Teradata Reports 2012 Fourth Quarter and Full-Year Results -- Revenue increased 10 percent in the fourth quarter, 11 percent in constant currency(1)

-- For the full-year, revenue increased 13 percent, 15 percent in constant currency(1)

-- Non-GAAP operating margin increased 100 basis points in the fourth quarter, 200 basis points for the year(2)

-- GAAP EPS of $0.66 in the quarter, $2.44 for the full-year period

-- Non-GAAP EPS of $0.79 in the quarter, up 20 percent from the fourth quarter of 2011(2)

-- Full-year Non-GAAP EPS was $2.85, an increase of 23 percent from full-year 2011(2)

ATLANTA, Feb. 7, 2013 /PRNewswire-FirstCall/ -- Teradata Corporation (NYSE: TDC) today reported revenue of $740 million for the quarter ended December 31, 2012, an increase of 10 percent from $673 million in the fourth quarter of 2011.  Revenue in the fourth quarter increased 11 percent when compared in constant currency.(1) For the full-year 2012, revenue was $2.665 billion, a 13 percent increase from $2.362 billion in 2011. In constant currency, revenue increased 15 percent for the full-year comparison.(1)

(Logo:  http://photos.prnewswire.com/prnh/20120412/CL86658LOGO)

Gross margin was 55.4 percent, as reported under U.S. Generally Accepted Accounting Principles (GAAP), versus 55.6 percent in the fourth quarter of 2011. On a non-GAAP basis, excluding stock-based compensation expense and the other special items described in footnote #2, gross margin was 56.4 percent, also about the same as the 56.5 percent gross margin in the fourth quarter of 2011.(2) Gross margin for full year 2012 was 55.9 percent, versus 54.7 percent in 2011. On a non-GAAP basis, excluding special items described in footnote #2, 2012 full-year non-GAAP gross margin was 56.9 percent, a 100 basis point improvement from 55.9 percent for the full-year 2011.(2) The increase in non-GAAP gross margin for the full year resulted from improved product margins and a greater portion of product revenue.

Stock-based compensation expense and other special items reduced Teradata's fourth quarter net income by $23 million (or 13 cents of EPS) and 2012 full-year net income by $70 million (or 41 cents of EPS) as reported under GAAP.(2)

Teradata reported fourth quarter GAAP net income of $112 million, or $0.66 per diluted share, which compared to GAAP net income of $98 million, or $0.57 per diluted share, in the fourth quarter of 2011. For the full year 2012, Teradata reported GAAP net income of $419 million, or $2.44 per diluted share, which compared to GAAP net income of $353 million, or $2.05 per diluted share, for the full year 2011. Excluding stock-based compensation expense and the other special items detailed in footnote #2, non-GAAP net income in the fourth quarter of 2012 was $135 million, or $0.79 per diluted share, versus $113 million, or $0.66 per diluted share in the fourth quarter of 2011.(2) Full-year non-GAAP net income was $489 million, or $2.85 per diluted share in 2012, compared to $399 million, or $2.32 per diluted share in 2011.(2)

"Teradata finished 2012 with a solid fourth quarter performance, resulting in 15 percent constant currency revenue growth and 23 percent non-GAAP earnings per share growth for the full year," said Mike Koehler, president and chief executive officer, Teradata Corporation. "The strength of our technology and the expertise of our people will continue to position Teradata as the trusted partner to the world's data-driven companies with our market-leading analytics and integrated marketing solutions."

