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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
 
x 	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the fiscal year ended December 31, 2013
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
incorporation or organization)	 	(I.R.S. Employer
Identification No.)	
10000 Innovation Drive
Dayton, Ohio 45342
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (866) 548-8348
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	 	Name of Each Exchange
on which Registered	
Common Stock, $0.01 par value	 	New York Stock Exchange	
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes   x     No   ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act.    Yes   ¨     No   x
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   x     No   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x     No   ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	 	x	  	Accelerated filer	 	¨	
				
Non-accelerated filer	 	¨	  	Smaller reporting company	 	¨	
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x
The aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2013, was approximately $8.2 billion.
At January 31, 2014, there were approximately 159.2 million shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
 
Part III:	Portions of the registrant’s Notice of Annual Meeting of Stockholders and Proxy Statement, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after registrant’s fiscal year end of December 31, 2013 are incorporated herein by reference.	

Table of Contents
 TABLE OF CONTENTS

Item	  	Description	  	Page	 	
	  	PART I	  				
			
1.	  	Business	  	 	4	  	
1A.	  	Risk Factors	  	 	15	  	
1B.	  	Unresolved Staff Comments	  	 	27	  	
2.	  	Properties	  	 	27	  	
3.	  	Legal Proceedings	  	 	27	  	
4.	  	Mine Safety Disclosures	  	 	27	  	
			
	  	PART II	  				
			
5.	  	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	  	 	28	  	
6.	  	Selected Financial Data	  	 	31	  	
7.	  	Management’s Discussion and Analysis of Financial Condition and Results of Operations	  	 	32	  	
7A.	  	Quantitative and Qualitative Disclosures about Market Risk	  	 	46	  	
8.	  	Financial Statements and Supplementary Data	  	 	47	  	
9.	  	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	  	 	80	  	
9A.	  	Controls and Procedures	  	 	80	  	
9B.	  	Other Information	  	 	81	  	
			
	  	PART III	  				
			
10.	  	Directors, Executive Officers and Corporate Governance	  	 	81	  	
11.	  	Executive Compensation	  	 	81	  	
12.	  	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	  	 	81	  	
13.	  	Certain Relationships and Related Transactions, and Director Independence	  	 	82	  	
14.	  	Principal Accounting Fees and Services	  	 	82	  	
			
	  	PART IV	  				
			
15.	  	Exhibits, Financial Statement Schedules	  	 	82	  	
This report contains trademarks, service marks, and registered marks of Teradata Corporation and its subsidiaries, and other companies, as indicated.
 
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 PART I
FORWARD-LOOKING STATEMENTS
Forward-looking statements in our public filings or other public statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other public statements. These forward-looking statements were based on various facts and were derived utilizing numerous important assumptions and other important factors, and changes in such facts, assumptions or factors could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements include the information concerning our future financial performance, business strategy, projected plans and objectives. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate,” and similar expression or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts. You should understand that the factors described under “Risk Factors” and the following important factors could affect our future results and could cause actual results to differ materially from those expressed in such forward-looking statements:
 
•	 	the rapidly changing and intensely competitive nature of the information technology (“IT”) industry and the software applications and analytic data platform businesses, including the ongoing consolidation activity, threats from new and emerging analytic data technologies and competitors, and pressure on achieving continued price/performance gains for analytic data solutions;	
 
•	 	fluctuations in our operating results, timing of transactions, unanticipated delays or accelerations in our sales cycles and the difficulty of accurately estimating revenues;	
 
•	 	our ability to successfully leverage significant acquisitions;	
 
•	 	the impact of global economic fluctuations on the markets in general or on the ability of our suppliers and customers to meet their commitments to us, or the timing of purchases by our current and potential customers; and	
 
•	 	risks inherent in operating in foreign countries, including the impact of foreign currency fluctuations, economic, political, legal, regulatory, compliance, cultural and other conditions abroad.	
Other factors not identified above, including the risk factors described in the section entitled “Risk Factors” included elsewhere in this Annual Report on Form 10-K (“Annual Report”), may also cause actual results to differ materially from those projected by our forward-looking statements. Most of these factors are difficult to anticipate and are generally beyond our reasonable control. We undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
 
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 Item 1. BUSINESS
Overview. Teradata Corporation (“we,” “us,” “Teradata,” or the “Company”) is a global leader in analytic data platforms, marketing and analytic applications, and related consulting services. Our analytic data platforms are comprised of software, hardware, and related business consulting and support services – for data warehousing, active intelligence, big data analytics, and data discovery. Through our Teradata Unified Data Architecture™ (a comprehensive enterprise approach that integrates our analytic data platforms and multiple technologies, including third-party provided products, into a cohesive data architecture), we help customers access and manage data and extract business value and insight from their data. Our applications are designed to leverage data to: improve organizations’ effectiveness in marketing to their customers, determine customer and product profitability, forecast consumer demand, and discover new insights. Our consulting services allow customers to maximize use and leverage the value of their analytic data and marketing investments. Our services include a broad range of offerings including consulting, cloud (software as a service), hosting, platform management, and related installation services (collectively, “consulting services”) and support services. We serve customers across a broad set of industries from around the world, including communications, financial services, government, healthcare, insurance, manufacturing, media and entertainment, retail, and travel and transportation — with offerings ranging from small departmental implementations to many of the world’s largest analytic data platforms and marketing applications. We provide our offerings on-premise or in the cloud (as a service).
Teradata operates from four main locations in the United States: Dayton, Ohio; Johns Creek (Atlanta), Georgia; Rancho Bernardo (San Diego), California; and Indianapolis, Indiana. In addition, we have sales and services offices located in approximately 43 countries.
For the full year ended December 31, 2013, we had net income of $377 million and total revenues of $2.692 billion, of which approximately 61% was derived in the Americas region (North America and Latin America) and 39% in the International region (Europe, Middle East, Africa, Asia Pacific and Japan). For financial information about these geographic areas which are also our reportable segments as of December 31, 2013, see “Note 11—Segment, Other Supplemental Information and Concentrations” in the Notes to Consolidated Financial Statements elsewhere in this Annual Report.
History and Development. Teradata was formed in 1979 as a Delaware corporation. Teradata established a relational database management system on a proprietary platform in 1984. In 1990, Teradata partnered with NCR Corporation (“NCR”) to jointly develop next-generation database systems. In 1991, AT&T Corp. acquired NCR and, later that year, NCR purchased Teradata.
In 1996, AT&T spun off NCR (including Teradata) to form an independent, publicly-traded company, NCR Corporation. In 1999, NCR consolidated its Teradata data warehousing operations and product offerings into a separate operating division. On September 30, 2007, NCR was effectively separated into two independent, publicly-traded companies through the distribution of 100% of its Teradata data warehousing business to shareholders of NCR.
Since that time, we have increased our investments and focus to extend the scope of our business to include a full range of analytic data platforms. In 2011, Teradata completed its acquisitions of Aprimo, Inc. (“Aprimo”), a global provider of cloud-based integrated marketing software, and Aster Data Systems, Inc. (“Aster Data”), a technology leader in big data analytics. In 2012, Teradata completed the acquisition of eCircle Beteiligungs GmbH (“eCircle”), a leading cloud-based, full-service digital marketing provider in Europe.
Industry Overview
Our revenues are primarily generated in three multi-billion dollar markets: data warehousing, big data analytics and marketing and analytic applications. These markets include data warehouse database software, discovery platform software, marketing application software, supporting hardware (servers, storage and interconnects), consulting services, cloud services and maintenance services. We expect that the need for analytic data solutions and marketing and analytic application software will continue to grow as organizations increasingly rely on data and analytics to compete on a global basis. This need is further driven by the convergence of the following key market dynamics we have observed:
 
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•	 	high levels of data growth are being driven by new data types, in particular multi-structured data, examples of which include web logs, sensor and social network data, internet text and search indexing, call detail records, genomics, biological research, medical records, seismic/exploration data, photography and video archives, and large scale e-commerce data – which we also refer to as “big data”;	
 
•	 	increasing obstacles in building and managing effective analytic environments, caused by the growth and volume of new types of data and multiple data management systems;	
 
•	 	economic and business uncertainty combined with intense competition is driving companies to increasingly adopt analytic data technologies to address the vast complexity inherent in their markets and businesses;	
 
