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 |
(State or other jurisdiction of | (I.R.S. Employer | |||||||
incorporation or organization) | Identification No.) |
Title of each class: | Trading Symbol | Name of Each Exchange on which Registered: | ||||||||||||
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 | 2021 | 2020 | |||||||||
Revenue | |||||||||||
Subscription software licenses | $ | $ | |||||||||
Services and other | |||||||||||
Total recurring | |||||||||||
Perpetual software licenses, hardware and other | |||||||||||
Consulting services | |||||||||||
Total revenue | |||||||||||
Cost of revenue | |||||||||||
Subscription software licenses | |||||||||||
Services and other | |||||||||||
Total recurring | |||||||||||
Perpetual software licenses, hardware and other | |||||||||||
Consulting services | |||||||||||
Total cost of revenue | |||||||||||
Gross profit | |||||||||||
Operating expenses | |||||||||||
Selling, general and administrative expenses | |||||||||||
Research and development expenses | |||||||||||
Total operating expenses | |||||||||||
Income (loss) from operations | ( | ||||||||||
Other expense, net | |||||||||||
Interest expense | ( | ( | |||||||||
Interest income | |||||||||||
Other expense | ( | ( | |||||||||
Total other expense, net | ( | ( | |||||||||
Income (loss) before income taxes | ( | ||||||||||
Income tax expense (benefit) | ( | ||||||||||
Net income | $ | $ | |||||||||
Net income per common share | |||||||||||
Basic | $ | $ | |||||||||
Diluted | $ | $ | |||||||||
Weighted average common shares outstanding | |||||||||||
Basic | |||||||||||
Diluted |
Three Months Ended March 31, | ||||||||||||||
In millions | 2021 | 2020 | ||||||||||||
Net income | $ | $ | ||||||||||||
Other comprehensive loss: | ||||||||||||||
Foreign currency translation adjustments | ( | ( | ||||||||||||
Derivatives: | ||||||||||||||
Unrealized gain (loss) on derivatives, before tax | ( | |||||||||||||
Unrealized gain (loss) on derivatives, tax portion | ( | |||||||||||||
Unrealized gain (loss) on derivatives, net of tax | ( | |||||||||||||
Defined benefit plans: | ||||||||||||||
Defined benefit plan adjustment, before tax | ||||||||||||||
Defined benefit plan adjustment, tax portion | ( | |||||||||||||
Defined benefit plan adjustment, net of tax | ||||||||||||||
Other comprehensive loss | ( | ( | ||||||||||||
Comprehensive income | $ | $ |
In millions, except per share amounts | March 31, 2021 | December 31, 2020 | |||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net | |||||||||||
Inventories | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Right of use assets - operating lease, net | |||||||||||
Goodwill | |||||||||||
Capitalized contract costs, net | |||||||||||
Deferred income taxes | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and stockholders’ equity | |||||||||||
Current liabilities | |||||||||||
Current portion of long-term debt | $ | $ | |||||||||
Current portion of finance lease liability | |||||||||||
Current portion of operating lease liability | |||||||||||
Accounts payable | |||||||||||
Payroll and benefits liabilities | |||||||||||
Deferred revenue | |||||||||||
Other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term debt | |||||||||||
Finance lease liability | |||||||||||
Operating lease liability | |||||||||||
Pension and other postemployment plan liabilities | |||||||||||
Long-term deferred revenue | |||||||||||
Deferred tax liabilities | |||||||||||
Other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 8) | |||||||||||
Stockholders’ equity | |||||||||||
Preferred stock: par value $ | |||||||||||
Common stock: par value $ | |||||||||||
Paid-in capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended March 31, | |||||||||||
In millions | 2021 | 2020 | |||||||||
Operating activities | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Stock-based compensation expense | |||||||||||
Deferred income taxes | ( | ||||||||||
Changes in assets and liabilities: | |||||||||||
Receivables | ( | ( | |||||||||
Inventories | |||||||||||
Current payables and accrued expenses | ( | ( | |||||||||
Deferred revenue | |||||||||||
Other assets and liabilities | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Investing activities | |||||||||||
Expenditures for property and equipment | ( | ( | |||||||||
Additions to capitalized software | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
Financing activities | |||||||||||
Repurchases of common stock | ( | ( | |||||||||
Repayments of long-term borrowings | ( | ( | |||||||||
Payments of finance leases | ( | ( | |||||||||
Other financing activities, net | |||||||||||
Net cash used in financing activities | ( | ( | |||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ( | |||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | ( | ||||||||||
Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
Supplemental cash flow disclosure: | |||||||||||
Assets acquired under operating lease | $ | $ | |||||||||
Assets acquired under finance lease | $ | $ | |||||||||
Annual variable incentive payout settled in equity | $ | $ |
March 31, 2021 | December 31, 2020 | ||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Total cash, cash equivalents and restricted cash | $ | $ |
Common Stock | Paid-in | Accumulated | Accumulated Other Comprehensive | ||||||||||||||||||||||||||||||||
In millions | Shares | Amount | Capital | Deficit | Loss | Total | |||||||||||||||||||||||||||||
December 31, 2020 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Employee stock compensation, employee stock purchase programs and option exercises, net of tax | — | — | — | ||||||||||||||||||||||||||||||||
Repurchases of common stock, retired | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Pension and postemployment benefit plans, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
Unrealized gain on derivatives, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
March 31, 2021 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Common Stock | Paid-in | Accumulated | Accumulated Other Comprehensive | ||||||||||||||||||||||||||||||||
In millions | Shares | Amount | Capital | Deficit | Loss | Total | |||||||||||||||||||||||||||||
December 31, 2019 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Employee stock compensation, employee stock purchase programs and option exercises, net of tax | — | — | — | ||||||||||||||||||||||||||||||||
Repurchases of common stock, retired | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Pension and postemployment benefit plans, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
Unrealized loss on derivatives, net of tax | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Currency translation adjustment | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
March 31, 2020 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||
in millions | 2021 | 2020 | |||||||||
Americas | |||||||||||
Recurring | $ | $ | |||||||||
Perpetual software licenses, hardware and other | |||||||||||
Consulting services | |||||||||||
Total Americas | |||||||||||
EMEA | |||||||||||
Recurring | |||||||||||
Perpetual software licenses, hardware and other | |||||||||||
Consulting services | |||||||||||
Total EMEA | |||||||||||
APJ | |||||||||||
Recurring | |||||||||||
Perpetual software licenses, hardware and other | |||||||||||
Consulting services | |||||||||||
Total APJ | |||||||||||
Total Revenue | $ | $ |
Three Months Ended March 31, | |||||||||||||||||
in millions | 2021 | 2020 | |||||||||||||||
Rental revenue* | $ | $ |
As of | |||||||||||
in millions | March 31, 2021 | December 31, 2020 | |||||||||
Accounts receivable, net | $ | ||||||||||
Contract assets | |||||||||||
Current deferred revenue | |||||||||||
Long-term deferred revenue |
in millions | Total at March 31, 2021 | Year 1 | Year 2 and Thereafter | |||||||||||||||||
Remaining unsatisfied obligations | $ | $ | $ |
in millions | December 31, 2020 | Capitalized | Amortization | March 31, 2021 | ||||||||||||||||||||||
Capitalized contract costs | $ | $ | $ | ( | $ |
in millions | December 31, 2019 | Capitalized | Amortization | March 31, 2020 | ||||||||||||||||||||||
Capitalized contract costs | $ | $ | $ | ( | $ |
As of | |||||||||||
In millions | March 31, 2021 | December 31, 2020 | |||||||||
Inventories | |||||||||||
Finished goods | $ | $ | |||||||||
Service parts | |||||||||||
Total inventories | $ | $ | |||||||||
Deferred revenue | |||||||||||
Deferred revenue, current | $ | $ | |||||||||
Long-term deferred revenue | |||||||||||
Total deferred revenue | $ | $ |
Three Months Ended March 31, | |||||||||||||||||
In millions | 2021 | 2020 | |||||||||||||||
Effective tax rate | % | % |
As of | |||||||||||
In millions | March 31, 2021 | December 31, 2020 | |||||||||
Contract notional amount of foreign exchange forward contracts | $ | $ | |||||||||
Net contract notional amount of foreign exchange forward contracts | $ | $ | |||||||||
Contract notional amount of interest rate swap | $ | $ |
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 at March 31, 2021 | $ | $ | $ | $ | |||||||||||||||||||
Money market funds at December 31, 2020 | $ | $ | $ | $ | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Interest rate swap at March 31, 2021 | $ | $ | $ | $ | |||||||||||||||||||
Interest rate swap at December 31, 2020 | $ | $ | $ | $ |
Three Months Ended March 31, | ||||||||||||||
In millions, except per share amounts | 2021 | 2020 | ||||||||||||
Net income attributable to common stockholders | $ | $ | ||||||||||||
Weighted average outstanding shares of common stock | ||||||||||||||
Dilutive effect of employee stock options, restricted stock and other stock awards | ||||||||||||||
Common stock and common stock equivalents | ||||||||||||||
Net income per share: | ||||||||||||||
Basic | $ | $ | ||||||||||||
Diluted | $ | $ |
Three Months Ended March 31, | ||||||||||||||
In millions | 2021 | 2020 | ||||||||||||
Segment revenue | ||||||||||||||
Americas | $ | $ | ||||||||||||
EMEA | ||||||||||||||
APJ | ||||||||||||||
Total revenue | ||||||||||||||
Segment gross profit | ||||||||||||||
Americas | ||||||||||||||
EMEA | ||||||||||||||
APJ | ||||||||||||||
Total segment gross profit | ||||||||||||||
Stock-based compensation costs | ||||||||||||||
Acquisition, integration, reorganization and transformation-related costs | ||||||||||||||
Amortization of capitalized software costs | ||||||||||||||
Total gross profit | ||||||||||||||
Selling, general and administrative expenses | ||||||||||||||
Research and development expenses | ||||||||||||||
Income (loss) from operations | $ | $ | ( |
In millions | Balance at December 31, 2020 | Expense accruals | Cash payments | Balance at March 31, 2021 | ||||||||||||||||||||||
VSP | $ | $ | $ | ( | $ | |||||||||||||||||||||
Employee severance and other employee-related costs | ( | |||||||||||||||||||||||||
Facilities lease related costs, outside service, legal and other associated costs | ( | |||||||||||||||||||||||||
Total | $ | $ | $ | ( | $ |
% of | % of | |||||||||||||||||||||||||
In millions | 2021 | Revenue | 2020 | Revenue | ||||||||||||||||||||||
Recurring | $ | 372 | 75.7 | % | $ | 311 | 71.7 | % | ||||||||||||||||||
Perpetual software licenses, hardware and other | 23 | 4.7 | % | 23 | 5.3 | % | ||||||||||||||||||||
