Convertible Debt and Credit Facility

3 Months Ended

Mar. 31, 2012

Convertible Debt and Credit Facility [Abstract]

Convertible Debt and Credit Facility

7.   Convertible Debt and Credit Facility

During December 2005, the Company issued $121.0 million of 2.875% senior subordinated convertible notes ("Notes") due December 15, 2035. The Company subsequently repurchased $27.9 million of the Notes during 2009 which reduced the outstanding principal amount to $93.1 million. Since the Notes are convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement), the Company separately accounts for the liability and equity components of the Notes in a manner that reflects the Company's nonconvertible debt borrowing rate as interest cost is recognized.

As of March 31, 2012 and December 31, 2011, long-term debt and the equity component (recorded in additional paid in capital, net of income tax benefit), determined in accordance with the accounting guidance for convertible debt, comprised the following (in thousands):

	March 31, 2012			December 31, 2011
Outstanding debt
Principal amount	$	93,100		$	93,100
Unamortized discount		(2,836	)		(3,806	)
Net carrying amount		90,264			89,294
Current portion of outstanding debt		90,264			89,294
Noncurrent  portion of outstanding debt	$	-		$	-
Equity component, net of income tax benefit	$	16,399		$	16,399

The discount on the liability component of long-term debt is being amortized using the effective interest method based on an annual effective rate of 7.5%, which represented the market interest rate for similar debt without a conversion option on the issuance date, through December 2012, which coincides with the first date that holders of the Notes can exercise their put option as discussed below. Interest expense on the Notes, excluding capitalized interest, for the three months ended March 31, 2012 and 2011 included the following (in thousands):

	Three Months Ended March 31,
	2012		2011
Contractual interest coupon	$	665	$	662
Non-cash amortization of discount on the liability component		971		892
Non-cash amortization of debt issuance costs		98		92
	$	1,734	$	1,646

The Notes contain put options, which may require the Company to repurchase in cash all or a portion of the Notes on December 15, 2012, December 15, 2015, December 15, 2020, December 15, 2025, and December 15, 2030 at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased plus accrued and unpaid interest up to but excluding the repurchase date.

In December 2005, the Company established an unsecured $10.0 million line of credit ("2005 LOC") which will expire on May 1, 2014. As of March 31, 2012, there were no outstanding amounts on the 2005 LOC. However, the available line of credit at March 31, 2012 has been reduced by outstanding letters of credit in the aggregate amount of $49,000. The interest rate on the 2005 LOC was 1.2% as of March 31, 2012 which was based on the LIBOR rate for a period of one month, plus a margin of 1.0%. In June 2011, the Company established a separate unsecured $5.0 million line of credit ("2011 LOC") that was increased to $7.0 million on December 19, 2011 and will mature on April 1, 2013. The Company expects to renew the 2011 LOC at that time for multiple years. As of March 31, 2012, there were no outstanding amounts on the 2011 LOC. However, the available line of credit at March 31, 2012 has been reduced by outstanding letters of credit in the aggregate amount of $5.7 million. The interest rate on the 2011 LOC was 1.2% as of March 31, 2012 which was based on the LIBOR rate for a period of one month, plus a margin of 1.0% percent. In April 2012, the Company finalized the transfer of the outstanding letters of credit under the 2005 LOC to the 2011 LOC and closed the 2005 LOC.

Pursuant to the bank line of credit, the Company is subject to certain covenants, which include, among other things, the maintenance of specified minimum amounts of net income and liquidity. The Company was in compliance with all covenants at March 31, 2012.

During the three months ended March 31, 2011, the Company capitalized interest of approximately $198,000 in connection with the construction of its new manufacturing plant in Tianjin, China. No interest was capitalized during the three months ended March 31, 2012.