EX-99.1 2 dex991.htm PRESS RELEASE, DATED MAY 8, 2008, ISSUED BY THE COMPANY Press Release, dated May 8, 2008, issued by the Company

Exhibit 99.1

 

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2835 Miami Village Drive

Miamisburg, OH 45342

 

NEWS RELEASE

 

For media information:    

For investor information:

Dian Terry    

Gregg Swearingen

(937) 242-4781    

(937) 242-4600

dian.terry@teradata.com    

gregg.swearingen@teradata.com

For Release on May 8, 2008

Teradata Announces 2008 First Quarter Results

 

   

Teradata reports 2 percent revenue growth over the first quarter of 2007

 

   

Teradata generates EPS of $0.23, maintains full-year EPS guidance

 

   

Cash from Operations of $143 million, versus $102 million in the year-ago quarter

MIAMISBURG, Ohio – Teradata Corporation (NYSE: TDC), the world’s largest company solely focused on data warehousing and enterprise analytics, today reported revenue of $375 million for the first quarter of 2008, a 2 percent increase from $367 million in the first quarter of 2007. Included in the year-over-year comparison was 4 percentage points of benefit from currency translation.(1)

Gross margin in the first quarter was 51.7 percent versus 53.4 percent in the first quarter of 2007. Gross margin was lower in the first quarter of 2008 primarily due to lower product volume in the Americas region.

Teradata’s first-quarter net income was $42 million, or $0.23 per diluted share, which compared to $43 million, or $0.24 per diluted share, in the first quarter of 2007. As expected, Teradata’s first quarter results included $11 million of incremental costs associated with Teradata now operating as an independent publicly-traded company.

“We continue to see overall global demand for enterprise data warehousing remain strong, as companies look to Teradata to achieve competitive advantage with our best-in-class data warehousing solutions. While we are disappointed with our start to the year, primarily due to lengthening sales cycles in the United States, the fundamentals of our business remain solid and we are maintaining our guidance for 2008,” said Mike Koehler, president and chief executive officer of Teradata. “Our services business grew 20% in the quarter and service


margins increased 1.3 points. Customer activity is strong entering the second quarter, especially internationally.

“We are investing for growth, both in our innovative technology and in our market coverage. We just introduced our comprehensive new platform family, which sets the standard in data warehousing and leverages the power of our industry-leading Teradata 12 database, and we are increasing our number of sales territories. Data will continue to grow exponentially in the years to come, both in volume and complexity, and Teradata is well positioned to help organizations address the challenge and gain competitive advantage.”

Regional Operating Segment Results (2)

Teradata reports its results in three regional operating segments.

North America and Latin America (Americas)

Teradata generated $210 million of revenue in its Americas region in the first quarter of 2008, down 2 percent from $215 million in the first quarter of 2007. Currency translation provided 1 percentage point of benefit in the year-over-year revenue comparison.

Gross margin in the Americas region in the first quarter of 2008 was 54.3 percent, compared to 59.5 percent in the first quarter of 2007. Gross margin in the Americas declined primarily due to lower product volume and revenue mix as well as an unfavorable deal mix.

Europe, Middle East and Africa (EMEA)

Revenue in Teradata’s EMEA region in the first quarter of 2008 was $103 million, up 14 percent from $90 million generated in the first quarter of 2007. Currency translation benefited revenue growth in the EMEA region by 11 percentage points.

Gross margin in the EMEA region in the first quarter of 2008 was 50.5 percent, an increase from 44.4 percent in the first quarter of 2007. Gross margins in the EMEA region improved due to the benefit of currency translation, improved performance in professional services and higher product volume.


Asia Pacific / Japan (APJ)

Teradata generated $62 million of revenue in its APJ region in the first quarter of 2008, the same as reported in the first quarter of 2007. The year-over-year revenue comparison in the APJ region was benefited by 9 percentage points from currency translation.

Gross margin in the APJ region in the first quarter of 2008 was 45.2 percent, the same as reported in the first quarter of 2007.

