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RISK FACTORS

You should carefully consider each of the following risk factors and all of the other information set forth in this information statement. The risk factors generally have been separated into three groups: (i) risks relating to our business, (ii) risks relating to the separation, and (iii) risks relating to our common stock. Based on the information currently known to us, we believe that the following information identifies the most significant risk factors affecting our company in each of these categories of risks. However, the risks and uncertainties our company faces are not limited to those set forth in the risk factors described below. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. In addition, past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods.

If any of the following risks and uncertainties develops into actual events, these events could have a material adverse effect on our business, financial condition or results of operations. In such case, the trading price of our common stock could decline.

Risks Relating to Our Business

Economic Pressures—Our business is affected by the global economies in which we operate and the economic climate of the industries we serve.

The information technology (“IT”) industry in which we operate is susceptible to significant changes in the strength of the economy and the economic health of companies who make capital commitments for new technologies. Accordingly, downturns in the global or regional economies in which we operate or certain economic sectors (such as the telecommunications or transportation industries) may adversely impact our business. For example, adverse changes to the economy could impact the timing of purchases by our current and potential customers or the ability of our customers to fulfill their obligations to us. Furthermore, decreased or more closely scrutinized capital spending in our customers’ businesses, in the industries we serve, in the domestic economy or in international economies where our customers do substantial business, may adversely impact our business.

The extent of these impacts, if any, on our business, is dependent on a number of factors, including the duration and extent of any economic downturns, their effect on the markets and other general economic and business conditions.

Competition—The information technology industry is intensely competitive, and competitive pressures could adversely affect prices or demand for our products and services.

We operate in the intensely competitive information technology industry, which is characterized by rapidly changing technology, evolving industry standards, frequent new product introductions, and price and cost reductions. In particular, in the data warehousing market, we face:

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To compete successfully in this environment, we must rapidly and continually design, develop and market solutions and related products and services that are valued in the marketplace. To do this, we must react on a timely basis to shifts in market demands. In addition, our market position depends on our ability to reduce costs without creating operating inefficiencies and to sustain competitive operating margins, while also maintaining the quality of our products and services.

Our primary competitors are IBM and Oracle, who are well-capitalized companies with widespread distribution, brand recognition and penetration of platforms and service offerings. The significant purchasing and market power of these larger competitors, which have greater financial resources than us, could allow them to surpass our market penetration and marketing efforts to promote and sell their products and services. In addition, many other companies participate in specific areas of our business, such as enterprise application analytic and business intelligence software. The status of our business relationships with these companies can influence our ability to compete in data warehousing opportunities in such areas. We also expect additional competition from both established and emerging companies which have recently become active at the entry-levels of the data warehousing market and which may increase their level of competitive activities. Failure to compete successfully with new or existing competitors in these and other areas could have a material adverse impact on our ability to generate new revenues or sustain existing revenue levels.

Data Warehousing Market—If the overall data warehousing market declines or does not grow, we may sell fewer products and services, and our business may not be able to sustain its current level of operations.

If the market trends toward more conservative IT spending, this could result in fewer customers making investments in our products and services. In the past, we have seen periodic breaks in the buying patterns from some of our larger customers, which indicate a level of maturation of their current data warehouse implementation or a shifting of IT priorities when these customers are still incorporating the investments they have made in their core data warehousing infrastructures during past years. In addition, reduced prices and improvements in data warehousing solutions are creating increased pressure on hardware and software revenues, as well as on customer services annuity revenue streams. If the growth rates for the data warehousing market decline for any reason, there could be a decrease in demand for our products and services, which would have a material adverse effect on our financial results.

Renewal Rates and Support Services Pricing Pressures— If our existing customers fail to renew their support agreements, or if customers do not license updated products on terms favorable to us, our revenues could be adversely affected.

We currently derive a significant portion of our overall revenues from customer support services, and we depend on our installed customer base for future revenue from customer services and licenses of updated products. The terms of our standard support service arrangements generally provide for the payment of license fees and prepayment of first-year support fees and are generally renewable on an annual basis. The IT industry generally has been experiencing increasing pricing pressure from customers when purchasing or renewing support agreements. Moreover, the trend towards consolidation in certain industries that we serve, such as telecommunications, could result in a reduction of the hardware and software being serviced and put pressure on our maintenance terms with customers who have merged. Given this environment, there can be no assurance that our current customers will renew their support agreements or agree to the same terms when they renew, which could result in our reducing or losing support fees, and therefore in reduced revenue.

If our existing customers fail to renew their support agreements, or if we are unable to generate additional support fees through the license of updated products to existing or new customers, our business and future operating results could be adversely affected.

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Operating Result Fluctuations—Our financial results are subject to fluctuations caused by many factors that could result in our failing to achieve anticipated financial results.

Our quarterly and annual financial results have varied in the past and are likely to continue to vary in the future due to a number of factors, many of which are beyond our control. In particular, if orders that we expect to be booked at the end of a quarter are not booked until a later date, our net income for that quarter could be substantially below expectations, especially given the large size of our transactions. These and any one or more of the factors listed below or other factors could cause us not to achieve our revenue or profitability expectations. The resulting failure to meet market expectations could cause a drop in our stock price. These factors include the risks discussed elsewhere in this section and the following:

Due to resulting fluctuations, we believe that quarter-to-quarter comparisons of our revenue and operating results may not be meaningful, and that these comparisons may not be an accurate indicator of our future performance.

Unanticipated delays or accelerations in our sales cycles make accurate estimation of our revenues difficult and could result in significant fluctuations in our quarterly operating results.

The size and timing of large orders for our products and services varies considerably, which can impact results from quarter to quarter. The process we use to forecast sales and trends in our business relies heavily on estimates of closure on a transaction-specific basis. It is very difficult to predict sales in a particular quarter or over a longer period of time. Unanticipated delays or accelerations in our sales cycles make accurate estimation of our revenues difficult and could result in significant fluctuations in our quarterly operating results.

The length of our sales cycle varies depending on a number of factors over which we may have little or no control, including the size and complexity of a potential transaction, the level of competition that we encounter in our selling activities and our current and potential customers’ internal budgeting and approval process. As a result of a generally long sales cycle, we may expend significant effort over a long period of time in an attempt to obtain an order, but ultimately not complete the sale, or the order ultimately received may be smaller than anticipated. Our revenue from different customers varies from quarter to quarter, and a customer with a large order in one quarter may generate significantly lower revenue in subsequent quarters. Our results in any particular quarter have generally been dependent on the ability to generate large orders for that quarter from a relatively small number of customers.

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In addition, the budgeting and IT capital spending cycles of our customers and potential customers make forecasting more difficult and may adversely affect our ability to accurately predict financial results. Spending may be particularly heavy in our fourth quarter because of large enterprise customers placing orders before the expiration of IT budgets tied to that calendar year.

Our operating expenses are based on projected annual and quarterly revenue levels and are generally incurred ratably throughout each quarter. Since our operating expenses are relatively fixed in the short term, failure to realize projected revenues for a specified period could adversely impact our operating results, reducing net income or causing an operating loss for that period. The deferral or non-occurrence of such sales revenues would materially adversely affect our operating results for that quarter and could impair our business in future periods.

Seasonal trends in sales of our products and services could adversely affect our quarterly operating results.

In general, we see fluctuations in buying patterns with lower revenue in the first quarter and higher revenue in the fourth quarter of each year. Such seasonality also causes our working capital cash flow requirements to vary from quarter to quarter depending on the variability in the volume, timing and mix of product sales. In addition, revenue in the third month of each quarter is typically higher than in the first and second months, which further impacts our ability to predict financial results accurately and enhances the enterprise risks inherent in our business. These and other factors make forecasting more difficult and may adversely affect our ability to predict financial results accurately .

Revenue Mix Variability—Our revenue is variable depending on the mix of products and services in any given period, and changes in the mix of products and services that we sell could materially adversely affect our operating results.

Our business model is based on our anticipated mix of products and services and the corresponding profit margins for such products and services. Unanticipated shifts in such mix could adversely impact our results of operations and require changes to our business model. Professional consulting services margins are generally lower than the other elements of our data warehousing solutions. In addition, when we use third parties to supplement the services we provide to customers, we generally have lower margin rates. As a result, increases in professional consulting services revenues as a percentage of our total revenues may decrease overall margins, which could materially adversely affect our operating results.