Consulting services | 96 | 19.6 | % | 100 | 23.0 | % | ||||||||||||||||||||
Total revenue | $ | 491 | 100.0 | % | $ | 434 | 100.0 | % |
% of | % of | ||||||||||||||||||||||
In millions | 2021 | Revenue | 2020 | Revenue | |||||||||||||||||||
Recurring | $ | 282 | 75.8 | % | $ | 218 | 70.1 | % | |||||||||||||||
Perpetual software licenses, hardware and other | 12 | 52.2 | % | 8 | 34.8 | % | |||||||||||||||||
Consulting services | 13 | 13.5 | % | (1) | (1.0) | % | |||||||||||||||||
Total gross profit | $ | 307 | 62.5 | % | $ | 225 | 51.8 | % |
% of | % of | ||||||||||||||||||||||
In millions | 2021 | Revenue | 2020 | Revenue | |||||||||||||||||||
Selling, general and administrative expenses | $ | 149 | 30.3 | % | $ | 158 | 36.4 | % | |||||||||||||||
Research and development expenses | 77 | 15.8 | % | 73 | 16.7 | % | |||||||||||||||||
Total operating expenses | $ | 226 | 46.0 | % | $ | 231 | 53.2 | % |
In millions | 2021 | 2020 | |||||||||
Interest income | $ | 1 | $ | 2 | |||||||
Interest expense | (7) | (7) | |||||||||
Other | (3) | (3) | |||||||||
Other expense, net | $ | (9) | $ | (8) |
2021 | 2020 | ||||||||||
Effective tax rate | 26.4 | % | 1,300.0 | % |
% of | % of | ||||||||||||||||||||||
In millions | 2021 | Revenue | 2020 | Revenue | |||||||||||||||||||
Segment revenue | |||||||||||||||||||||||
Americas | $ | 263 | 53.6 | % | $ | 244 | 56.2 | % | |||||||||||||||
EMEA | 147 | 29.9 | % | 118 | 27.2 | % | |||||||||||||||||
APJ | 81 | 16.5 | % | 72 | 16.6 | % | |||||||||||||||||
Total segment revenue | $ | 491 | 100 | % | $ | 434 | 100 | % | |||||||||||||||
Segment gross profit | |||||||||||||||||||||||
Americas | $ | 182 | 69.2 | % | $ | 144 | 59.0 | % | |||||||||||||||
EMEA | 88 | 59.9 | % | 61 | 51.7 | % | |||||||||||||||||
APJ | 45 | 55.6 | % | 30 | 41.7 | % | |||||||||||||||||
Total segment gross profit | $ | 315 | 64.2 | % | $ | 235 | 54.1 | % |
Three Months Ended March 31, 2021 | |||||||||||
In millions | 2021 | 2020 | |||||||||
Net cash provided by operating activities | $ | 110 | $ | 10 | |||||||
Less: | |||||||||||
Expenditures for property and equipment | (4) | (10) | |||||||||
Additions to capitalized software | (1) | (2) | |||||||||
Free cash flow | $ | 105 | $ | (2) |
Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Dilution Offset Program (1) | Total Number of Shares Purchased as Part of Publicly Announced General Share Repurchase Program (2) | 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 2021 | 1,131,893 | $ | 25.18 | 54,817 | 1,077,076 | $ | 799,586 | $ | 389,254,180 | |||||||||||||||||||||||||||||
February 2021 | 318,878 | $ | 31.49 | 100,000 | 218,878 | $ | 15,944,217 | $ | 383,254,259 | |||||||||||||||||||||||||||||
March 2021 | 1,137,133 | $ | 41.08 | 377,814 | 759,319 | $ | 3,379,199 | $ | 351,832,159 | |||||||||||||||||||||||||||||
First Quarter Total | 2,587,904 | $ | 32.94 | 532,631 | 2,055,273 | $ | 3,379,199 | $ | 351,832,159 | |||||||||||||||||||||||||||||
Reference Number per Item 601 of Regulation S-K | Description | |||||||
101 | Inline interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Statements of Income for the three months period ended March 31, 2021 and 2020, (ii) the Condensed Consolidated Statements of Comprehensive Income for the three months period ended March 31, 2021 and 2020, (iii) the Condensed Consolidated Balance Sheets at March 31, 2021 and December 31, 2020, (iv) the Condensed Consolidated Statements of Cash Flows for the three months period ended March 31, 2021 and 2020, (v) the Condensed Consolidated Statements of Changes in Stockholders' Equity for the three months period ended March 31, 2021 and 2020 and (vi) the Notes to Condensed Consolidated Financial Statements. | |||||||
104 | Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
TERADATA CORPORATION | ||||||||||||||
Date: May 7, 2021 | By: | /s/ Mark A. Culhane | ||||||||||||
Mark A. Culhane Chief Financial Officer |
European Union (“EU”)/European Economic Area (“EEA”), Switzerland and the United Kingdom | Data Privacy. If you are a resident of the EU/EEA, Switzerland or the UK, the following provision applies and supplements Section 12 of the Agreement: You understand and acknowledge that: •The data controller is the Company; queries or requests regarding your Personal Data should be made in writing to the Company’s representative relating to the Plan or Share Unit matters, who may be contacted at: Compensation.Global@Teradata.com •The legal basis for the processing of Personal Data is that the processing is necessary for the performance of a contract to which you are a party (namely, this Restricted Share Unit Agreement); •Personal Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan; •You may, at any time, access your Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data without cost or exercise any other rights you may have in relation to your Personal Data under applicable law, including the right to make a complaint to an EU/EEA data protection regulator, or if you are in the UK, the UK Information Commissioner’s Office. | ||||||||||||||||
Argentina | Foreign Ownership and Exchange Control Information. US dollar transactions must be conducted through financial intermediaries authorized by the Argentine Central Bank. If you transfer proceeds from the sale of Shares or the receipt of any dividends paid on Shares acquired under the Plan into Argentina , depending on the amount, you may be required to provide certain documentary evidence regarding such sale proceeds or dividends to your local bank. Please note that foreign asset and foreign exchange requirements in Argentina change frequently, and it is your responsibility to comply with all applicable requirements. Please confirm with your local bank before any transfer of funds in or out of Argentina. | ||||||||||||||||
Australia | Settlement of Share Units. Notwithstanding any discretion in the Plan or anything to the contrary in the Agreement, the grant of Share Units does not provide any right for you to receive a cash payment, and the Share Units are payable in Shares only. Securities Law Information and Offer Document. This disclosure has been prepared in connection with offers to employees in Australia under the Plan and the Agreement (copies of which are enclosed). It has been prepared to ensure that this grant and any other grant under the Plan (the “Offer”) satisfies the conditions for exemptions granted by the Australian Securities and Investments Commission (ASIC) under ASIC Class Order 14/1000. General Advice Only. Any advice given to you in connection with the Offer is general advice only. It does not take into account the objectives, financial situation and needs of any particular person. No financial product advice is provided in the documentation relating to the Plan and nothing in the documentation should be taken to constitute a recommendation or statement of opinion that is intended to influence you in making a decision to participate in the Plan. This means that you should consider obtaining your own financial product advice from an independent person who is licensed by the ASIC to give such advice. Australian Dollar Equivalents. The Share Units are issued for no consideration, meaning you will not have to pay anything to receive the Share Units or the underlying Shares. However, the Australia dollar equivalent of the current market price of the underlying shares subject to your Share Units may be determined by reference to the daily exchange rate published by the Reserve Bank of Australia on the relevant date. Note that the exchange rate may fluctuate, and the Australian dollar equivalent of the market price will depend on the then-current U.S. dollar/Australian dollar exchange rate. Teradata will make available upon your request the Australian dollar equivalent of the current market price of the underlying Shares subject to your Share Units. You can get those details by contacting Teradata Global Compensation at cg230072@teradata.com. Risks of Participation in the Plan. Participation in the Plan and acquiring Shares in Teradata Corporation carries inherent risks. These risks include the possibility of fluctuations (and decrease) in the price of shares in relation to company performance, as well as general market performance. You should carefully consider these risks in light of your investment objectives and personal circumstances. | ||||||||||||||||
Austria | Exchange Control Information. If you hold securities in foreign deposits (including Shares obtained through the Plan) outside of Austria, you must submit an annual report to the Austrian National Bank using the form “Wertpapiermeldung –Wertpapiere, nicht auf Depots bei inländischen Depotführern verwahrt.” An exemption applies if the value of the securities (including Shares) that you hold outside of Austria does not exceed €5,000,000 or the equivalent at year-end. If the value of the securities held outside of Austria exceeds €30 million or the equivalent at the end of a quarter, then the reports should be filed quarterly. You should consult your personal advisor regarding any such reporting obligations and applicable thresholds. | ||||||||||||||||
Belgium | Foreign Ownership Reporting. If you are a resident of Belgium, you will be required to submit an annual form declaring your income or assets (including shares acquired under an employee share plan) held outside of Belgium to the National Bank of Belgium. The reporting should be completed prior to filing your annual Belgian income tax return. | ||||||||||||||||
Brazil | Exchange Control Information. If you are a resident of Brazil, you will be required to submit an annual declaration of assets, money and rights held outside of Brazil to the Central Bank of Brazil (“BACEN”) if the aggregate value of such assets, money and rights (including any Share Units, capital gain, dividends or Dividend Units, or profit attributable to such assets) is equal to or greater than US $100,000 or equivalent as of each December 31st. The reporting is done via an online form (“Declaração de Capitais Brasileiros no Exterior” or “DCBE”) and usually should be completed in April in relation to the prior fiscal year. Quarterly reporting is also required if the assets, money and rights held abroad exceed US $100,000,000 or equivalent at the end of each quarter. However, please confirm the annual and quarterly reporting deadlines with BACEN, as they are periodically updated, and noncompliance is potentially subject to certain penalties. | ||||||||||||||||
