Document and Entity Information
Document and Entity Information - shares shares in Millions | 6 Months Ended | |
Jun. 30, 2016 | Jul. 29, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
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 | 130.4 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Loss) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenue | ||||
Product revenue | $ 228 | $ 256 | $ 422 | $ 497 |
Service revenue | 371 | 367 | 722 | 708 |
Total revenue | 599 | 623 | 1,144 | 1,205 |
Costs and operating expenses | ||||
Cost of products | 89 | 93 | 167 | 202 |
Cost of services | 200 | 203 | 398 | 399 |
Selling, general and administrative expenses | 172 | 190 | 346 | 374 |
Research and development expenses | 51 | 59 | 108 | 122 |
Impairment of goodwill, acquired intangibles and other assets | 0 | 340 | 80 | 340 |
Total costs and operating expenses | 512 | 885 | 1,099 | 1,437 |
Income (loss) from operations | 87 | (262) | 45 | (232) |
Interest expense | (4) | (2) | (7) | (3) |
Interest income | 2 | 1 | 3 | 2 |
Other income (expense), net | 0 | 14 | (1) | 14 |
Total other (expense) income, net | (2) | 13 | (5) | 13 |
Income (loss) before income taxes | 85 | (249) | 40 | (219) |
Income tax expense | 21 | 16 | 22 | 24 |
Net income (loss) | $ 64 | $ (265) | $ 18 | $ (243) |
Net income (loss) per weighted average common share | ||||
Basic (in dollars per share) | $ 0.49 | $ (1.87) | $ 0.14 | $ (1.69) |
Diluted (in dollars per share) | $ 0.49 | $ (1.87) | $ 0.14 | $ (1.69) |
Weighted average common shares outstanding | ||||
Basic (in shares) | 129.8 | 141.9 | 129.6 | 143.6 |
Diluted (in shares) | 131.5 | 141.9 | 131.2 | 143.6 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 64 | $ (265) | $ 18 | $ (243) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | (2) | 9 | 6 | (22) |
Securities: | ||||
Unrealized gain (loss) on securities, before tax | 0 | 4 | 0 | (5) |
Unrealized gain (loss) on securities, tax portion | 0 | (1) | 0 | 2 |
Unrealized gain (loss) on securities, net of tax | 0 | 3 | 0 | (3) |
Defined benefit plans: | ||||
Defined benefit plan adjustment, before tax | 2 | 0 | 2 | 2 |
Defined benefit plan adjustment, tax portion | (1) | 0 | (1) | 0 |
Defined benefit plan adjustment, net of tax | 1 | 0 | 1 | 2 |
Other comprehensive income (loss) | (1) | 12 | 7 | (23) |
Comprehensive income (loss) | $ 63 | $ (253) | $ 25 | $ (266) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 909 | $ 839 |
Accounts receivable, net | 465 | 580 |
Inventories | 37 | 49 |
Assets held for sale | 130 | 214 |
Other current assets | 54 | 52 |
Total current assets | 1,595 | 1,734 |
Property and equipment, net | 129 | 143 |
Capitalized software, net | 192 | 190 |
Goodwill | 384 | 380 |
Acquired intangible assets, net | 15 | 22 |
Deferred income taxes | 48 | 41 |
Other assets | 19 | 17 |
Total assets | 2,382 | 2,527 |
Current liabilities | ||
Current portion of long-term debt | 30 | 30 |
Short-term borrowings | 0 | 180 |
Accounts payable | 104 | 96 |
Payroll and benefits liabilities | 125 | 120 |
Deferred revenue | 430 | 367 |
Liabilities held for sale | 43 | 58 |
Other current liabilities | 87 | 102 |
Total current liabilities | 819 | 953 |
Long-term debt | 552 | 567 |
Pension and other postemployment plan liabilities | 88 | 89 |
Long-term deferred revenue | 16 | 15 |
Deferred tax liabilities | 17 | 28 |
Other liabilities | 26 | 26 |
Total liabilities | 1,518 | 1,678 |
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, 2016 and December 31, 2015, respectively | 0 | 0 |
Common stock: par value $0.01 per share, 500.0 shares authorized, 130.1 and 130.7 shares issued at June 30, 2016 and December 31, 2015, respectively | 1 | 1 |
Paid-in capital | 1,178 | 1,128 |
Accumulated deficit | (246) | (204) |
Accumulated other comprehensive loss | (69) | (76) |
Total stockholders’ equity | 864 | 849 |
Total liabilities and stockholders’ equity | $ 2,382 | $ 2,527 |
Condensed Consolidated Balance5
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 130,100,000 | 130,700,000 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Operating activities | ||
Net income (loss) | $ 18 | $ (243) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 65 | 84 |
Stock-based compensation expense | 33 | 30 |
Excess tax benefit from stock-based compensation | (2) | 0 |
Deferred income taxes | (15) | (18) |
Gain on investments | 0 | (15) |
Impairment of goodwill, acquired intangibles and other assets | 80 | 340 |
Changes in assets and liabilities: | ||
Receivables | 122 | 109 |
Inventories | 11 | (8) |
Current payables and accrued expenses | (10) | (28) |
Deferred revenue | 64 | 74 |
Other assets and liabilities | (16) | (23) |
Net cash provided by operating activities | 350 | 302 |
Investing activities | ||
Expenditures for property and equipment | (17) | (29) |
Proceeds from sales of property and equipment | 5 | 0 |
Additions to capitalized software | $ (36) | $ (30) |
Business acquisitions and other investing activities, net | (4) | 14 |
Net cash used in investing activities | $ (52) | $ (45) |
Financing activities | ||
Repurchases of common stock | (51) | (308) |
Proceeds from long-term borrowings | 0 | 600 |
Repayments of long-term borrowings | (15) | (247) |
Repayments of credit facility borrowings | (180) | (220) |
Excess tax benefit from stock-based compensation | 2 | 0 |
Other financing activities, net | 16 | 14 |
Net cash used in financing activities | (228) | (161) |
Effect of exchange rate changes on cash and cash equivalents | 0 | (9) |
Increase in cash and cash equivalents | 70 | 87 |
Cash and cash equivalents at beginning of period | 839 | 834 |
Cash and cash equivalents at end of period | $ 909 | $ 921 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2016 | |
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 2015 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, 2015 (the “ 2015 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, 2016 | |
