Leases

12 Months Ended

Jan. 31, 2023

Autodesk has operating leases for real estate, vehicles and certain equipment. Leases have remaining lease terms of less than 1 year to 67 years, some of which include options to extend the lease with renewal terms from 1 year to 10 years and some of which include options to terminate the leases from less than 1 year to 7 years. Options to extend the lease are included in the lease liability if they are reasonably certain of being exercised. Options to terminate are considered in determining the lease liability if they are reasonably certain of being exercised. Payments under our lease arrangements are primarily fixed, however, certain lease agreements contain variable payments, which are expensed as incurred and not included in the operating lease assets and liabilities. These amounts include payments affected by the Consumer Price Index, payments for common area maintenance that are subject to annual reconciliation, and payments for maintenance and utilities. The Company’s leases do not contain residual value guarantees or material restrictive covenants. Short-term leases are recognized in the Consolidated Statement of Operations on a straight-line basis over the lease term. Short-term lease expense was not material for the periods presented. Changes in operating lease right-of-use assets and operating lease liabilities are presented net in the “accounts payable and other liabilities” line in the Consolidated Statements of Cash Flows with the exception of “Lease-related asset impairments” which is presented in “Adjustments to reconcile net income to net cash provided by operating activities”.

During the fiscal years ended January 31, 2023 and 2022, Autodesk recorded total operating lease right-of-use assets impairment charges of $29 million and $75 million, respectively. Autodesk did not recognize any charges during the fiscal year ended January 31, 2021. Autodesk assessed the asset groupings for disaggregation based on the proposed changes in use of the facilities. For asset groups where impairment was triggered, Autodesk utilized an income approach to value the asset groups by developing discounted cash flow models. The significant assumptions used in the discounted cash flow models for each of the asset groups included projected sublease income over the remaining lease terms, expected downtime prior to the commencement of future subleases, expected lease incentives offered to future tenants, and discount rates that reflected the level of risk associated with these future cash flows. These significant assumptions are considered Level 1 and Level 2 inputs in accordance with the fair value hierarchy described in Note 1, “Business and Summary of Significant Accounting Policies.” The operating lease right-of-use assets and other lease-related assets charges are included in “general and administrative” in the Company’s Consolidated Statements of Operations.

The components of lease cost were as follows:


	Fiscal Year Ended January 31, 2023
	Cost of subscription and maintenance revenue		Cost of other revenue		Marketing and sales		Research and development		General and administrative		Total
Operating lease cost	$	8	$	3	$	36	$	27	$	11	$	85
Variable lease cost	1		—		6		5		2		14


	Fiscal Year Ended January 31, 2022
	Cost of subscription and maintenance revenue		Cost of other revenue		Marketing and sales		Research and development		General and administrative		Total
Operating lease cost	$	8	$	2	$	43	$	30	$	15	$	98
Variable lease cost	1		—		5		4		2		12


	Fiscal Year Ended January 31, 2021
	Cost of subscription and maintenance revenue		Cost of other revenue		Marketing and sales		Research and development		General and administrative		Total
Operating lease cost	$	7	$	2	$	45	$	29	$	18	$	101
Variable lease cost	1		—		5		4		2		12

Supplemental operating cash flow information related to leases was as follows:


	Fiscal Year Ended January 31, 2023		Fiscal Year Ended January 31, 2022		Fiscal Year Ended January 31, 2021

Cash paid for operating leases included in operating cash flows (1)	$	115	$	107	$	96
Non-cash operating lease liabilities arising from obtaining operating right-of-use assets	48		53		67

_______________

(1) Includes $14 million, $12 million, and $12 million in variable lease payments not included in “Operating lease liabilities” and “Long-term operating lease liabilities” on the Consolidated Balance Sheet for fiscal years ended January 31, 2023, 2022, and 2021, respectively.

The weighted average remaining lease term for operating leases is 6.5 years and 6.9 years at January 31, 2023 and 2022, respectively. The weighted average discount rate was 2.60% and 2.46% at January 31, 2023 and 2022, respectively,

Maturities of operating lease liabilities were as follows:


Fiscal year ending
2024	$	94
2025	78
2026	64
2027	43
2028	34
Thereafter	104
	417
Less imputed interest	32
Present value of operating lease liabilities	$	385

Autodesk has subleased certain office space to a third party and has classified the sublease as an operating lease. The sublease has a remaining lease term of 9.1 years. Sublease income was $5 million during the fiscal year ended January 31, 2023. There was no sublease income recognized during fiscal years ended January 31, 2022 and 2021, respectively. Sublease income is recorded as a reduction of lease expense in the Company’s Consolidated Statements of Operations.

Operating lease amounts in the table above do not include sublease income payments of $86 million. Autodesk expects to receive sublease income payments of approximately $47 million for fiscal 2024 through fiscal 2028 and $39 million thereafter.

As of January 31, 2023, Autodesk had no additional operating lease minimum lease payments for executed leases that have not yet commenced.