Regional Revenue Performance
(in millions)


For the Three Months Ended December 31

By segment/region

2012



2011



% Chg. as

Reported



% Chg. in

Constant

Currency(1)

   Americas region

$449



$415



8%



9%

   EMEA region

176



145



21%



24%

   APJ region

115



113



2%



2%

Total revenue

$740



$673



10%



11%
















For the Twelve Months Ended December 31

By segment/region

2012



2011



% Chg. as

Reported



% Chg. in

Constant

Currency(1)

   Americas region

$1,619



$1,436



13%



13%

   EMEA region

636



548



16%



23%

   APJ region

410



378



8%



9%

Total revenue

$2,665



$2,362



13%



15%













Operating Income 
Fourth quarter operating income of $150 million increased from $133 million reported in the fourth quarter of 2011. On a non-GAAP basis, operating income of $177 million increased $22 million from the fourth quarter of 2011.(2) Full-year operating income was $580 million in 2012, versus $456 million in 2011. On a non-GAAP basis, full-year operating income was $678 million, a 22 percent increase from $557 million in 2011.(2) For both the fourth quarter and full-year 2012, higher revenue as well as favorable product margins more than offset the increased investment in direct sales resources.

Cash Flow 
During the fourth quarter of 2012, Teradata generated $124 million of cash from operating activities, compared to $126 million in the prior-year period. An increase in accounts receivable was offset by other working capital items. Teradata generated $85 million of free cash flow (cash from operating activities less capital expenditures and additions to capitalized software)(3) in the fourth quarter of 2012, versus $103 million in the same period in 2011. Since cash provided by operating activities in the fourth quarter was about the same as that generated in the prior year period, the decline in free cash flow was due to increased investments in property and equipment, and capitalized software development expenses.

For the full year, Teradata generated $575 million of cash from operating activities, versus $513 million generated in 2011. Teradata's free cash flow for the full year was $427 million, a $24 million increase from $403 million generated in 2011.

 


For the Periods Ended December 31



(in millions)



Three Months


Twelve Months



2012


2011


2012


2011


Net Income (GAAP)

$112


$98


$419


$353











Cash provided by operating activities (GAAP)

$124


$126


$575


$513


   Less capital expenditures for:









      Expenditures for property and equipment

(18)


(11)


(67)


(42)


      Additions to capitalized software

(21)


(12)


(81)


(68)


           Total capital expenditures

(39)


(23)


(148)


(110)


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

$85


$103


$427


$403





























Balance Sheet 
Teradata ended 2012 with $729 million in cash, a $180 million decrease from September 30, 2012, and a $43 million decrease from December 31, 2011. During the quarter, Teradata purchased 3.9 million shares of its stock for $241 million. During 2012, Teradata purchased a total of 4.5 million shares of its stock for $280 million, and used approximately $270 million of cash for acquisitions and equity investments. 

As of December 31, 2012, Teradata had total debt of $289 million outstanding under a term loan. Additionally, Teradata has $300 million available through a pre-arranged credit facility; however, no funds were drawn from the credit facility.

2013 Outlook 
In 2013, Teradata expects revenue to increase approximately 6 to 10 percent from the $2.665 billion of revenue reported in 2012. Based on currency rates on January 31, 2013, Teradata does not anticipate that currency translation will have a meaningful impact on the year-over-year revenue comparison in 2013.

GAAP earnings per share in 2013 is expected to be in the $2.64 to $2.79 range. Excluding stock-based compensation expense and other special items, non-GAAP earnings per share for 2013 is expected to be in the $3.05 to $3.20 range.(2)

2012 Fourth Quarter Earnings Conference Call 
A conference call is scheduled today at 8:30 a.m. (ET) to discuss the company's fourth quarter 2012 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 leading analytic data solutions company, focused on integrated data warehousing, big data analytics, and business applications. Teradata's innovative products and services deliver data integration and business insight to empower organizations to make the best decisions possible for competitive advantage. Visit teradata.com for details.

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 fluctuation schedule on the Investor Relations page of the company's web site at www.teradata.com/investor, which is used to determine revenue on a constant currency basis.