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. I n March 2016, the FASB issued an update that amends and clarifies the implementation guidance on principal versus agent considerations for reporting revenue gross rather than net. In April 2016, the FASB issued an update that amends and clarifies the identification of performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB issued an update which addresses the narrow-scope improvements to the guidance on collectibility, non-cash consideration, and completed contracts at transition. Additionally, the amendments in this update provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. All updates issued in 2016 have the same deferred effective date. 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. Leases. In February 2016, the FASB issued new guidance which requires a lessee to account for leases as finance or operating leases. Both leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability on its balance sheet, with differing methodology for income statement recognition. For lessors, the standard modifies the classification criteria and the accounting for sales-type and direct financing leases. Entities will classify leases to determine how to recognize lease-related revenue and expense. This standard is effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. A modified retrospective approach is required for leases existing or entered into after the beginning of the earliest comparative period in the Consolidated Financial Statements. The Company is currently assessing the impact of this update on its Consolidated Financial Statements. Stock Compensation: Improvements to Employee Share-Based Payment Accounting. In March 2016, the FASB issued an update which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the Statements of Cash Flows. Under the new standard, income tax benefits and deficiencies are to be recognized in the income statement and the tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. This provision is to be applied prospectively. Excess tax benefits should be recognized regardless of whether the benefit reduces taxes payable in the current period, along with any valuation allowance, on a modified retrospective basis as a cumulative-effect adjustment to the retained earnings as of the date of adoption. Excess tax benefits should be classified along with other income tax cash flows as an operating activity. This provision can be applied prospectively or retrospectively for all periods presented. The standard is effective for public entities for annual reporting periods beginning after December 15, 2016, and interim periods therein. Early adoption is permitted. The Company is currently assessing the impact of this update on its Consolidated Financial Statements. Recently Adopted Guidance 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 Company adopted this guidance on January 1, 2016. This amendment did not have an impact on the Company's consolidated financial statements. Income Statement Presentation by Eliminating the Concept of Extraordinary Items . This update eliminates from GAAP the concept of extraordinary items. The Company adopted this guidance on January 1, 2016. This amendment did not have an 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. The Company adopted this guidance on January 1, 2016 on a retrospective basis. Debt issuance costs of $3 million have been presented as a deduction from the carrying value of the related long-term liabilities in our Consolidated Balance Sheets as of December 31, 2015 and June 30, 2016, respectively. 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. The Company adopted this guidance on January 1, 2016. This amendment did not have an impact on the Company's consolidated financial statements. Business Combinations . In September 2015, the FASB issued new guidance that eliminates the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. An acquirer will recognize a measurement-period adjustment during the period in which it determines the amount of the adjustment. |
Supplemental Financial Informat
Supplemental Financial Information | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Financial Information | Supplemental Financial Information As of In millions June 30, December 31, Inventories Finished goods $ 21 $ 32 Service parts 16 17 Total inventories $ 37 $ 49 Deferred revenue Deferred revenue, current $ 430 $ 367 Long-term deferred revenue 16 15 Total deferred revenue $ 446 $ 382 Above amounts exclude assets and liabilities held for sale. Refer to Note 13 for further information on the Company's assets and liabilities held for sale. |
Goodwill and Acquired Intangibl
Goodwill and Acquired Intangible Assets | 6 Months Ended |
Jun. 30, 2016 | |
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 Balance, Goodwill Americas Data and Analytics $ 251 $ — $ — $ 251 International Data and Analytics 129 — 4 133 Total goodwill $ 380 $ — $ 4 $ 384 In the fourth quarter of 2015, the Company committed to a plan to exit the marketing applications business, which met the criteria for held for sale and continued to be reported under continuing operations. Not included in the table above is $ 57 million at June 30, 2016 and $ 113 million at December 31, 2015 for goodwill that has been classified as held for sale. See Note 13 for additional disclosures related to goodwill that has been classified as held for sale. 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, 2016 December 31, 2015 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 $ 71 $ (58 ) $ 83 $ (63 ) Customer relationships 3 to 10 — — 3 (3 ) Trademarks/trade names 5 1 (1 ) 1 (1 ) In-process research and development 5 5 (3 ) 5 (3 ) Total acquired intangible assets $ 77 $ (62 ) $ 92 $ (70 ) The gross carrying amount of acquired intangibles was reduced by certain intangible assets previously acquired that became fully amortized and were removed from the balance sheet. Not included in the table above is $ 25 million at June 30, 2016 and $44 million at December 31, 2015 for intangible assets that were classified as held for sale. See Note 13 for additional disclosures related to intangible assets that have been classified as held for sale. The aggregate amortization expense (actual and estimated) for acquired intangible assets is as follows: Three Months Ended June 30, Six Months Ended June 30, In millions 2016 2015 2016 2015 Amortization expense $ 2 $ 11 $ 7 $ 22 Actual For the years ended (estimated) In millions 2015 2016 2017 2018 2019 Amortization expense $ 40 $ 10 $ 7 $ 3 $ 2 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2016 | |
