☒
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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, $0.01 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
June 30, |
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Six Months Ended
June 30, |
||||||||||||
In millions, except per share amounts
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
Recurring
|
$
|
338
|
|
|
$
|
312
|
|
|
$
|
669
|
|
|
$
|
614
|
|
Perpetual software licenses and hardware
|
29
|
|
|
97
|
|
|
60
|
|
|
166
|
|
||||
Consulting services
|
111
|
|
|
135
|
|
|
217
|
|
|
270
|
|
||||
Total revenue
|
478
|
|
|
544
|
|
|
946
|
|
|
1,050
|
|
||||
Cost of revenue
|
|
|
|
|
|
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||||||||
Cost of recurring
|
107
|
|
|
88
|
|
|
213
|
|
|
178
|
|
||||
Cost of perpetual software licenses and hardware
|
26
|
|
|
73
|
|
|
51
|
|
|
121
|
|
||||
Cost of consulting services
|
109
|
|
|
133
|
|
|
222
|
|
|
278
|
|
||||
Total cost of revenue
|
242
|
|
|
294
|
|
|
486
|
|
|
577
|
|
||||
Gross profit
|
236
|
|
|
250
|
|
|
460
|
|
|
473
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses
|
145
|
|
|
163
|
|
|
296
|
|
|
315
|
|
||||
Research and development expenses
|
81
|
|
|
77
|
|
|
159
|
|
|
152
|
|
||||
Total operating expenses
|
226
|
|
|
240
|
|
|
455
|
|
|
467
|
|
||||
Income from operations
|
10
|
|
|
10
|
|
|
5
|
|
|
6
|
|
||||
Other expense, net
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(8
|
)
|
|
(5
|
)
|
|
(17
|
)
|
|
(10
|
)
|
||||
Interest income
|
6
|
|
|
4
|
|
|
12
|
|
|
7
|
|
||||
Other expense
|
(3
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|
(5
|
)
|
||||
Total other expense, net
|
(5
|
)
|
|
(4
|
)
|
|
(10
|
)
|
|
(8
|
)
|
||||
Income (loss) before income taxes
|
5
|
|
|
6
|
|
|
(5
|
)
|
|
(2
|
)
|
||||
Income tax expense
|
6
|
|
|
2
|
|
|
6
|
|
|
1
|
|
||||
Net (loss) income
|
$
|
(1
|
)
|
|
$
|
4
|
|
|
$
|
(11
|
)
|
|
$
|
(3
|
)
|
Net (loss) income per common share
|
|
|
|
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|
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||||||||
Basic
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$
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(0.01
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.09
|
)
|
|
$
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(0.02
|
)
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Diluted
|
$
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(0.01
|
)
|
|
$
|
0.03
|
|
|
$
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(0.09
|
)
|
|
$
|
(0.02
|
)
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
115.5
|
|
|
119.5
|
|
|
116.3
|
|
|
120.4
|
|
||||
Diluted
|
115.5
|
|
|
121.5
|
|
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116.3
|
|
|
120.4
|
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Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
In millions
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net (loss) income
|
$
|
(1
|
)
|
|
$
|
4
|
|
|
$
|
(11
|
)
|
|
$
|
(3
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(1
|
)
|
|
(21
|
)
|
|
(7
|
)
|
|
(17
|
)
|
||||
Derivatives:
|
|
|
|
|
|
|
|
||||||||
Unrealized loss on derivatives, before tax
|
(9
|
)
|
|
(3
|
)
|
|
(13
|
)
|
|
(3
|
)
|
||||
Unrealized loss on derivatives, tax portion
|
2
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Unrealized loss on derivatives, net of tax
|
(7
|
)
|
|
(3
|
)
|
|
(10
|
)
|
|
(3
|
)
|
||||
Defined benefit plans:
|
|
|
|
|
|
|
|
||||||||
Defined benefit plan adjustment, before tax
|
1
|
|
|
4
|
|
|
2
|
|
|
4
|
|
||||
Defined benefit plan adjustment, tax portion
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Defined benefit plan adjustment, net of tax
|
1
|
|
|
3
|
|
|
2
|