We also realize different margins on the storage components we sell with our solutions, and the mix of such hardware varies from quarter to quarter depending on customer requirements. In addition, changes in the price and performance of our data warehousing hardware could negatively impact maintenance, support and subscription service revenues.

Complexity of Our Solutions—The solutions we sell are very complex, and we need to rapidly and successfully develop and introduce new solutions in a competitive, demanding and rapidly changing environment.

To succeed in the intensely competitive information technology industry, we must continually improve and refresh our product and service offerings to include newer features, functionality or solutions. Shortened product life cycles due to customer demands and competitive pressures impact the pace at which we must introduce and implement new technology. This requires a high level of innovation by both our software developers and the suppliers of the third-party software components included in our systems. In addition, bringing new solutions to the market entails a costly and lengthy process, and requires us to accurately anticipate customer needs and technology trends. We must continue to respond to market demands, develop leading technologies and maintain leadership in EDW database performance and scalability, or our business operations may be adversely affected.

We must also anticipate and respond to customer demands regarding the compatibility of our current and prior offerings. These demands could hinder the pace of introducing and implementing new technology. Our

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future results may be affected if our products cannot effectively interface and perform well with software products of other companies and with our customers’ existing information technology infrastructures, or if we are unsuccessful in our efforts to enter into agreements allowing integration of third-party technology with the Teradata database platform. Our efforts to develop the interoperability of our products may require significant investments of capital and employee resources. In addition, many of our principal products are used with products offered by third parties and, in the future, some vendors of non-Teradata products may become less willing to provide us with access to their products, technical information and marketing and sales support.

As a result of these and other factors, our ability to introduce new or improved solutions could be adversely impacted. There can be no assurance that our innovations will be profitable, and if we cannot successfully market and sell both existing and newly developed solutions, our business and operating results could be impacted. If we were to lose our significant technology advantage, our market share and growth could be adversely affected. In addition, if we are unable to deliver products, features, and functionality as projected, we may be unable to meet our commitments to customers, which could have an adverse affect on our reputation and business.

Risks of New Products—When we develop new products with higher capacity and more advanced technology, the increased difficulty and complexity associated with producing these products increases the likelihood of reliability, quality or operability problems.

Despite rigorous testing prior to their release and superior quality processes, our software and hardware products may contain errors or security flaws, which may be found after the products are introduced and shipped. This risk is enhanced when products are first introduced or when new versions are released, as well as when we develop products with more advanced technology, since the increased difficulty and complexity associated with producing these products increases the likelihood of reliability, quality or operability problems. The correction and detection of errors may cause delays, lost revenues and incremental costs. Errors in our software products could also affect the ability of our products to work with other hardware or software products, could delay the development or release of new products or new versions of products, and could adversely affect market acceptance of our products. While we attempt to remedy errors that we believe would be considered critical by our customers prior to shipment, we may not be able to detect or remedy all such errors.

Our customers who rely on our solutions for business-critical applications are more sensitive to product errors, which could expose us to product liability, performance and warranty claims, as well as harm our reputation. These and other risks associated with new product and service offerings may have a material adverse impact on our results of operations and future performance.

Product introductions and certain enhancements of existing products by us in the future periods may also reduce demand for our existing products or could delay purchases by customers awaiting arrival of our new products. As new or enhanced products are introduced, we must successfully manage the transition from older products.

In the ordinary course of business, we continually evaluate opportunities for new product and service offerings, new markets and new geographic sectors, and development of such opportunities could entail certain business risks which could affect our financial condition.

Security Lapses—The confidentiality of information we hold or the security of our computer systems could be jeopardized.

We operate pursuant to a business-to-business model, and therefore we normally do not handle large volumes of personally identifiable information for our customers – such as employee data, customer data, data that our customers collect from their customers, and information regulated by the Health Insurance Portability and Accountability Act of 1996. However, some of our services require us to have access to such highly

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confidential information. If unauthorized access to or use of such information occurs, despite our data security measures to protect it, our results of operation and reputation could be adversely impacted.

Reliance on Third Parties—Our future results depend in part on our relationships with key suppliers, strategic partners and other third parties.

Our development, marketing and distribution strategies depend in part on our ability to form strategic alliances with third parties that have complementary products, software, services and skills. Our strategic partners include consultants and system integrators, software and technology providers, and indirect channel distributors in certain countries. These relationships create risks beyond our control of our partners changing their business focus, entering into strategic alliance with other companies, being acquired by our competitors, failing to meet performance criteria or improperly using our confidential information. If we fail to maintain or expand our relationships with strategic partners, our business may be materially adversely affected.

Third-party vendors provide important elements to our solutions; if we do not maintain our relationships with these vendors, interruptions in the supply of our products may result. There are some components of our solutions that we purchase from single sources due to price, quality, technology or other reasons. For example, we have relied on Solectron as a key single source contract manufacturer for our hardware systems for the last several years. In addition, we depend on Accenture for transaction processing services, silicon computer chips and microprocessors from Intel Corporation, and storage disk systems from EMC Corporation and LSI Corporation. Some components supplied by third parties may be critical to our solutions, and several of our suppliers may terminate their agreements with us without cause with 180 days notice. If we were unable to purchase necessary services, parts, components or products from a particular vendor and had to find an alternative supplier, our shipments and deliveries could be delayed, and our operations could be adversely impacted.

In addition, smaller suppliers have operating risks that could impact our business. These risks could create product time delays, inventory and invoicing problems, staging delays, and other operational difficulties. We could also be impacted by their inability to provide high-quality products or services that conform to required specifications or contractual arrangements, which could negatively impact our business and operating results.

Reliance on the Intellectual Property of Third Parties—The loss of our rights to use software licensed to us by third parties could harm our business.

We have an active partner program that offers rights to sublicense third party software as part of a complete suite of solutions for our customers. This offering, as well as our reliance on third party software and licenses in our operating system software and business, creates risks that are not present when developing software in-house. For example, the viability, reliability and quality of such partners’ businesses, as well as their ability to fulfill their obligations to us, are factors that come into play and could adversely affect our financial condition. Our operations could also be impacted if we are forced to seek alternative technology, or technology for new solutions, that may not be available on commercially reasonable terms. Also, many of our offerings are complemented by technologies developed by others, and if we are unable to continue to obtain licenses for such technologies, our business would be impacted.

Intellectual Property—If we are unable to develop, preserve and protect our intellectual property assets, our operating results may be adversely affected.

As a technology company, our intellectual property portfolio is crucial to our continuing ability to be a leading EDW solutions provider. We strive to protect and enhance our proprietary intellectual property rights through patent, copyright, trademark and trade secret laws, as well as through technological safeguards. These efforts include protection of the products and application, diagnostic and other software we develop.

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To the extent we are not successful, our business could be materially adversely impacted. We may be unable to prevent third parties from using our technology without our authorization or independently developing technology that is similar to ours, particularly in those countries where the laws do not protect our proprietary rights as fully as in the United States. With respect to our pending patent applications, we may not be successful in securing patents for these claims, and our competitors may already have applied for patents that, once issued, will prevail over our patent rights or otherwise limit our ability to sell our products.

While we take steps to provide for confidentiality obligations of employees and third parties with whom we do business (including customers, suppliers and strategic partners), there is a risk that such parties will breach such obligations and jeopardize our intellectual property rights. Many customers have outsourced the administration and management of their data warehouses to third parties, including some of our competitors, who then have access to our confidential information. Although we have agreements in place to mitigate this risk, there can be no assurance that such protections will be sufficient. In addition, our ability to capture and re-use field-based developed intellectual property is important to future business opportunities and margins.

We are actively engaged in efforts to protect the value of our intellectual property and to prevent others from infringing our intellectual property rights. However, due to the complex and technical nature of such efforts and the potentially high stakes involved, such enforcement activity can be expensive and time consuming, and there can be no assurance that we will be successful in these efforts.

Research and Development—We make significant investments in research and development and cannot assure you that these investments will be profitable.

As part of our business strategy, we must continue to dedicate a significant amount of resources to our research and development efforts in order to maintain our competitive position. However, we do not expect to receive significant revenues from these investments for several years, if at all. Research and development expenses represent a significant portion of our fixed costs. We believe these new technologies could significantly improve our products and services over the long-term. However, if we have invested too much in these or other technologies, our results of operations could be adversely affected. In addition, as we replace our existing assets with new, higher cost assets, we expect that our depreciation expense will increase, which will contribute to our high level of fixed costs and reduce our earnings.

