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Debt | 9 Months Ended
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Sep. 30, 2018
Debt |
Debt | 12. Debt The components of the convertible notes are as follows (in thousands):
|  |  |  |  |  | Carrying Amount, |
|  | Interest Rates |  |  |  | September 30, |  | December 31, |
Debt |  | September 30, 2018 |  | Maturities |  | 2018 |  | 2017 |
0.375% Convertible Senior Notes due 2018 |  | 0.375 | % | 2018 |  | $ | 7,648 |  |  | 7,393 |
1.25% Convertible Senior Notes due 2020 |  | 1.25 | % | 2020 |  |  | 17,224 |  |  | 16,608 |
|  |  |  |  |  |  | 24,872 |  |  | 24,001 |
Less current portion |  |  |  |  |  |  | 7,648 |  |  | 7,393 |
|  |  |  |  |  | $ | 17,224 |  | $ | 16,608 |
The carrying amount and fair value of our convertible notes are as follows (in thousands):
|  | September 30, 2018 |  | December 31, 2017 |
|  | Carrying |  |  |  |  | Carrying |  |  |  |
|  | Amount |  | Fair Value |  | Amount |  | Fair Value |
0.375% Convertible Senior Notes due 2018 |  | $ | 7,648 |  | $ | 10,271 |  | $ | 7,393 |  | $ | 14,129 |
1.25% Convertible Senior Notes due 2020 |  |  | 17,224 |  |  | 26,645 |  |  | 16,608 |  |  | 35,431 |
|  | $ | 24,872 |  | $ | 36,916 |  | $ | 24,001 |  | $ | 49,560 |
The fair values of the 0.375% Convertible Senior Notes due 2018 (the “2018 Notes”) and the 1.25% Convertible Senior Notes due 2020 (the “2020 Notes”) are based on data from readily available pricing sources which utilize market observable inputs and other characteristics for similar types of instruments, and, therefore, these convertible senior notes are classified within Level 2 in the fair value hierarchy. Prior to May 14, 2014, the 2018 Notes and 2020 Notes were not convertible except in connection with a make-whole fundamental change, as defined in the respective indentures. Beginning on, and including, May 15, 2014, the 2018 and 2020 Notes are convertible prior to the close of business on the business day immediately preceding May 15, 2018, in the case of the 2018 Notes, and May 15, 2020, in the case of the 2020 Notes, only under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on March 31, 2014 (and only during such calendar quarter), if the last reported sale price of our 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 for the 2018 Notes or 2020 Notes, as applicable, on each applicable trading day; (ii) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2018 Notes or 2020 Notes, as applicable, for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the 2018 Notes or 2020 Notes, as applicable, on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after May 15, 2018, in the case of the 2018 Notes, and May 15, 2020, in the case of the 2020 Notes, until the close of business on the second scheduled trading day immediately preceding the relevant maturity date, the Notes are convertible at any time, regardless of the foregoing circumstances. Upon conversion we will pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at our election. On October 1, 2018, the 2020 Notes became convertible through at least December 31, 2018, based on meeting the conversion criteria related to the sale price of our common stock during the calendar quarter ended September 30, 2018 as described in (i) above. The 2018 Notes will mature in November 2018, and accordingly, are classified in short term liabilities on the condensed consolidated balance sheet as of September 30, 2018. The 2020 Notes are reflected in long term liabilities on the condensed consolidated balance sheet as of September 30, 2018 as management’s intent is to settle any conversions of the 2020 Notes during this period in shares of our common stock. During the nine months ended September 30, 2017, we entered into separately negotiated agreements with certain holders of the 2018 Notes pursuant to which such holders agreed to exchange a total of $367.2 million in aggregate principal amount of the 2018 Notes for the shares of our common stock into which the 2018 Notes were originally convertible, aggregating 7.1 million shares, an additional 0.1 million of premium shares (equivalent to $12.6 million in value) and $2.0 million in cash. Similarly we entered into separately negotiated agreements with certain holders of the 2020 Notes pursuant to which such holders agreed to exchange a total of $355.6 million in aggregate principal amount of the 2020 Notes for the shares of our common stock into which the 2020 Notes were originally convertible, aggregating 6.9 million shares, an additional 0.2 million of premium shares (equivalent to $26.8 million in value) and $7.0 million in cash. Included in the agreements were those with entities affiliated with Julian C. Baker, one of our directors, which agreed to exchange $259.0 million in aggregate principal amount of the 2018 Notes and $274.5 million in aggregate principal amount of the 2020 Notes for an aggregate of 10.6 million shares. Pursuant to the guidance within ASC 470-20-40-20, we measured the difference between the fair value and carrying value of the liability portions of the 2018 Notes and 2020 Notes, which resulted in recording expense related to senior note conversions of $1.4 million related to the 2018 Notes and $5.1 million related to the 2020 Notes. The estimated fair value of the debt component was determined using a valuation model which is subject to judgement. Assumptions used within the valuation model include an estimated credit rating and an estimated market-based cost of debt. These assumptions were used to perform a discounted cash flow analysis on the future interest and principal payments to determine the estimated fair value of the debt at inducement. In addition, the fair value of the premium shares issued pursuant to these agreements as well as the cash paid in connection with the agreements totaled $48.4 million and is also included within expense related to senior note conversions on the condensed consolidated statement of operations during the nine months ended September 30, 2017.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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