•	 	globalization, mobility, consolidation, security concerns and increased government regulation are creating the need for enhanced visibility across the entire enterprise at all times;	
 
•	 	improved analytic data platform affordability due to price/performance gains on server, disk, and memory hardware as well as open source software is enabling new types of usage, and the maintenance and analysis of more historical and near real-time data; and	
 
•	 	the adoption by customers of more real time, or “active,” environments is driving more applications, usage and capacity.	
Our Solutions
Teradata’s Unified Data Architecture is a comprehensive framework that enables organizations to address all types of data and analytics. This architecture combines the complementary value of technologies from Teradata, Teradata Aster, and open source Apache™ Hadoop ® to accelerate the time to value from all of an organization’s data. 
Data Warehousing. Data warehousing is the process of capturing, integrating, storing, managing, and analyzing data to answer business questions and exploit data for insight and value better than anyone else. Customers use our data warehousing software and hardware technologies and related services to acquire and integrate data from multiple sources, manage and analyze this data to gain business insights from data-driven decisions.
Active Intelligence. Teradata extends traditional data warehousing by integrating advanced analytics into enterprise business processes through Active Intelligence, the process of reducing the time between obtaining information and acting on it. Specifically, Active Intelligence integrates detailed historical information with near real-time data, to deploy timely, accurate strategic intelligence to knowledge workers in the corporate office as well as operational intelligence to front line users, customers and partners.
Big Data Analytics. Big data analytics describe analytic platform environments with significant data volume, variety, velocity and complexity. We help companies deal with emerging big data that typically has unknown relationships where fast analytic iteration is required to unlock new insights.
Integrated Marketing Applications . We offer fully integrated marketing management solutions to help organizations realize more effective marketing for greater results and gain more efficient marketing operations. Our integrated marketing management solutions manage marketing workflows, budget allocation, leads analytics, and digital assets from one integrated platform.
Our Products and Services. We are a single-source provider of analytic data platforms with a fully integrated business that includes market-leading technologies and customer-focused professionals. Our products are optimized and integrated specifically for data analytics and marketing and analytic applications, including our database and application software, workload-specific hardware platforms, and related consulting and support services.
 
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Our software and hardware products include:
 
•	 	Teradata Analytic Database Software —Our Teradata ® Database software combined with our massively parallel processing (“MPP”) hardware architecture provides the foundation for our unique ability to support and manage a wide range of mixed workloads and analytic data functions. Our Teradata Database software is designed to deliver near real-time intelligence for our customers with capabilities and features such as: support of short-term operational and long-term strategic workloads (mixed workloads), the ability to handle thousands of concurrent queries from thousands of concurrent users, robust and simplified system management, high system availability, event monitoring, and easy integration into the enterprise. Our database software includes Teradata Intelligent Memory, which keeps the most frequently used data in memory for rapid query processing. We also offer license subscriptions that provide our customers with when-and-if-available upgrades and enhancements to our database software. This software is available via an on-premise or a cloud delivery model.	
 
•	 	Teradata Workload-Specific Platforms — Products in this category are purpose-built to provide an analytic data platform that is used for all types of data-capturing, storing, archiving, and refining – and all types of uses – from fully-integrated warehouses, departmental data marts, discovery, archiving and disaster recovery. Key software products include the Teradata Database, Teradata Aster database and Hadoop (leveraging the Apache Hadoop distribution). For the hardware component of our solutions, Teradata integrates and optimizes industry standard hardware components to create highly-available, massively-scalable solution stacks. We utilize industry-standard Intel ® Xeon multi-core processors, along with industry-standard storage offerings, that are designed to provide seamless, transparent scalability. Our research and development efforts have sought to optimize Teradata’s platforms as high-performance, scalable, and easily manageable and supportable systems. Each platform comes ready to run for a distinct need, from basic reporting and analysis to integrated big data analytics, to data warehousing with full Active Intelligence capability. Teradata’s workload-specific platforms are designed to allow customers to meet their specific workload needs at various and most appropriate price points. These platforms (appliances) are available both on-premise or via a cloud delivery model.	
 
•	 	Teradata Aster Discovery Platform —Our big data analytics discovery platform is pre-configured with our powerful Teradata Aster Database, our patented SQL-MapReduce ® framework and a fully-supported Teradata hardware platform. It includes the Teradata Aster SQL-GR™ analytic engine, for graph analysis across big data sets. Also included is the extensible Teradata Aster SNAP Framework ™, which integrates multiple analytic engines and data stores that are designed to deliver an improvement in ease-of-use, analytic power, and performance. Our discovery platform is designed to provide business analysts and data scientists with an easy, reliable and powerful platform for rapid exploration and discovery from all data with next-generation analytics, which creates new, differentiated business value. With Aster, analysts can use commonly available business intelligence and reporting tools, access data in Hadoop directly, join it with data as needed in the Aster database, and leverage the analytical power of SQL-MapReduce and other business-ready analytic functions for applications such as click-stream analysis, marketing attribution, and customer churn analysis.	
 
•	 	Teradata Logical Data Models —Our industry-specific logical data models (“LDMs”) are designed as easy-to-follow blueprints for designing an integrated data warehouse that reflects business priorities tailored to the specific needs of a particular industry. In addition, our Unified LDM provides a unified view across multiple common subject areas. Our LDMs are licensed to our customers as a key component of our analytic data platform solutions. We also offer subscriptions that provide our customers with when-and-if-available upgrades and enhancements to our LDMs.	
 
•	 	Teradata Integrated Marketing Applications —Our fully-integrated marketing applications help organizations manage marketing workflows, budget allocation, leads, analytics, and digital assets. Designed to automate the planning and creation of timely and relevant campaigns for end-user customers and prospects, the following applications are offered on-premise and in the cloud (software as a service):	
 
 	•	 	Teradata Marketing Operations for efficient marketing resource management;	
 
 	•	 	Teradata Campaign Management for planning and performance analysis across multiple marketing channels; and	
 
 	•	 	Teradata Digital Messaging for executing relevant, personalized communications and delivering a consistent customer experience.	
 
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•	 	Teradata Analytic Applications —We offer a broad suite of applications that deliver value by analyzing data and delivering intelligence across the enterprise. The areas covered by these applications include master data management, demand and supply chain management, finance and performance management, profitability analytics, and data mining.	
Our service offerings include:
 
•	 	Teradata Business Consulting Services —Teradata offers services to identify and prioritize customer analytic needs to support corporate strategy. Our Teradata business consultants have extensive industry expertise and hands-on experience to help our customers quickly recognize business value. We employ skilled consultants who provide analytic data platform business impact modeling, analytic roadmap and maturity assessments, and solution planning. The business consultants work closely with the technology and implementation services to help plan and implement a complete project for the customer.	
 
•	 	Teradata Technology and Implementation Services —Teradata offers services to deliver a solution that meets business requirements via a disciplined analysis of conceptual, logical and physical design choices. Our skilled consultants provide analytic data platform design, architecture, migration, upgrade, implementation, optimization, and expansion services for enterprise analytics including data integration, business intelligence and Hadoop. Our consultants provide big data analytics and Hadoop consulting, enterprise analytics consulting, data management services, and business intelligence consulting. Our Global Consulting Centers around the world are staffed with professionals trained in our proven solutions methodologies, and supplement local consulting teams by accessing and utilizing the accumulated wealth of our global knowledge base. We provide both onshore and offshore consulting resources to address specific customer requirements.	
 
•	 	Teradata Managed Services —Teradata offers management services for data integration, data warehouse, discovery, Hadoop and business intelligence environments from a single source. These services encompass monitoring and managing day-to-day analytics operations to helping improve processes for greater productivity and efficiency.	
 
•	 	Teradata Marketing and Analytic Application Services —Teradata has consultants with extensive marketing and analytic applications knowledge to implement our application solutions on-premise or integrate with the marketing cloud solutions. Teradata also has media services to help customers manage their marketing communications with their customers.	
 
•	 	Teradata Cloud Services —We offer our integrated marketing applications and our analytic data platforms as a service to our customers. Our cloud services provide customers the flexibility to access Teradata solutions on demand in a secure environment with pay-as-you go pricing options.	
 
