ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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75-3236470
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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Title of each class:
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Trading Symbol
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Name of Each Exchange on which Registered:
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Common Stock, $0.10 par value
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TDC
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New York Stock Exchange
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Description
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Page
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Item 1.
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Financial Statements
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Item 2.
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Item 3.
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Item 4.
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PART II—OTHER INFORMATION
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Description
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Page
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 1.
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Financial Statements.
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Three Months Ended
March 31, |
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In millions, except per share amounts
|
2019
|
|
2018
|
||||
Revenue
|
|
|
|
||||
Recurring
|
$
|
331
|
|
|
$
|
302
|
|
Perpetual software licenses and hardware
|
31
|
|
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69
|
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||
Consulting services
|
106
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|
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135
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Total revenue
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468
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|
|
506
|
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Cost of revenue
|
|
|
|
||||
Cost of recurring
|
106
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90
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||
Cost of perpetual software licenses and hardware
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25
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|
48
|
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Cost of consulting services
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113
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|
|
145
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Total cost of revenue
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244
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|
|
283
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Gross profit
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224
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|
|
223
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Operating expenses
|
|
|
|
||||
Selling, general and administrative expenses
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151
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|
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152
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Research and development expenses
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78
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75
|
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||
Total operating expenses
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229
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|
|
227
|
|
||
Loss from operations
|
(5
|
)
|
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(4
|
)
|
||
Other expense, net
|
|
|
|
||||
Interest expense
|
(9
|
)
|
|
(5
|
)
|
||
Interest income
|
6
|
|
|
3
|
|
||
Other expense
|
(2
|
)
|
|
(2
|
)
|
||
Total other expense, net
|
(5
|
)
|
|
(4
|
)
|
||
Loss before income taxes
|
(10
|
)
|
|
(8
|
)
|
||
Income tax benefit
|
—
|
|
|
(1
|
)
|
||
Net Loss
|
$
|
(10
|
)
|
|
$
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(7
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)
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Net Loss per common share
|
|
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|
