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• | Persuasive evidence of an arrangement exists |
• | The products or services have been delivered to the customer |
• | The sales price is fixed or determinable and free of contingencies or significant uncertainties |
• | Collectibility is reasonably assured |
• | Subscription license - Teradata’s subscription licenses include a right-to-use license and are typically sold with PCS. The revenue for these arrangements is typically recognized ratably over the contract term. The term of these arrangements varies between one and five years. |
• | Cloud - These arrangements include a right-to-access software license that the customer does not have a right to take possession of without significant penalty during the hosting period and the services can be delivered through a managed or public cloud. These arrangements are recognized outside the software rules and revenue is recognized ratably over the contract term. The term of these arrangements typically varies between one and five years. |
• | Rentals - Teradata owns the equipment and may or may not provide managed services. The revenue for these arrangements is generally recognized straight-line over the term of the contract. The term of these arrangements typically varies between one and three years and are generally accounted for as operating leases. |
• | Service model - Teradata owns the equipment to provide the service on-premises. Service models typically include a minimum fixed amount that is recognized ratably over the contract term and may include an elastic amount for usage above the minimum, which is recognized monthly based on actual utilization. The term of these arrangements varies between one and five years. |
In millions | 2017 | 2016 | 2015 | ||||||||
Depreciation expense | $ | 55 | $ | 49 | $ | 53 |
Internal-use Software | External-use Software | ||||||||||||||||||||||
In millions | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | |||||||||||||||||
Beginning balance at January 1 | $ | 13 | $ | 13 | $ | 13 | $ | 174 | $ | 177 | $ | 186 | |||||||||||
Capitalized | 9 | 6 | 6 | — | 59 | 61 | |||||||||||||||||
Amortization | (6 | ) | (6 | ) | (6 | ) | (69 | ) | (62 | ) | (70 | ) | |||||||||||
Ending balance at December 31 | $ | 16 | $ | 13 | $ | 13 | $ | 105 | $ | 174 | $ | 177 |
Actual | For the years ended (estimated) | ||||||||||||||||||||||
In millions | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |||||||||||||||||
Internal-use software amortization expense | $ | 6 | $ | 7 | $ | 7 | $ | 7 | $ | 7 | $ | 6 | |||||||||||
External-use software amortization expense | $ | 69 | $ | 49 | $ | 34 | $ | 22 | $ | — | $ | — |
For the years ended December 31 | |||||||||||
In millions, except (loss) earnings per share | 2017 | 2016 | 2015 | ||||||||
Net (loss) income attributable to common stockholders | $ | (67 | ) | $ | 125 | $ | (214 | ) | |||
Weighted average outstanding shares of common stock | 125.8 | 129.7 | 139.6 | ||||||||
Dilutive effect of employee stock options, restricted shares and other stock awards | — | 1.8 | — | ||||||||
Common stock and common stock equivalents | 125.8 | 131.5 | 139.6 | ||||||||
Earnings (loss) per share: | |||||||||||
Basic | $ | (0.53 | ) | $ | 0.96 | $ | (1.53 | ) | |||
Diluted | $ | (0.53 | ) | $ | 0.95 | $ | (1.53 | ) |
• | As the Company transitions to the new go-to-market offerings, such as subscription-based licenses rather than perpetual licenses, the Company could potentially see a more significant impact in the amount of revenue recognized over time under the current rules but upfront under the new rules. This impact will result in revenue that is adjusted to retained earnings in the period of adoption and therefore not recognized in future periods or restated to prior periods due to the Company applying the modified retrospective method of adoption. |
• | The Company currently expenses contract acquisition costs and believes that the requirement to defer incremental contract acquisition costs and recognize them over the term of the contract to which the costs relate will have an impact, especially as the Company transitions to longer-term, over-time revenue contracts. |
• | The amount of revenue allocated to the delivered items and recognized upfront utilizing the relative selling price model is limited to the amount that is not contingent upon the delivery of additional items or meeting other specified performance conditions (i.e., the non-contingent amount) under current rules. Under the new rules, the amounts allocated to delivered items and recognized upfront could be higher if it is probable that a significant reversal in the amount of revenue recognized will not occur in future periods upon the delivery of additional items or meeting other specified performance conditions; and |
• | The new standard will impact our internal control environment, including our financial statement disclosure controls, business process controls, new systems and processes, and enhancements to existing systems and processes. |
|
At December 31 | |||||||
In millions | 2017 | 2016 | |||||
Accounts receivable | |||||||
Trade | $ | 559 | $ | 561 | |||
Other | 7 | 6 | |||||
Accounts receivable, gross | 566 | 567 | |||||
Less: allowance for doubtful accounts | (12 | ) | (19 | ) | |||
Total accounts receivable, net | $ | 554 | $ | 548 | |||
Inventories | |||||||
Finished goods | $ | 18 | $ | 20 | |||
Service parts | 12 | 14 | |||||
Total inventories | $ | 30 | $ | 34 | |||
Property and equipment | |||||||
Land | $ | 8 | $ | 8 | |||
Buildings and improvements | 82 | 77 | |||||
Machinery and other equipment | 404 | 354 | |||||
Property and equipment, gross | 494 | 439 | |||||
Less: accumulated depreciation | (332 | ) | (301 | ) | |||
Total property and equipment, net | $ | 162 | $ | 138 | |||
Other current liabilities | |||||||
Sales and value-added taxes | $ | 30 | $ | 28 | |||
Pension and other postemployment plan liabilities | 2 | 7 | |||||
Other | 70 | 53 | |||||
Total other current liabilities | $ | 102 | $ | 88 | |||
Deferred revenue | |||||||
Deferred revenue, current | $ | 414 | $ | 369 | |||
Long-term deferred revenue | 85 | 14 | |||||
Total deferred revenue | $ | 499 | $ | 383 | |||
Other long-term liabilities | |||||||
Transition tax | $ | 133 | $ | — | |||
Uncertain tax positions | 14 | 20 | |||||
Other | 2 | 12 | |||||
Total other long-term liabilities | $ | 149 | $ | 32 | |||
|
In millions | Balance at December 31, 2016 | Additions | Currency Translation Adjustments | Balance at December 31, 2017 | |||||||||||
Goodwill | |||||||||||||||
Americas Data and Analytics | $ | 251 | $ | 2 | $ | — | $ | 253 | |||||||
