Convertible Senior Notes

6 Months Ended

Jun. 30, 2020

In August 2019, we issued $345.0 million aggregate principal amount of 1.125% convertible senior notes due 2026 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, including the exercise in full by the initial purchasers of their option to purchase an additional $45.0 million principal amount (the “Notes”). The Notes were issued pursuant to an indenture and are senior, unsecured obligations of the Company. The Notes bear interest at a fixed rate of 1.125% per annum, payable semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2020. Proceeds from the issuance of the Notes totaled $335.9 million, net of initial purchaser discounts and issuance costs.

The initial conversion rate is 12.4756 shares of our common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $80.16 per share, subject to adjustment upon the occurrence of specified events.

Interest expense representing the amortization of the debt discount and issuance costs as well as contractual interest expense is amortized to interest expense at an effective interest rate of 4.3% over the term of the Notes.

The net carrying amount of the liability and equity components of the Notes was as follows (in thousands):


	June 30, 2020		December 31, 2019
Liability component:
Principal	$	345,000	$	345,000
Unamortized discount	(53,327)		(57,247)
Unamortized issuance costs	(6,662)		(7,152)
Net carrying amount	$	285,011	$	280,601

Equity component, net of purchase discounts and issuance costs	$	58,560	$	58,560

Interest expense related to the Notes is as follows (in thousands):


	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
Contractual interest expense	$	970	$	1,940
Amortization of debt discount	1,967		3,920
Amortization of issuance costs	246		490
Total interest expense	$	3,183	$	6,350