|
|
3
|
|
||||
Other comprehensive loss
|
(7
|
)
|
|
(21
|
)
|
|
(15
|
)
|
|
(17
|
)
|
||||
Comprehensive loss
|
$
|
(8
|
)
|
|
$
|
(17
|
)
|
|
$
|
(26
|
)
|
|
$
|
(20
|
)
|
In millions, except per share amounts
|
June 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
635
|
|
|
$
|
715
|
|
Accounts receivable, net
|
377
|
|
|
588
|
|
||
Inventories
|
35
|
|
|
28
|
|
||
Other current assets
|
82
|
|
|
97
|
|
||
Total current assets
|
1,129
|
|
|
1,428
|
|
||
Property and equipment, net
|
317
|
|
|
295
|
|
||
Capitalized software, net
|
49
|
|
|
72
|
|
||
Right of use assets - operating lease, net
|
58
|
|
|
—
|
|
||
Goodwill
|
396
|
|
|
395
|
|
||
Acquired intangible assets, net
|
12
|
|
|
16
|
|
||
Deferred income taxes
|
70
|
|
|
67
|
|
||
Other assets
|
92
|
|
|
87
|
|
||
Total assets
|
$
|
2,123
|
|
|
$
|
2,360
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Current portion of long-term debt
|
$
|
25
|
|
|
$
|
19
|
|
Current portion of finance lease liability
|
32
|
|
|
17
|
|
||
Current portion of operating lease liability
|
20
|
|
|
—
|
|
||
Accounts payable
|
102
|
|
|
141
|
|
||
Payroll and benefits liabilities
|
114
|
|
|
224
|
|
||
Deferred revenue
|
498
|
|
|
490
|
|
||
Other current liabilities
|
74
|
|
|
118
|
|
||
Total current liabilities
|
865
|
|
|
1,009
|
|
||
Long-term debt
|
466
|
|
|
478
|
|
||
Finance lease liability
|
54
|
|
|
30
|
|
||
Operating lease liability
|
44
|
|
|
—
|
|
||
Pension and other postemployment plan liabilities
|
102
|
|
|
113
|
|
||
Long-term deferred revenue
|
82
|
|
|
105
|
|
||
Deferred tax liabilities
|
4
|
|
|
3
|
|
||
Other liabilities
|
139
|
|
|
127
|
|
||
Total liabilities
|
1,756
|
|
|
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 June 30, 2019 and December 31, 2018, respectively
|
—
|
|
|
—
|
|
||
Common stock: par value $0.01 per share, 500.0 shares authorized, 114.1 and 116.8 shares issued at June 30, 2019 and December 31, 2018, respectively
|
1
|
|
|
1
|
|
||
Paid-in capital
|
1,491
|
|
|
1,418
|
|
||
Accumulated deficit
|
(1,009
|
)
|
|
(823
|
)
|
||
Accumulated other comprehensive loss
|
(116
|
)
|
|
(101
|
)
|
||
Total stockholders’ equity
|
367
|
|
|
495
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,123
|
|
|
$
|
2,360
|
|
|
Six Months Ended
June 30, |
||||||
In millions
|
2019
|
|
2018
|
||||
Operating activities
|
|
|
|
||||
Net loss
|
$
|
(11
|
)
|
|
$
|
(3
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
77
|
|
|
64
|
|
||
Stock-based compensation expense
|
37
|
|
|
35
|
|
||
Deferred income taxes
|
—
|
|
|
(6
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Receivables
|
211
|
|
|
185
|
|
||
Inventories
|
(7
|
)
|
|
2
|
|
||
Current payables and accrued expenses
|
(155
|
)
|
|
(31
|
)
|
||
Deferred revenue
|
(15
|
)
|
|
90
|
|
||
Other assets and liabilities
|
(33
|
)
|
|
(46
|
)
|
||
Net cash provided by operating activities
|
104
|
|
|
290
|
|
||
Investing activities
|
|
|
|
||||
Expenditures for property and equipment
|
(27
|
)
|
|
(58
|
)
|
||
Additions to capitalized software
|
(2
|
)
|
|
(4
|
)
|
||
Net cash used in investing activities
|
(29
|
)
|
|
(62
|
)
|
||
Financing activities
|
|
|
|
||||
Repurchases of common stock
|
(175
|
)
|
|
(157
|
)
|
||
Repayments of long-term borrowings
|
(6
|
)
|
|
(40
|
)
|
||
Repayments of credit facility borrowings
|
—
|
|
|
(240
|
)
|
||
Payments of finance leases
|
(9
|
)
|
|
—
|
|
||
Other financing activities, net
|
36
|
|
|
18
|
|
||
Net cash used in financing activities
|
(154
|
)
|
|
(419
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
|
|
(15
|
)
|
||
Decrease in cash, cash equivalents and restricted cash
|
(79
|
)
|
|
(206
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
716
|
|
|
1,089
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