Canada | Securities Law Notice. The security represented by the Share Unit was issued pursuant to an exemption from the prospectus requirements of applicable securities legislation in Canada. You acknowledge that as long as the Company is not a reporting issuer in any jurisdiction in Canada, the Share Units and the underlying Shares will be subject to an indefinite hold period in Canada and subject to restrictions on their transfer in Canada. Subject to the terms and conditions of the Agreement and applicable securities laws, Participant is permitted to sell Shares acquired through the Plan through the designated broker appointed under the Plan, assuming the sale of such Shares takes place outside Canada via the stock exchange on which the Shares are traded. Settlement of Share Units and Tax Treatment. Notwithstanding any discretion in the Plan or anything to the contrary in the Agreement, the grant of Share Units does not provide any right for you to receive a cash payment, and the Share Units are payable in Shares only. For the avoidance of doubt, for Canadian federal income tax purposes, the Share Units are intended to be treated as an agreement by the Company to sell or issue shares to you and, as such, subject to the rules in section 7 of the Income Tax Act (Canada). Under those rules, you will be considered to have received an employment benefit at the time of settlement of the vested Share Units equal to the full value of the Shares received, which amount will be taxed as employment income and will be subject to withholding at the source. Foreign Share Ownership Reporting. If you are a Canadian resident, your ownership of certain foreign property (including shares of foreign corporations, such as Shares acquired under the Plan) in excess of $100,000 may be subject to strict annual tax reporting obligations. Please refer to CRA Form T1135 (Foreign Income Verification Statement) and consult your tax advisor for further details. It is your responsibility to comply with all applicable tax reporting requirements. Quebec French Language Provision and Consent to Receive Information in English. The following will apply if you are a resident of Quebec: The parties acknowledge that it is their express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English. Les parties reconnaissent avoir exigé la redaction en anglais de cette convention (“Agreement”), ainsi que de tous documents exécutés, avis donnés et procedures judiciaries intentées, directement ou indirectement, relativement à la présente convention. | ||||||||||||||||
Chile | Securities Law Information. Neither the Company nor the Shares are registered with the Chilean Registry of Securities or under the control of the Comisión para el Mercado Financiero de Chile (“CMF”). This offer is being made as of the Date of Grant described in this Agreement and is subject to Norma de Carácter General Rule No. 336 (“NCG 336”). Pursuant to NCG 336, no public offering of Shares is being made, and the Company is under no obligation to provide any disclosure or other public information regarding the Shares in Chile or to the CMF. Note the Shares cannot be subject to public offering in Chile while they are not registered with the CMF. Exchange Control Information. If the value of the Shares exceeds US $10,000, you must complete Annex 1 of the Manual of Chapter XII of the Foreign Exchange Regulations and file it directly with the Central Bank within 10 days of the vesting/settlement of the Share Units. Further, if the Participant’s aggregate investments held outside Chile exceeds US $5,000,000 (including Shares received under the Plan), the Participant must report quarterly to the Central Bank. Annexes 3.1 and 3.2 of Chapter XII of the Foreign Exchange Regulations must be used to file this report. | ||||||||||||||||
Colombia | Exchange Control Information. Prior approval from a government authority is not required to hold foreign securities or to receive Share Units. However, for the transfer of proceeds from the sale of Shares or dividends paid on Shares back to Colombia, the local bank receiving the funds may require the International Investment Foreign Exchange Declaration (Declaración de Cambios por Inversiones Internacionales), formerly Form No. 4, concurrently with the receipt of funds, but this is part of the standard process managed by the bank. | ||||||||||||||||
Denmark | Employer Statement. If you are subject to the Danish Stock Option Act, your participation in the Plan is also subject to the Danish Employer Statement, which is available to you on HReXpress or by contacting your local Global Compensation representative. By accepting your grant, you acknowledge that you have received and agree to the Danish Employer Statement. | ||||||||||||||||
France | Foreign Account Reporting. Residents of France with foreign account balances in excess of €1 million or its equivalent must report monthly to the Bank of France. Consent to Receive Information in English. You confirm having read and understood the documents relating to this grant (the Plan and this Agreement) which were provided to you in the English language. You accept the terms of those documents accordingly. Vous confirmez avoir lu et compris les documents relatifs à cette attribution (le Plan et ce Contrat) qui vous ont été communiqués en langue anglaise. Vous en acceptez les termes en connaissance de cause. | ||||||||||||||||
Hong Kong | Securities Law Notice. Warning: The Share Units and Shares issued upon vesting do not constitute a public offering of securities under Hong Kong law and are available only to employees of the Company or its Subsidiaries and affiliates. The Agreement, including this Appendix, the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong and have not been registered with or authorized by any regulatory authority in Hong Kong, including the Securities and Futures Commission. The Award is intended only for the personal use of each eligible employee of the Employer, the Company or any Subsidiary or affiliate and may not be distributed to any other person. If you are in any doubt about any of the contents of the Agreement, including this Appendix, or the Plan, you should obtain independent professional advice. | ||||||||||||||||
India | Exchange Control Information. You must repatriate any proceeds from the sale of Shares acquired under the Plan to India within 90 days of receipt and any dividends received in relation to the Share Units or Shares within 180 days of receipt. You may not take any action (or refrain from any action) that has the effect of delaying the receipt of such sale proceeds or dividend payments or eliminating the foreign exchange to be received by you. You will receive a foreign inward remittance certificate (“FIRC”) from the bank where you deposit the foreign currency. You should maintain the FIRC as evidence of the repatriation of funds in case the Reserve Bank of India, the Company, or your employer requests proof of repatriation. | ||||||||||||||||
Indonesia | Exchange Control Information. If you remit proceeds from the sale of Shares into Indonesia, the Indonesian Bank through which the transaction is made will submit a report on the transaction to the Bank of Indonesia for statistical reporting purposes. For transactions above US $10,000, a description of the transaction must be included in the report. Although the bank through which the transaction is made is required to make the report, you must complete a “Transfer Report Form.” The Transfer Report Form will be provided to you by the bank through which the transaction is made. In addition, if you are an Indonesian resident, you may be required to provide the Indonesian Central Bank with information on foreign exchange activities. Indonesian residents may be subject to a monthly reporting obligation to the Bank of Indonesia which must be completed online through Bank of Indonesia’s website, no later than the 15th day of the following month. | ||||||||||||||||
Ireland | Director Notification Obligation. If you are a director or shadow director of the Company or related company, you may be subject to special reporting requirements with regard to the acquisition of Shares or rights over Shares. Please contact your personal legal advisor for further details if you are a director or shadow director. Settlement of Share Units. Notwithstanding any discretion in the Plan or the Agreement to the contrary, settlement of the Share Units shall be in shares and not, in whole or in part, in the form of cash. | ||||||||||||||||
Italy | Data Privacy Consent. This provision supplements Section 12 of the Agreement: Pursuant to the GDPR (General Data Protection Regulation – EU No. 2016/679) and Legislative Decree No. 196/2003, the Controller of personal data processing is Teradata Corporation with registered offices at 17095 Via Dela Campo, San Diego, California 92127, USA, and its representative in Italy is Teradata Italia S.R.L. with registered offices at via Cusago 150/4, 20153 Milano, Italy. By accepting the Share Units, you agree to the following: I understand that Data processing related to the purposes specified above shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data are collected and with confidentiality and security provisions as set forth by applicable laws and regulations, with specific reference to the GDPR (General Data Protection Regulation - EU No. 2016/679) and to Legislative Decree No. 196/2003. The processing activity, including the communication and transfer of my Data abroad, including outside of the European Union, as herein specified and pursuant to applicable laws and regulations, does not require my consent thereto as the processing is necessary for the performance of contractual obligations related to the implementation, administration and management of the Plan. I understand that the use of my Data will be minimized where it is not necessary for the implementation, administration and management of the Plan. I further understand that, pursuant to Sections 12 to 21 of the GDPR, I have the right to, including but not limited to, (i) access, (ii) delete, (iii) update, and (iv) ask for rectification of my Data, as well as to request, from the Controller, the (v) restriction of processing concerning my Data or to (vi) object to processing, as well as the right to (vii) “data portability”. Furthermore, I am aware that my Data will not be used for direct marketing purposes. | ||||||||||||||||
Japan | Foreign Ownership Information. If you acquire Shares valued at more than ¥100,000,000 in a single transaction, you must file a Securities Acquisition Report with the Ministry of Finance (“MOF”) through the Bank of Japan within 20 days of the acquisition of the Shares. Exit Tax. Please note that you may be subject to tax on your Share Units, even prior to vesting, if you relocate from Japan if you (1) hold financial assets with an aggregate value of ¥100,000,000 or more upon departure from Japan and (2) maintained a principle place of residence (jusho) or temporary place of abode (kyosho) in Japan for 5 years or more during the 10-year period immediately prior to departing Japan. You should discuss your tax treatment with your personal tax advisor. | ||||||||||||||||
