Convertible Senior Notes, Net

In two separate offerings during 2014, we issued an aggregate principal amount of $254.8 million of 2019 Notes, for which we received aggregate net proceeds of approximately $248.6 million, after deducting the underwriting discount and estimated offering expenses payable by us.

During the year ended December 31, 2018, we exchanged or converted $220.3 million in aggregate principal of the 2019 Notes as follows:

(i) on August 2, 2018, we entered into privately negotiated exchange agreements with a limited number of holders of the 2019 Notes pursuant to which we exchanged $206.2 million of the 2019 Notes for an aggregate of (a) 10,020,328 newly issued shares of our common stock, and (b) $39.3 million in cash. We recorded $166.0 million of additional paid-in-capital in the consolidated statement of changes in stockholders' equity in connection with these transactions,

(ii) certain holders elected to convert $14.1 million of the 2019 Notes through multiple transactions for an aggregate of (a) 808,148 newly issued shares of our common stock, and (b) $0.2 million in cash. We recorded $13.9 million of additional paid-in-capital in the consolidated statement of changes in stockholders' equity in connection with these transactions.

During the year ended December 31, 2018, we recorded a loss on early extinguishment of debt of $2.6 million, in connection with the exchange and conversions of the 2019 Notes. This includes fees and accelerated amortization of capitalized costs. There was no such loss related to the 2019 Notes during the years ended December 31, 2017 and 2016.

At December 31, 2018, the outstanding 2019 Notes had a carrying value of $34.3 million and an unamortized discount of $0.2 million.

In two separate offerings during 2017, we issued an aggregate principal amount of $345.0 million of the 2022 Notes, for which we received aggregate net proceeds of approximately $337.5 million, after deducting the underwriting discount and offering expenses payable by us. At December 31, 2018, the 2022 Notes had a carrying value of $335.3 million and an unamortized discount of $9.7 million.

During the fourth quarter of 2018, we issued $230.0 million in 2023 Notes, for which we received net proceeds of approximately $223.7 million, after deducting the underwriting discount and offering expenses payable by us. At December 31, 2018, the 2023 Notes had a carrying value of $222.4 million and an unamortized discount of $7.6 million.

The following table summarizes the terms of the Notes ($ in thousands):



	Principal Amount		Coupon Rate		Effective Rate ⁽¹⁾		Conversion Rate ⁽²⁾	Maturity Date	Remaining Period of Amortization
2019 Notes	$	34,482	5.50	%	8.31	%	58.2442	3/15/2019	0.21 years
2022 Notes	345,000		4.75	%	5.60	%	50.2260	8/23/2022	3.65 years
2023 Notes	230,000		5.375	%	6.16	%	48.7187	10/15/2023	4.79 years
Total	$	609,482

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(1)	Effective rate includes the effect of the adjustment for the conversion option (See endnote (2) below), the value of which reduced the initial liability and was recorded in additional paid-in-capital.

(2)

We have the option to settle any conversions in cash, shares of common stock or a combination thereof. The conversion rate represents the number of shares of common stock issuable per one thousand principal amount of the Notes converted, and includes adjustments relating to cash dividend payments made by us to stockholders that have been deferred and carried-forward in accordance with, and are not yet required to be made pursuant to, the terms of the applicable supplemental indenture.

We may not redeem the Notes prior to maturity except in limited circumstances. The closing price of our common stock on December 31, 2018 of $16.66 was less than the per share conversion price of the Notes. As of September 30, 2018, we no longer asserted our intent to fully settle the principal amount of the Notes in cash upon conversion.

On December 14, 2018, pursuant to the terms of the indenture governing the 2019 Notes, we elected to settle conversions on or after December 15, 2018 of the remaining principal of the 2019 Notes, due March 15, 2019, through issuance of shares of our common stock. Noteholders may elect to convert their 2019 Notes to common stock at any time prior to the close of business on March 13, 2019, which is the second trading day immediately preceding the maturity date. The noteholders, if any, that do not convert their 2019 Notes prior to such date will be paid the outstanding principal amount plus accrued and unpaid interest on the maturity date.

In accordance with ASC 470 - Debt, the liability and equity components of convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) is to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. GAAP requires that the initial proceeds from the sale of the Notes be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt that could have been issued by us at such time. We measured the fair value of the debt components of the Notes as of their issuance date based on effective interest rates. As a result, we attributed approximately $26.8 million of the proceeds to the equity component of the Notes ($11.4 million to the 2019 Notes, $11.0 million to the 2022 Notes and $4.4 million to the 2023 Notes), which represents the excess proceeds received over the fair value of the liability component of the Notes at the date of issuance. The equity component of the Notes has been reflected within additional paid-in capital in the consolidated balance sheet as of December 31, 2018. The resulting debt discount is being amortized over the period during which the Notes are expected to be outstanding (the maturity date) as additional non-cash interest expense. The additional non-cash interest expense attributable to each of the Notes will increase in subsequent reporting periods through the maturity date as the Notes accrete to their par value over the same period. When there is a partial or full exchange or conversion of the Notes, we measure the fair value of the debt component on the exchange or conversion date. The fair value of the debt component of the exchanged and converted 2019 Notes exceeded the total consideration to exchange or convert those Notes by $27.2 million, which has been reflected within additional paid-in capital in the consolidated balance sheet as of December 31, 2018.

The aggregate contractual interest expense was approximately $28.2 million, $18.7 million and $14.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. With respect to the amortization of the discount on the liability component of the Notes as well as the amortization of deferred financing costs, we reported additional non-cash interest expense of approximately $7.1 million, $4.7 million and $3.5 million for the years ended December 31, 2018, 2017 and 2016, respectively.