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XYRATEX LTDNOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)(U.S. dollars and amounts in thousands, except per share data, unless otherwise stated)13. Financial Instruments (Continued)November 30, 2005 and November 30, 2004, respectively. Any remaining unrealized amounts areexpected to be reclassified to earnings during the next twelve months. The fair value of these foreigncurrency contracts represents the amount the Company would receive or pay to terminate the contracts,considering first, quoted market prices of comparable agreements, or in the absence of quoted marketprices, such factors as interest rates, currency exchange rates and remaining maturity.The following table shows derivatives existing as of November 30, 2005 and November 30, 2004:November 30,2005 2004Forward exchange contracts and options .................. $46,070 $21,127Fair value of contracts—asset (liability) ................... $(1,658) $ 1,348Carrying value of contracts—asset (liability) ................ $(1,658) $ 1,348Average rate of contract .............................. $ 1.84 $ 1.76Period end rate .................................... $ 1.72 $ 1.89Maximum period of contracts (months) ................... 12 12Fair valuesThe carrying values of all financial instruments, including forward foreign exchange contracts,approximate their fair values.14. Commitments and ContingenciesOperating Lease Commitments: The Company leases certain real and personal property from bothunrelated third parties and HIL a related party (see Note 17). Future minimum lease payments undernon-cancelable operating leases agreements as of November 30, 2005 are as follows:Related party Other TotalYear Ending November 30:2006 ................................... $ 3,487 $2,763 $ 6,2502007 ................................... 3,479 1,842 5,3212008 ................................... 3,487 842 4,3292009 ................................... 3,224 624 3,8482010 and thereafter ........................ 995 367 1,362Total minimum payments required ............ $14,672 $6,438 $21,110Certain leases require the Company to pay property taxes, insurance and routine maintenance.Rent expense was $5,592, $4,273 and $3,649 for the years ended November 30, 2005, 2004 and 2003,respectively. These expenses include $3,319, $2,974 and $2,140 for the years ended November 30, 2005,2004 and 2003, respectively to a related party (Note 17).Customer Indemnity. As an element of standard customer contracts, the Company includes certainclauses that indemnify the customer against liability and damages, including legal defense costs, whichF-36