Document and Entity Information
Document and Entity Information Document - shares shares in Millions | 9 Months Ended | |
Sep. 30, 2019 | Oct. 31, 2019 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 001-33458 | |
Entity Registrant Name | TERADATA CORP /DE/ | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 75-3236470 | |
Entity Address, Address Line One | 17095 Via Del Campo | |
Entity Address, City or Town | San Diego | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92127 | |
City Area Code | 866 | |
Local Phone Number | 548-8348 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 112.5 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000816761 | |
Current Fiscal Year End Date | --12-31 | |
NEW YORK STOCK EXCHANGE, INC. [Member] | ||
Entity Information [Line Items] | ||
Title of each class: | Common Stock, $0.01 par value | |
Trading Symbol | TDC | |
Name of Each Exchange on which Registered: | NYSE |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Loss) (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue | ||||
Revenue | $ 459 | $ 526 | $ 1,405 | $ 1,576 |
Cost of revenue | ||||
Cost of revenue | 212 | 262 | 698 | 839 |
Gross profit | 247 | 264 | 707 | 737 |
Operating expenses | ||||
Selling, general and administrative expenses | 151 | 166 | 447 | 481 |
Research and development expenses | 86 | 84 | 245 | 236 |
Total operating expenses | 237 | 250 | 692 | 717 |
Income from operations | 10 | 14 | 15 | 20 |
Interest expense | (8) | (6) | (19) | (16) |
Interest income | 4 | 4 | 10 | 11 |
Other expense | (2) | (2) | (7) | (7) |
Total other expense, net | (6) | (4) | (16) | (12) |
Income (loss) before income taxes | 4 | 10 | (1) | 8 |
Income tax benefit | (6) | (8) | 0 | (7) |
Net income (loss) | $ 10 | $ 18 | $ (1) | $ 15 |
Net income (loss) per common share | ||||
Basic (in dollars per share) | $ 0.09 | $ 0.15 | $ (0.01) | $ 0.13 |
Diluted (in dollars per share) | $ 0.09 | $ 0.15 | $ (0.01) | $ 0.12 |
Weighted average common shares outstanding | ||||
Basic (in shares) | 113.2 | 118.7 | 115.2 | 119.9 |
Diluted (in shares) | 114.2 | 120.7 | 115.2 | 121.8 |
Recurring | ||||
Revenue | ||||
Revenue | $ 343 | $ 312 | $ 1,012 | $ 926 |
Cost of revenue | ||||
Cost of revenue | 110 | 93 | 323 | 271 |
Perpetual software licenses and hardware | ||||
Revenue | ||||
Revenue | 16 | 77 | 76 | 243 |
Cost of revenue | ||||
Cost of revenue | 9 | 43 | 60 | 164 |
Consulting services | ||||
Revenue | ||||
Revenue | 100 | 137 | 317 | 407 |
Cost of revenue | ||||
Cost of revenue | $ 93 | $ 126 | $ 315 | $ 404 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 10 | $ 18 | $ (1) | $ 15 |
Other comprehensive loss: | ||||
Foreign currency translation adjustments | (11) | (6) | (18) | (23) |
Derivatives: | ||||
Unrealized (loss) gain on derivatives, before tax | (2) | 4 | (15) | 1 |
Unrealized (loss) gain on derivatives, tax portion | 1 | 0 | 4 | 0 |
Unrealized (loss) gain on derivatives, net of tax | (1) | 4 | (11) | 1 |
Defined benefit plans: | ||||
Defined benefit plan adjustment, before tax | 2 | 0 | 4 | 4 |
Defined benefit plan adjustment, tax portion | (1) | 0 | (1) | (1) |
Defined benefit plan adjustment, net of tax | 1 | 0 | 3 | 3 |
Other comprehensive loss | (11) | (2) | (26) | (19) |
Comprehensive (loss) income | $ (1) | $ 16 | $ (27) | $ (4) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 528 | $ 715 |
Accounts receivable, net | 328 | 588 |
Inventories | 36 | 28 |
Other current assets | 86 | 97 |
Total current assets | 978 | 1,428 |
Property and equipment, net | 333 | 295 |
Capitalized software, net | 42 | 72 |
Right of use assets - operating lease, net | 53 | |
Goodwill | 394 | 395 |
Acquired intangible assets, net | 11 | 16 |
Deferred income taxes | 67 | 67 |
Other assets | 101 | 87 |
Total assets | 1,979 | 2,360 |
Current liabilities | ||
Current portion of long-term debt | 25 | 19 |
Current portion of finance lease liability | 42 | 17 |
Current portion of operating lease liability | 19 | 0 |
Accounts payable | 103 | 141 |
Payroll and benefits liabilities | 115 | 224 |
Deferred revenue | 408 | 490 |
Other current liabilities | 60 | 118 |
Total current liabilities | 772 | 1,009 |
Long-term debt | 460 | 478 |
Finance lease liability | 66 | 30 |
Operating lease liability | 41 | |
Pension and other postemployment plan liabilities | 101 | 113 |
Long-term deferred revenue | 68 | 105 |
Deferred tax liabilities | 4 | 3 |
Other liabilities | 139 | 127 |
Total liabilities | 1,651 | 1,865 |
Commitments and contingencies (Note 9) | ||
Stockholders’ equity | ||
Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 0 | 0 |
Common stock: par value $0.01 per share, 500.0 shares authorized, 112.4 and 116.8 shares issued at September 30, 2019 and December 31, 2018, respectively | 1 | 1 |
Paid-in capital | 1,517 | 1,418 |
Accumulated deficit | (1,063) | (823) |
Accumulated other comprehensive loss | (127) | (101) |
Total stockholders’ equity | 328 | 495 |
Total liabilities and stockholders’ equity | $ 1,979 | $ 2,360 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 112,400,000 | 116,800,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Operating activities | ||
Net income (loss) | $ (1) | $ 15 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 113 | 95 |
Stock-based compensation expense | 59 | 50 |
Deferred income taxes | 1 | (11) |
Changes in assets and liabilities: | ||
Receivables | 260 | 182 |
Inventories | (8) | (15) |
Current payables and accrued expenses | (156) | (8) |
Deferred revenue | (119) | 7 |
Other assets and liabilities | (55) | (58) |
Net cash provided by operating activities | 94 | 257 |
Investing activities | ||
Expenditures for property and equipment | (43) | (92) |
Additions to capitalized software | (3) | (5) |
Net cash used in investing activities | (46) | (97) |
Financing activities | ||
Repurchases of common stock | (239) | (206) |
Repayments of long-term borrowings | (12) | (40) |
Repayments of credit facility borrowings | 0 | (240) |
Payments of finance leases | (18) | (1) |
Other financing activities, net | 40 | 23 |
Net cash used in financing activities | (229) | (464) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (6) | (17) |
Decrease in cash, cash equivalents and restricted cash | (187) | (321) |
Cash, cash equivalents and restricted cash at beginning of period | 716 | 1,089 |
Cash, cash equivalents and restricted cash at end of period | 529 | 768 |
Supplemental cash flow disclosure: | ||
Assets acquired under operating lease | 5 | 0 |
Assets acquired under finance lease | 78 | 23 |
Total cash, cash equivalents and restricted cash | $ 529 | $ 1,089 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Shares issued, beginning balance (in shares) at Dec. 31, 2017 | 122 | ||||
Stockholders’ equity, beginning balance at Dec. 31, 2017 | $ 668 | $ 1 | $ 1,320 | $ (579) | $ (74) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (7) | (7) | |||
Employee stock compensation, employee stock purchase programs and option exercises (in shares) | 1 | ||||
Employee stock compensation, employee stock purchase programs and option exercises | 30 | 30 | |||
Repurchases of common stock, retired (in shares) | (2) | ||||
Repurchases of common stock, retired | (77) | (77) | |||
Currency translation adjustment | 4 | 4 | |||
Shares issued, beginning balance (in shares) at Mar. 31, 2018 | 121 | ||||
Stockholders’ equity, ending balance at Mar. 31, 2018 | 644 | $ 1 | 1,350 | (637) | (70) |
Shares issued, beginning balance (in shares) at Dec. 31, 2017 | 122 | ||||
Stockholders’ equity, beginning balance at Dec. 31, 2017 | 668 | $ 1 | 1,320 | (579) | (74) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 15 | ||||
Pension and postemployment benefit plans, net of tax | 3 | ||||
Currency translation adjustment | (23) | ||||
Shares issued, beginning balance (in shares) at Sep. 30, 2018 | 118 | ||||
Stockholders’ equity, ending balance at Sep. 30, 2018 | 560 | $ 1 | 1,397 | (745) | (93) |
Shares issued, beginning balance (in shares) at Mar. 31, 2018 | 121 | ||||
Stockholders’ equity, beginning balance at Mar. 31, 2018 | 644 | $ 1 | 1,350 | (637) | (70) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 4 | 4 | 0 | ||
Employee stock compensation, employee stock purchase programs and option exercises | 26 | 26 | |||
Repurchases of common stock, retired (in shares) | (2) | ||||
Repurchases of common stock, retired | (81) | (81) | |||
Pension and postemployment benefit plans, net of tax | 3 | 3 | |||
Unrealized loss on derivatives, net of tax | (3) | (3) | |||
Currency translation adjustment | (21) | (21) | |||
Shares issued, beginning balance (in shares) at Jun. 30, 2018 | 119 | ||||
Stockholders’ equity, ending balance at Jun. 30, 2018 | 572 | $ 1 | 1,376 | (714) | (91) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 18 | 18 | 0 | ||
Employee stock compensation, employee stock purchase programs and option exercises | 21 | 21 | |||
Repurchases of common stock, retired (in shares) | (1) | ||||
Repurchases of common stock, retired | (49) | (49) | |||
Pension and postemployment benefit plans, net of tax | 0 | ||||
Unrealized loss on derivatives, net of tax | 4 | 4 | |||
Currency translation adjustment | (6) | (6) | |||
Shares issued, beginning balance (in shares) at Sep. 30, 2018 | 118 | ||||
Stockholders’ equity, ending balance at Sep. 30, 2018 | 560 | $ 1 | 1,397 | (745) | (93) |
Shares issued, beginning balance (in shares) at Dec. 31, 2018 | 117 | ||||
Stockholders’ equity, beginning balance at Dec. 31, 2018 | 495 | $ 1 | 1,418 | (823) | (101) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (10) | (10) | |||
Employee stock compensation, employee stock purchase programs and option exercises (in shares) | 1 | ||||
Employee stock compensation, employee stock purchase programs and option exercises | 48 | 48 | |||
Repurchases of common stock, retired (in shares) | (1) | ||||
Repurchases of common stock, retired | (58) | (58) | |||
Pension and postemployment benefit plans, net of tax | 1 | 1 | |||
Unrealized loss on derivatives, net of tax | (3) | (3) | |||
Currency translation adjustment | (6) | (6) | |||
Shares issued, beginning balance (in shares) at Mar. 31, 2019 | 117 | ||||
Stockholders’ equity, ending balance at Mar. 31, 2019 | 467 | $ 1 | 1,466 | (891) | (109) |
Shares issued, beginning balance (in shares) at Dec. 31, 2018 | 117 | ||||
Stockholders’ equity, beginning balance at Dec. 31, 2018 | 495 | $ 1 | 1,418 | (823) | (101) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (1) | ||||
Pension and postemployment benefit plans, net of tax | 3 | ||||
Currency translation adjustment | (18) | ||||
Shares issued, beginning balance (in shares) at Sep. 30, 2019 | 112 | ||||
Stockholders’ equity, ending balance at Sep. 30, 2019 | 328 | $ 1 | 1,517 | (1,063) | (127) |
Shares issued, beginning balance (in shares) at Mar. 31, 2019 | 117 | ||||
Stockholders’ equity, beginning balance at Mar. 31, 2019 | 467 | $ 1 | 1,466 | (891) | (109) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (1) | (1) | |||
Employee stock compensation, employee stock purchase programs and option exercises | 25 | 25 | |||
Repurchases of common stock, retired (in shares) | (3) | ||||
Repurchases of common stock, retired | (117) | (117) | |||
Pension and postemployment benefit plans, net of tax | 1 | 1 | |||
Unrealized loss on derivatives, net of tax | (7) | (7) | |||
Currency translation adjustment | (1) | (1) | |||
Shares issued, beginning balance (in shares) at Jun. 30, 2019 | 114 | ||||
Stockholders’ equity, ending balance at Jun. 30, 2019 | 367 | $ 1 | 1,491 | (1,009) | (116) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 10 | 10 | |||
Employee stock compensation, employee stock purchase programs and option exercises | 26 | 26 | |||
Repurchases of common stock, retired (in shares) | (2) | ||||