Company Operating Results

Operating Income

First quarter of 2008 operating income was $53 million, compared to $70 million in the first quarter of 2007. Lower product revenue in the Americas region, along with incremental costs associated with Teradata now operating as an independent, publicly-traded company, were the key drivers of the lower operating income in the quarter.

Other Items

Other income in the first quarter of 2008 was $3 million, primarily from interest income earned on Teradata’s cash balance.

The effective tax rate in the first quarter of 2008 results was 25 percent versus 39 percent in the first quarter of 2007. Teradata now expects its full-year tax rate for 2008 to be approximately 25 percent.

Cash Flow

During the first quarter of 2008, Teradata generated $143 million of cash from operating activities, compared to $102 million in the same period in 2007. Capital expenditures of $20 million were comparable to $19 million in the first quarter of 2007. Teradata generated $123 million of free cash flow (cash from operations less capital expenditures and additions to capitalized software) in the first quarter of 2008, versus $83 million in the same period last year.


     For the three months
ended March 31
 
(in millions)             
     2008     2007  

Cash provided by operating activities (GAAP)

   $ 143     $ 102  

Less capital expenditures for:

    

Expenditures for property and equipment

     (4 )     (7 )

Additions to capitalized software

     (16 )     (12 )
                

Total capital expenditures

     (20 )     (19 )

Free cash flow (non-GAAP measure) (3)

   $ 123     $ 83  

Balance Sheet

As of March 31, 2008, Teradata had $339 million in cash and cash equivalents, an increase of $69 million from December 31, 2007. Free cash flow generation more than offset the use of cash for share repurchases. During the quarter, the company repurchased approximately 1.6 million shares for $38 million.

Although Teradata has a $300 million credit facility in place, Teradata had no short- or long-term debt outstanding as of March 31, 2008.

2008 Outlook

Teradata continues to expect 2008 full-year revenue growth of approximately 5 to 8 percent and 2008 earnings per share to be $1.35 to $1.45.

 

     2008 FY
Guidance

Year-over-year revenue growth:

   5 –8%

Earnings per share

   $1.35 - $1.45


2008 First-Quarter Earnings Conference Call

A conference call is scheduled today at 10:00 a.m. (EDT) to discuss the company’s first-quarter results, as well as its guidance for 2008. Access to the conference call, as well as a replay of the call, is available on Teradata’s Web site at www.teradata.com/investor.

Supplemental financial information regarding Teradata’s operating results is also available on Teradata’s Web site.

About Teradata Corporation

Teradata Corporation (NYSE: TDC) is the world’s largest company solely focused on raising intelligence through data warehousing and enterprise analytics. Teradata is in more than 60 countries and on the Web at www.teradata.com.

# # #

Teradata is a trademark or registered trademark of Teradata Corporation in the United States and other countries.

 

(1) The impact of currency is determined by calculating the prior period results using the current-year monthly average currency rates.

 

(2) The Operating Segment results discussed in this earnings release may exclude certain corporate-related costs consistent with the manner by which management evaluates and makes decisions regarding segment operating performance. This presentation is useful to investors because it allows analysis and comparability of operating trends. Schedule D, included in this earnings release, reconciles Teradata’s segment results to total company results reported under Generally Accepted Accounting Principles in the United States, or GAAP.

 

(3) Teradata reports its results in accordance with GAAP. However, as described below, the company believes that certain non-GAAP measures, such as free cash flow, are useful for investors. Teradata defines free cash flow as cash provided/used by operating activities less capital expenditures for property and equipment, and additions to capitalized software. Free cash flow does not have a uniform definition under GAAP and therefore, Teradata’s definition may differ from other companies’ definition of this measure. Teradata’s management uses free cash flow to assess the financial performance of the company and believes it is useful for investors because it relates the operating cash flow of the company to the capital that is spent to continue and improve business operations. In particular, free cash flow indicates the amount of cash generated after capital expenditures for, among other things, investment in the company’s existing businesses, strategic acquisitions, strengthening the company’s balance sheet, repurchase of company stock and repayment of the company’s debt obligations, if any. Free cash flow does not represent the residual cash flow available for discretionary expenditures since there may be other nondiscretionary expenditures that are not deducted from the measure. This non-GAAP measure should not be considered a substitute for or superior to cash flows from operating activities under GAAP.


