EX-99.1 2 dex991.htm PRESS RELEASE, DATED MAY 5, 2011 Press Release, dated May 5, 2011

Exhibit 99.1

 

LOGO   

11695 Johns Creek Pkwy.

Johns Creek, GA 30097

   NEWS RELEASE
For media information:    For investor information:
Mike O’Sullivan    Gregg Swearingen
(937) 242-4786    (937) 242-4600
mike.osullivan@teradata.com    gregg.swearingen@teradata.com

For Release on May 5, 2011

Teradata Announces 2011 First Quarter Results

 

   

First-quarter revenue grew 18 percent, up 16 percent in constant currency (1)

 

   

Operating income increased 6 percent, up 27 percent on a non-GAAP basis(2)

 

   

GAAP EPS was $0.38 in the first quarter of 2011, versus $0.39 in the first quarter of 2010

 

   

Non-GAAP EPS in first quarter 2011 was $0.48 versus $0.41 in the first quarter of 2010(2)

ATLANTA – Teradata Corporation (NYSE: TDC) reported revenue of $506 million for the quarter ended March 31, 2011, an increase of 18 percent from $429 million in 2010. The first quarter revenue comparison included 2 percentage points of benefit from currency translation.(1)

Included in Teradata’s results reported under U.S. Generally Accepted Accounting Principles (GAAP) for the first quarter of 2011 was $6 million of acquisition-related purchase accounting adjustments in connection with the acquisition of Aprimo, Inc. (Aprimo), $7 million of transaction, integration and reorganization costs, $3 million of amortization of acquisition-related intangible assets and $9 million of stock-based compensation expense. Teradata’s 2010 first quarter results included $5 million of stock-based compensation expense.

Gross margin in the first quarter was 54.3 percent compared to 55.0 percent in the first quarter of 2010. Excluding the items mentioned above, gross margin was 55.7 percent in the first quarter of 2011, an increase from 55.2 percent in the first quarter of 2010.(2) The increase in non-GAAP gross margin from the strong prior-year period resulted from an increase in product gross margin, which was somewhat offset by a decrease in consulting services gross margin as Teradata invests to grow its consulting services business to meet market demand.


Net income reported for the first quarter of 2011 was $65 million, or $0.38 per diluted share, which compared to net income of $67 million, or $0.39 per diluted share, in the first quarter of 2010. Excluding the special items, non-GAAP EPS was $0.48 in the first quarter of 2011, versus $0.41 in the first quarter of 2010.(2)

“Teradata is off to a strong start in 2011 with first quarter revenue growth of 18 percent,” said Mike Koehler, president and chief executive officer of Teradata. “Corporations are faced with the challenge of managing and extracting value from data that continues to grow exponentially. In addition, the new data elements coming from sources such as web interactions, social media, mobile computing, and sensors are providing new opportunities for businesses to innovate and compete with analytics. This is placing extreme requirements on data warehouses to scale and manage complexity like we have never seen before - which is where Teradata excels.”

Regional Operating Segment Results

Teradata reports its results in three regional operating segments.

Americas

Teradata generated $307 million of revenue in its Americas region in the first quarter of 2011, up 22 percent from $252 million in the first quarter of 2010. Currency translation benefited revenue growth in the Americas by 1 percentage point in the first quarter. (1)

Gross margin in the Americas region in the first quarter of 2011 was 57.0 percent, versus 57.9 percent achieved in the first quarter of 2010. The gross margin decline from the strong prior-year period resulted from lower consulting margin due to headcount additions to meet increased demand, which was offset in part by higher product margin as compared to the first quarter of 2010.

Europe, Middle East and Africa (EMEA)

Revenue in Teradata’s EMEA region in the first quarter of 2011 was $125 million, up 18 percent from $106 million generated in the first quarter of 2010. Currency translation benefited the revenue comparison in the EMEA region by 3 percentage points. (1)


Gross margin in the EMEA region in the first quarter of 2011 was 56.0 percent, up from 53.8 percent reported in the first quarter of 2010 due to a higher product gross margin, which was offset somewhat by lower consulting gross margin resulting from head count additions to meet increased demand.