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Basic
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$
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(0.09
|
)
|
|
$
|
(0.06
|
)
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Diluted
|
$
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(0.09
|
)
|
|
$
|
(0.06
|
)
|
Weighted average common shares outstanding
|
|
|
|
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Basic
|
117.1
|
|
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121.4
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Diluted
|
117.1
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121.4
|
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Three Months Ended
March 31, |
||||||
In millions
|
2019
|
|
2018
|
||||
Net loss
|
$
|
(10
|
)
|
|
$
|
(7
|
)
|
Other comprehensive loss:
|
|
|
|
||||
Foreign currency translation adjustments
|
(6
|
)
|
|
4
|
|
||
Derivatives:
|
|
|
|
||||
Unrealized loss on derivatives, before tax
|
(4
|
)
|
|
—
|
|
||
Unrealized loss on derivatives, tax portion
|
1
|
|
|
—
|
|
||
Unrealized loss on derivatives, net of tax
|
(3
|
)
|
|
—
|
|
||
Defined benefit plans:
|
|
|
|
||||
Defined benefit plan adjustment, before tax
|
1
|
|
|
—
|
|
||
Defined benefit plan adjustment, tax portion
|
—
|
|
|
—
|
|
||
Defined benefit plan adjustment, net of tax
|
1
|
|
|
—
|
|
||
Other comprehensive (loss) income
|
(8
|
)
|
|
4
|
|
||
Comprehensive loss
|
$
|
(18
|
)
|
|
$
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(3
|
)
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In millions, except per share amounts
|
March 31,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
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|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
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$
|
723
|
|
|
$
|
715
|
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Accounts receivable, net
|
445
|
|
|
588
|
|
||
Inventories
|
52
|
|
|
28
|
|
||
Other current assets
|
82
|
|
|
97
|
|
||
Total current assets
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1,302
|
|
|
1,428
|
|
||
Property and equipment, net
|
303
|
|
|
295
|
|
||
Capitalized software, net
|
60
|
|
|
72
|
|
||
Right of use assets - operating lease, net
|
60
|
|
|
—
|
|
||
Goodwill
|
396
|
|
|
395
|
|
||
Acquired intangible assets, net
|
14
|
|
|
16
|
|
||
Deferred income taxes
|
66
|
|
|
67
|
|
||
Other assets
|
85
|
|
|
87
|
|
||
Total assets
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$
|
2,286
|
|
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$
|
2,360
|
|
Liabilities and stockholders’ equity
|
|
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|
||||
Current liabilities
|
|
|
|
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Current portion of long-term debt
|
$
|
25
|
|
|
$
|
19
|
|
Current portion of finance lease liability
|
21
|
|
|
17
|
|
||
Current portion of operating lease liability
|
17
|
|
|
—
|
|
||
Accounts payable
|
99
|
|
|
141
|
|
||
Payroll and benefits liabilities
|
103
|
|
|
224
|
|
||
Deferred revenue
|
569
|
|
|
490
|
|
||
Other current liabilities
|
80
|
|
|
118
|
|
||
Total current liabilities
|
914
|
|
|
1,009
|
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||
Long-term debt
|
472
|
|
|
478
|
|
||
Finance lease liability
|
38
|
|
|
30
|
|
||
Operating lease liability
|
48
|
|
|
—
|
|
||
Pension and other postemployment plan liabilities
|
104
|
|
|
113
|
|
||
Long-term deferred revenue
|
100
|
|
|
105
|
|
||
Deferred tax liabilities
|
4
|
|
|
3
|
|
||
Other liabilities
|
139
|
|
|
127
|
|
||
Total liabilities
|
1,819
|
|
|
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 March 31, 2019 and December 31, 2018, respectively
|
—
|
|
|
—
|
|
||
Common stock: par value $0.01 per share, 500.0 shares authorized, 117.1 and 116.8 shares issued at March 31, 2019 and December 31, 2018, respectively
|
1
|
|
|
1
|
|
||
Paid-in capital
|
1,466
|
|
|
1,418
|
|
||
Accumulated deficit
|
(891
|
)
|
|
(823
|
)
|
||
Accumulated other comprehensive loss
|
(109
|
)
|
|
(101
|
)
|
||
Total stockholders’ equity
|
467
|
|
|
495
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,286
|
|
|
$
|
2,360
|
|
|
Three Months Ended
March 31, |
||||||
In millions
|
2019
|
|
2018
|
||||
Operating activities
|
|
|
|
||||
Net loss
|
$
|
(10
|
)
|
|
$
|
(7
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
37
|
|
|
34
|
|
||