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 is as follows: Three Months Ended June 30, Six Months Ended June 30, In millions 2016 2015 2016 2015 Effective tax rate 24.7 % (6.4 )% 55.0 % (11.0 )% For the three months ended June 30, 2016 , there were no discrete tax items. For the six months ended June 30, 2016 , there was a discrete tax item resulting from the $76 million impairment recorded in the first quarter, of which $57 million is related to non-deductible goodwill and $19 million is related to intangible assets for which $6 million of deferred tax benefit has been recorded. For the three and six months ended June 30, 2015, there was a discrete tax item resulting from the $340 million goodwill impairment recorded in the second quarter, of which $318 million related to non-deductible goodwill and $22 million was for tax deductible goodwill for which $8 million of deferred tax benefit has been recorded. The increase in the effective tax rate was primarily driven by the differential in the discrete tax impact of the goodwill impairment period over period. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 6 Months Ended |
Jun. 30, 2016 | |
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, December 31, Contract notional amount of foreign exchange forward contracts $ 100 $ 138 Net contract notional amount of foreign exchange forward contracts $ 7 $ 25 The fair value of derivative assets and liabilities recorded in other current assets and accrued liabilities at June 30, 2016 and December 31, 2015 , 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, 2016 and June 30, 2015 . 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 (expense), depending on the nature of the related hedged item. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2016 | |
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, 2016 , the maximum future payment obligation of this guaranteed value and the associated liability balance was $3 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 under other current liabilities in the balance sheet 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 2016 2015 Warranty reserve liability Beginning balance at January 1 $ 6 $ 7 Provisions for warranties issued 4 4 Settlements (in cash or in kind) (5 ) (5 ) Balance at June 30 $ 5 $ 6 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, 2016 | |
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 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. When deemed appropriate, the Company minimizes its exposure to changes in foreign currency exchange rates through the use of derivative financial instruments, specifically, foreign exchange forward 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, 2016 and December 31, 2015 , were not material. Any realized gains or losses would be mitigated by corresponding gains or losses on the underlying exposures. The Company’s assets measured at fair value on a recurring basis and subject to fair value disclosure requirements at June 30, 2016 and December 31, 2015 were as follows: Fair Value Measurements at Reporting Date Using In millions Total 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, June 30, 2016 $ 402 $ 402 $ — $ — Money market funds, December 31, 2015 $ 351 $ 351 $ — $ — |
Debt
Debt | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Debt Teradata's $600 million term loan is payable in quarterly installments, which commenced 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, 2016 , the term loan principal outstanding was $585 million and carried an interest rate of 1.8750% . Unamortized deferred issuance costs 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, 2016 . Annual contractual maturities of principal on the term loan outstanding at June 30, 2016 are as follows: In millions Amounts Due 2016 $ 15 2017 30 2018 60 2019 68 2020 412 Total $ 585 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. Teradata's revolving credit facility (the “Credit Facility”) has a borrowing capacity of $400 million . 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, 2016 , 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 $1 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, 2016 . |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 30, 2016 | |
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 In millions, except per share amounts 2016 2015 2016 2015 Net income (loss) attributable to common stockholders $ 64 $ (265 ) $ 18 $ (243 ) Weighted average outstanding shares of common stock 129.8 141.9 129.6 143.6 Dilutive effect of employee stock options, restricted stock and other stock awards 1.7 — 1.6 — Common stock and common stock equivalents 131.5 141.9 131.2 143.6 Income (loss) per share: Basic $ 0.49 $ (1.87 ) $ 0.14 $ (1.69 ) Diluted $ 0.49 $ (1.87 ) $ 0.14 $ (1.69 ) For the three and six months ended June 30, 2015, due to the net loss attributable to Teradata common stockholders, 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. Options to purchase 5.1 million and 5.4 million shares of common stock for the three and six months ended June 30, 2016 and 2.9 million and 3 million shares of common stock for the three and six months ended June 30, 2015 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. |
Segment and Other Supplemental
