ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 75-3236470 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
Large accelerated filer | ý | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |||
Emerging growth company | ¨ |
Description | Page | |
Item 1. | Financial Statements | |
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II—OTHER INFORMATION | ||
Description | Page | |
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Item 1. | Financial Statements. |
Three Months Ended March 31, | |||||||
In millions, except per share amounts | 2017 | 2016 | |||||
Revenue | |||||||
Product and cloud revenue | $ | 166 | $ | 208 | |||
Service revenue | 325 | 337 | |||||
Total revenue | 491 | 545 | |||||
Costs and operating expenses | |||||||
Cost of product and cloud | 76 | 89 | |||||
Cost of services | 191 | 187 | |||||
Selling, general and administrative expenses | 155 | 174 | |||||
Research and development expenses | 70 | 57 | |||||
Impairment of goodwill, acquired intangibles and other assets | — | 80 | |||||
Total costs and operating expenses | 492 | 587 | |||||
Loss from operations | (1 | ) | (42 | ) | |||
Other expense, net | |||||||
Interest expense | (3 | ) | (3 | ) | |||
Interest income | 2 | 1 | |||||
Other expense | — | (1 | ) | ||||
Total other expense, net | (1 | ) | (3 | ) | |||
Loss before income taxes | (2 | ) | (45 | ) | |||
Income tax expense | — | 1 | |||||
Net loss | $ | (2 | ) | $ | (46 | ) | |
Net loss per weighted average common share | |||||||
Basic | $ | (0.02 | ) | $ | (0.36 | ) | |
Diluted | $ | (0.02 | ) | $ | (0.36 | ) | |
Weighted average common shares outstanding | |||||||
Basic | 130.4 | 129.4 | |||||
Diluted | 130.4 | 129.4 |
Three Months Ended March 31, | |||||||
In millions | 2017 | 2016 | |||||
Net loss | $ | (2 | ) | $ | (46 | ) | |
Other comprehensive income: | |||||||
Foreign currency translation adjustments | 5 | 8 | |||||
Defined benefit plans: | |||||||
Defined benefit plan adjustment, before tax | 1 | — | |||||
Defined benefit plan adjustment, tax portion | — | — | |||||
Defined benefit plan adjustment, net of tax | 1 | — | |||||
Other comprehensive income | 6 | 8 | |||||
Comprehensive income (loss) | $ | 4 | $ | (38 | ) |
In millions, except per share amounts | March 31, 2017 | December 31, 2016 | |||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 1,164 | $ | 974 | |||
Accounts receivable, net | 442 | 548 | |||||
Inventories | 40 | 34 | |||||
Other current assets | 58 | 65 | |||||
Total current assets | 1,704 | 1,621 | |||||
Property and equipment, net | 142 | 138 | |||||
Capitalized software, net | 167 | 187 | |||||
Goodwill | 392 | 390 | |||||
Acquired intangible assets, net | 10 | 11 | |||||
Deferred income taxes | 50 | 49 | |||||
Other assets | 18 | 17 | |||||
Total assets | $ | 2,483 | $ | 2,413 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities | |||||||
Current portion of long-term debt | $ | 38 | $ | 30 | |||
Accounts payable | 89 | 103 | |||||
Payroll and benefits liabilities | 109 | 139 | |||||
Deferred revenue | 514 | 369 | |||||
Other current liabilities | 85 | 88 | |||||
Total current liabilities | 835 | 729 | |||||
Long-term debt | 523 | 538 | |||||
Pension and other postemployment plan liabilities | 101 | 96 | |||||
Long-term deferred revenue | 14 | 14 | |||||
Deferred tax liabilities | 25 | 33 | |||||
Other liabilities | 31 | 32 | |||||
Total liabilities | 1,529 | 1,442 | |||||
Commitments and contingencies (Note 7) | |||||||
Stockholders’ equity | |||||||
Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively | — | — | |||||
Common stock: par value $0.01 per share, 500.0 shares authorized, 129.6 and 130.6 shares issued at March 31, 2017 and December 31, 2016, respectively | 1 | 1 | |||||
Paid-in capital | 1,243 | 1,220 | |||||
Accumulated deficit | (207 | ) | (161 | ) | |||
Accumulated other comprehensive loss | (83 | ) | (89 | ) | |||
Total stockholders’ equity | 954 | 971 | |||||
Total liabilities and stockholders’ equity | $ | 2,483 | $ | 2,413 |
Three Months Ended March 31, | |||||||
In millions | 2017 | 2016 | |||||
Operating activities | |||||||
Net loss | $ | (2 | ) | $ | (46 | ) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 36 | 34 | |||||
Stock-based compensation expense | 16 | 21 | |||||
Deferred income taxes | (8 | ) | (10 | ) | |||
Impairment of goodwill, acquired intangibles and other assets | — | 80 | |||||
Changes in assets and liabilities: | |||||||
Receivables | 106 | 66 | |||||
Inventories | (6 | ) | (5 | ) | |||
Current payables and accrued expenses | (44 | ) | (16 | ) | |||
Deferred revenue | 145 | 140 | |||||
Other assets and liabilities | 5 | (14 | ) | ||||
Net cash provided by operating activities | 248 | 250 | |||||
Investing activities | |||||||
Expenditures for property and equipment | (16 | ) | (8 | ) | |||
Additions to capitalized software | (2 | ) | (18 | ) | |||
Business acquisitions and other investing activities, net | — | (3 | ) | ||||
Net cash used in investing activities | (18 | ) | (29 | ) | |||
Financing activities | |||||||
Repurchases of common stock | (43 | ) | (47 | ) | |||
Repayments of long-term borrowings | (8 | ) | (7 | ) | |||
Repayments of credit facility borrowings | — | (100 | ) | ||||
Other financing activities, net | 7 | 9 | |||||
Net cash used in financing activities | (44 | ) | (145 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 4 | 2 | |||||
Increase in cash and cash equivalents | 190 | 78 | |||||
Cash and cash equivalents at beginning of period | 974 | 839 | |||||
Cash and cash equivalents at end of period | $ | 1,164 | $ | 917 |
• | As the Company transitions to the new go-to-market offerings, such as subscription-based licenses rather than perpetual licenses, the Company could potentially see a more significant impact in the amount of revenue recognized over time under the current rules but upfront under the new rules; |