637
|
|
|
$
|
883
|
|
|
|
|
|
||||
Supplemental cash flow disclosure:
|
|
|
|
||||
Assets acquired under operating lease
|
$
|
4
|
|
|
$
|
—
|
|
Assets acquired under finance lease
|
$
|
48
|
|
|
$
|
—
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Cash and cash equivalents
|
$
|
635
|
|
|
$
|
715
|
|
Restricted cash
|
2
|
|
|
1
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
637
|
|
|
$
|
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
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Employee stock compensation, employee stock purchase programs and option exercises
|
—
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|||||
Repurchases of common stock, retired
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(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
|
)
|
|||||
June 30, 2019
|
114
|
|
|
$
|
1
|
|
|
$
|
1,491
|
|
|
$
|
(1,009
|
)
|
|
$
|
(116
|
)
|
|
$
|
367
|
|
|
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
|
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Employee stock compensation, employee stock purchase programs and option exercises
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
—
|
|
|
26
|
|
||||||
Repurchases of common stock, retired
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(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
|
)
|
||||||
June 30, 2018
|
$
|
119
|
|
|
$
|
1
|
|
|
$
|
1,376
|
|
|
$
|
(714
|
)
|
|
$
|
(91
|
)
|
|
$
|
572
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
in millions
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Americas
|
|
|
|
|
|
|
|
||||||||
Recurring
|
$
|
217
|
|
|
$
|
199
|
|
|
$
|
430
|
|
|
$
|
392
|
|
Perpetual software licenses and hardware
|
12
|
|
|
40
|
|
|
31
|
|
|
62
|
|
||||
Consulting services
|
40
|
|
|
48
|
|
|
77
|
|
|
97
|
|
||||
Total Americas
|
269
|
|
|
287
|
|
|
538
|
|
|
551
|
|
||||
EMEA
|
|
|
|
|
|
|
|
||||||||
Recurring
|
75
|
|
|
70
|
|
|
148
|
|
|
137
|
|
||||
Perpetual software licenses and hardware
|
10
|
|
|
10
|
|
|
17
|
|
|
43
|
|
||||
Consulting services
|
37
|
|
|
47
|
|
|
70
|
|
|
96
|
|
||||
Total EMEA
|
122
|
|
|
127
|
|
|
235
|
|
|
276
|
|
||||
APAC
|
|
|
|
|
|
|
|
||||||||
Recurring
|
46
|
|
|
43
|
|
|
91
|
|
|
85
|
|
||||
Perpetual software licenses and hardware
|
7
|
|
|
47
|
|
|
12
|
|
|
61
|
|
||||
Consulting services
|
34
|
|
|
40
|
|
|
70
|
|
|
77
|
|
||||
Total APAC
|
87
|
|
|
130
|
|
|
173
|
|
|
223
|
|
||||
Total Revenue
|
$
|
478
|
|
|
$
|
544
|
|
|
$
|
946
|
|
|
$
|
1,050
|
|
|
As of
|
||||||
in millions
|
June 30, 2019
|
|
December 31, 2018
|
||||
Accounts receivable, net
|
$
|
377
|
|
|
$
|
588
|
|
Contract assets
|
$
|
6
|
|
|
$
|
14
|
|
Current deferred revenue
|
$
|
498
|
|
|
$
|
490
|
|
Long-term deferred revenue
|
$
|
82
|
|
|
$
|
105
|
|
in millions
|
|
Total at June 30, 2019
|
|
Year 1
|
|
Year 2 and Thereafter
|
||||||
Remaining unsatisfied obligations
|
|
$
|
2,530
|
|
|
$
|
1,182
|
|
|
$
|
1,348
|
|
in millions
|
|
December 31, 2018
|
|
Capitalized
|
|
Amortization
|
|
June 30, 2019
|
||||
Capitalized contract costs
|
|
54
|
|
|
17
|
|
|
(8
|
)
|
|
63
|
|
|
As of
|
||||||
In millions
|
June 30,
2019 |
|
December 31,
2018 |
||||
Inventories
|
|
|
|
||||
Finished goods
|
$
|
23
|
|
|
$
|
16
|
|
Service parts
|
12
|
|
|
12
|
|
||
Total inventories
|
$
|
35
|
|
|
$
|
28
|
|
|
|
|
|
||||
Deferred revenue
|
|
|
|
||||
Deferred revenue, current
|
$
|
498
|
|
|
$
|
490
|
|
Long-term deferred revenue
|
82
|
|
|
105
|
|
||
Total deferred revenue
|
$
|
580
|
|
|
$
|
595
|
|
In millions
|
December 31, 2018
|
|
Reassignment of Goodwill
|
|
Currency translation adjustments
|
|
June 30, 2019
|
||||||||
Goodwill
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
253