Malaysia | Securities Law Notice. The offer of Teradata equity awards in Malaysia constitutes or relates to an ‘excluded offer,’ ‘excluded invitation,’ or ‘excluded issue’ pursuant to Section 229 and Section 230 of the CMSA, and as a consequence no prospectus is required to be registered with the Securities Commission of Malaysia. The award documents do not constitute and may not be used for the purpose of a public offering or an issue, offer for subscription or purchase, invitation to subscribe for or purchase any securities requiring the registration of a prospectus with the Securities Commission in Malaysia under the CMSA. Director Notification Obligation. If you are a director or shadow director of the Company or related company, you may be subject to special reporting requirements with regard to the acquisition of shares or rights over shares. Please contact your personal legal advisor for further details if you are a director or shadow director. Data Privacy. The following provision supplements Section 12 of the Agreement: Queries or requests regarding your Personal Data should be made in writing to the Company’s representative relating to the Plan or Share Unit matters, who may be contacted at: Compensation.Global@Teradata.com. Saya dengan ini secara eksplisit dan jelas bersetuju untuk pengumpulan, penggunaan dan pemindahan, dalam bentuk elektronik atau mana-mana cara, Data Peribadi saya (seperti yang ditakrifkan di bawah) dan apa-apa bahan geran Unit Saham oleh dan antara, mana-mana yang terpakai, Teradata atau pihak ketiga seperti yang dipilih oleh Teradata, untuk tujuan eksklusif bagi melaksanakan, mentadbir dan menguruskan penyertaan anda dalam Pelan tersebut, menguatkuasakan terma-terma and pengurusan hak-hak mereka di bawah Pelan ini atau mana-mana perjanjian dimana melibatkan pihak-pihak tersebut dengan pihak saya, samada secara langsung atau tidak, dan sepertimana yang perlu bagi mematuhi obligasi-obligasi di bawah mana-mana undang-undang, peraturan dan regulasi yang terpakai. Saya memahami dan bersetuju bahawa pengumpulam, penyimpanan, pemprosesan, penggunaan dan pemindahan Data Peribadi adalah bagi tujuan yang sah dan adalah perlu untuk operasi Pelan. Saya memahami bahawa keengganan atau tindakan menarik balik persetujuan akan mempengaruhi keupayaan saya untuk menyertai Pelan tersebut; tanpa memberi persetujuan, saya tidak akan dapat menyertai Pelan atau merealisasikan manfaat (jika ada) dari Unit-unit Saham atau sebarang anugerah lain di bawah Pelan tersebut. Saya memahami bahawa Teradata atau pihak ketiga yang ditetapkan boleh menerima, memegang, memproses dan memindahkan maklumat peribadi tertentu tentang saya, termasuk, tetapi tidak terhad kepada, nama, alamat rumah dan nombor telefon, tarikh lahir, nombor insurans sosial atau nombor pengenalan lain, jantina, gaji, kewarganegaraan , jawatan kerja, latarbelakang kerja dan apa-apa Saham atau pegangan sebagai pengarah dalam Teradata, dan butiran semua Unit Saham atau hak pembelian atau apa-apa hak lain terhadap Saham, yang diberikan, dibatalkan, dilaksanakan, diletak hak, tidak diletak hak atau tertunggak bagi pihak saya (“Data Peribadi”). Saya memahami bahawa Data Peribadi boleh dipindahkan ke mana-mana Subsidiari atau sekutu atau pihak ketiga yang membantu Teradata dengan pelaksanaan, pentadbiran dan pengurusan Pelan tersebut atau kepada pengganti hak kepada stok, asset-aset atau perniagaan Teradata. Saya memahami bahawa penerima-penerima Data mungkin terletak di negara saya, di Amerika Syarikat atau di tempat lain, dan bahawa penerima-penerima negara (contohnya, Amerika Syarikat) mungkin mempunyai undang-undang dan perlindungan privasi data yang berbeza dengan negara saya. Khususnya, Syarikat boleh memindahkan Data Peribadi kepada broker atau pentadbir pelan stok yang membantu dengan Pelan tersebut, kepada penasihat undang-undang dan penasihat cukai/perakaunan, dan kepada Majikan dan pembekal gajinya. Saya juga memahami dan memaklumkan penerimaan bahawa saya juga harus merujuk kepada Dasar Privasi Global Teradata Corporation (yang sedia ada secara berasingan dan boleh dikemas kini dari masa ke semasa) untuk maklumat lanjut mengenai pengumpulan, penggunaan, penyimpanan dan pemindahan Data Peribadi saya. Pertanyaan atau permintaan mengenai Data Peribadi saya hendaklah dibuat secara bertulis kepada wakil Syarikat berkenaan dengan perkara-perkara Pelan atau Unit Saham, yang boleh dihubungi di: Compensation.Global@Teradata.com. |
Mexico | Nature of Grant and Labor Law Acknowledgment. This provision supplements Section 11 of the Agreement: The invitation Teradata is making under the Plan is unilateral and discretionary and is not related to the salary and other contractual benefits granted to you by your employer; therefore, benefits derived from the Plan will not under any circumstance be considered as an integral part of your salary. Teradata reserves the absolute right to amend the Plan and discontinue it at any time without incurring any liability whatsoever. This invitation and, in your case, the acquisition of shares does not, in any way, establish a labor relationship between you and Teradata, as participation in the Plan is based on the commercial relationship between Teradata and your employer, nor does it establish any rights between you and your employer. Estas disposiciones complementan la Sección 11 del Acuerdo: La invitación que Teradata hace en relación con el Plan es unilateral, discrecional y no se relaciona con el salario y otros beneficios que recibe actualmente de su actual empleador, por lo que cualquier beneficio derivado del Plan no será considerado bajo ninguna circunstancia como parte integral de su salario. Por lo anterior, Teradata se reserva el derecho absoluto para modificar o terminar el mismo, sin incurrir en responsabilidad alguna. Esta invitación y, en su caso, la adquisición de acciones, de ninguna manera establecen relación laboral alguna entre usted y Teradata, toda vez que la participación en el Plan es derivado de la relación comercial entre Teradata y su empleador, como tampoco establecen ningún derecho alguno entre usted y su empleador. | ||||||||||||||||
New Zealand | Securities Law Notice. WARNING. You are being offered ordinary shares in Teradata Corporation (“Teradata”). Teradata Shares give you a stake in the ownership of Teradata. You may receive a return if dividends are paid. If Teradata runs into financial difficulties and is wound up, shareholders will only be paid after all creditors and holders of preference shares (if any) have been paid. You may lose some or all of your investment. New Zealand law normally requires people who offer financial products to give information to investors before they invest. This information is designed to help investors to make an informed decision. The usual rules do not apply to this offer because it is made under an employee share scheme. As a result, you may not be given all the information usually required. You will also have fewer other legal protections for this investment. Ask questions, read all documents carefully, and seek independent financial advice before committing yourself. Teradata shares are quoted on the New York Stock Exchange. This means you may be able to sell them on the New York Stock Exchange if there are interested buyers, subject to any applicable holding period or other sale restriction. You may get less than you invested. The price will depend on the demand for the Teradata shares. In addition, you are directed to the Company’s most recent annual report and published financial statements (including the auditor’s report). In compliance with New Zealand securities law, you are hereby notified that the documents listed below are available for your review on the Company’s external and internal sites at the web addresses listed below: 1.The Company’s most recent Annual Report (Form 10-K) – https://investor.teradata.com/financial-reports/sec-filings/default.aspx 2.The Company’s most recent published financial statements – https://investor.teradata.com/financial-reports/sec-filings/default.aspx 3.The Plan – www.netbenefits.com 4.The Plan Prospectus – www.netbenefits.com 5.The Agreement (of which this Exhibit is a Part) – www.netbenefits.com A copy of the above documents will be sent to you free of charge upon written request to Teradata Global Compensation at cg230072@teradata.com. You should read the materials provided carefully before making a decision whether to participate in the Plan. When reading these materials, please note all references to the Share price are listed in US dollars. In addition, please consult your tax advisor for specific information concerning your personal tax situation with regard to Plan participation. | ||||||||||||||||
Pakistan | Settlement of Share Units and Sale of Shares. Due to local regulatory requirements, upon the vesting of the Share Units, you agree to the immediate sale of any Shares to be issued to you upon vesting and settlement of the Award in the event the Company elects to do so. You further agree that the Company is authorized to instruct its designated broker to assist with the mandatory sale of such Shares (on your behalf pursuant to this authorization) and you expressly authorize the Company’s designated broker to complete the sale of such Shares. You acknowledge that the Company’s designated broker is under no obligation to arrange for the sale of the Shares at any particular price. Upon the sale of the Shares, the Company agrees to pay you the cash proceeds from the sale of the Shares, less any brokerage fees or commissions and subject to any obligation to satisfy Tax-Related Items. You acknowledge that you are not aware of any material nonpublic information with respect to the Company or any securities of the Company as of the date of this Agreement. Exchange Control Information. You are responsible for ensuring compliance with all exchange control laws in Pakistan in relation to your participation in the Plan. In particular, your ownership of foreign shares (including any Shares acquired under the Plan), must be registered with the State Bank of Pakistan by completing and submitting Form V-96. In addition, you are required immediately to repatriate to Pakistan the proceeds from the sale of Shares and any dividends paid on the Shares you acquire under the Plan. Under local law, such repatriation must be effectuated through authorized banking channels in Pakistan. You should consult your personal advisor prior to repatriation of the sale proceeds to ensure compliance with applicable exchange control regulations in Pakistan, as such regulations are subject to frequent change. | ||||||||||||||||
Philippines | Securities Law Notice. This offering is subject to exemption from the requirements of registration with the Philippines Securities and Exchange Commission under Section 10.2 of the Securities Regulation Code of the Philippines. THE SECURITIES BEING OFFERED OR SOLD HEREIN HAVE NOT BEEN REGISTERED WITH THE PHILIPPINES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES REGULATION CODE. ANY FUTURE OFFER OR SALE THEREOF IS SUBJECT TO REGISTRATION REQUIREMENTS UNDER THE CODE UNLESS SUCH OFFER OR SALE QUALIFIES AS AN EXEMPT TRANSACTION. | ||||||||||||||||
Poland | Exchange Control Information. If you hold more than PLN 7,000,000 in foreign securities (including Shares) at year-end, you are required to report quarterly to the National Bank of Poland regarding the number and value of such securities for the next 12 months. Such reports are filed on special forms available on the website of the National Bank of Poland. | ||||||||||||||||
