Autodesk 2005 Annual Report Download - page 72

Note 5. 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):
2006 ....................................................... $ 31.8
2007 ....................................................... 23.6
2008 ....................................................... 13.5
2009 ....................................................... 9.6
2010 ....................................................... 8.3
Thereafter ................................................. 22.6
109.4
Less: Sublease income ..................................... (10.0)
$ 99.4
Of these amounts, approximately $11.3 million has been included in our restructuring accruals at January 31,
2005. Rent expense was $34.2 million in fiscal 2005, $33.5 million in fiscal 2004 and $41.1 million in fiscal 2003.
Royalties
Autodesk has certain royalty commitments associated with the shipment and licensing of certain products.
Royalty expense is generally based on a dollar amount per unit shipped or a percentage of the underlying revenue.
Royalty expense, which was recorded under our cost of license and other revenues on our Consolidated
Statements of Income, was approximately $9.2 million, $8.6 million and $7.6 million in fiscal 2005, 2004 and 2003,
respectively.
Guarantees and Indemnifications
In the normal course of business, Autodesk provides indemnifications of varying scopes, including limited
product warranties and indemnification of customers against claims of intellectual property infringement made
by third parties arising from the use of our products or services. Autodesk accrues for known warranty and
indemnification issues if a loss is probable and can be reasonably estimated. Historically, costs related to these
warranties and indemnifications have not been significant, but because potential future costs are highly variable,
Autodesk is unable to estimate the maximum potential impact of these indemnities or guarantees on its future
results of operations.
In connection with the sale or license to third parties of assets or businesses, Autodesk has entered into
customary indemnity agreements related to the assets or businesses sold or licensed. Historically, costs related
to these indemnities or guarantees have not been significant, but because potential future costs are highly
variable, Autodesk is unable to estimate the maximum potential impact of these indemnities or guarantees on
its future results of operations.
As permitted under Delaware law, Autodesk has agreementswhereby it indemnifies its officers and directors
for certain events or occurrences while the officer or director is, or was, serving at Autodesk’s request in such
capacity. The maximum potential amount of future payments Autodesk could be required to make under these
indemnification agreements is unlimited; however, Autodesk has director and officer insurance coverage that
is intended to reduce its exposure and may enable Autodesk to recover a portion of any future amounts paid.
Autodesk believes the estimated fair value of these indemnification agreements in excess of applicable insurance
coverage is minimal.
AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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