Stock-based compensation expense
|
15
|
|
|
19
|
|
||
Deferred income taxes
|
2
|
|
|
(5
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Receivables
|
143
|
|
|
83
|
|
||
Inventories
|
(24
|
)
|
|
(13
|
)
|
||
Current payables and accrued expenses
|
(171
|
)
|
|
(27
|
)
|
||
Deferred revenue
|
74
|
|
|
124
|
|
||
Other assets and liabilities
|
(17
|
)
|
|
(24
|
)
|
||
Net cash provided by operating activities
|
49
|
|
|
184
|
|
||
Investing activities
|
|
|
|
||||
Expenditures for property and equipment
|
(15
|
)
|
|
(26
|
)
|
||
Additions to capitalized software
|
(1
|
)
|
|
(2
|
)
|
||
Net cash used in investing activities
|
(16
|
)
|
|
(28
|
)
|
||
Financing activities
|
|
|
|
||||
Repurchases of common stock
|
(56
|
)
|
|
(60
|
)
|
||
Repayments of long-term borrowings
|
—
|
|
|
(15
|
)
|
||
Repayments of credit facility borrowings
|
—
|
|
|
(240
|
)
|
||
Payments of finance leases
|
(3
|
)
|
|
—
|
|
||
Other financing activities, net
|
33
|
|
|
10
|
|
||
Net cash used in financing activities
|
(26
|
)
|
|
(305
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
1
|
|
|
—
|
|
||
Increase (decrease) in cash, cash equivalents and restricted cash
|
8
|
|
|
(149
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
716
|
|
|
1,089
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
724
|
|
|
$
|
940
|
|
|
|
|
|
||||
Supplemental cash flow disclosure
|
|
|
|
||||
Non-cash investing and financing activities:
|
|
|
|
||||
Assets acquired under operating lease
|
$
|
3
|
|
|
$
|
—
|
|
Assets acquired under finance lease
|
$
|
15
|
|
|
$
|
—
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Cash and cash equivalents
|
$
|
723
|
|
|
$
|
715
|
|
Restricted cash
|
1
|
|
|
1
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
724
|
|
|
$
|
716
|
|
|
Common Stock
|
|
Paid-in
|
|
Accumulated
|
|
Accumulated Other Comprehensive
|
|
|
|||||||||||||
In millions
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Loss
|
|
Total
|
|||||||||||
December 31, 2018
|
117
|
|
|
$
|
1
|
|
|
$
|
1,418
|
|
|
$
|
(823
|
)
|
|
$
|
(101
|
)
|
|
495
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
|||||
Employee stock compensation, employee stock purchase programs and option exercises
|
1
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
—
|
|
|
48
|
|
|||||
Repurchases of common stock, retired
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(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
|
)
|
|||||
March 31, 2019
|
117
|
|
|
$
|
1
|
|
|
$
|
1,466
|
|
|
$
|
(891
|
)
|
|
$
|
(109
|
)
|
|
$
|
467
|
|
|
Common Stock
|
|
Paid-in
|
|
Accumulated
|
|
Accumulated Other Comprehensive
|
|
|
|||||||||||||
In millions
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Loss
|
|
Total
|
|||||||||||
December 31, 2017
|
122
|
|
|
$
|
1
|
|
|
$
|
1,320
|
|
|
$
|
(579
|
)
|
|
$
|
(74
|
)
|
|
668
|
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|||||
Employee stock compensation, employee stock purchase programs and option exercises
|
1
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|||||
Repurchases of common stock, retired
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(77
|
)
|
|
—
|
|
|
(77
|
)
|
|||||
Adoption of ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
26
|
|
|||||
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|||||
March 31, 2018
|
121
|
|
|
$
|
1
|
|
|
$
|
1,350
|
|
|
$
|
(637
|
)
|
|
$
|
(70
|
)
|
|
$
|
644
|
|
|
Three months ended March 31,
|
||||||
in millions
|
2019
|
|
2018
|
||||
Americas
|
|
|
|
||||
Recurring
|
$
|
213
|
|
|
$
|
194
|
|
Perpetual software licenses and hardware
|
19
|
|
|
22
|
|
||
Consulting services
|
37
|
|
|
48
|
|
||
Total Americas
|
269
|
|
|
264
|
|
||
EMEA
|
|
|
|
||||
Recurring
|
73
|
|
|
67
|
|
||
Perpetual software licenses and hardware
|
7
|
|
|
33
|
|
||
Consulting services
|
33
|
|
|
49
|
|
||
Total EMEA
|
113
|
|
|
149
|
|
||
APAC
|
|
|
|
||||
Recurring
|
45
|
|
|
42
|
|
||
Perpetual software licenses and hardware
|
5
|
|
|
14
|
|
||
Consulting services
|
36
|
|
|
37
|
|
||
Total APAC
|
86
|
|
|
93
|
|
||
Total Revenue
|
$
|
468
|
|
|
$
|
506
|
|
|
As of
|
||||||
in millions
|
March 31, 2019
|
|
December 31, 2018
|
||||
Accounts receivable, net
|
$
|
445
|
|
|
$
|
588
|
|
Contract assets
|
$
|
8
|
|
|
$
|
14
|
|
Current deferred revenue
|
$
|
569
|
|
|
$
|
490
|
|
Long-term deferred revenue
|
$
|
100
|
|
|
$
|
105
|
|
in millions
|
|
Total at March 31, 2019
|
|
Year 1
|
|
Year 2 and Thereafter
|
||||||