Segment and Other Supplemental Information | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment and Other Supplemental Information | Segment and Other Supplemental Information Effective January 1, 2016, Teradata implemented an organizational change in which it now manages the Company's business under two geographic regions and the marketing applications division (prior to its completed sale on July 1, 2016); which are also the Company’s operating segments: (1) Americas Data and Analytics (North America and Latin America); (2) International Data and Analytics (Europe, Middle East, Africa, Asia Pacific and Japan); and (3) Marketing Applications. 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. Going forward, following the sale of the marketing applications business, Teradata will manage its business in two operating segments: (1) Americas region (North America and Latin America); and (2) International region (Europe, Middle East, Africa, Asia Pacific and Japan). The following table presents segment revenue and segment gross margin for the Company: Three Months Ended Six Months Ended In millions 2016 2015 2016 2015 Segment revenue Americas Data and Analytics $ 325 $ 348 $ 620 $ 684 International Data and Analytics 239 237 455 445 Total Data and Analytics 564 585 1,075 1,129 Marketing Applications 35 38 69 76 Total revenue 599 623 1,144 1,205 Segment gross margin Americas Data and Analytics 183 204 347 383 International Data and Analytics 116 118 213 211 Total Data and Analytics 299 322 560 594 Marketing Applications 16 16 33 31 Total segment gross margin 315 338 593 625 Stock-based compensation costs (3 ) (3 ) (7 ) (7 ) Amortization of acquisition-related intangible assets costs — (6 ) (2 ) (11 ) Acquisition, integration and reorganization-related costs (2 ) (2 ) (5 ) (3 ) Selling, general and administrative expenses 172 190 346 374 Research and development expenses 51 59 108 122 Impairment of goodwill, acquired intangibles and other assets — 340 80 340 Income (loss) from operations $ 87 $ (262 ) $ 45 $ (232 ) On July 1, 2016, Teradata completed the sale of our Marketing Applications business to exclusively focus on our data and analytics business as part of our business transformation plan. See note 14 for additional details. The following table presents revenue by product and services for the Company: Three Months Ended Six Months Ended In millions 2016 2015 2016 2015 Products (software and hardware) (1) $ 228 $ 256 $ 422 $ 497 Consulting services 192 194 371 366 Maintenance services 179 173 351 342 Total services 371 367 722 708 Total revenue $ 599 $ 623 $ 1,144 $ 1,205 (1) Our analytic database software and hardware products are often sold and delivered together as an integrated technology solution in the form of a “node” of capacity. Accordingly, it is impracticable to provide the breakdown of revenue from various types of software and hardware products. |
Reorganization and Business Tra
Reorganization and Business Transformation | 6 Months Ended |
Jun. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Reorganization and Business Transformation | Reorganization and Business Transformation In the fourth quarter of 2015, the Company announced a plan to realign Teradata’s business by reducing its cost structure and focusing on the Company’s core data and analytics business. This business transformation includes exiting the marketing applications business (see Note 13), rationalizing costs, and modifying the Company’s go-to-market approach. The Company incurred the following costs for the six months ended June 30, 2016 related to these actions: • $10 million for employee severance and other employee-related costs, • $80 million charge for asset write-downs, and • $19 million for professional services, legal and other associated costs. From the amounts incurred above, $80 million was for non-cash write-downs of goodwill, acquired intangibles and other assets in the first quarter of 2016. In addition to the costs and charges incurred above, the Company made cash payments of $16 million for employee severance that did not have a material impact on its Statement of Operations due to Teradata accounting for its postemployment benefits under Accounting Standards Codification 712, Compensation - Nonretirement Postemployment Benefits (“ASC 712”), which uses actuarial estimates and defers the immediate recognition of gains or losses. Because the Company accounts for postemployment benefits under ASC 712, it did not record any liability associated with ASC 420, Exit or Disposal Cost Obligations . |
Assets and Liabilities Held for
Assets and Liabilities Held for Sale | 6 Months Ended |
Jun. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Assets and Liabilities Held for Sale | Assets and Liabilities Held for Sale In the fourth quarter of 2015, the Company committed to a plan to exit the marketing applications business. The Company determined that it was in the long-term best interests of the Company and its shareholders to realign Teradata’s business by focusing on the Company’s core data and analytics business. The assets and liabilities for this business, which are included within our marketing applications segment, were classified as held for sale in the fourth quarter of 2015 and, therefore, the corresponding depreciation and amortization expense was ceased at that time. The anticipated divestiture is not presented as discontinued operations in our consolidated financial statements, because it does not have a major effect on the Company's operations and financial results. For the six months ended June 30, 2016 , we generated revenue from these assets of $69 million . Additionally, for the six months ended June 30, 2016 we recognized operating loss from these assets of $112 million (includes loss from impairment of goodwill and acquired intangibles of $76 million ). When an asset is classified as held for sale, the asset’s carrying amount is evaluated and adjusted to the lower of its carrying amount or fair value less costs to sell. On April 22, 2016, the Company entered into a definitive Asset Purchase Agreement (the “Purchase Agreement”) with TMA Solutions, L.P., a Cayman Islands exempted limited partnership and affiliate of Marlin Equity Partners (“Marlin Equity”) to sell the marketing applications business for $90 million in cash, subject to a post-closing adjustment for working capital, debt and other metrics, which is currently estimated at $92 million . The Company performed a goodwill impairment analysis on the business to be disposed of based on the fair value as determined using the Purchase Agreement. As a result of this analysis, the Company recognized an impairment of goodwill of $ 57 million in the first quarter of 2016. The remaining goodwill of $ 57 million is disclosed in the assets held for sale in the Consolidated Balance Sheets. In addition, in the first quarter of 2016, acquired intangible assets were reduced by $ 19 million to adjust the carrying amount of the disposal group's net assets and liabilities down to its fair value less cost to sell. No further adjustment was required in the second quarter of 2016 to either goodwill or acquired intangible