Asia Pacific / Japan (APJ)

Teradata generated $74 million of revenue in its APJ region in the first quarter of 2011, a 4 percent increase from $71 million in the first quarter of 2010. The revenue comparison in the APJ region benefited by 7 percentage points from currency translation. (1)

Gross margin in the APJ region in the first quarter of 2011 was 40.5 percent, compared to 46.5 percent in the first quarter of 2010. Gross margin declined in the quarter due to a greater proportion of services revenue (as compared to product revenue) which has a lower gross margin than product revenue, as well as lower consulting margins, versus the prior-year period.

Operating Income

First-quarter operating income of $91 million improved from $86 million reported in the first quarter of 2010. Excluding the items previously mentioned, non-GAAP operating income increased 27 percent to $116 million.(2) In the quarter, higher revenue more than offset increased investment in selling, general and administrative expense and research and development expense, as well as the inclusion of Aprimo operating expenses.

Other Items

The effective income tax rate in the first quarter of 2011 was 28 percent, which compared to a 22 percent tax rate in the prior-year period. The tax rate in the first quarter of 2010 benefited from the recognition of certain foreign net operating loss carry-forwards resulting from an audit settlement in the first quarter of 2010.

Cash Flow

During the first quarter of 2011, Teradata generated $106 million of cash from operating activities, compared to $138 million in the prior-year period. The decrease in cash from


operating activities was primarily due to the timing of transactional activity. Capital expenditures in the first quarter totaled $27 million compared to $21 million in the first quarter of 2010. Teradata generated $79 million of free cash flow (cash from operations less capital expenditures for property and equipment and additions to capitalized software) (3) in the first quarter of 2011, versus $117 million in the same period in 2010.

 

     For the Periods Ended March 31  
   (in millions)  
     Three Months  
     2011     2010  

Net Income (GAAP)

   $ 65      $ 67   
                

Cash provided by operating activities (GAAP)

   $ 106      $ 138   

Less capital expenditures for:

    

Expenditures for property and equipment

     (8     (6

Additions to capitalized software

     (19     (15
                

Total capital expenditures

     (27     (21
                

Free Cash Flow (non-GAAP measure) (3)

   $ 79      $ 117   
                

Balance Sheet

Teradata ended the first quarter of 2011 with $778 million in cash and short-term investments, a $105 million decrease from December 31, 2010. As of March 31, 2011, Teradata had total debt of $300 million under its revolving credit facility.

On January 21, 2011, Teradata completed its acquisition of Aprimo and funded the purchase by using $200 million of net cash and by drawing-down the full $300 million borrowing capacity from the Company’s existing revolving credit facility.

Subsequent to the end of the first quarter, Teradata completed its acquisition of Aster Data Systems, Inc (Aster Data) on April 5, 2011. Teradata funded the purchase of Aster Data by utilizing funds from a new $300 million long-term loan facility, which is not reflected in the Teradata’s balance sheet as of March 31, 2011.


Also subsequent to March 31, 2011, the Company repaid $280 million of the $300 million previously drawn on the revolving credit facility largely from cash collected from accounts receivables in April.

2011 Outlook

Teradata is increasing its expectation for full-year 2011 revenue growth to 14-16 percent. Teradata anticipates that currency fluctuations will benefit the year-over-year revenue comparison by approximately 4 percentage points, based on currency rates on April 29, 2011.

GAAP earnings per share in 2011 is expected to be in the $1.76 to $1.86 range. Due to Teradata’s increased expectation for full-year revenue growth, the company now expects it will be able to more than absorb the anticipated $0.03 of EPS dilution from the acquisition of Aster Data and therefore is increasing its prior 2011 non-GAAP EPS guidance to $2.13 to $2.23. Teradata excludes estimated purchase accounting adjustments, amortization of acquisition-related intangible assets, stock-based compensation expense, as well as transaction, integration and reorganization costs to arrive at non-GAAP earnings per share.

