Teradata Corp 10-K for FY2020

Teradata Corp (TDC)

10-K 2021-02-26 For: 2020-12-31

Added on April 10, 2026

About this 10-K

Teradata Corp filed this 10-K on February 26, 2021, covering the fiscal year ended December 31, 2020 (FY2020).

Headline figures

Fiscal year ended December 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.84B; down 3.3% from $1.9B a year earlier
Net income: $129M; compared with a net loss of $20M a year earlier
Diluted EPS: $1.16; compared with -$0.18 a year earlier

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Delaware						75-3236470
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)



Item	Description	Page
	PART I

1.	Business	4
1A.	Risk Factors	13
1B.	Unresolved Staff Comments	24
2.	Properties	24
3.	Legal Proceedings	25
4.	Mine Safety Disclosures	25

	PART II

5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	26
6.	(Reserved)	27
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
7A.	Quantitative and Qualitative Disclosures About Market Risk	39
8.	Financial Statements and Supplementary Data	40
9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	78
9A.	Controls and Procedures	78
9B.	Other Information	79

	PART III

10.	Directors, Executive Officers and Corporate Governance	79
11.	Executive Compensation	79
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	80
13.	Certain Relationships and Related Transactions, and Director Independence	80
14.	Principal Accounting Fees and Services	80

	PART IV

15.	Exhibits, Financial Statement Schedules	81
16.	Form 10-K Summary	88
	Signatures	89


Name	Age	Position(s)
Stephen McMillan	50	President and Chief Executive Officer
Hillary Ashton	49	Chief Product Officer
Todd Cione	51	Chief Revenue Officer
Mark Culhane	61	Chief Financial Officer
Kathleen Cullen-Cote	56	Chief Human Resources Officer
Martyn Etherington	59	Chief Marketing Officer
Daniel Harrington	57	Chief Services Officer
Margaret Treese	54	Chief Legal Officer


	As of December 31,
Company/Index	2015		2016		2017		2018		2019		2020
Teradata Corporation	$	100	$	103	$	146	$	145	$	101	$	85
S&P 500 Index	$	100	$	112	$	136	$	130	$	171	$	203
S&P Information Technology Index	$	100	$	114	$	158	$	158	$	237	$	341


	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Dilution Offset Program (1)	Total Number of Shares Purchased as Part of Publicly Announced General Share Repurchase Program (2)	Maximum Dollar Value that May Yet Be Purchased Under the Dilution Offset Program		Maximum Dollar Value that May Yet Be Purchased Under the General Share Repurchase Program
Period
First quarter total	3,656,766	$	20.52	208,078	3,448,688	$	1,317,522	$	432,248,874
Second quarter total	—	$	—	—	—	$	4,374,148	$	432,248,874
Third quarter total	—	$	—	—	—	$	7,538,584	$	432,248,874
October 2020	—	$	—	—	—	$	8,482,039	$	432,248,874
November 2020	662,619	$	21.13	429,440	233,179	$	366,961	$	427,248,910
December 2020	486,805	$	22.59	—	486,805	$	1,368,549	$	416,253,939
Fourth quarter total	1,149,424	$	21.75	429,440	719,984	$	1,368,549	$	416,253,939
2020 Full year total	4,806,190	$	20.81	637,518	4,168,672	$	1,368,549	$	416,253,939


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Part III:			Portions of the registrant’s Notice of Annual Meeting of Stockholders and Proxy Statement, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after registrant’s fiscal year end of December 31, 2020 are incorporated herein by reference.


Item 5.			MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


Item 6.			The Company has applied the amendment to Regulation S-K Item 301, which became effective on February 10, 2021.


Item 7.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ("MD&A")


			% of				% of
In millions	2020		Revenue		2019		Revenue
Recurring	$	1,451	79.0	%	$	1,362	71.7	%
Perpetual software license and hardware	73		4.0	%	106		5.6	%
Consulting services	312		17.0	%	431		22.7	%
Total revenue	$	1,836	100	%	$	1,899	100	%


	Total				2022-		2024-		2026 and
In millions	Amounts		2021		2023		2025		Thereafter
Transition tax	$	82	$	—	$	28	$	54	$	—
Purchase obligations	255		95		160		—		—
Total transition tax and purchase obligations	$	337	$	95	$	188	$	54	$	—