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
253
|
|
International
|
142
|
|
|
(142
|
)
|
|
—
|
|
|
—
|
|
||||
EMEA
|
—
|
|
|
88
|
|
|
—
|
|
|
88
|
|
||||
APAC
|
—
|
|
|
54
|
|
|
1
|
|
|
55
|
|
||||
Total goodwill
|
$
|
395
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
396
|
|
|
|
|
June 30, 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
|
|
|
$
|
(23
|
)
|
|
$
|
35
|
|
|
$
|
(20
|
)
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30,
|
||||||||||||
In millions
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Amortization expense
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
4
|
|
|
|
Actual
|
|
For the years ended (estimated)
|
|||||||||||||||||
In millions
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
||||||||||
Amortization expense
|
|
$
|
7
|
|
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
2
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
In millions
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Effective tax rate
|
|
120.0
|
%
|
|
33.3
|
%
|
|
(120.0
|
)%
|
|
(50.0
|
)%
|
|
As of
|
||||||
In millions
|
June 30,
2019 |
|
December 31,
2018 |
||||
Contract notional amount of foreign exchange forward contracts
|
$
|
156
|
|
|
$
|
256
|
|
Net contract notional amount of foreign exchange forward contracts
|
$
|
46
|
|
|
$
|
35
|
|
Contract notional amount of interest rate swap
|
$
|
494
|
|
|
$
|
500
|
|
In millions
|
2019
|
|
2018
|
||||
Warranty reserve liability
|
|
|
|
||||
Beginning balance at January 1
|
$
|
3
|
|
|
$
|
4
|
|
Accrual of warranties issued
|
1
|
|
|
2
|
|
||
Settlements (in cash or in kind)
|
(2
|
)
|
|
(3
|
)
|
||
Balance at June 30
|
$
|
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 June 30, 2019
|
$
|
218
|
|
|
$
|
218
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Money market funds at December 31, 2018
|
$
|
246
|
|
|
$
|
246
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate swap at June 30, 2019
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
—
|
|
Interest rate swap at December 31, 2018
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
|
|
As of
|
||
in millions, except weighted average calculations
|
Classification on the Balance Sheet
|
|
June 30, 2019
|
||
Assets
|
|
|
|
||
Operating lease assets
|
Right of use assets - operating lease, net
|
|
$
|
58
|
|
Finance lease assets
|
Property and equipment, net
|
|
90
|
|
|
Total lease assets
|
|
|
$
|
148
|
|
|
|
|
|
||
Liabilities
|
|
|
|
||
Current
|
|
|
|
||
Operating
|
Current portion of operating lease liability
|
|
$
|
20
|
|
Finance
|
Current portion of finance lease liability
|
|
32
|
|
|
Noncurrent
|
|
|
|
||
Operating
|
Operating lease liability
|
|
44
|
|
|
Finance
|
Finance lease liability
|
|
54
|
|
|
Total lease liabilities
|
|
|
$
|
150
|
|
|
|
|
|
||
Weighted-average remaining lease term
|
|
|
|
||
Operating leases
|
|
|
3.78 years
|
|
|
Finance leases
|
|
|
2.59 years
|
|
|
Weighted-average discount rate
|
|
|
|
||
Operating leases(1)
|
|
|
5.00
|
%
|
|
Finance leases
|
|
|
4.70
|
%
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
||||
in millions
|
|
June 30, 2019
|
|
June 30, 2019
|
|
||||
Finance lease cost
|
|
|
|
|
|
||||
Depreciation of leased assets
|
|
5
|
|
|
9
|
|
|
||
Interest of lease liabilities
|
|
1
|
|
|
2
|
|
|
||
Operating lease cost
|
|
6
|
|
|
18
|
|
|
||
Sub-lease income from real estate properties owned and leased
|
|
(2
|
)
|
|
(4
|
)
|
|
||
Total lease cost
|
|
$
|
10
|
|
|
$
|
25
|
|
|
|
|
Six Months Ended
|
||
in millions
|
|
June 30, 2019
|
||
Operating cash flows for operating leases
|
|
$
|
12
|
|
Operating cash flows for finance leases
|
|
$
|
1
|
|
Financing cash flows for finance leases
|
|
$
|
9
|
|
in millions
|
|
Operating Leases
|
|
Finance Leases
|
||||
