10-Q 1 tdc-20210930.htm 10-Q tdc-20210930
false2021Q3000081676112/31P1Y00008167612021-01-012021-09-30xbrli:shares00008167612021-10-29iso4217:USD0000816761tdc:SubscriptionSoftwareLicenseRecurringMember2021-07-012021-09-300000816761tdc:SubscriptionSoftwareLicenseRecurringMember2020-07-012020-09-300000816761tdc:SubscriptionSoftwareLicenseRecurringMember2021-01-012021-09-300000816761tdc:SubscriptionSoftwareLicenseRecurringMember2020-01-012020-09-300000816761tdc:ServicesAndOtherRecurringMember2021-07-012021-09-300000816761tdc:ServicesAndOtherRecurringMember2020-07-012020-09-300000816761tdc:ServicesAndOtherRecurringMember2021-01-012021-09-300000816761tdc:ServicesAndOtherRecurringMember2020-01-012020-09-300000816761tdc:ProductAndServiceRecurringMember2021-07-012021-09-300000816761tdc:ProductAndServiceRecurringMember2020-07-012020-09-300000816761tdc:ProductAndServiceRecurringMember2021-01-012021-09-300000816761tdc:ProductAndServiceRecurringMember2020-01-012020-09-300000816761tdc:SoftwareAndHardwarePerpetualMember2021-07-012021-09-300000816761tdc:SoftwareAndHardwarePerpetualMember2020-07-012020-09-300000816761tdc:SoftwareAndHardwarePerpetualMember2021-01-012021-09-300000816761tdc:SoftwareAndHardwarePerpetualMember2020-01-012020-09-300000816761tdc:ConsultingServicesMember2021-07-012021-09-300000816761tdc:ConsultingServicesMember2020-07-012020-09-300000816761tdc:ConsultingServicesMember2021-01-012021-09-300000816761tdc:ConsultingServicesMember2020-01-012020-09-3000008167612021-07-012021-09-3000008167612020-07-012020-09-3000008167612020-01-012020-09-30iso4217:USDxbrli:shares00008167612021-09-3000008167612020-12-3100008167612019-12-3100008167612020-09-300000816761us-gaap:CommonStockMember2020-12-310000816761us-gaap:AdditionalPaidInCapitalMember2020-12-310000816761us-gaap:RetainedEarningsMember2020-12-310000816761us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000816761us-gaap:RetainedEarningsMember2021-01-012021-03-3100008167612021-01-012021-03-310000816761us-gaap:CommonStockMember2021-01-012021-03-310000816761us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000816761us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000816761us-gaap:CommonStockMember2021-03-310000816761us-gaap:AdditionalPaidInCapitalMember2021-03-310000816761us-gaap:RetainedEarningsMember2021-03-310000816761us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-3100008167612021-03-310000816761us-gaap:RetainedEarningsMember2021-04-012021-06-3000008167612021-04-012021-06-300000816761us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300000816761us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300000816761us-gaap:CommonStockMember2021-06-300000816761us-gaap:AdditionalPaidInCapitalMember2021-06-300000816761us-gaap:RetainedEarningsMember2021-06-300000816761us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-3000008167612021-06-300000816761us-gaap:RetainedEarningsMember2021-07-012021-09-300000816761us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300000816761us-gaap:CommonStockMember2021-07-012021-09-300000816761us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000816761us-gaap:CommonStockMember2021-09-300000816761us-gaap:AdditionalPaidInCapitalMember2021-09-300000816761us-gaap:RetainedEarningsMember2021-09-300000816761us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300000816761us-gaap:CommonStockMember2019-12-310000816761us-gaap:AdditionalPaidInCapitalMember2019-12-310000816761us-gaap:RetainedEarningsMember2019-12-310000816761us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000816761us-gaap:RetainedEarningsMember2020-01-012020-03-3100008167612020-01-012020-03-310000816761us-gaap:CommonStockMember2020-01-012020-03-310000816761us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310000816761us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310000816761us-gaap:CommonStockMember2020-03-310000816761us-gaap:AdditionalPaidInCapitalMember2020-03-310000816761us-gaap:RetainedEarningsMember2020-03-310000816761us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-3100008167612020-03-310000816761us-gaap:RetainedEarningsMember2020-04-012020-06-3000008167612020-04-012020-06-300000816761us-gaap:CommonStockMember2020-04-012020-06-300000816761us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300000816761us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300000816761us-gaap:CommonStockMember2020-06-300000816761us-gaap:AdditionalPaidInCapitalMember2020-06-300000816761us-gaap:RetainedEarningsMember2020-06-300000816761us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-3000008167612020-06-300000816761us-gaap:RetainedEarningsMember2020-07-012020-09-300000816761us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300000816761us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300000816761us-gaap:CommonStockMember2020-09-300000816761us-gaap:AdditionalPaidInCapitalMember2020-09-300000816761us-gaap:RetainedEarningsMember2020-09-300000816761us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300000816761tdc:ReclassificationFromRecurringServicesToConsultingServicesMembersrt:RevisionOfPriorPeriodReclassificationAdjustmentMember2020-07-012020-09-300000816761tdc:ReclassificationFromRecurringServicesToConsultingServicesMembersrt:RevisionOfPriorPeriodReclassificationAdjustmentMember2020-01-012020-09-300000816761tdc:ReclassificationFromRecurringServicesToPerpetualSoftwareHardwareAndOtherMembersrt:RevisionOfPriorPeriodReclassificationAdjustmentMember2020-07-012020-09-300000816761tdc:ReclassificationFromRecurringServicesToPerpetualSoftwareHardwareAndOtherMembersrt:RevisionOfPriorPeriodReclassificationAdjustmentMember2020-01-012020-09-300000816761tdc:ProductAndServiceRecurringMembercountry:US2021-07-012021-09-300000816761tdc:ProductAndServiceRecurringMembercountry:US2020-07-012020-09