AMN 2017 Annual Report

28 We used the proceeds from the issuance and sale of the Notes to (1) repay $131.3 million of our existing Original Term Loan indebtedness, (2) repay $7.2 million of our existing Second Term Loan indebtedness, (3) repay $182.5 million under our Revolver, and (4) pay fees and expenses related to the transaction. Letters of Credit At December 31, 2017, we maintained outstanding standby letters of credit totaling $22.0 million as collateral in relation to our professional liability insurance agreements, workers compensation insurance agreements, and a corporate office lease agreement. Of the $22.0 million of outstanding letters of credit, we have collateralized $2.7 million in cash and cash equivalents and the remaining amount has been collateralized by the Revolver. Outstanding standby letters of credit at December 31, 2016 totaled $15.4 million. Off-Balance Sheet and Other Financing Arrangements At December 31, 2017 and 2016, we did not have any off-balance sheet arrangement that has or is reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors. Contractual Obligations The following table summarizes our contractual obligations as of December 31, 2017 (in thousands): Fiscal Year 2018 2019 2020 2021 2022 Thereafter Total Notes payable (1) $ 16,656 $ 16,656 $ 16,656 $ 16,656 $ 16,656 $ 358,314 $ 441,594 Operating lease obligations (2) 16,962 16,969 16,913 16,969 16,777 66,439 151,029 Total contractual obligations $ 33,618 $ 33,625 $ 33,569 $ 33,625 $ 33,433 $ 424,753 $ 592,623 (1) Amounts represent contractual amounts due under the Notes, including interest based on the fixed rate of 5.125%. (2) Amounts represent minimum contractual amounts, with initial or remaining lease terms and license terms in excess of one year. We have assumed no escalations in rent or changes in variable expenses other than as stipulated in lease contracts. In addition to the above disclosed contractual obligations, the unrecognized income tax benefits, including interest and penalties, was $5.3 million at December 31, 2017. See additional information in “Item 8. Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note (7), Income Taxes.” Critical Accounting Policies and Estimates Our critical accounting policies are described in Note (1) to our audited consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K. Critical accounting policies are those that we believe are both important to the portrayal of our financial condition and results and require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The preparation of our consolidated financial statements in conformity with United States generally accepted accounting principles requires us to make estimates and judgments that affect our reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and base them on the information that is currently available to us and on various other assumptions that we believe are reasonable under the circumstances. Actual results could vary from these estimates under different assumptions or conditions. We believe that the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements: Professional Liability Reserve We maintain an accrual for professional liability that we include in accounts payable and accrued expenses and other long-term liabilities in our consolidated balance sheets. We determine the adequacy of this accrual by evaluating our historical experience and trends, loss reserves established by our insurance carriers, management and third-party administrators, and our independent actuarial studies. We obtain actuarial studies on a semi-annual basis that use our historical claims data and industry