NOTE 18. NET (LOSS) INCOME PER SHARE

The following is a reconciliation of the numerator and denominator of basic and diluted net (loss) income per share for the three and nine months ended September 30, 2014 and 2013 (in thousands, except per share data):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Numerator:
(Loss) income from continuing operations	$	(252,049	)	$	69,175		$	(667,192	)	$	132,577
Less: Net income (loss) from continuing operations attributable to noncontrolling interests	35			—			(639		)	—
(Loss) income from continuing operations attributable to Endo International plc ordinary shareholders	(252,084		)	69,175			(666,553		)	132,577
Income (loss) from discontinued operations attributable to Endo International plc ordinary shareholders, net of tax	—			(28,952		)	(1,283		)	(42,006		)
Net (loss) income attributable to Endo International plc ordinary shareholders	$	(252,084	)	$	40,223		$	(667,836	)	$	90,571
Denominator:
For basic per share data—weighted average shares	153,309			114,327			144,604			112,691
Dilutive effect of ordinary share equivalents	—			2,301			—			2,168
Dilutive effect of 1.75% Convertible Senior Subordinated Notes and warrants	—			3,633			—			2,031
For diluted per share data—weighted average shares	153,309			120,261			144,604			116,890

Basic net (loss) income per share data is computed based on the weighted average number of ordinary shares outstanding during the period. Diluted (loss) income per share data is computed based on the weighted average number of ordinary shares outstanding and, if there is net income from continuing operations attributable to Endo International plc ordinary shareholders during the period, the dilutive impact of ordinary share equivalents outstanding during the period. Ordinary share equivalents are measured under the treasury stock method.

All stock options and stock awards were excluded from the diluted share calculation for the three months ended September 30, 2014 because their effect would have been anti-dilutive, as the Company was in a loss position. However, if the Company was not in a loss position, stock options and stock awards of 0.8 million would have been anti-dilutive, and thus excluded from the diluted share calculation for the three months ended September 30, 2014. Stock options and stock awards of 0.6 million were excluded from the diluted share calculation for the three months ended September 30, 2013 because their effect would have been anti-dilutive. All stock options and stock awards were excluded from the diluted share calculation for the nine months ended September 30, 2014 because their effect would have been anti-dilutive, as the Company was in a loss position. However, if the Company was not in a loss position, stock options and stock awards of 0.8 million would have been excluded from the diluted share calculation for the nine months ended September 30, 2014 because their effect would have been anti-dilutive. Stock options and stock awards of 3.3 million were excluded from the diluted share calculation for the nine months ended September 30, 2013 because their effect would have been anti-dilutive.

The 1.75% Convertible Senior Subordinated Notes due April 15, 2015 are only included in the dilutive net (loss) income per share calculations using the treasury stock method during periods in which the average market price of our ordinary shares was above the applicable conversion price of the Convertible Notes, or $29.20 per share and the impact would not be anti-dilutive. In these periods, under the treasury stock method, we calculated the number of shares issuable under the terms of these notes based on the average market price of the shares during the period, and included that number in the total diluted shares outstanding for the period.

We have entered into convertible note hedge and warrant agreements that, in combination, have the economic effect of reducing the dilutive impact of the Convertible Notes. However, we separately analyze the impact of the convertible note hedge and the warrant agreements on diluted weighted average shares outstanding. As a result, the purchases of the convertible note hedges are excluded because their impact would be anti-dilutive. The treasury stock method is applied when the warrants are in-the-money with the proceeds from the exercise of the warrant used to repurchase shares based on the average stock price in the calculation of diluted weighted average shares. Until the warrants are in-the-money, they have no impact to the diluted weighted average share calculation. The total number of shares that could potentially be included if the warrants were exercised is approximately 3.4 million at September 30, 2014.

The maximum incremental potential dilution of shares that could have occurred if our Convertible Notes and warrants were converted to ordinary shares was 6.8 million shares and 24.0 million shares for the nine months ended September 30, 2014 and 2013, respectively. These amounts were excluded from the diluted net (loss) income per share calculations for those respective periods.