Convertible Senior Notes

9 Months Ended

Sep. 30, 2011

Convertible Senior Notes [Abstract]

Convertible Senior Notes

9. Convertible Senior Notes

The following table summarizes the principal amount of the liability component, the unamortized discount and the net carrying amount of our convertible senior notes (in thousands):

	September 30, 2011			December 31, 2010
2004 Notes—Due April 15, 2011
Principal amount	$	—		$	200,000
2007 Notes—Due June 15, 2014
Principal amount	$	575,000		$	575,000
Unamortized debt discount		(86,036	)		(106,303	)
Net carrying amount		488,964			468,697
Total convertible senior notes, net		488,964			668,697
Less current portion		—			(200,000	)
Non-current portion	$	488,964		$	468,697

In April 2004, we issued an aggregate principal amount of $200 million of 2.5% convertible senior notes in a private placement, referred to as the 2004 Notes. The 2004 Notes matured and were repaid in full on April 15, 2011.

In June 2007, we issued notes with an aggregate principal amount of $575 million in a private placement, which are due June 15, 2014, referred to as the 2007 Notes. The 2007 Notes are senior unsecured obligations and rank equally with all other existing and future senior unsecured debt. The 2007 Notes bear interest at 3.0% per year, payable in cash semi-annually, and are initially convertible into a total of up to 9.4 million shares of common stock at a conversion price of $61.07 per share, subject to the customary adjustment for stock dividends and other dilutive transactions. We may not redeem the 2007 Notes prior to maturity. In addition, if a "fundamental change" (as defined in the associated indenture agreement) occurs prior to the maturity date, we will in some cases increase the conversion rate for a holder of notes that elects to convert its notes in connection with such fundamental change. The maximum conversion rate is 22.9252 ($43.62 per share), which would result in a maximum issuance of 13.2 million shares of common stock if all holders converted at the maximum conversion rate. The principal amount of the 2007 Notes exceeds the current if-converted value.

The 2007 Notes will be convertible into shares of our common stock unless we elect net-share settlement. If we elect net-share settlement, we will satisfy the accreted value of the obligation in cash and will satisfy the excess of conversion value over the accreted value in shares of our common stock based on a daily conversion value, determined in accordance with the associated indenture agreement, calculated on a proportionate basis for each day of the relevant 20-day observation period. Holders may convert the 2007 Notes only in the following circumstances and to the following extent: (1) during the five business-day period after any five consecutive trading day period (the measurement period) in which the trading price per note for each day of such measurement period was less than 97% of the product of the last reported sale price of our common stock and the conversion rate on each such day; (2) during any calendar quarter after the calendar quarter ending March 31, 2007, if the last reported sale price of our common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter; (3) upon the occurrence of specified events; and (4) the 2007 Notes will be convertible at any time on or after April 15, 2014 through the scheduled trading day immediately preceding the maturity date.

Subject to certain exceptions, if we undergo a "designated event" (as defined in the associated indenture agreement) including a "fundamental change," such as if a majority of our Board of Directors ceases to be composed of the existing directors or other individuals approved by a majority of the existing directors, holders of the 2007 Notes will, for the duration of the notes, have the option to require us to repurchase all or any portion of their 2007 Notes. The designated event repurchase price will be 100% of the principal amount of the 2007 Notes to be purchased plus any accrued interest up to but excluding the relevant repurchase date. We will pay cash for all notes so repurchased. The 2007 Notes have been registered under the Securities Act of 1933, as amended, to permit registered resale of the 2007 Notes and of the common stock issuable upon conversion of the 2007 Notes. The 2007 Notes pay interest in cash, semi-annually in arrears on June 15 and December 15 of each year, which began on December 15, 2007.

The fair value of the 2007 Notes, determined by observed market prices, was $511.8 million and $501.7 million at September 30, 2011 and December 31, 2010, respectively. Since we have the option to elect net-share settlement upon conversion of the 2007 Notes, we account for the 2007 Notes in accordance with the authoritative guidance for accounting for convertible debt instruments that may be settled in cash upon conversion.

The carrying amount of the equity component of the 2007 Notes was $180.3 million at September 30, 2011 and December 31, 2010. At September 30, 2011, the unamortized balance of the debt discount will be amortized over the remaining life of the 2007 Notes, or approximately three years. The effective interest rate on the net carrying value of the 2007 Notes was 9.3% for both the three and nine months ended September 30, 2011 and 2010.

The following table summarizes the interest expense we capitalized associated with construction in progress for the three and nine months ended September 30, 2011 and 2010 (in thousands):

	Three months  ended September 30,				Nine months  ended September 30,
	2011		2010		2011		2010
Coupon interest expense	$	3,076	$	3,007	$	7,060	$	9,448
Non-cash interest from debt discount		4,222		3,768		10,452		11,626
Total capitalized interest	$	7,298	$	6,775	$	17,512	$	21,074