2019 (balance of year)
|
|
$
|
13
|
|
|
$
|
21
|
|
2020
|
|
23
|
|
|
35
|
|
||
2021
|
|
17
|
|
|
30
|
|
||
2022
|
|
11
|
|
|
5
|
|
||
2023
|
|
7
|
|
|
—
|
|
||
Thereafter
|
|
5
|
|
|
—
|
|
||
Total minimum lease payments
|
|
76
|
|
|
91
|
|
||
Less: amount of lease payments representing interest
|
|
(12
|
)
|
|
(5
|
)
|
||
Present value of future minimum lease payments
|
|
64
|
|
|
86
|
|
||
Less: current obligations under leases
|
|
(20
|
)
|
|
(32
|
)
|
||
Long-term lease obligations
|
|
$
|
44
|
|
|
$
|
54
|
|
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)
|
$
|
38
|
|
2020
|
57
|
|
|
2021
|
43
|
|
|
2022
|
14
|
|
|
2023
|
—
|
|
|
Total
|
$
|
152
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
In millions, except per share amounts
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net (loss) income attributable to common stockholders
|
$
|
(1
|
)
|
|
$
|
4
|
|
|
$
|
(11
|
)
|
|
$
|
(3
|
)
|
Weighted average outstanding shares of common stock
|
115.5
|
|
|
119.5
|
|
|
116.3
|
|
|
120.4
|
|
||||
Dilutive effect of employee stock options, restricted stock and other stock awards
|
—
|
|
|
2.0
|
|
|
—
|
|
|
—
|
|
||||
Common stock and common stock equivalents
|
115.5
|
|
|
121.5
|
|
|
116.3
|
|
|
120.4
|
|
||||
Net loss (income) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.01
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.09
|
)
|
|
$
|
(0.02
|
)
|
Diluted
|
$
|
(0.01
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.09
|
)
|
|
$
|
(0.02
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
In millions
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Segment revenue
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
269
|
|
|
$
|
287
|
|
|
$
|
538
|
|
|
$
|
551
|
|
EMEA
|
122
|
|
|
127
|
|
|
235
|
|
|
276
|
|
||||
APAC
|
87
|
|
|
130
|
|
|
173
|
|
|
223
|
|
||||
Total revenue
|
478
|
|
|
544
|
|
|
946
|
|
|
1,050
|
|
||||
Segment gross profit
|
|
|
|
|
|
|
|
||||||||
Americas
|
158
|
|
|
154
|
|
|
315
|
|
|
301
|
|
||||
EMEA
|
57
|
|
|
54
|
|
|
107
|
|
|
117
|
|
||||
APAC
|
37
|
|
|
58
|
|
|
71
|
|
|
93
|
|
||||
Total segment gross profit
|
252
|
|
|
266
|
|
|
493
|
|
|
511
|
|
||||
Stock-based compensation costs
|
4
|
|
|
4
|
|
|
7
|
|
|
8
|
|
||||
Acquisition, integration, reorganization and transformation-related costs
|
2
|
|
|
—
|
|
|
5
|
|
|
3
|
|
||||
Amortization of capitalized software costs
|
10
|
|
|
12
|
|
|
21
|
|
|
27
|
|
||||
Total gross profit
|
236
|
|
|
250
|
|
|
460
|
|
|
473
|
|
||||
Selling, general and administrative expenses
|
145
|
|
|
163
|
|
|
296
|
|
|
315
|
|
||||
Research and development expenses
|
81
|
|
|
77
|
|
|
159
|
|
|
152
|
|
||||
Income from operations
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
5
|
|
|
$
|
6
|
|
In millions
|
Balance at
December 31, 2018
|
|
Expense accruals
|
|
Cash payments
|
|
Balance at
June 30, 2019
|
||||||||
Employee separation benefits costs related to headquarter transition and business transformation
|
$
|
11
|
|
|
$
|
4
|
|
|
$
|
(13
|
)
|
|
$
|
2
|
|
Transition support and other exit related costs for the headquarter transition and business transformation
|
1
|
|
|
2
|
|
|
(3
|
)
|
|
—
|
|
||||
Total
|
$
|
12
|
|
|
$
|
6
|
|
|
$
|
(16
|
)
|
|
$
|
2
|
|
•
|
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 $478 million for the second quarter of 2019, a 12% decrease compared to the second quarter of 2018, with an underlying 8% increase in recurring revenue as the Company's business shifts to subscription-based transactions offset by a 70% decrease in perpetual software licenses and hardware as deals move to subscription and an 18% decrease in consulting services revenue. Foreign currency fluctuations had a 2% negative impact on total revenue for the quarter.
