Document and Entity Information
Document and Entity Information - shares shares in Millions | 6 Months Ended | |
Jun. 30, 2015 | Jul. 31, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | TDC | |
Entity Registrant Name | TERADATA CORP /DE/ | |
Entity Central Index Key | 816,761 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 141.6 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of (Loss) Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenue | ||||
Product revenue | $ 256 | $ 300 | $ 497 | $ 573 |
Service revenue | 367 | 376 | 708 | 731 |
Total revenue | 623 | 676 | 1,205 | 1,304 |
Costs and operating expenses | ||||
Cost of products | 93 | 105 | 202 | 197 |
Cost of services | 203 | 200 | 399 | 403 |
Selling, general and administrative expenses | 190 | 188 | 374 | 376 |
Research and development costs | 59 | 50 | 122 | 106 |
Impairment of goodwill | 340 | 0 | 340 | 0 |
Total costs and operating expenses | 885 | 543 | 1,437 | 1,082 |
(Loss) income from operations | (262) | 133 | (232) | 222 |
Other income (expense), net | 13 | (1) | 13 | (8) |
(Loss) income before income taxes | (249) | 132 | (219) | 214 |
Income tax expense | 16 | 36 | 24 | 59 |
Net (loss) income | $ (265) | $ 96 | $ (243) | $ 155 |
Net (loss) income per weighted average common share | ||||
Basic (in dollars per share) | $ (1.87) | $ 0.61 | $ (1.69) | $ 0.98 |
Diluted (in dollars per share) | $ (1.87) | $ 0.60 | $ (1.69) | $ 0.97 |
Weighted average common shares outstanding | ||||
Basic (in shares) | 141.9 | 156.9 | 143.6 | 157.7 |
Diluted (in shares) | 141.9 | 159.4 | 143.6 | 160.2 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (265) | $ 96 | $ (243) | $ 155 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 9 | 1 | (22) | 0 |
Securities: | ||||
Unrealized gain (loss) on securities, before tax | 4 | 0 | (5) | 0 |
Unrealized gain (loss) on securities, tax portion | (1) | 0 | 2 | 0 |
Unrealized gain (loss) on securities, net of tax | 3 | 0 | (3) | 0 |
Defined benefit plans: | ||||
Defined benefit plan adjustment, before tax | 0 | 1 | 2 | 1 |
Defined benefit plan adjustment, tax portion | 0 | 0 | 0 | 0 |
Defined benefit plan adjustment, net of tax | 0 | 1 | 2 | 1 |
Other comprehensive income (loss) | 12 | 2 | (23) | 1 |
Comprehensive (loss) income | $ (253) | $ 98 | $ (266) | $ 156 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Current Assets | ||
Cash and cash equivalents | $ 921 | $ 834 |
Accounts receivable, net | 511 | 619 |
Inventories | 46 | 38 |
Other current assets | 99 | 81 |
Total current assets | 1,577 | 1,572 |
Property and equipment, net | 160 | 159 |
Capitalized software, net | 194 | 199 |
Goodwill | 590 | 948 |
Acquired intangible assets, net | 113 | 136 |
Deferred income taxes | 19 | 20 |
Other assets | 82 | 98 |
Total assets | 2,735 | 3,132 |
Current liabilities | ||
Current portion of long-term debt | 15 | 53 |
Short-term borrowings | 0 | 220 |
Accounts payable | 103 | 126 |
Payroll and benefits liabilities | 117 | 125 |
Deferred revenue | 444 | 370 |
Other current liabilities | 78 | 101 |
Total current liabilities | 757 | 995 |
Long-term debt | 585 | 195 |
Pension and other postemployment plan liabilities | 99 | 99 |
Long-term deferred revenue | 17 | 18 |
Deferred tax liabilities | 63 | 86 |
Other liabilities | 28 | 32 |
Total liabilities | $ 1,549 | $ 1,425 |
Commitments and contingencies | ||
Stockholders’ equity | ||
Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively | $ 0 | $ 0 |
Common stock: par value $0.01 per share, 500.0 shares authorized, 141.6 and 147.9 shares issued at June 30, 2015 and December 31, 2014, respectively | 1 | 1 |
Paid-in capital | 1,098 | 1,054 |
Retained earnings | 114 | 656 |
Accumulated other comprehensive loss | (27) | (4) |
Total stockholders’ equity | 1,186 | 1,707 |
Total liabilities and stockholders’ equity | $ 2,735 | $ 3,132 |
Condensed Consolidated Balance5
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 141,600,000 | 147,900,000 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Operating activities | ||
Net (loss) income | $ (243) | $ 155 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 84 | 84 |
Stock-based compensation expense | 30 | 25 |
Excess tax benefit from stock-based compensation | 0 | (1) |
Deferred income taxes | (18) | (12) |
(Gain) loss on investments | (15) | 9 |
Impairment of goodwill | 340 | 0 |
Changes in assets and liabilities: | ||
Receivables | 109 | 168 |
Inventories | (8) | 6 |
Current payables and accrued expenses | (28) | 2 |
Deferred revenue | 74 | 53 |
Other assets and liabilities | (23) | (8) |
Net cash provided by operating activities | 302 | 481 |
Investing activities | ||
Expenditures for property and equipment | (29) | (21) |
Additions to capitalized software | (30) | (37) |
Business acquisitions and other investing activities, net | 14 | (7) |
Net cash used in investing activities | (45) | (65) |
Financing activities | ||
Repurchases of common stock | (308) | (184) |
Proceeds from long-term borrowings | 600 | 0 |
Repayments of long-term borrowings | (247) | (11) |
Repayments of credit facility borrowings | (220) | 0 |
Excess tax benefit from stock-based compensation | 0 | 1 |
Other financing activities, net | 14 | 14 |
Net cash used in financing activities | (161) | (180) |
Effect of exchange rate changes on cash and cash equivalents | (9) | 3 |
Increase in cash and cash equivalents | 87 | 239 |
Cash and cash equivalents at beginning of period | 834 | 695 |
Cash and cash equivalents at end of period | $ 921 | $ 934 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation These statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and, in accordance with those rules and regulations, do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the results of operations, financial position and cash flows of Teradata Corporation (“Teradata” or the “Company”) for the interim periods presented herein. The year-end 2014 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amounts and disclosures. Actual results may vary from these estimates. These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Teradata’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the “ 2014 Annual Report”). The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year. |
New Accounting Pronouncements
New Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Revenue Recognition. In May 2014, the Financial Accounting Standards Board ("FASB") issued new guidance that affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The new guidance will supersede the revenue recognition requirements in the current revenue recognition guidance, and most industry-specific guidance. In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer are amended to be consistent with the guidance on recognition and measurement in this update. