Convertible Preferred Stock Warrants

9 Months Ended

Sep. 30, 2011

Convertible Preferred Stock [Abstract]

Convertible Preferred Stock: Warrants

(9) Convertible Preferred Stock:  Warrants

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 ("Series A-2 Preferred").  In 2005, three of the four investors exercised their right to purchase the Series A-2 Preferred.  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 Preferred and Series A-2 Preferred 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.

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.

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 Series A-2 Preferred.  These warrants are outstanding until 2012.

As of September 30, 2011
Warrants Outstanding		Expiration Date	Strike Price		Fair Value
					(In thousands)
	63,961	7/12/12	$	6.72	$	57
	55,963	9/30/12		7.93		37
	56,463	10/06/12		7.86		39
	176,387				$	133

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 $0.1 million and $1.6 million at September 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 nine months ended September 30, 2011 and 2010 caused an increase in revenues of $1.5 million and $0.4 million, respectively.