Autodesk 2003 Annual Report Download - page 60

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AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
needs. This credit facility, which expires in February 2004, contains restrictive covenants that, among other
provisions, require Autodesk to maintain certain financial ratios.
Note 7. Commitments and Contingencies
Leases
Autodesk leases office space and computer equipment under noncancelable operating lease agreements. The
leases generally provide that Autodesk pay taxes, insurance and maintenance expenses related to the leased
assets. Future minimum lease payments for fiscal years ended January 31 are as follows (in millions):
2004 ............................................................... $ 37.8
2005 ............................................................... 33.3
2006 ............................................................... 21.5
2007 ............................................................... 13.1
2008 ............................................................... 7.5
Thereafter ........................................................... 28.1
$141.3
Less: Sublease income ................................................. (6.2)
$135.1
Of these amounts, $10.2 million has been included in our restructuring accruals at January 31, 2003. Rent
expense was $41.1 million in fiscal 2003, $40.9 million in fiscal 2002 and $31.8 million in fiscal 2001.
Guarantees
Autodesk adopted the provisions of FIN 45 effective January 31, 2003. See Recently Issued Accounting
Standards in Note 1. Some of the software licenses granted by Autodesk contain provisions that indemnify
licensees of Autodesk’s software from damages and costs resulting from claims alleging that Autodesk’s
software infringes the intellectual property rights of a third party. Autodesk has historically received only a
limited number of requests for indemnification under these provisions and has not been required to make material
payments pursuant to these provisions. Accordingly, Autodesk has not recorded a liability related to these
indemnification provisions.
Legal Proceedings
On December 27, 2001, Spatial Corp. filed suit in Marin County Superior Court against Autodesk, which
among other things, seeks a declaration that Autodesk had breached a ten year old development agreement
between Spatial and an injunction preventing Autodesk from disclosing source code licensed from Spatial to
third parties. The Complaint was later amended to seek a remedy of preventing Autodesk from distributing the
licensed code to end users.
Autodesk believes that Spatial’s claims are without merit, and is contesting them vigorously. Although the
results of litigation are inherently uncertain, Autodesk believes that the ultimate resolution of this matter will not
have material effect on its consolidated statements of financial condition, results of operations or cash flows.
However, if Spatial were to prevail at trial on its request to terminate the perpetual license to the code, and
Autodesk could not obtain a license on acceptable terms or license or develop a substitute technology, our
business and operating results could be materially adversely affected. During the fourth quarter of fiscal 2003,
Autodesk recorded a $2.5 million reserve related to this matter.
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