|
•
|
Gross margin increased to 49.4% in the second quarter of 2019 from 46.0% in the second quarter of 2018, primarily due to a higher recurring revenue mix as compared to the prior period.
|
•
|
Operating expenses for the second quarter of 2019 decreased by 6% compared to the second quarter of 2018 primarily due to cost management initiatives.
|
•
|
Operating income was $10 million in the second quarter of 2019 and 2018.
|
•
|
Net loss in the second quarter of 2019 was $1 million, compared to net income of $4 million in the second quarter of 2018.
|
|
|
|
% of
|
|
|
|
% of
|
||||||
In millions
|
2019
|
|
Revenue
|
|
2018
|
|
Revenue
|
||||||
Recurring
|
$
|
338
|
|
|
70.7
|
%
|
|
$
|
312
|
|
|
57.4
|
%
|
Perpetual software licenses and hardware
|
29
|
|
|
6.1
|
%
|
|
97
|
|
|
17.8
|
%
|
||
Consulting services
|
111
|
|
|
23.2
|
%
|
|
135
|
|
|
24.8
|
%
|
||
Total revenue
|
$
|
478
|
|
|
100
|
%
|
|
$
|
544
|
|
|
100
|
%
|
•
|
At the end of the second quarter of 2019, ARR was $1,350 million, an 11% increase from the second quarter of 2018 including a 1% negative impact from foreign currency as compared to the second quarter of 2018.
|
•
|
90% of our bookings mix in the second 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
|
$
|
231
|
|
|
68.3
|
%
|
|
$
|
224
|
|
|
71.8
|
%
|
Perpetual software licenses and hardware
|
3
|
|
|
10.3
|
%
|
|
24
|
|
|
24.7
|
%
|
||
Consulting services
|
2
|
|
|
1.8
|
%
|
|
2
|
|
|
1.5
|
%
|
||
Total gross profit
|
$
|
236
|
|
|
49.4
|
%
|
|
$
|
250
|
|
|
46.0
|
%
|
|
|
|
% of
|
|
|
|
% of
|
||||||
In millions
|
2019
|
|
Revenue
|
|
2018
|
|
Revenue
|
||||||
Selling, general and administrative expenses
|
$
|
145
|
|
|
30.3
|
%
|
|
$
|
163
|
|
|
30.0
|
%
|
Research and development expenses
|
81
|
|
|
17.0
|
%
|
|
77
|
|
|
14.1
|
%
|
||
Total operating expenses
|
$
|
226
|
|
|
47.3
|
%
|
|
$
|
240
|
|
|
44.1
|
%
|
In millions
|
2019
|
|
2018
|
||||
Interest income
|
$
|
6
|
|
|
$
|
4
|
|
Interest expense
|
(8
|
)
|
|
(5
|
)
|
||
Other
|
(3
|
)
|
|
(3
|
)
|
||
Other expense, net
|
$
|
(5
|
)
|
|
$
|
(4
|
)
|
|
2019
|
|
2018
|
||
Effective tax rate
|
120.0
|
%
|
|
33.3
|
%
|
|
|
|
% of
|
|
|
|
% of
|
||||||
In millions
|
2019
|
|
Revenue
|
|
2018
|
|
Revenue
|
||||||
Segment revenue
|
|
|
|
|
|
|
|
||||||
Americas
|
$
|
269
|
|
|
56.3
|
%
|
|
$
|
287
|
|
|
52.8
|
%
|
EMEA
|
122
|
|
|
25.5
|
%
|
|
127
|
|
|
23.3
|
%
|
||
APAC
|
87
|
|
|
18.2
|
%
|
|
130
|
|
|
23.9
|
%
|
||
Total segment revenue
|
$
|
478
|
|
|
100
|
%
|
|
$
|
544
|
|
|
100
|