Intellectual Property Infringement Claims by Third Parties—Claims by others that we infringe their intellectual property rights could harm our business and financial condition.

We have seen a trend towards aggressive enforcement of intellectual property rights as the functionality of products in our industry increasingly overlaps and the volume of issued software patents continues to grow. As a result, there is a risk that we could be subject to infringement claims which, regardless of their validity, could:

Regardless of whether these claims have any merit, they can be burdensome to defend or settle and can harm our business and reputation.

Dependence on Key Employees—We depend on key employees and face competition in hiring and retaining qualified employees.

Our employees are critical to our success. Our future success depends on our ability to attract and retain the services of senior management and key personnel in all functional areas of our company, including engineering and development, marketing and sales professionals, and consultants. Competition for highly skilled personnel in

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the IT industry is intense. No assurance can be made that key personnel will remain with us, and it may be difficult and costly to replace such employees. There also can be no assurance that we will be successful in our initiative to grow our direct sales and consulting work forces. These risks are enhanced by the transitional efforts in connection with the spin-off that may adversely impact our workforce. Our failure to hire, retain and replace our key personnel could have a material adverse impact on our business operations.

Internal Controls—Inadequate internal controls and accounting practices could lead to errors, which could adversely impact our financial condition or results of operations.

We have internal controls and management oversight systems in place, however, we may not be able to prevent or detect misstatements in our reported financial statements due to system errors, the potential for human error and unauthorized actions of employees or contractors, inadequacy of controls, temporary lapses in controls due to shortfalls in transition planning and oversight or resource contracts, and other factors. In addition, due to their inherent limitations, such controls may not prevent or detect misstatements in our reported financial results as required under SEC and NYSE rules, which could increase our operating costs or impair our ability to operate our business. Controls may also become inadequate due to changes in circumstances, and it is necessary to replace, upgrade or modify our internal information systems from time to time. If we are unable to implement these changes in a timely and cost-effective manner, our ability to capture and process financial transactions and support our customers as required may be adversely impacted and could harm our operating results.

In addition, despite transition planning and management oversight, our transition from operating as a division of NCR to operating as a standalone company, as well as the outsourcing of certain transaction processing functions to Accenture, create certain risks of operational delays and difficulties.

Damage to Our Information Systems—Our information systems, computer equipment and information databases are critical to our business operations, and any damage or disruptions could adversely affect our operations.

Our operations are dependent on our ability to protect our computer equipment and the information stored in our databases from damage by, among other things, earthquake, fire, natural disaster, power loss, telecommunications failures, unauthorized intrusions and other catastrophic events. A significant part of our operations is based in an area of California that has experienced power outages and earthquakes and is considered seismically active. Despite our best efforts at planning for such contingencies, catastrophic events of this nature may still result in system failures and other interruptions in our operations, which could have a material adverse effect on our business and financial condition.

In addition, it is periodically necessary to replace, upgrade or modify our internal information systems. If we are unable to do this in a timely and cost-effective manner, especially in light of demands on our information technology resources, our ability to capture and process financial transactions and therefore our financial condition or results of operations may be adversely impacted.

Acquisitions and Alliances—Our ability to successfully integrate acquisitions and effectively manage acquisition and alliance activities may be an important element of future growth.

From time to time, we may make investments in companies, products, service capabilities and technologies through acquisitions, equity investments, joint ventures or strategic alliances. Such transactions entail various risks, including risks associated with:

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Our operating results may fluctuate as a result of acquisitions and other strategic growth transactions, and there is a risk that our financial results may be materially adversely affected.

Legal Contingencies and Regulatory Matters—Like other technology companies, we face uncertainties with regard to lawsuits, regulations and other related matters.

In the normal course of business, we are subject to proceedings, lawsuits, 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. Because such matters are subject to many uncertainties, their outcomes are not predictable. While we believe that amounts provided in our consolidated financial statements are currently adequate in light of the probable and estimable liabilities, there can be no assurances that the amounts required to satisfy alleged liabilities from such matters will not impact future operating results.

In addition, we are subject to diverse and complex laws and regulations, including those relating to corporate governance, public disclosure and reporting – which are rapidly changing and subject to many possible changes in the future. Laws and regulations impacting our customers, such as those relating to privacy and data protection, could also impact our future business.

There is an increased focus by the SEC on Foreign Corrupt Practices Act (“FCPA”) enforcement activities. Given the breadth and scope of our international operations, we may not be able to detect improper or unlawful conduct by our international partners and employees, despite our high ethics, governance and compliance standards, which could put Teradata at risk regarding possible violations of laws, including the FCPA.

Considerable management time and resources will be spent to understand and comply with changing laws, regulations and standards relating to corporate governance, public disclosure (including the Sarbanes-Oxley Act of 2002), SEC regulations, Basel II and the rules of the NYSE where our shares are expected to be listed. Although we do not believe that recent regulatory and legal initiatives will result in significant changes to our internal practices or our operations, rapid changes in accounting standards, taxation requirements, and federal securities laws and regulations, among others, may substantially increase costs to our organization and could have an impact on our future operating results.

Environmental Liabilities—Our business operations and our predecessor’s historical and ongoing manufacturing activities may subject us to environmental exposures, which could adversely impact our operations and financial results.

Our facilities and operations, and certain former operations for which we assumed liabilities, are subject to a wide range of environmental protection laws. For example, as a result of the Restriction of Hazardous Substances Directive (RoHS) and Directive 2002/96/EC on Waste Electrical and Electronic Equipment, our product distribution, logistics and waste management costs may increase and may adversely impact our financial condition. We expect from time to time to incur costs in connection with compliance with these matters. Given the uncertainties inherent in such activities, there can be no assurances that the costs required to comply with applicable environmental laws will not adversely impact future operating results.

NCR has been identified as a potentially responsible party in connection with certain environmental matters, including the Fox River matter, as further described in NCR’s Annual Report on Form 10-K for the year ended December 31, 2006, at “Environmental Matters” under Note 11 of Notes to Consolidated Financial Statements, “Commitments and Contingencies,” and in the “Critical Accounting Policies and Estimates” section of NCR’s “Management Discussion and Analysis,” and we incorporate such disclosures by reference and make them a part

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of this risk factor. As described in more detail in such disclosures, NCR maintains an accrual for potential liability relating to the Fox River matter that represents certain critical estimates and judgments made by NCR regarding potential liability; however, both the ultimate costs associated with the Fox River matter and NCR’s share of those costs are subject to a wide range of potential outcomes. We believe that Teradata should not be contingently liable for the Fox River matter under applicable law, whether as a successor or otherwise. However, in the event that a party were to assert that we are liable, NCR is obligated under the Separation and Distribution Agreement to indemnify Teradata with respect thereto. See the section entitled “Certain Relationships and Related Party Transactions—Agreements with NCR—Separation and Distribution Agreement” included elsewhere in this information statement.

Other Factors—There are a number of other factors that could cause our operating results to fluctuate and could have a material adverse impact on our financial condition.

Our revenue and operating results could fluctuate for a number of reasons, including:

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International Operations—Generating substantial revenues from our multinational operations helps us to meet our strategic goals, but poses a number of risks.

In 2006, the percentage of our total revenues from outside of the United States was 45%. We believe that our geographic diversity may help to mitigate some risks associated with geographic concentrations of operations (e.g., adverse changes in foreign currency exchange rates and deteriorating economic environments or business disruptions due to economic or political uncertainties). However, our ability to sell our solutions domestically and internationally is subject to the following risks, among others:

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Our products are subject to U.S. export controls and, when exported from the United States, or re-exported to another country, must be authorized under applicable U.S. export regulations. Changes in our products or changes in export regulations may create delays in the introduction of our products in international markets, prevent our customers with international operations from deploying our products throughout their global systems or, in some cases, prevent the export of our products to certain countries or customers altogether. Any change in export regulations or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons or technologies targeted by these regulations could result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations.

Open Source Software—The growing market acceptance of open source software presents benefits and challenges for our industry.