• | The Company currently expenses contract acquisition costs and believes that the requirement to defer incremental contract acquisition costs and recognize them over the term of the contract to which the costs relate could have an impact, especially as the Company transitions to longer-term, over-time revenue contracts; |
• | The amount of revenue allocated to the delivered items and recognized upfront utilizing the relative selling price model is limited to the amount that is not contingent upon the delivery of additional items or meeting other specified performance conditions (i.e., the non-contingent amount) under current rules. Under the new rules, the amounts allocated to delivered items and recognized upfront could be higher if it is probable that a significant reversal in the amount of revenue recognized will not occur in future periods upon the delivery of additional items or meeting other specified performance conditions; and |
• | The new standard will impact our internal control environment, including our financial statement disclosure controls, business process controls, new systems and processes, and enhancements to existing systems and processes. |
As of | |||||||
In millions | March 31, 2017 | December 31, 2016 | |||||
Inventories | |||||||
Finished goods | $ | 26 | $ | 20 | |||
Service parts | 14 | 14 | |||||
Total inventories | $ | 40 | $ | 34 | |||
Deferred revenue | |||||||
Deferred revenue, current | $ | 514 | $ | 369 | |||
Long-term deferred revenue | 14 | 14 | |||||
Total deferred revenue | $ | 528 | $ | 383 |
In millions | Balance, December 31, 2016 | Adjustments | Currency Translation Adjustments | Balance, March 31, 2017 | |||||||||||
Goodwill | |||||||||||||||
Americas Data and Analytics | $ | 251 | $ | — | $ | — | $ | 251 | |||||||
International Data and Analytics | 139 | — | 2 | 141 | |||||||||||
Total goodwill | $ | 390 | $ | — | $ | 2 | $ | 392 |
March 31, 2017 | December 31, 2016 | |||||||||||||||||
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 | 2 to 5 | $ | 23 | $ | (14 | ) | $ | 71 | $ | (61 | ) | |||||||
Trademarks/trade names | 5 | — | — | 1 | (1 | ) | ||||||||||||
In-process research and development | 5 | 5 | (4 | ) | 5 | (4 | ) | |||||||||||
Total acquired intangible assets | $ | 28 | $ | (18 | ) | $ | 77 | $ | (66 | ) |
Three Months Ended March 31, | ||||||||
In millions | 2017 | 2016 | ||||||
Amortization expense | $ | 2 | $ | 5 |
Actual | For the years ended (estimated) | |||||||||||||||
In millions | 2016 | 2017 | 2018 | 2019 | ||||||||||||
Amortization expense | $ | 10 | $ | 7 | $ | 3 | $ | 1 |
Three Months Ended March 31, | ||||||
In millions | 2017 | 2016 | ||||
Effective tax rate | — | % | (2.2 | )% |
As of | |||||||
In millions | March 31, 2017 | December 31, 2016 | |||||
Contract notional amount of foreign exchange forward contracts | $ | 141 | $ | 156 | |||
Net contract notional amount of foreign exchange forward contracts | $ | 7 | $ | 16 |
In millions | 2017 | 2016 | |||||
Warranty reserve liability | |||||||
Beginning balance at January 1 | $ | 5 | $ | 6 | |||
Provisions for warranties issued | 1 | 2 | |||||
Settlements (in cash or in kind) | (2 | ) | (2 | ) | |||
Balance at March 31 | $ | 4 | $ | 6 |
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, March 31, 2017 | $ | 617 | $ | 617 | $ | — | $ | — | |||||||
Money market funds, December 31, 2016 | $ | 473 | $ | 473 | $ | — | $ | — |
Three Months Ended March 31, | |||||||
In millions, except per share amounts | 2017 | 2016 | |||||
Net loss attributable to common stockholders | $ | (2 | ) | $ | (46 | ) | |
Weighted average outstanding shares of common stock | 130.4 | 129.4 | |||||
Dilutive effect of employee stock options, restricted stock and other stock awards | — | — | |||||
Common stock and common stock equivalents | 130.4 | 129.4 | |||||
Loss per share: | |||||||
Basic | $ | (0.02 | ) | $ | (0.36 | ) | |
Diluted | $ | (0.02 | ) | $ | (0.36 | ) |
Three Months Ended March 31, | |||||||
In millions | 2017 | 2016 | |||||
Segment revenue | |||||||
Americas Data and Analytics | $ | 267 | $ | 295 | |||
International Data and Analytics | 224 | 216 | |||||
Total Data and Analytics | 491 | 511 | |||||
Marketing Applications | — | 34 | |||||
Total revenue | 491 | 545 | |||||
Segment gross profit | |||||||
Americas Data and Analytics | 151 | 175 | |||||
International Data and Analytics | 100 | 102 | |||||
Total Data and Analytics | 251 | 277 | |||||
Marketing Applications | — | 17 | |||||
Total segment gross profit | 251 | 294 | |||||
Stock-based compensation costs | (4 | ) | (4 | ) | |||
Amortization of acquisition-related intangible assets costs | — | (2 | ) | ||||
Acquisition, integration, reorganization and transformation-related costs | (2 | ) | (3 | ) | |||
Amortization of capitalized software costs | (21 | ) | (16 | ) | |||
Selling, general and administrative expenses | 155 | 174 | |||||
Research and development expenses | 70 | 57 | |||||
Impairment of goodwill, acquired intangibles and other assets | — | 80 | |||||
Loss from operations | $ | (1 | ) | $ | (42 | ) |
Three Months Ended March 31, | |||||||
In millions | 2017 | 2016 | |||||
Maintenance | $ | 176 | $ | 168 | |||
Subscription, licenses, cloud and upgrades | 76 | 70 | |||||
Total recurring revenue | 252 | 238 | |||||
Licenses and products | 90 | 120 | |||||
Consulting services | 149 | 153 | |||||
Marketing applications | — | 34 | |||||
Total revenue | $ | 491 | $ | 545 |
Three Months Ended March 31, | |||||||
In millions | 2017 | 2016 | |||||
Employee severance and other employee related cost | $ | 2 | $ | 9 | |||
Asset write-downs | 6 | 80 | |||||
Professional services, legal and other transformation costs | 10 | 8 | |||||