•	 	Teradata Customer Support Services —Our customer services organization provides an experienced, single point of contact and delivery for the deployment, support and ongoing management of Teradata analytic data platforms and applications around the world. Our customer support service offers both proactive and reactive services, including installation, maintenance, monitoring, back-up, and recovery services to allow customers to maximize availability and better leverage the value of their investments in Teradata solutions.	
 
•	 	Training Services —To enhance the value of their investment, we also provide our customers with training to help them get the most value from their Teradata analytic data platforms and marketing and analytical applications.	
Our Strategy. Teradata helps companies achieve competitive advantage and win in their markets by empowering them to become “data-driven businesses” capable of exploiting data for insight and value. With Teradata, companies can become more competitive by leveraging data insights to reduce costs, improve business processes, enhance customer relationships, and drive innovation. Companies can also engage in better data-driven marketing through Teradata’s industry-leading analytic data platforms, marketing applications and proven consulting experience and expertise.
Our strategy focuses on three large and growing markets: data warehousing, big data analytics and marketing applications. We continue to focus on the following key initiatives to broaden our position in the market and take advantage of these market opportunities.
 
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•	 	Invest to expand our leading Unified Data Architecture, data warehouse software and platform family, big data discovery platforms, Hadoop-based data management platforms, and marketing applications to address multiple market segments through internal development and targeted strategic acquisitions;	
 
•	 	Deliver our solutions via the cloud (as a service) or on premise with offerings that support applications as a service, data warehousing as a service, as well as discovery analytics as a service and data management as a service;	
 
•	 	Invest in partnerships to increase the number of solutions available on Teradata platforms, maximize customer value, and increase our market coverage; and	
 
•	 	Continue to seek opportunities to strengthen our sales resources ( e.g. , by opportunistically hiring incremental sales account executives as well as technology and industry consultants, and sales support resources).	
Customers. We focus the majority of our sales efforts on the Global 3000 leading companies across a broad set of industries, including banking/financial services, communications (including telecommunications, e-business, and media and entertainment), government, insurance and healthcare, manufacturing, retail, travel and transportation logistics, and energy and utilities. These industries provide a good fit for our analytic data platforms, as they tend to have large data volumes, and expanding sources of data, complex data management requirements, or large and varied groups of users. The extent to which any given customer contributes to our revenues generally varies significantly from year to year and quarter to quarter.
With more than 30 years of experience, Teradata is a leader in implementing analytic data platforms. Our customers represent some of the best-known companies around the world. Teradata solutions support 18 of the top 20 global telecommunication firms, 17 of the top 20 global commercial and savings banks, 15 of the top 20 global retailers, and 14 of the top 20 travel and transportation companies (Rankings are based on Teradata customers and the 2012 Fortune Global 500 data released in July 2013, which ranks companies by total revenues for their respective fiscal years ended on or before March 31, 2013).
Although Teradata is a well-established vendor with strong penetration in each of these industries, our market and growth potential remain strong, as existing customers routinely increase the size and scope of their data environments due to growth in the number of users, amounts and types of data, and types and complexity of workloads, queries and analytics.
Data warehouses are typically built one project at a time. For example, an initial data warehouse may start with a single subject area, which forms the foundation of data that is available to be leveraged for the next project, and so on. In the big data discovery market, customers begin with a single platform and often increase the size or number of platforms to fully integrate and operationalize the business value via the Teradata Unified Data Architecture. Therefore, a customer with a large order in one quarter is likely to generate additional revenue for Teradata in subsequent periods. However, due to the breadth of our customer base, no single customer of Teradata (overall or within any of our reportable segments) accounted for 10% or more of our total revenue in any of the last three fiscal years. For the year ended December 31, 2013, our top ten customers collectively accounted for approximately 16% of our total revenues. Moreover, Teradata’s total revenue and revenue for each reportable segment can vary considerably from period to period given the different growth patterns of our existing customers’ data warehouse systems, discovery platforms and data management platforms and the variable timing of new customer orders. Due to the size and complexity of these transactions (purchases), the sales cycle for a new analytic data platform is often fairly long (typically more than a year). Our results in any particular quarter have generally been dependent on our ability to generate a relatively small number of large orders for that quarter.
 
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Partners, Marketing and Distribution Channels
Strategic Partnerships. We seek to leverage our sales and marketing reach by partnering with leading global and regional systems integrators, independent software vendors, and consultants, which we believe complement our analytic data platforms.
 
•	 	Alliance Partners —Strategic partnerships are a key factor in our ability to leverage the value of our analytic data platforms and expand the scope of our offerings to the marketplace. Our partner program is focused on working collaboratively with independent software vendors in several areas critical to our analytic data platforms, including tools, data and application integration solutions, data mining, analytics, business intelligence, and specific horizontal and industry solutions. Our goal is to provide customer choices with partner offerings that are optimized and certified with our solutions, and fit within the customer’s enterprise IT environment. Our strategic alliance partners include many leaders in the business intelligence, data acquisition and analytics market.	
 
•	 	Systems Integrators —Teradata works with a range of consultants and systems integrators that engage in the design, implementation and integration of analytic data platforms and marketing and analytic applications for our joint clients. Our strategic partnerships with select global consulting and systems integration firms provide broad industry and technology expertise in the design of business solutions that leverage Teradata technology to enable enterprise analytics and operational intelligence. In general, these partners are trusted advisors who assist in vision and strategy development with our customers while objectively assessing and meeting their needs. Our strategic global consulting and systems integration partners include Accenture, Capgemini, Cognizant, IBM Global Business Services, and Wipro Limited.	
Sales and Marketing. We sell and market our analytic data platforms in our reportable segments (which include the Americas and International regions) primarily through a direct sales force. We believe our quota-carrying sales force increases our visibility and penetration in the marketplace and fosters long-term customer relationships and additional product sales. We have approximately 80% of our employees in customer-facing and/or revenue driving roles (including sales, consulting and customer service, and product engineering).
We support our sales force with marketing and training programs which are designed to grow awareness and highlight our technology leadership and differentiation in the market, educate the sales force to build skills and knowledge, as well as provide a robust set of tools for use by our direct sales force. In support of growing awareness of the need for enterprise data warehousing and Teradata solutions specifically, we employ a broad range of marketing strategies including programs to inform and educate customers and prospects, the media, industry analysts, academics and other third-party influencers. These strategies include targeted direct marketing, our website, webinars, trade shows and conferences. We annually host or participate in worldwide and regional user conferences that take place in numerous locations around the globe.
We also believe that promoting customer success and return on investment is an important element of our success. As a result we have developed an active program to support and leverage customer references and testimonials/success stories.
Resellers and Distributors. Although the majority of our sales are direct, in limited situations to extend our sales coverage, we also market and sell our products through third-party channels, including resellers and distributors. We have a small number of licensed resellers, and have license and distribution agreements with independent distributors in several countries worldwide. The distribution agreements generally provide for the right to offer our products within a territory. Our distributors generally maintain sales and services personnel dedicated to our products. Accordingly, we have dedicated sales, marketing, and technical alliance resources designed to optimize our reseller and distributor relationships.
Sources of Materials. Our hardware components are assembled and configured by Flextronics International Ltd. (“Flextronics”). Our platform line is designed to leverage the best-in-class components from industry leaders. Our data storage devices and memory components utilize industry-standard technologies, but are selected and
 