Remaining unsatisfied obligations
|
|
$
|
2,476
|
|
|
$
|
1,160
|
|
|
$
|
1,316
|
|
in millions
|
|
January 1, 2019
|
|
Capitalized
|
|
Amortization
|
|
March 31, 2019
|
||||
Capitalized contract costs
|
|
54
|
|
|
7
|
|
|
(4
|
)
|
|
57
|
|
|
As of
|
||||||
In millions
|
March 31,
2019 |
|
December 31,
2018 |
||||
Inventories
|
|
|
|
||||
Finished goods
|
$
|
40
|
|
|
$
|
16
|
|
Service parts
|
12
|
|
|
12
|
|
||
Total inventories
|
$
|
52
|
|
|
$
|
28
|
|
|
|
|
|
||||
Deferred revenue
|
|
|
|
||||
Deferred revenue, current
|
$
|
569
|
|
|
$
|
490
|
|
Long-term deferred revenue
|
100
|
|
|
105
|
|
||
Total deferred revenue
|
$
|
669
|
|
|
$
|
595
|
|
In millions
|
December 31, 2018
|
|
Reassignment of Goodwill
|
|
Currency translation adjustments
|
|
March 31, 2019
|
||||||||
Goodwill
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
253
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
253
|
|
International
|
142
|
|
|
(142
|
)
|
|
—
|
|
|
—
|
|
||||
EMEA
|
—
|
|
|
88
|
|
|
—
|
|
|
88
|
|
||||
APAC
|
—
|
|
|
54
|
|
|
1
|
|
|
55
|
|
||||
Total goodwill
|
$
|
395
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
396
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
In millions
|
Amortization
Life (in Years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
and Currency
Translation
Adjustments
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
and Currency
Translation
Adjustments
|
||||||||
Acquired intangible assets
|
|
|
|
|
|
|
|
|
|
||||||||
Intellectual property/developed technology
|
1 to 7
|
|
$
|
35
|
|
|
$
|
(21
|
)
|
|
$
|
35
|
|
|
$
|
(20
|
)
|
|
|
Three Months Ended March 31
|
||||||
In millions
|
|
2019
|
|
2018
|
||||
Amortization expense
|
|
$
|
1
|
|
|
$
|
2
|
|
|
|
Actual
|
|
For the years ended (estimated)
|
||||||||||||||||||
In millions
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
|
||||||||||
Amortization expense
|
|
$
|
7
|
|
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
2
|
|
|
|
|
|
Three Months Ended March 31,
|
||||
In millions
|
|
2019
|
|
2018
|
||
Effective tax rate
|
|
—
|
%
|
|
12.5
|
%
|
|
As of
|
||||||
In millions
|
March 31,
2019 |
|
December 31,
2018 |
||||
Contract notional amount of foreign exchange forward contracts
|
$
|
200
|
|
|
$
|
256
|
|
Net contract notional amount of foreign exchange forward contracts
|
$
|
25
|
|
|
$
|
35
|
|
Contract notional amount of interest rate swap
|
$
|
500
|
|
|
$
|
500
|
|
In millions
|
2019
|
|
2018
|
||||
Warranty reserve liability
|
|
|
|
||||
Beginning balance at January 1
|
$
|
3
|
|
|
$
|
4
|
|
Accrual of warranties issued
|
—
|
|
|
1
|
|
||
Settlements (in cash or in kind)
|
(1
|
)
|
|
(2
|
)
|
||
Balance at March 31
|
$
|
2
|
|
|
$
|
3
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
In millions
|
Total
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Money market funds at March 31, 2019
|
$
|
290
|
|
|
$
|
290
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Money market funds at December 31, 2018
|
$
|
246
|
|
|
$
|
246
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate swap at March 31, 2019
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
—
|
|
Interest rate swap at December 31, 2018
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
|
|
As of
|
||
in millions, except weighted average calculations
|
Classification on the Balance Sheet
|
|
March 31, 2019
|
||
Assets
|
|
|
|
||
Operating lease assets
|
Right of use assets - operating lease, net
|
|
$
|
60
|
|
Finance lease assets
|
Property and equipment, net
|
|
67
|
|
|
Total lease assets
|
|
|
$
|
127
|
|
|
|
|
|
||
Liabilities
|
|
|
|
||
Current
|
|
|
|
||
Operating
|
Current portion of operating lease liability
|
|
$
|
17
|
|
Finance
|
Current portion of finance lease liability
|
|
21
|
|
|
Noncurrent
|
|
|
|
||
Operating
|
Operating lease liability
|
|
48
|
|
|
Finance
|
Finance lease liability
|
|
38
|
|
|
Total lease liabilities
|
|
|
$
|
124
|
|
|
|
|
|
||
Weighted-average remaining lease term
|
|
|
|
||
Operating leases
|
|
|
4.18 years
|
|
|
Finance leases
|
|
|
2.61 years
|
|
|
Weighted-average discount rate
|
|
|
|
||
Operating leases(1)
|
|
|
5.00
|
%
|
|
Finance leases
|
|
|
4.90
|
%
|
|
|
Three Months Ended
|
||
in millions
|
|
March 31, 2019
|
||
Finance lease cost
|
|
|
||
Depreciation of leased assets
|
|
4
|
|
|
Interest of lease liabilities
|
|
1
|
|
|
Operating lease cost
|
|
12
|
|
|
Sub-lease income from real estate properties owned and leased
|
|
(2