Total reorganization and business transformation cost | $ | 18 | $ | 97 |
• | Total revenue was $491 million for the first quarter of 2017, down 10% from the first quarter of 2016, with an underlying 20% decrease in product and cloud revenue and a 4% decrease in services revenue, in part due to the sale of the marketing applications business. |
• | Gross margin decreased to 45.6% in the first quarter of 2017 from 49.4% in the first quarter of 2016, driven by a decrease in both product and cloud and services gross margin. |
• | Operating loss was $1 million in the first quarter of 2017, compared to operating loss of $42 million in the first quarter of 2016. The first quarter of 2016 included an impairment loss on goodwill, acquired intangibles and other assets of $80 million. |
• | Net loss in the first quarter of 2017 was $2 million, compared to a net loss of $46 million in the first quarter of 2016. |
• | Hybrid Cloud: leading technology and services to deliver an analytic ecosystem deployed in a hybrid cloud architecture, including offerings such as managed cloud, private cloud, public cloud, and on premises software and hardware; |
• | Business Analytics Solutions: deliver high-value business outcomes realized by engaging with business users through solution-based selling that leverages analytic consulting and repeatable analytical intellectual property ("IP"); and |
• | Ecosystem Architecture Consulting: best-in-class architecture consulting expertise to help customers build optimized analytical ecosystems independent of technology, leveraging both open source and commercial solutions. |
• | deliver business outcomes for our customers through technology-enabled analytics at scale, |
• | by focusing on companies with the largest analytic opportunities, |
• | by offering market-leading hybrid cloud technology, |
• | that is enabled by a world class go-to-market sales and support team, |
• | with the ultimate goal of generating revenue, earnings, and cash flow growth. |
• | Cloud - We plan to continue to expand our data warehouse offerings in the public cloud and in Teradata’s managed cloud environments. With our "Teradata Everywhere" initiative, we offer our customers greater flexibility and agility through the same Teradata database that we offer on premises, in a managed cloud, public cloud, or private cloud environment. Teradata Everywhere is designed to speed time to value, save costs, and encourage analytics use throughout the organization. We offer services for cloud migration as well as for design, implementation and management of cloud and hybrid cloud environments. Teradata is currently available in Amazon's AWS and Microsoft's Azure cloud environments as well as in Teradata’s cloud, in support of offering customers’ choice in how they can purchase our software. |
• | On-premises data warehouse - We have introduced methods to make it easier to buy, expand, and seamlessly upgrade data warehouses. Our IntelliFlex platform architecture is providing more flexible configurations and seamless expansions of our customers’ IDW environments, and the software-only version of our Teradata database is allowing us to expand with both new and existing customers. |
• | Analytical ecosystem - We are adding to our data load and integration software and service offerings capabilities that manage customers' analytical ecosystems with new products such as Teradata Unity™, QueryGrid™, and Listener™. These offerings help customers integrate data and manage their analytic ecosystem to better extract value from their data. |
• | TCore - is a metric that tracks a consistent unit of consumption across all of Teradata’s products over the wide variety of configuration and deployment options, both on-premises and in the cloud. It is determined from the number of physical central processing unit ("CPU") cores in a system and adjusted/reduced by the underlying hardware platform's input/output ("I/O") throughput performance capabilities. |
• | TCore Growth - is the rate of increase in the number of TCores added in one period compared to the number of TCores added in another period. |
• | Annual Recurring Revenue ("ARR") - is the annual value at a point in time of all of our recurring contracts, including support, software upgrade rights, subscription licenses, rental and cloud. |
• | Recurring Revenue as a % of Total Revenue - revenue from all recurring contracts, including support, software upgrade rights, subscription licenses, rental and cloud divided by total Company revenue. |
• | Business Consulting Revenue Growth - revenue growth from our strategic service offerings around analytics consulting, business consulting, and ecosystem architecture consulting. Although the revenue from Business Consulting represents a small percent of total Company revenue, it is a leading indicator of future TCore (consumption) growth and measures our effectiveness of becoming a “Trusted Advisor” within our customers and targeted prospects. |
% of | % of | ||||||||||||
In millions | 2017 | Revenue | 2016 | Revenue | |||||||||
Product and cloud revenue | $ | 166 | 33.8 | % | $ | 208 | 38.2 | % | |||||
Service revenue | 325 | 66.2 | % | 337 | 61.8 | % | |||||||
Total revenue | $ | 491 | 100 | % | $ | 545 | 100 | % |
• | TCore (consumption) growth, as described above under "Business Transformation", in the first quarter of 2017 increased more than 30% as compared to the TCore consumption growth in the first quarter of 2016. |
• | Annual Recurring Revenue was approximately $1 billion, up 4% from first quarter of 2016. |
• | We had $252 million (51% of total revenue) of recurring revenue in the first quarter of 2017, which compares to $238 million (44% of total revenue) in the first quarter of 2016. |