Repurchases of common stock, retired | (64) | (64) | |||
Pension and postemployment benefit plans, net of tax | 1 | 1 | |||
Unrealized loss on derivatives, net of tax | (1) | (1) | |||
Currency translation adjustment | (11) | (11) | |||
Shares issued, beginning balance (in shares) at Sep. 30, 2019 | 112 | ||||
Stockholders’ equity, ending balance at Sep. 30, 2019 | $ 328 | $ 1 | $ 1,517 | $ (1,063) | $ (127) |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2019 | |
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 2018 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, 2018 , as amended by Form 10-K/A (the “ 2018 Annual Report”). The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year. Prior period amounts have been restated to conform to the current year presentation, except for lease accounting discussed in Notes 2 and 12. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Fair Value Measurement. In August 2018, the Financial Accounting Standards Board ("FASB") issued new guidance that modifies disclosure requirements related to fair value measurement. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Implementation on a prospective or retrospective basis varies by specific disclosure requirement. Early adoption is permitted. The standard also allows for early adoption of any removed or modified disclosures upon issuance of this update while delaying adoption of the additional disclosures until their effective date. The Company is currently evaluating this guidance to determine the impact it may have on its disclosures. Compensation-Retirement Benefits-Defined Benefit Plans-General. In August 2018, the FASB issued new guidance that modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. For public companies, the amendments in this update are effective for fiscal years beginning after December 15, 2020, with early adoption permitted, and is to be applied on a retrospective basis to all periods presented. The Company is currently evaluating this guidance to determine the impact it may have on its disclosures. Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. In August 2018, the FASB issued new guidance that reduces complexity for the accounting for costs of implementing a cloud computing service arrangement and aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). For public companies, the amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. Implementation should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The effects of this standard on our financial position, results of operations or cash flows are not expected to be material. Codification Improvements to Financial Instruments-Credit Losses, Derivatives and Hedging, and Financial Instruments. In June 2016, the FASB issued Accounting Standards, Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. Since the issuance of this accounting standard, the FASB has identified certain areas that require clarification and improvement. In May 2019, the FASB issued guidance that allows entities to make an irrevocable one-time election upon adoption of the new credit losses standard to measure financial assets measured at amortized cost (except held-to-maturity securities) using the fair value option. The election is to be applied on an instrument-by-instrument basis. For entities that have already adopted the new credit losses standard, the relief is effective for fiscal years beginning after December 15, 2019 and interim periods therein, and early adoption is permitted. For all other entities, the guidance is effective upon adoption of the new credit losses standard. The company is currently evaluating this new guidance to determine the impact it may have on our financial position, results of operations or cash flows. Recently Adopted Guidance Leases. In February 2016, the FASB issued new guidance, which requires a lessee to account for leases as finance or operating leases. Both types of leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability on its balance sheet, with differing methodology for income statement and cash flow recognition. For lessors, the standard modifies the classification criteria and the accounting for sales-type and direct financing leases. Entities will classify leases to determine how to recognize lease-related revenue and expense. We adopted the new standard as of January 1, 2019 using the modified retrospective adoption approach utilizing the optional transition method with prior periods not recast and have elected certain of the practical expedients allowed under the standard. The Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2019 are presented under the new standard, while comparative years presented are not adjusted and continue to be reported in accordance with our historical accounting policy. See Note 12 for more information. Comprehensive Income. In February 2018, the FASB issued new guidance for Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02), which allows companies to reclassify stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the "2017 Tax Act") from accumulated other comprehensive income to retained earnings. The impact of applying this standard did not have a material impact on our condensed consolidated financial statements. Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. In June 2018, the FASB issued new guidance to clarify and improve the scope and the accounting guidance for contributions received and contributions made. The amendments are intended to assist entities in evaluating whether transactions should be accounted for as contributions (nonreciprocal transactions) or as exchange (reciprocal) transactions and determining whether a contribution is conditional. The Company adopted this guidance on January 1, 2019, which did not have a material impact on our condensed consolidated financial statements. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer | Revenue from Contracts with Customers Disaggregation of Revenue from Contracts with Customers The following table presents a disaggregation of revenue: Three months ended September 30, Nine months ended September 30, in millions 2019 2018 2019 2018 Americas Recurring $ 222 $ 198 $ 652 $ 590 Perpetual software licenses and hardware — 31 31 93 Consulting services 34 48 111 145 Total Americas 256 277 794 828 EMEA Recurring 75 70 223 207 Perpetual software licenses and hardware 12 26 29 69 Consulting services 31 43 101 139 Total EMEA 118 139 353 415 APAC Recurring 46 44 137 129 Perpetual software licenses and hardware 4 20 16 81 Consulting services 35 46 105 123 Total APAC 85 110 258 333 Total Revenue $ 459 $ 526 $ 1,405 $ 1,576 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: As of in millions September 30, 2019 December 31, 2018 Accounts receivable, net $ 328 $ 588 Contract assets $ 8 $ 14 Current deferred revenue $ 408 $ 490 Long-term deferred revenue $ 68 $ 105 Revenue recognized during the nine months ended September 30, 2019 from amounts included in deferred revenue at the beginning of the period was $468 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 September 30, 2019: in millions Total at September 30, 2019 Year 1 Year 2 and Thereafter Remaining unsatisfied obligations $ 2,558 $ 1,210 $ 1,348 The amounts above represent the price of firm orders for which work has not been performed or goods have not been delivered and exclude unexercised contract options outside the stated contractual term that do not represent material rights to the customer. Although the Company believes that the contract value in the above table is firm, approximately $1,831 million of the amount includes customer-only general cancellation for convenience terms that the Company is contractually obligated to perform unless the customer notifies us. The Company expects to recognize revenue of approximately $300 million 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 Other Assets 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: in millions December 31, 2018 Capitalized Amortization September 30, 2019 Capitalized contract costs $ 54 $ 37 $ (14 ) $ 77 |
Contract Costs
Contract Costs | 9 Months Ended |
Sep. 30, 2019 | |
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: Three months ended September 30, Nine months ended September 30, in millions 2019 2018 2019 2018 Americas Recurring $ 222 $ 198 $ 652 $ 590 Perpetual software licenses and hardware — 31 31 93 Consulting services 34 48 111 145 Total Americas 256 277 794 828 EMEA Recurring 75 70 223 207 Perpetual software licenses and hardware 12 26 29 69 Consulting services 31 43 101 139 Total EMEA 118 139 353 415 APAC Recurring 46 44 137 129 Perpetual software licenses and hardware 4 20 16 81 Consulting services 35 46 105 123 Total APAC 85 110 258 333 Total Revenue $ 459 $ 526 $ 1,405 $ 1,576 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: As of in millions September 30, 2019 December 31, 2018 Accounts receivable, net $ 328 $ 588 Contract assets $ 8 $ 14 Current deferred revenue $ 408 $ 490 Long-term deferred revenue $ 68 $ 105 Revenue recognized during the nine months ended September 30, 2019 from amounts included in deferred revenue at the beginning of the period was $468 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 September 30, 2019: in millions Total at September 30, 2019 Year 1 Year 2 and Thereafter Remaining unsatisfied obligations $ 2,558 $ 1,210 $ 1,348 The amounts above represent the price of firm orders for which work has not been performed or goods have not been delivered and exclude unexercised contract options outside the stated contractual term that do not represent material rights to the customer. Although the Company believes that the contract value in the above table is firm, approximately $1,831 million of the amount includes customer-only general cancellation for convenience terms that the Company is contractually obligated to perform unless the customer notifies us. The Company expects to recognize revenue of approximately $300 million 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 Other Assets 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: in millions December 31, 2018 Capitalized Amortization September 30, 2019 Capitalized contract costs $ 54 $ 37 $ (14 ) $ 77 |
Supplemental Financial Informat
Supplemental Financial Information | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Financial Information | Supplemental Financial Information As of In millions September 30, December 31, Inventories Finished goods $ 24 $ 16 Service parts 12 12 Total inventories $ 36 $ 28 Deferred revenue Deferred revenue, current $ 408 $ 490 Long-term deferred revenue 68 105 Total deferred revenue $ 476 $ 595 |
Goodwill and Acquired Intangibl
Goodwill and Acquired Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Acquired Intangible Assets | Goodwill and Acquired Intangible Assets Effective January 1, 2019, the Company implemented an organizational change to its operating segments and will report future results under the separate segments: Americas, EMEA and APAC. The following table identifies the activity relating to goodwill by operating segment. In millions December 31, 2018 Reassignment of Goodwill Currency translation adjustments September 30, 2019 Goodwill Americas $ 253 $ — $ — $ 253 International 142 (142 ) — — EMEA — 88 (1 ) 87 APAC — 54 — 54 Total goodwill $ 395 $ — $ (1 ) $ 394 Acquired intangible assets were specifically identified when acquired and are deemed to have finite lives. The gross carrying amount and accumulated amortization for the Company's acquired intangible assets were as follows: September 30, 2019 December 31, 2018 In millions Amortization Gross Carrying Amount Accumulated Amortization and Currency Translation Adjustments Gross Carrying Amount Accumulated Amortization and Currency Translation Adjustments Acquired intangible assets Intellectual property/developed technology 5 $ 35 $ (24 ) $ 35 $ (20 ) The aggregate amortization expense (actual and estimated) for acquired intangible assets is as follows: Three Months Ended September 30 Nine Months Ended September 30, In millions 2019 2018 2019 2018 Amortization expense $ 1 $ 1 $ 4 $ 5 Actual For the years ended (estimated) In millions 2018 2019 2020 2021 2022 Amortization expense $ 7 $ 6 $ 4 $ 4 $ 2 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