-300000816761tdc:ProductAndServiceRecurringMembercountry:US2021-01-012021-09-300000816761tdc:ProductAndServiceRecurringMembercountry:US2020-01-012020-09-300000816761tdc:SoftwareAndHardwarePerpetualMembercountry:US2021-07-012021-09-300000816761tdc:SoftwareAndHardwarePerpetualMembercountry:US2020-07-012020-09-300000816761tdc:SoftwareAndHardwarePerpetualMembercountry:US2021-01-012021-09-300000816761tdc:SoftwareAndHardwarePerpetualMembercountry:US2020-01-012020-09-300000816761tdc:ConsultingServicesMembercountry:US2021-07-012021-09-300000816761tdc:ConsultingServicesMembercountry:US2020-07-012020-09-300000816761tdc:ConsultingServicesMembercountry:US2021-01-012021-09-300000816761tdc:ConsultingServicesMembercountry:US2020-01-012020-09-300000816761country:US2021-07-012021-09-300000816761country:US2020-07-012020-09-300000816761country:US2021-01-012021-09-300000816761country:US2020-01-012020-09-300000816761tdc:ProductAndServiceRecurringMemberus-gaap:EMEAMember2021-07-012021-09-300000816761tdc:ProductAndServiceRecurringMemberus-gaap:EMEAMember2020-07-012020-09-300000816761tdc:ProductAndServiceRecurringMemberus-gaap:EMEAMember2021-01-012021-09-300000816761tdc:ProductAndServiceRecurringMemberus-gaap:EMEAMember2020-01-012020-09-300000816761tdc:SoftwareAndHardwarePerpetualMemberus-gaap:EMEAMember2021-07-012021-09-300000816761tdc:SoftwareAndHardwarePerpetualMemberus-gaap:EMEAMember2020-07-012020-09-300000816761tdc:SoftwareAndHardwarePerpetualMemberus-gaap:EMEAMember2021-01-012021-09-300000816761tdc:SoftwareAndHardwarePerpetualMemberus-gaap:EMEAMember2020-01-012020-09-300000816761us-gaap:EMEAMembertdc:ConsultingServicesMember2021-07-012021-09-300000816761us-gaap:EMEAMembertdc:ConsultingServicesMember2020-07-012020-09-300000816761us-gaap:EMEAMembertdc:ConsultingServicesMember2021-01-012021-09-300000816761us-gaap:EMEAMembertdc:ConsultingServicesMember2020-01-012020-09-300000816761us-gaap:EMEAMember2021-07-012021-09-300000816761us-gaap:EMEAMember2020-07-012020-09-300000816761us-gaap:EMEAMember2021-01-012021-09-300000816761us-gaap:EMEAMember2020-01-012020-09-300000816761tdc:ProductAndServiceRecurringMembersrt:AsiaPacificMember2021-07-012021-09-300000816761tdc:ProductAndServiceRecurringMembersrt:AsiaPacificMember2020-07-012020-09-300000816761tdc:ProductAndServiceRecurringMembersrt:AsiaPacificMember2021-01-012021-09-300000816761tdc:ProductAndServiceRecurringMembersrt:AsiaPacificMember2020-01-012020-09-300000816761tdc:SoftwareAndHardwarePerpetualMembersrt:AsiaPacificMember2021-07-012021-09-300000816761tdc:SoftwareAndHardwarePerpetualMembersrt:AsiaPacificMember2020-07-012020-09-300000816761tdc:SoftwareAndHardwarePerpetualMembersrt:AsiaPacificMember2021-01-012021-09-300000816761tdc:SoftwareAndHardwarePerpetualMembersrt:AsiaPacificMember2020-01-012020-09-300000816761tdc:ConsultingServicesMembersrt:AsiaPacificMember2021-07-012021-09-300000816761tdc:ConsultingServicesMembersrt:AsiaPacificMember2020-07-012020-09-300000816761tdc:ConsultingServicesMembersrt:AsiaPacificMember2021-01-012021-09-300000816761tdc:ConsultingServicesMembersrt:AsiaPacificMember2020-01-012020-09-300000816761srt:AsiaPacificMember2021-07-012021-09-300000816761srt:AsiaPacificMember2020-07-012020-09-300000816761srt:AsiaPacificMember2021-01-012021-09-300000816761srt:AsiaPacificMember2020-01-012020-09-3000008167612021-10-012021-09-3000008167612022-10-012021-09-30xbrli:pure0000816761srt:ScenarioForecastMember2021-01-012021-12-310000816761us-gaap:InterestRateSwapMember2018-06-012018-06-300000816761us-gaap:InterestRateSwapMember2018-06-300000816761us-gaap:InterestRateSwapMember2021-09-300000816761us-gaap:ForeignExchangeContractMember2021-09-300000816761us-gaap:ForeignExchangeContractMember2020-12-310000816761us-gaap:InterestRateSwapMember2020-12-31tdc:patent00008167612019-07-012019-07-3100008167612021-08-312021-08-3100008167612021-02-162021-02-160000816761us-gaap:FairValueInputsLevel1Member2021-09-300000816761us-gaap:FairValueInputsLevel2Member2021-09-300000816761us-gaap:FairValueInputsLevel3Member2021-09-300000816761us-gaap:FairValueInputsLevel1Member2020-12-310000816761us-gaap:FairValueInputsLevel2Member2020-12-310000816761us-gaap:FairValueInputsLevel3Member2020-12-310000816761us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2021-09-300000816761us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel2Member2021-09-300000816761us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel3Member2021-09-300000816761us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2020-12-310000816761us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel2Member2020-12-310000816761us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel3Member2020-12-310000816761us-gaap:RevolvingCreditFacilityMembertdc:RevolvingCreditFacilityEndinginMarch2020Member2018-06-012018-06-300000816761us-gaap:RevolvingCreditFacilityMembertdc:RevolvingCreditFacilityEndinginMarch2020Member2018-06-300000816761tdc:RevolvingCreditFacilityEndingInJune2023Memberus-gaap:RevolvingCreditFacilityMember2018-06-30tdc:renewal0000816761tdc:RevolvingCreditFacilityEndingInJune2023Memberus-gaap:RevolvingCreditFacilityMember2018-06-012018-06-300000816761tdc:RevolvingCreditFacilityEndingInJune2023Memberus-gaap:RevolvingCreditFacilityMember2021-09-300000816761us-gaap:SeniorNotesMembertdc:SeniorUnsecuredTermLoanIssuedJune2018Member2018-06-300000816761us-gaap:SeniorNotesMembertdc:SeniorUnsecuredTermLoanIssuedJune2018Member2018-06-012018-06-300000816761tdc:TermLoanMember2018-06-012018-06-300000816761us-gaap:DebtInstrumentRedemptionPeriodOneMember2018-06-300000816761us-gaap:DebtInstrumentRedemptionPeriodTwoMember2018-06-300000816761us-gaap:DebtInstrumentRedemptionPeriodThreeMember2018-06-300000816761us-gaap:SeniorNotesMembertdc:SeniorUnsecuredTermLoanIssuedJune2018Member2021-09-30tdc:segment0000816761tdc:AmericasSegmentMember2021-07-012021-09-300000816761tdc:AmericasSegmentMember2020-07-012020-09-300000816761tdc:AmericasSegmentMember2021-01-012021-09-300000816761tdc:AmericasSegmentMember2020-01-012020-09-300000816761tdc:EMEASegmentMember2021-07-012021-09-300000816761tdc:EMEASegmentMember2020-07-012020-09-300000816761tdc:EMEASegmentMember2021-01-012021-09-300000816761tdc:EMEASegmentMember2020-01-012020-09-300000816761tdc:APJSegmentMember2021-07-012021-09-300000816761tdc:APJSegmentMember2020-07-012020-09-300000816761tdc:APJSegmentMember2021-01-012021-09-300000816761tdc:APJSegmentMember2020-01-012020-09-300000816761us-gaap:OperatingSegmentsMembertdc:AmericasSegmentMember2021-07-012021-09-300000816761us-gaap:OperatingSegmentsMembertdc:AmericasSegmentMember2020-07-012020-09-300000816761us-gaap:OperatingSegmentsMembertdc:AmericasSegmentMember2021-01-012021-09-300000816761us-gaap:OperatingSegmentsMembertdc:AmericasSegmentMember2020-01-012020-09-300000816761us-gaap:OperatingSegmentsMembertdc:EMEASegmentMember2021-07-012021-09-300000816761us-gaap:OperatingSegmentsMembertdc:EMEASegmentMember2020-07-012020-09-300000816761us-gaap:OperatingSegmentsMembertdc:EMEASegmentMember2021-01-012021-09-300000816761us-gaap:OperatingSegmentsMembertdc:EMEASegmentMember2020-01-012020-09-300000816761tdc:APJSegmentMemberus-gaap:OperatingSegmentsMember2021-07-012021-09-300000816761tdc:APJSegmentMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300000816761tdc:APJSegmentMemberus-gaap:OperatingSegmentsMember2021-01-012021-09-300000816761tdc:APJSegmentMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300000816761us-gaap:OperatingSegmentsMember2021-07-012021-09-300000816761us-gaap:OperatingSegmentsMember2020-07-012020-09-300000816761us-gaap:OperatingSegmentsMember2021-01-012021-09-300000816761us-gaap:OperatingSegmentsMember2020-01-012020-09-300000816761us-gaap:MaterialReconcilingItemsMember2021-07-012021-09-300000816761us-gaap:MaterialReconcilingItemsMember2020-07-012020-09-300000816761us-gaap:MaterialReconcilingItemsMember2021-01-012021-09-300000816761us-gaap:MaterialReconcilingItemsMember2020-01-012020-09-300000816761tdc:VoluntarySeparationProgramMember2020-09-012020-09-300000816761srt:MinimumMembertdc:WorkforceReductionPlanMember2020-11-020000816761srt:MaximumMembertdc:WorkforceReductionPlanMember2020-11-020000816761srt:MinimumMembertdc:WorkforceReductionPlanMemberus-gaap:EmployeeSeveranceMember2020-11-020000816761srt:MaximumMembertdc:WorkforceReductionPlanMemberus-gaap:EmployeeSeveranceMember2020-11-020000816761srt:MinimumMembertdc:VoluntarySeparationProgramMemberus-gaap:EmployeeSeveranceMember2020-11-020000816761srt:MaximumMembertdc:VoluntarySeparationProgramMemberus-gaap:EmployeeSeveranceMember2020-11-020000816761srt:MinimumMembertdc:WorkforceReductionPlanMemberus-gaap:FacilityClosingMember2020-11-020000816761srt:MaximumMembertdc:WorkforceReductionPlanMemberus-gaap:FacilityClosingMember2020-11-020000816761srt:MinimumMembertdc:WorkforceReductionPlanMembertdc:OutsideServicesLegalAndOtherAssociatedCostsMember2020-11-020000816761srt:MaximumMembertdc:WorkforceReductionPlanMembertdc:OutsideServicesLegalAndOtherAssociatedCostsMember2020-11-020000816761tdc:WorkforceReductionPlanMember2021-01-012021-09-300000816761tdc:WorkforceReductionPlanMember2020-01-012020-12-310000816761srt:MinimumMembertdc:WorkforceReductionPlanMembersrt:ScenarioForecastMember2020-11-022021-12-310000816761srt:MaximumMembertdc:WorkforceReductionPlanMembersrt:ScenarioForecastMember2020-11-022021-12-310000816761srt:MinimumMembertdc:WorkforceReductionPlanMembertdc:EmployeeMembersrt:ScenarioForecastMemberus-gaap:NonUsMember2020-11-022021-12-310000816761srt:MaximumMembertdc:WorkforceReductionPlanMembertdc:EmployeeMembersrt:ScenarioForecastMemberus-gaap:NonUsMember2020-11-022021-12-310000816761tdc:VoluntarySeparationProgramMember2021-01-012021-09-300000816761us-gaap:CostOfSalesMembertdc:VoluntarySeparationProgramMember2021-01-012021-09-300000816761tdc:VoluntarySeparationProgramMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-09-300000816761tdc:VoluntarySeparationProgramMemberus-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-09-3000008167612020-01-012020-12-310000816761tdc:EmployeeMemberus-gaap:NonUsMember2021-01-012021-09-300000816761tdc:EmployeeMemberus-gaap:NonUsMember2020-01-012020-12-310000816761tdc:VoluntarySeparationProgramMember2020-12-310000816761tdc:VoluntarySeparationProgramMember2021-09-300000816761tdc:WorkforceReductionPlanMemberus-gaap:EmployeeSeveranceMember2020-12-310000816761tdc:WorkforceReductionPlanMemberus-gaap:EmployeeSeveranceMember2021-01-012021-09-300000816761tdc:WorkforceReductionPlanMemberus-gaap:EmployeeSeveranceMember2021-09-300000816761us-gaap:OtherRestructuringMembertdc:WorkforceReductionPlanMember2020-12-310000816761us-gaap:OtherRestructuringMembertdc:WorkforceReductionPlanMember2021-01-012021-09-300000816761us-gaap:OtherRestructuringMembertdc:WorkforceReductionPlanMember2021-09-300000816761tdc:A2020RestructuringPlanMember2020-12-310000816761tdc:A2020RestructuringPlanMember2021-01-012021-09-300000816761tdc:A2020RestructuringPlanMember2021-09-300000816761tdc:VoluntarySeparationProgramMember2020-01-012020-12-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 001-33458
TERADATA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-3236470
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17095 Via Del Campo
San Diego, California 92127
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (866548-8348
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:Trading SymbolName of Each Exchange on which Registered:
Common Stock, $0.01 par valueTDCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ý  Accelerated filer ¨
Non-accelerated filer ¨  Smaller reporting company 
  Emerging growth company 
1