We have developed a version of the Teradata database software to operate on the LINUX open source platform and have incorporated other types of open source software into our products, allowing us to enhance certain solutions without incurring substantial additional research and development costs and expand our solution offerings. “Open source” software is made widely available by its authors and is licensed for a nominal fee or, in some cases, at no charge. For example, LINUX is a free UNIX-type operating system, and the source code for LINUX is freely available. While we believe our contractual obligations are limited with respect to such software, no assurances can be give that unanticipated problems arising from our use of open source software will not arise in the future.

Open source licenses typically mandate that proprietary software, when combined in specific ways with open source software, become subject to the open source license. We take steps to ensure that our proprietary software is not combined with, or does not incorporate, open source software in ways that would require our proprietary software to be subject to an open source license. However, few courts have interpreted the open source licenses, and the manner in which these licenses may be interpreted and enforced is therefore subject to uncertainty.

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Risks Relating to the Separation

We may be unable to achieve some or all of the benefits that we expect to achieve from our separation from NCR.

As a stand-alone, independent public company, we believe that our business will benefit from, among other things, allowing our management to design and implement corporate policies and strategies that are based primarily on the characteristics of our business, allowing us to focus our financial resources wholly on our own operations and implement and maintain a capital structure designed to meet our own specific needs. However, by separating from NCR there is a risk that our company may be more susceptible to market fluctuations and other adverse events than we would have been were we still a part of the current NCR. As part of NCR we were able to enjoy certain benefits from NCR’s operating diversity, purchasing and borrowing leverage, and available capital for investments. We may not be able to achieve some or all of the benefits that we expect to achieve as a stand-alone, independent company.

We have no operating history as a separate public company, and our historical and pro forma financial information is not necessarily representative of the results we would have achieved as a separate, publicly traded company and may not be a reliable indicator of our future results.

The historical and pro forma financial information included in this information statement does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as a separate publicly traded company during the periods presented or those that we will achieve in the future, primarily as a result of the following factors:

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We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent company, and we may experience increased costs after the separation or as a result of the separation.

Following the completion of our separation, NCR will be contractually obligated to provide to us only those transition services specified in the Interim Services and Systems Replication Agreement and the other agreements we enter into with NCR in preparation for the separation. The expiration date of the Interim Services and Systems Replication Agreement varies by service provided and is generally 18 months from the date of our separation, subject to extension in some cases for up to six additional months. We may be unable to replace in a timely manner or on comparable terms the services or other benefits that NCR previously provided to us that are not specified in the Interim Services and Systems Replication Agreement or the other agreements. Also, upon the expiration of the Interim Services and Systems Replication Agreement or other agreements, many of the services that are covered in such agreements will be provided internally or by unaffiliated third parties, and we expect that, in some instances, we will incur higher costs to obtain such services than we incurred under the terms of such agreements. In addition, if NCR does not perform effectively the transition services and the other services that are called for under the Interim Services and Systems Replication Agreement and other agreements, we may not be able to operate our business effectively and our profitability may decline. Furthermore, after the expiration of the Interim Services and Systems Replication Agreement and the other agreements, we may be unable to replace in a timely manner or on comparable terms the services specified in such agreements.

Similarly, we currently purchase a wide variety of products and services, including software licenses, from third parties jointly with NCR. We expect to experience some increased costs after the separation as a result of our inability to continue to purchase products and services on terms that are as favorable to us as those obtained under these joint purchasing arrangements. Although we cannot predict the extent of any such increased costs, it is possible that it could have a material adverse impact on our business and results of operations.

We may have been able to receive better terms from unaffiliated third parties than the terms provided in our agreements with NCR.

The agreements related to our separation from NCR, including the Separation and Distribution Agreement, Tax Sharing Agreement, Interim Services and Systems Replication Agreement and other agreements, were negotiated in the context of our separation from NCR while we were still part of NCR and, accordingly, may not reflect terms that would have been reached between unaffiliated parties. The terms of the agreements we negotiated in the context of our separation related to, among other things, allocation of assets, liabilities, rights, indemnifications and other obligations between NCR and us. Had these agreements been negotiated with unaffiliated third parties, they might have been more favorable to us. For more information, see the section entitled “Certain Relationships and Related Party Transactions” included elsewhere in this information statement.

If the distribution, together with certain related transactions, were to fail to qualify as a reorganization for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code, then our stockholders, we and/or NCR might be subject to significant tax liability.

NCR has applied for a private letter ruling from the IRS substantially to the effect that the distribution, together with certain related transactions, will qualify for tax-free treatment under Sections 355 and 368(a)(1)(D) of the Code. In addition, NCR intends to obtain an opinion from Wachtell, Lipton, Rosen & Katz substantially to the effect that the distribution, together with certain related transactions, will so qualify. Although NCR’s Board of Directors may waive the conditions of receiving both the ruling and the opinion, NCR has advised us that it does not intend to complete the distribution if it has not obtained the IRS private letter ruling and an opinion from Wachtell, Lipton, Rosen & Katz substantially to the effect that the distribution, together with certain related transactions, will qualify for tax-free treatment under Sections 355 and 368(a)(1)(D) of the Code. The IRS private letter ruling and the opinion will rely on certain representations, assumptions and undertakings, including those relating to the past and future conduct of our business, and neither the IRS private letter ruling nor the opinion would be valid if such representations, assumptions and undertakings were incorrect. Moreover, the IRS

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private letter ruling does not address all the issues that are relevant to determining whether the distribution will qualify for tax-free treatment. Notwithstanding the IRS private letter ruling and opinion, the IRS could determine that the distribution should be treated as a taxable transaction if it determines that any of the representations, assumptions or undertakings that were included in the request for the private letter ruling is false or has been violated or if it disagrees with the conclusions in the tax opinion that are not covered by the IRS ruling. For more information regarding the tax opinion and the private letter ruling, see the section entitled “The Separation—Certain U.S. Federal Income Tax Consequences of the Distribution” included elsewhere in this information statement.

If the distribution fails to qualify for tax-free treatment, NCR would be subject to tax as if it had sold the common stock of our company in a taxable sale for its fair market value, and our initial public stockholders would be subject to tax as if they had received a taxable distribution equal to the fair market value of our common stock that was distributed to them. Under the Tax Sharing Agreement between NCR and us, we would generally be required to indemnify NCR against any tax resulting from the distribution to the extent that such tax resulted from (i) an acquisition of all or a portion of our stock or assets, whether by merger or otherwise, (ii) other actions or failures to act by us or (iii) any of our representations or undertakings being incorrect or violated. For a more detailed discussion, see the section entitled “Certain Relationships and Related Party Transactions—Agreements with NCR—Tax Sharing Agreement” included elsewhere in this information statement. Our indemnification obligations to NCR and its subsidiaries, officers and directors are not limited by any maximum amount. If we are required to indemnify NCR or such other persons under the circumstances set forth in the Tax Sharing Agreement, we may be subject to substantial liabilities.

Teradata and NCR might not be able to engage in desirable strategic transactions and equity issuances following the distribution.

To preserve the tax-free treatment to NCR of the distribution, under the Tax Sharing Agreement that we will enter into with NCR, for the two year period following the distribution, we may be prohibited, except in specified circumstances, from:

These restrictions may limit our ability to pursue strategic transactions or engage in new business or other transactions that may maximize the value of our business. For more information, see the sections entitled “The Separation—Certain U.S. Federal Income Tax Consequences of the Distribution” and “Certain Relationships and Related Party Transactions—Agreements with NCR—Tax Sharing Agreement” included elsewhere in this information statement.

As a general matter, we are a holding company with no substantial independent operations, and therefore we rely on dividends, interest and other payments, advances and transfers of funds from our subsidiaries to meet our debt service and other obligations.

Following the spin-off, we will be a holding company and will conduct substantially all of our operations through our subsidiaries. As a result, we will rely on dividends, loans and other payments or distributions from our subsidiaries to meet our debt service obligations and enable us to pay interest and dividends, if any. The ability of our subsidiaries to pay dividends and make other payments or distributions to us will depend

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substantially on their respective operating results and will be subject to restrictions under, among other things, the laws of their jurisdiction of organization (which may limit the amount of funds available for the payment of dividends), agreements of those subsidiaries, the terms of our financing arrangements and the terms of any future financing arrangements of our subsidiaries.

Several contracts will need to be assigned from NCR or its affiliates to us in connection with our separation from NCR, and many of these contracts require the consent of the counterparty to such an assignment.

