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Royalty Obligation
9 Months Ended
Oct. 31, 2020
Royalty Obligation Disclosure [Abstract]  
Royalty Obligation
Note 10 – Royalty Obligation
In fiscal 2018, we entered into an Asset Purchase and License Agreement with Honeywell International, Inc. (“Honeywell”) to acquire an exclusive, perpetual, world-wide license to manufacture Honeywell’s narrow-format flight deck printers for two aircraft families along with certain inventory used in the manufacturing of the licensed printers. The purchase price included a guaranteed minimum royalty payment of $15.0 million, to be paid over ten years, based on gross revenues from the sales of the printers, paper and repair services of the licensed products. The royalty rates vary based on the year in which they are paid or earned, and product sold or service provided, and range from single-digit to mid double-digit percentages of gross revenue.
 
The
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uaranteed minimum royalty payment obligation was recorded at the present value of the minimum annual royalty payments using a present value factor of 2.8%, which is based on the estimated
after-tax
cost of debt for similar companies. As of October 31, 2020, we had paid an aggregate of $5.0 million of the guaranteed minimum royalty obligation. At October 31, 2020, the current portion of the outstanding guaranteed minimum royalty obligation of $2.0 million is to be paid over the next twelve months and is reported as a current liability and the remainder of $6.6 million is reported as a long-term liability on our condensed consolidated balance sheet. We did not incur any excess royalty expense for the three and nine month periods ended October 31, 2020. We did incur excess royalty expense of $0.1 million and $0.8 million, respectively, for the three and nine month periods ended November 2, 2019, which is included in cost of revenue in our consolidated statements of income. A total of $0.1 million of excess royalty is payable and reported as a current liability on our condensed consolidated balance sheet at October 31, 2020.