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes    No  ý
At October 29, 2021, the registrant had approximately 108.5 million shares of common stock outstanding.
2



TABLE OF CONTENTS
PART I—FINANCIAL INFORMATION
 
  
DescriptionPage
Item 1.Financial Statements
Item 2.
Item 3.
Item 4.
PART II—OTHER INFORMATION
  
DescriptionPage
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
3

Part 1—FINANCIAL INFORMATION
A
Item 1.Financial Statements.
Teradata Corporation
Condensed Consolidated Statements of Income (Loss) (Unaudited)
Three Months Ended
September 30,
Nine Months Ended September 30,
In millions, except per share amounts2021202020212020
Revenue
Subscription software licenses$64 $52 $238 $155 
Services and other288 277 862 808 
Total recurring352 329 1,100 963 
Perpetual software licenses, hardware and other18 25 58 73 
Consulting services90 100 284 309 
Total revenue460 454 1,442 1,345 
Cost of revenue
Subscription software licenses2 6 10 21 
Services and other93 90 262 257 
Total recurring95 96 272 278 
Perpetual software licenses, hardware and other12 13 34 46 
Consulting services78 91 244 286 
Total cost of revenue185 200 550 610 
Gross profit275 254 892 735 
Operating expenses
Selling, general and administrative expenses166 163 476 486 
Research and development expenses79 90 235 246 
Total operating expenses245 253 711 732 
Income from operations30 1 181 3 
Other expense, net
Interest expense(6)(7)(20)(21)
Interest income1 1 4 4 
Other expense(6)(5)(15)(13)
Total other expense, net(11)(11)(31)(30)
Income (loss) before income taxes19 (10)150 (27)
Income tax expense (benefit)2 (9)36 (151)
Net income (loss)$17 $(1)$114 $124 
Net income (loss) per common share
Basic$0.16 $(0.01)$1.05 $1.13 
Diluted$0.15 $(0.01)$1.01 $1.12 
Weighted average common shares outstanding
Basic108.9 109.1 108.9 109.3 
Diluted113.4 109.1 113.1 110.9 
See Notes to Condensed Consolidated Financial Statements (Unaudited).

4


Teradata Corporation
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
Three Months Ended
September 30,
Nine Months Ended September 30,
In millions2021202020212020
Net income (loss)$17 $(1)$114 $124 
Other comprehensive income (loss):
Foreign currency translation adjustments(10)6 (11)(11)
Derivatives:
Unrealized gain (loss) on derivatives, before tax3 3 10 (10)
Unrealized gain (loss) on derivatives, tax portion(1)(1)(3)2 
Unrealized gain (loss) on derivatives, net of tax2 2 7 (8)
Defined benefit plans:
Defined benefit plan adjustment, before tax3 3 8 7 
Defined benefit plan adjustment, tax portion(1)(1)(2)(2)
Defined benefit plan adjustment, net of tax2 2 6 5 
Other comprehensive (loss) income(6)10 2 (14)
Comprehensive income$11 $9 $116 $110 
See Notes to Condensed Consolidated Financial Statements (Unaudited).

5

Teradata Corporation
Condensed Consolidated Balance Sheets (Unaudited)
In millions, except per share amountsSeptember 30,
2021
December 31,
2020
Assets
Current assets
Cash and cash equivalents$613 $529 
Accounts receivable, net290 331 
Inventories17 29 
Other current assets144 155 
Total current assets1,064 1,044 
Property and equipment, net300 339 
Right of use assets - operating lease, net29 38 
Goodwill397 401 
Capitalized contract costs, net99 98 
Deferred income taxes205 222 
Other assets40 51 
Total assets$2,134 $2,193 
Liabilities and stockholders’ equity
Current liabilities
Current portion of long-term debt$75 $44 
Current portion of finance lease liability81 75 
Current portion of operating lease liability13 15 
Accounts payable104 50 
Payroll and benefits liabilities137 170 
Deferred revenue464 499 
Other current liabilities81 99 
Total current liabilities955 952 
Long-term debt349 411 
Finance lease liability58 70 
Operating lease liability20 28 
Pension and other postemployment plan liabilities141 152 
Long-term deferred revenue28 38 
Deferred tax liabilities8 6 
Other liabilities118 136 
Total liabilities1,677 1,793 
Commitments and contingencies (Note 8)
Stockholders’ equity
Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
  
Common stock: par value $0.01 per share, 500.0 shares authorized, 108.4 and 108.8 shares issued at September 30, 2021 and December 31, 2020, respectively
1 1 
Paid-in capital1,776 1,656 
Accumulated deficit(1,179)(1,114)
Accumulated other comprehensive loss(141)(143)
Total stockholders’ equity457 400 
Total liabilities and stockholders’ equity$2,134 $2,193 
See Notes to Condensed Consolidated Financial Statements (Unaudited).
6

Teradata Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)
 Nine Months Ended September 30,
In millions20212020
Operating activities
Net income$114 $124 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization113126
Stock-based compensation expense79 79 
Deferred income taxes10 (152)
Changes in assets and liabilities:
Receivables41 77 
Inventories12 17 
Current payables and accrued expenses45 (24)
Deferred revenue(45)(13)
Other assets and liabilities(1)(23)
Net cash provided by operating activities368 211 
Investing activities
Expenditures for property and equipment(19)(34)
Additions to capitalized software(2)(6)
Net cash used in investing activities(21)(40)
Financing activities
Repurchases of common stock(176)(75)
Repayments of long-term borrowings(32)(19)
Payments of finance leases(68)(43)
Other financing activities, net24 7 
Net cash used in financing activities(252)(130)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(11)(3)
Increase in cash, cash equivalents and restricted cash84 38 
Cash, cash equivalents and restricted cash at beginning of period533 496 
Cash, cash equivalents and restricted cash at end of period$617 $534 
Supplemental cash flow disclosure:
Assets acquired under operating lease$9 $6 
Assets acquired under finance lease$62 $58 
Annual variable incentive payout settled in equity$17 $ 
Reconciliation of cash, cash equivalents and restricted cash to the Condensed Consolidated Balance Sheets:
September 30, 2021December 31, 2020
Cash and cash equivalents$613 $529 
Restricted cash4 4 
Total cash, cash equivalents and restricted cash$617 $533 