International Data and Analytics | 139 | — | 7 | 146 | |||||||||||
Total goodwill | $ | 390 | $ | 2 | $ | 7 | $ | 399 |
December 31, 2017 | December 31, 2016 | ||||||||||||||||
In millions | Amortization Life (in Years) | Gross Carrying Amount | Accumulated Amortization and Currency Translation Adjustments | Gross Carrying Amount | Accumulated Amortization and Currency Translation Adjustments | ||||||||||||
Acquired intangible assets | |||||||||||||||||
Intellectual property/developed technology | 1 to 7 | $ | 43 | $ | (20 | ) | $ | 71 | $ | (61 | ) | ||||||
Trademarks/trade names | 5 | — | — | 1 | (1 | ) | |||||||||||
In-process research and development | 5 | — | — | 5 | (4 | ) | |||||||||||
Total | $ | 43 | $ | (20 | ) | $ | 77 | $ | (66 | ) |
Actual | For the years ended (estimated) | |||||||||||||||||||||||||||||||
In millions | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | ||||||||||||||||||||||||
Amortization expense | $ | 40 | $ | 10 | $ | 8 | $ | 7 | $ | 6 | $ | 4 | $ | 4 | $ | 2 |
|
In millions | 2017 | 2016 | 2015 | ||||||||
Income (loss) before income taxes | |||||||||||
United States | $ | (26 | ) | $ | 93 | $ | (88 | ) | |||
Foreign | 84 | 128 | (56 | ) | |||||||
Total income (loss) before income taxes | $ | 58 | $ | 221 | $ | (144 | ) |
In millions | 2017 | 2016 | 2015 | ||||||||
Income tax expense | |||||||||||
Current | |||||||||||
Federal | $ | 132 | $ | 67 | $ | 74 | |||||
State and local | 2 | 7 | 9 | ||||||||
Foreign | 25 | 25 | 26 | ||||||||
Deferred | |||||||||||
Federal | (22 | ) | 7 | (19 | ) | ||||||
State and local | (4 | ) | 1 | (3 | ) | ||||||
Foreign | (8 | ) | (11 | ) | (17 | ) | |||||
Total income tax expense | $ | 125 | $ | 96 | $ | 70 | |||||
Effective income tax rate | 215.5 | % | 43.4 | % | (48.6 | %) |
In millions | 2017 | 2016 | 2015 | |||||
Income tax expense at the U.S. federal tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
Foreign income tax differential | (18.0 | )% | (13.2 | )% | 14.0 | % | ||
State and local income taxes | (11.0 | )% | 0.2 | % | 0.5 | % | ||
U.S. permanent book/tax differences | (12.0 | )% | (0.1 | )% | 3.1 | % | ||
Change in valuation allowance for California R&D credit | 10.0 | % | 0.8 | % | (3.4 | )% | ||
U.S. manufacturing deduction permanent difference | (8.0 | )% | (3.5 | )% | 5.5 | % | ||
Goodwill impairment | — | % | 8.9 | % | (100.1 | )% | ||
Tax impact of sale of marketing applications business | — | % | 9.9 | % | — | % | ||
Impact of excess tax benefits and tax deficiencies | — | % | 2.2 | % | — | % | ||
Tax impact of U.S. tax law change - IRC Section 987 | — | % | 3.5 | % | — | % | ||
Deferred tax impact from U.S. rate change | (27.0 | )% | — | % | — | % | ||
Tax impact of transition Tax- U.S. tax reform | 250.0 | % | — | % | — | % | ||
Other, net | (3.5 | )% | (0.3 | )% | (3.2 | )% | ||
Effective income tax rate | 215.5 | % | 43.4 | % | (48.6 | )% |
In millions | 2017 | 2016 | |||||
Deferred income tax assets | |||||||
Employee pensions and other liabilities | $ | 50 | $ | 59 | |||
Other balance sheet reserves and allowances | 13 | 18 | |||||
Tax loss and credit carryforwards | 59 | 53 | |||||
Deferred revenue | 3 | 3 | |||||
Other | 2 | — | |||||
Total deferred income tax assets | 127 | 133 | |||||
Valuation allowance | (32 | ) | (26 | ) | |||
Net deferred income tax assets | 95 | 107 | |||||
Deferred income tax liabilities | |||||||
Intangibles and capitalized software | 30 | 63 | |||||
Property and equipment | 12 | 22 | |||||
Other | — | 6 | |||||
Total deferred income tax liabilities | 42 | 91 | |||||
Total net deferred income tax assets | $ | 53 | $ | 16 |
In millions | 2017 | 2016 | |||||
Balance at January 1 | $ | 30 | $ | 38 | |||
Gross decreases for prior period tax positions | (1 | ) | (7 | ) | |||
Gross increases for current period tax positions | 3 | 3 | |||||
Decreases due to the lapse of applicable statute of limitations | (4 | ) | (4 | ) | |||
Balance at December 31 | $ | 28 | $ | 30 |
|
In millions | 2017 | 2016 | 2015 | ||||||||
Stock options | $ | 9 | $ | 9 | $ | 12 | |||||
Restricted shares | 56 | 51 | 41 | ||||||||
Employee share repurchase program | 3 | 2 | 3 | ||||||||
Total stock-based compensation before income taxes | 68 | 62 | 56 | ||||||||
Tax benefit | (21 | ) | (13 | ) | (17 | ) | |||||
Total stock-based compensation, net of tax | $ | 47 | $ | 49 | $ | 39 |
2017 | 2016 | 2015 | ||||||
Dividend yield | — | % | — | % | — | % | ||
Risk-free interest rate | 1.99 | % | 2.08 | % | 1.76 | % | ||
Expected volatility | 35.0 | % | 35.2 | % | 34.4 | % | ||
Expected term (years) | 6.3 | 6.3 | 6.3 |
Shares in thousands | Shares Under Option | Weighted- Average Exercise Price per Share | Weighted- Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in millions) | ||||||||
Outstanding at January 1, 2017 | 6,509 | $ | 36.22 | 5.3 | $ | 8 | ||||||
Granted | 10 | $ | 29.04 | |||||||||
Exercised | (746 | ) | $ | 25.28 | ||||||||
Canceled | (153 | ) | $ | 46.56 | ||||||||
Forfeited | (247 | ) | $ | 32.97 | ||||||||
Outstanding at December 31, 2017 | 5,373 | $ | 37.63 | 4.5 | $ | 30 | ||||||
Fully vested and expected to vest at December 31, 2017 | 5,373 | $ | 37.63 | 4.5 | $ | 30 | ||||||
Exercisable at December 31, 2017 | 4,220 | $ | 39.60 | 3.4 | $ | 21 |
In millions | 2017 | 2016 | 2015 | ||||||||
Intrinsic value of options exercised | $ | 6 | $ | 13 | $ | 8 | |||||
Cash received from option exercises | $ | 19 | $ | 18 | $ | 9 | |||||
Tax benefit realized from option exercises | $ | 2 | $ | 5 | $ | 3 |
Shares in thousands | Number of Shares | Weighted- Average Grant Date Fair Value per Share | ||||
Unvested shares at January 1, 2017 | 4,042 | $ | 31.57 | |||
Granted | 2,044 | $ | 34.88 | |||
Vested | (1,487 | ) | $ | 33.55 | ||
Forfeited/canceled | (373 | ) | $ | 29.05 | ||
Unvested shares at December 31, 2017 | 4,226 | $ | 32.76 |
2017 | 2016 | 2015 | |||||||||
Weighted-average fair value of restricted share units granted | $ | 34.88 | $ | 26.61 | $ | 32.82 | |||||
Total fair value of shares vested (in millions) | $ | 50 | $ | 61 | $ | 45 |
Shares in thousands | Number of Shares | Weighted- Average Grant Date Fair Value | ||||
Service-based shares | 1,736 | $ | 36.33 | |||
Performance-based shares | 308 | $ | 26.68 | |||
Total stock grants | 2,044 | $ | 34.88 |
In millions | 2017 | 2016 | 2015 | ||||||||
Employee share purchases | 0.6 | 0.6 | 0.5 | ||||||||
Aggregate cost | $ | 15 | $ | 13 | $ | 17 |
|
2017 | 2016 | 2015 | |||||||||||||||||||||
In millions | Pension | Postemployment | Pension | Postemployment | Pension | Postemployment | |||||||||||||||||
Service cost | $ | 9 | $ | 7 | $ | 8 | $ | 6 | $ | 8 | $ | 6 | |||||||||||
