Note

- Commitments, Contingencies and Guarantees

Commitments

The following information is provided in respect of our operating and capital lease obligations:

Years Ended January 31,	Operating Leases	Capital Leases	Total
2019	5,135	61	5,196
2020	3,241	55	3,296
2021	1,782	2	1,784
2022	768	-	768
2023	471	-	471
2024	297	-	297
2025	287	-	287
2026	290	-	290
2027	188	-	188
	12,459	118	12,577

Lease Obligations

We are committed under non-cancelable operating leases for business premises, computer equipment and vehicles with terms expiring at various dates through

2027.

We are also committed under non-cancelable capital leases for computer equipment expiring at various dates through

2021.

The future minimum amounts payable under these lease agreements are outlined in the chart above. The

$0.1

million balance of the capital lease obligation outstanding at

January 31, 2018

is included in accrued liabilities in the consolidated balance sheet. For the years ended

January 31, 2018,

2017

and

2016,

rental expense from operating leases was

$5.1

million,

$4.9

million and

$4.4

million, respectively.

Other Obligations

As described in Note

to these consolidated financial statements, we maintain deferred share unit (“DSU”) and cash-settled restricted share unit (“CRSU”) plans for our non-employee directors and employees. Any payments made pursuant to these plans are settled in cash. For DSUs and CRSUs, the units vest over time and the liability recognized at any given consolidated balance sheet date reflects only those units vested at that date that have

not

yet been settled in cash. As such, we had an unrecognized aggregate liability for the unvested CRSUs and DSUs of

$0.9

million and

nil,

respectively, for which

liability was recorded on our consolidated balance sheet at

January 31, 2018,

in accordance with ASC Topic

718,

“Compensation – Stock Compensation”. The ultimate liability for any payment of DSUs and CRSUs is dependent on the trading price of our common shares. To partially offset our exposure to fluctuations in our stock price, we have entered into equity derivative contracts, including floating-rate equity forwards. As at

January 31, 2018,

we had equity derivatives for

242,000

Descartes common shares.

Contingencies

We are subject to a variety of other claims and suits that arise from time to time in the ordinary course of our business. The consequences of these matters are

not

presently determinable but, in the opinion of management after consulting with legal counsel, the ultimate aggregate potential liability is

not

currently expected to have a material effect on our results of operations or financial position.

Product Warranties

In the normal course of operations, we provide our customers with product warranties relating to the performance of our hardware, software and network services. To date, we have

not

encountered material costs as a result of such obligations and have

not

accrued any liabilities related to such obligations in our consolidated financial statements.

Business combination agreements

In respect of our acquisitions of Appterra and ShipRush, up to

$4.6

million in cash

may

become payable if certain revenue performance targets are met in the

two

years following the acquisition. A balance of

$2.2

million is accrued related to the fair value of this contingent consideration as at

January 31, 2018.

Guarantees

In the normal course of business, we enter into a variety of agreements that

may

contain features that meet the definition of a guarantee under ASC Topic

460,

“Guarantees”. The following lists our significant guarantees:

Intellectual property indemnification obligations

We provide indemnifications of varying scope to our customers against claims of intellectual property infringement made by

third

parties arising from the use of our products. In the event of such a claim, we are generally obligated to defend our customers against the claim and we are liable to pay damages and costs assessed against our customers that are payable as part of a final judgment or settlement. These intellectual property infringement indemnification clauses are

not

generally subject to any dollar limits and remain in force for the term of our license agreement with our customer, which license terms are typically perpetual. Historically, we have

not

encountered material costs as a result of such indemnification obligations.

Other indemnification agreements

In the normal course of operations, we enter into various agreements that provide general indemnities. These indemnities typically arise in connection with purchases and sales of assets, securities offerings or buy-backs, service contracts, administration of employee benefit plans, retention of officers and directors, membership agreements, customer financing transactions, and leasing transactions. In addition, our corporate by-laws provide for the indemnification of our directors and officers. Each of these indemnities requires us, in certain circumstances, to compensate the counterparties for various costs resulting from breaches of representations or obligations under such arrangements, or as a result of

third

party claims that

may

be suffered by the counterparty as a consequence of the transaction. We believe that the likelihood that we could incur significant liability under these obligations is remote. Historically, we have

not

made any significant payments under such indemnities.

In evaluating estimated losses for the guarantees or indemnities described above, we consider such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. We are unable to make a reasonable estimate of the maximum potential amount payable under such guarantees or indemnities as many of these arrangements do

not

specify a maximum potential dollar exposure or time limitation. The amount also depends on the outcome of future events and conditions, which cannot be predicted. Given the foregoing, to date, we have

not

accrued any liability in our financial statements for the guarantees or indemnities described above.