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configured to work optimally with our software and hardware platform. Flextronics also procures a wide variety of components used in the assembly process on our behalf. Although many of these components are available from multiple sources, Teradata utilizes preferred supplier relationships to better ensure more consistent quality, cost and delivery. Typically, these preferred suppliers maintain alternative processes and/or facilities to ensure business continuity of supply. Given our strategy to outsource product assembly activities to Flextronics and to source certain components from single suppliers, a disruption in production at Flextronics or at a supplier, or a global shortage of components, could impact the timing or profitability of customer shipments.
Competition. The analytic data platforms market is highly competitive, and we face a number of large traditional competitors, such as IBM and Oracle. We also expect to continue to see new and emerging competitors, as large and growing markets attract more market participants. We compete successfully in the marketplace and are bolstered by our expanded Teradata workload-specific platform family, which includes the: Active Enterprise Data Warehouse, Data Warehouse Appliance, Data Mart Appliance, Integrated Big Data Platform, all of which run on the Teradata Database; the Teradata Aster Discovery platform, and Teradata Appliance for Hadoop (leveraging the Apache Hadoop distribution); a powerful suite of software tools; and related services. These solutions are tied together within our Unified Data Architecture. We believe our proven architecture for both structured and unstructured data, integrated solutions with high-performing and scalable technology, deep and broad consulting and support services capabilities, strong customer relationships, and our successful track record will collectively enable us to continue to compete successfully. For more information, see Item 1A, Risk Factors, elsewhere in this Annual Report.
Competitors take different technical and integration approaches to addressing enterprise analytics needs, and therefore they often recommend a different architecture than we do. We believe that our customers recognize the advantages of our technologies and our approach as described above.
Our Active Enterprise Data Warehouse platform technology is designed to scale with customer growth needs and support the coexistence of multiple generations of nodes in a single environment, thus protecting the customer’s prior investments. Because our Teradata workload-specific platform family also includes data warehousing and big data discovery appliances, we believe we have the right platform for any analytical architecture need and any data type, both structured and unstructured, which makes our analytic data platforms particularly attractive to customers and enable us to successfully compete in the marketplace.
Key factors used to evaluate competitors in these markets include: data analytics experience; customer references; technology leadership; product quality; performance, scalability, availability and manageability; support and consulting services capabilities; industry knowledge; and total cost of ownership. We believe we have a competitive advantage in providing complete, integrated, and optimized analytic data platforms that address customers’ business, technical and architecture requirements.
Many companies participate in adjacent areas of the analytics market, such as enterprise analytic and business intelligence application software. The status of our business relationships with these companies can influence our ability to compete. Our products also complement offerings of some of our competitors, with whom we have formed partnerships to work with their business intelligence and application software businesses. Examples of these companies include both IBM and Oracle, due to their acquisitions of other business intelligence, consulting and application software companies in recent years.
In the marketing applications space we also see competition from companies like IBM, Oracle, and Adobe, along with a variety of niche providers whose offerings overlap to a greater or lesser degree with our own. The marketing application space is growing rapidly and, as with many large growing markets, continues to attract new competitors, either through acquisition or new development. We believe we compete successfully in this market, supported by the integration of our marketing applications with the Teradata data analytic solutions and other leading data solutions providers. Our ability to compete is further enhanced by the integration between our marketing operations, campaign management, and digital messaging solution components which make up our marketing application suite. Our competitive differentiators also include high-level performance at scale, robust and flexible functionality, and a complete product set for online and offline marketing.
 
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Seasonality. Historically our sales are somewhat seasonal, in line with capital spending patterns of our customers, with lower revenue typically in the first quarter and higher revenue generally in the fourth quarter of each year. Such seasonality causes our working capital cash flow requirements to vary from quarter to quarter depending on the variability in the volume, timing and mix of product sales. In addition, revenue in the third month of each quarter has historically been significantly higher than in the first and second months. These factors, among others as more fully described in Item 1A, Risk Factors, elsewhere in this Annual Report, make forecasting more difficult and may adversely affect our ability to accurately predict financial results.
Research and Development (“R&D”). We remain focused on designing and developing products, services and solutions for analytic data platforms and marketing and analytic applications that anticipate our customers’ changing technological needs. As we seek improvements in our products and services, we also consider our customers’ current needs as we design our new technology so that new generations of the Teradata database software and operating platforms are compatible with prior generations of our technology. We believe our extensive R&D workforce is one of our core strengths. The global R&D team for analytic data platforms is headquartered at our facility in Rancho Bernardo (San Diego), California. R&D for marketing and analytic applications is headquartered in Raleigh, North Carolina. We anticipate that we will continue to have significant R&D expenditures, which may include strategic acquisitions, in order to help support the flow of innovative, high-quality products, services and applications, which is vital to our leading competitive position. For information regarding the accounting and costs included in R&D activities see “Note 1—Description of Business, Basis of Presentation and Significant Accounting Policies” in the Notes to Consolidated Financial Statements elsewhere in this Annual Report.
Intellectual Property and Technology. The Company owns approximately 661 patents in the United States and about 46 patents in foreign countries. The foreign patents are generally counterparts of the Company’s U.S. patents. Many of the patents that we own are licensed to others, and we are licensed to use certain patents owned by others. While our portfolio of patents and patent applications in aggregate is of significant value to our Company, we do not believe that any particular individual patent is by itself of material importance to our business as a whole.
In addition, the Company owns copyrights and trade secrets in its vast code base which makes up the core Teradata software product offerings, including the Teradata database and application software products. The Teradata database software, which was initially based upon computer science research at the California Institute of Technology, works on multiple tasks at once, an approach known as “parallel processing.” The Teradata database software architecture is known in the industry as a massively parallel processing system. Parallel processing vastly increases the speed with which results are delivered and correspondingly increases the amount of data that can be queried and the number and complexity of queries that can be run at the same time. The name “Teradata” evokes the ability to manage terabytes ( i.e. , trillions of bytes) of data. One of our key technological advances has been making the Teradata database software and hardware compatible with several operating systems, such as UNIX, LINUX and Windows. The Teradata database software is a relational database management system that reflects the investment of hundreds of person-years of development work.
The source code versions of our products are protected as trade secrets and, in all major markets, as unpublished copyright works. We also protect our rights in the Teradata database software, Teradata Aster’s patented SQL-MapReduce technology, SQL-GR graph technology and related intellectual property; however, there can be no assurance that these measures will be successful. The Company owns the Teradata ® , Aprimo ® , Aster ® and eCircle ® trademarks, which are registered in the United States and in many foreign countries, as well as other trade names, service marks, and trademarks.
Employees. As of December 31, 2013, we had approximately 10,800 employees globally. We believe that our future success will depend, in part, on our ability to continue to attract, hire and retain skilled and experienced personnel.
 
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Properties and Facilities. Our corporate headquarters is located in Dayton, Ohio, and we manage our business through four main locations in the United States: Dayton, Ohio; Johns Creek (Atlanta), Georgia; Rancho Bernardo (San Diego), California; and Indianapolis, Indiana. As of December 31, 2013, we operated approximately 108 facilities throughout the world. We own our Rancho Bernardo complex. All of our other research and development facilities are leased, as well as our offices in Dayton, Johns Creek and Indianapolis, technical support centers, training, and other miscellaneous sites. We maintain facilities in approximately 43 countries.
Executive Officers of the Registrant. The following table sets forth the information as of January 31, 2014 regarding the individuals who are serving as our executive officers.

Name	  	Age	 	  	Position(s)	
Michael Koehler	  	 	61	  	  	President and Chief Executive Officer	
Stephen Scheppmann	  	 	58	  	  	Executive Vice President and Chief Financial Officer	
Rocky Blanton	  	 	53	  	  	Executive Vice President, Americas	
Saundra Davis	  	 	50	  	  	Chief Human Resource Officer	
Robert Fair	  	 	51	  	  	Executive Vice President and Chief Marketing and Information Officer	
Scott Gnau	  	 	48	  	  	Executive Vice President, Teradata Labs	
Daniel Harrington	  	 	50	  	  	Executive Vice President, Global Consulting and Support Services	
Bruce Langos	  	 	60	  	  	Chief Operations Officer	
Darryl McDonald	  	 	55	  	  	Executive Vice President, Applications	
Laura Nyquist	  	 	60	  	  	General Counsel and Secretary	
Hermann Wimmer	  	 	50	  	  	Executive Vice President, International	
Michael Koehler . Mr. Koehler is President and Chief Executive Officer of Teradata. Previously, Mr. Koehler served as Senior Vice President, Teradata Division of NCR from 2003 to 2007. From September 2002 until March 2003, he was the Interim Teradata Division Leader, Teradata Division. From 1999 to 2002, Mr. Koehler was Vice President, Global Field Operations, Teradata Division, and held management positions of increasingly greater responsibility at NCR prior to that time. He joined our board in August 2007 and also serves as a director of Hertz Global Holdings, Inc., a publicly-traded company, which through its subsidiary, Hertz Corporation, is a leading rental car and equipment provider.
Stephen Scheppmann. Stephen Scheppmann has served as Executive Vice President and Chief Financial Officer of Teradata since September 4, 2007. He served as Executive Vice President and Chief Financial Officer of Per-Se Technologies, Inc., a leading provider of administrative healthcare industry services, from May 2006 until May 2007, following the completion of that company’s acquisition. From 2000 to May 2006, Mr. Scheppmann served as Executive Vice President and Chief Financial Officer for NOVA Information Systems, Inc., and, from 1988 to 2000, he was Senior Vice President and Chief Financial Officer of Larson-Juhl, Inc. From January 2006 until June 2012, Mr. Scheppmann served as a member of the Board of Directors of eResearch Technology, Inc. and as chairman of its Audit Committee from April 2006 until June 2012.
Rocky Blanton. Rocky Blanton is Executive Vice President, Americas of Teradata. Previously, Mr. Blanton served as Vice President of the Americas region for Teradata from October 2007 to December 2012. He served as Vice President of the Americas region, Teradata Division of NCR from 2002 to September 2007. Mr. Blanton began his career with NCR in 1982 and held various sales and management positions of increasing responsibility before joining Teradata.
Saundra Davis . Saundra Davis is Teradata’s Chief Human Resource Officer and has served in this role since joining Teradata in 2007. Ms. Davis served as Vice President, Human Resources, Teradata Division of NCR from January 2004 to September 2007. Prior to this position, Ms. Davis served as Vice President, Human Resources, Corporate Infrastructure, at NCR from January 2003 to December 2003. Ms. Davis joined NCR in 1985 and held a number of positions of increasing responsibility in human resources during her career there.
 