• | Total Business Consulting revenue, which includes the Company's newer Analytic Business Consulting and Ecosystem Architecture Consulting services, increased 10% from the first quarter of 2016. |
% of | % of | ||||||||||||
In millions | 2017 | Revenue | 2016 | Revenue | |||||||||
Product and cloud gross profit | $ | 90 | 54.2 | % | $ | 119 | 57.2 | % | |||||
Service gross profit | 134 | 41.2 | % | 150 | 44.5 | % | |||||||
Total gross profit | $ | 224 | 45.6 | % | $ | 269 | 49.4 | % |
% of | % of | ||||||||||||
In millions | 2017 | Revenue | 2016 | Revenue | |||||||||
Selling, general and administrative expenses | $ | 155 | 31.6 | % | $ | 174 | 31.9 | % | |||||
Research and development expenses | 70 | 14.3 | % | 57 | 10.5 | % | |||||||
Impairment of goodwill, acquired intangibles and other assets | — | — | % | 80 | 14.7 | % | |||||||
Total operating expenses | $ | 225 | 45.8 | % | $ | 311 | 57.0 | % |
In millions | 2017 | 2016 | |||||
Interest income | 2 | 1 | |||||
Interest expense | (3 | ) | (3 | ) | |||
Other | — | (1 | ) | ||||
Other expense, net | $ | (1 | ) | $ | (3 | ) |
2017 | 2016 | ||||
Effective tax rate | — | % | (2.2 | )% |
% of | % of | ||||||||||||
In millions | 2017 | Revenue | 2016 | Revenue | |||||||||
Segment revenue | |||||||||||||
Americas Data and Analytics | $ | 267 | 54.4 | % | $ | 295 | 54.1 | % | |||||
International Data and Analytics | 224 | 45.6 | % | 216 | 39.5 | % | |||||||
Total Data and Analytics | 491 | 100.0 | % | 511 | 93.8 | % | |||||||
Marketing Applications | — | — | % | 34 | 6.2 | % | |||||||
Total segment revenue | $ | 491 | 100 | % | $ | 545 | 100 | % | |||||
Segment gross profit | |||||||||||||
Americas Data and Analytics | $ | 151 | 56.6 | % | $ | 175 | 59.3 | % | |||||
International Data and Analytics | 100 | 44.6 | % | 102 | 47.2 | % | |||||||
Total Data and Analytics | 251 | 51.1 | % | 277 | 54.2 | % | |||||||
Marketing Applications | — | — | % | 17 | 50.0 | % | |||||||
Total segment gross profit | $ | 251 | 51.1 | % | $ | 294 | 53.9 | % |
Three Months Ended March 31, | |||||||
In millions | 2017 | 2016 | |||||
Net cash provided by operating activities | $ | 248 | $ | 250 | |||
Less: | |||||||
Expenditures for property and equipment | (16 | ) | (8 | ) | |||
Additions to capitalized software | (2 | ) | (18 | ) | |||
Free cash flow | $ | 230 | $ | 224 |
Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Dilution Offset Program | Total Number of Shares Purchased as Part of Publicly Announced General Share Repurchase Program | Maximum Dollar Value that May Yet Be Purchased Under the Dilution Offset Program | Maximum Dollar Value that May Yet Be Purchased Under the General Share Repurchase Program | ||||||||||||||||
Month | |||||||||||||||||||||
January 2017 | — | NA | — | — | $ | 13,714,164 | $ | 511,525,804 | |||||||||||||
February 2017 | 236,710 | $ | 31.20 | 236,710 | — | $ | 11,297,040 | $ | 511,525,804 | ||||||||||||
March 2017 | 1,150,000 | $ | 31.21 | 300,000 | 850,000 | $ | 4,285,712 | $ | 485,012,249 | ||||||||||||
First Quarter Total | 1,386,710 | $ | 31.21 | 536,710 | 850,000 | $ | 4,285,712 | $ | 485,012,249 |
Reference Number per Item 601 of Regulation S-K | Description | ||
2.1 | Form of Separation and Distribution Agreement between Teradata Corporation and NCR Corporation (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated September 11, 2007 (SEC file number 001-33458)). | ||
3.1 | Amended and Restated Certificate of Incorporation of Teradata Corporation as amended and restated on September 24, 2007 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K dated September 25, 2007 (SEC file number 001-33458)). | ||
3.2 | Amended and Restated By-Laws of Teradata Corporation, as amended and restated on July 26, 2016 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K dated August 1, 2016). | ||
4.1 | Common Stock Certificate of Teradata Corporation (incorporated by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q dated November 13, 2007 (SEC file number 001-33458)). | ||
10.1* | Teradata Executive Severance Plan, effective as of February 1, 2017 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated February 3, 2017). | ||
10.2* | Teradata Change in Control Severance Plan, as Amended and Restated January 30, 2017 to be Effective as of February 1, 2017. | ||
10.3* | Settlement Terms issued by Augsburg Labour Court with respect to Teradata Corporation, Teradata GmbH and Hermann Wimmer dated March 29, 2017 and entered as of April 4, 2017 (incorporated by reference to Exhibit 10.1 to Amendment No. 1 to the Current Report on Form 8-K/A dated April 6, 2017). | ||
31.1 | Certification pursuant to Rule 13a-14(a), dated May 5, 2017. | ||
31.2 | Certification pursuant to Rule 13a-14(a), dated May 5, 2017. | ||
32 | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated May 5, 2017. | ||
101 | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Statements of Loss for the three month period ended March 31, 2017 and 2016, (ii) the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three month period ended March 31, 2017 and 2016, (iii) the Condensed Consolidated Balance Sheets at March 31, 2017 and December 31, 2016, (iv) the Condensed Consolidated Statements of Cash Flows for the three month periods ended March 31, 2017 and 2016 and (v) the notes to the Condensed Consolidated Financial Statements. |
TERADATA CORPORATION | ||||
Date: May 5, 2017 | By: | /s/ Stephen M. Scheppmann | ||
Stephen M. Scheppmann Executive Vice President and Chief Financial Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Teradata Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 5, 2017 | /s/ Victor L. Lund | |
Victor L. Lund | ||
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Teradata Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 5, 2017 | /s/ Stephen M. Scheppmann | |