Item 7A.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


	For the Years Ended December 31
	2020		2019		2018
Revenue
Subscription software licenses	$	224	$	157	$	71
Services and other	1,227		1,205		1,183
Total recurring	1,451		1,362		1,254
Perpetual software licenses and hardware	73		106		340
Consulting services	312		431		570
Total revenue	1,836		1,899		2,164
Cost of revenue
Subscription software licenses	35		34		17
Services and other	442		408		357
Total recurring	477		442		374
Perpetual software licenses and hardware	39		84		222
Consulting services	301		418		542
Total cost of revenue	817		944		1,138
Gross profit	1,019		955		1,026
Operating expenses
Selling, general and administrative expenses	669		618		666
Research and development expenses	334		327		317
Total operating expenses	1,003		945		983
Income from operations	16		10		43
Other expense, net
Interest expense	(27)		(26)		(22)
Interest income	4		12		14
Other expense	(17)		(9)		(8)
Total other expense, net	(40)		(23)		(16)
(Loss) income before income taxes	(24)		(13)		27
Income tax (benefit) expense	(153)		7		(3)
Net income (loss)	$	129	$	(20)	$	30
Net income (loss) per weighted average common share
Basic	$	1.18	$	(0.18)	$	0.25
Diluted	$	1.16	$	(0.18)	$	0.25
Weighted average common shares outstanding
Basic	109.3		114.2		119.2
Diluted	111.6		114.2		121.2


Item 1B.			UNRESOLVED STAFF COMMENTS


Item 2.			PROPERTIES


Item 3.			LEGAL PROCEEDINGS


Item 4.			MINE SAFETY DISCLOSURES


	At December 31
	2020		2019
Assets
Current assets
Cash and cash equivalents	$	529	$	494
Accounts receivable, net	331		398
Inventories	29		31
Other current assets	155		91
Total current assets	1,044		1,014
Property and equipment, net	339		350
Right of use assets - operating lease, net	38		51
Goodwill	401		396
Capitalized contract costs, net	98		91
Deferred income taxes	222		87
Other assets	51		68
Total assets	$	2,193	$	2,057
Liabilities and stockholders’ equity
Current liabilities
Current portion of long-term debt	$	44	$	25

Current portion of finance lease liability	75		55
Current portion of operating lease liability	15		20
Accounts payable	50		66
Payroll and benefits liabilities	170		157
Deferred revenue	499		472
Other current liabilities	99		91
Total current liabilities	952		886
Long-term debt	411		454
Finance lease liability	70		75
Operating lease liability	28		38
Pension and other postemployment plan liabilities	152		137
Long-term deferred revenue	38		61
Deferred tax liabilities	6		6
Other liabilities	136		138
Total liabilities	1,793		1,795
Commitments and contingencies (Note 10)
Stockholders’ equity
Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding at December 31, 2020 and 2019, respectively	—		—
Common stock: par value $0.01 per share, 500.0 shares authorized, 108.8 and 110.9 shares issued and outstanding at December 31, 2020 and 2019, respectively	1		1
Paid-in capital	1,656		1,545
Accumulated deficit	(1,114)		(1,143)
Accumulated other comprehensive loss	(143)		(141)
Total stockholders’ equity	400		262
Total liabilities and stockholders’ equity	$	2,193	$	2,057


	Common Stock			Paid-in		Retained Earnings (Accumulated		Accumulated Other Comprehensive
	Shares	Amount		Capital		Deficit)		(Loss) income		Total
December 31, 2017	122	$	1	$	1,320	$	(579)	$	(74)	$	668
Net income	—	—		—		30		—		30
Employee stock compensation, employee stock purchase programs and option exercises, net of tax	2	—		98		—		—		98
Repurchases of common stock, retired	(7)	—		—		(300)		—		(300)
Pension and postemployment benefit plans, net of tax	—	—		—		—		(8)		(8)
Unrealized loss on derivatives, net of tax	—	—		—		—		(6)		(6)
Adoption of Topic 606	—	—		—		26		—		26
Currency translation adjustment	—	—		—		—		(13)		(13)
December 31, 2018	117	$	1	$	1,418	$	(823)	$	(101)	$	495
Net loss	—	—		—		(20)		—		(20)
Employee stock compensation, employee stock purchase programs and option exercises, net of tax	2	—		127		—		—		127
Repurchases of common stock, retired	(8)	—		—		(300)		—		(300)
Pension and postemployment benefit plans, net of tax	—	—		—		—		(21)		(21)
Unrealized loss on derivatives, net of tax	—	—		—		—		(9)		(9)
Currency translation adjustment	—	—		—		—		(10)		(10)
December 31, 2019	111	$	1	$	1,545	$	(1,143)	$	(141)	$	262
Net income	—	—		—		129		—		129
Employee stock compensation, employee stock purchase programs and option exercises, net of tax	2	—		111		—		—		111
Repurchases of common stock, retired	(5)	—		—		(100)		—		(100)
Pension and postemployment benefit plans, net of tax	—	—		—		—		(3)		(3)
Unrealized loss on derivatives, net of tax	—	—		—		—		(6)		(6)
Currency translation adjustment	—	—		—		—		7		7
December 31, 2020	108	$	1	$	1,656	$	(1,114)	$	(143)	$	400