The Separation and Distribution Agreement will provide that in connection with our separation from NCR, several contracts with customers, suppliers, landlords and other third parties are to be assigned from NCR or its affiliates to Teradata or Teradata’s affiliates. However, many of these contracts require the contractual counterparty’s consent to such an assignment. Similarly, in some circumstances, we and another business unit of NCR are jointly parties to a customer contract, and we will need to enter into a new agreement with the customer to assign the portion of the contract related to our business. It is possible that some customers may use the requirement of a consent to seek more favorable terms from us. If we are unable to obtain these consents, we may be unable to obtain the benefits, assets, and contractual commitments which are intended to be allocated to us as part of our separation from NCR. If we are unable to obtain consents with respect to a substantial portion of these contracts, the loss of these contracts could adversely impact our financial condition and future results of operations.

In connection with our separation from NCR, NCR will indemnify us for certain liabilities. However, there can be no assurance that the indemnity will be sufficient to insure us against the full amount of such liabilities, or that NCR’s ability to satisfy its indemnification obligations is not impaired in the future.

Pursuant to the Separation and Distribution Agreement, NCR will agree to indemnify us from certain liabilities, as discussed further in the section entitled “Separation and Distribution Agreement—Indemnification” included elsewhere in this information statement. This indemnity includes the Fox River environmental matter described in the section entitled “Risks Relating to Our Business—Environmental Liabilities” included elsewhere in this information statement. However, third parties could seek to hold us responsible for any of the liabilities that NCR has agreed to retain, and there can be no assurance that the indemnity from NCR will be sufficient to protect us against the full amount of such liabilities, or that NCR will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from NCR any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves. Each of these risks could adversely affect our business, results of operations and financial condition.

Potential liabilities may arise due to fraudulent transfer considerations, which would adversely affect our financial condition and our results of operations.

In connection with the spin-off, NCR intends to undertake several corporate restructuring transactions which, along with the spin-off, may be subject to federal and state fraudulent conveyance and transfer laws. If, under these laws, a court were to determine that, at the time of the spin-off, any entity involved in these restructuring transactions or the spin-off:

the court could void the spin-off, in whole or in part, as a fraudulent conveyance or transfer. The court could then require our stockholders to return to NCR some or all of the shares of our common stock issued pursuant to the spin-off, or require NCR or us, as the case may be, to fund liabilities of the other company for the benefit of

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creditors. The measure of insolvency will vary depending upon the jurisdiction whose law is being applied. Generally, however, an entity would be considered insolvent if the fair value of its assets were less than the amount of its liabilities or if it incurred debt beyond its ability to repay the debt as it matures.

After the separation, certain of our directors and officers may have actual or potential conflicts of interest because of their positions in Teradata and NCR and because of their stock or option ownership in NCR.

It is currently expected that up to two directors of Teradata will also be members of NCR’s Board of Directors, although one of these directors will have a term limited to two years and will not seek re-election after expiration of this term. These common directors could create, or appear to create, potential conflicts of interest when Teradata’s and NCR’s management and directors face decisions that could have different implications for the two companies.

Also, because of their current or former positions with NCR, most of our directors and executive officers own shares of NCR common stock, options to purchase shares of NCR common stock or other equity awards. Following the distribution, these officers and directors may own shares of NCR common stock and, in some cases, may have options to purchase shares of common stock or other equity awards in NCR. The individual holdings may be significant for some of these persons compared to these persons’ total assets. This ownership may create, or, may create the appearance of, conflicts of interest when these directors and officers are faced with decisions that could have different implications for NCR and Teradata.

For example, potential conflicts of interest could arise in connection with the resolution of any dispute that may arise between Teradata and NCR regarding the terms of the agreements governing the separation and the relationship thereafter between the companies. Potential conflicts of interest could also arise if Teradata and NCR enter into any commercial arrangements with each other in the future.

Risks Relating to Our Common Stock

There is no existing market for our common stock, and a trading market that will provide you with adequate liquidity may not develop for our common stock. In addition, once our common stock begins trading, the market price of our shares may fluctuate widely.

There is currently no public market for our common stock. It is anticipated that on or prior to the record date for the distribution, trading of shares of our common stock will begin on a “when-issued” basis and will continue up to and including through the distribution date. However, there can be no assurance that an active trading market for our common stock will develop as a result of the distribution or be sustained in the future.

We cannot predict the prices at which our common stock may trade after the distribution. The market price of our common stock may fluctuate widely, depending upon many factors, some of which may be beyond Teradata’s control, including:

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Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock.

Substantial sales of common stock may occur in connection with this distribution, which could cause our stock price to decline.

The shares of Teradata common stock that NCR distributes to its stockholders generally may be sold immediately in the public market. Although we have no actual knowledge of any plan or intention on the part of any 5% or greater stockholder to sell Teradata’s common stock following the separation, it is possible that some NCR stockholders, including possibly some of NCR’s large stockholders and index fund investors as described in the preceding risk factor, will sell NCR or Teradata common stock received in the distribution for various reasons, for example, our business profile or market capitalization as an independent company does not fit their investment objectives. The sales of significant amounts of our common stock or the perception in the market that this will occur may result in the lowering of the market price of our common stock.

Your percentage ownership in Teradata may be diluted in the future.

As with any publicly traded company, your percentage ownership in Teradata may be diluted in the future because of equity awards that we expect will be granted to our directors, officers and employees and the accelerated vesting of other equity awards. For a more detailed description of the Stock Incentive Plan and the Equitable Adjustment Awards, see the section entitled “Management—Employee Benefit Plans” included elsewhere in this information statement.

Provisions in our certificate of incorporation and by-laws, and provisions of Delaware law, may prevent or delay an acquisition of our company, which could decrease the trading price of our common stock.

Our certificate of incorporation, by-laws and Delaware law contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the raider and to encourage prospective acquirers to negotiate with our Board of Directors rather than to attempt a hostile takeover. These provisions include, among others:

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Delaware law also imposes some restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock. For more information, see the section entitled “Description of Capital Stock—Anti-Takeover Effects of Our Certificate of Incorporation, By-laws and Delaware Law” included elsewhere in this information statement. We believe these provisions protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with our Board and by providing our Board with more time to assess any acquisition proposal. These provisions are not intended to make our company immune from takeovers. However, these provisions apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our Board determines is not in the best interests of our company and our stockholders.

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FORWARD-LOOKING STATEMENTS

Forward-looking statements in our public filings or other public statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other public statements. These forward-looking statements were based on various facts and were derived utilizing numerous important assumptions and other important factors, and changes in such facts, assumptions or factors could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements include the information concerning our future financial performance, business strategy, projected plans and objectives. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate,” and similar expression or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward looking in nature and not historical facts. You should understand that the factors described under “Risk Factors” and the following important factors could affect our future results and could cause actual results to differ materially from those expressed in such forward-looking statements:

Other factors not identified above, including the risk factors described in the section entitled “Risk Factors” included elsewhere in this information statement, may also cause actual results to differ materially from those projected by our forward-looking statements. Most of these factors are difficult to anticipate and are generally beyond our reasonable control.

You should consider the areas of risk described above, as well as those set forth in the section entitled “Risk Factors” included elsewhere in this information statement, in connection with considering any forward-looking statements that may be made by us and our businesses generally. We undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

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THE SEPARATION

General

On January 5, 2007, the Board of Directors of NCR preliminarily approved a plan to separate NCR into two independent, publicly traded companies. As preliminarily approved, the separation was to occur through the distribution to NCR stockholders of all of the shares of common stock of a subsidiary of NCR that holds or will hold, directly or indirectly, the assets and liabilities of the Teradata Data Warehousing business.

In furtherance of this plan, on [ · ], 2007, the NCR Board of Directors approved the distribution of all of the shares of our common stock held by NCR to holders of NCR common stock. On [ · ], 2007, the distribution date, each NCR stockholder will receive one share of our common stock for each share of NCR common stock held at the close of business on the record date, as described below. Following the distribution, NCR stockholders will own 100% of our common stock. You will not be required to make any payment, surrender or exchange your shares of NCR common stock or take any other action to receive your shares of Teradata’s common stock.

Furthermore, the distribution of Teradata’s common stock as described in this information statement is subject to the satisfaction or waiver of certain conditions. For a more detailed description of these conditions, see the caption entitled “—Conditions to the Distribution” included elsewhere in this section.

