F-25
Annual futureminimumpayments under operating leases as ofDecember 31, 2013 are as follows (in thousands):
Operating
Leases
2014 ...................................................................................................................... $
1,470
2015 ......................................................................................................................
1,395
2016 ......................................................................................................................
1,538
2017 ......................................................................................................................
1,481
2018 ......................................................................................................................
1,451
Thereafter .............................................................................................................
19,126
Totalminimumpayments ..................................................................................... $
26,461
Rent expense for the years endedDecember 31, 2013, 2012 and2011was $1.8million, $1.9million and $4.6million,
respectively. We recognize rent expense on a straight line basis over the lease term for the lease onourmanufacturing facility and the
lease onour building adjacent toourmanufacturing facility, which resulted in a deferred rent balance of $1.6million and$1.4million
at December 31, 2013 and2012, respectively.
ResearchandDevelopment FacilityLeaseObligation
InMarch2010, we entered into a lease agreementwith an affiliate ofBioMedRealty, L.P., orBioMed. Under the lease,
BioMed constructedour primary research anddevelopment facility inCarlsbad, California. The lease expires in2031 andhas four
five-year options to extend. Under the lease agreement, we have the option topurchase the facility and land at the endof each year
from2016 through2020, and at the endof 2026 and2031. To gain early access to the facility, we agreed tomodify our leasewith
BioMed to accept additional responsibility. As a result, we recorded the costs for the facility as a fixed asset andwe also recorded a
corresponding liability in our non-current liabilities as a long-term financingobligation. In July2011, we tookpossessionof the
facility andbegan depreciating the cost of the facility over its economic useful life. AtDecember 31, 2013 and2012, the facility and
associatedparcel of landhad a net bookvalue of $66.7million and$68.9million, respectively, which included$5.5million and$3.2
million, respectively, of accumulated depreciation.We are applyingour rent payments, whichbegan on January1, 2012, against the
liability over the termof the lease.
In conjunctionwith the lease agreementwithBioMed, we purchased a parcel of land for $10.1million and subsequently sold
it toBioMed. Sincewe have the option topurchase the facility, including the land, we have continuing involvement in the land,
which requires us to account for the purchase and sale of the land as a financing transaction. As such, our property, plant and
equipment at December 31, 2013 and 2012 included the value of the land. Additionally, we have recorded a corresponding amount in
our non-current liabilities as a long-term financingobligation. Since land is not a depreciable asset, the value of the land and
financingobligationwe recordedwill not change untilwe exercise our purchase optionor the lease terminates.
Annual future rent payments as ofDecember 31, 2013 for our primary research anddevelopment facility are as follows (in
thousands):
FutureRent
Payments
2014 ............................................................................................................................. $
6,179
2015 .............................................................................................................................
6,179
2016 .............................................................................................................................
6,550
2017 .............................................................................................................................
6,550
2018 .............................................................................................................................
6,943
Thereafter ....................................................................................................................
105,508
Totalminimumpayments ............................................................................................ $
137,909
5. Stockholders’ Equity
PreferredStock
We are authorized to issue up to15,000,000 shares of “blank check”PreferredStock. As ofDecember 31, 2013, therewere
no shares of PreferredStockoutstanding. We have designatedSeriesC Junior ParticipatingPreferredStockbut have no issuedor
outstanding shares as ofDecember 31, 2013.