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Robert Fair . Robert Fair is Executive Vice President and Chief Marketing and Information Officer for Teradata. Mr. Fair served as Executive Vice President, Global Field Operations of Teradata from October 2007 to December 2012. From April 2003 to September 2007, he served as Vice President, Business Development and Global Marketing, Teradata Division of NCR. From March 2000 to April 2003, he was Vice President, Americas Communications Industry, Teradata Division. Mr. Fair began his career at NCR in 1984 and held a number of positions of increasing responsibility in the areas of sales, consulting services and marketing before joining Teradata.
Scott Gnau. Scott Gnau is Executive Vice President, Teradata Labs, and has been head of Teradata’s research, development and sales support activities for its integrated data warehousing, big data analytics, and associated solutions since 2011. He served as Chief Development Officer of Teradata from September 2007 until January 2011. Prior to that time, he was Vice President, Teradata Research and Development for NCR from June 2005 to September 2007. Mr. Gnau joined NCR in 1995 and held various technology research, product development and management positions of increasing responsibility before joining Teradata.
Daniel Harrington . Daniel Harrington is Executive Vice President, Global Consulting and Support Services for Teradata leading Teradata’s global consulting and support services organizations. Prior to this position, Mr. Harrington served as Executive Vice President, Technology and Support Services of Teradata from October 2007 to December 2012. He served as Vice President, Customer Services, Teradata Division of NCR, from January 2005 until September 2007. From April 1999 to December 2004, he was Vice President, Northern Europe, Teradata Division with responsibility for Europe sales. Mr. Harrington joined NCR in 1985 and held a number of positions of increasing responsibility in the areas of sales, marketing and product management before he joined Teradata.
Bruce Langos . Bruce Langos is Chief Operations Officer of Teradata. Mr. Langos was Senior Vice President, Global Operations of NCR, from May 2006 to September 2007. From 1996 until that time, Mr. Langos was Vice President, Business Operations, Teradata Division. Mr. Langos joined NCR in 1976 and held positions of increasing responsibility in sales, marketing, product management and strategic planning prior to joining Teradata.
Darryl McDonald . Darryl McDonald serves as Executive Vice President, Applications for Teradata. Mr. McDonald served as Executive Vice President, Applications, Business Development & Chief Marketing Officer from May 2010 to December 2012. Prior to that, he was the Chief Marketing Officer from September 2007 to April 2010. Mr. McDonald was Vice President, Global Consulting Services, Teradata Division of NCR from April 2003 to September 2007. From 1997 until April 2003, Mr. McDonald was Vice President, Americas Retail Industry, Teradata Division. Mr. McDonald joined NCR in 1982 and held a number of positions of increasing responsibility in the areas of sales and consulting before joining Teradata.
Laura Nyquist . Laura Nyquist is the General Counsel and Secretary of Teradata. Ms. Nyquist served as Deputy General Counsel and Chief Counsel, Business Counsel Group, NCR, from October 2006 to September 2007. Prior to this position, Ms. Nyquist was Chief Counsel, Financial Solutions Division from 2004 to September 2006, and was Vice President, Corporate Affairs, and Secretary to the Board of Directors of NCR from 1999 to 2004. Ms. Nyquist joined NCR in 1986 and held a number of positions of increasing responsibility at NCR prior to joining Teradata.
Hermann Wimmer. Hermann Wimmer is Executive Vice President, International of Teradata, with responsibility for the Company’s business in Europe, Middle East, Africa (“EMEA”) and Asia-Pacific/Japan. From October 2007 to December 2012, Mr. Wimmer was Vice President of the EMEA region for Teradata, and from January 2004 to September 2007, Mr. Wimmer was Vice President of the EMEA region, Teradata Division of NCR. Mr. Wimmer joined NCR in 1996 and held various management positions of increasing responsibility prior to joining Teradata.
 
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There are no family relationships between any of the executive officers or directors of Teradata.
There are no contractual obligations regarding the election of our executive officers or directors.
Information. Teradata makes available through its website, free of charge, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and all amendments to such reports, as soon as reasonably practicable after these reports are electronically filed or furnished to the U.S. Securities and Exchange Commission (“SEC”) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. These reports and other information are also available, free of charge, at www.sec.gov . Alternatively, the public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. Teradata will furnish, without charge to a security holder upon written request, the Notice of Meeting and Proxy Statement for the 2014 Annual Meeting of Stockholders. Teradata will furnish the Code of Conduct and any other exhibit at cost (the Code of Conduct is also available through Teradata’s website at http://www.teradata.com/code-of-conduct/). Document requests are available by calling or writing to:
Teradata – Shareholder Relations
10000 Innovation Drive
Dayton, OH 45342
Phone: 937-242-4878
Website: http://www.teradata.com
 
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 Item 1A.	RISK FACTORS	
You should carefully consider each of the following risk factors and all of the other information set forth in this Annual Report. Based on the information currently known to us, we believe that the following information identifies the most significant risk factors affecting our company in each of these categories of risks. However, the risks and uncertainties our company faces are not limited to those set forth in the risk factors described below. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.
In addition, past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods.
If any of the following risks and uncertainties develops into actual events, these events could have a material adverse effect on our business, financial condition or results of operations. In such case, the trading price of our common stock could decline.
Economic Pressures and Uncertainty—Our business is affected by the global economies in which we operate and the economic climate of the industries we serve.
Our business and results of operations are affected by international, national and regional economic conditions. In particular, the IT industry in which we operate is susceptible to significant changes in the strength of the economy and the financial health of companies and governmental entities that make capital commitments for new technologies. Accordingly, downturns or uncertainty in the global or regional economies in which we operate or certain economic sectors (such as retail, manufacturing, financial services or government) may adversely impact our business. For example, adverse changes to the economy could impact the timing of purchases by our current and potential customers or the ability of our customers to fulfill their obligations to us. In addition, decreased or more closely scrutinized capital spending in our customers’ businesses and in the industries we also serve may adversely impact our business. Uncertainty about future economic conditions makes it difficult for us to forecast operating results and to make decisions about future investments. Accordingly, global economic and market conditions may cause material impacts on our results of operations, prospects and financial condition. The Company’s success in periods of economic uncertainty is also dependent, in part, on our ability to reduce costs in response to changes in demand and other activity.
Competition—The IT industry is intensely competitive and evolving, and competitive pressures could adversely affect our pricing practices or demand for our products and services.
We operate in the intensely competitive IT industry, which is characterized by rapidly changing technology, evolving industry standards and models for consuming and delivering business and IT services, frequent new product introductions, and price and cost reductions. In general, as a participant in the analytic data solutions market, we face:
 