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the FASB defines a five step process which includes the following: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. In July 2015, the FASB issued a one-year delay in the effective date of the new standard. Under this guidance, the new revenue standard will be effective for annual reporting periods beginning after December 15, 2017, with early application permitted. The standard allows entities to apply the standard retrospectively for all periods presented or alternatively an entity is permitted to recognize the cumulative effect of initially applying the guidance as an opening balance sheet adjustment to retained earnings in the period of initial application. The Company is currently evaluating the impact on its consolidated financial position, results of operations and cash flows, as well as the method of transition that will be used in adopting the standard. Accounting for Share-based Payments with Performance Targets. In June 2014, the FASB issued new guidance that requires that a performance target that affects vesting and that could be achieved after the requisite service period, be treated as a performance condition. A reporting entity should apply existing guidance as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. The amendments in this update are effective for annual periods, and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The Company is currently evaluating the impact on its consolidated financial position, results of operations and cash flows. Income Statement Presentation by Eliminating the Concept of Extraordinary Items. This update eliminates from GAAP the concept of extraordinary items. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. This amendment is not expected to have a material impact on the Company's results of operations. Simplifying the Presentation of Debt Issuance Costs. To simplify presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. For public business entities, the amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years and shall be applied on a retrospective basis. This amendment is not expected to have a material impact on the Company's consolidated financial position. Intangibles, Goodwill and Other Internal-Use Software. The amendments in this update provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance will not change current guidance for a customer’s accounting for service contracts. This amendment will be effective for annual periods, including interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial position, results of operations and cash flows. |
Supplemental Financial Informat
Supplemental Financial Information | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Financial Information | Supplemental Financial Information As of In millions June 30, December 31, 2014 Inventories Finished goods $ 29 $ 21 Service parts 17 17 Total inventories $ 46 $ 38 Deferred revenue Deferred revenue, current $ 444 $ 370 Long-term deferred revenue 17 18 Total deferred revenue $ 461 $ 388 |
Goodwill and Acquired Intangibl
Goodwill and Acquired Intangible Assets | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Acquired Intangible Assets | Goodwill and Acquired Intangible Assets The following table identifies the activity relating to goodwill by operating segment: In millions Balance, Adjustments Currency Translation Adjustments Impairment Balance, Goodwill Data and Analytics $ 351 $ (3 ) $ (4 ) $ — $ 344 Marketing Applications 597 — (11 ) (340 ) 246 Total goodwill $ 948 $ (3 ) $ (15 ) $ (340 ) $ 590 The changes to goodwill for the six months ended June 30, 2015 were due to an impairment of goodwill discussed below, changes in foreign currency exchange rates and a purchase accounting adjustment on a recent acquisition. The Company reviews goodwill for impairment annually in the fourth quarter and whenever events or changes in circumstances indicate it is more likely than not that the fair value of the reporting unit is less than its carrying amount. The guidance on goodwill impairment requires the Company to perform a step one impairment test, which may result in a second step if the fair value of the reporting unit is less than the carrying value of the net assets. In the first step, the Company compares the fair value of each reporting unit to its carrying value. The Company’s reporting units are at one level below the operating segment level, which include the Americas and International reporting units for the data and analytics and marketing applications operating segments. The Company determines the fair value of its reporting units using a weighting of fair values derived from the income approach and the market approach. Under the income approach, the Company calculates the fair value of a reporting unit based on the present value of estimated future cash flows. The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable companies with similar operating and investment characteristics as the reporting unit. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the second step of the impairment test is performed in order to determine the implied fair value of the reporting unit’s goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then the Company records an impairment loss equal to the difference. During the second quarter, the Company determined that indicators were present in the marketing applications reporting units which would suggest the fair value of the reporting units may have declined below the carrying value. This decline was primarily due to lower than forecasted revenue and profitability levels for 2015 and future periods. The lower projected operating results reflect further review and analysis of the marketing applications business performed following the recent creation of the business as a separate business unit as was announced at the end of the first quarter of 2015. Due to the complexity and the effort required to estimate the fair value of the marketing applications reporting units in step one of the impairment test and to estimate the fair value of all assets and liabilities of the marketing applications reporting units in step two of the test, the fair value estimates were derived based on preliminary assumptions and analysis that are subject to change. Based on our preliminary analysis, the implied fair value of goodwill was substantially lower than the carrying value of goodwill for the marketing applications reporting units. As a result, the Company recorded an estimate of $340 million for the goodwill impairment charge during the quarter ended June 30, 2015. The impairment charge was included in impairment of goodwill in the consolidated statements of (loss) income. Any adjustments to the estimated impairment charge will be recorded in the third quarter of 2015. As a result of the goodwill impairment charge, the remaining carrying value of goodwill is $246 million for the marketing applications reporting units as of June 30, 2015. The Company utilized a combination of income and market approaches evenly weighted to estimate the fair value of the reporting units for step one. The income approach was determined based on the present value of estimated future cash flows, discounted at a risk-adjusted market rate, including a growth rate to calculate the terminal value. The Company’s forecasted future cash flows, which incorporate anticipated future revenue growth and related expenses to support the growth, were used to calculate fair value. These cash flow projections are based on management’s estimates of revenue growth rates and operating margins, taking into consideration historical, industry and market conditions. The discount rate used represents the weighted average cost of capital for the marketing applications reporting units considering the risks and uncertainty inherent in the cash flows of the reporting units and in the internally developed forecasts. In applying the market approach, valuation multiples were derived from historical and projected operating data of