2011 First-Quarter Earnings Conference Call

A conference call is scheduled today at 8:30 a.m. (ET)to discuss the company’s first-quarter 2011 results. Access to the conference call, as well as a replay of the call, is available on Teradata’s web site at www.teradata.com/investor.

Supplemental financial information regarding Teradata’s operating results is also available on the Investor Relations page of Teradata’s web site.

About Teradata

Teradata Corporation (NYSE: TDC) is the world’s leader in data warehousing and integrated marketing management through its database software, data warehouse appliances, and enterprise analytics. For more information, visit teradata.com.

# # #

Teradata is a trademark or registered trademark of Teradata Corporation in the United States and other countries.


1. The impact of currency is determined by calculating the prior-period results using the current-year monthly average currency rates. See the foreign currency schedule on the Investor Relations page of the company’s web site www.teradata.com/investor.

 

     For the Periods Ended March 31
(in millions)
Three Months
 
     2011      2010      %
Chg
As
Rept’d
    %
Chg
CC
 

Revenue

          

Products (software/hardware)

   $ 235       $ 200         18     16

Consulting services

     145         117         24     21

Maintenance services

     126         112         13     10
                      

Total services

     271         229         18     16
                      

Total revenue

   $ 506       $ 429         18     16
                      
     2011      2010      %
Chg
As
Rept’d
    %
Chg
CC
 

By segment/region

          

Americas region

   $ 307       $ 252         22     21

EMEA region

     125         106         18     15

APJ region

     74         71         4     (3 %) 
                      

Total revenue

   $ 506       $ 429         18     16
                      

 

2. Teradata reports its results in accordance with Generally Accepted Accounting Principles in the United States, or GAAP. However, as described below, the company believes that certain non-GAAP measures (such as free cash flow, non-GAAP EPS and non-GAAP gross margin which excludes certain items) are useful for investors. Our non-GAAP measures are not meant to be considered in isolation or as substitutes for or superior to results determined in accordance with GAAP, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP.

Schedule E of this earnings release, as well as the following table reconciles Teradata’s actual and projected results and earnings per diluted share, or EPS, under GAAP to the company’s actual and projected non-GAAP results and EPS for the periods presented, which exclude certain items. Our management regularly uses supplemental non-GAAP financial measures, such as EPS, gross margin and operating income excluding certain items, internally to understand, manage and evaluate our business and support operating decisions. The company believes such non-GAAP financial measures (1) provide useful information to investors regarding the underlying business trends and performance of the company’s ongoing operations, (2) are useful for period-over-period comparisons of such operations and results, that may be more easily compared to peer companies and allows investors a view to the company’s operating results during the integration period of the acquisitions of Aprimo and Aster Data, (3) provide useful information to management and investors regarding present and future business trends, and (4) provide consistency and comparability with past reports and projections of future results.


Reconciliation of GAAP to Non-GAAP Measures:    Q1
2011
     Q1
2010
     2011
Guidance
 

Diluted Earnings Per Share (GAAP)

   $ 0.38       $ 0.39       $ 1.76 -$1.86   

Excluding:

        

Stock-based compensation expense

   $ 0.04       $ 0.02       $ 0.12   

Purchase accounting adjustments

   $ 0.02          $ 0.06   

Amortization of acquisition-related intangible assets

   $ 0.01          $ 0.09   

Transaction, integration and reorganization related costs

   $ 0.03          $ 0.10   
                          

Adjusted Diluted Earnings Per Share (Non-GAAP)

   $ 0.48       $ 0.41       $ 2.13 - $2.23   
                          

 