assets. A summary of the carrying amounts of assets and liabilities held for sale on our consolidated balance sheets as of June 30, 2016 related to the anticipated divestiture discussed above is detailed below: As of As of In millions June 30, 2016 December 31, 2015 Current assets held for sale Accounts receivable, net $ 35 $ 41 Other current assets 2 3 Total current assets held for sale 37 44 Property and equipment, net 11 12 Goodwill 57 113 Acquired intangibles, net 25 44 Other assets — 1 Total assets held for sale $ 130 $ 214 Current liabilities held for sale Accounts payable 4 10 Payroll and benefits liabilities 4 12 Deferred Revenue 28 30 Other current liabilities 2 5 Total current liabilities held for sale 38 57 Other liabilities 5 1 Total liabilities held for sale $ 43 $ 58 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On July 1, 2016, pursuant to the Purchase Agreement, Teradata completed the previously announced sale of Teradata’s marketing applications business to Marlin Equity. The purchase price received for this business was approximately $92 million in cash, which includes a post-closing adjustment for working capital, debt and other metrics. The final cash to be received is subject to change depending on the finalization of working capital and transaction costs. In connection with the closing of the transaction, the parties have entered into a transition services agreement, pursuant to which Teradata will provide certain services to Marlin Equity, including accounting, human resources, order processing and invoicing and information technology services for a service period of up to 15 months after the closing of the transaction. The Company expects to record tax expense of approximately $18 million in the third quarter of 2016 related to this transaction. The tax expense associated with the gain on sale of the marketing applications business assets, of which $13 million is cash taxes due to having zero tax basis in goodwill, was calculated based on the amount of proceeds allocated to the various jurisdictions in accordance with the Purchase Agreement at the local statutory rates. The actual tax expense to be reported in the third quarter of 2016 is subject to change pending final determination of the net asset value of the marketing applications business, finalization of the working capital, transaction costs and other adjustments. |
New Accounting Pronouncements (
New Accounting Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
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. I n March 2016, the FASB issued an update that amends and clarifies the implementation guidance on principal versus agent considerations for reporting revenue gross rather than net. In April 2016, the FASB issued an update that amends and clarifies the identification of performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB issued an update which addresses the narrow-scope improvements to the guidance on collectibility, non-cash consideration, and completed contracts at transition. Additionally, the amendments in this update provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. All updates issued in 2016 have the same deferred effective date. 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. |
New Accounting Pronouncements | Leases. In February 2016, the FASB issued new guidance which requires a lessee to account for leases as finance or operating leases. Both leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability on its balance sheet, with differing methodology for income statement recognition. For lessors, the standard modifies the classification criteria and the accounting for sales-type and direct financing leases. Entities will classify leases to determine how to recognize lease-related revenue and expense. This standard is effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. A modified retrospective approach is required for leases existing or entered into after the beginning of the earliest comparative period in the Consolidated Financial Statements. The Company is currently assessing the impact of this update on its Consolidated Financial Statements. Stock Compensation: Improvements to Employee Share-Based Payment Accounting. In March 2016, the FASB issued an update which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the Statements of Cash Flows. Under the new standard, income tax benefits and deficiencies are to be recognized in the income statement and the tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. This provision is to be applied prospectively. Excess tax benefits should be recognized regardless of whether the benefit reduces taxes payable in the current period, along with any valuation allowance, on a modified retrospective basis as a cumulative-effect adjustment to the retained earnings as of the date of adoption. Excess tax benefits should be classified along with other income tax cash flows as an operating activity. This provision can be applied prospectively or retrospectively for all periods presented. The standard is effective for public entities for annual reporting periods beginning after December 15, 2016, and interim periods therein. Early adoption is permitted. The Company is currently assessing the impact of this update on its Consolidated Financial Statements. Recently Adopted Guidance 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 Company adopted this guidance on January 1, 2016. This amendment did not have an impact on the Company's consolidated financial statements. Income Statement Presentation by Eliminating the Concept of Extraordinary Items . This update eliminates from GAAP the concept of extraordinary items. The Company adopted this guidance on January 1, 2016. This amendment did not have an 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. The Company adopted this guidance on January 1, 2016 on a retrospective basis. Debt issuance costs of $3 million have been presented as a deduction from the carrying value of the related long-term liabilities in our Consolidated Balance Sheets as of December 31, 2015 and June 30, 2016, respectively. 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. The Company adopted this guidance on January 1, 2016. This amendment did not have an impact on the Company's consolidated financial statements. Business Combinations . In September 2015, the FASB issued new guidance that eliminates the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. An acquirer will recognize a measurement-period adjustment during the period in which it determines the amount of the adjustment. |