selected peer companies and applied to the appropriate historical and projected operating data to arrive at a fair value. The implied fair value of the goodwill in step two was determined by allocating the fair value of the reporting units to all of the assets and liabilities as if the reporting units had been acquired in a business combination and its fair value was the purchase price paid to be acquired. The use of these unobservable inputs resulted in the fair value estimate being classified as a Level 3 measurement. The determination of whether or not goodwill is impaired involves a significant level of judgment in the assumptions underlying the approaches used to determine the estimated fair value of our reporting units. The Company believes that assumptions and rates used in the impairment assessment are reasonable. However, these assumptions are judgmental and variations in any assumptions could result in materially different calculations of fair value. The Company will continue to evaluate goodwill on an annual basis as of the beginning of its fourth quarter, and whenever events or changes in circumstances, such as significant adverse changes in operating results, market conditions or changes in management’s business strategy, indicate that there may be a probable indicator of impairment. It is possible that the assumptions used by management related to the evaluation may change or that actual results may vary significantly from management’s estimates. As a result, additional impairment charges may occur in the future. Acquired intangible assets were specifically identified when acquired, and are deemed to have finite lives. The gross carrying amount and accumulated amortization for Teradata’s acquired intangible assets were as follows: June 30, 2015 December 31, 2014 In millions Amortization Life (in Years) Gross Carrying Amount Accumulated Amortization and Currency Translation Adjustments Gross Carrying Amount Accumulated Amortization and Currency Translation Adjustments Acquired intangible assets Intellectual property/developed technology 1 to 7 $ 186 $ (112 ) $ 186 $ (95 ) Customer relationships 3 to 10 77 (41 ) 77 (35 ) Trademarks/trade names 5 1 (1 ) 1 (1 ) In-process research and development 5 5 (2 ) 5 (2 ) Total $ 269 $ (156 ) $ 269 $ (133 ) Prior to conducting the first step of the goodwill impairment test for the marketing applications reporting units, the Company first evaluated the recoverability of the long-lived assets, including purchased intangible assets. When indicators of impairment are present, the Company tests long-lived assets (other than goodwill) for recoverability by comparing the carrying value of an asset group to its undiscounted cash flows. The Company considered the lower than expected revenue and profitability levels as business indicators of impairment for the marketing applications long-lived assets. Based on the results of the recoverability test, the Company determined that the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition exceeded the carrying value of the marketing applications asset groups and were therefore recoverable. The Company did not recognize any impairment charges for intangible assets as a result of this analysis. The aggregate amortization expense (actual and estimated) for acquired intangible assets for the following periods is as follows: Three Months Ended June 30, Six Months Ended June 30, In millions 2015 2014 2015 2014 Amortization expense $ 11 $ 12 $ 22 $ 23 For the years ended (estimated) In millions 2015 2016 2017 2018 2019 2020 Amortization expense $ 42 $ 33 $ 25 $ 14 $ 11 $ 5 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax provisions for interim periods are based on estimated annual income tax rates, adjusted to reflect the effects of any significant infrequent or unusual items which are required to be discretely recognized within the current interim period. The Company’s intention is to permanently reinvest its foreign earnings outside of the United States. As a result, the effective tax rates in the periods presented are largely based upon the forecasted pre-tax earnings mix and allocation of certain expenses in various taxing jurisdictions where the Company conducts its business that apply a broad range of statutory income tax rates, a large majority of which are less than the U.S. statutory rate. The effective tax rate for the three and six months ended June 30, 2015 and June 30, 2014 were as follows: Three Months Ended June 30, Six Months Ended June 30, In millions 2015 2014 2015 2014 Effective tax rate (6.4 )% 27.3 % (11.0 )% 27.6 % For the three and six months ended June 30, 2015 , there was a discrete tax item of $78 million resulting from the $340 million goodwill impairment recorded in the second quarter, of which $318 million is related to non-deductible goodwill. There were no material discrete tax items for the three and six months ended June 30, 2014 . The difference in the effective tax rate period over period was primarily driven by the $78 million discrete tax impact from the goodwill impairment recorded in the second quarter of 2015 . |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 6 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities As a portion of Teradata’s operations is conducted outside the United States and in currencies other than the U.S. dollar, the Company is exposed to potential gains and losses from changes in foreign currency exchange rates. In an attempt to mitigate the impact of currency fluctuations, the Company uses foreign exchange forward contracts to hedge transactional exposures resulting predominantly from foreign currency denominated inter-company receivables and payables. The forward contracts are designated as fair value hedges of specified foreign currency denominated inter-company receivables and payables and generally mature in three months or less. The Company does not hold or issue derivative financial instruments for trading purposes, nor does it hold or issue leveraged derivative instruments. By using derivative financial instruments to hedge exposures to changes in exchange rates, the Company exposes itself to credit risk. The Company manages exposure to counterparty credit risk by entering into derivative financial instruments with highly rated institutions that can be expected to fully perform under the terms of the applicable contracts. All derivatives are recognized in the consolidated balance sheets at their fair value. The fair values of foreign exchange contracts are based on market spot and forward exchange rates and represent estimates of possible value that may not be realized in the future. Changes in the fair value of derivative financial instruments, along with the loss or gain on the hedged asset or liability, are recorded in current period earnings. The notional amounts represent agreed-upon amounts on which calculations of dollars to be exchanged are based, and are an indication of the extent of Teradata’s involvement in such instruments. These notional amounts do not represent amounts exchanged by the parties and, therefore, are not a measure of the instruments. Across its portfolio of contracts, Teradata has both long and short positions relative to the U.S. dollar. As a result, Teradata’s net involvement is less than the total contract notional amount of the Company’s foreign exchange forward contracts. The following table identifies the contract notional amount of the Company’s foreign exchange forward contracts: As of In millions June 30, 2015 December 31, 2014 Contract notional amount of foreign exchange forward contracts $ 76 $ 116 Net contract notional amount of foreign exchange forward contracts $ 18 $ 17 The fair value of derivative assets and liabilities recorded in other current assets and accrued liabilities at June 30, 2015 and December 31, 2014 , were not material. Gains and losses from the Company’s fair value hedges (foreign currency forward contracts and related hedged items) were immaterial for the three and six months ended June 30, 2015 and June 30, 2014 . Gains and losses from foreign exchange forward contracts are fully recognized each period and reported along with the offsetting gain or loss of the related hedged item, either in cost of products or in other income, depending on the nature of the related hedged item. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In the normal course of business, the Company is subject to proceedings, lawsuits, governmental investigations, claims and other matters, including those that relate to the environment, health and safety, employee benefits, export compliance, intellectual property, tax matters and other regulatory compliance and general matters. Guarantees and Product Warranties. Guarantees associated with the Company’s business activities are reviewed for appropriateness and impact to the Company’s financial statements. Periodically, the Company’s customers enter into various leasing arrangements coordinated with a leasing company. In some instances, the Company guarantees the leasing company a minimum value at the end of the lease term on the leased equipment. As of June 30, 2015 , the maximum future payment obligation of this guaranteed value and the associated liability balance was $4 million . The Company provides its customers a standard manufacturer’s warranty and records, at the time of the sale, a corresponding estimated liability for potential warranty costs. Estimated future obligations due to warranty claims are based upon historical factors such as labor rates, average repair time, travel time, number of service calls and cost of replacement parts. For each consummated sale, the Company recognizes the total customer revenue and records the associated warranty liability using pre-established warranty percentages for that product class. The following table identifies the activity relating to the warranty reserve for the six months ended June 30 : In millions 2015 2014 Warranty reserve liability Beginning balance at January 1 $ 7 $ 8 Provisions for warranties issued 4 7 Settlements (in cash or in kind) (5 ) (8 ) Balance at June 30 $ 6 $ 7 The Company also offers extended and/or enhanced coverage to its customers in the form of maintenance contracts. The Company accounts for these contracts by deferring the related maintenance revenue over the extended and/or enhanced coverage period. Costs associated with maintenance support are expensed as incurred. Amounts associated with these maintenance contracts are not included in the table above. In addition, the Company provides its customers with certain indemnification rights. In general, the Company agrees to indemnify the customer if a third party asserts patent or other infringement on the part of the customer for its use of the Company’s products. The Company has entered into indemnification agreements with the officers and directors of its subsidiaries. From time to time, the Company also enters into agreements in connection with its acquisition and divesture activities that include indemnification obligations by the Company. The fair value of these indemnification obligations is not readily determinable due to the conditional nature of the Company’s potential obligations and the specific facts and circumstances involved with each particular agreement, and as such the Company has not recorded a liability in connection with these indemnification arrangements. Historically, payments made by the Company under these types of agreements have not had a material effect on the Company’s consolidated financial condition, results of operations or cash flows. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value measurements are established utilizing a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, defined as significant other observable inputs, such as quoted prices in active markets for similar assets or liabilities, or quoted prices in less-active markets for identical assets; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assets and liabilities measured at fair value on a recurring basis include money market funds, available-for-sale securities and foreign currency exchange contracts. A portion of the Company’s excess cash reserves are held in money market funds which generate interest income based on the prevailing market rates. Money market funds are included in cash and cash equivalents in the Company’s balance sheet. Money market fund holdings are measured at fair value using quoted market prices and are classified within Level 1 of the valuation hierarchy. Available-for-sale securities include equity securities that are traded in active markets, such as the National Association of Securities Dealers Automated Quotations Systems ("NASDAQ"), and are therefore included in Level 1 of the valuation hierarchy. Available-for-sale securities are included in other assets in the Company's balance sheet. Unrealized holding gains and losses are excluded from earnings and reported in other comprehensive income until realized. When deemed appropriate, the Company minimizes its exposure to changes in foreign currency exchange rates through the use of derivative financial instruments, specifically, forward foreign exchange contracts. The fair value of these contracts are measured at the end of each interim reporting period using observable inputs other than quoted prices, specifically market spot and forward exchange rates. As such, these derivative instruments are classified within Level 2 of the valuation hierarchy. Fair value gains for open contracts are recognized as assets and fair value losses are recognized as liabilities. The fair value derivative assets and liabilities recorded in other current assets and accrued liabilities at June 30, 2015 and December 31, 2014 , were not material. Any realized gains or losses would be mitigated by corresponding gains or losses on the underlying exposures. During the second quarter of 2015, goodwill with a carrying value of $586 million in the marketing applications reporting units was written down to its estimated fair value of $246 million , resulting in a non-cash impairment charge of $340 million . In order to arrive at the implied fair value of goodwill, the Company calculated the fair value of all of the assets and liabilities of the marketing applications reporting units as if they had been acquired in a business combination. After assigning fair value to the assets and liabilities of the reporting units, the result was the implied fair value of goodwill of $246 million , which represented a Level 3 asset measured at fair value on a nonrecurring basis subsequent to its original recognition. The Company’s assets measured at fair value on a recurring basis and subject to fair value disclosure requirements at June 30, 2015 and December 31, 2014 were as follows: Fair Value Measurements at Reporting Date Using In millions June 30, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Money market funds $ 419 $ 419 $ — $ — Available-for-sale securities 73 73 — — Total assets at fair value $ 492 $ 492 $ — $ — Fair Value Measurements at Reporting Date Using In millions December 31, 2014 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Money market funds $ 393 $ 393 $ — $ — Available-for-sale securities 78 78 — — Total assets at fair value $ 471 $ 471 $ — $ — |