 


For the Three Months Ended

December 31

For the Twelve Months Ended

December 31



(in millions)


(in millions)     



Revenue

2012


2011


% Chg

As Rpt'd


%
Chg
CC



2012


2011



 

% Chg

As
Rpt'd



%
Chg
CC






















 Products (software/hardware)

$362


$331


9%


10%



$1,297


$1,122



16%



17%






















 Consulting services

224


197


14%


15%



776


695



12%



14%


 Maintenance services

154


145


6%


7%



592


545



9%



10%


       Total services

378


342


11%


11%



1,368


1,240



10%



12%


Total revenue

$740


$673


10%


11%



$2,665


$2,362



13%



15%





For the Three Months Ended

December 31

For the Twelve Months Ended

December 31



(in millions)


(in millions)       



By segment/region

2012


2011


% Chg

As Rpt'd


%
Chg
CC




2012


2011


% Chg

As Rpt'd



%
Chg
CC


   Americas region

$449


$415


8%


9%




$1,619


$1,436


13%



13%


   EMEA region

176


145


21%


24%




636


548


16%



23%


   APJ region

115


113


2%


2%




410


378



8%



9%


Total revenue

$740


$673


10%


11%




$2,665


$2,362


13%



15%



 

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 non-GAAP gross margin, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per diluted share, or EPS, which exclude certain items as well as free cash flow) 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. 

Special items included in Teradata's fourth quarter GAAP operating income results as reported in this release included $12 million of stock-based compensation expense; $10 million of amortization of acquisition-related intangible assets; and $5 million of acquisition transaction and integration expenses. For the full year, special items included in Teradata's GAAP operating income included $43 million of stock-based compensation expense; $36 million of amortization of acquisition-related intangible assets; $17 million of acquisition transaction and integration expenses; and $2 million of acquisition-related purchase accounting adjustments.

Special items included in Teradata's fourth quarter and full-year 2012 non-GAAP net income as reported in this release included $4 million of income tax benefit related to the 2012 U.S. Research & Development tax credit. This benefit was excluded from the GAAP net income results in the fourth quarter and full-year 2012 results due to the American Taxpayer Relief Act of 2012 not being enacted until 2013.

The following tables reconcile Teradata's actual and projected results and 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 gross margin, operating income, net income and EPS, 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 allow investors a view of the company's operating results excluding special items, (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.

 


 

(a) Gross Margin Reconciliation of GAAP to Non-GAAP Measures












For the Three Months

Ended December 31

(in millions)


For the Twelve Months

Ended December 31

(in millions)





% chg





% chg

2012

2011


2012

2011


Gross Margin (GAAP)

$410


$374

10%


$1,491


$1,293

15%

  % of Revenue (GAAP)

55.4%


55.6%



55.9%


54.7%












  Excluding:










   Stock-based compensation expense

1


1



4


4


   Purchase accounting adjustments

-


2



2


17


   Amortization of acquisition-related intangible assets

6


3



22


14


   Transaction, integration and reorganization related costs

1


2



2


4


  Adjusted Gross Margin (non-GAAP)

$418


$382

9%


$1,521


$1,332

14%

    % of Revenue (non-GAAP)

56.4%


56.5%



56.9%


55.9%






















(b) Operating Income Reconciliation of GAAP to Non-GAAP Measures











For the Three Months

 Ended December 31

(in millions)


For the Twelve Months

 Ended December 31

(in millions)





% chg





% chg

2012

2011


2012

2011


Operating Income (GAAP)

$150


$133

13%


$580


$456

27%

  % of Revenue (GAAP)

20.3%


19.8%



21.8%


19.3%












  Excluding:










   Stock-based compensation expense

12


10



43


35


   Purchase accounting adjustments

-


2



2


17


   Amortization of acquisition-related intangible assets

10


6



36


24


   Transaction, integration and reorganization related costs

5


4



17


25


  Adjusted Operating Income (non-GAAP)

$177


$155

14%


$678


$557

22%

    % of Revenue (non-GAAP)

23.9%


22.9%



25.4%


23.4%






















(c) Net Income Reconciliation of GAAP to Non-GAAP Measures














For the Three Months

 Ended December 31

(in millions)


For the Twelve Months

 Ended December 31

(in millions)





% chg





% chg

2012

2011


2012

2011


Net Income (GAAP)

$112


$98

14%


$419


$353

19%

  % of Revenue (GAAP)