Reasons for the Separation

The NCR Board of Directors believes that separating the Teradata business from the NCR business is in the best interests of NCR and its stockholders and has concluded that the separation will provide each separated company, including us, with certain opportunities and benefits. The following are some of the opportunities and benefits that the NCR Board of Directors considered in approving the separation:

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The NCR Board of Directors also considered a number of potentially negative factors in evaluating the separation, including the potential loss of synergies (if any) from operating as one company and potential increased costs, potential loss of joint purchasing power, potential disruptions to the businesses as a result of the separation, the limitations placed on Teradata as a result of the Tax Sharing Agreement and other agreements it is expected to enter into with NCR in connection with the spin-off, risks of being unable to achieve the benefits expected to be achieved by the separation, the risk that the plan of separation might not be completed and the one-time and ongoing costs of the separation. The NCR Board of Directors concluded that the potential benefits of the separation outweighed these factors.

In view of the wide variety of factors considered in connection with the evaluation of the separation and the complexity of these matters, the NCR Board of Directors did not find it useful to, and did not attempt to, quantify, rank or otherwise assign relative weights to the factors considered. The individual members of the NCR Board of Directors likely may have given different weights to different factors.

Formation of a Holding Company Prior to Our Distribution

In connection with and prior to our distribution, NCR organized Teradata as a Delaware corporation for the purpose of transferring to Teradata all of the assets and liabilities, including certain entities holding such assets and liabilities, of the Teradata Data Warehousing business.

The Number of Shares You Will Receive

For each share of NCR common stock that you owned at the close of business on [ · ], 2007, the record date, you will receive one share of Teradata common stock on the distribution date. NCR will distribute fractional shares of Teradata common stock to its stockholders to the extent stockholders own fractional shares of NCR common stock.

When and How You Will Receive the Dividend

NCR will distribute the shares of our common stock on [ · ], 2007, the distribution date. NCR’s transfer agent and registrar, Mellon, will serve as transfer agent and registrar for the Teradata common stock and as distribution agent in connection with the distribution of Teradata common stock.

If you own NCR common stock as of the close of business on the record date, the shares of Teradata common stock that you are entitled to receive in the distribution will be issued electronically, as of the distribution date, to your account as follows:

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Commencing on or shortly after the distribution date, if you hold physical paper stock certificates that represent your shares of NCR common stock and you are the registered holder of the NCR shares represented by those certificates, the distribution agent will mail to you an account statement that indicates the number of shares of Teradata’s common stock that have been registered in book-entry form in your name.

If you have any questions concerning the mechanics of having shares of our common stock registered in book-entry form, we encourage you to contact Mellon at the address set forth on page 8 of this information statement.

Results of the Separation

After our separation from NCR, we will be a separate publicly traded company. Immediately following the distribution, we expect to have approximately [ · ] stockholders of record, based on the number of registered stockholders of NCR common stock on [ · ], and approximately [ · ] million shares of Teradata common stock outstanding. The actual number of shares to be distributed will be determined on the record date and will reflect any exercise of NCR options between the date the NCR Board of Directors declares the dividend for the distribution and the record date for the distribution.

Before the separation, we will enter into a Separation and Distribution Agreement and several other agreements with NCR to effect the separation and provide a framework for our relationships with NCR after the separation. These agreements will govern the relationships between Teradata and NCR subsequent to the completion of the separation plan and provide for the allocation between Teradata and NCR of NCR’s assets, liabilities and obligations (including transition services, employee benefits, intellectual property and tax-related assets and liabilities) attributable to periods prior to Teradata’s separation from NCR. The Separation and Distribution Agreement, in particular, requires NCR to allocate a specified portion of its cash to us.

For a more detailed description of these agreements, see the section entitled “Certain Relationships and Related Party Transactions” included elsewhere in this information statement.

The distribution will not affect the number of outstanding shares of NCR common stock or any rights of NCR stockholders.

Incurrence of Debt

We expect to enter into a customary revolving credit facility with available borrowing capacity of approximately $300 million, although we have not yet obtained any financing commitment for that facility.

Certain U.S. Federal Income Tax Consequences of the Distribution

The following is a summary of certain material U.S. federal income tax consequences relating to the distribution by NCR. This summary is based on the Code, the U.S. Treasury regulations promulgated thereunder, and interpretations of the Code and the U.S. Treasury regulations by the courts and the IRS, in effect as of the

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date hereof, and all of which are subject to change, possibly with retroactive effect. This summary does not discuss all the tax considerations that may be relevant to NCR stockholders in light of their particular circumstances, nor does it address the consequences to NCR stockholders subject to special treatment under the U.S. federal income tax laws (such as non-U.S. persons, insurance companies, dealers or brokers in securities or currencies, tax-exempt organizations, financial institutions, mutual funds, pass-through entities and investors in such entities, holders who hold their shares as a hedge or as part of a hedging, straddle, conversion, synthetic security, integrated investment or other risk-reduction transaction or who are subject to alternative minimum tax or holders who acquired their shares upon the exercise of employee stock options or otherwise as compensation). In addition, this summary does not address the U.S. federal income tax consequences to those NCR stockholders who do not hold their NCR common stock as a capital asset. Finally, this summary does not address any state, local or foreign tax consequences. NCR STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF THE DISTRIBUTION TO THEM.

The distribution is conditioned upon NCR’s receipt of a private letter ruling from the IRS and an opinion of Wachtell, Lipton, Rosen & Katz, in each case, substantially to the effect that the distribution, together with certain related transactions, will qualify as a reorganization for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. NCR has applied for a private letter ruling from the IRS that the distribution will so qualify. Assuming the distribution so qualifies: (i) the distribution will not generally result in any taxable income, gain or loss to NCR; (ii) no gain or loss will be recognized by (and no amount will be included in the income of) NCR common stockholders upon their receipt of shares of Teradata common stock in the distribution; (iii) the aggregate basis of the NCR common stock and the Teradata common stock in the hands of each NCR common stockholder after the distribution will equal the aggregate basis of NCR common stock held by the stockholder immediately before the distribution, allocated between the NCR common stock and the Teradata common stock in proportion to the relative fair market value of each on the date of the distribution; and (iv) the holding period of the Teradata common stock received by each NCR common stockholder will include the holding period at the time of the distribution for the NCR common stock on which the distribution is made, provided that the NCR common stock is held as a capital asset on the date of the distribution.

United States Treasury Regulations also generally provide that if an NCR common stockholder holds different blocks of NCR common stock (generally shares of NCR common stock purchased or acquired on different dates or at different prices), the aggregate basis for each block of NCR common stock purchased or acquired on the same date and at the same price will be allocated, to the greatest extent possible, between the shares of Teradata common stock received in the spin-off in respect of such block of NCR common stock and such block of NCR common stock, in proportion to their respective fair market values, and the holding period of the shares of Teradata common stock received in the spin-off in respect of such block of NCR common stock will include the holding period of such block of NCR common stock, provided that such block of NCR common stock was held as a capital asset on the distribution date. If an NCR common stockholder is not able to identify which particular shares of Teradata common stock are received in the spin-off with respect to a particular block of NCR common stock, for purposes of applying the rules described above, the stockholder may designate which shares of Teradata common stock are received in the spin-off in respect of a particular block of NCR common stock, provided that such designation is consistent with the terms of the spin-off. Holders of NCR common stock are urged to consult their own tax advisors regarding the application of these rules to their particular circumstances.

Although a private letter ruling from the IRS generally is binding on the IRS, if the factual representations or assumptions made in the letter ruling request are untrue or incomplete in any material respect, we will not be able to rely on the ruling. Furthermore, the IRS will not rule on whether a distribution satisfies certain requirements necessary to obtain tax-free treatment under Section 355 of the Code. Rather, the ruling is based upon representations by NCR that these conditions have been satisfied, and any inaccuracy in such representations could invalidate the ruling. In addition to obtaining the ruling from the IRS, NCR has made it a condition to the distribution that NCR obtain an opinion of Wachtell, Lipton, Rosen & Katz substantially to the effect that the distribution, together with certain related transactions, will qualify as a reorganization for U.S.

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federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. The opinion will rely on the ruling as to matters covered by the ruling. In addition, the opinion will be based on, among other things, certain assumptions and representations made by NCR and us, which if incorrect or inaccurate in any material respect would jeopardize the conclusions reached by counsel in its opinion. The opinion will not be binding on the IRS or the courts.

