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Commitments And Contingencies, And Derivative Financial Instruments

12 Months Ended

Sep. 30, 2011

Commitments And Contingencies, And Derivative Financial Instruments

Commitments And Contingencies, And Derivative Financial Instruments

10. Commitments and Contingencies, and Derivative Financial Instruments

Commitments Under Operating Leases

We lease certain of our facilities and equipment under operating leases with net aggregate future lease payments of approximately $832.7 million at September 30, 2011 payable as follows (in thousands):


In fiscal years,
2012	$	150,209
2013		131,481
2014		100,982
2015		127,554
2016		66,999
Thereafter		269,882

		847,107
Amounts representing sublease income		(14,406	)

	$	832,701

We recognize rent expense, inclusive of landlord concessions and tenant allowances, over the lease term on a straight-line basis. We also recognize rent expense on a straight-line basis for leases containing fixed escalation clauses and rent holidays. Contingent rentals are included in rent expense as accruable. Operating leases relating to many of our major offices generally contain renewal options, and provide for additional rental based on escalation in operating expenses and real estate taxes.

The following table presents rent expense and sublease income offsetting the Company's rent expense during each of the last three fiscal years (in thousands):


	2011			2010			2009
Rent expense	$	157,955		$	155,517		$	159,682
Sublease income		(8,315	)		(11,160	)		(10,012	)

Net rent	$	149,640		$	144,357		$	149,670

Guarantee

We are party to a synthetic lease agreement involving certain real and personal property located in Houston, Texas that we use in our operations. A synthetic lease is a type of off-balance sheet transaction which provides us with certain tax and other financial benefits. Significant terms of the lease are as follows:


End of lease term		2015
End of term purchase option (in thousands)	$	52,200
Residual value guaranty (in thousands)	$	38,800

The lease agreement gives us the right to request an extension of the lease term. We may also assist the owner in selling the property at the end of the lease term, the proceeds from which would be used to reduce our residual value guarantee. In connection with the lease, we entered into a floating-to-fixed interest rate swap agreement with a U.S. bank which fixes the amount of the Company's lease payments. The notional amount of this hedge at September 30, 2011 was $52.2 million. This instrument allows us to receive a floating rate payment tied to the 1-month LIBOR from the counterparty in exchange for a fixed-rate payment from us. We've determined this interest rate swap to be "highly effective" according to U.S. GAAP. The minimum lease payments required by the lease agreement is included in the above lease pay-out schedule. We have determined that the estimated fair value of the aforementioned financial guarantee was not significant at September 30, 2011.

Derivative Financial Instruments

In situations where our operations incur contract costs in currencies other than their functional currency, we attempt to have a portion of the related contract revenues denominated in the same currencies as the costs. In those situations where revenues and costs are transacted in different currencies, we sometimes enter into foreign exchange contracts in order to limit our exposure to fluctuating foreign currencies. The Company does not currently have exchange rate sensitive instruments that would have a material effect on our consolidated financial statements or results of operations.

Letters of Credit

Letters of credit outstanding at September 30, 2011 totaled $309.6 million. Of this amount $28.7 million has been issued under our revolving credit facility and $280.9 million are stand-alone letters of credit.