Interest cost | 3 | 1 | 3 | 1 | 3 | 1 | |||||||||||||||||
Expected return on plan assets | (2 | ) | — | (2 | ) | — | (2 | ) | — | ||||||||||||||
Settlement charge | — | — | 1 | — | 1 | — | |||||||||||||||||
Amortization of actuarial loss | 1 | 2 | 1 | 1 | 2 | — | |||||||||||||||||
Amortization of prior service (credit) cost | (1 | ) | 1 | — | 2 | — | — | ||||||||||||||||
Divestiture | — | — | (2 | ) | (1 | ) | — | — | |||||||||||||||
Total costs | $ | 10 | $ | 11 | $ | 9 | $ | 9 | $ | 12 | $ | 7 |
Pension | Postemployment | ||||||||||||||
In millions | 2017 | 2016 | 2017 | 2016 | |||||||||||
Change in benefit obligation | |||||||||||||||
Benefit obligation at January 1 | $ | 120 | $ | 115 | $ | 42 | $ | 49 | |||||||
Service cost | 9 | 8 | 7 | 6 | |||||||||||
Interest cost | 3 | 3 | 1 | 1 | |||||||||||
Plan participant contributions | 1 | 1 | — | — | |||||||||||
Actuarial (gain) loss | (3 | ) | 5 | 12 | 12 | ||||||||||
Benefits paid | (4 | ) | (8 | ) | (15 | ) | (20 | ) | |||||||
Currency translation adjustments | 10 | (2 | ) | — | (1 | ) | |||||||||
Divestiture | — | (2 | ) | — | (5 | ) | |||||||||
Benefit obligation at December 31 | $ | 136 | $ | 120 | $ | 47 | $ | 42 | |||||||
Change in plan assets | |||||||||||||||
Fair value of plan assets at January 1 | $ | 64 | $ | 63 | $ | — | $ | — | |||||||
Actual return on plan assets | 5 | 2 | — | — | |||||||||||
Company contributions | 5 | 6 | — | — | |||||||||||
Benefits paid | (4 | ) | (8 | ) | — | — | |||||||||
Currency translation adjustments | 4 | — | — | — | |||||||||||
Plan participant contribution | 1 | 1 | — | — | |||||||||||
Fair value of plan assets at December 31 | 75 | 64 | — | — | |||||||||||
Funded status (underfunded) | $ | (61 | ) | $ | (56 | ) | $ | (47 | ) | $ | (42 | ) | |||
Amounts Recognized in the Balance Sheet | |||||||||||||||
Non-current assets | $ | 10 | $ | 5 | $ | — | $ | — | |||||||
Current liabilities | (2 | ) | (1 | ) | (7 | ) | (6 | ) | |||||||
Non-current liabilities | (69 | ) | (60 | ) | (40 | ) | (36 | ) | |||||||
Net amounts recognized | $ | (61 | ) | $ | (56 | ) | $ | (47 | ) | $ | (42 | ) | |||
Amounts Recognized in Accumulated Other Comprehensive (Loss) Income | |||||||||||||||
Unrecognized Net actuarial loss | $ | 15 | $ | 21 | $ | 37 | $ | 26 | |||||||
Unrecognized Prior service (credit) cost | (1 | ) | (1 | ) | 3 | 4 | |||||||||
Total | $ | 14 | $ | 20 | $ | 40 | $ | 30 |
In millions | 2017 | 2016 | |||||
Accumulated pension benefit obligation | $ | 125 | $ | 110 |
In millions | 2017 | 2016 | |||||
Projected benefit obligation | $ | 69 | $ | 60 | |||
Accumulated benefit obligation | $ | 63 | $ | 53 | |||
Fair value of plan assets | $ | — | $ | — |
Pension | Postemployment | ||||||||||||||
In millions | 2017 | 2016 | 2017 | 2016 | |||||||||||
Actuarial (gain) loss arising during the year | $ | (7 | ) | $ | 5 | $ | 13 | $ | 4 | ||||||
Amortization of loss included in net periodic benefit cost | (1 | ) | (1 | ) | (2 | ) | (1 | ) | |||||||
Prior service (credit) cost arising during the year | — | — | (1 | ) | 2 | ||||||||||
Recognition of loss due to settlement | — | (1 | ) | — | — | ||||||||||
Foreign currency exchange | 2 | (1 | ) | — | — | ||||||||||
Total recognized in other comprehensive (loss) income | $ | (6 | ) | $ | 2 | $ | 10 | $ | 5 |
In millions | Pension | Postemployment | |||||
Net loss to be recognized in other comprehensive income | $ | 1 | $ | 4 |
Pension Benefit Obligations | Pension Benefit Cost | ||||||||
2017 | 2016 | 2017 | 2016 | 2015 | |||||
Discount rate | 2.1% | 2.0% | 2.0% | 2.4% | 2.3% | ||||
Rate of compensation increase | 3.3% | 3.3% | 3.3% | 3.2% | 3.3% | ||||
Expected return on plan assets | N/A | N/A | 2.9% | 3.0% | 3.3% | ||||
Postemployment Benefit Obligations | Postemployment Benefit Cost | ||||||||
2017 | 2016 | 2017 | 2016 | 2015 | |||||
Discount rate | 2.6% | 3.4% | 2.6% | 3.4% | 3.5% | ||||
Rate of compensation increase | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | ||||
Involuntary turnover rate | 2.3% | 2.0% | 2.3% | 2.0% | 1.3% |
Actual Asset Allocation as of December 31 | Target Asset | ||||
2017 | 2016 | Allocation | |||
Equity securities | 32% | 32% | 31% | ||
Debt securities | 41% | 42% | 47% | ||
Insurance (annuity) contracts | 17% | 17% | 16% | ||
Real-estate | 8% | 7% | 3% | ||
Other | 2% | 2% | 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, 2017 | (Level 1) | (Level 2) | (Level 3) | |||||||||||
Money market funds | $ | 2 | $ | — | $ | 2 | $ | — | |||||||
Equity funds | 24 | — | 24 | — | |||||||||||
Bond/fixed-income funds | 31 | — | 31 | — | |||||||||||
Real-estate indirect investments | 6 | — | 6 | — | |||||||||||
Insurance contracts | 12 | — | — | 12 | |||||||||||
Total assets at fair value | $ | 75 | $ | — | $ | 63 | $ | 12 |
In millions | Insurance Contracts | ||
Balance as of January 1, 2017 | $ | 11 | |
Purchases, sales and settlements, net | 1 | ||
Balance as of December 31, 2017 | $ | 12 |
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, 2016 | (Level 1) | (Level 2) | (Level 3) | |||||||||||
Money market funds | $ | 1 | $ | — | $ | 1 | $ | — | |||||||
Equity funds | 21 | — | 21 | — | |||||||||||
Bond/fixed-income funds | 27 | — | 27 | — | |||||||||||
Real-estate indirect investments | 4 | — | 4 | — | |||||||||||
Insurance contracts | 11 | — | — | 11 | |||||||||||
Total assets at fair value | $ | 64 | $ | — | $ | 53 | $ | 11 |
In millions | Insurance Contracts | ||
Balance as of January 1, 2016 | $ | 10 | |
Purchases, sales and settlements, net | 1 | ||
December 31, 2016 | $ | 11 |
Pension | Postemployment | ||||||
In millions | Benefits | Benefits | |||||
Year | |||||||
2018 | $ | 5 | $ | 7 | |||
2019 | $ | 5 | $ | 6 | |||
2020 | $ | 5 | $ | 6 | |||
2021 | $ | 6 | $ | 6 | |||
2022 | $ | 6 | $ | 6 | |||
2023 - 2027 | $ | 34 | $ | 24 |
In millions | 2017 | 2016 | 2015 | ||||||||
U.S. savings plan | $ | 21 | $ | 19 | $ | 22 | |||||
International subsidiary savings plans | $ | 17 | $ | 16 | $ | 18 |
|
In millions | 2017 | 2016 | |||||
Contract notional amount of foreign exchange forward contracts | $ | 147 | $ | 156 | |||
Net contract notional amount of foreign exchange forward contracts | $ | 23 | $ | 16 |
|
In millions | 2017 | 2016 | 2015 | ||||||||
Beginning balance at January 1 | $ | 5 | $ | 6 | $ | 7 | |||||
Accruals for warranties issued | 6 | 8 | 9 | ||||||||
Settlements (in cash or kind) | (7 | ) | (9 | ) | (10 | ) | |||||
Balance at end of period | $ | 4 | $ | 5 | $ | 6 |
In millions | Total Amounts | 2018 | 2019 | 2020 | 2021 | 2022 and Thereafter | |||||||||||||||||
Operating lease obligations | $ | 81 | $ | 27 | $ | 20 | $ | 16 | $ | 8 | $ | 10 | |||||||||||