•	 	Changes in customer IT spending habits and other shifts in market demands, which drive competition;	
 
•	 	A continuing trend toward consolidation of companies which could adversely affect our ability to compete, including if our key partners merge or partner with our competitors;	
 
•	 	Continued pressure on price/performance for analytic data platform solutions due to constant technology improvements in processor capacity and speed;	
 
•	 	Changes in pricing, marketing and product strategies, such as potential aggressive price discounting and the use of different pricing models by our competitors or other factors;	
 
•	 	Rapid changes in computing technology and capabilities that challenge our ability to maintain differentiation at the lower range of business intelligence analytic functions;	
 
•	 	New and emerging analytic data technologies, competitors, and business models;	
 
•	 	Continued emergence of open source software that often attempt to rival current technology offerings at a much lower cost despite its limited functionality;	
 
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•	 	Rapid changes in product delivery models, such as in-house solutions versus cloud solutions, and	
 
•	 	Changing competitive requirements and deliverables in developing and emerging markets.	
To compete successfully in this environment, we must rapidly and continually design, develop and market solutions and related products and services that are valued in the marketplace. To do this, we must react on a timely basis to shifts in market demands. Our market position depends on our ability to continually improve the price/performance of our solutions, while maintaining efficient operations to sustain our competitive operating margins. We must also maintain the quality of our products and services throughout these shifts in market demand. If we are unable to react quickly when and as needed to improve the value of our product offerings our operating results could be negatively impacted.
Our competitors include certain larger companies, such as IBM and Oracle, who are well-capitalized companies with widespread distribution, brand recognition and penetration of platforms and service offerings. The significant purchasing and market power of these larger competitors, which have greater financial resources than we do, could allow them to surpass our market penetration and marketing efforts to promote and sell their products and services. In addition, many other companies participate in specific areas of our business, such as enterprise applications, analytic data platforms and business intelligence software. In some cases we may partner with a company in one area of our business and compete with them in another. The status of our business relationships with these companies can influence our ability to compete for analytic data solutions opportunities in such areas. We also expect additional competition from both established and emerging companies. Failure to compete successfully with new or existing competitors in these and other areas could have a material adverse impact on our ability to generate additional revenues or sustain existing revenue levels.
Analytic Data Solutions Market—If the overall analytic data solutions market declines or does not grow, we may sell fewer products and services, and our business may not be able to sustain and/or grow its current level of operations.
If the market trends toward more limited IT spending, or limited liquidity, this could result in fewer customers making, or customers delaying investments in, our products and services. In the past, we have seen periodic breaks in the buying patterns from some of our larger customers, which indicate a level of maturation of their current data warehouse implementation or a shifting of IT priorities when these customers are still leveraging the investments they have made in their core data warehousing infrastructures during past years. In addition, reduced prices and improvements in analytic data solutions may increase pressure on our product revenues and margins, as well as on the annuity streams we receive from our maintenance business. If the growth rates for the analytic data solutions market decline for any reason, there could be a decrease in demand for our products and services, which could have a material adverse effect on our financial results.
Renewal Rates and Support Services Pricing Pressures—If our existing customers fail to renew their support agreements, or if customers do not license updated software products on terms favorable to us, our revenues could be adversely affected.
We currently derive a significant portion of our overall revenues from maintenance services and software subscriptions (unspecified when-and-if-available upgrades), and we depend on our installed customer base for future revenue from maintenance services and software subscriptions and licenses of updated products. The terms of our standard maintenance services and software subscription arrangements generally provide for the payment of license fees and prepayment of first-year support fees and are generally renewable on an annual basis. The IT industry generally has been experiencing increasing pricing pressure from customers when purchasing or renewing support agreements. Mergers and acquisitions in certain industries that we serve could result in a reduction of the software and hardware being serviced and put pressure on our maintenance terms with customers who have merged. Given this environment, there can be no assurance that our current customers will renew their maintenance agreements or agree to the same terms when they renew, which could result in our reducing or losing maintenance fees.
 
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If our existing customers fail to renew their maintenance agreements, or if we are unable to generate additional maintenance fees through the license of updated products to existing or new customers, our business and future operating results could be adversely affected.
Replacements of older Teradata systems often result in less hardware maintenance revenue since Teradata’s newer hardware is designed to be more powerful, use less energy and require less floor space. As a result, less hardware is needed for the same workload, and therefore less maintenance may be required on the replacement system. However, it is common that when a customer replaces an older platform, they often also expand the size and scope their Teradata system, resulting in an increase in maintenance revenue, though not at the same rate as product revenue.
Additionally, as a result of past acquisitions and changes in customer demand, Teradata’s software application offerings have been expanded to include term licenses, hosting arrangements and software as a service. As a result, future revenue streams could be adversely affected if customers do not renew their term and software as a service arrangement.
Operating Result Fluctuations—Our financial results are subject to fluctuations caused by many factors that could result in our failing to achieve anticipated financial results.
Our quarterly and annual financial results have varied in the past and are likely to continue to vary in the future due to a number of factors, many of which are beyond our control. In particular, if transactions that we expect to close by the end of a quarter are not closed until a later date, our revenue and/or net income for that quarter could be substantially below expectations, especially given the large size of our transactions. These and any one or more of the factors listed below or other factors could cause us not to achieve our revenue or profitability expectations. The resulting failure to meet market expectations could cause a decrease in our stock price. These factors include the risks discussed elsewhere in this section and the following:
 
•	 	Downturns in our customers’ businesses, in the domestic economy or in international economies where our customers do substantial business;	
 
•	 	Changes in demand for our products and services, including changes in growth rates in the analytic data solutions market;	
 
•	 	The size, timing and contractual terms of large orders for our products and services, which may impact in particular our quarterly operating results (either positively or negatively);	
 
•	 	Possible delays in our ability to recognize revenue as the result of contract terms;	
 
•	 	The budgeting cycles of our customers and potential customers;	
 
•	 	Changes in pricing policies resulting from competitive pressures, such as aggressive price discounting by our competitors, new pricing strategies, or other factors;	
 
•	 	Our ability to develop and introduce on a timely basis new or enhanced versions of our products and services;	
 
•	 	Changes in the mix of pre-tax earnings attributable to domestic versus international sales;	
 
•	 	Seasonal fluctuations in buying patterns;	
 
•	 	Future acquisitions and divestitures of technologies, products and businesses;	
 
•	 	Unexpected needs for capital expenditures or other unanticipated expenses; and	
 
•	 	Changes in certain assumptions, estimates and judgments of management (which are required in connection with the preparation of the Company’s financial statements) that could affect the reported amounts of assets, liabilities, revenues, costs, expenses and the related disclosure of contingent liabilities.	
Acquisitions and Alliances—Our ability to successfully integrate acquisitions and effectively manage acquisitions may be an important element of future growth.
We are continually evaluating the most effective ways to extend Teradata’s core technology and expand our family of compatible analytic platforms and software applications to address multiple market segments and solution offerings. From time to time, this includes acquisitions, equity investments or joint ventures. Such transactions entail various risks, including risks associated with:
 
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•	 	Assimilating and integrating different business operations, corporate cultures, personnel, infrastructure and technologies or products acquired or licensed;	
 
•	 	Retaining key employees and maintaining relationships with employees, customers, clients or suppliers of the acquired companies, and recurring revenue of the acquired company may decline or fail to be renewed;	
 
•	 	The potential for unknown liabilities, as well as undetected internal control, compliance or quality issues within the acquired or combined business or additional costs not anticipated at the time of acquisition;	
 
•	 	Disruptions of our ongoing business or inability to successfully incorporate acquired products, services or technologies into our solutions and maintain quality;	
 
•	 	Failure to achieve the projected synergies after integration of acquired companies or a decline in value of the acquired business and related impairments;	
 
•	 	Funding acquisition activities, whether through the use of existing cash reserves, or through the use of debt, and the related impact on our liquidity and financial condition; and	
 
