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Note 10 - Long-Term Debt | 3 Months Ended
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Mar. 31, 2016
Long-term Debt, Unclassified [Abstract] |
Long-term Debt | Long-Term Debt The carrying value of our long-term debt at March 31, 2016 and December 31, 2015 was as follows:
(In thousands) |  | March 31, 2016 |  | December 31, 2015
9.000% | Senior Notes due 2017 | $ | 192,783 |  |  | $ | 192,261 |
3.000% | Convertible Senior Notes due 2017 | 19,931 |  |  | 46,115 |
2.250% | Convertible Senior Notes due 2019 | 89,785 |  |  | 341,214 |
5.500% | Senior Notes due 2019 | 296,033 |  |  | 295,751 |
5.250% | Senior Notes due 2020 | 344,406 |  |  | 344,113 |
7.000% | Senior Notes due 2021 | 343,528 |  |  | — |
| Total long-term debt | $ | 1,286,466 |  |  | $ | 1,219,454 |
Senior Notes due 2021 In March 2016, we issued $350 million aggregate principal amount of Senior Notes due 2021 and received net proceeds of approximately $343.5 million. These notes mature on March 15, 2021 and bear interest at a rate of 7.000% per annum, payable semi-annually on March 15 and September 15 of each year, commencing on September 15, 2016. We have the option to redeem these notes, in whole or in part, at any time or from time to time prior to maturity at a redemption price equal to the greater of: (i) 100% of the aggregate principal amount of the notes to be redeemed; and (ii) the make-whole amount, which is the sum of the present value of the remaining scheduled payments of principal and interest in respect of the notes, discounted at the applicable treasury rate plus 50 basis points, plus, in each case, accrued and unpaid interest thereon to, but excluding, the redemption date. The Senior Notes due 2021 have covenants customary for securities of this nature, including covenants related to the payments of the notes, reports, compliance certificates and modification of the covenants. Additionally, the indenture governing the Senior Notes due 2021 includes covenants restricting us from encumbering the capital stock of a designated subsidiary (as defined in the indenture for the notes) or disposing of any capital stock of any designated subsidiary unless either all of the stock is disposed of or we retain more than 80% of the stock. Convertible Senior Notes due 2017 and 2019 In March 2016, we entered into privately negotiated agreements to purchase, for cash or a combination of cash and shares of Radian Group common stock, aggregate principal amounts of $30.1 million and $288.4 million, respectively, of our outstanding Convertible Senior Notes due 2017 and 2019. We funded the purchases with $191.5 million in cash (plus accrued and unpaid interest due on the purchased notes) and by issuing to the sellers approximately 17.0 million shares of Radian Group common stock. These purchases of Convertible Senior Notes due 2017 and 2019 resulted in a pretax charge in the first quarter of 2016 of approximately $55.6 million. This charge represents:
• | the $39.7 million market premium representing the consideration paid to the sellers of the Convertible Senior Notes due 2017 and 2019 in excess of the conversion value of the purchased notes;
• | the $14.8 million difference between the fair value and the carrying value, net of unamortized issuance costs, of the liability component of the purchased notes; and
• | the $1.1 million impact of transaction costs on the purchased notes.
In connection with our March 2016 purchases of Convertible Senior Notes due 2017, we terminated a corresponding portion of the capped call transactions we had entered into in 2010 related to the initial issuance of the Convertible Senior Notes due 2017. As a result of this termination, we received consideration of 0.2 million shares of Radian Group common stock, which was valued at $2.6 million based on a stock price on the closing date of $11.86. In accordance with the accounting standards regarding equity and contracts in an entity’s own equity, the total consideration received was recorded as an increase to additional paid-in capital. The shares of Radian Group common stock received were retired, resulting in a decrease in shares issued and outstanding and a corresponding increase in unissued shares. See Note 16 for additional information regarding Radian Group common stock. Upon the original issuance of the Convertible Senior Notes due 2017 and 2019, in accordance with accounting standards related to convertible debt instruments that may be settled in cash upon conversion, the Company recorded a pretax equity component, net of the capped call transaction (with respect to the Convertible Senior Notes due 2017) and related issuance costs (with respect to the Convertible Senior Notes due 2017 and 2019). The pretax equity component is not subject to remeasurement, and therefore remains unchanged unless a reduction of outstanding principal occurs. As a result of our March 2016 purchases, the remaining pretax equity component associated with the Convertible Senior Notes due 2017 and 2019 decreased from $11.3 million and $75.1 million, respectively, at December 31, 2015 to $5.0 million and $19.6 million, respectively, at March 31, 2016. During the three-month period ended March 31, 2016, our closing stock price did not exceed the thresholds required for the holders of our Convertible Senior Notes due 2017 or our Convertible Senior Notes due 2019 to be able to exercise their conversion rights during the three-month period ending June 30, 2016. In any period when holders of the Convertible Senior Notes due 2017 are eligible to exercise their conversion option, the equity component related to these instruments would be classified as mezzanine (temporary) equity rather than permanent equity, because we are required to settle the aggregate principal amount of the notes in cash. This equity component is the difference between (1) the amount of cash deliverable upon conversion (i.e., par value of debt) and (2) the carrying value of the debt. Issuance and transaction costs incurred at the time of the original issuance of the convertible notes were allocated to the liability and equity components in proportion to the allocation of proceeds and are accounted for as debt issuance costs and equity issuance costs, respectively. The convertible notes are reflected on our condensed consolidated balance sheets as follows:
| Convertible Senior Notes due 2017 |  | Convertible Senior Notes due 2019
(In thousands) | March 31, 2016 |  | December 31, 2015 |  | March 31, 2016 |  | December 31, 2015
Liability component: |  |  |  |  |  |  |
Principal | $ | 22,233 |  |  | $ | 52,370 |  |  | $ | 101,581 |  |  | $ | 389,992 |
Debt discount, net (1) | (2,187 | ) |  | (5,941 | ) |  | (10,716 | ) |  | (44,313 | )
Debt issuance costs (1) | (115 | ) |  | (314 | ) |  | (1,080 | ) |  | (4,465 | )
Net carrying amount | $ | 19,931 |  |  | $ | 46,115 |  |  | $ | 89,785 |  |  | $ | 341,214 |
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(1) | Included within long-term debt and is being amortized over the life of the convertible notes.
The following tables set forth total interest expense recognized related to the convertible notes for the periods indicated:
| Convertible Senior Notes due 2017 |  | Convertible Senior Notes due 2019
| Three Months Ended March 31, |  | Three Months Ended March 31,
($ in thousands) | 2016 |  | 2015 |  | 2016 |  | 2015
Contractual interest expense | $ | 372 |  |  | $ | 3,375 |  |  | $ | 2,013 |  |  | $ | 2,250 |
Amortization of debt issuance costs | 37 |  |  | 318 |  |  | 293 |  |  | 328 |
Amortization of debt discount | 708 |  |  | 5,708 |  |  | 2,909 |  |  | 3,073 |
Total interest expense | $ | 1,117 |  |  | $ | 9,401 |  |  | $ | 5,215 |  |  | $ | 5,651 |

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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