Sublease rentals | (14 | ) | (6 | ) | (5 | ) | (3 | ) | — | — | |||||||||||||
Total committed operating leases less sublease rentals | $ | 67 | $ | 21 | $ | 15 | $ | 13 | $ | 8 | $ | 10 |
In millions | 2017 | 2016 | 2015 | ||||||||
Rental expense | $ | 24 | $ | 24 | $ | 26 | |||||
Sublease rental income | $ | 5 | $ | 3 | $ | 3 |
|
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, 2017 | $ | 501 | $ | 501 | $ | — | $ | — | |||||||
Money market funds at December 31, 2016 | $ | 473 | $ | 473 | $ | — | $ | — |
|
In millions | |||
2018 | $ | 60 | |
2019 | 68 | ||
2020 | 412 | ||
Total | $ | 540 |
In millions | 2017 | 2016 | 2015 | ||||||||
Interest expense | $ | 15 | $ | 12 | $ | 9 |
|
In millions | 2017 | 2016 | 2015 | ||||||||
Segment revenue | |||||||||||
Americas Data and Analytics | $ | 1,195 | $ | 1,334 | $ | 1,470 | |||||
International Data and Analytics | 961 | 919 | 907 | ||||||||
Total Data and Analytics | 2,156 | 2,253 | 2,377 | ||||||||
Marketing Applications | — | 69 | 153 | ||||||||
Total revenue | 2,156 | 2,322 | 2,530 | ||||||||
Segment gross profit | |||||||||||
Americas Data and Analytics | 676 | 796 | 871 | ||||||||
International Data and Analytics | 434 | 445 | 452 | ||||||||
Total Data and Analytics | 1,110 | 1,241 | 1,323 | ||||||||
Marketing Application | — | 34 | 63 | ||||||||
Total segment gross profit | 1,110 | 1,275 | 1,386 | ||||||||
Stock-based compensation expense | 13 | 14 | 13 | ||||||||
Amortization of acquisition-related intangible assets | 1 | 2 | 16 | ||||||||
Acquisition, integration and reorganization-related costs | 6 | 9 | 11 | ||||||||
Amortization of capitalized software costs | 68 | 62 | 70 | ||||||||
Selling, general and administrative expenses | 652 | 664 | 765 | ||||||||
Research and development expenses | 306 | 212 | 228 | ||||||||
Impairment of goodwill, acquired intangibles and other assets | — | 80 | 478 | ||||||||
Total income (loss) from operations | $ | 64 | $ | 232 | $ | (195 | ) |
In millions | 2017 | 2016 | 2015 | ||||||||
Recurring revenue | $ | 1,047 | $ | 978 | $ | 956 | |||||
Product - perpetual licenses and hardware | 429 | 600 | 752 | ||||||||
Consulting services | 680 | 675 | 669 | ||||||||
Marketing applications | — | 69 | 153 | ||||||||
Total revenue | $ | 2,156 | $ | 2,322 | $ | 2,530 |
In millions | 2017 | 2016 | 2015 | ||||||||
United States | $ | 1,089 | $ | 1,246 | $ | 1,428 | |||||
Americas (excluding United States) | 107 | 123 | 125 | ||||||||
International | 960 | 953 | 977 | ||||||||
Total revenue | $ | 2,156 | $ | 2,322 | $ | 2,530 |
In millions | 2017 | 2016 | |||||
United States | $ | 119 | $ | 113 | |||
Americas (excluding United States) | 11 | 4 | |||||
International | 32 | 21 | |||||
Property and equipment, net | $ | 162 | $ | 138 |
|
|
In millions | Available-for-sale securities | Defined benefit plans | Foreign currency translation adjustments | Total AOCI | |||||||||||
Balance as of December 31, 2014 | $ | 31 | $ | (24 | ) | $ | (11 | ) | $ | (4 | ) | ||||
Other comprehensive loss before reclassifications | (5 | ) | (8 | ) | (36 | ) | (49 | ) | |||||||
Amounts reclassified from AOCI | (26 | ) | 3 | — | (23 | ) | |||||||||
Net other comprehensive loss | (31 | ) | (5 | ) | (36 | ) | (72 | ) | |||||||
Balance as of December 31, 2015 | $ | — | $ | (29 | ) | $ | (47 | ) | $ | (76 | ) | ||||
Other comprehensive loss before reclassifications | — | (9 | ) | (7 | ) | (16 | ) | ||||||||
Amounts reclassified from AOCI | — | 3 | — | 3 | |||||||||||
Net other comprehensive loss | — | (6 | ) | (7 | ) | (13 | ) | ||||||||
Balance as of December 31, 2016 | $ | — | $ | (35 | ) | $ | (54 | ) | $ | (89 | ) | ||||
Other comprehensive (loss) income before reclassifications | — | (5 | ) | 16 | 11 | ||||||||||
Amounts reclassified from AOCI | — | 4 | — | 4 | |||||||||||
Net other comprehensive (loss) income | — | (1 | ) | 16 | 15 | ||||||||||
Balance as of December 31, 2017 | $ | — | $ | (36 | ) | $ | (38 | ) | $ | (74 | ) |
In millions | ||||||||||||||
AOCI Component | Location | 2017 | 2016 | 2015 | ||||||||||
Defined benefit plans | Cost of services | $ | (3 | ) | $ | (3 | ) | $ | (2 | ) | ||||
Defined benefit plans | Selling, general and administrative expenses | (2 | ) | (1 | ) | (1 | ) | |||||||
Available for sale securities | Other income | — | — | 42 | ||||||||||
Tax portion | Income tax benefit (expense) | 1 | 1 | (16 | ) | |||||||||
Total reclassifications | Net (loss) income | $ | (4 | ) | $ | (3 | ) | $ | 23 |
|
In millions | 2017 | 2016 | 2015 | |||||||||
Employee severance and other employee related cost | $ | 2 | $ | 14 | $ | 4 | ||||||
Asset write-downs | — | 80 | 140 | |||||||||
Professional services, legal and other associated cost | 24 | 35 | 8 | |||||||||
Total reorganization and business transformation cost | $ | 26 | $ | 129 | $ | 152 |
|
|
In millions, except per share amounts | First (1) | Second | Third | Fourth (2) | |||||||||||
2017 | |||||||||||||||
Total revenues | $ | 491 | $ | 513 | $ | 526 | $ | 626 | |||||||
Gross profit | $ | 224 | $ | 242 | $ | 250 | $ | 306 | |||||||
Operating (loss) income | $ | (1 | ) | $ | (1 | ) | $ | 7 | $ | 59 | |||||
Net (loss) income | $ | (2 | ) | $ | (4 | ) | $ | 13 | $ | (74 | ) | ||||
Net (loss) income per share: | |||||||||||||||
Basic | $ | (0.02 | ) | $ | (0.03 | ) | $ | 0.11 | $ | (0.61 | ) | ||||
Diluted | $ | (0.02 | ) | $ | (0.03 | ) | $ | 0.10 | $ | (0.61 | ) | ||||
2016 | |||||||||||||||
Total revenues | $ | 545 | $ | 599 | $ | 552 | $ | 626 | |||||||
Gross profit | $ | 269 | $ | 310 | $ | 294 | $ | 315 | |||||||
Operating (loss) income | $ | (42 | ) | $ | 87 | $ | 89 | $ | 98 | ||||||
Net (loss) income | $ | (46 | ) | $ | 64 | $ | 49 | $ | 58 | ||||||
Net (loss) income per share: | |||||||||||||||
Basic | $ | (0.36 | ) | $ | 0.49 | $ | 0.38 | $ | 0.45 | ||||||
Diluted | $ | (0.36 | ) | $ | 0.49 | $ | 0.37 | $ | 0.44 |
|
|
Column A | Column B | Column C | Column D | Column E | ||||||||||||||||
Description | Balance at Beginning of Period | Provision/reversals Charged to Costs & Expenses | Charged to Other Accounts | Deductions | Balance at End of Period | |||||||||||||||
Allowance for doubtful accounts | ||||||||||||||||||||
Year ended December 31, 2017 | $ | 19 | $ | (6 | ) | $ | — | $ | 1 | $ | 12 | |||||||||
Year ended December 31, 2016* | $ | 22 | $ | 3 | $ | — | $ | 6 | $ | 19 | ||||||||||
Year ended December 31, 2015** | $ | 19 | $ | 5 | $ | — | $ | 2 | $ | 22 | ||||||||||
Deferred tax valuation allowance | ||||||||||||||||||||
Year ended December 31, 2017 | $ | 26 | $ | 6 | $ | — | $ | — | $ | 32 | ||||||||||
Year ended December 31, 2016 | $ | 25 | $ | 1 | $ | — | $ | — | $ | 26 | ||||||||||
Year ended December 31, 2015 | $ | 20 | $ | 5 | $ | — | $ | — | $ | 25 |
