TERADATA CORPORATION (Exact name of registrant as specified in its - PDF document

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2016 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-33458 TERADATA CORPORATION (Exact name of registrant as specified in its charter) Delaware 75-3236470 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10000 Innovation Drive Dayton, Ohio 45342 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (866) 548-8348 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ý Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý At July 29, 2016 , the registrant had approximately 130.4 million shares of common stock outstanding. 1

TABLE OF CONTENTS PART I—FINANCIAL INFORMATION Description Page Item 1. Financial Statements Condensed Consolidated Statements of Income (Loss) (Unaudited) Three and Six Months Ended June 30, 2016 and 2015 3 Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three and Six Months Ended June 30, 2016 and 2015 4 Condensed Consolidated Balance Sheets (Unaudited) June 30, 2016 and December 31, 2015 5 Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, 2016 and 2015 6 Notes to Condensed Consolidated Financial Statements (Unaudited) 7 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18 Item 3. Quantitative and Qualitative Disclosures About Market Risk 29 Item 4. Controls and Procedures 29 PART II—OTHER INFORMATION Description Page Item 1. Legal Proceedings 29 Item 1A. Risk Factors 29 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 30 Item 3. Defaults Upon Senior Securities 30 Item 4. Mine Safety Disclosures 30 Item 5. Other Information 30 Item 6. Exhibits 31 Signatures 32 2

Table of Contents Part 1—FINANCIAL INFORMATION Item 1. Financial Statements. Teradata Corporation Condensed Consolidated Statements of Income (Loss) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, In millions, except per share amounts 2016 2015 2016 2015 Revenue Product revenue $ 228 $ 256 $ 422 $ 497 Service revenue 371 367 722 708 Total revenue 599 623 1,144 1,205 Costs and operating expenses Cost of products 89 93 167 202 Cost of services 200 203 398 399 Selling, general and administrative expenses 172 190 346 374 Research and development expenses 51 59 108 122 Impairment of goodwill, acquired intangibles and other assets — 340 80 340 Total costs and operating expenses 512 885 1,099 1,437 Income (loss) from operations 87 (262) 45 (232) Other (expense) income, net Interest expense (4) (2) (7) (3) Interest income 2 1 3 2 Other income (expense), net — 14 (1) 14 Total other (expense) income, net (2) 13 (5) 13 Income (loss) before income taxes 85 (249) 40 (219) Income tax expense 21 16 22 24 Net income (loss) $ 64 $ (265) $ 18 $ (243) Net income (loss) per weighted average common share Basic $ 0.49 $ (1.87) $ 0.14 $ (1.69) Diluted $ 0.49 $ (1.87) $ 0.14 $ (1.69) Weighted average common shares outstanding Basic 129.8 141.9 129.6 143.6 Diluted 131.5 141.9 131.2 143.6 See Notes to Condensed Consolidated Financial Statements (Unaudited). 3

Table of Contents Teradata Corporation Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 In millions Net income (loss) $ 64 $ (265) $ 18 $ (243) Other comprehensive income (loss): Foreign currency translation adjustments (2) 9 6 (22) Securities: Unrealized gain (loss) on securities, before tax — 4 — (5) Unrealized gain (loss) on securities, tax portion — (1) — 2 Unrealized gain (loss) on securities, net of tax — 3 — (3) Defined benefit plans: Defined benefit plan adjustment, before tax 2 — 2 2 Defined benefit plan adjustment, tax portion (1) — (1) — Defined benefit plan adjustment, net of tax 1 — 1 2 Other comprehensive income (loss) (1) 12 7 (23) Comprehensive income (loss) $ 63 $ (253) $ 25 $ (266) See Notes to Condensed Consolidated Financial Statements (Unaudited). 4

Table of Contents Teradata Corporation Condensed Consolidated Balance Sheets (Unaudited) June 30, December 31, 2016 2015 In millions, except per share amounts Assets Current assets Cash and cash equivalents $ 909 $ 839 Accounts receivable, net 465 580 Inventories 37 49 Assets held for sale 130 214 Other current assets 54 52 Total current assets 1,595 1,734 Property and equipment, net 129 143 Capitalized software, net 192 190 Goodwill 384 380 Acquired intangible assets, net 15 22 Deferred income taxes 48 41 Other assets 19 17 Total assets $ 2,382 $ 2,527 Liabilities and stockholders’ equity Current liabilities Current portion of long-term debt $ 30 $ 30 Short-term borrowings — 180 Accounts payable 104 96 Payroll and benefits liabilities 125 120 Deferred revenue 430 367 Liabilities held for sale 43 58 Other current liabilities 87 102 Total current liabilities 819 953 Long-term debt 552 567 Pension and other postemployment plan liabilities 88 89 Long-term deferred revenue 16 15 Deferred tax liabilities 17 28 Other liabilities 26 26 Total liabilities 1,518 1,678 Commitments and contingencies (Note 7) Stockholders’ equity Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively — — Common stock: par value $0.01 per share, 500.0 shares authorized, 129.5 and 130.7 shares issued at June 30, 2016 and December 31, 2015, respectively 1 1 Paid-in capital 1,178 1,128 Accumulated deficit (246) (204) Accumulated other comprehensive loss (69) (76) Total stockholders’ equity 864 849 Total liabilities and stockholders’ equity $ 2,382 $ 2,527 See Notes to Condensed Consolidated Financial Statements (Unaudited). 5

Table of Contents Teradata Corporation Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, In millions 2016 2015 Operating activities Net income (loss) $ 18 $ (243) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 65 84 Stock-based compensation expense 33 30 Excess tax benefit from stock-based compensation (2) — Deferred income taxes (15) (18) Gain on investments — (15) Impairment of goodwill, acquired intangibles and other assets 80 340 Changes in assets and liabilities: Receivables 122 109 Inventories 11 (8) Current payables and accrued expenses (10) (28) Deferred revenue 64 74 Other assets and liabilities (16) (23) Net cash provided by operating activities 350 302 Investing activities Expenditures for property and equipment (17) (29) Proceeds from sales of property and equipment 5 — Additions to capitalized software (36) (30) Business acquisitions and other investing activities, net (4) 14 Net cash used in investing activities (52) (45) Financing activities Repurchases of common stock (51) (308) Proceeds from long-term borrowings — 600 Repayments of long-term borrowings (15) (247) Repayments of credit facility borrowings (180) (220) Excess tax benefit from stock-based compensation 2 — Other financing activities, net 16 14 Net cash used in financing activities (228) (161) Effect of exchange rate changes on cash and cash equivalents — (9) Increase in cash and cash equivalents 70 87 Cash and cash equivalents at beginning of period 839 834 Cash and cash equivalents at end of period $ 909 $ 921 See Notes to Condensed Consolidated Financial Statements (Unaudited). 6