|
)
|
|
Total lease cost
|
|
$
|
15
|
|
|
|
Three Months Ended
|
||
in millions
|
|
March 31, 2019
|
||
Operating cash flows for operating leases
|
|
$
|
6
|
|
Operating cash flows for finance leases
|
|
$
|
—
|
|
Financing cash flows for finance leases
|
|
$
|
3
|
|
in millions
|
|
Operating Leases
|
|
Finance Leases
|
||||
2019 (balance of year)
|
|
$
|
18
|
|
|
$
|
20
|
|
2020
|
|
21
|
|
|
24
|
|
||
2021
|
|
15
|
|
|
19
|
|
||
2022
|
|
11
|
|
|
—
|
|
||
2023
|
|
7
|
|
|
—
|
|
||
Thereafter
|
|
7
|
|
|
—
|
|
||
Total minimum lease payments
|
|
79
|
|
|
63
|
|
||
Less: amount of lease payments representing interest
|
|
(14
|
)
|
|
(4
|
)
|
||
Present value of future minimum lease payments
|
|
65
|
|
|
59
|
|
||
Less: current obligations under leases
|
|
(17
|
)
|
|
(21
|
)
|
||
Long-term lease obligations
|
|
$
|
48
|
|
|
$
|
38
|
|
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
|
|
in millions
|
Rental Revenue
|
||
2019 (balance of year)
|
$
|
43
|
|
2020
|
45
|
|
|
2021
|
20
|
|
|
2022
|
4
|
|
|
2023
|
—
|
|
|
Total
|
$
|
112
|
|
|
Three Months Ended
March 31, |
|
||||||
In millions, except per share amounts
|
2019
|
|
2018
|
|
||||
Net loss attributable to common stockholders
|
$
|
(10
|
)
|
|
$
|
(7
|
)
|
|
Weighted average outstanding shares of common stock
|
117.1
|
|
|
121.4
|
|
|
||
Dilutive effect of employee stock options, restricted stock and other stock awards
|
—
|
|
|
—
|
|
|
||
Common stock and common stock equivalents
|
117.1
|
|
|
121.4
|
|
|
||
Net loss per share:
|
|
|
|
|
||||
Basic
|
$
|
(0.09
|
)
|
|
$
|
(0.06
|
)
|
|
Diluted
|
$
|
(0.09
|
)
|
|
$
|
(0.06
|
)
|
|
|
Three Months Ended
March 31, |
||||||
In millions
|
2019
|
|
2018
|
||||
Segment revenue
|
|
|
|
||||
Americas
|
$
|
269
|
|
|
$
|
264
|
|
EMEA
|
113
|
|
|
149
|
|
||
APAC
|
86
|
|
|
93
|
|
||
Total revenue
|
468
|
|
|
506
|
|
||
Segment gross profit
|
|
|
|
||||
Americas
|
157
|
|
|
147
|
|
||
EMEA
|
50
|
|
|
63
|
|
||
APAC
|
34
|
|
|
35
|
|
||
Total segment gross profit
|
241
|
|
|
245
|
|
||
Stock-based compensation costs
|
3
|
|
|
4
|
|
||
Acquisition, integration, reorganization and transformation-related costs
|
3
|
|
|
3
|
|
||
Amortization of capitalized software costs
|
11
|
|
|
15
|
|
||
Total gross profit
|
224
|
|
|
223
|
|
||
Selling, general and administrative expenses
|
151
|
|
|
152
|
|
||
Research and development expenses
|
78
|
|
|
75
|
|
||
Loss from operations
|
$
|
(5
|
)
|
|
$
|
(4
|
)
|
In millions
|
Balance at
December 31, 2018
|
|
Expense accruals
|
|
Cash payments
|
|
Balance at
March 31, 2019
|
||||||||
Employee separation benefits costs related to headquarter transition and business transformation
|
$
|
11
|
|
|
$
|
4
|
|
|
$
|
(8
|
)
|
|
$
|
7
|
|
Transition support and other exit related costs for the headquarter transition and business transformation
|
1
|
|
|
1
|
|
|
(2
|
)
|
|
—
|
|
||||
Total
|
$
|
12
|
|
|
$
|
5
|
|
|
$
|
(10
|
)
|
|
$
|
7
|
|
•
|
Annual Recurring Revenue ("ARR") - annual contract value for all active and contractually binding term-based contracts at the end of a period. It includes maintenance, software upgrade rights, subscription-based transactions and managed services.
|
•
|
Bookings Mix - subscription bookings divided by the sum of subscription bookings plus perpetual bookings.
|
•
|
Total revenue was $468 million for the first quarter of 2019, an 8% decrease compared to the first quarter of 2018, with an underlying 10% increase in recurring revenue as the Company's business shifts to subscription-based transactions offset by a 55% decrease in perpetual software licenses and hardware revenue and a 21% decrease in consulting services revenue. Foreign currency fluctuations had a 4% negative impact on total revenue for the quarter.
|
•
|
Gross margin increased to 47.9% in the first quarter of 2019 from 44.1% in the first quarter of 2018, primarily due to a higher recurring revenue mix as compared to the prior period.
|
•
|
Operating expenses for the first quarter of 2019 increased by 1% compared to the first quarter of 2018 primarily due to higher reorganization and restructuring costs including costs related to the movement of our corporate headquarters to San Diego, California from Dayton, Ohio.
|
•
|
Operating loss was $5 million in the first quarter of 2019, compared to $4 million in the first quarter of 2018.
|
•
|
Net loss in the first quarter of 2019 was $10 million, compared to $7 million in the first quarter of 2018.
