Convertible Notes

9 Months Ended

Sep. 30, 2011

Convertible Notes [Abstract]

Convertible Notes

Note 14—Convertible Notes

2018 Convertible Notes

In February 2011, the Company issued the 2018 Convertible Notes at par that become due on February 1, 2018. The Company received cash proceeds from the sale of the Notes of $222.7 million, net of expenses. The aggregate principal amount of the Convertible Notes sold reflects the full exercise by the underwriters of their option to purchase $30 million principal amount of Convertible Notes to cover over-allotments. The 2018 Convertible Notes bear cash interest at a rate of 4.75% per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2011. The 2018 Convertible Notes may be converted into shares of the Company's common stock based on an initial conversion rate of 86.6739 shares per $1,000 principal amount of Convertible Notes, which represents a conversion price of approximately $11.54 per share. The Company may not redeem the Convertible Notes prior to February 1, 2015. On or after February 1, 2015 and prior to the maturity date, the Company may redeem for cash all or part of the Convertible Notes at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. This conversion rate will be adjusted if the Company makes specified types of distributions or enter into certain other transactions with respect to the Company's common stock.

The 2018 Convertible Notes may only be converted: (1) during any calendar quarter commencing after March 31, 2011 (and only during such calendar quarter), if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day; (3) if the Company calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. As of September 30, 2011, the 2018 Convertible Notes were not convertible.

As required for cash settled Convertible Notes, the debt and equity components of the 2018 Convertible Notes were bifurcated and accounted for separately. While the 2018 Convertible Notes are outstanding, their discounted carrying values resulting from the bifurcation are accreted back to their principal amounts over periods that end on the scheduled maturity dates, resulting in the recognition of non-cash interest expense. For the three months ended September 30, 2011, total interest expense for the 2018 Convertible Notes was $3.4 million, consisting of $2.9 million of interest based upon the 4.75% coupon rate coupled with $0.5 million of non-cash interest expense related to the accretion of the discount on the Convertible Notes. For the nine months ended September 30, 2011, total interest expense for the 2018 Convertible Notes was $11.4 million, consisting of $7.3 million of accrued interest based upon the 4.75% coupon rate coupled with $4.1 million of non-cash interest expense related to the accretion of the discount on the Note.

The principal balance, unamortized discount and net carrying amount of the liability components and the equity components of the 2018 Convertible Notes was as follows as of September 30, 2011:

	Liability Component						Equity Component
September 30, 2011	Principal Balance		Unamortized Discount		Net Carrying Amount		Net Carrying Amount
	(In thousands)
2018 Convertible Notes	$	230,000	$	56,155	$	173,845	$	34,427

Debt Discount

The accretion of debt discount expected to be included in the Company's consolidated financial statements is as follows for each of the following calendar years:

2018 Convertible Notes	(In thousands)
Remainder of 2011	$	1,613
2012	$	6,865
2013	$	7,582
2014	$	8,372
2015	$	9,246
Thereafter	$	22,477

Financing Costs

Deferred financing costs are amortized to interest expense over the seven-year contract term of the debt using the effective-interest method. Amortization of deferred financing costs is included as a component of interest expense and was $0.1 million and $0.4 million for the three and nine months ended September 30, 2011.