•	 	Failure to realize all the economic benefits from these acquisitions, equity investments or joint ventures could result in an impairment of goodwill, intangible assets or other assets, which could result in a significant charge to our results of operations.	
Our operating results may fluctuate as a result of acquisitions and related integration activities, as well as other strategic growth transactions, and there is a risk that our financial results may be adversely affected.
Changing Tax Rates—A change in our effective tax rate can have a significant adverse impact on our business.
A number of factors may adversely impact our future effective tax rates, such as the jurisdictions in which our profits are determined to be earned and taxed; the resolution of issues arising from tax audits with various tax authorities; changes in the valuation of our deferred tax assets and liabilities; adjustments to estimated taxes upon finalization of various tax returns; changes in available tax credits, especially surrounding tax credits in the United States for our research and development activities; and the repatriation of non-U.S. earnings for which we have not previously provided for U.S. taxes. Tax authorities may disagree with certain positions we have taken and assess additional taxes. We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provision, however, there can be no assurance that we will accurately predict the outcomes of these audits, and the actual outcomes of these audits could have a material impact on our net income or financial condition. Changes in tax laws or tax rulings could materially impact our effective tax rate. For example, proposals for fundamental U.S. international tax reform, if enacted, could have a significant adverse impact on our future results of operations.
Sales Cycle Variations—Unanticipated delays or accelerations in our sales cycles make accurate estimation of our revenues difficult and could result in significant fluctuations in our quarterly operating results.
The size and timing of large orders for our products and services varies considerably, which can impact results from quarter to quarter. The process we use to forecast sales and trends in our business relies heavily on estimates of closure on a transaction-specific basis. It is very difficult to predict sales in a particular quarter or over a longer period of time. Unanticipated delays or accelerations in our sales cycles make accurate estimation of our revenues difficult and could result in significant fluctuations in our quarterly operating results.
The length of our sales cycle varies depending on a number of factors over which we may have little or no control, including the size and complexity of a potential transaction, the level of competition that we encounter in our selling activities and our current and potential customers’ internal budgeting and approval process, as well as overall macro-economic conditions. As a result of a generally long sales cycle, we may expend significant effort over a long period of time in an attempt to obtain an order, but ultimately not complete the sale, or the order ultimately received may be smaller than anticipated. Our revenue from different customers varies from quarter to quarter, and a customer with a large order in one quarter may generate significantly lower revenue in subsequent quarters/years. Our results in any particular quarter have generally been dependent on the timing of a relatively small number of large transactions.
 
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Due to resulting fluctuations, we believe that quarter-to-quarter comparisons of our revenue, margins, and operating results may not be meaningful, and that these comparisons may not be an accurate indicator of our future performance.
In addition, the budgeting and IT capital spending cycles of our customers and potential customers make forecasting more difficult and may adversely affect our ability to accurately predict financial results. Spending may be particularly heavy in our fourth quarter because of large enterprise customers placing orders before the expiration of IT budgets tied to that calendar year.
Our operating expense budgets (including such categories as headcount, real estate, and technology resources) are based on projected annual and quarterly revenue levels and are generally incurred ratably throughout each quarter. Since our operating expenses are relatively fixed in the short term, failure to generate projected revenues for a specified period could adversely impact our operating results, reducing net income or causing an operating loss for that period. The deferral or non-occurrence of such sales revenues could materially adversely affect our operating results for that quarter and could negatively impact our business in future periods.
Seasonal Variability—Seasonal trends in sales of our products and services could adversely affect our quarterly operating results.
In general, we see fluctuations in buying patterns with lower revenue in the first quarter and higher revenue in the fourth quarter of each year. Such seasonality also causes our working capital cash flow requirements to vary from quarter to quarter depending on the variability in the volume, timing and mix of product sales. In addition, revenue in the third month of each quarter has historically been significantly higher than in the first and second months, which further impacts our ability to predict financial results accurately and enhances the enterprise risks inherent in our business. These and other factors make forecasting more difficult and may adversely affect our ability to predict financial results accurately.
Revenue Mix Variability—Our revenue is variable depending on the mix of products and services in any given period, and changes in the mix of products and services that we sell could materially adversely affect our operating results.
Our business model is based on our anticipated mix of products and services and the corresponding profit margins for such products and services. Unanticipated shifts in such mix could adversely impact our results of operations and require changes to our business model. Consulting services margins are generally lower than the other elements of our analytic data solutions. In addition, when we use third parties to supplement some consulting services we provide to customers, this generally results in lower margin rates. As a result, increases in consulting services revenues as a percentage of our total revenues may decrease overall margins.
We also realize different margins on integrated data warehousing and workload-specific platforms, as well as certain components we re-sell as part of our solutions, and the mix of such hardware and software varies from quarter to quarter depending on customer requirements. In addition, changes in the price and performance of our analytic data platforms, particularly for certain hardware components, could negatively impact maintenance and support services, and software subscription revenues.
Advancement of Our Solutions—The solutions we sell are advanced, and we need to rapidly and successfully develop and introduce new solutions in a competitive, demanding and rapidly changing environment.
To succeed in the intensely competitive IT industry, we must continually improve, refresh and expand our product and service offerings to include newer features, functionality or solutions, and keep pace with price-to-performance gains in the IT industry. Shortened product life cycles due to customer demands and competitive pressures impact the pace at which we must introduce and implement new technology. This requires a high level
 
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of innovation by both our software developers and the suppliers of the third-party software components included in our systems. In addition, bringing new solutions to the market entails a costly and lengthy process, and requires us to accurately anticipate customer needs and technology trends. We must continue to respond to market demands, develop leading technologies and maintain leadership in analytic data solutions performance and scalability, or our business operations may be adversely affected.
We must also anticipate and respond to customer demands regarding the compatibility of our current and prior offerings. These demands could hinder the pace of introducing and implementing new technology. Our future results may be affected if our products cannot effectively interface and perform well with software products of other companies and with our customers’ existing IT infrastructures, or if we are unsuccessful in our efforts to enter into agreements allowing integration of third-party technology with the Teradata database and software platforms. Our efforts to develop the interoperability of our products may require significant investments of capital and employee resources. In addition, many of our principal products are used with products offered by third parties and, in the future, some vendors of non-Teradata products may become less willing to provide us with access to their products, technical information and marketing and sales support.
As a result of these and other factors, our ability to introduce new or improved solutions could be adversely impacted. There can be no assurance that our innovations will be profitable, and if we cannot successfully market and sell both existing and newly developed solutions, our business and operating results could be impacted. If we were to lose our significant technology advantage, our market share and growth could be adversely affected. In addition, if we are unable to deliver products, features, and functionality as projected, we may be unable to meet our commitments to customers, which could have an adverse effect on our reputation and business.
Highly Advanced Products—Our products include highly advanced technology, and as we develop new products with greater capacity and performance capabilities, the increased difficulty and complexity associated with producing these products increases the likelihood of reliability, quality or operability problems.
Despite rigorous testing prior to their release and well-designed quality processes, our software and hardware products may contain undetected errors or security flaws, which may be found after the products are introduced and shipped. This risk is enhanced when products are first introduced or when new versions are released, as well as when we develop products with more advanced technology, since the increased difficulty and complexity associated with producing these products increases the likelihood of reliability, quality or operability problems. The correction and detection of errors may cause delays, lost revenues and incremental costs. Errors in our software products could also affect the ability of our products to work with other hardware or software products, could delay the development or release of new products or new versions of products, and could adversely affect market acceptance of our products. While we attempt to remedy errors that we believe would be considered critical by our customers prior to shipment, we may not be able to detect or remedy all such errors.
Our customers who rely on our solutions for business-critical applications are more sensitive to product errors, which could expose us to product liability, performance and warranty claims, as well as harm our reputation. These and other risks associated with new product and service offerings may have a material adverse impact on our results of operations and future performance.
Product introductions and certain enhancements of existing products by us in future periods may also reduce demand for our existing products or could delay purchases by customers awaiting arrival of our new products. As new or enhanced products are introduced, we must successfully manage the transition from older products.
In the ordinary course of business, we continually evaluate opportunities for new product and service offerings, new markets and new geographic sectors, and development of such opportunities could entail certain business risks which could affect our financial condition. In addition, due to the complexity of many of our offerings, we may not be able to meet customer requirements with respect to consulting services without incurring costs greater than expected levels.
 