See Notes to Condensed Consolidated Financial Statements (Unaudited).
7

Teradata Corporation
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

Common StockPaid-inAccumulated Accumulated Other Comprehensive 
In millionsSharesAmountCapitalDeficitLossTotal
December 31, 2020108 $1 $1,656 $(1,114)$(143)$400 
Net income— — — 53 — 53 
Employee stock compensation, employee stock purchase programs and option exercises, net of tax4 — 52 — — 52 
Repurchases of common stock, retired(3)— — (85)— (85)
Pension and postemployment benefit plans, net of tax— — — — 2 2 
Unrealized gain on derivatives, net of tax— — — — 3 3 
Currency translation adjustment— — — — (8)(8)
March 31, 2021109 $1 $1,708 $(1,146)$(146)$417 
Net income— — — 44 — 44 
Employee stock compensation, employee stock purchase programs and option exercises, net of tax— — 35 — — 35 
Repurchases of common stock, retired— — — (36)— (36)
Pension and postemployment benefit plans, net of tax— — — — 2 2 
Unrealized gain on derivatives, net of tax— — — — 2 2 
Currency translation adjustment— — — — 7 7 
June 30, 2021109 $1 $1,743 $(1,138)$(135)$471 
Net income— — — 17 — 17 
Employee stock compensation, employee stock purchase programs and option exercises, net of tax— — 33 — — 33 
Repurchases of common stock, retired(1)— — (58)— (58)
Pension and postemployment benefit plans, net of tax— — — — 2 2 
Unrealized gain on derivatives, net of tax— — — — 2 2 
Currency translation adjustment— — — — (10)(10)
September 30, 2021108 $1 $1,776 $(1,179)$(141)$457 

8

Common StockPaid-inAccumulatedAccumulated Other Comprehensive 
In millionsSharesAmountCapitalDeficitLossTotal
December 31, 2019111 $1 $1,545 $(1,143)$(141)$262 
Net income— — — 168 — 168 
Employee stock compensation, employee stock purchase programs and option exercises, net of tax1 — 22 — — 22 
Repurchases of common stock, retired(4)— — (75)— (75)
Pension and postemployment benefit plans, net of tax— — — — 2 2 
Unrealized loss on derivatives, net of tax— — — — (11)(11)
Currency translation adjustment— — — — (19)(19)
March 31, 2020108 $1 $1,567 $(1,050)$(169)$349 
Net loss— — — (43)— (43)
Employee stock compensation, employee stock purchase programs and option exercises, net of tax1 36 — — 36 
Pension and postemployment benefit plans, net of tax— — — — 1 1 
Unrealized gain on derivatives, net of tax— — — — 1 1 
Currency translation adjustment— — — — 2 2 
June 30, 2020109 $1 $1,603 $(1,093)$(165)$346 
Net loss— — — (1)— (1)
Employee stock compensation, employee stock purchase programs and option exercises, net of tax— — 29 — — 29 
Pension and postemployment benefit plans, net of tax— — — — 2 2 
Unrealized gain on derivatives, net of tax— — — — 2 2 
Currency translation adjustment— — — — 6 6 
September 30, 2020109 $1 $1,632 $(1,094)$(155)$384 

See Notes to Condensed Consolidated Financial Statements (Unaudited).
9

Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Basis of Presentation
These statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC") and, in accordance with those rules and regulations, do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the results of operations, financial position and cash flows of Teradata Corporation ("Teradata" or the "Company") for the interim periods presented herein. The year-end 2020 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amounts and disclosures. Actual results may vary from these estimates. 
These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Teradata’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the "2020 Annual Report"). The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year.
Prior period amounts have been revised to conform to the current year presentation. At the beginning of the first quarter of 2021, the Company changed its historical presentation for certain components within its revenue and cost categories. To better reflect the strategy and shift in the business, the Company adopted and revised the presentation beginning in the first quarter of 2021, including reclassifying managed services revenue of $28 million and $80 million for the three and nine months ended September 30, 2020 and costs of $21 million and $62 million for the three and nine months ended September 30, 2020 from Recurring to Consulting services. The Company also reclassified third party revenue of $8 million and $25 million for the three and nine months ended September 30, 2020 and costs of $6 million and $19 million for the three and nine months ended September 30, 2020 from Recurring to Perpetual software licenses, hardware and other. This change in presentation does not affect the Company's total revenues, total costs of revenues or overall total gross profit (defined as total revenue less total cost of revenue).
2. New Accounting Pronouncements
Reference Rate Reform. In March 2020, the Financial Accounting Standards Board ("FASB") issued new guidance to provide relief to companies that will be impacted by the expected change in benchmark interest rates, as participating banks will no longer be required to submit London Interbank Offered Rate ("LIBOR") quotes by the U.K. Financial Conduct Authority. The new guidance allows companies to, provided the only change to existing contracts are a change to an approved benchmark interest rate, account for modifications as a continuance of the existing contract without additional analysis. For new and existing contracts, companies may elect to apply the amendments as of March 12, 2020 through December 31, 2022. The Company is currently evaluating this new guidance to determine the impact it may have on our condensed consolidated financial statements or related disclosures.
Recently Adopted Guidance
Accounting for Income Taxes. In December 2019, the FASB issued new guidance to simplify the accounting for income taxes. The new guidance changes various subtopics of accounting for income taxes including, but not limited to, accounting for "hybrid" tax regimes, tax basis step-up in goodwill obtained in a transaction that is not a business combination, intra-period tax allocation exception to incremental approach, ownership changes in investments, interim-period accounting for enacted changes in tax law, and year-to-date loss limitation in interim-period tax accounting. We adopted the guidance in the first quarter of 2021. The adoption did not have a material impact on our condensed consolidated financial statements or related disclosures.

10

3. Revenue from Contracts with Customers
Disaggregation of Revenue from Contracts with Customers
The following table presents a disaggregation of revenue:
Three Months Ended September 30,Nine Months Ended September 30,
in millions2021202020212020
Americas
Recurring $210 $203 $661 $603 
Perpetual software licenses, hardware and other5 16 16 36 
Consulting services34 42 109 125 
Total Americas249 261 786 764 
EMEA
Recurring90 79 277 227 
Perpetual software licenses, hardware and other10 5 30 26 
Consulting services33 31 101 98 
Total EMEA133 115 408 351 
APJ
Recurring52 47 162 133 
Perpetual software licenses, hardware and other3 4 12 11 
Consulting services23 27 74 86 
Total APJ78 78 248 230 
Total Revenue$460 $454 $1,442 $1,345 
Rental revenue, which is included in recurring revenue in the above table, was as follows:
Three Months Ended September 30,Nine Months Ended September 30,
in millions2021202020212020
Rental revenue* $36 $28 $123 $72 
*Rental revenue includes hardware maintenance.
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets, and customer advances and deposits (deferred revenue or contract liabilities) on the condensed consolidated balance sheet. Accounts receivable include amounts due from customers that are unconditional. Contract assets relate to the Company’s rights to consideration for goods delivered or services completed and recognized as revenue but billing and the right to receive payment is conditional upon the completion of other performance obligations. Contract assets are included in other current assets on the balance sheet and are transferred to accounts receivable when the rights become unconditional. Deferred revenue consists of advance payments and billings in excess of revenue recognized. Deferred revenue is classified as either current or noncurrent based on the timing of when the Company expects to recognize revenue. These assets and liabilities are reported on a contract-by-contract basis at the end of each reporting period. The following table provides information about receivables, contract assets and deferred revenue from contracts with customers:
11