Russia | Securities Law Notice. Neither this offer nor the distribution of related documentation constitutes the public circulation of securities in Russia. You will receive shares in a brokerage account held in your name outside of Russia, but a stock certificate will not be issued to you. You are not permitted to transfer any shares received under any Teradata employee equity program into Russia. Foreign Account and Repatriation. You may be prohibited from receiving funds into a non-Russian bank or brokerage or trust account, and noncompliance with Russian exchange control rules, if applicable, may be subject to administrative sanction and fines. Therefore, you should immediately repatriate the proceeds from the sale of your Shares (or receipt of any dividends) into your personal bank account in Russia. Please note that foreign account and exchange requirements in Russia are subject to frequent change, and you are solely responsible for ensuring compliance with all currency control laws in Russia in relation to your participation in the Plan. Note that your foreign accounts may also be subject to reporting to the Russian tax authorities. | ||||||||||||||||
Singapore | Securities Law Notice. This Award of Stock Units and Common Stock to be issued hereunder shall be made available only to an employee, director, consultant, or other “qualifying person” of the Company or its Subsidiary, in reliance on the prospectus exemption set out in Section 273(1)(i) read together with section 273(2) of the Securities and Futures Act (Chapter 289) of Singapore (“the SFA”) and is not made with a view to the Common Stocks so issued being subsequently offered for sale or sold to any other party in Singapore. You understand and acknowledge that this Agreement and/or any other document or material in connection with this offer and the Common Stock thereunder have not been and will not be lodged, registered or reviewed by the Monetary Authority of Singapore. Any and all Common Stocks to be issued hereunder shall therefore be subject to the general resale restriction under Section 257 of the SFA, and you undertake not to make any subsequent sale in Singapore, or any offer of sale in Singapore, of any of the shares of Common Stock (received upon exercise of this offer), unless that sale or offer in Singapore is made pursuant to the exemptions under Part XIII Division (1) Subdivision (4) other than Section 280 of the SFA. Director Notification Obligation. If you are a director, associate director or shadow director of the Company’s related entities in Singapore, you may be subject to special reporting requirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Singapore entity in writing when you receive an interest (e.g., Shares) in the Company, which should be done within 2 days of acquiring or disposing of any such interest. In addition, a notification of such interest should be made within 2 days of becoming a director. Please contact your personal legal advisor for further details. Exit Tax / Deemed Exercise Rule. If you have received the restricted Share Units in relation to your employment in Singapore, please note that if you are 1) a permanent resident of Singapore and leave Singapore permanently or are transferred out of Singapore; or 2) neither a Singapore citizen nor permanent resident and either cease employment in Singapore or leave Singapore for any period exceeding 3 months (unless it can be proven that you will not be leaving Singapore permanently), you will likely be taxed on the restricted Share Units on a “deemed exercise” basis, even if the restricted Share Units have not yet vested. You should discuss your tax treatment with your personal tax advisor. | ||||||||||||||||
Spain | Exchange Control Information and Foreign Share Ownership Reporting. If you are a Spanish resident, your acquisition, purchase, and/or sale of foreign-listed stock may be subject to ongoing annual reporting obligations with the General Directorate of International Economy and Foreign Transactions (the “Directorate”), the Bank of Spain, and/or the tax authorities. These requirements change periodically, so you should consult your personal advisor to determine your specific reporting obligations. Currently, you must declare the acquisition of shares to the Directorate for statistical purposes. You must also declare the ownership of any shares each January while the shares are owned. The relevant forms are Form D6 and, depending on the amount of assets, Form D8. In addition, if you perform transactions with non-Spanish residents or hold a balance of assets and liabilities with foreign parties higher than €1,000,000, you may be required to report such transactions and accounts to the Bank of Spain. The frequency (monthly, quarterly or annually) of the notification will vary depending on the total value of the transactions or the balance of assets and liabilities. If you hold assets or rights outside of Spain (including Shares acquired under the Plan), you may also have to file Form 720 with the tax authorities, generally if the value of your foreign investments exceeds €50,000. Please note that reporting requirements are based on what you have previously disclosed and the increase in value and the total value of certain groups of foreign assets. | ||||||||||||||||
Taiwan | Exchange Control Information. You may convert foreign currency (including proceeds from the sale of Shares) into NTD for inward remittance to Taiwan in amounts up to US $5,000,000 per year. If this threshold is exceeded, you may be required to apply for an approval from the Central Bank of China (“CBC”). If the transaction amount is NT $500,000 or more in a single transaction, it should be declared on a CBC-prescribed form, but this is typically a standard procedure managed by the local bank handling the transaction. If the transaction amount is US $500,000 or more, you may be required to provide additional supporting documentation to the satisfaction of the remitting bank. Note the above monetary limits do not apply to the extent you retain USD in your foreign currency account at a bank in Taiwan. Please consult your personal advisor to ensure compliance with applicable exchange control laws in Taiwan. | ||||||||||||||||
United Kingdom | Settlement of Share Units. Notwithstanding any discretion in the Plan or the Agreement to the contrary, settlement of the Share Units shall be in shares only and not, in whole or in part, in the form of cash. Responsibility for Taxes. The following provision supplements Section 7 of the Agreement: If payment or withholding of the Tax-Related Items is not made within ninety (90) days of the event giving rise to the Tax-Related Items or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected Tax-Related Items shall constitute a loan owed by you to the Employer, effective on the Due Date. You agree that the loan will bear interest at the then-current Official Rate of HM Revenue & Customs (“HMRC”), it shall be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 7 of the Agreement. Notwithstanding the foregoing, if you are a director or elected, corporate officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), the terms of the immediately foregoing provision will not apply. In the event that you are such a director or officer and Tax-Related Items are not collected from or paid by you by the Due Date, the amount of any uncollected Tax-Related Items will constitute a benefit to you on which additional income tax and national insurance contributions (“NICs”) will be payable. You understand that you will be responsible for reporting any income tax and NICs due on this additional benefit directly to HMRC under the self-assessment regime. |
Australia | Settlement of Share Units. Notwithstanding any discretion in the Plan or anything to the contrary in the Agreement, the grant of Share Units does not provide any right for you to receive a cash payment, and the Share Units are payable in Shares only. Securities Law Information and Offer Document. This disclosure has been prepared in connection with offers to employees in Australia under the Plan and the Agreement (copies of which are enclosed). It has been prepared to ensure that this grant and any other grant under the Plan (the “Offer”) satisfies the conditions for exemptions granted by the Australian Securities and Investments Commission (ASIC) under ASIC Class Order 14/1000. General Advice Only. Any advice given to you in connection with the Offer is general advice only. It does not take into account the objectives, financial situation and needs of any particular person. No financial product advice is provided in the documentation relating to the Plan and nothing in the documentation should be taken to constitute a recommendation or statement of opinion that is intended to influence you in making a decision to participate in the Plan. This means that you should consider obtaining your own financial product advice from an independent person who is licensed by the ASIC to give such advice. Australian Dollar Equivalents. The Share Units are issued for no consideration, meaning you will not have to pay anything to receive the Share Units or the underlying Shares. However, the Australia dollar equivalent of the current market price of the underlying shares subject to your Share Units may be determined by reference to the daily exchange rate published by the Reserve Bank of Australia on the relevant date. Note that the exchange rate may fluctuate, and the Australian dollar equivalent of the market price will depend on the then-current U.S. dollar/Australian dollar exchange rate. Teradata will make available upon your request the Australian dollar equivalent of the current market price of the underlying Shares subject to your Share Units. You can get those details by contacting Teradata Global Compensation at cg230072@teradata.com. Risks of Participation in the Plan. Participation in the Plan and acquiring Shares in Teradata Corporation carries inherent risks. You should carefully consider these risks in light of your investment objectives and personal circumstances. |
Date : May 7, 2021 | /s/ Stephen McMillan | |||||||
Stephen McMillan | ||||||||
President and Chief Executive Officer |
Date : May 7, 2021 | /s/ Mark A. Culhane | |||||||
Mark A. Culhane | ||||||||
Chief Financial Officer |
Date: May 7, 2021 | /s/ Stephen McMillan | |||||||
Stephen McMillan | ||||||||
President and Chief Executive Officer | ||||||||
Date: May 7, 2021 | /s/ Mark A. Culhane | |||||||
Mark A. Culhane | ||||||||
Chief Financial Officer |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 53 | $ 168 |
Other comprehensive loss: | ||
Foreign currency translation adjustments | (8) | (19) |
Derivatives: | ||
Unrealized gain (loss) on derivatives, before tax | 4 | (14) |
Unrealized gain (loss) on derivatives, tax portion | (1) | 3 |
Unrealized gain on derivatives, net of tax | 3 | (11) |
Defined benefit plans: | ||
Defined benefit plan adjustment, before tax | 2 | 3 |
Defined benefit plan adjustment, tax portion | 0 | (1) |
Defined benefit plan adjustment, net of tax | 2 | 2 |
Other comprehensive loss | (3) | (28) |
Comprehensive income | $ 50 | $ 140 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Mar. 31, 2021 |
Dec. 31, 2020 |
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Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000.0 | 100,000,000.0 |
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) | 500,000,000.0 | 500,000,000.0 |
Common stock, shares issued (in shares) | 109,400,000 | 108,800,000 |