	Internal-use Software						External-use Software
In millions	2020		2019		2018		2020		2019		2018
Beginning balance at January 1	$	13	$	15	$	16	$	23	$	57	$	105
Capitalized	7		5		6		—		—		—
Amortization	(7)		(7)		(7)		(23)		(34)		(48)
Ending balance at December 31	$	13	$	13	$	15	$	—	$	23	$	57


	Actual		For the years ended (estimated)
In millions	2020		2021		2022		2023		2024		2025
Internal-use software amortization expense	$	7	$	6	$	6	$	6	$	6	$	6
External-use software amortization expense	$	23	$	—	$	—	$	—	$	—	$	—



In millions, except earnings (loss) per share	2020		2019		2018
Net income (loss) attributable to common stockholders	$	129	$	(20)	$	30
Weighted average outstanding shares of common stock	109.3		114.2		119.2
Dilutive effect of employee stock options, restricted shares and other stock awards	2.3		—		2.0
Common stock and common stock equivalents	111.6		114.2		121.2
Earnings (loss) per share:
Basic	$	1.18	$	(0.18)	$	0.25
Diluted	$	1.16	$	(0.18)	$	0.25


In millions	Total at December 31, 2020		Year 1		Year 2 and Thereafter



Remaining unsatisfied obligations	$	2,921	$	1,538	$	1,383


In millions	Balance at December 31, 2019		Currency Translation Adjustments		Balance at December 31, 2020
Goodwill
Americas	$	253	$	—	$	253
EMEA	88		4		92
APJ	55		1		56
Total goodwill	$	396	$	5	$	401


Shares in thousands	Number of Shares	Weighted- Average Grant Date Fair Value per Share
Unvested shares at January 1, 2020	5,169	$	40.95
Granted	6,145	$	20.74
Vested	(2,100)	$	37.19
Forfeited/canceled	(1,702)	$	31.74
Unvested shares at December 31, 2020	7,512	$	27.00


Shares in thousands	Number of Shares	Weighted- Average Grant Date Fair Value
Service-based shares	5,570	$	20.75
Performance-based shares	575	$	20.68
Total stock grants	6,145	$	20.74


	Pension				Postemployment
In millions	2020		2019		2020		2019
Change in benefit obligation
Benefit obligation at January 1	$	149	$	132	$	61	$	54
Service cost	7		7		11		11
Interest cost	2		3		1		1
Plan participant contributions	1		1		—		—
Actuarial loss	14		24		12		21
Benefits paid	(1)		(10)		(24)		(26)
Curtailment	(5)		(1)		—		—
Settlement	(11)		(6)		—		—
Plan Amendment	—		—		3		—
Currency translation adjustments	8		(1)		—		—
Benefit obligation at December 31	$	164	$	149	$	64	$	61
Change in plan assets
Fair value of plan assets at January 1	$	69	$	68	$	—	$	—
Actual return on plan assets	4		10		—		—
Company contributions	5		6		—		—
Benefits paid	(1)		(10)		—		—
Currency translation adjustments	5		—		—		—
Plan participant contribution	1		1		—		—
Settlements	(11)		(6)		—		—

Fair value of plan assets at December 31	72		69		—		—
Funded status (underfunded)	$	(92)	$	(80)	$	(64)	$	(61)
Amounts Recognized in the Consolidated Balance Sheet
Non-current assets	$	8	$	6	$	—	$	—
Current liabilities	(2)		(1)		(10)		(10)
Non-current liabilities	(98)		(85)		(54)		(51)
Net amounts recognized	$	(92)	$	(80)	$	(64)	$	(61)
Amounts Recognized in Accumulated Other Comprehensive Income (Loss)
Unrecognized Net actuarial loss	$	31	$	30	$	66	$	61
Unrecognized Prior service cost	—		—		5		2
Total	$	31	$	30	$	71	$	63