As of
in millionsSeptember 30, 2021December 31, 2020
Accounts receivable, net290 $331 
Contract assets12 11 
Current deferred revenue464 499 
Long-term deferred revenue28 38 
Revenue recognized during the nine months ended September 30, 2021 from amounts included in deferred revenue at the beginning of the period was $445 million.
Transaction Price Allocated to Unsatisfied Obligations
The following table includes estimated revenue expected to be recognized in the future related to the Company's unsatisfied (or partially satisfied) obligations at September 30, 2021:
in millionsTotal at September 30, 2021Year 1Year 2 and Thereafter
Remaining unsatisfied obligations$2,524 $1,550 $974 
The amounts above represent the price of firm orders for which work has not been performed or goods have not been delivered and exclude unexercised contract options outside the stated contractual term that do not represent material rights to the customer. Although the Company believes that the contract value in the above table is firm, approximately $1,423 million of the amount is under contracts that are subject to customer-only general cancellation for convenience terms that the Company is contractually obligated to perform unless the customer notifies us of cancellation. The Company expects to recognize revenue of approximately $481 million in the next year from contracts that are non-cancelable. The Company believes the inclusion of this information is important to understanding the obligations that the Company is contractually required to perform and provides useful information regarding remaining obligations related to these executed contracts.
4. Contract Costs
The Company capitalizes sales commissions and other contract costs that are incremental direct costs of obtaining customer contracts if the expected amortization period of the asset is greater than one year. These costs are recorded in capitalized contract costs, net on the Company’s balance sheet. The capitalized amounts are calculated based on the annual recurring revenue and contract value for individual multi-term contracts. The judgments made in determining the amount of costs incurred include whether the commissions are in fact incremental and would not have occurred absent the customer contract. Costs to obtain a contract are amortized as selling, general and administrative expenses on a straight-line basis over the expected period of benefit, which is typically around four years. These costs are periodically reviewed for impairment. The following table identifies the activity relating to capitalized contract costs:
in millionsDecember 31, 2020CapitalizedAmortizationSeptember 30, 2021
Capitalized contract costs$98 $35 $(34)$99 
in millionsDecember 31, 2019CapitalizedAmortizationSeptember 30, 2020
Capitalized contract costs$91 $23 $(25)$89 

12

5. Supplemental Financial Information
 As of
In millionsSeptember 30,
2021
December 31,
2020
Inventories
Finished goods$7 $18 
Service parts10 11 
Total inventories$17 $29 
Deferred revenue
Deferred revenue, current$464 $499 
Long-term deferred revenue28 38 
Total deferred revenue$492 $537 
6. Income Taxes
Income tax provisions for interim periods are based on estimated annual income tax rates, adjusted to reflect the effects of any significant infrequent or unusual items which are required to be discretely recognized within the current interim period. The Company expects that a majority of its foreign earnings will be repatriated back to the United States ("U.S."). As a result, the effective tax rates in the periods presented are largely based upon the forecasted pre-tax earnings mix and allocation of certain expenses in various taxing jurisdictions where the Company conducts its business.

The effective tax rate is as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
In millions2021202020212020
Effective tax rate10.5 %90.0 %24.0 %559.3 %

For the three months ended September 30, 2021, the Company recorded a total of $4 million of net discrete tax benefits, of which $5 million of tax benefit was related to true-up adjustments to reconcile the Company’s 2020 U.S. tax return as completed in the third quarter of 2021 versus the preliminary estimate as booked in its tax provision for the year ended December 31, 2020. In addition, the Company recognized $1 million of incremental tax benefit related to stock-based compensation vesting. These tax benefits were partially offset by $2 million of discrete tax expense related to adjustments to the Company’s accrual for unrecognized tax benefits in accordance with FIN 48. As a result of these discrete items the Company recorded income tax expense of $2 million on a pre-tax income of $19 million for the three months ended September 30, 2021, resulting in an effective income tax rate of 10.5%.

For the nine months ended September 30, 2021, the Company recorded $7 million of net discrete tax benefits, of which $5 million of tax benefit was related to the true-up adjustments to reconcile the Company’s 2020 U.S. tax return as completed in the third quarter of 2021 versus the preliminary estimate as booked in its tax provision for the year ended December 31, 2020. In addition, the Company recognized $4 million of incremental tax benefit related to stock-based compensation vesting and $1 million incremental tax benefit from true-ups to its forecasted marginal annual rate for 2021 based on revised full-year forecasted earnings. These tax benefits were partially offset by $3 million of discrete tax expense related to adjustments to the Company’s accrual for unrecognized tax benefits in accordance with FIN 48. The Company recorded income tax expense of $36 million on a pre-tax net income of $150 million for the nine months ended September 30, 2021, resulting in an effective income tax rate of 24.0%.
For the three months ended September 30, 2020, the Company recorded $9 million of discrete tax benefit, a majority of which related to the adjustment of the marginal tax rate from the second quarter based on revised full-year forecasted earnings. As a result, the Company recorded income tax benefit of $9 million on a pre-tax net loss of $10 million for the three months ended September 30, 2020, resulting in an effective income tax rate of 90.0%.
13

