statements of Operations (Unaudited)
			Three Months and Nine Months Ended September 30, 2002 and 2001		2
	Consolidated Statements of Cash Flows (Unaudited)
			Nine Months Ended September 30, 2002 and 2001		3
	Notes to Consolidated Financial Statements (Unaudited)				4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations				12
	Overview				12
	Critical Accounting Policies				12
	Results of Operations				13
			Goodwill and Other Intangibles		13
			Compensation Related to Stock Options		14
			Other Events		15
			Net Sales		16
			Three Months Ended September 30, 2002 Compared to the Three Months Ended September 30, 2001		17
			Nine Months Ended September 30, 2002 Compared to the Nine Months Ended September 30, 2001		18
			Liquidity and Capital Resources		20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk				21
Item 4.	Controls and Procedures				21

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PART II.   OTHER INFORMATION
Item 1.	Legal Proceedings				22
Item 2.	Changes in Securities and Use of Proceeds				23
Item 3.	Defaults Upon Senior Securities				23
Item 4.	Submission of Matters to a Vote of Security Holders				23
Item 5.	Other Information				23
Item 6.	Exhibits and Reports on Form 8-K				24
	Signatures				25
	Certifications				26

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Forward Looking Statements

        We have made “forward-looking statements” in this document within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These statements, including estimates of future net sales and consolidated EBITDA contained in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed results of operations. Also, statements including words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” or similar expressions are forward-looking statements. 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 in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this Report could affect our future financial results and could cause our actual results to differ materially from those expressed in forward-looking statements contained in this Report. Important factors that could cause our actual results to differ materially from the expectations reflected in the forward-looking statements in this Report include, among others:

We do not undertake any obligation to update our forward-looking statements after the date of this Report for any reason, even if new information becomes available or other events occur in the future.

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PART I

FINANCIAL INFORMATION

Item 1.  Financial Statements

ENDO PHARMACEUTICALS HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)

		September 30,				December 31,
		2002				2001
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	36,545			$	95,357
Accounts receivable, net			111,203				85,329
Inventories			33,259				27,766
Prepaid expenses			4,615				5,527
Deferred income taxes			42,574				26,946
Total current assets			228,196				240,925
PROPERTY AND EQUIPMENT, Net			10,477				9,883
GOODWILL			181,079				182,318
OTHER INTANGIBLES, Net			11,940				12,495
DEFERRED INCOME TAXES			24,678				23,420
RESTRICTED CASH							150
OTHER ASSETS			1,665				1,804
TOTAL ASSETS		$	458,035			$	470,995
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	46,977			$	30,705
Accrued expenses			70,276				50,176
Income taxes payable			2,681				3,526
Current portion of long-term debt							91,259
Total current liabilities			119,934				175,666
OTHER LIABILITIES			231				207
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Preferred Stock, $.01 par value; 40,000,000 shares authorized; none issued Common Stock, $.01 par value; 175,000,000 shares authorized; 102,064,450 and 102,063,950 issued and outstanding at September 30, 2002 and December 31, 2001, respectively			1,021				1,021
Additional paid-in capital			552,995				519,316
Accumulated deficit			(216,146	)			(225,215	)
Total Stockholders’ Equity			337,870				295,122
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	458,035			$	470,995

See Notes to Consolidated Financial Statements

1

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ENDO PHARMACEUTICALS HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except share data)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2002				2001				2002				2001
NET SALES		$	110,554			$	66,268				285,482			$	173,507
COST OF SALES			24,392				20,622				71,088				54,303
GROSS PROFIT			86,162				45,646				214,394				119,204
COSTS AND EXPENSES:
Selling, general and administrative			28,753				19,588				79,898				54,931
Research and development			15,352				7,886				43,890				25,396
Depreciation and amortization			692				12,394				2,168				37,170
Compensation related to stock options - primarily selling, general and administrative			40,406				37,253				40,406				37,253
Purchased in-process research and development			13,334								13,334
Manufacturing transfer fee			9,000								9,000
OPERATING (LOSS) INCOME			(21,375	)			(31,475	)			25,698				(35,546	)
INTEREST EXPENSE, Net of interest income of $376, $607, $1,024 and $2,423 respectively			1,031				2,686				4,302				9,129
(LOSS) INCOME BEFORE INCOME TAX (BENEFIT)			(22,406	)			(34,161	)			21,396				(44,675	)
INCOME TAX (BENEFIT)			(4,098	)			(1,168	)			12,327				(175	)
NET (LOSS) INCOME		$	(18,308	)		$	(32,993	)		$	9,069			$	(44,500	)
NET (LOSS) INCOME PER SHARE:
Basic		$	(.18	)		$	(.37	)		$	.09			$	(.50	)
Diluted		$	(.18	)		$	(.37	)		$	.09			$	(.50	)
NET (LOSS) INCOME PRO FORMA TO EXCLUDE AMORTIZATION OF GOODWILL AND WORKFORCE-IN-PLACE:		$	(18,308	)		$	(13,868	)		$	9,069			$	(5,886	)
NET (LOSS) INCOME PER SHARE PRO FORMA TO EXCLUDE AMORTIZATION OF GOODWILL AND WORKFORCE-IN-PLACE:
Basic		$	(.18	)		$	(.16	)		$	.09			$	(.07	)
Diluted		$	(.18	)		$	(.16	)		$	.09			$	(.07	)
WEIGHTED AVERAGE SHARES:
Basic			102,064				89,139				102,064				89,139
Diluted			102,064				89,139				102,245				89,139

See Notes to Consolidated Financial Statements

2

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ENDO PHARMACEUTICALS HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)

	Nine Months Ended
	September 30,
	2002				2001
OPERATING ACTIVITIES:
Net Income (Loss)	$	9,069			$	(44,500	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		2,168				37,170
Purchased in-process research and development		13,334
Amortization of deferred financing costs		290				1,165
Accretion of promissory notes		4,627				3,771
Deferred income taxes		(14,304	)			(1,100	)
Compensation related to stock options		40,406				37,253
Changes in assets and liabilities which provided (used) cash:
Accounts receivable		(25,874	)			(1,107	)
Inventories		(5,493	)