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. As a result of the 2017 Tax Act, the Company changed its indefinite reversal assertion related to its undistributed earnings of its foreign subsidiaries and no longer considers a majority of its foreign earnings permanently reinvested outside of the United States ("U.S."). As a result, the effective tax rates in the periods presented are largely based upon the forecasted pre-tax earnings mix and allocation of certain expenses in various taxing jurisdictions where the Company conducts its business. The effective tax rate is as follows: Three Months Ended September 30, Nine Months Ended September 30, In millions 2019 2018 2019 2018 Effective tax rate (150.0 )% (80.0 )% — % (87.5 )% For the three months ended September 30, 2019 , a $5 million discrete tax benefit was recorded related to the reversal of an uncertain tax position resulting from the expiration of the statute of limitations. For the nine months ended September 30, 2019, the $5 million discrete tax benefit was partially offset by $4 million in discrete tax expense recorded in the second quarter related to the reversal of the United States Tax Court’s decision in the Altera Corp. v. Commissioner case by the Ninth Circuit Court of Appeals on June 7, 2019. The Altera case focused on whether current U.S. Treasury Regulations requiring the inclusion of stock-based compensation expense in a taxpayer's cost-sharing calculations are valid. As a result of these discrete items and incremental tax expense related to equity compensation, the Company recorded insignificant income tax expense on a pre-tax net loss of $1 million for the nine months ended September 30, 2019 , resulting in an effective income tax rate of zero percent . For the three and nine months ended September 30, 2018 , the Company recorded a $7 million tax benefit as an adjustment to the provisional estimates as a result of additional regulatory guidance and changes in interpretations and assumptions the Company has made as a result of the 2017 Tax Act. This resulted in an income tax benefit for the respective periods. The Company estimates its annual effective tax rate for 2019 to be approximately 300% , which takes into consideration, among other things, the forecasted earnings mix by jurisdiction, and the impact of discrete tax items. The 2017 Tax Act subjects U.S. shareholders 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 the tax is incurred, and has included approximately $1 million of tax expense related to GILTI in our forecasted marginal effective tax rate for 2019. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 9 Months Ended |
Sep. 30, 2019 | |
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 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 11. 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 will step-down according to the amortization schedule of the term loan. The notional amount of the hedge was $488 million as of September 30, 2019. 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: As of In millions September 30, December 31, Contract notional amount of foreign exchange forward contracts $ 261 $ 256 Net contract notional amount of foreign exchange forward contracts $ 23 $ 35 Contract notional amount of interest rate swap $ 488 $ 500 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 10 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. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies 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 threatened litigation against us, that we believe would materially adversely affect our business, operating results, financial condition or cash flows. Guarantees and Product Warranties. Guarantees associated with the Company’s business activities are reviewed for appropriateness and impact to the Company’s financial statements. Periodically, the Company’s customers enter into various leasing arrangements with a third-party leasing company as part of a revenue transaction, whereby the leasing company purchases the equipment from Teradata and leases it to the customer. In some instances, the Company guarantees the leasing company a minimum value at the end of the lease term on the leased equipment. As of September 30, 2019 , the maximum future payment obligation of this guaranteed value and the associated liability balance was $3 million . The Company provides its customers a standard manufacturer’s warranty and records, at the time of the sale, a corresponding estimated liability for potential warranty costs. Estimated future obligations due to warranty claims are based upon historical factors such as labor rates, average repair time, travel time, number of service calls and cost of replacement parts. For each consummated sale, the Company recognizes the total customer revenue and records the associated warranty liability under other current liabilities in the balance sheet using pre-established warranty percentages for that product class. The following table identifies the activity relating to the warranty reserve for the nine months ended September 30 : In millions 2019 2018 Warranty reserve liability Beginning balance at January 1 $ 3 $ 4 Accrual of warranties issued 2 3 Settlements (in cash or in kind) (3 ) (4 ) Balance at September 30 $ 2 $ 3 The Company also offers extended and/or enhanced coverage to its customers in the form of maintenance contracts. The Company accounts for these contracts by deferring the related maintenance revenue over the extended and/or enhanced coverage period. Costs associated with maintenance support are expensed as incurred. Amounts associated with these maintenance contracts are not included in the table above. In addition, the Company provides its customers with certain indemnification rights. In general, the Company agrees to indemnify the customer if a third-party asserts patent or other infringement on the part of the customer for its use of the Company’s products. The Company has entered into indemnification agreements with the officers and directors of its subsidiaries. From time to time, the Company also enters into agreements in connection with its acquisition and divesture activities that include indemnification obligations by the Company. The fair value of these indemnification obligations is not readily determinable due to the conditional nature of the Company’s potential obligations and the specific facts and circumstances involved with each particular agreement, and as such the Company has not recorded a liability in connection with these indemnification arrangements. Historically, payments made by the Company under these types of agreements have not had a material effect on the Company’s consolidated financial condition, results of operations or cash flows. Concentrations of Risk . The Company is potentially subject to concentrations of credit risk on accounts receivable and financial instruments such as hedging instruments, and cash and cash equivalents. Credit risk includes the risk of nonperformance by counterparties. The maximum potential loss may exceed the amount recognized on the balance sheet. Exposure to credit risk is managed through credit approvals, credit limits, selecting major international financial institutions (as counterparties to hedging transactions) and monitoring procedures. Teradata’s business often involves large transactions with customers, and if one or more of those customers were to default in its obligations under applicable contractual arrangements, the Company could be exposed to potentially significant losses. However, management believes that the reserves for potential losses were adequate at September 30, 2019 and December 31, 2018 . 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. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2019 | |
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 contracts recorded in other assets and other liabilities at September 30, 2019 and at December 31, 2018 were 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 and nine months ended September 30, 2019 and 2018. The Company’s other assets and liabilities measured at fair value on a recurring basis and subject to fair value disclosure requirements at September 30, 2019 and December 31, 2018 were as follows: Fair Value Measurements at Reporting Date Using In millions Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Money market funds at September 30, 2019 $ 163 $ 163 $ — $ — Money market funds at December 31, 2018 $ 246 $ 246 $ — $ — Liabilities Interest rate swap at September 30, 2019 $ 22 $ — $ 22 $ — Interest rate swap at December 31, 2018 $ 7 $ — $ 7 $ — |
Debt
Debt | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt In June 2018, Teradata replaced an existing five-year, $400 million revolving credit facility with a new $ 400 million revolving credit facility (the “Credit Facility”). The Credit Facility ends 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 London Interbank Offered Rate (“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 September 30, 2019, the Company had no borrowings outstanding under the Credit Facility, leaving $400 million in additional borrowing capacity available under the Credit Facility. The Company was in compliance with all covenants under the Credit Facility as of September 30, 2019. 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 September 30, 2019 , the term loan principal outstanding was $488 million . As disclosed in Note 8, 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 September 30, 2019 , the all-in fixed rate is 4.36% . The Company was in compliance with all covenants under the term loan as of September 30, 2019 . Teradata’s term loan is recognized on the Company’s balance sheet at its unpaid principal balance and is not subject to fair value measurement. However, given that the loan carries a variable rate, the Company estimates that the unpaid principal balance of the term loan would approximate its fair value. If measured at fair value in the financial statements, the Company’s term loan would be classified as Level 2 in the fair value hierarchy. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases Lessee The Company adopted ASU No. 2016-02, “Leases (Topic 842),” on January 1, 2019, which requires leases with durations greater than twelve months to be recognized on the balance sheet. The Company adopted the standard using the modified retrospective approach utilizing the optional transition method. Prior year financial statements were not recast using this approach. The Company elected the package of practical expedients available for expired or existing contracts, which allowed us to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of approximately $68 million and $66 million , respectively, as of January 1, 2019. The standard did not materially impact our consolidated net earnings or cash flows. The Company leases property and equipment under finance and operating leases. The Company's operating leases consist of automobiles in certain countries and real estate, including office, storage and parking spaces. The duration of these leases range from 2 to 10 years. The Company's finance leases primarily consist of equipment financed for the purpose of delivering services to our customers. For leases with terms greater than 12 months, the Company recorded the related asset and obligation at the present value of lease payments over the term. Many of our leases include variable rental escalation clauses which are recognized when incurred. Some of our leases also include renewal options and/or termination options that are factored into the determination of lease payments and lease terms when it is reasonably certain that the Company will exercise these options. Lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. For real estate leases beginning in 2019 and later, we account for lease components ( e.g. , fixed payments including rent, real estate taxes and insurance costs) separately from the non-lease components ( e.g. , common-area maintenance costs). For automobile leases we account for lease and non-lease components together. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, real estate leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate the incremental borrowing rate to discount the lease payments based on information available at lease commencement. The incremental borrowing rate used in the calculation of the lease liability is based on the secured rate associated with financed lease obligations for each location of leased property. The table below presents the lease-related assets and liabilities recorded on the balance sheet: As of in millions, except weighted average calculations Classification on the Balance Sheet September 30, 2019 Assets Operating lease assets Right of use assets - operating lease, net $ 53 Finance lease assets Property and equipment, net 113 Total lease assets $ 166 Liabilities Current Operating Current portion of operating lease liability $ 19 Finance Current portion of finance lease liability 42 Noncurrent Operating Operating lease liability 41 Finance Finance lease liability 66 Total lease liabilities $ 168 Weighted-average remaining lease term Operating leases 3.55 years Finance leases 2.51 years Weighted-average discount rate Operating leases (1) 5.00 % Finance leases 4.56 % (1) Upon adoption of the new lease standard, discount rates used for existing leases were established based on the Company's incremental borrowing rate at January 1, 2019. For new leases entered after January 1, 2019, the discount rate was determined based on the Company's incremental borrowing rate at lease commencement. Lessee Costs The table below presents certain information related to the lease costs for finance and operating leases recognized in the Company's condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2019: Three Months Ended Nine Months Ended in millions September 30, 2019 September 30, 2019 Finance lease cost Depreciation of leased assets $ 7 $ 16 Interest of lease liabilities 1 3 Operating lease cost 6 24 Sub-lease income from real estate properties owned and leased (1 ) (5 ) Total lease cost $ 13 $ 38 Other Information The table below presents supplemental cash flow information related to cash paid for amounts included in the measurement of lease liabilities: Nine Months Ended in millions September 30, 2019 Operating cash flows for operating leases $ 17 Operating cash flows for finance leases $ 2 Financing cash flows for finance leases $ 18 Undiscounted Cash Flows The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of September 30, 2019: in millions Operating Leases Finance Leases 2019 (balance of year) $ 6 $ 15 2020 23 46 2021 16 41 2022 11 12 2023 7 — Thereafter 6 — Total minimum lease payments 69 114 Less: amount of lease payments representing interest (9 ) (6 ) Present value of future minimum lease payments 60 108 Less: current obligations under leases (19 ) (42 ) Long-term lease obligations $ 41 $ 66 The table below provides the undiscounted cash flows for the Company's finance lease liabilities and operating lease obligations as of December 31, 2018. in millions Operating Leases Finance Leases 2019 $ 24 $ 19 2020 20 31 2021 12 — 2022 11 — 2023 6 — Thereafter 2 — Total minimum lease payments $ 75 $ 50 Lessor The Company receives rental revenue for leasing hardware offerings to its customers. For our hardware rental offering, the Company owns or leases the hardware and may or may not provide managed services. Leases sometimes include options to renew but typically do not include lessee purchase options. The revenue for these operating leases is generally recognized straight-line over the term of the contract and is included within the recurring revenue caption on the condensed consolidated statements of income (loss). Equipment used for this revenue is reported within Property and equipment, net on the condensed consolidated balance sheet. Rental revenue for these operating leases was as follows: Three Months Ended September 30 Nine Months Ended September 30 in millions 2019 2018 2019 2018 Rental revenue* $ 22 $ 7 52 27 *Rental revenue includes hardware maintenance. The following table includes estimated rental revenue expected to be recognized in the future based on executed contracts at September 30, 2019: in millions Rental Revenue 2019 (balance of year) $ 19 2020 64 2021 58 2022 26 2023 — Total $ 167 |
Leases | Leases Lessee The Company adopted ASU No. 2016-02, “Leases (Topic 842),” on January 1, 2019, which requires leases with durations greater than twelve months to be recognized on the balance sheet. The Company adopted the standard using the modified retrospective approach utilizing the optional transition method. Prior year financial statements were not recast using this approach. The Company elected the package of practical expedients available for expired or existing contracts, which allowed us to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of approximately $68 million and $66 million , respectively, as of January 1, 2019. The standard did not materially impact our consolidated net earnings or cash flows. The Company leases property and equipment under finance and operating leases. The Company's operating leases consist of automobiles in certain countries and real estate, including office, storage and parking spaces. The duration of these leases range from 2 to 10 years. The Company's finance leases primarily consist of equipment financed for the purpose of delivering services to our customers. For leases with terms greater than 12 months, the Company recorded the related asset and obligation at the present value of lease payments over the term. Many of our leases include variable rental escalation clauses which are recognized when incurred. Some of our leases also include renewal options and/or termination options that are factored into the determination of lease payments and lease terms when it is reasonably certain that the Company will exercise these options. Lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. For real estate leases beginning in 2019 and later, we account for lease components ( e.g. , fixed payments including rent, real estate taxes and insurance costs) separately from the non-lease components ( e.g. , common-area maintenance costs). For automobile leases we account for lease and non-lease components together. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, real estate leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate the incremental borrowing rate to discount the lease payments based on information available at lease commencement. The incremental borrowing rate used in the calculation of the lease liability is based on the secured rate associated with financed lease obligations for each location of leased property. The table below presents the lease-related assets and liabilities recorded on the balance sheet: As of in millions, except weighted average calculations Classification on the Balance Sheet September 30, 2019 Assets Operating lease assets Right of use assets - operating lease, net $ 53 Finance lease assets Property and equipment, net 113 Total lease assets $ 166 Liabilities Current Operating Current portion of operating lease liability $ 19 Finance Current portion of finance lease liability 42 Noncurrent Operating Operating lease liability 41 Finance Finance lease liability 66 Total lease liabilities $ 168 Weighted-average remaining lease term Operating leases 3.55 years Finance leases 2.51 years Weighted-average discount rate Operating leases (1) 5.00 % Finance leases 4.56 % (1) Upon adoption of the new lease standard, discount rates used for existing leases were established based on the Company's incremental borrowing rate at January 1, 2019. For new leases entered after January 1, 2019, the discount rate was determined based on the Company's incremental borrowing rate at lease commencement. Lessee Costs The table below presents certain information related to the lease costs for finance and operating leases recognized in the Company's condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2019: Three Months Ended Nine Months Ended in millions September 30, 2019 September 30, 2019 Finance lease cost Depreciation of leased assets $ 7 $ 16 Interest of lease liabilities 1 3 Operating lease cost 6 24 Sub-lease income from real estate properties owned and leased (1 ) (5 ) Total lease cost $ 13 $ 38 Other Information The table below presents supplemental cash flow information related to cash paid for amounts included in the measurement of lease liabilities: Nine Months Ended in millions September 30, 2019 Operating cash flows for operating leases $ 17 Operating cash flows for finance leases $ 2 Financing cash flows for finance leases $ 18 Undiscounted Cash Flows The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of September 30, 2019: in millions Operating Leases Finance Leases 2019 (balance of year) $ 6 $ 15 2020 23 46 2021 16 41 2022 11 12 2023 7 — Thereafter 6 — Total minimum lease payments 69 114 Less: amount of lease payments representing interest (9 ) (6 ) Present value of future minimum lease payments 60 108 Less: current obligations under leases (19 ) (42 ) Long-term lease obligations $ 41 $ 66 The table below provides the undiscounted cash flows for the Company's finance lease liabilities and operating lease obligations as of December 31, 2018. in millions Operating Leases Finance Leases 2019 $ 24 $ 19 2020 20 31 2021 12 — 2022 11 — 2023 6 — Thereafter 2 — Total minimum lease payments $ 75 $ 50 Lessor The Company receives rental revenue for leasing hardware offerings to its customers. For our hardware rental offering, the Company owns or leases the hardware and may or may not provide managed services. Leases sometimes include options to renew but typically do not include lessee purchase options. The revenue for these operating leases is generally recognized straight-line over the term of the contract and is included within the recurring revenue caption on the condensed consolidated statements of income (loss). Equipment used for this revenue is reported within Property and equipment, net on the condensed consolidated balance sheet. Rental revenue for these operating leases was as follows: Three Months Ended September 30 Nine Months Ended September 30 in millions 2019 2018 2019 2018 Rental revenue* $ 22 $ 7 52 27 *Rental revenue includes hardware maintenance. The following table includes estimated rental revenue expected to be recognized in the future based on executed contracts at September 30, 2019: in millions Rental Revenue 2019 (balance of year) $ 19 2020 64 2021 58 2022 26 2023 — Total $ 167 |