	Pension Benefit Obligations		Pension Benefit Cost
	2020	2019	2020	2019	2018
Discount rate	0.9%	1.2%	1.2%	2.2%	2.1%
Rate of compensation increase	2.8%	3.0%	3.0%	3.4%	3.3%
Expected return on plan assets	N/A	N/A	3.5%	3.0%	2.8%
Interest crediting rate assumption	0.9%	0.9%	0.9%	0.8%	N/A
	Postemployment Benefit Obligations		Postemployment Benefit Cost
	2020	2019	2020	2019	2018
Discount rate	1.6%	1.8%	1.8%	2.5%	2.6%
Rate of compensation increase	3.0%	3.0%	3.0%	3.0%	3.0%
Involuntary turnover rate	3.5%	3.0%	3.0%	2.5%	2.3%


	Actual Asset Allocation as of December 31		Target Asset
	2020	2019	Allocation
Equity securities	34%	34%	32%
Debt securities	44%	43%	49%
Insurance (annuity) contracts	12%	12%	12%
Real estate	8%	10%	4%
Other	2%	1%	3%
Total	100%	100%	100%


			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
In millions	December 31, 2020		(Level 1)		(Level 2)		(Level 3)
Money market funds	$	1	$	—	$	1	$	—
Equity funds	25		—		25		—
Bond/fixed-income funds	32		—		32		—
Real estate indirect investments	6		—		6		—
Insurance contracts	8		—		—		8
Total assets at fair value	$	72	$	—	$	64	$	8


In millions	Insurance Contracts
Balance as of January 1, 2020	$	8
Purchases, sales and settlements, net	—
Balance as of December 31, 2020	$	8


			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
In millions	December 31, 2019		(Level 1)		(Level 2)		(Level 3)
Money market funds	$	1	$	—	$	1	$	—
Equity funds	23		—		23		—
Bond/fixed-income funds	30		—		30		—
Real estate indirect investments	7		—		7		—

Insurance contracts	8		—		—		8
Total assets at fair value	$	69	$	—	$	61	$	8


In millions	Insurance Contracts
Balance as of January 1, 2019	$	8
Purchases, sales and settlements, net	—
December 31, 2019	$	8


			Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
In millions	Total		(Level 1)		(Level 2)		(Level 3)
Assets
Money market funds at December 31, 2020	$	16	$	16	$	—	$	—

Money market funds at December 31, 2019	$	141	$	141	$	—	$	—
Liabilities
Interest rate swap at December 31, 2020	$	27	$	—	$	27	$	—
Interest rate swap at December 31, 2019	$	19	$	—	$	19	$	—



In millions, except weighted average calculations	Classification on the Balance Sheet	2020			2019
Assets
Operating lease assets	Right of use assets - operating lease, net	$	38		$	51
Finance lease assets	Property and equipment, net	170			141
Total lease assets		$	208		$	192

Liabilities
Current
Operating	Current portion of operating lease liability	$	15		$	20
Finance	Current portion of finance lease liability	75			55
Non current
Operating	Operating lease liability	28			38
Finance	Finance lease liability	70			75
Total lease liabilities		$	188		$	188

Weighted-average remaining lease term
Operating leases		3.35 years			3.49 years
Finance leases		2.03 years			2.44 years
Weighted-average discount rate
Operating leases(1)		5.00		%	5.00		%
Finance leases		4.33		%	4.58		%


In millions	Derivatives		Defined benefit plans		Foreign currency translation adjustments		Total AOCI
Balance as of December 31, 2017	$	—	$	(36)	$	(38)	$	(74)
Other comprehensive loss before reclassifications	(6)		(13)		(13)		(32)
Amounts reclassified from AOCI	—		5		—		5
Net other comprehensive loss	(6)		(8)		(13)		(27)
Balance as of December 31, 2018	$	(6)	$	(44)	$	(51)	$	(101)
Other comprehensive loss before reclassifications	(9)		(27)		(10)		(46)
Amounts reclassified from AOCI	—		6		—		6
Net other comprehensive loss	(9)		(21)		(10)		(40)
Balance as of December 31, 2019	$	(15)	$	(65)	$	(61)	$	(141)
Other comprehensive (loss) income before reclassifications	(6)		(12)		7		(11)
Amounts reclassified from AOCI	—		9		—		9
Net other comprehensive (loss) income	(6)		(3)		7		(2)
Balance as of December 31, 2020	$	(21)	$	(68)	$	(54)	$	(143)


In millions
AOCI Component	Location	2020		2019		2018


Other Expense	Other Expense	(10)		(7)		(6)

Tax portion	Income tax benefit	1		1		1
Total reclassifications	Net (loss) income	$	(9)	$	(6)	$	(5)