For the nine months ended September 30, 2020, the Company recorded $122 million of discrete tax benefit. The year to date discrete tax expense of $29 million recorded for marginal tax rate adjustments based on revised full year forecasted earnings was offset by $152 million of discrete tax benefit recorded in the first quarter, a majority of which related to an intra-entity asset transfer of certain of the Company's intellectual property ("IP") to one of its Irish subsidiaries, which occurred on January 1, 2020. As a result, the Company recorded income tax benefit of $151 million on a pre-tax net loss of $27 million for the nine months ended September 30, 2020, resulting in an effective income tax rate of 559.3%.
The Company estimates its annual effective tax rate for 2021 to be approximately 27%, which takes into consideration, among other things, the forecasted earnings mix by jurisdiction and the impact of discrete tax items to be recognized in 2021. Under U.S. tax law, U.S. shareholders are subject to a tax on global intangible low-taxed income ("GILTI") earned by certain foreign subsidiaries. The Company has elected to provide for the tax expense related to GILTI in the year in which the tax is incurred. The Company does not expect a material amount of tax expense related to GILTI based on our forecasted marginal effective tax rate for 2021.
7. Derivative Instruments and Hedging Activities
As a portion of Teradata’s operations is conducted outside the U.S. and in currencies other than the U.S. dollar, the Company is exposed to potential gains and losses from changes in foreign currency exchange rates. In an attempt to mitigate the impact of currency fluctuations, the Company uses foreign exchange forward contracts to hedge transactional exposures resulting predominantly from foreign currency denominated inter-company receivables and payables. The forward contracts are designated as fair value hedges of specified foreign currency denominated inter-company receivables and payables and generally mature in three months or less. The fair values of foreign exchange contracts are based on market spot and forward exchange rates and represent estimates of possible value that may not be realized in the future. Across its portfolio of contracts, Teradata has both long and short positions relative to the U.S. dollar. As a result, Teradata’s net involvement is less than the total contract notional amount of the Company’s foreign exchange forward contracts.
Gains and losses from foreign exchange forward contracts are fully recognized each period and reported along with the offsetting gain or loss of the related hedged item, either in cost of revenues, operating expenses or in other income (expense), depending on the nature of the related hedged item.
In June 2018, Teradata executed a five-year interest rate swap with a $500 million initial notional amount to hedge the floating interest rate of its term loan, as more fully described in Note 10. The Company uses interest rate swaps to manage interest rate risks on future interest payments caused by interest rate changes on its variable rate term loan. The notional amount of the hedge steps down according to the amortization schedule of the term loan. The notional amount of the hedge was $425 million as of September 30, 2021.
The Company performed an initial effectiveness assessment in the third quarter of 2018 on the interest rate swap, and the hedge was determined to be effective. The hedge is being evaluated qualitatively on a quarterly basis for effectiveness. Changes in fair value are recorded in Accumulated Other Comprehensive Loss and periodic settlements of the swap will be recorded in interest expense along with the interest on amounts outstanding under the term loan.
The following table identifies the contract notional amount of the Company’s derivative financial instruments:
As of
In millionsSeptember 30,
2021
December 31,
2020
Contract notional amount of foreign exchange forward contracts$80 $90 
Net contract notional amount of foreign exchange forward contracts$46 $29 
Contract notional amount of interest rate swap $425 $456 
All derivatives are recognized in the condensed consolidated balance sheets at their fair value. The notional amounts represent agreed-upon amounts on which calculations of dollars to be exchanged are based and are an indication of the extent of Teradata’s involvement in such instruments. These notional amounts do not represent amounts
14

exchanged by the parties and, therefore, are not a measure of the instruments. Refer to Note 9 for disclosures related to the fair value of all derivative assets and liabilities.
The Company does not hold or issue derivative financial instruments for trading purposes, nor does it hold or issue leveraged derivative instruments. By using derivative financial instruments to hedge exposures to changes in foreign exchange and interest rates, the Company exposes itself to credit risk. The Company manages exposure to counterparty credit risk by entering into derivative financial instruments with highly rated institutions that can be expected to fully perform under the terms of the applicable contracts.
8. Commitments and Contingencies
Legal Proceedings. In the ordinary course of business, the Company is subject to proceedings, lawsuits, governmental investigations, 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. We are not currently a party to any litigation, nor are we aware of any pending or threatened litigation against us that we believe would materially affect our business, operating results, financial condition or cash flows, other than the following:

On June 19, 2018, the Company and certain of its subsidiaries filed a lawsuit in the U.S. District Court for the Northern District of California against SAP SE, SAP America, Inc., and SAP Labs, LLC (collectively, "SAP"). In the lawsuit, the Company alleges, among other things, that SAP misappropriated certain of the Company’s trade secrets within the Company’s enterprise data analytics and warehousing products and used them to help develop, improve, introduce, and sell one or more competing products. The Company further alleges that SAP has employed anticompetitive practices using its substantial market position in the enterprise resource planning applications market to pressure the Company’s customers and prospective customers to use SAP’s one or more competing products and reduce or eliminate customers' and prospective customers' use of the Company's offerings. The Company may seek an injunction barring SAP’s alleged conduct, monetary damages, and other available legal and equitable relief. In July 2019, SAP filed patent infringement counterclaims against Teradata based on five of SAP’s U.S. patents (one of which has since been dismissed from the suit), and the Company is vigorously defending against these counterclaims. On August 31, 2020, the Company filed a second lawsuit against SAP in the U.S. District Court for the Northern District of California. In this lawsuit as it currently stands, Teradata alleges infringement by SAP of four of Teradata’s U.S. patents and seeks an injunction barring SAP from further infringement, monetary damages, and other available legal and equitable relief. On February 16, 2021, SAP filed additional patent infringement counterclaims against Teradata based on six additional U.S. patents. On the same day, SAP also filed a lawsuit in Germany for infringement of a single German patent. Currently, it is not possible to determine the likelihood of a loss or a reasonably estimated range of loss, if any, pertaining to any of SAP’s patent counterclaims in the United States or its German lawsuit.
Other Contingencies. The Company provides its customers with certain indemnification rights. In general, the Company agrees to indemnify the customer if a third party asserts patent or other infringement on the part of the customer for its use of the Company’s offerings. The Company has indemnification obligations under its charter and bylaws to its officers and directors, and has entered into indemnification agreements with the officers and directors of its subsidiaries. From time to time, the Company also enters into agreements in connection with its acquisition and divesture activities that include indemnification obligations by the Company. The fair value of these indemnification obligations is typically not readily determinable due to the conditional nature of the Company’s potential obligations and the specific facts and circumstances involved with each particular agreement. As such, the Company has generally not recorded a liability in connection with these indemnification arrangements. Historically, payments made by the Company under these types of agreements have not had a material effect on the Company’s consolidated financial condition, results of operations or cash flows.
Concentrations of Risk. The Company is potentially subject to concentrations of credit risk on accounts receivable and financial instruments such as hedging instruments, and cash and cash equivalents. Credit risk includes the risk of nonperformance by counterparties. The maximum potential loss may exceed the amount recognized on the balance sheet. Exposure to credit risk is managed through credit approvals, credit limits, selecting major international financial institutions (as counterparties to hedging transactions) and monitoring procedures. Teradata’s business often involves large transactions with customers, and if one or more of those customers were to default in
15