Leases | Leases Lessee The Company adopted ASU No. 2016-02, “Leases (Topic 842),” on January 1, 2019, which requires leases with durations greater than twelve months to be recognized on the balance sheet. The Company adopted the standard using the modified retrospective approach utilizing the optional transition method. Prior year financial statements were not recast using this approach. The Company elected the package of practical expedients available for expired or existing contracts, which allowed us to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of approximately $68 million and $66 million , respectively, as of January 1, 2019. The standard did not materially impact our consolidated net earnings or cash flows. The Company leases property and equipment under finance and operating leases. The Company's operating leases consist of automobiles in certain countries and real estate, including office, storage and parking spaces. The duration of these leases range from 2 to 10 years. The Company's finance leases primarily consist of equipment financed for the purpose of delivering services to our customers. For leases with terms greater than 12 months, the Company recorded the related asset and obligation at the present value of lease payments over the term. Many of our leases include variable rental escalation clauses which are recognized when incurred. Some of our leases also include renewal options and/or termination options that are factored into the determination of lease payments and lease terms when it is reasonably certain that the Company will exercise these options. Lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. For real estate leases beginning in 2019 and later, we account for lease components ( e.g. , fixed payments including rent, real estate taxes and insurance costs) separately from the non-lease components ( e.g. , common-area maintenance costs). For automobile leases we account for lease and non-lease components together. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, real estate leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate the incremental borrowing rate to discount the lease payments based on information available at lease commencement. The incremental borrowing rate used in the calculation of the lease liability is based on the secured rate associated with financed lease obligations for each location of leased property. The table below presents the lease-related assets and liabilities recorded on the balance sheet: As of in millions, except weighted average calculations Classification on the Balance Sheet September 30, 2019 Assets Operating lease assets Right of use assets - operating lease, net $ 53 Finance lease assets Property and equipment, net 113 Total lease assets $ 166 Liabilities Current Operating Current portion of operating lease liability $ 19 Finance Current portion of finance lease liability 42 Noncurrent Operating Operating lease liability 41 Finance Finance lease liability 66 Total lease liabilities $ 168 Weighted-average remaining lease term Operating leases 3.55 years Finance leases 2.51 years Weighted-average discount rate Operating leases (1) 5.00 % Finance leases 4.56 % (1) Upon adoption of the new lease standard, discount rates used for existing leases were established based on the Company's incremental borrowing rate at January 1, 2019. For new leases entered after January 1, 2019, the discount rate was determined based on the Company's incremental borrowing rate at lease commencement. Lessee Costs The table below presents certain information related to the lease costs for finance and operating leases recognized in the Company's condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2019: Three Months Ended Nine Months Ended in millions September 30, 2019 September 30, 2019 Finance lease cost Depreciation of leased assets $ 7 $ 16 Interest of lease liabilities 1 3 Operating lease cost 6 24 Sub-lease income from real estate properties owned and leased (1 ) (5 ) Total lease cost $ 13 $ 38 Other Information The table below presents supplemental cash flow information related to cash paid for amounts included in the measurement of lease liabilities: Nine Months Ended in millions September 30, 2019 Operating cash flows for operating leases $ 17 Operating cash flows for finance leases $ 2 Financing cash flows for finance leases $ 18 Undiscounted Cash Flows The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of September 30, 2019: in millions Operating Leases Finance Leases 2019 (balance of year) $ 6 $ 15 2020 23 46 2021 16 41 2022 11 12 2023 7 — Thereafter 6 — Total minimum lease payments 69 114 Less: amount of lease payments representing interest (9 ) (6 ) Present value of future minimum lease payments 60 108 Less: current obligations under leases (19 ) (42 ) Long-term lease obligations $ 41 $ 66 The table below provides the undiscounted cash flows for the Company's finance lease liabilities and operating lease obligations as of December 31, 2018. in millions Operating Leases Finance Leases 2019 $ 24 $ 19 2020 20 31 2021 12 — 2022 11 — 2023 6 — Thereafter 2 — Total minimum lease payments $ 75 $ 50 Lessor The Company receives rental revenue for leasing hardware offerings to its customers. For our hardware rental offering, the Company owns or leases the hardware and may or may not provide managed services. Leases sometimes include options to renew but typically do not include lessee purchase options. The revenue for these operating leases is generally recognized straight-line over the term of the contract and is included within the recurring revenue caption on the condensed consolidated statements of income (loss). Equipment used for this revenue is reported within Property and equipment, net on the condensed consolidated balance sheet. Rental revenue for these operating leases was as follows: Three Months Ended September 30 Nine Months Ended September 30 in millions 2019 2018 2019 2018 Rental revenue* $ 22 $ 7 52 27 *Rental revenue includes hardware maintenance. The following table includes estimated rental revenue expected to be recognized in the future based on executed contracts at September 30, 2019: in millions Rental Revenue 2019 (balance of year) $ 19 2020 64 2021 58 2022 26 2023 — Total $ 167 |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the reported period. The calculation of diluted earnings per share is similar to basic earnings per share, except that the weighted average number of shares outstanding includes the dilution from potential shares resulting from stock options, restricted stock awards and other stock awards. The components of basic and diluted earnings per share are as follows: Three Months Ended Nine Months Ended In millions, except per share amounts 2019 2018 2019 2018 Net income (loss) attributable to common stockholders $ 10 $ 18 $ (1 ) $ 15 Weighted average outstanding shares of common stock 113.2 118.7 115.2 119.9 Dilutive effect of employee stock options, restricted stock and other stock awards 1.0 2.0 — 1.9 Common stock and common stock equivalents 114.2 120.7 115.2 121.8 Net income (loss) per share: Basic $ 0.09 $ 0.15 $ (0.01 ) $ 0.13 Diluted $ 0.09 $ 0.15 $ (0.01 ) $ 0.12 For the nine months ended September 30, 2019, due to the net loss attributable to Teradata common stockholders, potential common shares that would cause dilution, such as employee stock options, restricted shares and other stock awards, have been excluded from the diluted share count because their effect would have been anti-dilutive. The fully diluted shares would have been 116.6 million for the nine months ended September 30, 2019. Options to purchase 1.6 million shares of common stock for the three and nine months ended September 30, 2019 and 2.5 million shares of common stock for the three and nine months ended September 30, 2018 |
Segment and Other Supplemental
Segment and Other Supplemental Information | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment and Other Supplemental Information | Segment and Other Supplemental Information Effective January 1, 2019, Teradata implemented an organizational change in which Teradata now 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) APAC 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 our Interim 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. Prior periods have been restated to conform to the current year presentation. The following table presents segment revenue and segment gross profit for the Company: Three Months Ended Nine Months Ended In millions 2019 2018 2019 2018 Segment revenue Americas $ 256 $ 277 $ 794 $ 828 EMEA 118 139 353 415 APAC 85 110 258 333 Total revenue 459 526 1,405 1,576 Segment gross profit Americas 158 158 473 459 EMEA 62 67 169 184 APAC 37 53 108 146 Total segment gross profit 257 278 750 789 Stock-based compensation costs 5 3 12 11 Acquisition, integration, reorganization and transformation-related costs (1 ) — 4 3 Amortization of capitalized software costs 6 11 27 38 Total gross profit 247 264 707 737 Selling, general and administrative expenses 151 166 447 481 Research and development expenses 86 84 245 236 Income from operations $ 10 $ 14 $ 15 $ 20 |
Reorganization and Business Tra
Reorganization and Business Transformation | 9 Months Ended |
Sep. 30, 2019 | |
Restructuring and Related Activities [Abstract] | |
Reorganization and Business Transformation | Reorganization and Business Transformation On June 4, 2018, the Company approved a plan to consolidate certain of its operations, including transitioning its corporate headquarters to San Diego, California from its location in Dayton, Ohio. This plan, which is being executed in connection with Teradata’s comprehensive business transformation from a data warehouse company to a data analytics platform company, is intended to better align the Company’s skills and resources to effectively pursue opportunities in the marketplace. The Company recognized costs o f $23 million in 2018 and $13 million for the nine months ended September 30, 2019 for employee separation benefits, transition support, facilities lease related costs, outside service, legal and other exit-related costs. The employee separation benefit costs are being expensed over the time period that the employees have to work to earn them. The Company expects that it will incur costs and charges in the range of approximately $36 to $40 million rel ated to the plan and expects the actions will be completed in 2019. Cash paid in 2018 related to the plan listed above was $11 million . The 2019 activity and the reserves related to the plan are as follows: In millions Balance at December 31, 2018 Expense accruals Cash payments Balance at September 30, 2019 Employee separation benefits costs related to headquarter transition and business transformation $ 11 $ 4 $ (14 ) $ 1 Transition support and other exit related costs for the headquarter transition and business transformation 1 3 (4 ) — Total $ 12 $ 7 $ (18 ) $ 1 In addition, the Company incurred $6 million |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Departure of President and Chief Executive Officer; Election of Interim President and Chief Executive Officer On November 5, 2019 (the “Effective Date”), the Company announced that Oliver Ratzesberger is no longer serving as Teradata’s President and Chief Executive Officer and has resigned from the Board of Directors of the Company. The Company also announced that Victor L. Lund, had been elected as the Interim President and Chief Executive Officer of the Company on the Effective Date. The Board has initiated a search for the new President and CEO, and Mr. Lund has agreed to serve in this interim capacity until the completion of the search process. Mr. Lund will remain on the Board as its Executive Chairman. Workforce Reduction Plan On November 11, 2019, the Company approved a plan to reduce its workforce. This plan, which is incremental to Teradata’s comprehensive business transformation discussed in Note 15, is intended to reduce costs and increase efficiencies in certain of the Company’s operations. The Company expects that it will incur cost and cash expenditures in the range of $20 to $25 million related to the plan, consisting primarily of employee severance and other employee-related cash expenditures. Approximately half of these cash expenditures, which relate to cash payments for its international employees, will not have a material impact on the Condensed Consolidated Statements of Income (Loss) 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 expects these actions will be substantially completed by the first half of 2020. |
