CONVERTIBLE SUBORDINATED NOTES

On March 19, 2014, we issued $143.75 million aggregate principal amount of 2.75% convertible subordinated notes due March 15, 2021 (the “Convertible Notes”). The Convertible Notes bear interest at 2.75%. Interest on the Convertible Notes began to accrue on March 19, 2014 and is payable semi-annually in arrears on March 15 and September 15 of each year.

The carrying values of the liability and equity components of the Convertible Notes at December 31, 2015 and March 31, 2016 are reflected in our Consolidated Balance Sheets as follows (in thousands):



	December 31, 2015			March 31, 2016
Long-term liabilities:
Principal amount	$	143,750		$	143,750
Unamortized discount of liability component	(25,754		)	(24,827		)
Convertible Notes issuance costs, net of accumulated amortization of $858 and $982, respectively	$	(2,769	)	$	(2,645	)
Carrying value of the liability component	$	115,227		$	116,278

Equity component carrying value	$	17,973		$	17,973

The fair value of the Convertible Notes, which are Level 2 measurements, was approximately $157.9 million at March 31, 2016.

Interest expense on the Convertible Notes included contractual coupon interest expense of approximately $1.0 million for both the three months ended March 31, 2015 and 2016. Amortization of debt issuance costs was approximately $0.1 million for both the three months ended March 31, 2015 and 2016. Accretion of the discount on the Convertible Notes was $0.8 million and $0.9 million for the three months ended March 31, 2015 and 2016, respectively.

Beginning January 1, 2016, debt issuance costs are retroactively reflected as a direct deduction from the carrying value of the related debt liability (refer herein to Note 1 to the Consolidated Financial Statements). The unamortized discount and the unamortized debt issuance costs are being amortized using the effective interest method over the remaining term of the Convertible Notes. The effective interest rate on the liability component and the debt issuance costs for the three months ended March 31, 2015 and 2016 was 6.75% and 2.75%, respectively.