|
|
|
|
% of
|
|
|
|
% of
|
||||||
In millions
|
2019
|
|
Revenue
|
|
2018
|
|
Revenue
|
||||||
Recurring
|
$
|
331
|
|
|
70.7
|
%
|
|
$
|
302
|
|
|
59.7
|
%
|
Perpetual software licenses and hardware
|
31
|
|
|
6.6
|
%
|
|
69
|
|
|
13.6
|
%
|
||
Consulting services
|
106
|
|
|
22.7
|
%
|
|
135
|
|
|
26.7
|
%
|
||
Total revenue
|
$
|
468
|
|
|
100
|
%
|
|
$
|
506
|
|
|
100
|
%
|
•
|
At the end of the first quarter of 2019, ARR was $1.319 billion, a 9% increase from the first quarter of 2018 including a 3% negative impact from foreign currency as compared to the first quarter of 2018.
|
•
|
72% of our bookings mix in the first quarter of 2019 was subscription-based and we continue to expect 70% or more of our 2019 full-year bookings mix to be subscription-based.
|
|
|
|
% of
|
|
|
|
% of
|
||||||
In millions
|
2019
|
|
Revenue
|
|
2018
|
|
Revenue
|
||||||
Recurring
|
$
|
225
|
|
|
68.0
|
%
|
|
$
|
212
|
|
|
70.2
|
%
|
Perpetual software licenses and hardware
|
6
|
|
|
19.4
|
%
|
|
21
|
|
|
30.4
|
%
|
||
Consulting services
|
(7
|
)
|
|
(6.6
|
)%
|
|
(10
|
)
|
|
(7.4
|
)%
|
||
Total gross profit
|
$
|
224
|
|
|
47.9
|
%
|
|
$
|
223
|
|
|
44.1
|
%
|
|
|
|
% of
|
|
|
|
% of
|
||||||
In millions
|
2019
|
|
Revenue
|
|
2018
|
|
Revenue
|
||||||
Selling, general and administrative expenses
|
$
|
151
|
|
|
32.3
|
%
|
|
$
|
152
|
|
|
30.0
|
%
|
Research and development expenses
|
78
|
|
|
16.7
|
%
|
|
75
|
|
|
14.8
|
%
|
||
Total operating expenses
|
$
|
229
|
|
|
48.9
|
%
|
|
$
|
227
|
|
|
44.9
|
%
|
In millions
|
2019
|
|
2018
|
||||
Interest income
|
$
|
6
|
|
|
$
|
3
|
|
Interest expense
|
(9
|
)
|
|
(5
|
)
|
||
Other
|
(2
|
)
|
|
(2
|
)
|
||
Other expense, net
|
$
|
(5
|
)
|
|
$
|
(4
|
)
|
|
2019
|
|
2018
|
||
Effective tax rate
|
—
|
%
|
|
12.5
|
%
|
|
|
|
% of
|
|
|
|
% of
|
||||||
In millions
|
2019
|
|
Revenue
|
|
2018
|
|
Revenue
|
||||||
Segment revenue
|
|
|
|
|
|
|
|
||||||
Americas
|
$
|
269
|
|
|
57.5
|
%
|
|
$
|
264
|
|
|
52.2
|
%
|
EMEA
|
113
|
|
|
24.1
|
%
|
|
149
|
|
|
29.4
|
%
|
||
APAC
|
86
|
|
|
18.4
|
%
|
|
93
|
|
|
18.4
|
%
|
||
Total segment revenue
|
$
|
468
|
|
|
100
|
%
|
|
$
|
506
|
|
|
100
|
%
|
Segment gross profit
|
|
|
|
|
|
|
|
||||||
Americas
|
$
|
157
|
|
|
58.4
|
%
|
|
$
|
147
|
|
|
55.7
|
%
|
EMEA
|
50
|
|
|
44.2
|
%
|
|
63
|
|
|
42.3
|
%
|
||
APAC
|
34
|
|
|
39.5
|
%
|
|
35
|
|
|
37.6
|
%
|
||
Total segment gross profit
|
$
|
241
|
|
|
51.5
|
%
|
|
$
|
245
|
|
|
48.4
|
%
|
|
Three Months Ended March 31,
|
||||||
In millions
|
2019
|
|
2018
|
||||
Net cash provided by operating activities
|
$
|
49
|
|
|
$
|
184
|
|
Less:
|
|
|
|
||||
Expenditures for property and equipment
|
(15
|
)
|
|
(26
|
)
|
||
Additions to capitalized software
|
(1
|
)
|
|
(2
|
)
|
||
Free cash flow
|
$
|
33
|
|
|
$
|
156
|
|
in millions
|
|
Operating Leases
|
|
Finance Leases
|
||||
2019 (balance of year)
|
|
$
|
18
|
|
|
$
|
20
|
|
2020
|
|
21
|
|
|
24
|
|
||
2021
|
|
15
|
|
|
19
|
|
||
2022
|
|
11
|
|
|
—
|
|
||
2023
|
|
7
|
|
|
—
|
|
||
Thereafter
|
|
7
|
|
|
—
|
|
||
Total minimum lease payments
|
|
79
|
|
|
63
|
|
|
|
Total
Number
of Shares Purchased
|
|
Average
Price
Paid
per Share
|
|
Total
Number
of Shares
Purchased
as Part of
Publicly
Announced
Dilution
Offset Program (1)
|
|
Total
Number
of Shares
Purchased
as Part of
Publicly
Announced
General Share
Repurchase Program (2)
|
|
Maximum
Dollar
Value
that May
Yet Be
Purchased
Under the
Dilution
Offset Program
|
|
Maximum
Dollar
Value
that May
Yet Be
Purchased
Under the
General Share
Repurchase Program
|
|||||||||
Month
|
|
|
|
|
|
|
|||||||||||||||
January 2019
|
|
—
|
|
|
NA
|
|
|
—
|
|
|
—
|
|
|
$
|
14,804,798
|
|
