Stockholder's Equity

6 Months Ended

Jun. 30, 2011

Stockholder's Equity

Stockholder's Equity

Note 10—Stockholder's Equity

In February 2011, the Company issued $230 million principal amount of the 2018 Convertible Notes at par that become due on February 1, 2018. As part of the accounting for the convertible notes, the Company bifurcated the conversion feature and recorded $34.4 million to additional paid-in-capital, net of a deferred tax liability of $23.9 million as well as equity issuance costs of $1.9 million. See Note 14 to the consolidated financial statements for more details.

On April 8, 2009, the Company raised $31.0 million from a registered direct offering, which yielded approximately $29.0 million in cash, net of approximately $2.0 million of offering costs which were charged to additional paid-in-capital. The Company issued 5,927,343 shares of its common stock to existing and new institutional investors as part of the offering. The investors also received warrants to purchase up to 5,038,237 shares of the Company's common stock at an initial exercise price of $10.46 per share.

The Company's warrant liability was marked-to-market each reporting period with the change in fair value recorded as a gain or loss within Other Expense, net on the Company's consolidated statement of operations until the warrants were exercised, expire or other facts and circumstances led the warrant liability to be reclassified as an equity instrument. The fair value of the warrant liability was determined at each reporting period by utilizing a Monte Carlo simulation model that takes into account estimated probabilities of possible outcomes provided by the Company. At the date of the transaction, April 8, 2009, the fair value of the warrant liability was $12.6 million.

During the six months ended June 30, 2010, the Company recorded income of $8.3 million within Other Income, net on its consolidated statement of operations to reflect the decrease in the valuation of the warrants, prior to being exercised.

During the year ended December 31, 2010, holders of the Company's warrants exercised warrants to purchase an aggregate of 5,038,237 shares of the Company's common stock, either through a cashless exercise or cash exercise. The Company received an aggregate of $8.5 million of cash proceeds from the cash exercises of warrants to purchase an aggregate of 812,617 shares of common stock. The remainder of the warrants were exercised via a cashless net share settlement process, whereby warrants to purchase an aggregate of 4,225,620 shares of common stock were exercised, resulting in the forfeiture of 1,997,657 shares in satisfaction of the warrant exercise price, and the issuance of 2,227,963 shares of common stock. As of December 31, 2010, all of the warrants had been exercised and no warrants to purchase shares of the Company's common stock remained outstanding. As all of the warrants have been exercised and are no longer outstanding, the Company's warrant liability was completely converted into stockholders' equity as of December 31, 2010.