United Healthcare 2008 Annual Report Download - page 96

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UNITEDHEALTH GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
15. Commitments and Contingencies
The Company leases facilities, computer hardware and other equipment under long-term operating leases that are
noncancelable and expire on various dates through 2028. Rent expense under all operating leases for 2008, 2007
and 2006 was $264 million, $223 million and $209 million, respectively. At December 31, 2008, future
minimum annual lease payments, net of sublease income, under all noncancelable operating leases were as
follows:
(in millions)
Future Minimum
Lease Payments
2009 ......................................................................... $258
2010 ......................................................................... 230
2011 ......................................................................... 195
2012 ......................................................................... 174
2013 ......................................................................... 129
Thereafter .................................................................... 688
In conjunction with the PacifiCare acquisition the Company committed to make $50 million in charitable
contributions for the benefit of California health care consumers, which has been accrued in its Consolidated
Balance Sheets. The Company has committed to specific projects totaling approximately $30 million of the $50
million charitable commitment at December 31, 2008, of which $21 million was paid. Additionally, the
Company agreed to invest $200 million in California’s health care infrastructure to further health care services to
the underserved populations of the California marketplace, of which $87 million was invested at December 31,
2008. The timing and amount of individual contributions and investments are at the Company’s discretion
subject to the advice and oversight of the local regulatory authorities; however, the Company’s goal is to have
the investment commitment fully funded by the end of 2010. The investment commitment remains in place for
20 years after funding.
The Company contracts on an administrative services only (ASO) basis with customers who fund their own
claims. The Company charges these customers administrative fees based on the expected cost of administering
their self-funded programs. In some cases, the Company provides performance guarantees related to its
administrative function. If these standards are not met, the Company may be financially at risk up to a stated
percentage of the contracted fee or a stated dollar amount. Amounts accrued for performance guarantees were not
material at December 31, 2008 and 2007.
At December 31, 2008, the Company has outstanding, undrawn letters of credit with financial institutions of
approximately $60 million and surety bonds outstanding with insurance companies of approximately $300
million, primarily to bond contractual performance.
Legal Matters
Legal Matters Relating to Historical Stock Option Practices
Regulatory Inquiries. In March 2006, the Company received an informal inquiry from the SEC relating to its
historical stock option practices. On December 19, 2006, the Company received from the SEC staff a formal
order of investigation into the Company’s historical stock option practices. On December 22, 2008, the Company
announced it had reached an agreement to settle the SEC’s investigation. Without admitting or denying the
SEC’s allegations, the Company agreed to a permanent injunction against any future violations of certain
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