Fair Value Measurements

9 Months Ended

Sep. 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 a liability in an orderly transaction between market participants at measurement date. The Company categorizes financial assets and liabilities into the three levels of the fair value hierarchy as guidance directs. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value and bases categorization within the hierarchy on the lowest level of input 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 September 30, 2012:
None	$	—	$	—	$	—	$	—
At December 31, 2011:
Common stock warrants (1)	$	—	$	—	$	16,622	$	16,622

(1) The fair value of the common stock warrants was 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 during the year to date periods ended September 30, 2012 and December 31, 2011. During the nine months ended September 30, 2012, $2.6 million of non-cash gains were recognized as fair value adjustments 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 outstanding resultant from a decrease in the Company’s common share price to $9.53 at June 14, 2012 from $9.96 at December 31, 2011.

For the nine months ended September 30, 2012 and the year ended December 31, 2011, there were no transfers in or out of the Level 3 hierarchy.

Changes in Level 3 liabilities are as follows (in thousands):

	Nine Months Ended September 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

Fair Value of Other Financial Instruments

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

	September 30, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Convertible senior notes (2008 Notes) (1)	$	54,062	$	56,263	$	65,604	$	69,880
Convertible senior secured notes (2010 Notes) (1)		—		—		34,134		37,561
Capital lease obligations		1,890		1,869		1,642		1,611

(1) The carrying value of the 2008 and 2010 Notes represents the discounted debt component only, while the fair value of the Notes is based on the market value of the respective notes, including 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 was 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. No impairment of any of these assets was recognized during the nine months ended September 30, 2012 or 2011.