3. As described above, the company believes that free cash flow is a useful non-GAAP measure for investors. Teradata defines free cash flow as cash provided/used by operating activities less capital expenditures for property and equipment, and additions to capitalized software. Free cash flow does not have a uniform definition under GAAP and therefore, Teradata’s definition may differ from other companies’ definitions of this measure. Teradata’s management uses free cash flow to assess the financial performance of the company and believes it is useful for investors because it relates the operating cash flow of the company to the capital that is spent to continue and improve business operations. In particular, free cash flow indicates the amount of cash generated after capital expenditures for, among other things, investment in the company’s existing businesses, strategic acquisitions, strengthening the company’s balance sheet, repurchase of company stock and repayment of the company’s debt obligations, if any. Free cash flow does not represent the residual cash flow available for discretionary expenditures since there may be other nondiscretionary expenditures that are not deducted from the measure. This non-GAAP measure is not meant to be considered in isolation or as a substitute for or superior to results determined in accordance with GAAP, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP.

Note to Investors

This news release contains forward-looking statements, including statements as to anticipated or expected results, beliefs, opinions and future financial performance, within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements include projections of revenue, profit growth and other financial items, future economic performance and statements concerning analysts’ earnings estimates, among other things. These forward-looking statements are based on current expectations and assumptions and involve risks and uncertainties that could cause Teradata’s actual results to differ materially. In addition to the factors discussed in this release, other risks and uncertainties could affect our future results, and could cause actual results to differ materially from those expressed in such forward-looking statements. Such factors include those relating to: the global economic environment in general or on the ability of our suppliers to meet their commitments to us, or the timing of purchases by our current and potential customers, and other general economic and business conditions; the rapidly changing and intensely competitive nature of the information technology industry and the enterprise data warehousing business, including the increased pressure on price/performance for data warehousing solutions; fluctuations in our operating results, unanticipated delays or accelerations in our sales cycles and the difficulty of accurately estimating revenues; risks inherent in operating in foreign countries, including the impact of economic, political, legal, regulatory, compliance, cultural, foreign currency fluctuations and other conditions abroad; the timely and successful development, production or acquisition and market acceptance of new and existing products


and services, including our ability to accelerate market acceptance of new products and services as well as the reliability, quality and operability of new products because of the difficulty and complexity associated with their testing and production; tax rates; turnover of workforce and the ability to attract and retain skilled employees; availability and successful exploitation of new acquisition and alliance opportunities; our ability to execute integration plans for newly acquired entities, including the possibility that expected synergies and operating efficiencies may not be achieved, that such integration efforts may be more difficult, time-consuming or costly than expected, and that operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater than expected following the transaction; recurring revenue may decline or fail to be renewed; changes in Generally Accepted Accounting Principles (GAAP) and the resulting impact, if any, on the company’s accounting policies; continued efforts to establish and maintain best-in-class internal information technology and control systems; and other factors described from time to time in the company’s filings with the U.S. Securities and Exchange Commission, including its annual report on Form 10-K and subsequent quarterly reports on Forms 10-Q, as well as the company’s annual reports to stockholders The company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


LOGO    Schedule A

TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in millions, except per share amounts)

 

     For the Period Ended March 31  
     Three Months  
     2011     2010     % Chg  

Revenue

      

Products

   $ 235      $ 200        18

Services

     271        229        18
                  

Total revenue

     506        429        18

Product gross margin

     156        128     

% of Revenue

     66.4     64.0  

Services gross margin

     119        108     

% of Revenue

     43.9     47.2  
                  

Total gross margin

     275        236     

% of Revenue

     54.3     55.0  

Selling, general and administrative expenses

     150        118     

Research and development expenses

     34        32     
                  

Income from operations

     91        86     

% of Revenue

     18.0     20.0  

Other expense, net

     (1     —       

Income before income taxes

     90        86     

% of Revenue

     17.8     20.0  

Income tax expense

     25        19     
                  

% Tax rate

     28     22  

Net income

   $ 65      $ 67     
                  

% of Revenue

     12.8     15.6  

Net income per common share

      