%
|
Segment gross profit
|
|
|
|
|
|
|
|
||||||
Americas
|
$
|
158
|
|
|
58.7
|
%
|
|
$
|
154
|
|
|
53.7
|
%
|
EMEA
|
57
|
|
|
46.7
|
%
|
|
54
|
|
|
42.5
|
%
|
||
APAC
|
37
|
|
|
42.5
|
%
|
|
58
|
|
|
44.6
|
%
|
||
Total segment gross profit
|
$
|
252
|
|
|
52.7
|
%
|
|
$
|
266
|
|
|
48.9
|
%
|
|
|
|
% of
|
|
|
|
% of
|
||||||
In millions
|
2019
|
|
Revenue
|
|
2018
|
|
Revenue
|
||||||
Recurring
|
$
|
669
|
|
|
70.7
|
%
|
|
$
|
614
|
|
|
58.5
|
%
|
Perpetual software licenses and hardware
|
60
|
|
|
6.3
|
%
|
|
166
|
|
|
15.8
|
%
|
||
Consulting services
|
217
|
|
|
22.9
|
%
|
|
270
|
|
|
25.7
|
%
|
||
Total revenue
|
$
|
946
|
|
|
100
|
%
|
|
$
|
1,050
|
|
|
100
|
%
|
|
|
|
% of
|
|
|
|
% of
|
||||||
In millions
|
2019
|
|
Revenue
|
|
2018
|
|
Revenue
|
||||||
Recurring
|
$
|
456
|
|
|
68.2
|
%
|
|
$
|
436
|
|
|
71.0
|
%
|
Perpetual software licenses and hardware
|
9
|
|
|
15.0
|
%
|
|
45
|
|
|
27.1
|
%
|
||
Consulting services
|
(5
|
)
|
|
(2.3
|
)%
|
|
(8
|
)
|
|
(3.0
|
)%
|
||
Total gross profit
|
$
|
460
|
|
|
48.6
|
%
|
|
$
|
473
|
|
|
45.0
|
%
|
|
|
|
% of
|
|
|
|
% of
|
||||||
In millions
|
2019
|
|
Revenue
|
|
2018
|
|
Revenue
|
||||||
Operating expenses
|
|
|
|
|
|
|
|
||||||
Selling, general and administrative expenses
|
$
|
296
|
|
|
31.3
|
%
|
|
$
|
315
|
|
|
30.0
|
%
|
Research and development expenses
|
159
|
|
|
16.8
|
%
|
|
152
|
|
|
14.5
|
%
|
||
Total operating expenses
|
$
|
455
|
|
|
48.1
|
%
|
|
$
|
467
|
|
|
44.5
|
%
|
In millions
|
2019
|
|
2018
|
||||
Interest income
|
$
|
12
|
|
|
$
|
7
|
|
Interest expense
|
(17
|
)
|
|
(10
|
)
|
||
Other
|
(5
|
)
|
|
(5
|
)
|
||
Other expense, net
|
$
|
(10
|
)
|
|
$
|
(8
|
)
|
|
2019
|
|
2018
|
||
Effective tax rate
|
(120.0
|
)%
|
|
(50.0
|
)%
|
|
|
|
% of
|
|
|
|
% of
|
||||||
In millions
|
2019
|
|
Revenue
|
|
2018
|
|
Revenue
|
||||||
Segment revenue
|
|
|
|
|
|
|
|
||||||
Americas
|
$
|
538
|
|
|
56.9
|
%
|
|
$
|
551
|
|
|
52.5
|
%
|
EMEA
|
235
|
|
|
24.8
|
%
|
|
276
|
|
|
26.3
|
%
|
||
APAC
|
173
|
|
|
18.3
|
%
|
|
223
|
|
|
21.2
|
%
|
||
Total segment revenue
|
$
|
946
|
|
|
100
|
%
|
|
$
|
1,050
|
|
|
100
|
%
|
Segment gross profit
|
|
|
|
|
|
|
|
||||||
Americas
|
$
|
315
|
|
|
58.6
|
%
|
|
$
|
301
|
|
|
54.6
|
%
|
EMEA
|
107
|
|
|
45.5
|
%
|
|
117
|
|
|
42.4
|
%
|
||
APAC
|
71
|
|
|
41.0
|
%
|
|
93
|
|
|
41.7
|
%
|
||
Total segment gross profit
|
$
|
493
|
|
|
52.1
|
%
|
|
$
|
511
|
|
|
48.7
|
%
|
|
Six Months Ended June 30, 2019
|
||||||
In millions
|
2019
|
|
2018
|
||||
Net cash provided by operating activities
