MNKD 2017 Annual Report

presented (excluding payments in respect of the Milestone Rights) below are estimated based on current information. These contractual obligations consisted of the following at December 31, 2017 (in thousands): Payments Due in Contractual Obligations Less Than One Year 1-3 Years 4-5 Years More Than 5 Years Total Open purchase order and commitments (1) . . . . . . . . . . $ 8,080 $ 3,187 $ 533 $— $ 11,800 Senior convertible notes — long term (2) . . . . . . . . . . . 1,362 28,034 — — 29,396 Note payable to principal stockholder (3) . . . . . . . . . . . — 91,387 — — 91,387 Facility financing obligation (4) . . . . . . . . . . . . . . . . . . . 28,194 31,851 — — 60,045 Insulin supply agreement (5) . . . . . . . . . . . . . . . . . . . . . 11,688 51,116 46,469 — 109,273 Operating lease obligations . . . . . . . . . . . . . . . . . . . . . . 545 2,969 1,123 — 4,637 Total contractual obligations . . . . . . . . . . . . . . . . . . . . . $49,869 $208,544 $48,125 $— $306,538 (1) The amounts included in open purchase order and supply commitments are subject to performance under the purchase order or contract by the supplier of the goods or services and do not become our obligation until such performance is rendered. The amount shown is principally for the purchase of materials for commercial operations or sales and marketing efforts. (2) The amounts include future interest payments at fixed rates of 5.75% and payment of the notes in full upon maturity in 2021. (3) The obligation for the note payable to the principal stockholder includes future principal and interest payments related to the $79.7 million of borrowings as of December 31, 2017. Interest is accrued based on a fixed rate of 5.84% and the outstanding principal amount and all accrued interest thereon will be due on January 5, 2020. (4) The facility financing obligation includes future principal and interest payments on $39.4 million aggregate principal amount of 2019 notes issued in the first and fourth tranches under the Facility Agreement, and on $15.0 million aggregate principal amount of Tranche B notes, payable in accordance with the provisions of the Facility Agreement, as amended. Interest accrues on the 2019 notes at a fixed rate of 9.75% per annum and on the Tranche B notes at a fixed rate of 8.75% per annum. (5) On July 31, 2014, we entered into the Insulin Supply Agreement, pursuant to which we originally agreed to purchase certain annual minimum quantities of insulin for calendar years 2015 through 2019 for an aggregate total purchase price of approximately € 120.1 million The Insulin Supply Agreement specifies that Amphastar will be deemed to have satisfied its obligations with respect to quantity, if the actual quantity supplied is within plus or minus ten percent (+/- 10%) of the quantity set forth in the applicable purchase order. On November 9, 2016, we amended the Insulin Supply Agreement to lower the annual minimum quantities purchased of insulin for calendar year 2017 through 2023 to an aggregate total remaining purchase price of € 90.3 million at December 31, 2017. Future payments due were estimated by converting to U.S. dollars using the December 31, 2017 Euro-to-dollar exchange rate. In addition, the aggregate cancellation fees that we would incur in the event that certain insulin quantities are not purchased was lowered from $5.3 million to $3.4 million. Related Party Transactions For a description of our related party transactions see Note 6 — Related-Party Arrangements of the Notes to Consolidated Financial Statements included in “Part II, Item 8 — Financial Statements and Supplementary Data. Recent Accounting Pronouncements See Note 2 — Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included in Part II, Item 8 — Financial Statements and Supplementary Data”, for information regarding accounting standards we adopted in 2017 and other new accounting standards that have been issued by the FASB but are not effective until after December 31, 2017. 63