Basis of Presentation |
3 Months Ended |
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Mar. 31, 2021 | |
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 2020 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, 2020 (the "2020 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 revised to conform to the current year presentation. At the beginning of the first quarter of 2021, the Company changed its historical presentation for certain components within its revenue and cost categories. To better reflect the strategy and shift in the business, the Company adopted and revised the presentation in the first quarter of 2021, including reclassifying managed services revenue of $25 million and costs of $20 million from Recurring to Consulting services and reclassifying third party revenue of $9 million and costs of $7 million from Recurring to Perpetual software licenses, hardware and other. This change in presentation does not affect the Company's total revenues, total costs of revenues or overall total gross profit (defined as total revenue less total cost of revenue).
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New Accounting Pronouncements |
3 Months Ended |
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Mar. 31, 2021 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Reference Rate Reform. In March 2020, the Financial Accounting Standards Board ("FASB") issued new guidance to provide relief to companies that will be impacted by the expected change in benchmark interest rates, as participating banks will no longer be required to submit London Interbank Offered Rate ("LIBOR") quotes by the U.K. Financial Conduct Authority. The new guidance allows companies to, provided the only change to existing contracts are a change to an approved benchmark interest rate, account for modifications as a continuance of the existing contract without additional analysis. For new and existing contracts, companies may elect to apply the amendments as of March 12, 2020 through December 31, 2022. The Company is currently evaluating this new guidance to determine the impact it may have on our condensed consolidated financial statements or related disclosures. Recently Adopted Guidance Accounting for Income Taxes. In December 2019, the FASB issued new guidance to simplify the accounting for income taxes. The new guidance changes various subtopics of accounting for income taxes including, but not limited to, accounting for "hybrid" tax regimes, tax basis step-up in goodwill obtained in a transaction that is not a business combination, intra-period tax allocation exception to incremental approach, ownership changes in investments, interim-period accounting for enacted changes in tax law, and year-to-date loss limitation in interim-period tax accounting. We adopted the guidance in the first quarter of 2021. The adoption did not have a material impact on our condensed consolidated financial statements or related disclosures.
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Revenue from Contracts with Customers |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers | Revenue from Contracts with Customers Disaggregation of Revenue from Contracts with Customers The following table presents a disaggregation of revenue:
Rental revenue, which is included in recurring revenue in the above table, was as follows:
*Rental revenue includes hardware maintenance. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets, and customer advances and deposits (deferred revenue or contract liabilities) on the condensed consolidated balance sheet. Accounts receivable include amounts due from customers that are unconditional. Contract assets relate to the Company’s rights to consideration for goods delivered or services completed and recognized as revenue but billing and the right to receive payment is conditional upon the completion of other performance obligations. Contract assets are included in Other current assets on the balance sheet and are transferred to accounts receivable when the rights become unconditional. Deferred revenue consists of advance payments and billings in excess of revenue recognized. Deferred revenue is classified as either current or noncurrent based on the timing of when the Company expects to recognize revenue. These assets and liabilities are reported on a contract-by-contract basis at the end of each reporting period. The following table provides information about receivables, contract assets and deferred revenue from contracts with customers:
Revenue recognized during the three months ended March 31, 2021 from amounts included in deferred revenue at the beginning of the period was $182 million. Transaction Price Allocated to Unsatisfied Obligations The following table includes estimated revenue expected to be recognized in the future related to the Company's unsatisfied (or partially satisfied) obligations at March 31, 2021:
The Company capitalizes sales commissions and other contract costs that are incremental direct costs of obtaining customer contracts if the expected amortization period of the asset is greater than one year. These costs are recorded in Capitalized contract costs, net on the Company’s balance sheet. The capitalized amounts are calculated based on the annual recurring revenue and total contract value for individual multi-term contracts. The judgments made in determining the amount of costs incurred include whether the commissions are in fact incremental and would not have occurred absent the customer contract. Costs to obtain a contract are amortized as selling, general and administrative expenses on a straight-line basis over the expected period of benefit, which is typically around four years. These costs are periodically reviewed for impairment. The following table identifies the activity relating to capitalized contract costs:
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Contract Costs |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Costs | Revenue from Contracts with Customers Disaggregation of Revenue from Contracts with Customers The following table presents a disaggregation of revenue:
Rental revenue, which is included in recurring revenue in the above table, was as follows:
*Rental revenue includes hardware maintenance. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets, and customer advances and deposits (deferred revenue or contract liabilities) on the condensed consolidated balance sheet. Accounts receivable include amounts due from customers that are unconditional. Contract assets relate to the Company’s rights to consideration for goods delivered or services completed and recognized as revenue but billing and the right to receive payment is conditional upon the completion of other performance obligations. Contract assets are included in Other current assets on the balance sheet and are transferred to accounts receivable when the rights become unconditional. Deferred revenue consists of advance payments and billings in excess of revenue recognized. Deferred revenue is classified as either current or noncurrent based on the timing of when the Company expects to recognize revenue. These assets and liabilities are reported on a contract-by-contract basis at the end of each reporting period. The following table provides information about receivables, contract assets and deferred revenue from contracts with customers:
Revenue recognized during the three months ended March 31, 2021 from amounts included in deferred revenue at the beginning of the period was $182 million. Transaction Price Allocated to Unsatisfied Obligations The following table includes estimated revenue expected to be recognized in the future related to the Company's unsatisfied (or partially satisfied) obligations at March 31, 2021:
The Company capitalizes sales commissions and other contract costs that are incremental direct costs of obtaining customer contracts if the expected amortization period of the asset is greater than one year. These costs are recorded in Capitalized contract costs, net on the Company’s balance sheet. The capitalized amounts are calculated based on the annual recurring revenue and total contract value for individual multi-term contracts. The judgments made in determining the amount of costs incurred include whether the commissions are in fact incremental and would not have occurred absent the customer contract. Costs to obtain a contract are amortized as selling, general and administrative expenses on a straight-line basis over the expected period of benefit, which is typically around four years. These costs are periodically reviewed for impairment. The following table identifies the activity relating to capitalized contract costs:
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Supplemental Financial Information |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Financial Information | Supplemental Financial Information
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Income Taxes |
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 expects that a majority of its foreign earnings will be repatriated back to 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. The effective tax rate is as follows:
For the three months ended March 31, 2021, the Company recorded $3 million of discrete tax benefit, a majority of which related to the excess tax benefits derived from equity compensation vesting. For the three months ended March 31, 2020, the Company recorded a net $152 million discrete tax benefit. The Company recorded approximately $157 million of discrete tax benefit related to an intra-entity asset transfer of certain of its intellectual property ("IP") to one of its Irish subsidiaries, which occurred on January 1, 2020. The tax benefit for this intra-entity asset transfer was recorded as a deferred tax asset and represents the book and tax basis difference on the transferred assets measured based on the applicable Irish statutory tax rate. The tax deductions for amortization of the IP asset will be recognized in the future, and any amortization not deducted for tax purposes will be carried forward indefinitely under Irish tax laws. The Company expects to be able to realize the deferred tax assets resulting from these intra-entity asset transfers. This tax benefit was offset by discrete tax expense of $6 million related to equity compensation vesting. As a result of these discrete items, the Company recorded $182 million of income tax benefit on a on a pre-tax net loss of $14 million for the three months ended March 31, 2020, resulting in an effective income tax rate of 1,300.0%. The Company estimates its annual effective tax rate for 2021 to be approximately 30%, which takes into consideration, among other things, the forecasted earnings mix by jurisdiction and the impact of discrete tax items to be recognized in 2021. Under U.S. tax law, U.S. shareholders are subject to a tax on global intangible low-taxed income ("GILTI") earned by certain foreign subsidiaries. The Company has elected to provide for the tax expense related to GILTI in the year in which the tax is incurred. The Company does not expect a material amount of tax expense related to GILTI based on our forecasted marginal effective tax rate for 2021.