Supplemental Financial Inform22
Supplemental Financial Information (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Financial Information | As of In millions June 30, December 31, Inventories Finished goods $ 21 $ 32 Service parts 16 17 Total inventories $ 37 $ 49 Deferred revenue Deferred revenue, current $ 430 $ 367 Long-term deferred revenue 16 15 Total deferred revenue $ 446 $ 382 |
Goodwill and Acquired Intangi23
Goodwill and Acquired Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 Balance, Goodwill Americas Data and Analytics $ 251 $ — $ — $ 251 International Data and Analytics 129 — 4 133 Total goodwill $ 380 $ — $ 4 $ 384 |
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, 2016 December 31, 2015 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 $ 71 $ (58 ) $ 83 $ (63 ) Customer relationships 3 to 10 — — 3 (3 ) Trademarks/trade names 5 1 (1 ) 1 (1 ) In-process research and development 5 5 (3 ) 5 (3 ) Total acquired intangible assets $ 77 $ (62 ) $ 92 $ (70 ) |
Aggregate Amortization Expense for Acquired Intangible Assets | The aggregate amortization expense (actual and estimated) for acquired intangible assets is as follows: Three Months Ended June 30, Six Months Ended June 30, In millions 2016 2015 2016 2015 Amortization expense $ 2 $ 11 $ 7 $ 22 Actual For the years ended (estimated) In millions 2015 2016 2017 2018 2019 Amortization expense $ 40 $ 10 $ 7 $ 3 $ 2 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Effective Tax Rate | The effective tax rate is as follows: Three Months Ended June 30, Six Months Ended June 30, In millions 2016 2015 2016 2015 Effective tax rate 24.7 % (6.4 )% 55.0 % (11.0 )% |
Derivative Instruments and He25
Derivative Instruments and Hedging Activities (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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, December 31, Contract notional amount of foreign exchange forward contracts $ 100 $ 138 Net contract notional amount of foreign exchange forward contracts $ 7 $ 25 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 2016 2015 Warranty reserve liability Beginning balance at January 1 $ 6 $ 7 Provisions for warranties issued 4 4 Settlements (in cash or in kind) (5 ) (5 ) Balance at June 30 $ 5 $ 6 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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, 2016 and December 31, 2015 were as follows: Fair Value Measurements at Reporting Date Using In millions Total 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, June 30, 2016 $ 402 $ 402 $ — $ — Money market funds, December 31, 2015 $ 351 $ 351 $ — $ — |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Annual Contractual Maturities of Principal on Debt Outstanding | Annual contractual maturities of principal on the term loan outstanding at June 30, 2016 are as follows: In millions Amounts Due 2016 $ 15 2017 30 2018 60 2019 68 2020 412 Total $ 585 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 In millions, except per share amounts 2016 2015 2016 2015 Net income (loss) attributable to common stockholders $ 64 $ (265 ) $ 18 $ (243 ) Weighted average outstanding shares of common stock 129.8 141.9 129.6 143.6 Dilutive effect of employee stock options, restricted stock and other stock awards 1.7 — 1.6 — Common stock and common stock equivalents 131.5 141.9 131.2 143.6 Income (loss) per share: Basic $ 0.49 $ (1.87 ) $ 0.14 $ (1.69 ) Diluted $ 0.49 $ (1.87 ) $ 0.14 $ (1.69 ) |
Segment and Other Supplementa30
Segment and Other Supplemental Information (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 In millions 2016 2015 2016 2015 Segment revenue Americas Data and Analytics $ 325 $ 348 $ 620 $ 684 International Data and Analytics 239 237 455 445 Total Data and Analytics 564 585 1,075 1,129 Marketing Applications 35 38 69 76 Total revenue 599 623 1,144 1,205 Segment gross margin Americas Data and Analytics 183 204 347 383 International Data and Analytics 116 118 213 211 Total Data and Analytics 299 322 560 594 Marketing Applications 16 16 33 31 Total segment gross margin 315 338 593 625 Stock-based compensation costs (3 ) (3 ) (7 ) (7 ) Amortization of acquisition-related intangible assets costs — (6 ) (2 ) (11 ) Acquisition, integration and reorganization-related costs (2 ) (2 ) (5 ) (3 ) Selling, general and administrative expenses 172 190 346 374 Research and development expenses 51 59 108 122 Impairment of goodwill, acquired intangibles and other assets — 340 80 340 Income (loss) from operations $ 87 $ (262 ) $ 45 $ (232 ) |
Revenue by Product and Services | The following table presents revenue by product and services for the Company: Three Months Ended Six Months Ended In millions 2016 2015 2016 2015 Products (software and hardware) (1) $ 228 $ 256 $ 422 $ 497 Consulting services 192 194 371 366 Maintenance services 179 173 351 342 Total services 371 367 722 708 Total revenue $ 599 $ 623 $ 1,144 $ 1,205 (1) Our analytic database software and hardware products are often sold and delivered together as an integrated technology solution in the form of a “node” of capacity. Accordingly, it is impracticable to provide the breakdown of revenue from various types of software and hardware products. |
Assets and Liabilities Held f31
Assets and Liabilities Held for Sale (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Assets and Liabilities Held for Sale | A summary of the carrying amounts of assets and liabilities held for sale on our consolidated balance sheets as of June 30, 2016 related to the anticipated divestiture discussed above is detailed below: As of As of In millions June 30, 2016 December 31, 2015 Current assets held for sale Accounts receivable, net $ 35 $ 41 Other current assets 2 3 Total current assets held for sale 37 44 Property and equipment, net 11 12 Goodwill 57 113 Acquired intangibles, net 25 44 Other assets — 1 Total assets held for sale $ 130 $ 214 Current liabilities held for sale Accounts payable 4 10 Payroll and benefits liabilities 4 12 Deferred Revenue 28 30 Other current liabilities 2 5 Total current liabilities held for sale 38 57 Other liabilities 5 1 Total liabilities held for sale $ 43 $ 58 |