15.1%


14.6%



15.7%


14.9%












  Excluding:










   Gain from equity investments

-


-



-


(22)


   Stock-based compensation expense

10


6



29


22


   Purchase accounting adjustments

-


1



1


11


   Amortization of acquisition-related intangible assets

6


3



23


15


   Transaction, integration and reorganization related costs

3


5



13


20


   R&D tax credit for 2012, enacted in 2013

4


-



4


-


  Adjusted Net Income (non-GAAP)

$135


$113

19%


$489


$399

23%

    % of Revenue (non-GAAP)

18.2%


16.7%



18.3%


16.7%


 

(d) Earnings Per Share Reconciliation of GAAP to Non-GAAP Measures






For the periods ended December 31




Three Months


Twelve Months


2013


2012


2011


2012


2011


   Guidance











Diluted Earnings Per Share (GAAP)

$0.66


$0.57


$2.44


$2.05


$2.64 - $2.79

  Excluding:










   Gain from equity investments

-


-


-


($0.13)



   Stock-based compensation expense

$0.06


$0.04


$0.17


$0.13


$0.22

   Purchase accounting adjustments

-


-

 


$0.01


$0.06


-

   Amortization of acquisition-related intangible assets

$0.03


$0.02


$0.13


$0.09


$0.16

   Transaction, integration and reorganization related costs

$0.02


$0.03


$0.08


$0.12


$0.05

   2012 R&D Tax Credit, enacted in 2013

$0.02


-


$0.02


-


($0.02)

Adjusted Diluted Earnings Per Share (Non-GAAP)

$0.79


$0.66


$2.85


$2.32


$3.05- $3.20


















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 the company's 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, 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 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.













Schedule A








































TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in millions, except per share amounts)
















For the Period Ended December 31



Three Months


Twelve Months



2012


2011


% Chg


2012


2011


% Chg

Revenue


























Products 


$362


$ 331


9%


$1,297


$1,122


16%

Services


378


342


11%


1,368


1,240


10%














Total revenue


740


673


10%


2,665


2,362


13%














Product gross margin


243


221




881


741



% of Revenue


67.1%


66.8%




67.9%


66.0%



Services gross margin


167


153




610


552



% of Revenue


44.2%


44.7%




44.6%


44.5%
















Total gross margin


410


374




1,491


1,293



% of Revenue


55.4%


55.6%




55.9%


54.7%
















Selling, general and administrative expenses


210


185




728


663



Research and development expenses


50


56




183


174
















Income from operations


150


133




580


456



% of Revenue


20.3%


19.8%




21.8%


19.3%
















Other (expense) income, net


(1)


-




(2)


25
















Income before income taxes


149


133




578


481



% of Revenue


20.1%


19.8%




21.7%


20.4%
















Income tax expense


37


35




159


128



% Tax rate


24.8%


26.3%




27.5%


26.6%
















Net income


$112


$98




$ 419


$ 353



% of Revenue


15.1%


14.6%




15.7%


14.9%
















Net income per common share













Basic 


$0.67


$0.59




$2.49


$2.10



Diluted


$0.66


$0.57




$2.44


$2.05
















Weighted average common shares outstanding













Basic


167.4


167.4




168.2


168.1



Diluted


170.7


171.3




171.7


171.9
















 







Schedule B






















TERADATA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions)

















 December 31, 


 September 30, 


 December 31, 



2012


2012


2011

Assets














Current assets







Cash and cash equivalents


$               729


$                 909


$                 772

Accounts receivable, net


668


524


494

Inventories


47


41


61

Other current assets


90


79


85








Total current assets


1,534


1,553


1,412








Property and equipment, net


150


143


120

Capitalized software, net


173


162


140

Goodwill


932


933


742

Acquired intangible assets


186


193


163

Deferred income taxes


29


34


28

Other assets


62


33


11








Total assets


$            3,066


$              3,051


$              2,616








Liabilities and stockholders' equity














Current liabilities







Accounts payable


$               141


$                 107


$                   97

Payroll and benefits liabilities


158


136


169

Deferred revenue


375


352


339

Other current liabilities


132


99


90








Total current liabilities


806


694


695








Long-term debt


274


278


290

Pension and other postemployment plan liabilities


73


80


77

Long-term deferred revenue


30


30


24

Other liabilities


104


91


36








Total liabilities


1,287


1,173


1,122








Stockholders' equity







Preferred stock


-


-


-

Common stock


2


2


2

Paid-in capital


898


875


765

Treasury Stock


(806)