Debt
Debt | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Debt On March 25, 2015, Teradata replaced its existing five -year, $300 million revolving credit facility with a new $400 million revolving credit facility (the “Credit Facility”). The Credit Facility ends on March 25, 2020 at which point any remaining outstanding borrowings would be due for repayment unless extended by agreement of the parties for up to two additional one -year periods. The interest rate charged on borrowings pursuant to the Credit Facility can vary depending on the interest rate option the Company chooses to utilize and the Company’s leverage ratio at the time of the borrowing. In the near term, Teradata would anticipate choosing a floating rate based on the London Interbank Offered Rate (“LIBOR”). The Credit Facility is unsecured and contains certain representations and warranties, conditions, affirmative, negative and financial covenants, and events of default customary for such facilities. As of June 30, 2015 , the Company had no borrowings outstanding under the Credit Facility, leaving $400 million in additional borrowing capacity available. Unamortized deferred costs on the original credit facility and new lender fees of approximately $2 million are being amortized over the five -year term of the credit facility. The Company was in compliance with all covenants as of June 30, 2015 . Also on March 25, 2015 , Teradata closed on a new senior unsecured $600 million five -year term loan, the proceeds of which were used to pay off the remaining $247 million of principal on its existing term loan, pay off the $220 million outstanding balance on the prior credit facility, and to fund share repurchases. The $600 million term loan is payable in quarterly installments, which will commence on March 31, 2016 , with all remaining principal due in March 2020 . The outstanding principal amount under the term loan agreement bears interest at a floating rate based upon a negotiated base rate or a Eurodollar rate plus a margin based on the leverage ratio of the Company. As of June 30, 2015 , the term loan principal outstanding was $600 million and carried an interest rate of 1.4375% . The new term loan is accounted for as a modification. Unamortized deferred issuance costs on the original term loan and new lender fees of approximately $2 million are being amortized over the five -year term of the loan. The Company was in compliance with all covenants as of June 30, 2015 . Annual contractual maturities of principal on the term loan outstanding at June 30, 2015 are as follows: In millions Amounts Due 2016 $ 30 2017 30 2018 60 2019 68 2020 412 Total $ 600 Teradata’s term loan is recognized on the Company’s balance sheet at its unpaid principal balance, and is not subject to fair value measurement. However, given that the loan carries a variable rate, the Company estimates that the unpaid principal balance of the term loan would approximate its fair value. If measured at fair value in the financial statements, the Company’s term loan would be classified as Level 2 in the fair value hierarchy. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the reported period. The calculation of diluted earnings per share is similar to basic earnings per share, except that the weighted average number of shares outstanding includes the dilution from potential shares resulting from stock options, restricted stock awards and other stock awards. The components of basic and diluted earnings per share are as follows: Three Months Ended Six Months Ended June 30, In millions, except per share amounts 2015 2014 2015 2014 Net (loss) income attributable to common stockholders $ (265 ) $ 96 $ (243 ) $ 155 Weighted average outstanding shares of common stock 141.9 156.9 143.6 157.7 Dilutive effect of employee stock options, restricted stock and other stock awards — 2.5 — 2.5 Common stock and common stock equivalents 141.9 159.4 143.6 160.2 Earnings per share: Basic $ (1.87 ) $ 0.61 $ (1.69 ) $ 0.98 Diluted $ (1.87 ) $ 0.60 $ (1.69 ) $ 0.97 For the three and six months ended June 30, 2015, due to the net loss attributable to Teradata common stockholders, largely due to the goodwill impairment charge, potential common shares that would cause dilution, such as employee stock options, restricted stock and other stock awards, have been excluded from the diluted share count because their effect would have been anti-dilutive. For the three months ended June 30, 2015, the fully diluted shares would have been 144.4 million and for the six months ended June 30, 2015, the fully diluted shares would have been 146.1 million . Certain options to purchase shares of common stock were not included in the computation of diluted earnings per share because their exercise prices were greater than the average market price of the common shares for the period, and therefore would have been anti-dilutive. For the three months ended June 30, 2015 and June 30, 2014 there were 2.9 million and 2.2 million shares of common stock excluded from the computation of diluted earnings per share. For the six months ended June 30, 2015 and June 30, 2014 there were 3.0 million and 2.2 million shares of common stock excluded from the computation of diluted earnings per share. |
Segment and Other Supplemental
Segment and Other Supplemental Information | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment and Other Supplemental Information | Segment and Other Supplemental Information Effective January 1, 2015, Teradata implemented an organizational change in which Teradata now manages its business in two divisions, which are also the Company’s operating segments: (1) data and analytics, and (2) marketing applications. This change will enable each division to be more sharply focused in rapidly addressing the dynamics of each market, and in bringing the best solutions to our customers. For purposes of discussing results by segment, management excludes the impact of certain items, consistent with the manner by which management evaluates the performance of each segment. This format is useful to investors because it allows analysis and comparability of operating trends. It also includes the same information that is used by Teradata management to make decisions regarding the segments and to assess financial performance. The chief operating decision maker evaluates the performance of the segments based on revenue and multiple profit measures, including segment gross margin. For management reporting purposes assets are not allocated to the segments. Prior period segment information has been reclassified to conform to the current period presentation. The following table presents segment revenue and segment gross margin for the Company: Three Months Ended Six months ended June 30, In millions 2015 2014 2015 2014 Segment revenue Data and Analytics $ 575 $ 623 $ 1,111 $ 1,200 Marketing Applications 48 53 94 104 Total revenue 623 