Stephen M. Scheppmann | ||
Executive Vice President and Chief Financial Officer |
(1) | the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 5, 2017 | /s/ Victor L. Lund | |
Victor L. Lund | ||
Preseident and Chief Executive Officer | ||
Date: May 5, 2017 | /s/ Stephen M. Scheppmann | |
Stephen M. Scheppmann Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Apr. 28, 2017 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | TDC | |
Entity Registrant Name | TERADATA CORP /DE/ | |
Entity Central Index Key | 0000816761 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 129.3 |
Condensed Consolidated Statements of Loss (Unaudited) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Revenue | ||
Product and cloud revenue | $ 166 | $ 208 |
Service revenue | 325 | 337 |
Total revenue | 491 | 545 |
Costs and operating expenses | ||
Cost of product and cloud | 76 | 89 |
Cost of services | 191 | 187 |
Selling, general and administrative expenses | 155 | 174 |
Research and development expenses | 70 | 57 |
Impairment of goodwill, acquired intangibles and other assets | 0 | 80 |
Total costs and operating expenses | 492 | 587 |
Loss from operations | (1) | (42) |
Interest expense | (3) | (3) |
Interest income | 2 | 1 |
Other expense | 0 | (1) |
Total other expense, net | (1) | (3) |
Loss before income taxes | (2) | (45) |
Income tax expense | 0 | 1 |
Net loss | $ (2) | $ (46) |
Net loss per weighted average common share | ||
Basic (in dollars per share) | $ (0.02) | $ (0.36) |
Diluted (in dollars per share) | $ (0.02) | $ (0.36) |
Weighted average common shares outstanding | ||
Basic (in shares) | 130.4 | 129.4 |
Diluted (in shares) | 130.4 | 129.4 |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (2) | $ (46) |
Other comprehensive income: | ||
Foreign currency translation adjustments | 5 | 8 |
Defined benefit plans: | ||
Defined benefit plan adjustment, before tax | 1 | 0 |
Defined benefit plan adjustment, tax portion | 0 | 0 |
Defined benefit plan adjustment, net of tax | 1 | 0 |
Other comprehensive income | 6 | 8 |
Comprehensive income (loss) | $ 4 | $ (38) |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
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) | 129,600,000 | 130,600,000 |
Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
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 United States 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 2016 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, 2016 (the “2016 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. Prior period amounts have been restated to conform to the current year presentation. As a result of the Company's early adoption of Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting, in the fourth quarter of 2016, retroactively to January 1, 2016, the restatement of prior year results resulted in a change in net cash provided by operating activities and net cash used by financing activities of $1 million for the three months ended March 31, 2016. |
New Accounting Pronouncements |
3 Months Ended | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||
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 (modified retrospective method). In 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 plans to adopt the new accounting guidance effective January 1, 2018 by utilizing the modified retrospective method. The Company is currently evaluating the impact on its consolidated financial position, results of operations and cash flows. Although the Company is still evaluating the impact on its consolidated financial statements, the Company believes the most significant impacts may include the following items:
The Company does not expect that the new standard will result in substantive changes in our deliverables or the amounts of revenue allocated between multiple deliverables, with the exception of contingent revenue discussed above. The Company is still in the process of evaluating these impacts, and our initial assessment may change as the Company continues with implementing new systems, processes, accounting policies and internal controls. Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost. In March 2017, the FASB issued accounting guidance for “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost”. The amendment requires the service cost component of net periodic benefit cost be presented in the same income statement line item as other employee compensation costs arising from services rendered during the period and other components of the net periodic benefit cost be presented separately from the line item that includes the service cost and outside of any subtotal of operating income. For public entities, the amendments are effective for interim and annual reporting periods beginning after December 15, 2017. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. Recently Adopted Guidance Simplifying the measurement for goodwill. In January 2017, the FASB issued guidance to simplify the accounting for the impairment of goodwill. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance is required to be applied prospectively and is effective for periods beginning after December 15, 2019, with early adoption permitted. The Company elected to early adopt this accounting guidance effective January 1, 2017. The Company does not expect any impact from the adoption of the new accounting guidance on its consolidated financial statements. |
Supplemental Financial Information |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Financial Information | Supplemental Financial Information
|
Goodwill and Acquired Intangible Assets |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
The only changes in goodwill for the three months ended March 31, 2017 were due to changes in foreign currency exchange rates. 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:
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. The aggregate amortization expense (actual and estimated) for acquired intangible assets is as follows:
|
Income Taxes |
3 Months Ended | |||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||
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 ("U.S."). 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:
For the three months ended March 31, 2017, no discrete tax items were recorded. For the three months ended March 31, 2016, there were discrete tax items resulting from the $76 million impairment recorded in the first quarter of 2016, of which $57 million was related to non-deductible goodwill and $19 million was related to intangible assets for which $6 million of deferred tax benefit had been recorded. In addition, there was a $1 million favorable tax benefit recognized due to the release of a reserve taken for a previously uncertain tax position. These discrete items resulted in income tax expense in Q1 2016 of $1 million, on a pre-tax net loss of $45 million, causing a negative tax rate of (2.2)%. |
Derivative Instruments and Hedging Activities |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
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 U.S. 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:
The fair value of derivative assets and liabilities recorded in other current assets and accrued liabilities at March 31, 2017 and December 31, 2016, 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 months ended March 31, 2017 and March 31, 2016. 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 |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 March 31, 2017, 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 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 three months ended March 31:
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. Concentrations of Risk. The Company is potentially subject to concentrations of credit risk on accounts receivable and financial instruments such as hedging instruments, and cash and cash equivalents. Credit risk includes the risk of nonperformance by counterparties. The maximum potential loss may exceed the amount recognized on the balance sheet. Exposure to credit risk is managed through credit approvals, credit limits, selecting major international financial institutions (as counterparties to hedging transactions) and monitoring procedures. Teradata’s business often involves large transactions with customers, and if one or more of those customers were to default in its obligations under applicable contractual arrangements, the Company could be exposed to potentially significant losses. However, management believes that the reserves for potential losses were adequate at March 31, 2017 and December 31, 2016. The Company is also potentially subject to concentrations of supplier risk. Our hardware components are assembled exclusively by Flextronics International Ltd. (“Flextronics”). Flextronics procures a wide variety of components used in the manufacturing process on behalf of the Company. Although many of these components are available from multiple sources, Teradata utilizes preferred supplier relationships to provide more consistent and optimal quality, cost and delivery. Typically, these preferred suppliers maintain alternative processes and/or facilities to ensure continuity of supply. Given the Company’s strategy to outsource its manufacturing activities to Flextronics and to source certain components from single suppliers, a disruption in production at Flextronics or at a supplier could impact the timing of customer shipments and/or Teradata’s operating results. In addition, a significant change in the forecasts to any of these preferred suppliers could result in purchase obligations for components that may be in excess of demand. |
Fair Value Measurements |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 March 31, 2017 and December 31, 2016, 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 March 31, 2017 and December 31, 2016 were as follows:
|
Earnings per Share |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
For the three months ended March 31, 2017 and March 31, 2016, due to the net loss attributable to Teradata common stockholders, 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. The fully diluted shares would have been 131.9 million for the three months ended March 31, 2017 and 130.9 million for the three months ended March 31, 2016. Options to purchase 4.5 million shares of common stock for the three months ended March 31, 2017 and 5.7 million shares of common stock for the three months ended March 31, 2016 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 Information |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment and Other Supplemental Information | Segment and Other Supplemental Information Effective July 1, 2016, following the sale of the marketing applications business, Teradata is managing 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). 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 profit. For management reporting purposes assets are not allocated to the segments. The following table presents segment revenue and segment gross margin for the Company:
Prior period segment information has been reclassified to conform to the current period presentation. Certain items, including amortization of certain capitalized software costs, were excluded from segment gross profit to conform to the way the Company manages and reviews the results by segment. The following table presents a further disaggregation of revenue for the Company:
|