|
$
|
104
|
|
|
$
|
290
|
|
Less:
|
|
|
|
||||
Expenditures for property and equipment
|
(27
|
)
|
|
(58
|
)
|
||
Additions to capitalized software
|
(2
|
)
|
|
(4
|
)
|
||
Free cash flow
|
$
|
75
|
|
|
$
|
228
|
|
in millions
|
|
Operating Leases
|
|
Finance Leases
|
||||
2019 (balance of year)
|
|
$
|
13
|
|
|
$
|
21
|
|
2020
|
|
23
|
|
|
35
|
|
||
2021
|
|
17
|
|
|
30
|
|
||
2022
|
|
11
|
|
|
5
|
|
||
2023
|
|
7
|
|
|
—
|
|
||
Thereafter
|
|
5
|
|
|
—
|
|
||
Total minimum lease payments
|
|
$
|
76
|
|
|
$
|
91
|
|
|
|
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
|
|
|
|
|
|
|
|||||||||||||||
First Quarter Total
|
|
1,237,569
|
|
|
$
|
47.00
|
|
|
748,958
|
|
|
488,611
|
|
|
$
|
3,002,235
|
|
|
$
|
229,669,749
|
|
April 2019
|
|
469,999
|
|
|
$
|
44.48
|
|
|
68,398
|
|
|
401,601
|
|
|
$
|
2,510,526
|
|
|
$
|
211,761,976
|
|
May 2019
|
|
2,120,129
|
|
|
$
|
36.99
|
|
|
—
|
|
|
2,120,129
|
|
|
$
|
2,715,474
|
|
|
$
|
136,777,313
|
|
June 2019
|
|
491,077
|
|
|
$
|
35.68
|
|
|
110,423
|
|
|
380,654
|
|
|
$
|
1,482,900
|
|
|
$
|
119,767,910
|
|
Second Quarter Total
|
|
3,081,205
|
|
|
$
|
37.92
|
|
|
178,821
|
|
|
2,902,384
|
|
|
$
|
1,482,900
|
|
|
$
|
119,767,910
|
|
|
|
|
|
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) Income for the three and six months period ended June 30, 2019 and 2018, (ii) the Condensed Consolidated Statements of Comprehensive Loss for the three and six months period ended June 30, 2019 and 2018, (iii) the Condensed Consolidated Balance Sheets at June 30, 2019 and December 31, 2018, (iv) the Condensed Consolidated Statements of Cash Flows for the six months period ended June 30, 2019 and 2018, (v) the Condensed Consolidated Statements of Changes in Stockholders' Equity for the three and six months period ended June 30, 2019 and 2018 and (vi) the notes to the Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
|
TERADATA CORPORATION
|
||
|
|
|
|
|
Date: August 5, 2019
|
|
By:
|
|
/s/ Mark A. Culhane
|
|
|
|
|
Mark A.Culhane
Chief Financial Officer
|
4.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
|
Date: August 5, 2019
|
|
/s/ Oliver Ratzesberger
|
|
|
Oliver Ratzesberger
|
|
|
President and Chief Executive Officer
|
|
|
|
Date: August 5, 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.
|
|
|
|
Dated: August 5, 2019
|
|
/s/ Oliver G. Ratzesberger
|
|
|
Oliver G. Ratzesberger
|
|
|
President and Chief Executive Officer
|
|
|
|
Dated: August 5, 2019
|
|
/s/ Mark A. Culhane
|
|
|
Chief Financial Officer
|