676 1,205 1,304 Segment gross margin Data and Analytics 318 355 587 677 Marketing Applications 20 24 38 47 Total segment gross margin 338 379 625 724 Stock-based compensation expense (3 ) (3 ) (7 ) (6 ) Amortization of acquisition-related intangible assets (6 ) (5 ) (11 ) (10 ) Acquisition, integration and reorganization-related costs (2 ) — (3 ) (4 ) Total gross margin 327 371 604 704 Selling, general and administrative expenses 190 188 374 376 Research and development costs 59 50 122 106 Impairment of goodwill 340 — 340 — (Loss) income from operations $ (262 ) $ 133 $ (232 ) $ 222 The following table presents revenue by product and services for the Company: Three Months Ended Six Months Ended June 30, In millions 2015 2014 2015 2014 Products (software and hardware) (1) $ 256 $ 300 $ 497 $ 573 Consulting services 194 203 366 392 Maintenance services 173 173 342 339 Total services 367 376 708 731 Total revenue $ 623 $ 676 $ 1,205 $ 1,304 (1) Our analytic database software and hardware products are often sold and delivered together in the form of a “node” of capacity as an integrated technology solution. Accordingly, it is impracticable to provide the breakdown of revenue from various types of software and hardware products. |
New Accounting Pronouncements (
New Accounting Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Revenue Recognition | Revenue Recognition. In May 2014, the Financial Accounting Standards Board ("FASB") issued new guidance that affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The new guidance will supersede the revenue recognition requirements in the current revenue recognition guidance, and most industry-specific guidance. In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer are amended to be consistent with the guidance on recognition and measurement in this update. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the FASB defines a five step process which includes the following: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. In July 2015, the FASB issued a one-year delay in the effective date of the new standard. Under this guidance, the new revenue standard will be effective for annual reporting periods beginning after December 15, 2017, with early application permitted. The standard allows entities to apply the standard retrospectively for all periods presented or alternatively an entity is permitted to recognize the cumulative effect of initially applying the guidance as an opening balance sheet adjustment to retained earnings in the period of initial application. The Company is currently evaluating the impact on its consolidated financial position, results of operations and cash flows, as well as the method of transition that will be used in adopting the standard. |
Accounting for Share-based Payments with Performance Targets | Accounting for Share-based Payments with Performance Targets. In June 2014, the FASB issued new guidance that requires that a performance target that affects vesting and that could be achieved after the requisite service period, be treated as a performance condition. A reporting entity should apply existing guidance as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. The amendments in this update are effective for annual periods, and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The Company is currently evaluating the impact on its consolidated financial position, results of operations and cash flows. |
New Accounting Pronouncements | Income Statement Presentation by Eliminating the Concept of Extraordinary Items. This update eliminates from GAAP the concept of extraordinary items. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. This amendment is not expected to have a material impact on the Company's results of operations. Simplifying the Presentation of Debt Issuance Costs. To simplify presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. For public business entities, the amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years and shall be applied on a retrospective basis. This amendment is not expected to have a material impact on the Company's consolidated financial position. Intangibles, Goodwill and Other Internal-Use Software. The amendments in this update provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance will not change current guidance for a customer’s accounting for service contracts. This amendment will be effective for annual periods, including interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial position, results of operations and cash flows. |
Supplemental Financial Inform19
Supplemental Financial Information (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Financial Information | As of In millions June 30, December 31, 2014 Inventories Finished goods $ 29 $ 21 Service parts 17 17 Total inventories $ 46 $ 38 Deferred revenue Deferred revenue, current $ 444 $ 370 Long-term deferred revenue 17 18 Total deferred revenue $ 461 $ 388 |
Goodwill and Acquired Intangi20
Goodwill and Acquired Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill by Operating Segment | The following table identifies the activity relating to goodwill by operating segment: In millions Balance, Adjustments Currency Translation Adjustments Impairment Balance, Goodwill Data and Analytics $ 351 $ (3 ) $ (4 ) $ — $ 344 Marketing Applications 597 — (11 ) (340 ) 246 Total goodwill $ 948 $ (3 ) $ (15 ) $ (340 ) $ 590 |
Gross Carrying Amount and Accumulated Amortization for Teradata's Acquired Intangible Assets | The gross carrying amount and accumulated amortization for Teradata’s acquired intangible assets were as follows: June 30, 2015 December 31, 2014 In millions Amortization Life (in Years) Gross Carrying Amount Accumulated Amortization and Currency Translation Adjustments Gross Carrying Amount Accumulated Amortization and Currency Translation Adjustments Acquired intangible assets Intellectual property/developed technology 1 to 7 $ 186 $ (112 ) $ 186 $ (95 ) Customer relationships 3 to 10 77 (41 ) 77 (35 ) Trademarks/trade names 5 1 (1 ) 1 (1 ) In-process research and development 5 5 (2 ) 5 (2 ) Total $ 269 $ (156 ) $ 269 $ (133 ) |
Aggregate Amortization Expense for Acquired Intangible Assets | The aggregate amortization expense (actual and estimated) for acquired intangible assets for the following periods is as follows: Three Months Ended June 30, Six Months Ended June 30, In millions 2015 2014 2015 2014 Amortization expense $ 11 $ 12 $ 22 $ 23 For the years ended (estimated) In millions 2015 2016 2017 2018 2019 2020 Amortization expense $ 42 $ 33 $ 25 $ 14 $ 11 $ 5 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Effective Tax Rate | The effective tax rate for the three and six months ended June 30, 2015 and June 30, 2014 were as follows: Three Months Ended June 30, Six Months Ended June 30, In millions 2015 2014 2015 2014 Effective tax rate (6.4 )% 27.3 % (11.0 )% 27.6 % |
Derivative Instruments and He22
