Autodesk 2006 Annual Report Download - page 88

Contractual Obligations
The following table summarizes our significant financial contractual obligations at January 31, 2006 and the
effect such obligations are expected to have on our liquidity and cash flows in future periods. This table excludes
amounts already recorded on our balance sheet as current liabilities at January 31, 2006.
Payments due by period
Total FY 2007 FY 2008–2009 FY 2010–2011 Thereafter
(in millions)
Operating lease obligations ......... $119.0 $ 30.5 $43.7 $28.1 $16.7
Purchase obligations ................. 38.5 35.9 2.6 — —
Total (1) ......................... $ 157.5 $66.4 $46.3 $28.1 $16.7
(1) Total does not include contractual obligations recorded on the balance sheet or certain purchase obligations
as discussed below.
For the purposes of this table, contractual obligations for purchase of goods or services are defined as
agreements that are enforceable and legally binding on Autodesk and that specify all significant terms, including:
fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate
timing of the transaction. Purchase orders or contracts for the purchase of supplies, services and other goods
and services are not included in the table above. We are not able to determine the aggregate amount of such
purchase orders that represent contractual obligations, as purchase orders may represent authorizations to
purchase rather than binding agreements. Our purchase orders are based on our current procurement or
development needs and are fulfilled by our vendors within short time horizons. We do not have significant
agreements for the purchase of supplies, services or other goods specifying minimum quantities or set prices
that exceed our expected requirements for three months. We also enter into contracts for outsourced services;
however in most instances, the obligations under these contracts were not significant and the contracts contain
clauses allowing for cancellation without significant penalty. In addition, we have certain software
royalty commitments associated with the shipment and licensing of certain products. Royalty expense is
generally based on the number of units shipped or a percentage of the underlying revenue. Royalty expense,
included in cost of license and other revenues, was $12.1million, $9.2 million and $8.6 million in fiscal 2006, 2005
and 2004, respectively.
Principal commitments at January 31, 2006 shown above, consisted of obligations under operating leases
for facilities and computer equipment, IT infrastructure costs, marketing costs and contractual development
costs. Purchase commitments also include $15.5 million related to a termination fee for an outsource application
hosting services agreement entered into during fiscal 2006. This fee is reduced as time lapses during the five-year
contract period.
The expected timing of payment of the obligations discussed above is estimated based on current
information. Timing of payments and actual amounts paid may be different depending on the time of receipt
of goods or services or changes to agreed-upon amounts for some obligations.
We provide indemnifications ofvarying scopes and certain guarantees, including limited product warranties.
Historically, costs related to these warranties and indemnifications have not been significant, but because
potential future costs are highly variable, we are unable to estimate the maximum potential impact of these
guarantees on our future results of operations.
Off-Balance Sheet Arrangements
Other than operating leases, we do not engage in off-balance sheet financing arrangements or have any
variable-interest entities. As of January 31, 2006 we did not have any off-balance sheet arrangements as defined
in Item 303(a)(4)(ii) of SEC Regulation S-K.
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