Reorganization and Business Transformation |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 included exiting the marketing applications business, rationalizing costs, and modifying the Company’s go-to-market approach. The Company incurred the following costs for the three months ended March 31:
For the three months ended March 31, 2017, costs incurred above includes $8 million for an inventory charge and other associated transformation costs related to the discontinuation of Teradata's prior hardware platforms. In addition to the costs and charges incurred above, the Company made cash payments of $11 million for the three months ended March 31, 2016 for employee severance that did not have a material impact on its Statement of Operations due to Teradata's 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. |
New Accounting Pronouncements (Policies) |
3 Months Ended | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||
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 (modified retrospective method). In 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 plans to adopt the new accounting guidance effective January 1, 2018 by utilizing the modified retrospective method. The Company is currently evaluating the impact on its consolidated financial position, results of operations and cash flows. Although the Company is still evaluating the impact on its consolidated financial statements, the Company believes the most significant impacts may include the following items:
The Company does not expect that the new standard will result in substantive changes in our deliverables or the amounts of revenue allocated between multiple deliverables, with the exception of contingent revenue discussed above. The Company is still in the process of evaluating these impacts, and our initial assessment may change as the Company continues with implementing new systems, processes, accounting policies and internal controls. |
||||||||||||||||
New Accounting Pronouncements | Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost. In March 2017, the FASB issued accounting guidance for “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost”. The amendment requires the service cost component of net periodic benefit cost be presented in the same income statement line item as other employee compensation costs arising from services rendered during the period and other components of the net periodic benefit cost be presented separately from the line item that includes the service cost and outside of any subtotal of operating income. For public entities, the amendments are effective for interim and annual reporting periods beginning after December 15, 2017. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. Recently Adopted Guidance Simplifying the measurement for goodwill. In January 2017, the FASB issued guidance to simplify the accounting for the impairment of goodwill. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance is required to be applied prospectively and is effective for periods beginning after December 15, 2019, with early adoption permitted. The Company elected to early adopt this accounting guidance effective January 1, 2017. The Company does not expect any impact from the adoption of the new accounting guidance on its consolidated financial statements. |
Supplemental Financial Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Financial Information |
|
Goodwill and Acquired Intangible Assets (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill by Operating Segment | The following table identifies the activity relating to goodwill by operating segment:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate Amortization Expense for Acquired Intangible Assets | The aggregate amortization expense (actual and estimated) for acquired intangible assets is as follows:
|
Income Taxes (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||
Effective Tax Rate | The effective tax rate is as follows:
|
Derivative Instruments and Hedging Activities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
Commitments and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warranty Reserve Activity | The following table identifies the activity relating to the warranty reserve for the three months ended March 31:
|
Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 March 31, 2017 and December 31, 2016 were as follows:
|
Earnings per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Basic and Diluted Earnings Per Share | The components of basic and diluted earnings per share are as follows:
|
Segment and Other Supplemental Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regional Segment Revenue and Gross Margin | The following table presents segment revenue and segment gross margin for the Company:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue by Product and Services | The following table presents a further disaggregation of revenue for the Company:
|
Reorganization and Business Transformation - (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The Company incurred the following costs for the three months ended March 31:
|
Basis of Presentation - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Change in Accounting Estimate [Line Items] | ||
Net cash used in financing activities | $ 44 | $ 145 |
Net cash provided by operating activities | $ 248 | 250 |
Accounting Standards Update, 2016-09 [Member] | ||
Change in Accounting Estimate [Line Items] | ||
Net cash used in financing activities | 1 | |
Net cash provided by operating activities | $ 1 |
Supplemental Financial Information (Detail) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Inventories | ||
Finished goods | $ 26 | $ 20 |
Service parts | 14 | 14 |
Total inventories | 40 | 34 |
Deferred revenue | ||
Deferred revenue, current | 514 | 369 |
Long-term deferred revenue | 14 | 14 |
Total deferred revenue | $ 528 | $ 383 |
