Notes Payable

Notes payable consist of the following:



As of	July 31, 2012		January 31, 2012
4.00% Debentures due 2031	$	215,837	$	213,224
Other	1,369		1,349
Notes payable	$	217,206	$	214,573

4.00% Debentures due 2031: In April 2011, we issued $253,000 of 4.00% Convertible Subordinated Debentures (4.00% Debentures) due 2031 in a private placement pursuant to SEC Rule 144A under the Securities Act of 1933. Interest on the 4.00% Debentures is payable semi-annually in April and October.

The 4.00% Debentures are convertible, under certain circumstances, into our common stock at a conversion price of $20.538 per share for a total of 12,319 shares as of July 31, 2012. These circumstances include:


•	The market price of our common stock exceeding 120% of the conversion price;


•	A call for redemption of the 4.00% Debentures;


•	Specified distributions to holders of our common stock;


•	If a fundamental change, such as a change of control, occurs;


•	During the two months prior to, but not on, the maturity date; or


•	The market price of the 4.00% Debentures declining to less than 98% of the value of the common stock into which the 4.00% Debentures are convertible.

Upon conversion of any 4.00% Debentures, a holder will receive:


(i)	Cash up to the principal amount of the 4.00% Debentures that are converted; and


(ii)	Cash or shares of common stock, at our election, for the excess, if any, of the value of the converted shares over the principal amount.

If a holder elects to convert their 4.00% Debentures in connection with a fundamental change in the company that occurs prior to April 5, 2016, the holder will also be entitled to receive a make whole premium upon conversion in some circumstances.

We may redeem some or all of the 4.00% Debentures for cash on or after April 5, 2016 at the following redemption prices expressed as a percentage of principal, plus any accrued and unpaid interest:



Period	Price
Beginning on April 5, 2016 and ending on March 31, 2017	101.143	%
Beginning on April 1, 2017 and ending on March 31, 2018	100.571	%
On April 1, 2018 and thereafter	100.000	%

The holders, at their option, may redeem the 4.00% Debentures in whole or in part for cash on April 1, 2018, April 1, 2021, and April 1, 2026, and in the event of a fundamental change in the company. In each case, our repurchase price will be 100% of the principal amount of the 4.00% Debentures plus any accrued and unpaid interest.

As the 4.00% Debentures contain a conversion feature that allows the debt to be settled in cash upon conversion, we separately account for the implied liability and equity components of the 4.00% Debentures. The principal amount, unamortized debt discount, net carrying amount of the liability component, and carrying amount of the equity component of the 4.00% Debentures are as follows:



As of	July 31, 2012			January 31, 2012
Principal amount	$	253,000		$	253,000
Unamortized debt discount	(37,163		)	(39,776		)
Net carrying amount of the liability component	$	215,837		$	213,224
Equity component	$	43,930		$	43,930

The unamortized debt discount will be amortized to interest expense using the effective interest method through March 2018.

We recognized the following amounts in interest expense in the condensed consolidated statement of income related to the 4.00% Debentures:



	Three months ended July 31,				Six months ended July 31,
	2012		2011		2012		2011
Interest expense at the contractual interest rate	$	2,530	$	2,530	$	5,060	$	3,289
Amortization of debt discount	$	1,318	$	1,228	$	2,613	$	1,632

The effective interest rate on the 4.00% Debentures was 7.25% for the six months ended July 31, 2012.

6.25% Debentures due 2026: During the six months ended July 31, 2011, we redeemed the remaining $196,509 principal amount of the 6.25% Convertible Subordinated Debentures (6.25% Debentures) due 2026 utilizing proceeds received from the issuance of the 4.00% Debentures and cash on hand. In connection with this redemption, we incurred a before tax net loss on the early extinguishment of debt of $11,192, which included a $6,190 write-off of net unamortized debt discount, a $3,518 premium on redemption of the 6.25% Debentures, and a write-off of $1,484 for the unamortized debt issuance costs. This loss is included in interest expense on the condensed consolidated statement of income. No balance remained outstanding following this redemption.

We recognized the following amounts in interest expense in the condensed consolidated statements of income related to the 6.25% Debentures:



	Three months ended July 31,				Six months ended July 31,
	2012		2011		2012		2011
Interest expense at the contractual interest rate	$	—	$	—	$	—	$	2,900
Amortization of debt discount	$	—	$	—	$	—	$	793

Term Loan due 2013: In April 2010, we entered into a three-year term loan (Term Loan) for $20,000 to repay borrowings under our revolving credit facility used to purchase office buildings in Fremont, California. During the six months ended July 31, 2011, we repaid the remaining obligation of $18,500 under the Term Loan utilizing proceeds received from the issuance of the 4.00% Debentures. In connection with this repayment, we incurred a before tax net loss on the early retirement of debt of $312, representing the write-off of the unamortized debt issuance costs. This loss is included in interest expense on the condensed consolidated statement of income. No balance remained outstanding following this repayment.

Other Notes Payable: In November 2009, we issued a subordinated note payable as part of a business combination. The note bears interest at a rate of 3.875% and is due in full along with all accrued interest on November 17, 2012.