Basic

   $ 0.39      $ 0.40     

Diluted

   $ 0.38      $ 0.39     

Weighted average common shares outstanding

      

Basic

     168.4        167.8     

Diluted

     171.8        170.5     


LOGO    Schedule B

TERADATA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions)

 

     March 31,
2011
    December 31,
2010
    March 31,
2010
 
Assets       

Current assets

      

Cash and cash equivalents

   $ 778      $ 883      $ 712   

Accounts receivable, net

     467        402        334   

Inventories

     66        65        56   

Other current assets

     56        56        58   
                        

Total current assets

     1,367        1,406        1,160   

Property and equipment, net

     111        105        96   

Capitalized software, net

     125        116        109   

Goodwill

     516        136        109   

Acquired intangible assets

     131        12        3   

Deferred income taxes

     62        59        75   

Other assets

     47        49        24   
                        

Total assets

   $ 2,359      $ 1,883      $ 1,576   
                        
Liabilities and stockholders’ equity       

Current liabilities

      

Accounts payable

   $ 98      $ 102      $ 81   

Payroll and benefits liabilities

     99        134        77   

Deferred revenue

     400        263        326   

Other current liabilities

     63        70        59   
                        

Total current liabilities

     660        569        543   

Long-term debt

     300        —          —     

Pension and other postemployment plan liabilities

     83        85        81   

Other liabilities

     42        40        35   
                        

Total liabilities

     1,085        694        659   
                        

Stockholders’ equity

      

Preferred stock

     —          —          —     

Common stock

     2        2        2   

Paid-in capital

     706        690        632   

Treasury Stock

     (399     (399     (382

Retained earnings

     949        884        650   

Accumulated other comprehensive income

     16        12        15   
                        

Total stockholders’ equity

     1,274        1,189        917   
                        

Total liabilities and stockholders’ equity

   $ 2,359      $ 1,883      $ 1,576   
                        


LOGO    Schedule C

TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in millions)

 

     For the Period Ended March 31  
     Three Months  
     2011     2010  

Operating activities

    

Net income

   $ 65      $ 67   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     18        14   

Stock-based compensation expense

     9        5   

Excess tax benefit from stock-based compensation

     (3     (1

Deferred income taxes

     6        9   

Changes in assets and liabilities:

    

Receivables

     (43     52   

Inventories

     (1     (10

Current payables and accrued expenses

     (49     (67

Deferred revenue

     113        72   

Other assets and liabilities

     (9     (3
                

Net cash provided by operating activities

     106        138   

Investing activities

    

Expenditures for property and equipment

     (8     (6

Additions to capitalized software

     (19     (15

Business acquisitions and other investing activities, net

     (499     —     
                

Net cash used in investing activities

     (526     (21

Financing activities

    

Repurchases of common stock

     —          (71

Proceeds from credit facility borrowings

     300        —     

Excess tax benefit from stock-based compensation

     3        1   

Other financing activities, net

     8        5   
                

Net cash provided by (used in) financing activities

     311        (65

Effect of exchange rate changes on cash and cash equivalents

     4        (1
                

(Decrease) increase in cash and cash equivalents

     (105     51   

Cash and cash equivalents at beginning of period

     883        661   
                

Cash and cash equivalents at end of period

   $ 778      $ 712   
                


LOGO    Schedule D

TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in millions)

 

     For the Period Ended March 31  
     Three Months  
     2011     2010     % Change As
Reported
    % Change
Constant
Currency
 

Revenue

        

Americas

   $ 307      $ 252        22     21

EMEA

     125        106        18     15

APJ

     74        71        4     -3
                    

Total revenue

     506        429        18     16

Segment gross margin

        