|
$
|
252,570,116
|
|
|
February 2019
|
|
226,712
|
|
|
$
|
46.28
|
|
|
226,712
|
|
|
—
|
|
|
$
|
18,694,292
|
|
|
$
|
252,570,116
|
|
March 2019
|
|
1,010,857
|
|
|
$
|
47.16
|
|
|
522,246
|
|
|
488,611
|
|
|
$
|
3,002,235
|
|
|
$
|
229,669,749
|
|
First Quarter Total
|
|
1,237,569
|
|
|
$
|
47.00
|
|
|
748,958
|
|
|
488,611
|
|
|
$
|
3,002,235
|
|
|
$
|
229,669,749
|
|
|
|
|
|
Reference Number
per Item 601 of
Regulation S-K
|
|
Description
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
101
|
|
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Statements of Loss for the three months period ended March 31, 2019 and 2018, (ii) the Condensed Consolidated Statements of Comprehensive Loss for the three months period ended March 31, 2019 and 2018, (iii) the Condensed Consolidated Balance Sheets at March 31, 2019 and December 31, 2018, (iv) the Condensed Consolidated Statements of Cash Flows for the three months period ended March 31, 2019 and 2018, (v) the Condensed Consolidated Statements of Changes in Stockholders' Equity for the three months period ended March 31, 2019 and 2018 and (vi) the notes to the Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
|
TERADATA CORPORATION
|
||
|
|
|
|
|
Date: May 6, 2019
|
|
By:
|
|
/s/ Mark A. Culhane
|
|
|
|
|
Mark A.Culhane
Chief Financial Officer
|
•
|
Salary and target annual bonus continuation for 12 months, less required withholdings and deductions;
|
•
|
Payment of 2018 annual bonus under the Management Incentive Plan as determined by the Compensation and Human Resource Committee of the Board of Directors (the “Compensation Committee”), payable following the determination of the actual performance for fiscal year 2018 by the Compensation Committee and on the same schedule as these bonuses are paid to other eligible participants, and subject to the terms and conditions of the Management Incentive Plan and less required withholdings and deductions;
|
•
|
Pro-rata (two month) payment of 2019 target annual bonus;
|
•
|
The Company will contribute towards your COBRA premiums the portion of the premiums currently paid by the Company for your medical, dental and/or vision benefits for up to twelve (12) months (however, you must apply for COBRA benefits, Teradata cannot do so on your behalf);
|
•
|
Outplacement services for 12 months as provided in the Plan; and
|
•
|
Pro-rata vesting of your outstanding service-based restricted share units (“RSU”) awards. Because you are retirement eligible, you are entitled to receive an additional year of vesting service for a total of 26 months of vesting in respect of your outstanding RSUs with the remaining units forfeited. Your RSUs that are scheduled to vest under the Plan in connection with your termination will be distributed to your Fidelity account on the date listed below. If you have any questions about your equity awards, please contact Fidelity Stock Plan Services on 1-800-429-2363.
|
•
|
Pro-rata vesting of 14 months of your outstanding performance-based restricted share unit (“PBRSU”) awards, with the remaining units forfeited, subject to the achievement of the performance goals under such awards as certified by the Compensation Committee at the end of the applicable performance period; and
|
•
|
Teradata will cover the costs of your outstanding car lease and apartment rental in San Diego, California that were part of your commuting benefits while employed by the Company, provided that you provide reasonable assistance in mitigating the cost of such obligations.
|
1.
|
I may sign and submit this Release of Claims (“Release”) at any time during the 45 days after my termination.