New Accounting Pronouncements (
New Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Fair Value Measurement. In August 2018, the Financial Accounting Standards Board ("FASB") issued new guidance that modifies disclosure requirements related to fair value measurement. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Implementation on a prospective or retrospective basis varies by specific disclosure requirement. Early adoption is permitted. The standard also allows for early adoption of any removed or modified disclosures upon issuance of this update while delaying adoption of the additional disclosures until their effective date. The Company is currently evaluating this guidance to determine the impact it may have on its disclosures. Compensation-Retirement Benefits-Defined Benefit Plans-General. In August 2018, the FASB issued new guidance that modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. For public companies, the amendments in this update are effective for fiscal years beginning after December 15, 2020, with early adoption permitted, and is to be applied on a retrospective basis to all periods presented. The Company is currently evaluating this guidance to determine the impact it may have on its disclosures. Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. In August 2018, the FASB issued new guidance that reduces complexity for the accounting for costs of implementing a cloud computing service arrangement and aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). For public companies, the amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. Implementation should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The effects of this standard on our financial position, results of operations or cash flows are not expected to be material. Codification Improvements to Financial Instruments-Credit Losses, Derivatives and Hedging, and Financial Instruments. In June 2016, the FASB issued Accounting Standards, Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. Since the issuance of this accounting standard, the FASB has identified certain areas that require clarification and improvement. In May 2019, the FASB issued guidance that allows entities to make an irrevocable one-time election upon adoption of the new credit losses standard to measure financial assets measured at amortized cost (except held-to-maturity securities) using the fair value option. The election is to be applied on an instrument-by-instrument basis. For entities that have already adopted the new credit losses standard, the relief is effective for fiscal years beginning after December 15, 2019 and interim periods therein, and early adoption is permitted. For all other entities, the guidance is effective upon adoption of the new credit losses standard. The company is currently evaluating this new guidance to determine the impact it may have on our financial position, results of operations or cash flows. Recently Adopted Guidance Leases. In February 2016, the FASB issued new guidance, which requires a lessee to account for leases as finance or operating leases. Both types of leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability on its balance sheet, with differing methodology for income statement and cash flow recognition. For lessors, the standard modifies the classification criteria and the accounting for sales-type and direct financing leases. Entities will classify leases to determine how to recognize lease-related revenue and expense. We adopted the new standard as of January 1, 2019 using the modified retrospective adoption approach utilizing the optional transition method with prior periods not recast and have elected certain of the practical expedients allowed under the standard. The Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2019 are presented under the new standard, while comparative years presented are not adjusted and continue to be reported in accordance with our historical accounting policy. See Note 12 for more information. Comprehensive Income. In February 2018, the FASB issued new guidance for Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02), which allows companies to reclassify stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the "2017 Tax Act") from accumulated other comprehensive income to retained earnings. The impact of applying this standard did not have a material impact on our condensed consolidated financial statements. Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. In June 2018, the FASB issued new guidance to clarify and improve the scope and the accounting guidance for contributions received and contributions made. The amendments are intended to assist entities in evaluating whether transactions should be accounted for as contributions (nonreciprocal transactions) or as exchange (reciprocal) transactions and determining whether a contribution is conditional. The Company adopted this guidance on January 1, 2019, which did not have a material impact on our condensed consolidated financial statements. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table presents a disaggregation of revenue: Three months ended September 30, Nine months ended September 30, in millions 2019 2018 2019 2018 Americas Recurring $ 222 $ 198 $ 652 $ 590 Perpetual software licenses and hardware — 31 31 93 Consulting services 34 48 111 145 Total Americas 256 277 794 828 EMEA Recurring 75 70 223 207 Perpetual software licenses and hardware 12 26 29 69 Consulting services 31 43 101 139 Total EMEA 118 139 353 415 APAC Recurring 46 44 137 129 Perpetual software licenses and hardware 4 20 16 81 Consulting services 35 46 105 123 Total APAC 85 110 258 333 Total Revenue $ 459 $ 526 $ 1,405 $ 1,576 |
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: As of in millions September 30, 2019 December 31, 2018 Accounts receivable, net $ 328 $ 588 Contract assets $ 8 $ 14 Current deferred revenue $ 408 $ 490 Long-term deferred revenue $ 68 $ 105 |
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 September 30, 2019: in millions Total at September 30, 2019 Year 1 Year 2 and Thereafter Remaining unsatisfied obligations $ 2,558 $ 1,210 $ 1,348 |
Contract Costs (Tables)
Contract Costs (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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: in millions December 31, 2018 Capitalized Amortization September 30, 2019 Capitalized contract costs $ 54 $ 37 $ (14 ) $ 77 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Supplemental Financial Information | As of In millions September 30, December 31, Inventories Finished goods $ 24 $ 16 Service parts 12 12 Total inventories $ 36 $ 28 Deferred revenue Deferred revenue, current $ 408 $ 490 Long-term deferred revenue 68 105 Total deferred revenue $ 476 $ 595 |
Goodwill and Acquired Intangi_2
Goodwill and Acquired Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Activity Relating to Goodwill by Operating Segment | The following table identifies the activity relating to goodwill by operating segment. In millions December 31, 2018 Reassignment of Goodwill Currency translation adjustments September 30, 2019 Goodwill Americas $ 253 $ — $ — $ 253 International 142 (142 ) — — EMEA — 88 (1 ) 87 APAC — 54 — 54 Total goodwill $ 395 $ — $ (1 ) $ 394 |
Schedule of Gross Carrying Amount and Accumulated Amortization for the Company's Acquired Intangible Assets | The gross carrying amount and accumulated amortization for the Company's acquired intangible assets were as follows: September 30, 2019 December 31, 2018 In millions Amortization Gross Carrying Amount Accumulated Amortization and Currency Translation Adjustments Gross Carrying Amount Accumulated Amortization and Currency Translation Adjustments Acquired intangible assets Intellectual property/developed technology 5 $ 35 $ (24 ) $ 35 $ (20 ) |
Schedule of Aggregate Amortization Expense for Acquired Intangible Assets | The aggregate amortization expense (actual and estimated) for acquired intangible assets is as follows: Three Months Ended September 30 Nine Months Ended September 30, In millions 2019 2018 2019 2018 Amortization expense $ 1 $ 1 $ 4 $ 5 Actual For the years ended (estimated) In millions 2018 2019 2020 2021 2022 Amortization expense $ 7 $ 6 $ 4 $ 4 $ 2 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Tax Rate | The effective tax rate is as follows: Three Months Ended September 30, Nine Months Ended September 30, In millions 2019 2018 2019 2018 Effective tax rate (150.0 )% (80.0 )% — % (87.5 )% |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table identifies the contract notional amount of the Company’s derivative financial instruments: As of In millions September 30, December 31, Contract notional amount of foreign exchange forward contracts $ 261 $ 256 Net contract notional amount of foreign exchange forward contracts $ 23 $ 35 Contract notional amount of interest rate swap $ 488 $ 500 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Warranty Reserve Activity | The following table identifies the activity relating to the warranty reserve for the nine months ended September 30 : In millions 2019 2018 Warranty reserve liability Beginning balance at January 1 $ 3 $ 4 Accrual of warranties issued 2 3 Settlements (in cash or in kind) (3 ) (4 ) Balance at September 30 $ 2 $ 3 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 September 30, 2019 and December 31, 2018 were as follows: Fair Value Measurements at Reporting Date Using In millions Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Money market funds at September 30, 2019 $ 163 $ 163 $ — $ — Money market funds at December 31, 2018 $ 246 $ 246 $ — $ — Liabilities Interest rate swap at September 30, 2019 $ 22 $ — $ 22 $ — Interest rate swap at December 31, 2018 $ 7 $ — $ 7 $ — |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Lease-related Assets And Liabilities Recorded on the Balance Sheet | The table below presents the lease-related assets and liabilities recorded on the balance sheet: As of in millions, except weighted average calculations Classification on the Balance Sheet September 30, 2019 Assets Operating lease assets Right of use assets - operating lease, net $ 53 Finance lease assets Property and equipment, net 113 Total lease assets $ 166 Liabilities Current Operating Current portion of operating lease liability $ 19 Finance Current portion of finance lease liability 42 Noncurrent Operating Operating lease liability 41 Finance Finance lease liability 66 Total lease liabilities $ 168 Weighted-average remaining lease term Operating leases 3.55 years Finance leases 2.51 years Weighted-average discount rate Operating leases (1) 5.00 % Finance leases 4.56 % (1) Upon adoption of the new lease standard, discount rates used for existing leases were established based on the Company's incremental borrowing rate at January 1, 2019. For new leases entered after January 1, 2019, the discount rate was determined based on the Company's incremental borrowing rate at lease commencement. |