its obligations under applicable contractual arrangements, the Company could be exposed to potentially significant losses. However, management believes that the reserves for potential losses were adequate at September 30, 2021 and December 31, 2020.
The Company is also potentially subject to concentrations of supplier risk. Our hardware components are assembled exclusively by Flex Ltd. ("Flex"). Flex procures a wide variety of components used in the manufacturing process on behalf of the Company. Although many of these components are available from multiple sources, Teradata utilizes preferred supplier relationships to provide more consistent and optimal quality, cost and delivery. Typically, these preferred suppliers maintain alternative processes and/or facilities to ensure continuity of supply. Given the Company’s strategy to outsource its manufacturing activities to Flex and to source certain components from single suppliers, a disruption in production at Flex or at a supplier could impact the timing of customer shipments and/or Teradata’s operating results. In addition, a significant change in the forecasts to any of these preferred suppliers could result in purchase obligations for components that may be in excess of demand.
9. Fair Value Measurements
Fair value measurements are established utilizing a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, defined as significant other observable inputs, such as quoted prices in active markets for similar assets or liabilities, or quoted prices in less-active markets for identical assets; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The Company’s assets and liabilities measured at fair value on a recurring basis include money market funds, interest rate swaps and foreign currency exchange contracts. A portion of the Company’s excess cash reserves are held in money market funds which generate interest income based on the prevailing market rates. Money market funds are included in cash and cash equivalents in the Company’s balance sheet. Money market fund holdings are measured at fair value using quoted market prices and are classified within Level 1 of the valuation hierarchy.
When deemed appropriate, the Company minimizes its exposure to changes in foreign currency exchange rates through the use of derivative financial instruments, specifically, foreign exchange forward contracts. Additionally, in June 2018, Teradata executed a five-year interest rate swap with a $500 million initial notional amount in order to hedge the floating interest rate on its term loan. The fair value of these contracts and swaps are measured at the end of each interim reporting period using observable inputs other than quoted prices, specifically market spot and forward exchange rates. As such, these derivative instruments are classified within Level 2 of the valuation hierarchy. Fair value of unrealized gains for open contracts are recorded in other assets and the fair value of unrealized losses are recorded in other liabilities in the Company's balance sheet. The fair value of foreign exchange forward contract assets and liabilities at September 30, 2021 and December 31, 2020 was not material. Realized gains and losses from the Company’s fair value hedges net of corresponding gains or losses on the underlying exposures were immaterial for the three and nine months ended September 30, 2021 and 2020.
16

The Company’s other assets and liabilities measured at fair value on a recurring basis and subject to fair value disclosure requirements at September 30, 2021 and December 31, 2020 were as follows:
  Fair Value Measurements at Reporting Date Using
In millionsTotalQuoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets
Money market funds at September 30, 2021
$207 $207 $ $ 
Money market funds at December 31, 2020
$16 $16 $ $ 
Liabilities
Interest rate swap at September 30, 2021
$17 $ $17 $ 
Interest rate swap at December 31, 2020
$27 $ $27 $ 
10. Debt
In June 2018, Teradata replaced an existing 5 year, $400 million revolving credit facility with a new $400 million revolving credit facility (the "Credit Facility"). The Credit Facility expires in June 2023, at which point any remaining outstanding borrowings would be due for repayment unless extended by agreement of the parties for up to two additional one-year periods. In addition, under the terms of the Credit Facility, Teradata from time to time and subject to certain conditions may increase the lending commitments under the Credit Facility in an aggregate principal amount up to an additional $200 million, to the extent that existing or new lenders agree to provide such additional commitments. The outstanding principal amount of the Credit Facility bears interest at a floating rate based upon, at Teradata’s option, a negotiated base rate or a Eurodollar rate plus, in each case, a margin based on Teradata’s leverage ratio. In the near term, Teradata would anticipate choosing a floating rate based on LIBOR. The Credit Facility is unsecured but is guaranteed by certain of Teradata’s material domestic subsidiaries and contains certain representations and warranties, conditions, affirmative, negative and financial covenants, and events of default customary for such facilities. As of September 30, 2021, the Company had no borrowings outstanding under the Credit Facility, leaving $400 million in borrowing capacity available under the Credit Facility. The Company was in compliance with all covenants under the Credit Facility as of September 30, 2021.
Also, in June 2018, Teradata closed on a new senior unsecured $500 million five-year term loan, the proceeds of which plus additional cash-on-hand were used to pay off the remaining $525 million of principal on its previous term loan. The term loan is payable in quarterly installments, which commenced on June 30, 2019, with 1.25% of the initial principal amount due on each of the first eight payment dates; 2.50% of the initial principal amount due on each of the next four payment dates; 5.0% of the initial principal amount due on each of the next three payment dates; and all remaining principal due in June 2023. The outstanding principal amount of the term loan bears interest at a floating rate based upon a negotiated base rate or a Eurodollar rate, plus in each case, a margin based on the leverage ratio of the Company. As of September 30, 2021, the term loan principal outstanding was $425 million. As disclosed in Note 7, Teradata entered into an interest rate swap to hedge the floating interest rate of the term loan. As a result of the swap, Teradata’s fixed rate on the term loan equals 2.86% plus the applicable leverage-based margin as defined in the term loan agreement. As of September 30, 2021, the all-in fixed rate is 4.36%. The Company was in compliance with all covenants under the term loan as of September 30, 2021.
Teradata’s term loan is recognized on the Company’s balance sheet at its unpaid principal balance, net of deferred issuance costs, and is not subject to fair value measurement. However, given that the loan carries a variable rate, the Company estimates that the unpaid principal balance of the term loan would approximate its fair value. If measured at fair value in the financial statements, the Company’s term loan would be classified as Level 2 in the fair value hierarchy.
17

11. Earnings per Share
Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the reported period. The calculation of diluted earnings per share is similar to basic earnings per share, except that the weighted average number of shares outstanding includes the dilution from potential shares resulting from stock options, restricted stock awards and other stock awards. The components of basic and diluted earnings per share are as follows:
 Three Months Ended
September 30,
Nine Months Ended September 30,
In millions, except per share amounts2021202020212020
Net income (loss) attributable to common stockholders$17 $(1)$114 $124 
Weighted average outstanding shares of common stock108.9 109.1 108.9 109.3 
Dilutive effect of employee stock options, restricted stock and other stock awards4.5  4.2 1.6 
Common stock and common stock equivalents113.4 109.1 113.1 110.9 
Net income (loss) per share:
Basic$