Notwithstanding receipt by NCR of the ruling and opinion of counsel, the IRS could assert that the distribution does not qualify for tax-free treatment for U.S. federal income tax purposes. If the IRS were successful in taking this position, our initial public stockholders and NCR could be subject to significant U.S. federal income tax liability. In general, NCR would be subject to tax as if it had sold the common stock of our company in a taxable sale for its fair market value and our initial public stockholders would be subject to tax as if they had received a taxable distribution equal to the fair market value of our common stock that was distributed to them. In addition, even if the distribution were otherwise to qualify under Section 355 of the Code, it may be taxable to NCR (but not to NCR’s stockholders) under Section 355(e) of the Code, if the distribution were later deemed to be part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, stock representing a 50% or greater interest in NCR or us. For this purpose, any acquisitions of NCR stock or of our common stock within the period beginning two years before the distribution and ending two years after the distribution are presumed to be part of such a plan, although we or NCR may be able to rebut that presumption.

In connection with the distribution, we and NCR will enter into a Tax Sharing Agreement pursuant to which we will agree to be responsible for certain liabilities and obligations following the distribution. In general, under the terms of the Tax Sharing Agreement, in the event the distribution were to fail to qualify for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code (including as a result of Section 355(e) of the Code) and if such failure was the result of actions taken after the distribution by NCR or us, the party responsible for such failure would be responsible for all taxes imposed on NCR to the extent that such taxes result from such actions. However, if such failure was the result of any acquisition of our shares, we would be responsible for all taxes imposed on NCR as a result of such acquisition. For a more detailed discussion, see the section entitled “Certain Relationships and Related Party Transactions—Agreements with NCR—Tax Sharing Agreement” included elsewhere in this information statement. Our indemnification obligations to NCR and its subsidiaries, officers and directors are not limited in amount or subject to any cap. If we are required to indemnify NCR and its subsidiaries and their respective officers and directors under the circumstances set forth in the Tax Sharing Agreement, we may be subject to substantial liabilities.

NCR may incur some tax cost in connection with the distribution (as a result of certain intercompany transactions or as a result of certain differences between federal, on the one hand, and foreign or state tax rules, on the other), whether or not the distribution qualifies for tax-free treatment under Sections 355 and 368(a)(1)(D) of the Code.

U.S. Treasury regulations require each stockholder that receives stock in a spin-off to attach to the stockholder’s U.S. federal income tax return for the year in which the spin-off occurs a detailed statement setting forth certain information relating to the tax-free nature of the spin-off.

THE FOREGOING IS A SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION UNDER CURRENT LAW AND IS FOR GENERAL INFORMATION ONLY. THE FOREGOING DOES NOT PURPORT TO ADDRESS ALL U.S. FEDERAL INCOME TAX CONSEQUENCES OR TAX CONSEQUENCES THAT MAY ARISE UNDER THE TAX LAWS OF OTHER JURISDICTIONS OR THAT MAY APPLY TO PARTICULAR CATEGORIES OF STOCKHOLDERS. EACH NCR STOCKHOLDER SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE DISTRIBUTION TO SUCH STOCKHOLDER, INCLUDING THE APPLICATION OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS, AND THE EFFECT OF POSSIBLE CHANGES IN TAX LAWS THAT MAY AFFECT THE TAX CONSEQUENCES DESCRIBED ABOVE.

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Market for Common Stock

There is currently no public market for Teradata common stock. A condition to the distribution is the listing on the NYSE of our common stock. We intend to apply to list Teradata common stock on the NYSE under the symbol “TDC.”

Trading Between the Record Date and Distribution Date

Beginning on or shortly before the record date and continuing up to and including through the distribution date, we expect that there will be two markets in NCR common stock: a “regular-way” market and an “ex-distribution” market. Shares of NCR common stock that trade on the regular way market will trade with an entitlement to shares of Teradata common stock distributed pursuant to the distribution. Shares that trade on the ex-distribution market will trade without an entitlement to shares of Teradata common stock distributed pursuant to the distribution. Therefore, if you sell shares of NCR common stock in the “regular-way” market up to and including through the distribution date, you will be selling your right to receive shares of Teradata common stock in the distribution. If you own shares of NCR common stock at the close of business on the record date and sell those shares on the “ex-distribution” market, up to and including through the distribution date, you will still receive the shares of Teradata common stock that you would be entitled to receive pursuant to your ownership of the shares of NCR common stock.

Furthermore, beginning on or shortly before the record date and continuing up to and including through the distribution date, we expect that there will be a “when-issued” market in our common stock. “When-issued” trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. The “when-issued” trading market will be a market for shares of Teradata common stock that will be distributed to NCR stockholders on the distribution date. If you owned shares of NCR common stock at the close of business on the record date, you would be entitled to shares of our common stock distributed pursuant to the distribution. You may trade this entitlement to shares of Teradata common stock, without the shares of NCR common stock you own, on the “when-issued” market. On the first trading day following the distribution date, “when-issued” trading with respect to Teradata common stock will end and “regular-way” trading will begin.

Conditions to the Distribution

We expect that the distribution will be effective on [ · ], 2007, the distribution date, provided that, among other conditions described in this information statement, the following conditions shall have been satisfied or, if permissible under the Separation and Distribution Agreement, waived by NCR:

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The fulfillment of the foregoing conditions does not create any obligations on NCR’s part to effect the distribution, and the NCR Board of Directors has reserved the right, in its sole discretion, to abandon, modify or change the terms of the distribution, including by accelerating or delaying the timing of the consummation of all or part of the distribution, at any time prior to the distribution date.

Separation Costs

In connection with the consummation of the separation plan, NCR expects to incur one-time, non-recurring pre-tax separation costs of approximately $50 to $65 million, which costs may ultimately be higher than currently expected. These one-time costs are expected to consist of, among other things: financial, legal, tax, accounting and other advisory fees; non-income tax costs and regulatory fees incurred as part of the reorganization and separation; costs for building and/or reconfiguring the required information systems to run the stand-alone companies and restacking of building facilities as required; other various costs for branding the new company, NYSE listing fees, investor and other stakeholder communications, printing costs, fees of the distribution agent; and employee recruiting fees and incentive compensation, among other things. Nearly all of these costs will be incurred by NCR prior to the spin-off. After the spin-off, to the extent additional one-time costs are incurred by Teradata in connection with the strategic separation, they will be the responsibility of Teradata; however, such costs are not currently estimable. In addition, we expect certain incremental costs to be incurred on a going-forward basis in connection with operating an independent publicly traded company as discussed elsewhere in this information statement in the section entitled “Unaudited Pro Forma Balance Sheet” included elsewhere in this information statement.

Reason for Furnishing this Information Statement

This information statement is being furnished solely to provide information to NCR stockholders who are entitled to receive shares of our common stock in the distribution. The information statement is not, and is not to be construed as an inducement or encouragement to buy, hold or sell any of our securities. We believe that the information in this information statement is accurate as of the date set forth on the cover. Changes may occur after that date and neither NCR nor we undertake any obligation to update such information except in the normal course of our respective public disclosure obligations.

DIVIDEND POLICY

Teradata does not expect to pay a regular cash dividend.

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CAPITALIZATION

The following table, which should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Unaudited Pro Forma Balance Sheet” and the financial statements and accompanying notes included elsewhere in this information statement, sets forth our cash and cash equivalents and combined capitalization as of December 31, 2006 on an historical basis and on a pro forma basis after giving effect to the following planned transactions to be effected prior to the distribution of Teradata Corporation common stock to NCR’s stockholders:

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UNAUDITED PRO FORMA BALANCE SHEET

The unaudited pro forma balance sheet information presented below has been prepared from the historical audited balance sheet of the Teradata Data Warehousing business of NCR (“Teradata”) as of December 31, 2006. The pro forma adjustments and notes to the pro forma financial information give effect to the legal formation and capitalization of Teradata Corporation and the contribution of the assets and liabilities of Teradata by NCR as described below. The unaudited pro forma balance sheet should be read together with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Teradata’s financial statements and notes related to those financial statements included elsewhere in the information statement.