Americas

     175        146       

% of Revenue

     57.0     57.9    

EMEA

     70        57       

% of Revenue

     56.0     53.8    

APJ

     30        33       

% of Revenue

     40.5     46.5    
                    

Total gross margin

     275        236       

% of Revenue

     54.3     55.0    

Selling, general and administrative expenses

     150        118       

Research and development expenses

     34        32       
                    

Income from operations

   $ 91      $ 86       
                    

% of Revenue

     18.0     20.0    


LOGO    Schedule E

TERADATA CORPORATION

RECONCILIATION OF RESULTS - NON-GAAP TO GAAP

(Unaudited)

Reflects the Impact of Special Items

(in millions, except per share amounts)

 

    For the Periods Ended March 31  
    Three Months  
    2011     2010  
    GAAP     Equity
Compensation
Expense 2
    Other
Special
Items 2
    Non-GAAP
Excluding
Stock Comp.
Expense and
Special Items 1
    GAAP     Equity
Compensation
Expense 3
    Other
Special
Items 3
    Non-GAAP
Excluding
Stock Comp.
Expense and
Special Items 1
    % Change
Non-GAAP
Yr/Yr
 

Revenue

                 

Products

  $ 235      $ —        $ (6   $ 241      $ 200      $ —        $ —        $ 200        21

Services

    271        —          —          271        229        —          —          229        18
                                                                 

Total revenue

    506        —          (6     512        429        —          —          429        19

Gross margin

                 

Products

    156        —          (7     163        128        —          —          128        27

% of Revenue

    66.4         67.6     64.0         64.0  

Services

    119        (1     (2     122        108        (1     —          109        12

% of Revenue

    43.9         45.0     47.2         47.6  
                                                                 

Total gross margin

    275        (1     (9     285        236        (1     —          237        20

% of Revenue

    54.3         55.7     55.0         55.2  

Selling, general and administrative expenses

    150        7        7        136        118        3        —          115     

Research and development expenses

    34        1        —          33        32        1        —          31     
                                                                 

Total expenses

    184        8        7        169        150        4        —          146        16

% of Revenue

    36.4         33.0     35.0         34.0  
                                                                 

Income from operations

    91        (9     (16     116        86        (5     —          91        27

% of Revenue

    18.0         22.7     20.0         21.2  

Other expense, net

    (1     —          —          (1     —          —          —          —       
                                                                 

Income before income taxes

    90        (9     (16     115        86        (5     —          91        26

Income tax expense

    25        (3     (5     33        19        (2     —          21     
                                                                 

% Tax rate

    28         29     22         23  

Net income

  $ 65      $ (6   $ (11   $ 82      $ 67      $ (3   $ —        $ 70        17
                                                                 

% of Revenue

    12.8         16.0     15.6         16.3  

Net income per common share

                 

Basic income per share

  $ 0.39      $ (0.04   $ (0.06   $ 0.49      $ 0.40      $ (0.02   $ —        $ 0.42        17

Diluted income per share

  $ 0.38      $ (0.04   $ (0.06   $ 0.48      $ 0.39      $ (0.02   $ —        $ 0.41        17

Weighted average common shares outstanding

                 

Basic

    168.4            168.4        167.8            167.8     

Diluted

    171.8            171.8        170.5            170.5     

 

1) While Teradata reports its results using generally accepted accounting principles in the U.S. (GAAP), certain non-GAAP financial measures may be used to reflect operational performance and to determine the effectiveness of its business management. Certain special items may be segregated from our GAAP results from time-to-time to reflect the on-going Earnings Per Share performance of the company. Non-GAAP measures should not be used as a substitute for, or superior to, the company's reported GAAP results.
2) Special items for the three months ended March 31, 2011 includes $9 million ($6 million after-tax) for equity compensation expense, as well as $6 million for acquisition-related purchase accounting adjustments, $7 million for acquisition-related transaction, integration and reorganization expenses, and $3 million for amortization of acquired intangible assets, with an offsetting tax impact of $5 million.
3) Special items for the three months ended March 31, 2010 includes $5 million ($3 million after-tax) for equity compensation expense.