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Long-Term Obligations | 12 Months Ended
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Dec. 31, 2011
Long-Term Obligations |
Long-Term Obligations |
7. Long-Term Obligations Long-term obligations are as follows:
|  | December 31, 2011 |  | December 31, 2010 |
--- | --- | --- | --- | --- | ---
(in thousands) |  | Carrying value |  | Estimated fair value |  | Carrying value |  | Estimated fair value |
Convertible subordinated notes |  | $ | 172,500 |  | $ | 189,588 |  | $ | 172,500 |  | $ | 202,391 |
Note payable to lessor |  |  | — |  |  | — |  |  | 42 |  |  | 42 |
Convertible Subordinated Notes In January 2008, the Company closed an underwritten public offering of $172.5 million aggregate principal amount of unsecured convertible subordinated notes which will mature on January 15, 2015. The financing raised proceeds, net of issuance costs, of $166.7 million. The notes bear interest at the rate of 3.0% per year, that is payable semi-annually in arrears in cash on January 15 and July 15 of each year, beginning on July 15, 2008. The fair value of debt was estimated based on the quoted price of the instrument on December 30, 2011. The notes are convertible, at the option of the holder, into shares of the Company's common stock at an initial conversion rate of 38.6548 shares per $1,000 principal amount of the notes, subject to adjustment in certain circumstances, which represents an initial conversion price of approximately $25.87 per share. The debt issuance costs, which are included in other long-term assets, are being amortized on a straight-line basis over the life of the notes. Unamortized debt issuance costs totaled $2.5 million as of December 31, 2011. Amortization expense was $0.8 million in 2011, 2010 and 2009. Holders of the notes will be able to require the Company to repurchase some or all of their notes upon the occurrence of a fundamental change (as defined) at 100% of the principal amount of the notes being repurchased plus accrued and unpaid interest. The Company may not redeem the notes prior to January 15, 2012. On or after January 15, 2012 and prior to the maturity date, the Company, upon notice of redemption, may redeem for cash all or part of the notes if the last reported sale price of its common stock has been greater than or equal to 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period prior to the date on which it provides notice of redemption. The redemption price will equal 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest up to but excluding the redemption date. Note Payable In connection with the Company's original lease agreement for its facility in South San Francisco, California (see Note 8, "Operating Leases and Subleases," for more information), the Company received approximately $0.9 million in July 2002 under a tenant improvement loan from the lessor, which is payable in monthly installments through 2012, bears interest at 14.5% per annum and is secured by the underlying leasehold improvements. The aggregate maturity of the note payable for the remaining year was $42,000 in 2012 and is included in note payable and capital lease, current in the accompanying consolidated balance sheets. Capital Lease The Company's capital lease agreement for communications equipment entered into in June 2009 is accounted for as follows:
|  | Year Ended December 31, |
--- | --- | --- | ---
(in thousands) |  | 2011 |  | 2010 |
Obligation of lease arrangement |  | $ | 79 |  | $ | 130 |
Minimum lease payments less interest |  |  | (52 | ) |  | (51 | )
Present value of future payments |  |  | 27 |  |  | 79 |
Less current portion |  |  | (27 | ) |  | (52 | )
Long-term portion |  | $ | — |  | $ | 27 |
The equipment under the capital lease arrangement is included in property and equipment and the related amortization is included in depreciation and amortization expense in the consolidated statements of cash flows. The cost of equipment financed under capital leases was $0.2 million and the related accumulated amortization was $72,000 as of December 31, 2011 and $41,000 as of December 31, 2010.

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 22 -Article 5 Reference 2: 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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