The unaudited pro forma balance sheet as of December 31, 2006 has been prepared as if the transactions described below occurred on December 31, 2006. The pro forma adjustments are based on the best information available and assumptions that management believes are reasonable given the information available; however, such adjustments are subject to change based upon the finalization of the terms of the separation and the underlying separation agreements. The historical financial statements of Teradata include allocations of expenses from NCR. These costs may not be representative of our future costs to be incurred as a separate public company. At this time management cannot make any estimates of the costs the Company would expect to incur as a separate public company that are reasonably estimable and factually supportable. As a result, a pro forma income statement has not been presented. It is not anticipated that the transactions described below that give rise to pro forma balance sheet adjustments would have a recurring or factually supportable impact on a pro forma income statement. The unaudited pro forma balance sheet is for illustrative and information purposes only and is not intended to represent, or be indicative of, what Teradata’s financial position would have been had the transactions contemplated by the separation and distribution and related transactions occurred on the dates indicated. The unaudited pro forma balance sheet also should not be considered representative of Teradata’s financial position and the financial information presented below should not be relied on as a representation of Teradata’s future performance .

The following unaudited pro forma balance sheet has been adjusted to give effect to the following transactions:

A significant amount of non-recurring charges to effect the strategic separation will be incurred by NCR, such as financial, legal, tax, accounting and other advisory fees, non-income taxes and regulatory fees, and facility and NCR information technology system reconfiguration costs. Teradata may also incur costs in connection with the strategic separation that are expected to have a future benefit, such as, among other things, recruiting and relocation expenses associated with hiring key senior management positions. The total non-recurring separation charges to be incurred by Teradata is not estimable at this time.

There are expected to be certain incremental cost increases and decreases that Teradata will experience as a stand-alone public entity. For example, NCR currently provides many corporate functions on Teradata’s behalf.

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As an independent, publicly traded company, Teradata’s total costs related to functions such as treasury, tax, accounting, legal, internal audit, human resources, public and investor relations, general management, real estate, shared information technology systems, procurement and other statutory functions, including a board of directors and centrally managed employee benefit arrangements, are expected to differ from the costs for such functions that were historically allocated to Teradata from NCR. The annual costs associated with replacing and/or establishing these functions have not been reflected for the reasons described above and are currently estimated to be in the range of approximately $[ · ] to $[ · ] million. In addition, because the NCR U.S. defined benefit pension plan is frozen and Teradata is not expected to offer a defined pension benefit to U.S. employees after the separation, total annual pension expense is expected to decrease in the range of $10 to $12 million.

Additionally, in the audited financial statements for the year ended December 31, 2006, Teradata’s effective tax rate was 37%. This rate, which is higher than the effective tax rate for NCR as a whole, is reflective of a different mix of earnings for Teradata across various tax jurisdictions. Moreover, the rate was negatively impacted by NCR’s tax structure, which was designed to optimize its overall tax rate and not that of Teradata as part of its multiple businesses. Going forward, as a result of yet to be implemented tax strategies and changes in the legal entity structure we envision implementing as an independent company, Teradata’s recurring effective tax rate is expected to be significantly lower, although these changes have not been finalized or implemented and, as such, the lower costs are not estimable at this point.

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See accompanying notes.

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NOTES TO UNAUDITED PRO FORMA BALANCE SHEET

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”)

SEPARATION FROM NCR CORPORATION

On January 5, 2007, NCR’s Board of Directors preliminarily approved the separation of NCR into two independent publicly traded companies through the spin-off of 100% of its Teradata Data Warehousing business to holders of shares of NCR stock. NCR intends to accomplish the separation in the third quarter of 2007 through a distribution of shares of Teradata Corporation to NCR stockholders that is tax-free for U.S. federal income tax purposes. Following the distribution, NCR’s stockholders will own 100% of the equity in both companies. The separation will not require a vote by NCR stockholders. The Teradata business discussed herein represents the historical operating results and financial condition of Teradata. Any references to “we,” “us,” “Teradata” or the “Company” in this MD&A refer to the Teradata Data Warehousing business as operated as a part of NCR prior to the spin-off.

Historically, Teradata has used the corporate functions of NCR for a variety of services including treasury, accounting, tax, legal, internal audit, human resources, public and investor relations, general management, real estate, shared information technology systems, procurement and other statutory functions such as board of directors and centrally managed employee benefit arrangements, which include the costs of salaries, benefits and other related costs. Teradata was allocated $122 million in 2006, $139 million in 2005 and $163 million in 2004 of these costs incurred by NCR. Management believes the assumptions and methodologies underlying the allocation of these expenses from NCR are reasonable. However, such expenses may not be indicative of the actual level of expense that would have been or will be incurred by the Company if it were to operate as an independent, publicly traded company. We expect to enter into agreements with NCR for continuation of some of these services, but the terms and prices on which such services are rendered may be different than the terms and prices in effect prior to the distribution. We will also incur additional costs associated with being an independent, publicly traded company. These anticipated incremental costs, which are described in more detail in this information statement in the section entitled “Unaudited Pro Forma Balance Sheet,” are not reflected in our historical financial statements.

BUSINESS OVERVIEW

Teradata provides enterprise data warehousing solutions for customers worldwide that combine hardware, software, including the Teradata database software and tools, data mining and analytical applications, and related consulting and support services. These solutions can also include third-party products and services from other leading technology and service partners.

Our solutions enable customers to integrate detailed enterprise-wide data such as customer, financial and operational data into a single data warehouse and provide the analytical capabilities to transform that data into useful information. As a result, customers have a consistent, accurate view of their data and businesses which gives them more accurate, insightful and timely information when and where they need it so they can make better and faster decisions. This approach provides customers with better insight, faster access to new analytics and less redundancy within their information technology infrastructure so they can maximize business value while minimizing their total cost of ownership.

Our data warehousing technologies provide a high level of performance, scalability, availability, and manageability for strategic and operational analytic requirements. Our professional service consultants combine a proven methodology, deep industry expertise and years of hands-on experience to help clients quickly capture business value while minimizing risk. Our customer services professionals provide a single source of support services to allow customers to maximize use and fully leverage the value of their investments in data warehousing.

Through active enterprise intelligence, Teradata is extending the use of traditional data warehousing by integrating advanced analytics into enterprise business processes, allowing companies to combine current and

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historical data so operations personnel can make decisions at the point of contact or service and take action as events occur.

Teradata offers data warehousing solutions to many major industries, including banking/financial services, entertainment (including gaming and media), government, insurance and healthcare, manufacturing, retail, telecommunications, transportation and travel. Teradata delivers its solutions primarily through direct sales channels, as well as alliances with system integrators, other independent software vendors, value-added resellers and distributors. We deliver our solutions to customers on a global basis, and organize our operations in the following three regions which are also our reportable segments: North America and Latin America (the “Americas”), Europe, the Middle East and Africa (“EMEA”) and Asia Pacific and Japan (“APJ”).

2006 FINANCIAL OVERVIEW

As more fully discussed in later sections of this MD&A, the following were significant themes and events for 2006:

STRATEGY OVERVIEW

Our strategy is to grow profitably as the global leader of enterprise data warehousing technology and services. We are executing our multi-year strategy to advance enterprise data warehousing as the preferred data warehousing architecture companies utilize to build their enterprise analytics infrastructure. To do this, we are focused on three core strategies:

Further discussion of our business strategy is included in the section entitled “Business” included elsewhere in this information statement and incorporated herein by reference.

FUTURE TRENDS

We expect that businesses around the globe will continue to move away from decentralized data warehouse infrastructures toward enterprise-wide data warehousing systems such as those provided by Teradata. We believe demand for our solutions will also increase due to the growing use of new data elements and more real-time analytics, thus adding to the scale and complexity of business requirements and to data volumes over time. For example, new technologies such as global positioning systems (“GPS”) and radio frequency identification (“RFID”) are expected to drive additional customer data volumes, as are new data dimensions such as text, location, and time. The adoption by customers of more real-time environments for enterprise intelligence is driving more applications, usage and capacity.

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While we have seen fluctuations in the information technology environment in the past, our outlook remains positive, as we expect to see continued revenue growth in 2007 versus 2006. As discussed above, there are expected to be certain incremental cost increases and decreases that Teradata will experience as a stand-alone public entity.

We see the following as the most significant risks to the execution of our initiatives:

Further discussion of these risk factors is included in the section entitled “Risk Factors” included elsewhere in this information statement and incorporated herein by reference.

RESULTS FROM OPERATIONS