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Derivative Instruments and Hedging Activities |
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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 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. 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. 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 revenues, operating expenses or in other income (expense), depending on the nature of the related hedged item. In June 2018, Teradata executed a five-year interest rate swap with a $500 million initial notional amount to hedge the floating interest rate of its term loan, as more fully described in Note 10. The Company uses interest rate swaps to manage interest rate risks on future interest payments caused by interest rate changes on its variable rate term loan. The notional amount of the hedge steps down according to the amortization schedule of the term loan. The notional amount of the hedge was $450 million as of March 31, 2021. The Company performed an initial effectiveness assessment in the third quarter of 2018 on the interest rate swap, and the hedge was determined to be effective. The hedge is being evaluated qualitatively on a quarterly basis for effectiveness. Changes in fair value are recorded in Accumulated Other Comprehensive Loss and periodic settlements of the swap will be recorded in interest expense along with the interest on amounts outstanding under the term loan. The following table identifies the contract notional amount of the Company’s derivative financial instruments:
All derivatives are recognized in the condensed consolidated balance sheets at their fair value. 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. Refer to Note 9 for disclosures related to the fair value of all derivative assets and liabilities. 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 foreign exchange and interest 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.
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Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings. In the ordinary 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. We are not currently a party to any litigation, nor are we aware of any pending or threatened litigation against us that we believe would materially affect our business, operating results, financial condition or cash flows, other than the following: On June 19, 2018, the Company and certain of its subsidiaries filed a lawsuit in the U.S. District Court for the Northern District of California against SAP SE, SAP America, Inc., and SAP Labs, LLC (collectively, "SAP"). In the lawsuit, the Company alleges, among other things, that SAP misappropriated certain of the Company’s trade secrets within the Company’s enterprise data analytics and warehousing products and used them to help develop, improve, introduce, and sell one or more competing products. The Company further alleges that SAP has employed anticompetitive practices using its substantial market position in the enterprise resource planning applications market to pressure the Company’s customers and prospective customers to use SAP’s one or more competing products and reduce or eliminate customers' and prospective customers' use of the Company's offerings. The Company seeks an injunction barring SAP’s alleged conduct, monetary damages, and other available legal and equitable relief. In July 2019, SAP filed patent infringement counterclaims against Teradata based on five of SAP’s U.S. patents (one of which has since been dismissed from the suit), and the Company is vigorously defending against these counterclaims. On August 31, 2020, the Company filed a second lawsuit against SAP in the U.S. District Court for the Northern District of California. In this lawsuit as it currently stands, Teradata alleges infringement by SAP of four of Teradata’s U.S. patents and seeks an injunction barring SAP from further infringement, monetary damages, and other available legal and equitable relief. On February 16, 2021, SAP filed additional patent infringement counterclaims against Teradata based on six additional U.S. patents. On the same day, SAP also filed a lawsuit in Germany for infringement of a single German patent. Currently, it is not possible to determine the likelihood of a loss or a reasonably estimated range of loss, if any, pertaining to any of SAP’s patent counterclaims in the United States or its German lawsuit. Other Contingencies. 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 offerings. The Company has indemnification obligations under its charter and bylaws to its officers and directors, and 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 typically 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. As such, the Company has generally 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, 2021 and December 31, 2020. The Company is also potentially subject to concentrations of supplier risk. Our hardware components are assembled exclusively by Flex Ltd. ("Flex"). Flex 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 Flex and to source certain components from single suppliers, a disruption in production at Flex 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.
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Fair Value Measurements |
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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, interest rate swaps 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. Additionally, in June 2018, Teradata executed a five-year interest rate swap with a $500 million initial notional amount in order to hedge the floating interest rate on its term loan. The fair value of these contracts and swaps 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 of unrealized gains for open contracts are recorded in other assets and the fair value of unrealized losses are recorded in other liabilities in the Company's balance sheet. The fair value of foreign exchange forward contract assets and liabilities at March 31, 2021 and December 31, 2020 was not material. Realized gains and losses from the Company’s fair value hedges net of corresponding gains or losses on the underlying exposures were immaterial for the three months ended March 31, 2021 and 2020. The Company’s other assets and liabilities measured at fair value on a recurring basis and subject to fair value disclosure requirements at March 31, 2021 and December 31, 2020 were as follows:
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Debt |
3 Months Ended |
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Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | DebtIn June 2018, Teradata replaced an existing 5 year, $400 million revolving credit facility with a new $400 million revolving credit facility (the "Credit Facility"). The Credit Facility expires in June 2023, at which point any remaining outstanding borrowings would be due for repayment unless extended by agreement of the parties for up to two additional one-year periods. In addition, under the terms of the Credit Facility, Teradata from time to time and subject to certain conditions may increase the lending commitments under the Credit Facility in an aggregate principal amount up to an additional $200 million, to the extent that existing or new lenders agree to provide such additional commitments. The outstanding principal amount of the Credit Facility bears interest at a floating rate based upon, at Teradata’s option, a negotiated base rate or a Eurodollar rate plus, in each case, a margin based on Teradata’s leverage ratio. In the near term, Teradata would anticipate choosing a floating rate based on LIBOR. The Credit Facility is unsecured but is guaranteed by certain of Teradata’s material domestic subsidiaries and contains certain representations and warranties, conditions, affirmative, negative and financial covenants, and events of default customary for such facilities. As of March 31, 2021, the Company had no borrowings outstanding under the Credit Facility, leaving $400 million in borrowing capacity available under the Credit Facility. The Company was in compliance with all covenants under the Credit Facility as of March 31, 2021. Also, in June 2018, Teradata closed on a new senior unsecured $500 million five-year term loan, the proceeds of which plus additional cash-on-hand were used to pay off the remaining $525 million of principal on its previous term loan. The term loan is payable in quarterly installments, which commenced on June 30, 2019, with 1.25% of the initial principal amount due on each of the first eight payment dates; 2.50% of the initial principal amount due on each of the next four payment dates; 5.0% of the initial principal amount due on each of the next three payment dates; and all remaining principal due in June 2023. The outstanding principal amount of the term loan bears interest at a floating rate based upon a negotiated base rate or a Eurodollar rate, plus in each case, a margin based on the leverage ratio of the Company. As of March 31, 2021, the term loan principal outstanding was $450 million. As disclosed in Note 7, Teradata entered into an interest rate swap to hedge the floating interest rate of the term loan. As a result of the swap, Teradata’s fixed rate on the term loan equals 2.86% plus the applicable leverage-based margin as defined in the term loan agreement. As of March 31, 2021, the all-in fixed rate is 4.36%. The Company was in compliance with all covenants under the term loan as of March 31, 2021. Teradata’s term loan is recognized on the Company’s balance sheet at its unpaid principal balance, net of deferred issuance costs, and is not subject to fair value measurement. However, given that the loan carries a variable rate, the Company estimates that the unpaid principal balance of the term loan would approximate its fair value. If measured at fair value in the financial statements, the Company’s term loan would be classified as Level 2 in the fair value hierarchy.
