Convertible Preferred Stock

6 Months Ended

Jun. 30, 2011

Convertible Preferred Stock [Abstract]

Convertible Preferred Stock

(9) Convertible Preferred Stock

In July 2004, the Company completed a private placement of Series A-1 Convertible Preferred Stock ("Series A-1 Preferred") to four unaffiliated institutional investors.  The investors were also issued unit warrants to purchase Series A-2 Convertible Preferred Stock.  In 2005, three of the four investors exercised their right to purchase the Series A-2 Convertible Preferred Stock.  We also issued to the investors warrants to purchase shares of our Class A common stock at various exercise prices that range from $6.72 to $7.93, with most of them striking at $6.95.  The conversion, exercise and redemption prices, along with the number of shares and warrants, were adjusted for stock dividends paid on December 31, 2004 and 2005.

On July 13, 2009, the Company converted all of its outstanding Series A-1 and Series A-2 Convertible Preferred Stock into Class A common shares in accordance with the mandatory redemption provision of the preferred shareholder agreement dated July 12, 2004.  The total amount of Class A common shares issued as part of the conversion was 1,706,682, inclusive of pro rata dividends due through the conversion date.  Warrants to purchase shares of Class A common stock are still outstanding until July 2011 and 2012.

There are outstanding warrants to purchase the Company's stock at prices ranging from $6.72 to $7.93, which were issued to investors of the Class A-1 and A-2 preferred stock.

As of June 30, 2011
Warrants Outstanding		Expiration Date	Strike Price		Fair Value
					(In thousands)
	1,022,471	7/12/11	$	6.95	$	174
	63,961	7/12/12		6.72		83
	55,963	9/30/12		7.93		57
	56,463	10/6/12		7.86		58
	1,198,858				$	372

The fair value of the warrants is calculated using the Black-Scholes option pricing model and is classified as a liability on the balance sheet in the amount of $0.4 million and $1.6 million at June 30, 2011, and December 31, 2010, respectively.  The change in fair value of warrants is reported as a component of revenue in the income statement.  The change in fair value of warrants for the six months ended June 30 caused an increase in revenues of $1.2 million and $0.3 million in 2011 and 2010, respectively.

On July 12, 2011, 255,216 warrant shares were exercised for cash totaling $1.8 million.  The remaining shares were exercised by a cashless provision that resulted in the issuance of 1,989 Class A shares by the Company to the warrant holders.