New Accounting Pronouncements -
New Accounting Pronouncements - Narrative (Details) $ in Millions | Dec. 31, 2015USD ($) |
Long-term Debt | Accounting Standards Update 2015-03 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Debt issuance costs, net | $ 3 |
Supplemental Financial Inform33
Supplemental Financial Information (Detail) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Inventories | ||
Finished goods | $ 21 | $ 32 |
Service parts | 16 | 17 |
Total inventories | 37 | 49 |
Deferred revenue | ||
Deferred revenue, current | 430 | 367 |
Long-term deferred revenue | 16 | 15 |
Total deferred revenue | $ 446 | $ 382 |
Goodwill and Acquired Intangi34
Goodwill and Acquired Intangible Assets - Goodwill by Operating Segment (Detail) $ in Millions | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Goodwill [Roll Forward] | |
Goodwill Balance at December 31, 2015 | $ 380 |
Adjustments | 0 |
Currency Translation Adjustments | 4 |
Goodwill Balance at June 30, 2016 | 384 |
Data and Analytics | |
Goodwill [Roll Forward] | |
Goodwill Balance at December 31, 2015 | 251 |
Adjustments | 0 |
Currency Translation Adjustments | 0 |
Goodwill Balance at June 30, 2016 | 251 |
Marketing Applications | |
Goodwill [Roll Forward] | |
Goodwill Balance at December 31, 2015 | 129 |
Adjustments | 0 |
Currency Translation Adjustments | 4 |
Goodwill Balance at June 30, 2016 | $ 133 |
Goodwill and Acquired Intangi35
Goodwill and Acquired Intangible Assets - Additional Information (Details) - Marketing Applications - Discontinued Operations, Held-for-sale - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Goodwill [Line Items] | ||
Goodwill | $ 57 | $ 113 |
Acquired intangibles, net | $ 25 | $ 44 |
Goodwill and Acquired Intangi36
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, 2016 | Dec. 31, 2015 | |
Acquired Finite-Lived Intangible Assets | ||
Gross Carrying Amount | $ 77 | $ 92 |
Accumulated Amortization and Currency Translation Adjustments | (62) | (70) |
Intellectual property/developed technology | ||
Acquired Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 71 | 83 |
Accumulated Amortization and Currency Translation Adjustments | (58) | (63) |
Customer relationships | ||
Acquired Finite-Lived Intangible Assets | ||
Gross Carrying Amount | 0 | 3 |
Accumulated Amortization and Currency Translation Adjustments | $ 0 | $ (3) |
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 | $ (3) | $ (3) |
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 Intangi37
Goodwill and Acquired Intangible Assets - Aggregate Amortization Expense for Acquired Intangible Assets (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Amortization expense | $ 2 | $ 11 | $ 7 | $ 22 | $ 40 |
Amortization expense - Remainder of 2016 | 10 | 10 | |||
Amortization expense - 2017 | 7 | 7 | |||
Amortization expense - 2018 | 3 | 3 | |||
Amortization expense - 2019 | $ 2 | $ 2 |
Income Taxes - Additional infor
Income Taxes - Additional information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 24.70% | (6.40%) | 55.00% | (11.00%) |
Impairment of goodwill, acquired intangibles and other assets | $ 340 | $ 76 | $ 340 | |
Non-deductible goodwill | 318 | 57 | 318 | |
Impairment of intangible assets, indefinite-lived (excluding goodwill) | 22 | 19 | 22 | |
Deferred income taxes | $ 8 | $ 6 | $ 8 |
Derivative Instruments and He39
Derivative Instruments and Hedging Activities - Additional Information (Detail) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Derivative | ||
Net contract notional amount of foreign exchange forward contracts | $ 7,000,000 | $ 25,000,000 |
Foreign Exchange Contract | ||
Derivative | ||
Contract notional amount of foreign exchange forward contracts | $ 100,000,000 | $ 138,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | Jun. 30, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Maximum future payment obligation of the guaranteed value and associated liabilities | $ 3,000,000 |
Commitments and Contingencies41
Commitments and Contingencies - Warranty Reserve Activity (Detail) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance at January 1 | $ 6 | $ 7 |
Provisions for warranties issued | 4 | 4 |
Settlements (in cash or in kind) | (5) | (5) |
Balance at June 30 | $ 5 | $ 6 |
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, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | $ 402 | $ 351 |
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 | 402 | 351 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 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 |
Debt - Additional Information (
Debt - Additional Information (Detail) | 6 Months Ended | |
Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | |
Credit Facility | Line of Credit | Revolving Credit Facility | ||
Debt Instrument | ||
Unamortized deferred issuance costs | $ 1,000,000 | |
Term of loan, years | 5 years | |
Credit facility maximum borrowing capacity | $ 400,000,000 | |
Credit facility, number of one-year extensions | 2 | |
Credit facility, duration of extension term (in years) | 1 year | |
Credit facility outstanding balance | $ 0 | |
Credit facility borrowing capacity | 400,000,000 | |
New Senior Unsecured Term Loan | Senior Unsecured Term Loan | ||
Debt Instrument | ||
Term loan, face amount | $ 600,000,000 | |
Principal outstanding | $ 585,000,000 | |
Interest rate | 1.875% | |
Unamortized deferred issuance costs | $ 2,000,000 | |
Term of loan, years | 5 years |
Debt - Annual Contractual Matur
Debt - Annual Contractual Maturities of Principal on Debt Outstanding (Details) $ in Millions | Jun. 30, 2016USD ($) |
Debt Disclosure [Abstract] | |
2,016 | $ 15 |
2,017 | 30 |
2,018 | 60 |
2,019 | 68 |
2,020 | 412 |
Total | $ 585 |
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, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to common stockholders | $ 64 | $ (265) | $ 18 | $ (243) |
Weighted average outstanding shares of common stock (in shares) | 129.8 | 141.9 | 129.6 | 143.6 |
Dilutive effect of employee stock options, restricted stock and other stock awards (in shares) | 1.7 | 0 | 1.6 | 0 |