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Earnings per Share |
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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:
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Segment and Other Supplemental Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment and Other Supplemental Information | Segment and Other Supplemental Information Teradata manages its business under three geographic regions, which are also the Company’s operating segments: (1) Americas region (North America and Latin America); (2) EMEA region (Europe, Middle East and Africa) and (3) APJ region (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, who is the Company's President and Chief Executive Officer, 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 profit for the Company:
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Reorganization and Business Transformation |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reorganization and Business Transformation | Reorganization and Business Transformation 2020 Workforce Reduction and Real Estate Rationalization Measures In September 2020, the Company offered a voluntary separation program ("VSP") to certain tenured employees. This global program was generally made available to active employees in good standing who (1) were at least 55 years old as of October 1, 2020 and (2) had at least ten years of service with Teradata. This program was implemented as part of the Company's efforts to improve its cost structure. On November 2, 2020, the Company approved a plan to realign and reduce its workforce and rationalize its real estate footprint. The workforce measures involve involuntary headcount reduction actions. These actions are separate from the VSP. The rationalization of the Company’s real estate footprint involves terminating leases relating to certain of the Company’s offices globally and transitioning impacted employees to a permanent virtual working environment, co-working space or a smaller facility, depending on business need. The Company is continuing to evaluate and implement additional measures that would be expected to result in further cost savings. The Company expects that the costs relating to these workforce reduction and real estate rationalization measures will include one-time employee separation benefits, transition support, outside services and other exit-related costs. The Company expects that it will incur total costs and charges related to these actions in the range of approximately $52 to $60 million, consisting primarily of the following: •$13 to $15 million for employee severance and other employee-related costs, which is separate from the $28 to $30 million for costs related to the VSP, •$4 to $7 million charge for facilities lease related costs, and •$7 to $8 million for outside service, legal and other associated costs. The Company incurred $8 million of these costs and charges in the first quarter of 2021 and $42 million in 2020 with the remaining costs and charges expected to be incurred in 2021 upon completion of these actions. Cash expenditures related to these actions are estimated at approximately $60 to $70 million. Approximately $12 million to $14 million of the cash expenditures relate to cash payments to international employees and which are not expected to have a material impact on the Company's Condensed Consolidated Statements of Income due to the Company accounting for its International 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. The Company recognized costs of $8 million ($7 million cash and $1 million non-cash) in the first quarter of 2021 for the VSP, employee separation benefits, facilities lease related costs, outside service, legal and other associated costs. Certain benefits are being expensed over the time period that the employees are required to work to earn them to the extent the required service period extends beyond the nominal period. $3 million of these costs were recorded to Costs of revenue, $2 million were recorded to Selling, general and administrative expenses and $3 million were recorded to Research and development expenses. There was no impact to the segment gross profit. Cash paid related to the actions described above was $17 million in 2021 and $23 million in 2020. Not included in the table below are approximately $1 million in 2021 and $2 million in 2020 of cash payments for international employees which, are not expected to have a material impact on the Condensed Consolidated Statements of Income as noted above. The 2021 activity and the reserves related to these workforce reduction and real estate rationalization measures are as follows:
In addition, the Company incurred non-cash costs not reflected in the table above of $1 million in 2021 and $2 million in 2020 for stock-based compensation for accelerated vesting tied to the VSP and $2 million for accelerated amortization of right-of-use assets and fixed assets in 2020 associated with the termination of leases relating to certain of the Company’s offices globally. The remaining lease liability is included in our operating lease obligations as of March 31, 2021 and is not included in the table above.
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New Accounting Pronouncements (Policies) |
3 Months Ended |
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Mar. 31, 2021 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Reference Rate Reform. In March 2020, the Financial Accounting Standards Board ("FASB") issued new guidance to provide relief to companies that will be impacted by the expected change in benchmark interest rates, as participating banks will no longer be required to submit London Interbank Offered Rate ("LIBOR") quotes by the U.K. Financial Conduct Authority. The new guidance allows companies to, provided the only change to existing contracts are a change to an approved benchmark interest rate, account for modifications as a continuance of the existing contract without additional analysis. For new and existing contracts, companies may elect to apply the amendments as of March 12, 2020 through December 31, 2022. The Company is currently evaluating this new guidance to determine the impact it may have on our condensed consolidated financial statements or related disclosures. Recently Adopted Guidance Accounting for Income Taxes. In December 2019, the FASB issued new guidance to simplify the accounting for income taxes. The new guidance changes various subtopics of accounting for income taxes including, but not limited to, accounting for "hybrid" tax regimes, tax basis step-up in goodwill obtained in a transaction that is not a business combination, intra-period tax allocation exception to incremental approach, ownership changes in investments, interim-period accounting for enacted changes in tax law, and year-to-date loss limitation in interim-period tax accounting. We adopted the guidance in the first quarter of 2021. The adoption did not have a material impact on our condensed consolidated financial statements or related disclosures.
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Revenue from Contracts with Customers (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenue | The following table presents a disaggregation of revenue:
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Schedule of Rental Revenue | Rental revenue, which is included in recurring revenue in the above table, was as follows:
*Rental revenue includes hardware maintenance.
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Schedule of Assets and Liabilities Related to Contracts with Customers | The following table provides information about receivables, contract assets and deferred revenue from contracts with customers:
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Schedule of Estimated Revenue Expected to be Recognized in the Future | The following table includes estimated revenue expected to be recognized in the future related to the Company's unsatisfied (or partially satisfied) obligations at March 31, 2021:
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Contract Costs (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Activity Related to Capitalized Contract Cost | The following table identifies the activity relating to capitalized contract costs:
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Supplemental Financial Information (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Financial Information |
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Tax Rate | The effective tax rate is as follows:
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Derivative Instruments and Hedging Activities (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Financial Instruments | The following table identifies the contract notional amount of the Company’s derivative financial instruments:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis and Subject to Fair Value Disclosure Requirements | The Company’s other assets and liabilities measured at fair value on a recurring basis and subject to fair value disclosure requirements at March 31, 2021 and December 31, 2020 were as follows:
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Earnings per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Basic and Diluted Earnings Per Share | The components of basic and diluted earnings per share are as follows:
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Segment and Other Supplemental Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regional Segment Revenue and Gross Margin | The following table presents segment revenue and segment gross profit for the Company:
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Reorganization and Business Transformation (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The 2021 activity and the reserves related to these workforce reduction and real estate rationalization measures are as follows:
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Basis of Presentation (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Reclassification [Line Items] | ||
Revenue | $ 491 | $ 434 |
Cost of revenue | 184 | $ 209 |
Reclassification Adjustment | Reclassification, from Recurring Services to Consulting Services | ||
Reclassification [Line Items] | ||
Revenue | 25 | |
Cost of revenue | 20 | |
Reclassification Adjustment | Reclassification, from Recurring Services to Perpetual Software Hardware and Other | ||
Reclassification [Line Items] | ||
Revenue | 9 | |
Cost of revenue | $ 7 |
Revenue from Contracts with Customers - Schedule of Operating Lease Income (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Revenue from Contract with Customer [Abstract] | ||
Rental revenue | $ 39 | $ 19 |
Revenue from Contracts with Customers - Contract Balances (Details) - USD ($) $ in Millions |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Accounts receivable, net | $ 367 | $ 331 |
Contract assets | 19 | 11 |
Current deferred revenue | 557 | 499 |
Long-term deferred revenue | $ 43 | $ 38 |
Revenue from Contracts with Customers - Narrative (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2021
USD ($)
| |
Revenue from Contract with Customer [Abstract] | |
Deferred revenue, revenue recognized | $ 182 |
Remaining performance obligation, amount of customer only general cancellation | 1,674 |
Remaining performance obligation, amount of non-cancelable contracts | $ 373 |
Revenue from Contracts with Customers - Transaction Price Allocated to the Remaining Performance Obligations (Details) $ in Millions |
Mar. 31, 2021
USD ($)
|
---|---|
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation | $ 2,702 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation | $ 1,450 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation | $ 1,252 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, period |
Contract Costs (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Revenue from Contract with Customer [Abstract] | ||
Capitalized contract cost, amortization period | 4 years | |
Capitalized Contract Cost, Net [Roll Forward] | ||
Capitalized contract cost, net at period start | $ 98 | $ 91 |
Capitalized | 13 | 6 |
Amortization | (12) | (10) |
Capitalized contract cost, net at period end | $ 99 | $ 87 |
Supplemental Financial Information (Detail) - USD ($) $ in Millions |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Inventories | ||
Finished goods | $ 6 | $ 18 |
Service parts | 10 | 11 |
Total inventories | 16 | 29 |
Deferred revenue | ||
Current deferred revenue | 557 | 499 |
Long-term deferred revenue | 43 | 38 |
Total deferred revenue | $ 600 | $ 537 |
Income Taxes (Detail) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Dec. 31, 2021 |
|
Operating Loss Carryforwards [Line Items] | |||
Effective tax rate (percentage) | 26.40% | 1300.00% | |
Discrete income tax expense (benefit) | $ (3) | $ (152) | |
Discrete tax benefit related to intra-entity asset transfer | 157 | ||
Tax expense related to equity compensation vesting | 6 | ||
Income tax expense (benefit) | (19) | 182 | |
Pre-tax income (loss) | $ 72 | $ (14) | |
Scenario, Forecast | |||
Operating Loss Carryforwards [Line Items] | |||
Effective tax rate (percentage) | 30.00% |
Derivative Instruments and Hedging Activities (Detail) - USD ($) $ in Millions |
1 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2021 |
Dec. 31, 2020 |
|
Interest Rate Swap | |||
Derivative | |||
Derivative, term of contract | 5 years | ||
Derivative, contract notional amount | $ 500 | $ 450 | $ 456 |
Foreign Exchange Contract | |||
Derivative | |||
Derivative, contract notional amount | 121 | 90 | |
Net contract notional amount of foreign exchange forward contracts | $ 83 | $ 29 |
Fair Value Measurements - Additional Information (Details) - Interest Rate Swap - USD ($) $ in Millions |
1 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2021 |
Dec. 31, 2020 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivative, term of contract | 5 years | ||
Derivative, contract notional amount | $ 500 | $ 450 | $ 456 |
Earnings per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Earnings Per Share [Abstract] | ||
Net income attributable to common stockholders | $ 53 | $ 168 |
Weighted average outstanding shares of common stock (in shares) | 108.7 | 110.3 |
Dilutive effect of employee stock options, restricted stock and other stock awards (in shares) | 4.1 | 1.0 |
Common stock and common stock equivalents (in shares) | 112.8 | 111.3 |
Net income per share: | ||
Basic (in dollars per share) | $ 0.49 | $ 1.52 |
Diluted (in dollars per share) | $ 0.47 | $ 1.51 |
Antidilutive options to purchase that were not included in the computation of diluted earnings per share (in shares) | 1.2 | 2.2 |
Segment and Other Supplemental Information - Additional Information (Detail) |
3 Months Ended |
---|---|
Mar. 31, 2021
segment
| |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
Label | Element | Value |
---|---|---|
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | $ 4,000,000 |
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | $ 4,000,000 |
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