Derivative Instruments and Hedging Activities (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Foreign Exchange Contracts | The following table identifies the contract notional amount of the Company’s foreign exchange forward contracts: As of In millions June 30, 2015 December 31, 2014 Contract notional amount of foreign exchange forward contracts $ 76 $ 116 Net contract notional amount of foreign exchange forward contracts $ 18 $ 17 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Warranty Reserve Activity | The following table identifies the activity relating to the warranty reserve for the six months ended June 30 : In millions 2015 2014 Warranty reserve liability Beginning balance at January 1 $ 7 $ 8 Provisions for warranties issued 4 7 Settlements (in cash or in kind) (5 ) (8 ) Balance at June 30 $ 6 $ 7 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value on Recurring Basis and Subject to Fair Value Disclosure Requirements | The Company’s assets measured at fair value on a recurring basis and subject to fair value disclosure requirements at June 30, 2015 and December 31, 2014 were as follows: Fair Value Measurements at Reporting Date Using In millions June 30, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Money market funds $ 419 $ 419 $ — $ — Available-for-sale securities 73 73 — — Total assets at fair value $ 492 $ 492 $ — $ — Fair Value Measurements at Reporting Date Using In millions December 31, 2014 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Money market funds $ 393 $ 393 $ — $ — Available-for-sale securities 78 78 — — Total assets at fair value $ 471 $ 471 $ — $ — |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Annual Contractual Maturities of Principal on Debt Outstanding | Annual contractual maturities of principal on the term loan outstanding at June 30, 2015 are as follows: In millions Amounts Due 2016 $ 30 2017 30 2018 60 2019 68 2020 412 Total $ 600 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
Components of Basic and Diluted Earnings Per Share | The components of basic and diluted earnings per share are as follows: Three Months Ended Six Months Ended June 30, In millions, except per share amounts 2015 2014 2015 2014 Net (loss) income attributable to common stockholders $ (265 ) $ 96 $ (243 ) $ 155 Weighted average outstanding shares of common stock 141.9 156.9 143.6 157.7 Dilutive effect of employee stock options, restricted stock and other stock awards — 2.5 — 2.5 Common stock and common stock equivalents 141.9 159.4 143.6 160.2 Earnings per share: Basic $ (1.87 ) $ 0.61 $ (1.69 ) $ 0.98 Diluted $ (1.87 ) $ 0.60 $ (1.69 ) $ 0.97 |
Segment and Other Supplementa27
Segment and Other Supplemental Information (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Regional Segment Revenue and Gross Margin | The following table presents segment revenue and segment gross margin for the Company: Three Months Ended Six months ended June 30, In millions 2015 2014 2015 2014 Segment revenue Data and Analytics $ 575 $ 623 $ 1,111 $ 1,200 Marketing Applications 48 53 94 104 Total revenue 623 676 1,205 1,304 Segment gross margin Data and Analytics 318 355 587 677 Marketing Applications 20 24 38 47 Total segment gross margin 338 379 625 724 Stock-based compensation expense (3 ) (3 ) (7 ) (6 ) Amortization of acquisition-related intangible assets (6 ) (5 ) (11 ) (10 ) Acquisition, integration and reorganization-related costs (2 ) — (3 ) (4 ) Total gross margin 327 371 604 704 Selling, general and administrative expenses 190 188 374 376 Research and development costs 59 50 122 106 Impairment of goodwill 340 — 340 — (Loss) income from operations $ (262 ) $ 133 $ (232 ) $ 222 |
Revenue by Product and Services | The following table presents revenue by product and services for the Company: Three Months Ended Six Months Ended June 30, In millions 2015 2014 2015 2014 Products (software and hardware) (1) $ 256 $ 300 $ 497 $ 573 Consulting services 194 203 366 392 Maintenance services 173 173 342 339 Total services 367 376 708 731 Total revenue $ 623 $ 676 $ 1,205 $ 1,304 (1) Our analytic database software and hardware products are often sold and delivered together in the form of a “node” of capacity as an integrated technology solution. Accordingly, it is impracticable to provide the breakdown of revenue from various types of software and hardware products. |
Supplemental Financial Inform28
Supplemental Financial Information (Detail) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Inventories | ||
Finished goods | $ 29 | $ 21 |
Service parts | 17 | 17 |
Total inventories | 46 | 38 |
Deferred revenue | ||
Deferred revenue, current | 444 | 370 |
Long-term deferred revenue | 17 | 18 |
Total deferred revenue | $ 461 | $ 388 |
Goodwill and Acquired Intangi29
Goodwill and Acquired Intangible Assets - Goodwill by Operating Segment (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Goodwill [Roll Forward] | ||||
Goodwill Balance at December 31, 2014 | $ 948 | |||
Adjustments | (3) | |||
Currency Translation Adjustments | (15) | |||
Impairment | $ (340) | $ 0 | (340) | $ 0 |
Goodwill Balance at June 30, 2015 | 590 | 590 | ||
Data and Analytics | ||||
Goodwill [Roll Forward] | ||||
Goodwill Balance at December 31, 2014 | 351 | |||
Adjustments | (3) | |||
Currency Translation Adjustments | (4) | |||
Impairment | 0 | |||
Goodwill Balance at June 30, 2015 | 344 | 344 | ||
Marketing Applications | ||||
Goodwill [Roll Forward] | ||||
Goodwill Balance at December 31, 2014 | 597 | |||
Adjustments | 0 | |||
Currency Translation Adjustments | (11) | |||
Impairment | (340) | (340) | ||
Goodwill Balance at June 30, 2015 | $ 246 | $ 246 |
Goodwill and Acquired Intangi30
Goodwill and Acquired Intangible Assets - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Goodwill [Line Items] | |||||
Impairment of goodwill | $ 340 | $ 0 | $ 340 | $ 0 | |
Goodwill carrying value | 590 | 590 | $ 948 | ||
Marketing Applications | |||||
Goodwill [Line Items] | |||||
Impairment of goodwill | 340 | 340 | |||
Goodwill carrying value | $ 246 | $ 246 | $ 597 |
Goodwill and Acquired Intangi31
Goodwill and Acquired Intangible Assets - Gross Carrying Amount and Accumulated Amortization for Teradata Acquired Intangible Assets (Detail) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Acquired Finite-Lived Intangible Assets | ||
Gross Carrying Amount | $ 269 | $ 269 |
Accumulated Amortization and Currency Translation Adjustments | (156) | (133) |
Intellectual property/developed technology | ||
Acquired Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 186 | 186 |
Accumulated Amortization and Currency Translation Adjustments | (112) | (95) |
Customer relationships | ||
Acquired Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 77 | 77 |
Accumulated Amortization and Currency Translation Adjustments | $ (41) | $ (35) |
Trademarks/trade names | ||
Acquired Finite-Lived Intangible Assets | ||
Amortization Life (in Years) | 5 years | 5 years |
Gross Carrying Amount | $ 1 | $ 1 |
Accumulated Amortization and Currency Translation Adjustments | $ (1) | $ (1) |
In-process research and development | ||
Acquired Finite-Lived Intangible Assets | ||
Amortization Life (in Years) | 5 years | 5 years |
Gross Carrying Amount | $ 5 | $ 5 |
Accumulated Amortization and Currency Translation Adjustments | $ (2) | $ (2) |
Minimum | Intellectual property/developed technology | ||
Acquired Finite-Lived Intangible Assets | ||
Amortization Life (in Years) | 1 year | 1 year |
Minimum | Customer relationships | ||
Acquired Finite-Lived Intangible Assets | ||
Amortization Life (in Years) | 3 years | 3 years |
Maximum | Intellectual property/developed technology | ||
Acquired Finite-Lived Intangible Assets | ||
Amortization Life (in Years) | 7 years | 7 years |
Maximum | Customer relationships | ||
Acquired Finite-Lived Intangible Assets | ||
Amortization Life (in Years) | 10 years | 10 years |