Common stock and common stock equivalents (in shares) | 131.5 | 141.9 | 131.2 | 143.6 |
Income (loss) per share: | ||||
Basic (in dollars per share) | $ 0.49 | $ (1.87) | $ 0.14 | $ (1.69) |
Diluted (in dollars per share) | $ 0.49 | $ (1.87) | $ 0.14 | $ (1.69) |
Earnings per Share - Additional
Earnings per Share - Additional Information (Detail) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Earnings Per Share [Abstract] | ||||
Fully diluted shares (in shares) | 144.4 | 146.1 | ||
Antidilutive options to purchase were excluded from computation of diluted earnings per share (in shares) | 5.1 | 2.9 | 5.4 | 3 |
Segment and Other Supplementa47
Segment and Other Supplemental Information - Additional Information (Detail) | 6 Months Ended |
Jun. 30, 2016segmentregion | |
Segment Reporting [Abstract] | |
Number of geographical regions | region | 2 |
Number of operating segments | segment | 2 |
Segment and Other Supplementa48
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, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Segment Reporting Information | ||||
Revenue | $ 599 | $ 623 | $ 1,144 | $ 1,205 |
Selling, general and administrative expenses | 172 | 190 | 346 | 374 |
Research and development expenses | 51 | 59 | 108 | 122 |
Impairment of goodwill, acquired intangibles and other assets | 0 | 340 | 80 | 340 |
Income (loss) from operations | 87 | (262) | 45 | (232) |
Operating segment | ||||
Segment Reporting Information | ||||
Revenue | 599 | 623 | 1,144 | 1,205 |
Gross margin | 315 | 338 | 593 | 625 |
Operating segment | Americas Data and Analytics | ||||
Segment Reporting Information | ||||
Revenue | 325 | 348 | 620 | 684 |
Gross margin | 183 | 204 | 347 | 383 |
Operating segment | International Data and Analytics | ||||
Segment Reporting Information | ||||
Revenue | 239 | 237 | 455 | 445 |
Gross margin | 116 | 118 | 213 | 211 |
Operating segment | Data and Analytics | ||||
Segment Reporting Information | ||||
Revenue | 564 | 585 | 1,075 | 1,129 |
Gross margin | 299 | 322 | 560 | 594 |
Operating segment | Marketing Applications | ||||
Segment Reporting Information | ||||
Revenue | 35 | 38 | 69 | 76 |
Gross margin | 16 | 16 | 33 | 31 |
Unallocated segment | ||||
Segment Reporting Information | ||||
Stock-based compensation costs | (3) | (3) | (7) | (7) |
Amortization of acquisition-related intangible assets costs | 0 | (6) | (2) | (11) |
Acquisition, integration and reorganization-related costs | $ (2) | $ (2) | $ (5) | $ (3) |
Segment and Other Supplementa49
Segment and Other Supplemental Information - Revenue by Product and Services (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Segment Reporting [Abstract] | ||||
Products (software and hardware) | $ 228 | $ 256 | $ 422 | $ 497 |
Consulting services | 192 | 194 | 371 | 366 |
Maintenance services | 179 | 173 | 351 | 342 |
Total services | 371 | 367 | 722 | 708 |
Total revenue | $ 599 | $ 623 | $ 1,144 | $ 1,205 |
Reorganization and Business T50
Reorganization and Business Transformation (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Restructuring Cost and Reserve [Line Items] | ||||
Goodwill, impairment loss | $ 318 | $ 57 | $ 318 | |
Marketing Applications | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Severance costs | 10 | |||
Goodwill, impairment loss | 80 | |||
Other restructuring costs | 19 | |||
International Marketing Application | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of goodwill and acquired intangibles | $ 80 | |||
Employee Severance | Marketing Applications | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Payments for restructuring | $ 16 |
Assets and Liabilities Held f51
Assets and Liabilities Held for Sale - Narrative (Details) - USD ($) $ in Millions | Apr. 22, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Impairment of goodwill, acquired intangibles and other assets | $ 340 | $ 76 | $ 340 | ||
Goodwill, impairment loss | 318 | 57 | 318 | ||
Impairment of intangible assets, indefinite-lived (excluding goodwill) | $ 22 | 19 | $ 22 | ||
Marketing Applications | Discontinued Operations, Held-for-sale | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Revenue | 69 | ||||
Operating loss | 112 | ||||
Impairment of goodwill, acquired intangibles and other assets | 76 | ||||
Goodwill, impairment loss | 57 | ||||
Goodwill | 57 | $ 113 | |||
Impairment of intangible assets, indefinite-lived (excluding goodwill) | $ 19 | ||||
Affiliated Entity | Marketing Applications | Discontinued Operations, Held-for-sale | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Consideration to be received from disposal of a segment | $ 90 | ||||
Proceeds from sale of business | $ 92 |
Assets and Liabilities Held f52
Assets and Liabilities Held for Sale (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets held for sale | ||
Total current assets held for sale | $ 130 | $ 214 |
Current liabilities held for sale | ||
Other liabilities | 43 | 58 |
Marketing Applications | Discontinued Operations, Held-for-sale | ||
Current assets held for sale | ||
Accounts receivable, net | 35 | 41 |
Other current assets | 2 | 3 |
Total current assets held for sale | 37 | 44 |
Property and equipment, net | 11 | 12 |
Goodwill | 57 | 113 |
Acquired intangibles, net | 25 | 44 |
Other assets | 0 | 1 |
Total assets held for sale | 130 | 214 |
Current liabilities held for sale | ||
Accounts payable | 4 | 10 |
Payroll and benefits liabilities | 4 | 12 |
Deferred Revenue | 28 | 30 |
Other current liabilities | 2 | 5 |
Other liabilities | 38 | 57 |
Other liabilities | 5 | 1 |
Total liabilities held for sale | $ 43 | $ 58 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Millions | Jul. 01, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 |
Subsequent Event [Line Items] | ||||||
Income tax expense | $ 21 | $ 16 | $ 22 | $ 24 | ||
Affiliated Entity | Marketing Applications | Discontinued Operations, Disposed of by Sale | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Proceeds from sale of business | $ 92 | |||||
Period of continuing involvement after disposal | 15 months | |||||
Scenario, Forecast | Marketing Applications | ||||||
Subsequent Event [Line Items] | ||||||
Income tax expense | $ 18 | |||||
Income Tax Expense, Related to Goodwill Tax Basis | $ 13 |