Fair Value Measurements

6 Months Ended

Jun. 30, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 10 — Fair Value Measurements

Fair value is defined as the amount that would be received on the sale of an asset or paid to transfer an asset in an orderly transaction between market participants at the measurement date. The Company categorizes financial assets and liabilities into the three levels of the fair value hierarchy. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value and bases the categorization within the hierarchy on the lowest level of input that is available and significant to the fair value measurement.

• Level 1 — Quoted prices in active markets for identical assets or liabilities;

• Level 2 — Observable inputs other than Level 1, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

• Level 3 — Significant unobservable inputs supported by little or no market activity or that are based upon the reporting entity’s assumptions about the inputs.

Liabilities Measured at Fair Value on a Recurring Basis

Liabilities required to be measured at fair value on a recurring basis, including identification of the fair value hierarchy of the valuation techniques used by the Company to determine these fair values, are as follows (in thousands):

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
At June 30, 2012:
Common stock warrants	$	—	$	—	$	—	$	—
At December 31, 2011:
Common stock warrants (1)	$	—	$	—	$	16,622	$	16,622

(1) The fair value of common stock warrants is estimated using a Black-Scholes option-pricing model. See Note 12 for additional information regarding warrants.

There were no significant transfers in or out of either Level 1 or Level 2 fair value measurements at June 30, 2012 or December 31, 2011. During the six months ended June 30, 2012, $2.6 million of non-cash gains was recognized as a fair value adjustment within Level 3 of the fair value measurement hierarchy. The change was driven by the change in the fair value per share of the exercisable and contingent warrants primarily resulting from a decrease in the Company’s common share price to $9.53 at June 14, 2012 from $9.96 at December 31, 2011.

On June 14, 2012, contractual terms within the Company’s Exercisable and Contingent Warrant Certificates were modified to eliminate anti-dilution price adjustment provisions and cash settlement provisions related to a change of control. As a result of the amendments, the modified warrants were classified as equity. As of the date of the amendments the Company revalued the warrant liability and recognized $6.5 million and $2.6 million of income for the three and six months ended June 30, 2012, respectively, based upon the market price of the Company’s stock at the effective date of the amendments and the fair value of the Company warrant liability, on the date of the amendment. The revalued fair value of the warrant liability of $14.0 million was reclassified out of the Level 3 hierarchy to additional paid-in-capital on June 14, 2012 and no longer requires fair value adjustments.

For the six months ended June 30, 2012 and the year ended December 31, 2011, there were no transfers in or out of the Level

3 hierarchy.

	Six Months Ended June 30, 2012			Year Ended December 31, 2011
Balance, beginning of period	$	16,622		$	26,193
Fair value adjustments, net		(2,649	)		(9,571	)
Reclassification to additional paid-in-capital		(13,973	)		—
Net transfers in/(out)		—			—
Balance, end of period	$	—		$	16,622

The carrying value and estimated fair value of the Company’s convertible notes and long-term debt are as follows (in thousands):

	June 30, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Convertible senior notes (2008 Notes) (1)	$	53,231	$	56,610	$	65,604	$	69,880
Convertible senior secured notes (2010 Notes) (1)		—		—		34,134		37,561
Capital lease obligations		1,990		1,932		1,647		1,611

(1) The carrying value of the 2008 and 2010 Notes is representative of the discounted debt component only, while the fair value is based on the market value of the respective notes, which includes the associated convertible equity features.

The estimated fair value of the 2008 Notes is based upon quoted market prices. The estimated fair value of the 2010 Notes is based upon rates available for instruments with similar risks and maturities. The fair value of capital lease obligations is based on recent lease rates adjusted for a risk premium. The estimated fair value of the 2010 Notes and long-term debt are measured using Level 2 inputs.

Assets Measured at Fair Value on a Nonrecurring Basis

Non-financial assets, including property, plant and equipment, goodwill and other intangible assets are measured at fair value on a non-recurring basis and are subject to fair value adjustment in certain circumstances. There were no impairments of these assets recorded during the six months ended June 30, 2012 or 2011.