|
• | Persuasive evidence of an arrangement exists |
• | The products or services have been delivered to the customer |
• | The sales price is fixed or determinable and free of contingencies or significant uncertainties |
• | Collectibility is reasonably assured |
• | Subscription license - Teradata’s subscription licenses include a right-to-use license and are typically sold with PCS. The revenue for these arrangements is typically recognized ratably over the contract term. The term of these arrangements varies between one and five years. |
• | Cloud - These arrangements include a right-to-access software license that the customer does not have a right to take possession of without significant penalty during the hosting period and the services can be delivered through a managed or public cloud. These arrangements are recognized outside the software rules and revenue is recognized ratably over the contract term. The term of these arrangements typically varies between one and five years. |
• | Rentals - Teradata owns the equipment and may or may not provide managed services. The revenue for these arrangements is generally recognized straight-line over the term of the contract. The term of these arrangements typically varies between one and three years and are generally accounted for as operating leases. |
• | Service model - Teradata owns the equipment to provide the service on-premises. Service models typically include a minimum fixed amount that is recognized ratably over the contract term and may include an elastic amount for usage above the minimum, which is recognized monthly based on actual utilization. The term of these arrangements varies between one and five years. |
Internal-use Software | External-use Software | ||||||||||||||||||||||
In millions | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | |||||||||||||||||
Beginning balance at January 1 | $ | 13 | $ | 13 | $ | 13 | $ | 174 | $ | 177 | $ | 186 | |||||||||||
Capitalized | 9 | 6 | 6 | — | 59 | 61 | |||||||||||||||||
Amortization | (6 | ) | (6 | ) | (6 | ) | (69 | ) | (62 | ) | (70 | ) | |||||||||||
Ending balance at December 31 | $ | 16 | $ | 13 | $ | 13 | $ | 105 | $ | 174 | $ | 177 |
Actual | For the years ended (estimated) | ||||||||||||||||||||||
In millions | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |||||||||||||||||
Internal-use software amortization expense | $ | 6 | $ | 7 | $ | 7 | $ | 7 | $ | 7 | $ | 6 | |||||||||||
External-use software amortization expense | $ | 69 | $ | 49 | $ | 34 | $ | 22 | $ | — | $ | — |
• | As the Company transitions to the new go-to-market offerings, such as subscription-based licenses rather than perpetual licenses, the Company could potentially see a more significant impact in the amount of revenue recognized over time under the current rules but upfront under the new rules. This impact will result in revenue that is adjusted to retained earnings in the period of adoption and therefore not recognized in future periods or restated to prior periods due to the Company applying the modified retrospective method of adoption. |
• | The Company currently expenses contract acquisition costs and believes that the requirement to defer incremental contract acquisition costs and recognize them over the term of the contract to which the costs relate will have an impact, especially as the Company transitions to longer-term, over-time revenue contracts. |
• | The amount of revenue allocated to the delivered items and recognized upfront utilizing the relative selling price model is limited to the amount that is not contingent upon the delivery of additional items or meeting other specified performance conditions (i.e., the non-contingent amount) under current rules. Under the new rules, the amounts allocated to delivered items and recognized upfront could be higher if it is probable that a significant reversal in the amount of revenue recognized will not occur in future periods upon the delivery of additional items or meeting other specified performance conditions; and |
• | The new standard will impact our internal control environment, including our financial statement disclosure controls, business process controls, new systems and processes, and enhancements to existing systems and processes. |
|
In millions | 2017 | 2016 | 2015 | ||||||||
Depreciation expense | $ | 55 | $ | 49 | $ | 53 |
Internal-use Software | External-use Software | ||||||||||||||||||||||
In millions | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | |||||||||||||||||
Beginning balance at January 1 | $ | 13 | $ | 13 | $ | 13 | $ | 174 | $ | 177 | $ | 186 | |||||||||||
Capitalized | 9 | 6 | 6 | — | 59 | 61 | |||||||||||||||||
Amortization | (6 | ) | (6 | ) | (6 | ) | (69 | ) | (62 | ) | (70 | ) | |||||||||||
Ending balance at December 31 | $ | 16 | $ | 13 | $ | 13 | $ | 105 | $ | 174 | $ | 177 |
Actual | For the years ended (estimated) | ||||||||||||||||||||||
In millions | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |||||||||||||||||
Internal-use software amortization expense | $ | 6 | $ | 7 | $ | 7 | $ | 7 | $ | 7 | $ | 6 | |||||||||||
External-use software amortization expense | $ | 69 | $ | 49 | $ | 34 | $ | 22 | $ | — | $ | — |
For the years ended December 31 | |||||||||||
In millions, except (loss) earnings per share | 2017 | 2016 | 2015 | ||||||||
Net (loss) income attributable to common stockholders | $ | (67 | ) | $ | 125 | $ | (214 | ) | |||
Weighted average outstanding shares of common stock | 125.8 | 129.7 | 139.6 | ||||||||
Dilutive effect of employee stock options, restricted shares and other stock awards | — | 1.8 | — | ||||||||
Common stock and common stock equivalents | 125.8 | 131.5 | 139.6 | ||||||||
Earnings (loss) per share: | |||||||||||
Basic | $ | (0.53 | ) | $ | 0.96 | $ | (1.53 | ) | |||
Diluted | $ | (0.53 | ) | $ | 0.95 | $ | (1.53 | ) |
|
At December 31 | |||||||
In millions | 2017 | 2016 | |||||
Accounts receivable | |||||||
Trade | $ | 559 | $ | 561 | |||
Other | 7 | 6 | |||||
Accounts receivable, gross | 566 | 567 | |||||
Less: allowance for doubtful accounts | (12 | ) | (19 | ) | |||
Total accounts receivable, net | $ | 554 | $ | 548 | |||
Inventories | |||||||
Finished goods | $ | 18 | $ | 20 | |||
Service parts | 12 | 14 | |||||
Total inventories | $ | 30 | $ | 34 | |||
Property and equipment | |||||||
Land | $ | 8 | $ | 8 | |||
Buildings and improvements | 82 | 77 | |||||
Machinery and other equipment | 404 | 354 | |||||
Property and equipment, gross | 494 | 439 | |||||
Less: accumulated depreciation | (332 | ) | (301 | ) | |||
Total property and equipment, net | $ | 162 | $ | 138 | |||
Other current liabilities | |||||||