|
2.
|
I understand this Release does not constitute an admission by Teradata of any liability, violation of any federal or state laws, or any other civil wrong.
|
3.
|
I may revoke this Release during the seven days after I sign it by delivering written notice to Teradata in accordance with Section 15 of the Plan no later than the close of business on the seventh day after signature. This Release will not become effective or enforceable until the expiration of that seven-day period. I understand that my severance benefits will be processed after the expiration of the seven-day period.
|
4.
|
I release and discharge Teradata, its affiliates, successors, and each of their fiduciaries, stockholders, directors, officers, agents, and employees (“Released Parties”), from all claims, causes of action, suits, damages, rights to monetary or equitable relief, known or unknown, including access to Teradata’s internal dispute resolution process, for anything occurring up to and including the date on which I sign this Release. Without limiting the prior sentence, this release covers all claims I have, have ever had, or may now have, for or related in any way to my employment or the end of my employment with the Company, including but not limited to all claims for age discrimination under the Age Discrimination in Employment Act; Title VII of the Civil Rights Act of 1964; the Family and Medical Leave Act; the Employee Retirement Income Security Act (“ERISA”), any similar state or local Fair Employment statute or ordinance, including, without limitation, the California Fair Housing and Employment Act; any claim of wrongful discharge, discrimination, harassment, retaliation, breach of implied or express promises, defamation, invasion of privacy and intentional or negligent infliction of emotional distress; all claims for lost or unpaid wages, overtime, bonuses, or statutory penalties; and any claims of coverage under any of Teradata’s commercial automobile liability insurance policies.
|
5.
|
Teradata advises me to consult with an attorney prior to signing this Release. By signing this Release I understand I am giving up and waiving legal rights. I have either freely chosen not to consult with an attorney or I have decided to sign after discussing this Release with my attorney.
|
6.
|
This Release does not prevent me from responding accurately and fully to any question, inquiry or request for information when required by legal process, or disclosing information to regulatory bodies. Further, nothing contained in this Release limits my ability to file a charge or complaint with any federal, state or local governmental agency or commission (a “Government Agency”). In addition, nothing in this Release or any other Company agreement, policy, practice, procedure, directive or instruction shall prohibit me from reporting possible violations of federal, state or local laws or regulations to any Government Agency or making other disclosures that are protected under the whistleblower provisions of federal, state or local laws or regulations. I understand that I do not need prior authorization of any kind to make any such reports or disclosures, and that I am not required to notify the Company that I have made such reports or disclosures. However, if I file any charge or complaint with any Government Agency, and if the Government Agency pursues any claim on my behalf, or if any other third party pursues any claim on my behalf, I hereby waive any right to monetary or other individualized relief (either individually, or as part of any collective or class action) that arises out of alleged facts or circumstances on or before the effective date of this Release; provided that nothing in this Release limits any right I may have to receive a whistleblower award or bounty for information provided to the Securities and Exchange Commission or other Government Agency.
|
7.
|
As used in this Release, “Teradata” includes its parents, subsidiaries, affiliates, divisions, past and present directors, officers, agents and employees.
|
8.
|
This Release and the Plan represent the entire agreement between me and Teradata relating to the end of my employment and, with the exception of any agreements relating to arbitration of employment-related disputes, or trade secrets and preserving the confidentiality of Teradata information, supersedes all prior written or oral understandings, statements or agreements.
|
/s/ Eric P. Tom
|
XXXXXXXXXX
|
XXXXXXXXXXXXX
|
2/28/19
|
Signature of Associate
|
Social Security Number
|
Non-Teradata E-mail Address
|
Date
|
Eric P. Tom
|
XXXXXXXXXX
|
XXXXXXXXXXXXX
|
|
Associate Name (Printed)
|
Associate QuickLook ID
|
Non-Teradata Telephone Number
|
|
/s/ T Mazakas
|
Sr. Dir. Global Comp.
|
2/28/2019
|
Human Resources Representative
|
Title
|
Date
|
|
|
|
Date: May 6, 2019
|
|
/s/ Oliver Ratzesberger
|
|
|
Oliver Ratzesberger
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
Date: May 6, 2019
|
|
/s/ Mark A. Culhane
|
|
|
Mark A. Culhane
|
|
|
Chief Financial Officer
|
(1)
|
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
Date: May 6, 2019
|
|
/s/ Oliver G. Ratzesberger
|
|
|
Oliver G. Ratzesberger
|
|
|
President and Chief Executive Officer
|
|
|
|
Date: May 6, 2019
|
|
/s/ Mark A. Culhane
|
|
|
Mark A. Culhane
Chief Financial Officer
|