CONVERTIBLE NOTES AND CREDIT FACILITY

3 Months Ended

Mar. 31, 2021

CONVERTIBLE NOTES

Convertible Notes

On September 17, 2019, the Company issued $86.25 million aggregate principal amount of 3.750% Convertible Senior Notes due 2026 (the "Notes"), which included the exercise in full of an $11.25 million purchase option, to certain financial institutions as the initial purchasers of the Notes (the "Initial Purchasers"). The Company pays interest on the Notes semiannually in arrears at a rate of 3.750% per annum on March 15 and September 15 of each year. The Notes are senior unsecured obligations of the Company. The Notes were issued pursuant to an Indenture, dated September 17, 2019 (the “Indenture”), between the Company and U.S. Bank National Association, as trustee. The net proceeds from the sale of the Notes were approximately $83.7 million after deducting the Initial Purchasers' discounts and the offering expenses payable by the Company.

Refer to Note 16, Convertible Notes, in the Notes to Consolidated Financial Statements included in Part II, Item 8 of the Company's 2020 Form 10-K for further information on the Notes.

No portion of the Notes was converted during the three months ended March 31, 2021 and the liability component was classified as long-term debt on the Company's Condensed Consolidated Balance Sheet as of March 31, 2021.

As discussed in Note 1, the Company early adopted ASU 2020-06, effective January 1, 2021, which simplifies the accounting for certain convertible instruments. Under the new standard, qualifying convertible debt is accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. As a result of ASU 2020-06, the Company's cash interest expense is not impacted, however, the Company's non-cash interest accretion is limited to the amortization of debt issuance costs under ASC 835-30. The new effective interest rate of the Notes post-adoption is 4.35%. The Company also reversed the conversion feature amount recorded in APIC and reversed the difference in non-cash interest expense via retained earnings.

The following table summarizes the net carrying amount of the Notes (in thousands):


	March 31, 2021		December 31, 2020
Principal amount of the Notes	$	86,250	$	86,250
Unamortized debt discount	(2,529)		(37,791)
Net carrying amount	$	83,721	$	48,459

Interest expense related to the Notes is comprised of the amortization of the debt discount and debt issuance costs and the contractual coupon interest as follows (in thousands):


	Three Months Ended March 31,
	2021		2020
Interest expense related to contractual coupon interest	$	809	$	809
Interest expense related to amortization of the debt discount	102		1,524
	$	911	$	2,333

As of March 31, 2021, the remaining period over which the unamortized discount will be amortized is 66.0 months.

The estimated fair value of the Notes was $180.4 million and $156.9 million as of March 31, 2021 and December 31, 2020, respectively, determined through consideration of quoted market prices in less active markets. The fair value measurement is classified as Level 2 in the fair value hierarchy, which is defined in ASC 820 as inputs other than quoted prices in active markets that are either directly or indirectly observable. Based on our closing stock price of $168.46 on March 31, 2021, the if-converted value exceeded the aggregate principal amount of the Notes by $81.5 million.