Sales and value-added taxes | $ | 30 | $ | 28 | |||
Pension and other postemployment plan liabilities | 2 | 7 | |||||
Other | 70 | 53 | |||||
Total other current liabilities | $ | 102 | $ | 88 | |||
Deferred revenue | |||||||
Deferred revenue, current | $ | 414 | $ | 369 | |||
Long-term deferred revenue | 85 | 14 | |||||
Total deferred revenue | $ | 499 | $ | 383 | |||
Other long-term liabilities | |||||||
Transition tax | $ | 133 | $ | — | |||
Uncertain tax positions | 14 | 20 | |||||
Other | 2 | 12 | |||||
Total other long-term liabilities | $ | 149 | $ | 32 | |||
|
In millions | Balance at December 31, 2016 | Additions | Currency Translation Adjustments | Balance at December 31, 2017 | |||||||||||
Goodwill | |||||||||||||||
Americas Data and Analytics | $ | 251 | $ | 2 | $ | — | $ | 253 | |||||||
International Data and Analytics | 139 | — | 7 | 146 | |||||||||||
Total goodwill | $ | 390 | $ | 2 | $ | 7 | $ | 399 |
December 31, 2017 | December 31, 2016 | ||||||||||||||||
In millions | Amortization Life (in Years) | Gross Carrying Amount | Accumulated Amortization and Currency Translation Adjustments | Gross Carrying Amount | Accumulated Amortization and Currency Translation Adjustments | ||||||||||||
Acquired intangible assets | |||||||||||||||||
Intellectual property/developed technology | 1 to 7 | $ | 43 | $ | (20 | ) | $ | 71 | $ | (61 | ) | ||||||
Trademarks/trade names | 5 | — | — | 1 | (1 | ) | |||||||||||
In-process research and development | 5 | — | — | 5 | (4 | ) | |||||||||||
Total | $ | 43 | $ | (20 | ) | $ | 77 | $ | (66 | ) |
Actual | For the years ended (estimated) | |||||||||||||||||||||||||||||||
In millions | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | ||||||||||||||||||||||||
Amortization expense | $ | 40 | $ | 10 | $ | 8 | $ | 7 | $ | 6 | $ | 4 | $ | 4 | $ | 2 |
|
In millions | 2017 | 2016 | 2015 | ||||||||
Income (loss) before income taxes | |||||||||||
United States | $ | (26 | ) | $ | 93 | $ | (88 | ) | |||
Foreign | 84 | 128 | (56 | ) | |||||||
Total income (loss) before income taxes | $ | 58 | $ | 221 | $ | (144 | ) |
In millions | 2017 | 2016 | 2015 | ||||||||
Income tax expense | |||||||||||
Current | |||||||||||
Federal | $ | 132 | $ | 67 | $ | 74 | |||||
State and local | 2 | 7 | 9 | ||||||||
Foreign | 25 | 25 | 26 | ||||||||
Deferred | |||||||||||
Federal | (22 | ) | 7 | (19 | ) | ||||||
State and local | (4 | ) | 1 | (3 | ) | ||||||
Foreign | (8 | ) | (11 | ) | (17 | ) | |||||
Total income tax expense | $ | 125 | $ | 96 | $ | 70 | |||||
Effective income tax rate | 215.5 | % | 43.4 | % | (48.6 | %) |
In millions | 2017 | 2016 | 2015 | |||||
Income tax expense at the U.S. federal tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
Foreign income tax differential | (18.0 | )% | (13.2 | )% | 14.0 | % | ||
State and local income taxes | (11.0 | )% | 0.2 | % | 0.5 | % | ||
U.S. permanent book/tax differences | (12.0 | )% | (0.1 | )% | 3.1 | % | ||
Change in valuation allowance for California R&D credit | 10.0 | % | 0.8 | % | (3.4 | )% | ||
U.S. manufacturing deduction permanent difference | (8.0 | )% | (3.5 | )% | 5.5 | % | ||
Goodwill impairment | — | % | 8.9 | % | (100.1 | )% | ||
Tax impact of sale of marketing applications business | — | % | 9.9 | % | — | % | ||
Impact of excess tax benefits and tax deficiencies | — | % | 2.2 | % | — | % | ||
Tax impact of U.S. tax law change - IRC Section 987 | — | % | 3.5 | % | — | % | ||
Deferred tax impact from U.S. rate change | (27.0 | )% | — | % | — | % | ||
Tax impact of transition Tax- U.S. tax reform | 250.0 | % | — | % | — | % | ||
Other, net | (3.5 | )% | (0.3 | )% | (3.2 | )% | ||
Effective income tax rate | 215.5 | % | 43.4 | % | (48.6 | )% |
In millions | 2017 | 2016 | |||||
Deferred income tax assets | |||||||
Employee pensions and other liabilities | $ | 50 | $ | 59 | |||
Other balance sheet reserves and allowances | 13 | 18 | |||||
Tax loss and credit carryforwards | 59 | 53 | |||||
Deferred revenue | 3 | 3 | |||||
Other | 2 | — | |||||
Total deferred income tax assets | 127 | 133 | |||||
Valuation allowance | (32 | ) | (26 | ) | |||
Net deferred income tax assets | 95 | 107 | |||||
Deferred income tax liabilities | |||||||
Intangibles and capitalized software | 30 | 63 | |||||
Property and equipment | 12 | 22 | |||||
Other | — | 6 | |||||
Total deferred income tax liabilities | 42 | 91 | |||||
Total net deferred income tax assets | $ | 53 | $ | 16 |
In millions | 2017 | 2016 | |||||
Balance at January 1 | $ | 30 | $ | 38 | |||
Gross decreases for prior period tax positions | (1 | ) | (7 | ) | |||
Gross increases for current period tax positions | 3 | 3 | |||||
Decreases due to the lapse of applicable statute of limitations | (4 | ) | (4 | ) | |||
Balance at December 31 | $ | 28 | $ | 30 |
|
In millions | 2017 | 2016 | 2015 | ||||||||
Stock options | $ | 9 | $ | 9 | $ | 12 | |||||
Restricted shares | 56 | 51 | 41 | ||||||||
Employee share repurchase program | 3 | 2 | 3 | ||||||||
Total stock-based compensation before income taxes | 68 | 62 | 56 | ||||||||
Tax benefit | (21 | ) | (13 | ) | (17 | ) | |||||
Total stock-based compensation, net of tax | $ | 47 | $ | 49 | $ | 39 |
2017 | 2016 | 2015 | ||||||
Dividend yield | — | % | — | % | — | % | ||
Risk-free interest rate | 1.99 | % | 2.08 | % | 1.76 | % | ||
Expected volatility | 35.0 | % | 35.2 | % | 34.4 | % | ||
Expected term (years) | 6.3 | 6.3 | 6.3 |
Shares in thousands | Shares Under Option | Weighted- Average Exercise Price per Share | Weighted- Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in millions) | ||||||||
Outstanding at January 1, 2017 | 6,509 | $ | 36.22 | 5.3 | $ | 8 | ||||||
Granted | 10 | $ | 29.04 | |||||||||
Exercised | (746 | ) | $ | 25.28 | ||||||||
Canceled | (153 | ) | $ | 46.56 | ||||||||
Forfeited | (247 | ) | $ | 32.97 | ||||||||
Outstanding at December 31, 2017 | 5,373 | $ | 37.63 | 4.5 | $ | 30 | ||||||
Fully vested and expected to vest at December 31, 2017 | 5,373 | $ | 37.63 | 4.5 | $ | 30 | ||||||
Exercisable at December 31, 2017 | 4,220 | $ | 39.60 | 3.4 | $ | 21 |
In millions | 2017 | 2016 | 2015 | ||||||||
Intrinsic value of options exercised | $ | 6 | $ | 13 | $ | 8 | |||||
Cash received from option exercises | $ | 19 | $ | 18 | $ | 9 | |||||
Tax benefit realized from option exercises | $ | 2 | $ | 5 | $ | 3 |
Shares in thousands | Number of Shares | Weighted- Average Grant Date Fair Value per Share | ||||
Unvested shares at January 1, 2017 | 4,042 | $ | 31.57 | |||
Granted | 2,044 | $ | 34.88 | |||
Vested | (1,487 | ) | $ | 33.55 | ||
Forfeited/canceled | (373 | ) | $ | 29.05 | ||
Unvested shares at December 31, 2017 | 4,226 | $ | 32.76 |
2017 | 2016 | 2015 | |||||||||