Schedule of Lease Costs | The table below presents certain information related to the lease costs for finance and operating leases recognized in the Company's condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2019: Three Months Ended Nine Months Ended in millions September 30, 2019 September 30, 2019 Finance lease cost Depreciation of leased assets $ 7 $ 16 Interest of lease liabilities 1 3 Operating lease cost 6 24 Sub-lease income from real estate properties owned and leased (1 ) (5 ) Total lease cost $ 13 $ 38 The table below presents supplemental cash flow information related to cash paid for amounts included in the measurement of lease liabilities: Nine Months Ended in millions September 30, 2019 Operating cash flows for operating leases $ 17 Operating cash flows for finance leases $ 2 Financing cash flows for finance leases $ 18 |
Schedule of Operating Lease Liability Maturities | The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of September 30, 2019: in millions Operating Leases Finance Leases 2019 (balance of year) $ 6 $ 15 2020 23 46 2021 16 41 2022 11 12 2023 7 — Thereafter 6 — Total minimum lease payments 69 114 Less: amount of lease payments representing interest (9 ) (6 ) Present value of future minimum lease payments 60 108 Less: current obligations under leases (19 ) (42 ) Long-term lease obligations $ 41 $ 66 |
Schedule of Finance Lease Liability Maturities | The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of September 30, 2019: in millions Operating Leases Finance Leases 2019 (balance of year) $ 6 $ 15 2020 23 46 2021 16 41 2022 11 12 2023 7 — Thereafter 6 — Total minimum lease payments 69 114 Less: amount of lease payments representing interest (9 ) (6 ) Present value of future minimum lease payments 60 108 Less: current obligations under leases (19 ) (42 ) Long-term lease obligations $ 41 $ 66 |
Schedule of Future Minimum Rental Payments for Operating Leases | The table below provides the undiscounted cash flows for the Company's finance lease liabilities and operating lease obligations as of December 31, 2018. in millions Operating Leases Finance Leases 2019 $ 24 $ 19 2020 20 31 2021 12 — 2022 11 — 2023 6 — Thereafter 2 — Total minimum lease payments $ 75 $ 50 |
Schedule of Operating Lease Income | Rental revenue for these operating leases was as follows: Three Months Ended September 30 Nine Months Ended September 30 in millions 2019 2018 2019 2018 Rental revenue* $ 22 $ 7 52 27 *Rental revenue includes hardware maintenance. |
Schedule of Future Minimum Lease Payments for Capital Leases | The table below provides the undiscounted cash flows for the Company's finance lease liabilities and operating lease obligations as of December 31, 2018. in millions Operating Leases Finance Leases 2019 $ 24 $ 19 2020 20 31 2021 12 — 2022 11 — 2023 6 — Thereafter 2 — Total minimum lease payments $ 75 $ 50 |
Estimated Rental Revenue Expected to be Recognized in the Future | The following table includes estimated rental revenue expected to be recognized in the future based on executed contracts at September 30, 2019: in millions Rental Revenue 2019 (balance of year) $ 19 2020 64 2021 58 2022 26 2023 — Total $ 167 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Components of Basic and Diluted Earnings Per Share | The components of basic and diluted earnings per share are as follows: Three Months Ended Nine Months Ended In millions, except per share amounts 2019 2018 2019 2018 Net income (loss) attributable to common stockholders $ 10 $ 18 $ (1 ) $ 15 Weighted average outstanding shares of common stock 113.2 118.7 115.2 119.9 Dilutive effect of employee stock options, restricted stock and other stock awards 1.0 2.0 — 1.9 Common stock and common stock equivalents 114.2 120.7 115.2 121.8 Net income (loss) per share: Basic $ 0.09 $ 0.15 $ (0.01 ) $ 0.13 Diluted $ 0.09 $ 0.15 $ (0.01 ) $ 0.12 |
Segment and Other Supplementa_2
Segment and Other Supplemental Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Regional Segment Revenue and Gross Margin | The following table presents segment revenue and segment gross profit for the Company: Three Months Ended Nine Months Ended In millions 2019 2018 2019 2018 Segment revenue Americas $ 256 $ 277 $ 794 $ 828 EMEA 118 139 353 415 APAC 85 110 258 333 Total revenue 459 526 1,405 1,576 Segment gross profit Americas 158 158 473 459 EMEA 62 67 169 184 APAC 37 53 108 146 Total segment gross profit 257 278 750 789 Stock-based compensation costs 5 3 12 11 Acquisition, integration, reorganization and transformation-related costs (1 ) — 4 3 Amortization of capitalized software costs 6 11 27 38 Total gross profit 247 264 707 737 Selling, general and administrative expenses 151 166 447 481 Research and development expenses 86 84 245 236 Income from operations $ 10 $ 14 $ 15 $ 20 |
Reorganization and Business T_2
Reorganization and Business Transformation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Activity and Related Reserves | Cash paid in 2018 related to the plan listed above was $11 million . The 2019 activity and the reserves related to the plan are as follows: In millions Balance at December 31, 2018 Expense accruals Cash payments Balance at September 30, 2019 Employee separation benefits costs related to headquarter transition and business transformation $ 11 $ 4 $ (14 ) $ 1 Transition support and other exit related costs for the headquarter transition and business transformation 1 3 (4 ) — Total $ 12 $ 7 $ (18 ) $ 1 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Disaggregation of Revenue from Contracts with Customers (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 459 | $ 526 | $ 1,405 | $ 1,576 |
Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 256 | 277 | 794 | 828 |
EMEA | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 118 | 139 | 353 | 415 |
APAC | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 85 | 110 | 258 | 333 |
Recurring | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 343 | 312 | 1,012 | 926 |
Recurring | Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 222 | 198 | 652 | 590 |
Recurring | EMEA | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 75 | 70 | 223 | 207 |
Recurring | APAC | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 46 | 44 | 137 | 129 |
Perpetual software licenses and hardware | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 16 | 77 | 76 | 243 |
Perpetual software licenses and hardware | Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 31 | 31 | 93 |
Perpetual software licenses and hardware | EMEA | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 12 | 26 | 29 | 69 |
Perpetual software licenses and hardware | APAC | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 4 | 20 | 16 | 81 |
Consulting services | Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 34 | 48 | 111 | 145 |
Consulting services | EMEA | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 31 | 43 | 101 | 139 |
Consulting services | APAC | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 35 | $ 46 | $ 105 | $ 123 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Contract Balances (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Revenue from Contract with Customer [Abstract] | |||
Accounts receivable, net | $ 328 | $ 588 | |
Contract assets | 8 | 14 | |
Deferred revenue, current | 408 | 490 | $ 490 |
Long-term deferred revenue | $ 68 | $ 105 | $ 105 |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Narrative (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Deferred revenue, revenue recognized | $ 468 |
Remaining performance obligation, amount of customer only general cancellation | 1,831 |
Remaining performance obligation, amount of non-cancelable contracts | $ 300 |
Revenue from Contracts with C_6
Revenue from Contracts with Customers - Transaction Price Allocated to the Remaining Performance Obligations (Details) $ in Millions | Sep. 30, 2019USD ($) |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation | $ 2,558 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation | $ 1,210 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, period | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation | $ 1,348 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, period |
Contract Costs (Details)
Contract Costs (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
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 | $ 54 |
Capitalized | 37 |
Amortization | (14) |
Capitalized contract cost, net at period end | $ 77 |
Supplemental Financial Inform_3
Supplemental Financial Information (Detail) - USD ($) $ in Millions | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Inventories | |||
Finished goods | $ 24 | $ 16 | |
Service parts | 12 | 12 | |
Total inventories | 36 | 28 | |
Deferred revenue | |||
Deferred revenue, current | 408 | $ 490 | 490 |
Long-term deferred revenue | 68 | $ 105 | 105 |
Total deferred revenue | $ 476 | $ 595 |
Goodwill and Acquired Intangi_3
Goodwill and Acquired Intangible Assets - Goodwill by Operating Segment (Detail) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 395 |
Reassignment of Goodwill | 0 |
Currency translation adjustments | (1) |
Ending balance | 394 |
Americas | |
Goodwill [Roll Forward] | |
Beginning balance | 253 |
Reassignment of Goodwill | 0 |
Currency translation adjustments | 0 |
Ending balance | 253 |
International | |
Goodwill [Roll Forward] | |
Beginning balance | 142 |
Reassignment of Goodwill | (142) |
Currency translation adjustments | 0 |
Ending balance | 0 |
EMEA | |
Goodwill [Roll Forward] | |
Beginning balance | 0 |
Reassignment of Goodwill | 88 |
Currency translation adjustments | (1) |
Ending balance | 87 |
APAC | |
Goodwill [Roll Forward] | |
Beginning balance | 0 |
Reassignment of Goodwill | 54 |
Currency translation adjustments | 0 |
Ending balance | $ 54 |
Goodwill and Acquired Intangi_4
Goodwill and Acquired Intangible Assets - Gross Carrying Amount and Accumulated Amortization for Teradata Acquired Intangible Assets (Detail) - Intellectual property/developed technology - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Acquired Finite-Lived Intangible Assets | ||
Amortization Life (in Years) | 5 years | |
Gross Carrying Amount | $ 35 | $ 35 |
Accumulated Amortization and Currency Translation Adjustments | $ (24) | $ (20) |
Goodwill and Acquired Intangi_5
Goodwill and Acquired Intangible Assets - Aggregate Amortization Expense for Acquired Intangible Assets (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Amortization expense | $ 1 | $ 1 | $ 4 | $ 5 | $ 7 |
Amortization expense - Remainder of 2019 | 6 | 6 | |||
Amortization expense - 2020 | 4 | 4 | |||
Amortization expense - 2021 | 4 | 4 | |||
Amortization expense - 2022 | $ 2 | $ 2 |
Income Taxes (Detail)
Income Taxes (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2019 | |
Operating Loss Carryforwards [Line Items] | ||||||
Effective tax rate (percentage) | (150.00%) | (80.00%) | 0.00% | (87.50%) | ||
Discrete income tax expense (benefit) | $ (5) | $ 4 | $ (5) | |||
Pre-tax net loss | $ (4) | $ (10) | $ 1 | $ (8) | ||
Income tax benefit | $ 7 | $ 7 | ||||
Scenario, Forecast | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Effective tax rate (percentage) | 300.00% | |||||
Tax expense related to GILTI included in forecasted marginal effective tax rate for 2019 | $ 1 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities (Detail) - USD ($) $ in Millions | 1 Months Ended | ||
Jun. 30, 2018 | Sep. 30, 2019 | Dec. 31, 2018 | |
Interest Rate Swap | |||
Derivative | |||
Derivative, term of contract (in years) | 5 years | ||
Derivative, contract notional amount | $ 500 | $ 488 | $ 500 |
Foreign Exchange Contract | |||
Derivative | |||
Derivative, contract notional amount | 261 | 256 | |
Net contract notional amount of foreign exchange forward contracts | $ 23 | $ 35 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | Sep. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Maximum future payment obligation of the guaranteed value and associated liabilities | $ 3,000,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Warranty Reserve Activity (Detail) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance at January 1 | $ 3 | $ 4 |