Note to Investors

This news release contains forward-looking statements, including statements as to anticipated or expected results, beliefs, opinions and future financial performance, within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements include projections of revenue, profit growth and other financial items, future economic performance and statements concerning analysts’ earnings estimates, among other things. These forward-looking statements are based on current expectations and assumptions and involve risks and uncertainties that could cause Teradata’s actual results to differ materially.

In addition to the factors discussed in this release, other risks and uncertainties could affect our future results and could cause actual results to differ materially from those expressed in such forward-looking statements. Such factors include those relating to: the uncertain economic climate and its impact on the markets in general or on the ability of our suppliers to meet their commitments to us, or the timing of purchases by our current and potential customers, and other general economic and business conditions; the impact of our separation from NCR Corporation and risks relating to our ability to operate effectively as a stand-alone, publicly traded company; changes in our cost structure, management, financing and business operations following our separation from NCR; the rapidly changing and intensely competitive nature of the information technology industry and the data enterprise warehousing business, including the increased pressure on price/performance for data warehousing solutions; fluctuations in our operating results, unanticipated delays or accelerations in our sales cycles and the difficulty of accurately estimating revenues; risks inherent in operating in foreign countries, including the impact of economic, political, legal, regulatory, compliance, cultural, foreign currency fluctuations and other conditions abroad; the timely development, production or acquisition and market acceptance of new and existing products and services, including our ability to accelerate market acceptance of new products and services; tax rates; turnover of workforce and the ability to attract and retain skilled employees; availability and successful exploitation of new acquisition and alliance opportunities; changes in Generally Accepted Accounting Principles (GAAP) and the resulting impact, if any, on the company’s accounting policies; continued efforts to establish and maintain best-in-class internal information technology and control systems; and other factors described from time to time in the company’s filings with the U.S. Securities and Exchange Commission and the company’s annual reports to stockholders The company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


Schedule A

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TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in millions, except per share amounts)

 

     For the Periods Ended March 31  
     Three Months  
     2008     2007*  

Revenue

    

Products

   $ 165     $ 192  

Services

     210       175  
                

Total revenue

     375       367  

Product gross margin

     105       124  

% of Revenue

     63.6 %     64.6 %

Services gross margin

     89       72  

% of Revenue

     42.4 %     41.1 %
                

Total gross margin

     194       196  

% of Revenue

     51.7 %     53.4 %

Selling, general and administrative expenses

     116       99  

Research and development expenses

     25       27  
                

Income from operations

     53       70  

% of Revenue

     14.1 %     19.1 %

Interest income

     3       —    
                

Income before income taxes

     56       70  

% of Revenue

     14.9 %     19.1 %

Income tax expense

     14       27  
                

Net income

   $ 42     $ 43  
                

% of Revenue

     11.2 %     11.7 %

Net income per common share

    

Basic

   $ 0.23     $ 0.24  

Diluted

   $ 0.23     $ 0.24  

Weighted average common shares outstanding

    

Basic

     180.4       180.7  

Diluted

     182.3       180.7  

 

* As previously disclosed in Teradata’s 2007 10-K, the first quarter of 2007 financial results have been restated to correct for the inclusion of a transaction that previously had been recorded in the fourth quarter of 2006. The restatement resulted in a $13 million increase in revenue and a $6 million increase in net income ($0.04 per share).