Weighted-average fair value of restricted share units granted | $ | 34.88 | $ | 26.61 | $ | 32.82 | |||||
Total fair value of shares vested (in millions) | $ | 50 | $ | 61 | $ | 45 |
Shares in thousands | Number of Shares | Weighted- Average Grant Date Fair Value | ||||
Service-based shares | 1,736 | $ | 36.33 | |||
Performance-based shares | 308 | $ | 26.68 | |||
Total stock grants | 2,044 | $ | 34.88 |
In millions | 2017 | 2016 | 2015 | ||||||||
Employee share purchases | 0.6 | 0.6 | 0.5 | ||||||||
Aggregate cost | $ | 15 | $ | 13 | $ | 17 |
|
2017 | 2016 | 2015 | |||||||||||||||||||||
In millions | Pension | Postemployment | Pension | Postemployment | Pension | Postemployment | |||||||||||||||||
Service cost | $ | 9 | $ | 7 | $ | 8 | $ | 6 | $ | 8 | $ | 6 | |||||||||||
Interest cost | 3 | 1 | 3 | 1 | 3 | 1 | |||||||||||||||||
Expected return on plan assets | (2 | ) | — | (2 | ) | — | (2 | ) | — | ||||||||||||||
Settlement charge | — | — | 1 | — | 1 | — | |||||||||||||||||
Amortization of actuarial loss | 1 | 2 | 1 | 1 | 2 | — | |||||||||||||||||
Amortization of prior service (credit) cost | (1 | ) | 1 | — | 2 | — | — | ||||||||||||||||
Divestiture | — | — | (2 | ) | (1 | ) | — | — | |||||||||||||||
Total costs | $ | 10 | $ | 11 | $ | 9 | $ | 9 | $ | 12 | $ | 7 |
In millions | 2017 | 2016 | |||||
Accumulated pension benefit obligation | $ | 125 | $ | 110 |
In millions | 2017 | 2016 | |||||
Projected benefit obligation | $ | 69 | $ | 60 | |||
Accumulated benefit obligation | $ | 63 | $ | 53 | |||
Fair value of plan assets | $ | — | $ | — |
Pension | Postemployment | ||||||||||||||
In millions | 2017 | 2016 | 2017 | 2016 | |||||||||||
Change in benefit obligation | |||||||||||||||
Benefit obligation at January 1 | $ | 120 | $ | 115 | $ | 42 | $ | 49 | |||||||
Service cost | 9 | 8 | 7 | 6 | |||||||||||
Interest cost | 3 | 3 | 1 | 1 | |||||||||||
Plan participant contributions | 1 | 1 | — | — | |||||||||||
Actuarial (gain) loss | (3 | ) | 5 | 12 | 12 | ||||||||||
Benefits paid | (4 | ) | (8 | ) | (15 | ) | (20 | ) | |||||||
Currency translation adjustments | 10 | (2 | ) | — | (1 | ) | |||||||||
Divestiture | — | (2 | ) | — | (5 | ) | |||||||||
Benefit obligation at December 31 | $ | 136 | $ | 120 | $ | 47 | $ | 42 | |||||||
Change in plan assets | |||||||||||||||
Fair value of plan assets at January 1 | $ | 64 | $ | 63 | $ | — | $ | — | |||||||
Actual return on plan assets | 5 | 2 | — | — | |||||||||||
Company contributions | 5 | 6 | — | — | |||||||||||
Benefits paid | (4 | ) | (8 | ) | — | — | |||||||||
Currency translation adjustments | 4 | — | — | — | |||||||||||
Plan participant contribution | 1 | 1 | — | — | |||||||||||
Fair value of plan assets at December 31 | 75 | 64 | — | — | |||||||||||
Funded status (underfunded) | $ | (61 | ) | $ | (56 | ) | $ | (47 | ) | $ | (42 | ) | |||
Amounts Recognized in the Balance Sheet | |||||||||||||||
Non-current assets | $ | 10 | $ | 5 | $ | — | $ | — | |||||||
Current liabilities | (2 | ) | (1 | ) | (7 | ) | (6 | ) | |||||||
Non-current liabilities | (69 | ) | (60 | ) | (40 | ) | (36 | ) | |||||||
Net amounts recognized | $ | (61 | ) | $ | (56 | ) | $ | (47 | ) | $ | (42 | ) | |||
Amounts Recognized in Accumulated Other Comprehensive (Loss) Income | |||||||||||||||
Unrecognized Net actuarial loss | $ | 15 | $ | 21 | $ | 37 | $ | 26 | |||||||
Unrecognized Prior service (credit) cost | (1 | ) | (1 | ) | 3 | 4 | |||||||||
Total | $ | 14 | $ | 20 | $ | 40 | $ | 30 |
Pension | Postemployment | ||||||||||||||
In millions | 2017 | 2016 | 2017 | 2016 | |||||||||||
Actuarial (gain) loss arising during the year | $ | (7 | ) | $ | 5 | $ | 13 | $ | 4 | ||||||
Amortization of loss included in net periodic benefit cost | (1 | ) | (1 | ) | (2 | ) | (1 | ) | |||||||
Prior service (credit) cost arising during the year | — | — | (1 | ) | 2 | ||||||||||
Recognition of loss due to settlement | — | (1 | ) | — | — | ||||||||||
Foreign currency exchange | 2 | (1 | ) | — | — | ||||||||||
Total recognized in other comprehensive (loss) income | $ | (6 | ) | $ | 2 | $ | 10 | $ | 5 |
In millions | Pension | Postemployment | |||||
Net loss to be recognized in other comprehensive income | $ | 1 | $ | 4 |
Pension Benefit Obligations | Pension Benefit Cost | ||||||||
2017 | 2016 | 2017 | 2016 | 2015 | |||||
Discount rate | 2.1% | 2.0% | 2.0% | 2.4% | 2.3% | ||||
Rate of compensation increase | 3.3% | 3.3% | 3.3% | 3.2% | 3.3% | ||||
Expected return on plan assets | N/A | N/A | 2.9% | 3.0% | 3.3% | ||||
Postemployment Benefit Obligations | Postemployment Benefit Cost | ||||||||
2017 | 2016 | 2017 | 2016 | 2015 | |||||
Discount rate | 2.6% | 3.4% | 2.6% | 3.4% | 3.5% | ||||
Rate of compensation increase | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | ||||
Involuntary turnover rate | 2.3% | 2.0% | 2.3% | 2.0% | 1.3% |
Actual Asset Allocation as of December 31 | Target Asset | ||||
2017 | 2016 | Allocation | |||
Equity securities | 32% | 32% | 31% | ||
Debt securities | 41% | 42% | 47% | ||
Insurance (annuity) contracts | 17% | 17% | 16% | ||
Real-estate | 8% | 7% | 3% | ||
Other | 2% | 2% | 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, 2016 | (Level 1) | (Level 2) | (Level 3) | |||||||||||
Money market funds | $ | 1 | $ | — | $ | 1 | $ | — | |||||||
Equity funds | 21 | — | 21 | — | |||||||||||
Bond/fixed-income funds | 27 | — | 27 | — | |||||||||||
Real-estate indirect investments | 4 | — | 4 | — | |||||||||||
Insurance contracts | 11 | — | — | 11 | |||||||||||
Total assets at fair value | $ | 64 | $ | — | $ | 53 | $ | 11 |
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, 2017 | (Level 1) | (Level 2) | (Level 3) | |||||||||||
Money market funds | $ | 2 | $ | — | $ | 2 | $ | — | |||||||
Equity funds | 24 | — | 24 | — | |||||||||||
Bond/fixed-income funds | 31 | — | 31 | — | |||||||||||
Real-estate indirect investments | 6 | — | 6 | — | |||||||||||
Insurance contracts | 12 | — | — | 12 | |||||||||||
Total assets at fair value | $ | 75 | $ | — | $ | 63 | $ | 12 |
In millions | Insurance Contracts | ||
Balance as of January 1, 2017 | $ | 11 | |
Purchases, sales and settlements, net | 1 | ||
Balance as of December 31, 2017 | $ | 12 |
In millions | Insurance Contracts | ||
Balance as of January 1, 2016 | $ | 10 | |
Purchases, sales and settlements, net | 1 | ||
December 31, 2016 | $ | 11 |
Pension | Postemployment | ||||||
In millions | Benefits | Benefits | |||||
Year | |||||||
2018 | $ | 5 | $ | 7 | |||
2019 | $ | 5 | $ | 6 | |||
2020 | $ | 5 | $ | 6 | |||
2021 | $ | 6 | $ | 6 | |||
2022 | $ | 6 | $ | 6 | |||
2023 - 2027 | $ | 34 | $ | 24 |
In millions | 2017 | 2016 | 2015 | ||||||||
U.S. savings plan | $ | 21 | $ | 19 | $ | 22 | |||||
