Autodesk 2007 Annual Report Download - page 128

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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 $16.8 million, $12.1 million and $9.2 million in
fiscal 2007, 2006 and 2005, respectively.
Principal commitments at January 31, 2007 shown above consist of obligations under operating
leases for facilities and computer equipment, IT infrastructure costs, marketing costs and contractual
development costs. Purchase commitments also include $28.8 million related to a termination fee for an
outsource application hosting services agreement entered into during fiscal 2006. This fee is reduced as
time elapses 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 of varying 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, 2007 we did not have any off-balance sheet arrangements
as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.
Stock Compensation
As of January 31, 2007, we maintained two active stock option plans for the purpose of granting stock
options to employees and members of Autodesk’s Board of Directors (“Board”): the 2006 Employee Stock
Plan (available only to employees) and the 2000 Directors’ Option Plan (available only to non-employee
directors). Additionally, there are eight expired or terminated plans with options outstanding, including
the 1996 Stock Plan which was replaced by the 2006 Employee Stock Plan in March 2006. In connection
with our past acquisitions, we have sometimes issued replacement options to employees of the acquired
companies. The 2006 Employee Stock Plan reserves 9.65 million shares of Autodesk common stock, plus
the shares that remained available for issuance under the 1996 Stock Plan upon its expiration, for issuance
under the plan. The 2006 Employee Stock Plan, which will expire in fiscal year 2009, is limited to grants
of stock options to employees. At January 31, 2007, 8.0 million shares were available for future issuance
under this plan.