Goodwill and Acquired Intangi32
Goodwill and Acquired Intangible Assets - Aggregate Amortization Expense for Acquired Intangible Assets (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 11 | $ 12 | $ 22 | $ 23 |
Amortization expense - Remainder of 2015 | 42 | 42 | ||
Amortization expense - 2016 | 33 | 33 | ||
Amortization expense - 2017 | 25 | 25 | ||
Amortization expense - 2018 | 14 | 14 | ||
Amortization expense - 2019 | 11 | 11 | ||
Amortization expense - 2020 | $ 5 | $ 5 |
Income Taxes - Additional infor
Income Taxes - Additional information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | (6.40%) | 27.30% | (11.00%) | 27.60% |
Discrete tax item | $ 78 | $ 78 | ||
Goodwill impairment | 340 | $ 0 | $ 340 | $ 0 |
Non-deductible goodwill | $ 318 |
Derivative Instruments and He34
Derivative Instruments and Hedging Activities - Additional Information (Detail) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Derivative | ||
Net contract notional amount of foreign exchange forward contracts | $ 18,000,000 | $ 17,000,000 |
Foreign Exchange Contract | ||
Derivative | ||
Contract notional amount of foreign exchange forward contracts | $ 76,000,000 | $ 116,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) $ in Millions | Jun. 30, 2015USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Maximum future payment obligation of the guaranteed value and associated liabilities | $ 4 |
Commitments and Contingencies36
Commitments and Contingencies - Warranty Reserve Activity (Detail) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance at January 1 | $ 7 | $ 8 |
Provisions for warranties issued | 4 | 7 |
Settlements (in cash or in kind) | (5) | (8) |
Balance at June 30 | $ 6 | $ 7 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - Marketing Applications $ in Millions | Jun. 30, 2015USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Goodwill carrying value | $ 586 |
Fair value of goodwill | 246 |
non-cash impairment charge to goodwill | 340 |
Nonrecurring Basis | Level 3 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fair value of goodwill | $ 246 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis and Subject to Fair Value Disclosure Requirements (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | $ 419 | $ 393 |
Available-for-sale securities | 73 | 78 |
Total assets at fair value | 492 | 471 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 419 | 393 |
Available-for-sale securities | 73 | 78 |
Total assets at fair value | 492 | 471 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 0 | 0 |
Available-for-sale securities | 0 | 0 |
Total assets at fair value | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 0 | 0 |
Available-for-sale securities | 0 | 0 |
Total assets at fair value | $ 0 | $ 0 |
Debt - Additional Information (
Debt - Additional Information (Detail) | Mar. 25, 2015USD ($)Extension | Jun. 30, 2015USD ($) |
Credit Facility | Line of Credit | Revolving Credit Facility | ||
Debt Instrument | ||
Credit facility maximum borrowing capacity | $ 400,000,000 | |
Credit facility, number of one-year extensions | Extension | 2 | |
Credit facility, duration of extension term (in years) | 1 year | |
Credit facility outstanding balance | $ 0 | |
Credit facility borrowing capacity | 400,000,000 | |
Unamortized deferred issuance costs | 2,000,000 | |
Term of loan, years | 5 years | |
Existing Revolving Credit Facility Prior to March 2015 | Line of Credit | Revolving Credit Facility | ||
Debt Instrument | ||
Revolving credit agreement period (in years) | 5 years | |
Credit facility maximum borrowing capacity | $ 300,000,000 | |
Payment of credit facility | 220,000,000 | |
New Senior Unsecured Term Loan | Senior Unsecured Term Loan | ||
Debt Instrument | ||
Unamortized deferred issuance costs | 2,000,000 | |
Term loan, face amount | $ 600,000,000 | |
Term of loan, years | 5 years | |
Principal outstanding | $ 600,000,000 | |
Interest rate | 1.4375% | |
Senior Unsecured Term Loan Prior to March 2015 | Senior Unsecured Term Loan | ||
Debt Instrument | ||
Payment of term loan | $ 247,000,000 |
Debt - Annual Contractual Matur
Debt - Annual Contractual Maturities of Principal on Debt Outstanding (Details) $ in Millions | Jun. 30, 2015USD ($) |
Debt Disclosure [Abstract] | |
2,016 | $ 30 |
2,017 | 30 |
2,018 | 60 |
2,019 | 68 |
2,020 | 412 |
Total | $ 600 |
Earnings Per Share - Components
Earnings Per Share - Components of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Net (loss) income attributable to common stockholders | $ (265) | $ 96 | $ (243) | $ 155 |
Weighted average outstanding shares of common stock (in shares) | 141.9 | 156.9 | 143.6 | 157.7 |
Dilutive effect of employee stock options, restricted stock and other stock awards (in shares) | 0 | 2.5 | 0 | 2.5 |
Common stock and common stock equivalents (in shares) | 141.9 | 159.4 | 143.6 | 160.2 |
Earnings per share: | ||||
Basic (in dollars per share) | $ (1.87) | $ 0.61 | $ (1.69) | $ 0.98 |
Diluted (in dollars per share) | $ (1.87) | $ 0.60 | $ (1.69) | $ 0.97 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Fully diluted shares | 144.4 | 146.1 | ||
Antidilutive options to purchase were excluded from computation of diluted earnings per share | 2.9 | 2.2 | 3 | 2.2 |
Segment and Other Supplementa43
Segment and Other Supplemental Information - Additional Information (Detail) - 6 months ended Jun. 30, 2015 | DivisionSegment |
Segment Reporting [Abstract] | |
Number of divisions | Division | 2 |
Number of operating segments | 2 |
Segment and Other Supplementa44
Segment and Other Supplemental Information - Regional Segment Revenue and Gross Margin for Company (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Segment Reporting Information | ||||
Revenue | $ 623 | $ 676 | $ 1,205 | $ 1,304 |
Gross margin | 327 | 371 | 604 | 704 |
Selling, general and administrative expenses | 190 | 188 | 374 | 376 |
Research and development costs | 59 | 50 | 122 | 106 |
Impairment of goodwill | 340 | 0 | 340 | 0 |
(Loss) income from operations | (262) | 133 | (232) | 222 |
Data and Analytics | ||||
Segment Reporting Information | ||||
Impairment of goodwill | 0 | |||
Marketing Applications | ||||
Segment Reporting Information | ||||
Impairment of goodwill | 340 | 340 | ||
Operating segment | ||||
Segment Reporting Information | ||||
Revenue | 623 | 676 | 1,205 | 1,304 |
Gross margin | 338 | 379 | 625 | 724 |
Operating segment | Data and Analytics | ||||
Segment Reporting Information | ||||
Revenue | 575 | 623 | 1,111 | 1,200 |
Gross margin | 318 | 355 | 587 | 677 |
Operating segment | Marketing Applications | ||||
Segment Reporting Information | ||||
Revenue | 48 | 53 | 94 | 104 |
Gross margin | 20 | 24 | 38 | 47 |
Unallocated segment | ||||
Segment Reporting Information | ||||
Stock-based compensation expense | (3) | (3) | (7) | (6) |
Amortization of acquisition-related intangible assets | (6) | (5) | (11) | (10) |
Acquisition, integration and reorganization-related costs | $ (2) | $ 0 | $ (3) | $ (4) |
Segment and Other Supplementa45
Segment and Other Supplemental Information - Revenue by Product and Services (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Segment Reporting [Abstract] | ||||
Products (software and hardware) | $ 256 | $ 300 | $ 497 | $ 573 |
Consulting services | 194 | 203 | 366 | 392 |
Maintenance services | 173 | 173 | 342 | 339 |
Total services | 367 | 376 | 708 | 731 |
Total revenue | $ 623 | $ 676 | $ 1,205 | $ 1,304 |