Goodwill and Acquired Intangible Assets - Goodwill by Operating Segment (Detail) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Goodwill [Roll Forward] | |
December 31, 2016 | $ 390 |
Adjustments | 0 |
Currency Translation Adjustments | 2 |
March 31, 2017 | 392 |
Americas Data and Analytics | |
Goodwill [Roll Forward] | |
December 31, 2016 | 251 |
Adjustments | 0 |
Currency Translation Adjustments | 0 |
March 31, 2017 | 251 |
International Data and Analytics | |
Goodwill [Roll Forward] | |
December 31, 2016 | 139 |
Adjustments | 0 |
Currency Translation Adjustments | 2 |
March 31, 2017 | $ 141 |
Goodwill and Acquired Intangible Assets - Aggregate Amortization Expense for Acquired Intangible Assets (Detail) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense | $ 2 | $ 5 | $ 10 |
Amortization expense - Remainder of 2017 | 7 | ||
Amortization expense - 2018 | 3 | ||
Amortization expense - 2019 | $ 1 |
Income Taxes - Additional information (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 0.00% | (2.20%) |
Impairment of goodwill, acquired intangibles and other assets | $ 76 | |
Non-deductible goodwill | 57 | |
Impairment of intangible assets, indefinite-lived (excluding goodwill) | 19 | |
Deferred income taxes benefit | 6 | |
Income tax expense | $ 0 | 1 |
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest | $ 2 | $ 45 |
Derivative Instruments and Hedging Activities - Additional Information (Detail) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Derivative | ||
Net contract notional amount of foreign exchange forward contracts | $ 7 | $ 16 |
Foreign Exchange Contract | ||
Derivative | ||
Contract notional amount of foreign exchange forward contracts | $ 141 | $ 156 |
Commitments and Contingencies - Additional Information (Detail) |
Mar. 31, 2017
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Maximum future payment obligation of the guaranteed value and associated liabilities | $ 4,000,000 |
Commitments and Contingencies - Warranty Reserve Activity (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance at January 1 | $ 5 | $ 6 |
Provisions for warranties issued | 1 | 2 |
Settlements (in cash or in kind) | (2) | (2) |
Balance at March 31 | $ 4 | $ 6 |
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 |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | $ 617 | $ 473 |
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 | 617 | 473 |
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 |
Earnings per Share - Components of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Earnings Per Share [Abstract] | ||
Net loss attributable to common stockholders | $ (2) | $ (46) |
Weighted average outstanding shares of common stock (in shares) | 130.4 | 129.4 |
Dilutive effect of employee stock options, restricted stock and other stock awards (in shares) | 0.0 | 0.0 |
Common stock and common stock equivalents (in shares) | 130.4 | 129.4 |
Loss per share: | ||
Basic (in dollars per share) | $ (0.02) | $ (0.36) |
Diluted (in dollars per share) | $ (0.02) | $ (0.36) |
Earnings per Share - Additional Information (Detail) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Earnings Per Share [Abstract] | ||
Fully diluted shares (in shares) | 131.9 | 130.9 |
Antidilutive options to purchase were excluded from computation of diluted earnings per share (in shares) | 4.5 | 5.7 |
Segment and Other Supplemental Information - Additional Information (Detail) |
3 Months Ended |
---|---|
Mar. 31, 2017
segment
| |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment and Other Supplemental Information - Revenue by Product and Services (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Segment Reporting [Abstract] | ||
Maintenance | $ 176 | $ 168 |
Subscription, licenses, cloud and upgrades | 76 | 70 |
Total recurring revenue | 252 | 238 |
Licenses and products | 90 | 120 |
Consulting services | 149 | 153 |
Marketing applications | 0 | 34 |
Total revenue | $ 491 | $ 545 |
Reorganization and Business Transformation (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Restructuring Cost and Reserve [Line Items] | ||
Asset write-downs | $ 0 | $ 80 |
Marketing Applications | ||
Restructuring Cost and Reserve [Line Items] | ||
Employee severance and other employee related cost | 2 | 9 |
Asset write-downs | 6 | 80 |
Professional services, legal and other transformation costs | 10 | 8 |
Total reorganization and business transformation cost | $ 18 | 97 |
Other Restructuring | Marketing Applications | ||
Restructuring Cost and Reserve [Line Items] | ||
Total reorganization and business transformation cost | 8 | |
Employee Severance | Marketing Applications | ||
Restructuring Cost and Reserve [Line Items] | ||
Payments for restructuring | $ 11 |
$NJKNP2))+4G"!"S\3&1MHY50 26Y<,%K->/]9^@R3"O
M#BWV%(&7'%@[3?3GL6O@!IA@A,'&[P+JF9BK?V)S!]@E.48SIX9A*(=%SJ4=
M.+P_;U_SNH7I(\E>87H5C:"SQS6[3GY;/#[M-JRM*_Y05*MT=IR+>BF6JX_)
M]8??3=@Z;?;F'QM?!=L&?OV+]@M02P,$% @ +ENE2IE M/D+_X!4$L#!!0 ( "Y;I4KH
MW#T-'00 !L5 8 >&PO=V]R:W-H965TJZ2 VU >9JDV]=GI;S):+G19"#AS(S(0XC BT0<$8 :7L6
M0"Z! [+HZ%^!HXT(W0*A,X)0T\,%/7+3(R<]TO1H08^- [ 1B5L@=@K$%CTU
M!&Q$YA9(G *)1=\8 C8"!FZ%U*F0VGQH2(R06$.Z\9H#F+I%,J=(9HL8F7(8
M(
*7E(/S1L\L*$6+U^F473S'F?\*VP;P&<#? =A4*"K_)+PH,FM&8J?9
M]R)<\?[ <39E",91Q'\HWF'T4NR3)&.70#3G'*<V >>WN1W
M^#CM7X1MI''DBCZ\;.I_C>@A2-G
E#B:U0H;?R2:K .U!G P-?C!V5Y$3IBYI\.>]=3P$!@5*H"EC>;E (:J0Q/@]U73G
M+95Q.7ZK_DEGEUE.F$-!R:_F+.J]F[C.&2I\)>*9#I]ARA.YSA3^*]R 2+DB
MD7N4E'!]=
;U2L_#@)^AJA&9,/F'"%298$$BK
M+RG"O11Y^$ /[Q.<=A!X/T.T6T1D^=':(#[L"\2[ K$5B.^Z$&RZ,&$.%M--
M2:+ ^[0I90_EKU!W9O"N&;QC9M.Q'#^DB3V\L?*(P=ZV*VAU3AB(VEXIZ11\
MZ)3Y(ZOH,!,BW5CUM8$!-W$WJ31*GFSUSUIZVS$
ML9)=2S,9'?O>>^@:-6-\I?KAOGM]<],WT]^S9I]7K?,DI&H#=;.V$T)R1=&_
M5;-T4/W[^%'PG>Q>8_7>]$UL_R%%/33HWOA?@N4_4$L#!!0 ( "];I4H]
MV#)96 ( )8' 9 >&PO=V]R:W-H965T