Humana 2006 Annual Report Download - page 100

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Future annual minimum payments due subsequent to December 31, 2006 under all of our noncancelable
operating leases with initial terms in excess of one year are as follows:
Minimum
Lease
Payments
Sublease
Rental
Receipts
Net Lease
Commitments
(in thousands)
For the years ending December 31:
2007 .................................. $ 88,196 $(1,988) $ 86,208
2008 .................................. 66,974 (774) 66,200
2009 .................................. 50,217 (173) 50,044
2010 .................................. 41,103 — 41,103
2011 .................................. 23,021 — 23,021
Thereafter .............................. 15,368 — 15,368
Total .............................. $284,879 $(2,935) $281,944
Purchase Obligations
We have agreements to purchase services, primarily information technology related services, or to make
improvements to real estate, in each case that are enforceable and legally binding on us and that specify all
significant terms, including: fixed or minimum levels of service to be purchased; fixed, minimum or variable
price provisions; and the appropriate timing of the transaction. We have purchase obligation commitments of
$27.4 million in 2007, $14.5 million in 2008, $3.7 million in 2009, $2.8 million in 2010 and $1.3 million
thereafter. Purchase obligations exclude agreements that are cancelable without penalty.
Off-Balance Sheet Arrangements
As part of our ongoing business, we do not participate or knowingly seek to participate in transactions that
generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as
structured finance or special purpose entities (SPEs), which would have been established for the purpose of
facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of
December 31, 2006, we are not involved in any SPE transactions.
Guarantees and Indemnifications
Our operating lease of an airplane, which expires January 1, 2010, provides for a residual value payment of
no more than $4.8 million at the end of the lease term. At the end of the term, we have the right to exercise a
purchase option for $8.9 million or the airplane can be sold to a third party. The residual value payment will be
reduced by the net sales proceeds in excess of $4.2 million from the sale of the airplane to a third party.
Through indemnity agreements approved by the state regulatory authorities, certain of our regulated
subsidiaries generally are guaranteed by Humana Inc., our parent company, in the event of insolvency for
(1) member coverage for which premium payment has been made prior to insolvency; (2) benefits for members
then hospitalized until discharged; and (3) payment to providers for services rendered prior to insolvency. Our
parent also has guaranteed the obligations of our TRICARE subsidiaries.
In the ordinary course of business, we enter into contractual arrangements under which we may agree to
indemnify a third party to such arrangement from any losses incurred relating to the services they perform on
behalf of us, or for losses arising from certain events as defined within the particular contract, which may
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