(8) Long-Term Obligations

Long-term obligations at December 31, 2011 and 2010 consist of:


	2011			2010
	(In thousands)
Convertible debt to mature in 2037, bearing fixed interest of 2.75%, with a put/call option in 2012	$	275,000		$	275,000
Unamortized discount		(9,059	)		(19,273	)
Convertible debt to mature in 2037, bearing fixed interest of 2.75%, with a put/call option in 2014		275,000			275,000
Unamortized discount		(31,332	)		(40,953	)
Eurodollar loans under five-year revolving credit agreement bearing annual interest equal to the British Bankers Association LIBOR Rate ("BBA LIBOR") plus an applicable margin based on the Company's consolidated leverage ratio (consolidated funded indebtedness to consolidated EBITDA)		100,000			0
Other long-term liabilities		1,710			4,497
Contingent consideration		21,595			0
Unsecured acquisition obligations, net of imputed interest, payable in various installments through 2015		20,996			619

Total long-term obligations		653,910			494,890
Less: current installments		397,132			619

Long-term obligations, excluding current installments	$	256,778		$	494,271

The Company's revolving credit agreement with several lenders and Bank of America N.A., as agent, dated September 15, 2011, permits the Company to borrow amounts up to $450.0 million under a five-year revolving credit facility. The revolving credit facility contains a $60.0 million letter of credit sub-facility, which reduces the principal amount available under the facility by the amount of outstanding letters of credit on the sub-facility. As of December 31, 2011, $100.0 million of borrowings was outstanding under the credit facility and $33.8 million in standby letters of credit were issued. The Company pays an annual administration agency fee along with a quarterly facility fee. The facility fee is based on the Company's consolidated leverage ratio and ranges between 0.175% and 0.275% annually. The leverage ratio is calculated each quarter to determine the applicable interest rate on revolving loans, the letter of credit fee and the facility fee for the following quarter. The revolving credit agreement contains several financial and other negative and affirmative covenants customary in such agreements and is secured by a pledge of the stock of the wholly-owned subsidiaries of Lincare Holdings Inc. The financial covenants in the Company's credit agreement include interest coverage and leverage ratios, as defined in the agreement. The Company's credit agreement requires compliance with all covenants set forth in the agreement and the Company was in compliance with all covenants as of December 31, 2011. The credit agreement defines the occurrence of certain specified events as events of default which, if not waived by or cured to the satisfaction of the requisite lenders, allow the lenders to take actions against the Company, including termination of commitments under the agreement, acceleration of any unpaid principal and accrued interest in respect of outstanding borrowings, payment of additional cash collateral to be held in escrow for the benefit of the lenders and enforcement of any and all rights and interests created and existing under the credit agreement. Under certain conditions, an event of default may result in an increase in the interest rate (the "Default Rate") payable by the Company on loans outstanding under the credit facility. The Default Rate is equal to the interest rate (including any applicable percentage as set forth in the agreement) otherwise applicable to such loans plus 2% per annum. In the case of a bankruptcy event (as defined in the credit agreement), all commitments automatically terminate and all amounts outstanding under the credit facility become immediately due and payable.

On October 31, 2007, the Company completed the sale of $275.0 million principal amount (including exercise of a $25.0 million over-allotment option) of convertible senior debentures due 2037 – Series A (the "Series A Debentures") and $275.0 million principal amount (including exercise of a $25.0 million over-allotment option) of convertible senior debentures due 2037 – Series B (the "Series B Debentures" and together with the Series A Debentures, the "Series Debentures") in a private placement. The Series Debentures pay interest semi-annually at a rate of 2.75% per annum. The Series Debentures are unsecured and unsubordinated obligations and are convertible under specified circumstances based upon a base conversion rate, which, under certain circumstances, will be increased pursuant to a formula that is subject to a maximum conversion rate. Upon conversion, holders of the Series Debentures will receive cash up to the principal amount, and any excess conversion value will be delivered in shares of the Company's common stock or in a combination of cash and shares of common stock, at the Company's option. The base conversion rate for the Debentures as of December 31, 2011 is 30.5977 shares of common stock per $1,000 principal amount of Series Debentures, equivalent to a base conversion price of approximately $32.68 per share. In addition, if at the time of conversion the applicable price of the Company's common stock exceeds the base conversion price, holders of the Series A Debentures and Series B Debentures will receive an additional number of shares of common stock per $1,000 principal amount of the Debentures, as determined pursuant to a specified formula. The Company will have the right to redeem the Series A Debentures and the Series B Debentures at any time after November 1, 2012 and November 1, 2014, respectively. Holders of the Series Debentures will have the right to require the Company to repurchase for cash all or some of their Series Debentures upon the occurrence of certain fundamental change transactions or on November 1, 2012, 2017, 2022, 2027 and 2032, in the case of the Series A Debentures, and November 1, 2014, 2017, 2022, 2027 and 2032 in the case of the Series B Debentures. Due to the right of the Series A holders to put the securities to us for cash within one year of December 31, 2011, the Company reclassified the Series A Debentures from a long-term obligation to a current liability in the consolidated balance sheet as of December 31, 2011.

The aggregate maturities of long-term obligations for each of the five years subsequent to December 31, 2011 are as follows:


	(In thousands)
2012	$	406,191
2013		7,494
2014		280,217
2015		394
2016		5
Thereafter		0

	$	694,301

The Company has estimated the fair value of the liability components of the Series Debentures by calculating the present value of the cash flows of similar liabilities without associated equity components. In performing those calculations, the Company estimated that instruments similar to the Series A and B Debentures without a conversion feature as of the date of issuance would have had 7.0% and 7.4% rates of return (respectively) and expected lives of five and seven years (respectively). These estimated rates of return were based on the Company's nonconvertible debt borrowing rate at the time of issuance and the expected lives were based on the holder's put option features embedded in the notes. The initial proceeds from the instruments exceeded the estimated fair value of the liability components, and as a result, the Company reclassified $47.4 million and $67.2 million, respectively, of the carrying value of the Series A and B convertible debentures to equity as of the October 31, 2007 issuance date. These amounts represent the equity components of the proceeds from the debentures. The Company also recognized debt discounts equal to the equity components which are accreted to interest expense over the respective 5 and 7-year terms of the first put option dates specified in the indentures underlying the debentures. The accreted interest plus the cash interest payments based on the stated coupon rates results in interest cost being recognized in the income statement that reflects the interest rates on similar instruments without a conversion feature.

The debt and equity components recognized for our Series A and Series B convertible debentures were as follows (in thousands):


	December 31, 2011						December 31, 2010
	Series A			Series B			Series A			Series B
Principal amount of convertible debentures	$	275,000		$	275,000		$	275,000		$	275,000
Unamortized discount		(9,059	)		(31,332	)		(19,273	)		(40,953	)

Net carrying amount		265,941			243,668			255,727			234,047
Additional paid-in capital		29,065			41,238			29,065			41,238

At December 31, 2011, the remaining period over which the discount on the liability components will be amortized is 10 months and 34 months for the Series A and Series B convertible debentures, respectively.

The amount of interest expense recognized for the years ended December 31, 2011, 2010 and 2009 was as follows (in thousands):


	December 31, 2011				December 31, 2010				December 31, 2009
	Series A		Series B		Series A		Series B		Series A		Series B
Contractual coupon interest	$	7,562	$	7,562	$	7,562	$	7,562	$	7,562	$	7,562
Amortization of discount on convertible debentures		10,214		9,621		9,541		8,954		8,913		8,333

Interest expense	$	17,776	$	17,183	$	17,103	$	16,516	$	16,475	$	15,895