Accrual of warranties issued | 2 | 3 |
Settlements (in cash or in kind) | (3) | (4) |
Balance at September 30 | $ 2 | $ 3 |
Fair Value Measurements (Detail
Fair Value Measurements (Detail) - USD ($) $ in Millions | 1 Months Ended | ||
Jun. 30, 2018 | Sep. 30, 2019 | Dec. 31, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Money market funds | $ 163 | $ 246 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Money market funds | 163 | 246 | |
Significant Other Observable Inputs (Level 2) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Money market funds | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Money market funds | 0 | 0 | |
Interest Rate Swap | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Derivative, term of contract (in years) | 5 years | ||
Derivative, notional amount | $ 500 | 488 | 500 |
Interest rate swap | 22 | 7 | |
Interest Rate Swap | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swap | 0 | 0 | |
Interest Rate Swap | Significant Other Observable Inputs (Level 2) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swap | 22 | 7 | |
Interest Rate Swap | Significant Unobservable Inputs (Level 3) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swap | $ 0 | $ 0 |
Debt - Additional Information (
Debt - Additional Information (Detail) | Jun. 11, 2018USD ($) | May 31, 2018USD ($) | Sep. 30, 2019USD ($)renewal | Jun. 30, 2018USD ($) |
Debt Instrument | ||||
Number of renewals | renewal | 2 | |||
Renewal term | 1 year | |||
Borrowings outstanding under the Credit Facility | $ 0 | |||
Term Loan | ||||
Debt Instrument | ||||
Extinguishment of debt, amount | $ 525,000,000 | |||
Revolving Credit Facility Ending in March 2020 | Revolving Credit Facility | ||||
Debt Instrument | ||||
Term of loan (years) | 5 years | |||
Credit facility maximum borrowing capacity | $ 400,000,000 | |||
Credit facility, additional borrowings capacity | 200,000,000 | |||
Revolving Credit Facility Ending In June 2023 | Revolving Credit Facility | ||||
Debt Instrument | ||||
Credit facility maximum borrowing capacity | 400,000,000 | $ 400,000,000 | ||
Senior Unsecured term loan Issued June 2018 | Senior Unsecured Term Loan | ||||
Debt Instrument | ||||
Term of loan (years) | 5 years | |||
Debt instrument, face amount | $ 500,000,000 | |||
Principal outstanding | $ 488,000,000 | |||
Debt Instrument, Redemption, Period One | ||||
Debt Instrument | ||||
Term loan, payable quarterly installments (percentage) | 1.25% | |||
Debt Instrument, Redemption, Period Two | ||||
Debt Instrument | ||||
Term loan, payable quarterly installments (percentage) | 2.50% | |||
Debt Instrument, Redemption, Period Three | ||||
Debt Instrument | ||||
Term loan, payable quarterly installments (percentage) | 5.00% | |||
Interest Rate Swap | ||||
Debt Instrument | ||||
Fixed rate on term loan (percentage) | 2.86% | |||
All-in fixed rate (percentage) | 4.36% |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jan. 01, 2019 |
Lessee, Lease, Description [Line Items] | ||
Lease assets | $ 166 | |
Lease liabilities | $ 168 | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease, term of contract | 2 years | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease, term of contract | 10 years | |
Accounting Standards Update 2016-02 | ||
Lessee, Lease, Description [Line Items] | ||
Lease assets | $ 68 | |
Lease liabilities | $ 66 |
Leases - Lease-related Assets
Leases - Lease-related Assets and Liabilities recorded on the Balance Sheet (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Operating lease assets | $ 53 | |
Finance lease assets | 113 | |
Total lease assets | 166 | |
Liabilities | ||
Current portion of operating lease liability | 19 | $ 0 |
Current portion of finance lease liability | 42 | 17 |
Noncurrent portion of operating lease liability | 41 | |
Long-term finance lease obligations | 66 | $ 30 |
Total lease liabilities | $ 168 | |
Weighted-average remaining lease term | ||
Weighted-average remaining lease term, operating leases | 3 years 6 months 18 days | |
Weighted-average remaining lease term, finance leases | 2 years 6 months 3 days | |
Weighted-average discount rate | ||
Weighted-average discount rate, operating leases (percentage) | 5.00% | |
Weighted-average discount rate, finance leases (percentage) | 4.56% |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Finance lease cost, depreciation of leased assets | $ 7 | $ 16 |
Finance lease cost, interest of lease liabilities | 1 | 3 |
Operating lease cost | 6 | 24 |
Sub-lease income from real estate properties owned and leased | (1) | (5) |
Total lease cost | $ 13 | $ 38 |
Leases - Other Information (Det
Leases - Other Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Leases [Abstract] | ||
Operating cash flows for operating leases | $ 17 | |
Operating cash flows for finance leases | 2 | |
Financing cash flows for finance leases | $ 18 | $ 1 |
Leases - Undiscounted Cash Flow
Leases - Undiscounted Cash Flows under ASC 842 (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Operating Leases | ||
2019 (balance of year) | $ 6 | |
2020 | 23 | |
2021 | 16 | |
2022 | 11 | |
2023 | 7 | |
Thereafter | 6 | |
Total minimum lease payments | 69 | |
Less: amount of lease payments representing interest | (9) | |
Present value of future minimum lease payments | 60 | |
Less: current obligations under leases | (19) | $ 0 |
Long-term lease operating lease obligations | 41 | |
Finance Leases | ||
2019 (balance of year) | 15 | |
2020 | 46 | |
2021 | 41 | |
2022 | 12 | |
2023 | 0 | |
Thereafter | 0 | |
Total minimum lease payments | 114 | |
Less: amount of lease payments representing interest | (6) | |
Present value of future minimum lease payments | 108 | |
Less: current obligations under leases | (42) | (17) |
Long-term finance lease obligations | $ 66 | $ 30 |
Leases - Undiscounted Cash Fl_2
Leases - Undiscounted Cash Flows under ASC 840 (Details) $ in Millions | Dec. 31, 2018USD ($) |
Operating Leases | |
2019 | $ 24 |
2020 | 20 |
2021 | 12 |
2022 | 11 |
2023 | 6 |
Thereafter | 2 |
Total minimum lease payments | 75 |
Finance Leases | |
2019 | 19 |
2020 | 31 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
Thereafter | 0 |
Total minimum lease payments | $ 50 |
Leases - Lessor Rental Revenue
Leases - Lessor Rental Revenue for Operating Leases (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Leases [Abstract] | ||||
Rental revenue | $ 22 | $ 7 | $ 52 | $ 27 |
Leases - Estimated Rental Reven
Leases - Estimated Rental Revenue Expected to be Recognized in the Future (Details) $ in Millions | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
2019 (balance of year) | $ 19 |
2020 | 64 |
2021 | 58 |
2022 | 26 |
2023 | 0 |
Total | $ 167 |
Earnings per Share (Detail)
Earnings per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to common stockholders | $ 10 | $ 18 | $ (1) | $ 15 |
Weighted average outstanding shares of common stock (in shares) | 113.2 | 118.7 | 115.2 | 119.9 |
Dilutive effect of employee stock options, restricted stock and other stock awards (in shares) | 1 | 2 | 0 | 1.9 |
Common stock and common stock equivalents (in shares) | 114.2 | 120.7 | 115.2 | 121.8 |
Net income (loss) per share: | ||||
Basic (in dollars per share) | $ 0.09 | $ 0.15 | $ (0.01) | $ 0.13 |
Diluted (in dollars per share) | $ 0.09 | $ 0.15 | $ (0.01) | $ 0.12 |
Weighted average number of shares outstanding, diluted and anti-dilutive (in shares) | 116.6 | |||
Antidilutive options to purchase were excluded from computation of diluted earnings per share (in shares) | 1.6 | 2.5 | 1.6 | 2.5 |
Segment and Other Supplementa_3
Segment and Other Supplemental Information - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2019segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
Segment and Other Supplementa_4
Segment and Other Supplemental Information - Regional Segment Revenue and Gross Margin for Company (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Segment Reporting Information | ||||
Segment revenue | $ 459 | $ 526 | $ 1,405 | $ 1,576 |
Gross profit | 247 | 264 | 707 | 737 |
Selling, general and administrative expenses | 151 | 166 | 447 | 481 |
Research and development expenses | 86 | 84 | 245 | 236 |
Income from operations | 10 | 14 | 15 | 20 |
Americas | ||||
Segment Reporting Information | ||||
Segment revenue | 256 | 277 | 794 | 828 |
EMEA | ||||
Segment Reporting Information | ||||
Segment revenue | 118 | 139 | 353 | 415 |
APAC | ||||
Segment Reporting Information | ||||
Segment revenue | 85 | 110 | 258 | 333 |
Operating segments | ||||
Segment Reporting Information | ||||
Gross profit | 257 | 278 | 750 | 789 |
Operating segments | Americas | ||||
Segment Reporting Information | ||||
Gross profit | 158 | 158 | 473 | 459 |
Operating segments | EMEA | ||||
Segment Reporting Information | ||||
Gross profit | 62 | 67 | 169 | 184 |
Operating segments | APAC | ||||
Segment Reporting Information | ||||
Gross profit | 37 | 53 | 108 | 146 |
Segment reconciling items | ||||
Segment Reporting Information | ||||
Stock-based compensation costs | 5 | 3 | 12 | 11 |
Acquisition, integration, reorganization and transformation-related costs | (1) | 0 | 4 | 3 |
Amortization of capitalized software costs | $ 6 | $ 11 | $ 27 | $ 38 |
Reorganization and Business T_3
Reorganization and Business Transformation (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring costs | $ 13 | $ 23 |
Cash payments for restructuring | 18 | 11 |
Restructuring Reserve [Roll Forward] | ||
Balance at December 31, 2018 | 12 | |
Expense accruals | 7 | |
Cash payments | (18) | (11) |
Balance at September 30, 2019 | 1 | 12 |
Accelerated depreciation | 6 | |
Employee separation benefits costs related to headquarter transition and business transformation | ||
Restructuring Cost and Reserve [Line Items] | ||
Cash payments for restructuring | 14 | |
Restructuring Reserve [Roll Forward] | ||
Balance at December 31, 2018 | 11 | |
Expense accruals | 4 | |
Cash payments | (14) | |
Balance at September 30, 2019 | 1 | 11 |
Transition support and other exit related costs for the headquarter transition and business transformation | ||
Restructuring Cost and Reserve [Line Items] | ||
Cash payments for restructuring | 4 | |
Restructuring Reserve [Roll Forward] | ||
Balance at December 31, 2018 | 1 | |
Expense accruals | 3 | |
Cash payments | (4) | |
Balance at September 30, 2019 | 0 | $ 1 |
Minimum | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and related cost, expected cost | 36 | |
Maximum | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring and related cost, expected cost | $ 40 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Millions | Nov. 11, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Subsequent Event [Line Items] | |||
Employee severance, facilities lease-related costs, and other employee-related cash expenditures | $ 18 | $ 11 | |
Minimum | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Employee severance, facilities lease-related costs, and other employee-related cash expenditures | $ 20 | ||
Maximum | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Employee severance, facilities lease-related costs, and other employee-related cash expenditures | $ 25 |
Uncategorized Items - tdc-09301
Label | Element | Value |
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | $ 1,000,000 |
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | 1,000,000 |
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | us-gaap_NewAccountingPronouncementOrChangeInAccountingPrincipleCumulativeEffectOfChangeOnEquityOrNetAssets1 | 26,000,000 |
Retained Earnings [Member] | ||
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | us-gaap_NewAccountingPronouncementOrChangeInAccountingPrincipleCumulativeEffectOfChangeOnEquityOrNetAssets1 | $ 26,000,000 |