DEBT

Long-term debt consists of the following (in thousands):


	September 30, 2011			December 31, 2010
Convertible notes	$	91,875		$	97,500
Real estate loan		—			2,541

		91,875			100,041
Less unamortized debt discount		(7,610	)		(15,258	)

		84,265			84,783
Less current portion		(84,265	)		(590	)

Total long-term debt	$	—		$	84,193

The Company's outstanding debt consists of convertible bond notes and a revolving credit facility. At September 30, 2011, the Company had no outstanding borrowings under its revolving credit facility and available borrowing capacity of approximately $60 million. During the nine months ended September 30, 2011, the Company used cash on hand to pay in full a $2.5 million real estate note.

The Company accounts for its convertible debt in accordance with ASC 470-20, Debt with Conversion and Other Options. ASC 470 requires the proceeds from the issuance of convertible debt instruments that may be settled in cash upon conversion to be allocated between a liability component and an equity component. The allocation is determined based on the fair value of the convertible debt instruments as if the instruments were issued without the conversion options. During the three months ended September 30, 2011, the Company used cash on hand to repurchase approximately $5.6 million of its $97.5 million outstanding convertible bond notes. ASC 470 requires that upon extinguishment of a convertible debt obligation, the total fair value of the settlement consideration is first allocated to the extinguishment of the liability component in an amount equal to the fair value of that component immediately prior to extinguishment, with any difference between this allocation and the net carrying amount of the liability component recognized in the statement of operations as a gain or loss on debt extinguishment. Any remaining settlement consideration is allocated to the reacquisition of the equity component and recognized as a reduction of stockholders' equity. As a result of the repurchase of a portion of its convertible awards during the period, the Company recorded a loss of approximately $0.6 million as additional interest expense.

The Company determined that the fair value of the debt component of its convertible debt awards was approximately 104%. This fair value measurement was determined based on an analysis prepared by a specialist hired by the Company. The analysis considered the future principal and interest payments as well as an estimated market yield. The market yield was determined by considering the Company's credit worthiness and corroboration of similar debt instruments and was considered a Level 2 measurement in accordance with ASC 820.

As of September 30, 2011, the Company was in compliance with all of the covenants contained in its debt agreements. Failure to comply with the loan covenants might cause lenders to accelerate the repayment obligations under the credit facility, which may be declared payable immediately based on a default and which could result in a cross-default under our convertible notes.

The existing credit facility matures on December 31, 2011, $55 million of which has been extended from October 28, 2011 to December 31, 2012. The Company is exploring other sources of financing that will provide additional borrowing capacity.

The following table provides additional information regarding the Company's convertible debt instruments (in thousands, except conversion price):


	September 30, 2011			December 31, 2010
Principal amount of the liability component	$	91,875		$	97,500
Unamortized discount of liability component		(7,610	)		(15,258	)
Net carrying amount of liability component		84,265			82,242
Carrying amount of the equity component		23,668			23,860
Remaining amortization period of discount		9 months			18 months
Conversion price	$	21.78		$	21.78
Effective interest rate on liability component		18.41	%		18.41	%
If-converted value in excess of principal amount (a)	$	14,127			—
If-converted number of shares to be issued (a)		562			—


	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Interest expense at coupon rate (6.0%)	$	1,422	$	1,462	$	4,347	$	4,387
Non-cash interest in accordance with ASC 470		2,488		2,127		7,133		6,022

Total interest expense recognized on convertible debt instruments	$	3,910	$	3,589	$	11,480	$	10,409

(a)

If-converted value amounts are for disclosure purposes only. The if-converted value in excess of the principal amount and the if-converted number of shares to be issued illustrated above are based on the average stock price of $25.13 during the nine months ended September 30, 2011, which exceeded the conversion price of $21.78.

The notes are convertible if a specified trading price of $28.31 of the Company's common stock (the "trigger price") is achieved and maintained for a specified period. If the holders exercise the conversion feature, the principal amount of the notes is settled in cash upon conversion and the conversion spread is settled in common shares. The trigger price condition was not satisfied during the third quarter of 2011.