Schedule B

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TERADATA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions)

 

     March 31,
2008
    December 31,
2007
 

Assets

    

Current assets

    

Cash and cash equivalents

   $ 339     $ 270  

Accounts receivable, net

     417       507  

Inventories, net

     48       51  

Other current assets

     50       45  
                

Total current assets

     854       873  

Property and equipment, net

     93       94  

Capitalized software, net

     67       61  

Goodwill

     108       90  

Deferred income taxes

     142       140  

Other assets

     38       36  
                

Total assets

   $ 1,302     $ 1,294  
                

Liabilities and stockholders’ equity

    

Current liabilities

    

Accounts payable

   $ 98     $ 120  

Payroll and benefits liabilities

     59       88  

Deferred revenue and customer deposits

     300       246  

Other current liabilities

     97       118  
                

Total current liabilities

     554       572  

Pension and other postemployment plan liabilities

     92       88  

Other liabilities

     11       3  
                

Total liabilities

     657       663  

Stockholders’ equity/parent company equity

    

Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding at March 31, 2008 and December 31, 2007

     —         —    

Common stock: par value $0.01 per share, 500.0 shares authorized, 179.6 and 181.0 shares issued and outstanding at March 31, 2008 and December 31, 2007, respectively

     2       2  

Paid-in capital

     525       555  

Retained earnings

     121       79  

Accumulated other comprehensive loss

     (3 )     (5 )
                

Total stockholders’ equity

     645       631  
                

Total liabilities and stockholders’ equity

   $ 1,302     $ 1,294  
                


Schedule C

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TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in millions)

 

     For the Periods Ended March 31
Three Months
 
     2008     2007  

Operating activities

    

Net income

   $ 42     $ 43  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     17       16  

Stock-based compensation expense

     5       3  

Excess tax benefit from stock-based compensation

     (1 )     —    

Deferred income taxes

     6       10  

Changes in assets and liabilities:

    

Receivables

     102       4  

Inventories

     3       —    

Current payables and accrued expenses

     (62 )     (29 )

Deferred revenue and customer deposits

     59       59  

Other assets and liabilities

     (28 )     (4 )
                

Net cash provided by operating activities

     143       102  

Investing activities

    

Expenditures for property and equipment

     (4 )     (7 )

Additions to capitalized software

     (16 )     (12 )

Other investing activities and business acquisition, net

     (22 )     —    
                

Net cash used in investing activities

     (42 )     (19 )

Financing activities

    

Repurchases and retirement of common stock

     (38 )     —    

Excess tax benefit from stock-based compensation

     1       —    

Transfer to parent, net

     —         (83 )

Other financing activities, net

     1       —    
                

Net cash used in financing activities

     (36 )     (83 )

Effect of exchange rate changes on cash and cash equivalents

     4       —    
                

Increase in cash and cash equivalents

     69       —    

Cash and cash equivalents at beginning of period

     270       —    
                

Cash and cash equivalents at end of period

   $ 339     $ —    
                


Schedule D

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TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in millions, except per share amounts)

 

     For the Periods Ended March 31
Three Months
 
     2008     2007**     % Change  

Revenue

      

Americas

   $ 210     $ 215     -2 %

EMEA

     103       90     14 %

APJ

     62       62     0 %
                  

Total revenue

     375       367     2 %

Segment gross margin

      

Americas

     114       128    

% of Revenue

     54.3 %     59.5 %  

EMEA

     52       40    

% of Revenue

     50.5 %     44.4 %  

APJ

     28       28    

% of Revenue

     45.2 %     45.2 %  
                  

Subtotal—segment gross margin

     194       196    

% of Revenue

     51.7 %     53.4 %  

Reconciling amounts*

     —         —      
                  

Total gross margin

     194       196    

% of Revenue

     51.7 %     53.4 %  

Selling, general and administrative expenses

     116       99    

Research and development expenses

     25       27    
                  

Income from operations

   $ 53     $ 70    
                  

% of Revenue

     14.1 %     19.1 %  

 

* Includes corporate-related costs that management does not use to make decisions regarding the segments or to assess their financial performance.
** As previously disclosed in Teradata’s 2007 10-K, the first quarter of 2007 financial results have been restated to correct for the inclusion of a transaction that previously had been recorded in the fourth quarter of 2006. The restatement resulted in a $13 million increase in revenue and a $10 million increase in gross margin for the Americas region.