(565)


(526)

Retained earnings


1,656


1,544


1,237

Accumulated other comprehensive income


29


22


16








Total stockholders' equity


1,779


1,878


1,494








Total liabilities and stockholders' equity


$            3,066


$              3,051


$              2,616








 









Schedule C




























TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in millions)












For the Period Ended December 31



Three Months


Twelve Months



2012


2011


2012


2011

Operating activities









Net income


$                     112


$                       98


$                    419


$                    353










Adjustments to reconcile net income to net cash provided









  by operating activities:









Depreciation and amortization


33


28


126


102

Stock-based compensation expense


12


10


43


35

Excess tax benefit from stock-based compensation


(4)


(4)


(37)


(14)

Deferred income taxes


49


40


77


71

Gain on investments


-


-


-


(28)

Changes in assets and liabilities:









Receivables


(145)


(53)


(165)


(65)

Inventories


(7)


3


14


3

Current payables and accrued expenses


82


28


105


28

Deferred revenue


23


(12)


42


45

Other assets and liabilities


(31)


(12)


(49)


(17)










Net cash provided by operating activities


124


126


575


513










Investing activities









Expenditures for property and equipment


(18)


(11)


(67)


(42)

Additions to capitalized software


(21)


(12)


(81)


(68)

Business acquisitions and other investing activities, net


(35)


-


(274)


(722)










Net cash used in investing activities


(74)


(23)


(422)


(832)










Financing activities









Repurchases of common stock


(238)


(32)


(277)


(127)

Proceeds from long-term borrowings


-


-


-


600

Repayments of long-term borrowings


(3)


-


(11)


(300)

Excess tax benefit from stock-based compensation


4


4


37


14

Other financing activities, net


7


6


55


25










Net cash (used in) provided by financing activities


(230)


(22)


(196)


212










Effect of exchange rate changes on cash and cash equivalents


-


-


-


(4)










(Decrease) Increase in cash and cash equivalents


(180)


81


(43)


(111)

Cash and cash equivalents at beginning of period


909


691


772


883










Cash and cash equivalents at end of period


$                     729


$                     772


$                    729


$                    772

 

















Schedule D




















































TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in millions)




















For the Period Ended December 31



Three Months


Twelve Months



2012


2011


% Change
As Reported


% Change
Constant
Currency


2012


2011


% Change

As Reported


% Change Constant Currency

Segment Revenue


































Americas


$   449


$    415


8%


9%


$ 1,619


$ 1,436


13%


13%

EMEA


176


145


21%


24%


636


548


16%


23%

APJ


115


113


2%


2%


410


378


8%


9%


















Total revenue


740


673


10%


11%


2,665


2,362


13%


15%


















Segment gross margin


































Americas


264


245






967


837





% of Revenue


58.8%


59.0%






59.7%


58.3%





EMEA


91


73






331


281





% of Revenue


51.7%


50.3%






52.0%


51.3%





APJ


55


56






193


175





% of Revenue


47.8%


49.6%






47.1%


46.3%






















Total gross margin


410


374






1,491


1,293





% of Revenue


55.4%


55.6%






55.9%


54.7%






















Selling, general and administrative expenses


210


185






728


663





Research and development expenses


50


56






183


174






















Income from operations


$    150


$    133






$    580


$    456





% of Revenue


20.3%


19.8%






21.8%


19.3%






















 

SOURCE Teradata Corporation



RELATED LINKS
http://www.teradata.com

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