International subsidiary savings plans | $ | 17 | $ | 16 | $ | 18 |
|
In millions | 2017 | 2016 | |||||
Contract notional amount of foreign exchange forward contracts | $ | 147 | $ | 156 | |||
Net contract notional amount of foreign exchange forward contracts | $ | 23 | $ | 16 |
|
In millions | 2017 | 2016 | 2015 | ||||||||
Beginning balance at January 1 | $ | 5 | $ | 6 | $ | 7 | |||||
Accruals for warranties issued | 6 | 8 | 9 | ||||||||
Settlements (in cash or kind) | (7 | ) | (9 | ) | (10 | ) | |||||
Balance at end of period | $ | 4 | $ | 5 | $ | 6 |
In millions | Total Amounts | 2018 | 2019 | 2020 | 2021 | 2022 and Thereafter | |||||||||||||||||
Operating lease obligations | $ | 81 | $ | 27 | $ | 20 | $ | 16 | $ | 8 | $ | 10 | |||||||||||
Sublease rentals | (14 | ) | (6 | ) | (5 | ) | (3 | ) | — | — | |||||||||||||
Total committed operating leases less sublease rentals | $ | 67 | $ | 21 | $ | 15 | $ | 13 | $ | 8 | $ | 10 |
In millions | 2017 | 2016 | 2015 | ||||||||
Rental expense | $ | 24 | $ | 24 | $ | 26 | |||||
Sublease rental income | $ | 5 | $ | 3 | $ | 3 |
|
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, 2017 | $ | 501 | $ | 501 | $ | — | $ | — | |||||||
Money market funds at December 31, 2016 | $ | 473 | $ | 473 | $ | — | $ | — |
|
In millions | |||
2018 | $ | 60 | |
2019 | 68 | ||
2020 | 412 | ||
Total | $ | 540 |
In millions | 2017 | 2016 | 2015 | ||||||||
Interest expense | $ | 15 | $ | 12 | $ | 9 |
|
In millions | 2017 | 2016 | 2015 | ||||||||
Segment revenue | |||||||||||
Americas Data and Analytics | $ | 1,195 | $ | 1,334 | $ | 1,470 | |||||
International Data and Analytics | 961 | 919 | 907 | ||||||||
Total Data and Analytics | 2,156 | 2,253 | 2,377 | ||||||||
Marketing Applications | — | 69 | 153 | ||||||||
Total revenue | 2,156 | 2,322 | 2,530 | ||||||||
Segment gross profit | |||||||||||
Americas Data and Analytics | 676 | 796 | 871 | ||||||||
International Data and Analytics | 434 | 445 | 452 | ||||||||
Total Data and Analytics | 1,110 | 1,241 | 1,323 | ||||||||
Marketing Application | — | 34 | 63 | ||||||||
Total segment gross profit | 1,110 | 1,275 | 1,386 | ||||||||
Stock-based compensation expense | 13 | 14 | 13 | ||||||||
Amortization of acquisition-related intangible assets | 1 | 2 | 16 | ||||||||
Acquisition, integration and reorganization-related costs | 6 | 9 | 11 | ||||||||
Amortization of capitalized software costs | 68 | 62 | 70 | ||||||||
Selling, general and administrative expenses | 652 | 664 | 765 | ||||||||
Research and development expenses | 306 | 212 | 228 | ||||||||
Impairment of goodwill, acquired intangibles and other assets | — | 80 | 478 | ||||||||
Total income (loss) from operations | $ | 64 | $ | 232 | $ | (195 | ) |
In millions | 2017 | 2016 | 2015 | ||||||||
Recurring revenue | $ | 1,047 | $ | 978 | $ | 956 | |||||
Product - perpetual licenses and hardware | 429 | 600 | 752 | ||||||||
Consulting services | 680 | 675 | 669 | ||||||||
Marketing applications | — | 69 | 153 | ||||||||
Total revenue | $ | 2,156 | $ | 2,322 | $ | 2,530 |
In millions | 2017 | 2016 | 2015 | ||||||||
United States | $ | 1,089 | $ | 1,246 | $ | 1,428 | |||||
Americas (excluding United States) | 107 | 123 | 125 | ||||||||
International | 960 | 953 | 977 | ||||||||
Total revenue | $ | 2,156 | $ | 2,322 | $ | 2,530 |
In millions | 2017 | 2016 | |||||
United States | $ | 119 | $ | 113 | |||
Americas (excluding United States) | 11 | 4 | |||||
International | 32 | 21 | |||||
Property and equipment, net | $ | 162 | $ | 138 |
|
In millions | Available-for-sale securities | Defined benefit plans | Foreign currency translation adjustments | Total AOCI | |||||||||||
Balance as of December 31, 2014 | $ | 31 | $ | (24 | ) | $ | (11 | ) | $ | (4 | ) | ||||
Other comprehensive loss before reclassifications | (5 | ) | (8 | ) | (36 | ) | (49 | ) | |||||||
Amounts reclassified from AOCI | (26 | ) | 3 | — | (23 | ) | |||||||||
Net other comprehensive loss | (31 | ) | (5 | ) | (36 | ) | (72 | ) | |||||||
Balance as of December 31, 2015 | $ | — | $ | (29 | ) | $ | (47 | ) | $ | (76 | ) | ||||
Other comprehensive loss before reclassifications | — | (9 | ) | (7 | ) | (16 | ) | ||||||||
Amounts reclassified from AOCI | — | 3 | — | 3 | |||||||||||
Net other comprehensive loss | — | (6 | ) | (7 | ) | (13 | ) | ||||||||
Balance as of December 31, 2016 | $ | — | $ | (35 | ) | $ | (54 | ) | $ | (89 | ) | ||||
Other comprehensive (loss) income before reclassifications | — | (5 | ) | 16 | 11 | ||||||||||
Amounts reclassified from AOCI | — | 4 | — | 4 | |||||||||||
Net other comprehensive (loss) income | — | (1 | ) | 16 | 15 | ||||||||||
Balance as of December 31, 2017 | $ | — | $ | (36 | ) | $ | (38 | ) | $ | (74 | ) |
In millions | ||||||||||||||
AOCI Component | Location | 2017 | 2016 | 2015 | ||||||||||
Defined benefit plans | Cost of services | $ | (3 | ) | $ | (3 | ) | $ | (2 | ) | ||||
Defined benefit plans | Selling, general and administrative expenses | (2 | ) | (1 | ) | (1 | ) | |||||||
Available for sale securities | Other income | — | — | 42 | ||||||||||
Tax portion | Income tax benefit (expense) | 1 | 1 | (16 | ) | |||||||||
Total reclassifications | Net (loss) income | $ | (4 | ) | $ | (3 | ) | $ | 23 |
|
In millions | 2017 | 2016 | 2015 | |||||||||
Employee severance and other employee related cost | $ | 2 | $ | 14 | $ | 4 | ||||||
Asset write-downs | — | 80 | 140 | |||||||||
Professional services, legal and other associated cost | 24 | 35 | 8 | |||||||||
Total reorganization and business transformation cost | $ | 26 | $ | 129 | $ | 152 |
|
In millions, except per share amounts | First (1) | Second | Third | Fourth (2) | |||||||||||
2017 | |||||||||||||||
Total revenues | $ | 491 | $ | 513 | $ | 526 | $ | 626 | |||||||
Gross profit | $ | 224 | $ | 242 | $ | 250 | $ | 306 | |||||||
Operating (loss) income | $ | (1 | ) | $ | (1 | ) | $ | 7 | $ | 59 | |||||
Net (loss) income | $ | (2 | ) | $ | (4 | ) | $ | 13 | $ | (74 | ) | ||||
Net (loss) income per share: | |||||||||||||||
Basic | $ | (0.02 | ) | $ | (0.03 | ) | $ | 0.11 | $ | (0.61 | ) | ||||
Diluted | $ | (0.02 | ) | $ | (0.03 | ) | $ | 0.10 | $ | (0.61 | ) | ||||
2016 | |||||||||||||||
Total revenues | $ | 545 | $ | 599 | $ | 552 | $ | 626 | |||||||
Gross profit | $ | 269 | $ | 310 | $ | 294 | $ | 315 | |||||||
Operating (loss) income | $ | (42 | ) | $ | 87 | $ | 89 | $ | 98 | ||||||
Net (loss) income | $ | (46 | ) | $ | 64 | $ | 49 | $ | 58 | ||||||
Net (loss) income per share: | |||||||||||||||
Basic | $ | (0.36 | ) | $ | 0.49 | $ | 0.38 | $ | 0.45 | ||||||
Diluted | $ | (0.36 | ) | $ | 0.49 | $ | 0.37 | $ | 0.44 |
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