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Information Systems and Security—A breach of security, disruption or failure of our information systems or those of our third party providers could adversely impact our business and financial results.
Our operations are dependent on our ability to protect our computer equipment and the information stored in our databases (and the computer equipment and database information of certain suppliers and other third parties) from damage by, among other things, earthquake, fire, natural disaster, cyber-attacks, power loss, telecommunications failures, unauthorized intrusions and other events. Despite our contingency planning, events of this nature may still result in system failures and other interruptions in our operations, which could have a material adverse effect on our business, financial condition or results of operations.
We generally operate pursuant to a business-to-business model, such that our customers buy or lease hardware systems used in connection with our solutions and the customers deploy and operate those solutions. With respect to these kinds of customer on-premises solutions, the customer, directly or through its selected services providers, manages all aspects of the data controls and security with respect to any confidential, private or otherwise sensitive information stored or processed through these solutions, including any personally identifiable data or information – such as non-public data regarding our customers’ employees, customer’s customers, consumers, data subjects, individuals’ identities, individual financial accounts and health information regulated by the Health Insurance Portability and Accountability Act of 1996. However, some of our services, including our software as a service or cloud offerings, may require us to deploy or operate solutions for our customers, directly or through the use of third party services providers, either on-premises at customer-selected data center facilities or at third-party-hosted data center facilities selected by us. With respect to these kinds of cloud and non-traditional solution deployments and operations, we and such service providers have increased roles, responsibilities and risk exposures regarding some or all aspects of the data controls and security with respect to any confidential, private or otherwise sensitive information stored or processed through these solutions on our systems or those of selected third-party providers. If unauthorized access to or use of such information or systems occurs, despite data security measures and third party commitments to protect them, our results of operation, reputation, and relationships with our customers could be adversely impacted.
Additionally, experienced computer programmers, Nation State Sponsored Advanced Persistent Code (“NSSAPC”) attacks (from countries such as Iran, China and certain European Eastern Bloc countries) and hackers may be able to penetrate our network security or that of our third party providers and misappropriate or compromise our intellectual property or other confidential information or that of our customers, create system disruptions or cause shutdowns. Computer programmers and hackers also may be able to develop and deploy viruses, worms, and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our products. We have reason to believe that at least one attempted NSSAPC cyber-attack has occurred against our systems, although we do not believe that it was successful or that there was any adverse impact to the Company in connection with the incident. Despite the fact that our preventative and remediation tools and actions may have mitigated or preempted this attack, we have since taken additional steps designed to further improve the security of our networks and computer systems; however, there can be no assurance that our defensive measures will be adequate to prevent them in the future. Also, like many other companies, our workstations are regularly subject to penetration attempts and malicious threats by hackers and, despite our defensive measures, we may not always be able to detect, mitigate or preempt them all. Breaches of security and disruptions of our information systems have not historically had a material impact on our results of operations and we have no reason to believe that attempts by hackers such as those described above have negatively impacted our IT infrastructure, operations, confidential information or intellectual property. However, there is risk that these types of activities will recur and persist, that one or more of them may be successful in the future, that one or more of them may have been or will be successful but not detected, prevented, remediated or mitigated by us, and the costs to us to eliminate, detect, prevent, remediate, mitigate or alleviate cyber or other security problems, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could adversely impact our future results of operations.
 
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Reliance on Third Parties—Our future results depend in part on our relationships with key suppliers, strategic partners and other third parties.
Our development, marketing and distribution strategies depend in part on our ability to form strategic alliances with third parties that have complementary products, software, services and skills. Our strategic partners include consultants and system integrators, software and technology providers, and indirect channel distributors in certain countries. These relationships create risks beyond our control of our partners changing their business focus, entering into strategic alliance with other companies, being acquired by our competitors, failing to meet performance criteria or improperly using our confidential information. If we fail to maintain or expand our relationships with strategic partners, our business may be adversely affected.
Third-party vendors provide important elements to our solutions; if we do not maintain our relationships with these vendors or if these vendors cease to be going concerns, interruptions in the supply of our products may result. There are some components of our solutions that we purchase from single sources due to price, quality, technology or other reasons. For example, we have relied on Flextronics as a key single source contract manufacturer for our hardware systems for the last several years. In addition, we buy silicon computer chips and microprocessors from Intel Corporation, and storage disk systems from NetApp, Inc. Some components supplied by third parties may be critical to our solutions, and several of our suppliers may terminate their agreements with us without cause with 180 days notice. If we were unable to purchase necessary services, parts, components or products from a particular vendor and had to find an alternative supplier, our shipments and deliveries could be delayed. Also, disruption in our supply chain or the need to find alternative suppliers could impact the costs and/or timing associated with procuring necessary products, components and services. In either case, our operations could be adversely impacted. Similarly, our suppliers’ products and services have certain dependencies with respect to their own supply chain networks, and supply issues among our suppliers’ suppliers may also adversely impact our business.
In addition, smaller suppliers have operating risks that could impact our business. These risks could create product time delays, inventory and invoicing problems, staging delays, and other operational difficulties. We could also be impacted by their inability to provide high-quality products or services that conform to required specifications or contractual arrangements, which could negatively impact our business and operating results.
Reliance on the Intellectual Property of Third Parties—The loss of our rights to use software licensed to us by third parties could harm our business.
We have an active partner program that offers rights to sublicense third party software as part of a complete suite of solutions for our customers. This offering, as well as our reliance on third party software and licenses in our operating system software and business, creates risks that are not present when developing software in-house. For example, the viability, reliability and quality of such partners’ businesses, as well as their ability to fulfill their obligations to us, are factors that come into play and could adversely affect our financial condition. Our operations could also be impacted if we are forced to seek alternative technology, or technology for new solutions, that may not be available on commercially reasonable terms. Also, many of our offerings are complemented by technologies developed by others, and if we are unable to continue to obtain licenses for such technologies at competitive prices, our business could be impacted.
Intellectual Property—If we are unable to develop, preserve and protect our intellectual property assets, our operating results may be adversely affected.
As a technology company, our intellectual property portfolio is crucial to our continuing ability to be a leading analytic data solutions provider. We strive to protect and enhance our proprietary intellectual property rights through patent, copyright, trademark and trade secret laws, as well as through technological safeguards. These efforts include protection of the products and application, diagnostic and other software we develop.
 
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To the extent we are not successful our business could be materially adversely impacted. We may be unable to prevent third parties from using our technology without our authorization or independently developing technology that is similar to ours, particularly in those countries where the laws do not protect our proprietary rights as fully as in the United States (such as Iran, China and certain European Eastern Bloc countries who may use NSSAPC to advance their own industries). With respect to our pending patent applications, we may not be successful in securing patents for these claims, and our competitors may already have applied for patents that, once issued, will prevail over our patent rights or otherwise limit our ability to sell our products.
While we take steps to provide for confidentiality obligations of employees and third parties with whom we do business (including customers, suppliers and strategic partners), there is a risk that such parties will breach such obligations and jeopardize our intellectual property rights. Many customers have outsourced the administration and management of their data warehouses to third parties, including some of our competitors, who then have access to our confidential information. Although we have agreements in place to mitigate this risk, there can be no assurance that such protections will be sufficient. In addition, our ability to capture and re-use field-based developed intellectual property is important to future business opportunities and margins.
We are actively engaged in efforts to protect the value of our intellectual property and to prevent others from infringing our intellectual property rights. However, due to the complex and technical nature of such efforts and the potentially high stakes involved, such enforcement activity can be expensive and time consuming, and there can be no assurance that we will be successful in these efforts.
Research and Development—We make significant investments in research and development and cannot assure that these investments will be profitable.
As part of our business strategy, we must continue to dedicate a significant amount of resources to our research and development efforts in order to maintain our competitive position. However, we may not expect to receive significant revenues from these investments for several years, if at all. Research and development expenses represent a significant portion of our discretionary fixed costs. We believe these new technologies could significantly improve our products and services over the long-term. However, if we have invested too much in these or other technologies, our results of operations could be adversely affected. In addition, as we replace our existing assets with new, higher cost assets, we expect that our depreciation expense will increase, which will contribute to our high level of fixed costs and reduce our earnings.
Intellectual Property Infringement Claims by Third Parties—Claims by others that we infringe their intellectual property rights could harm our business and financial condition.
We have seen a trend towards aggressive enforcement of intellectual property rights as the functionality of products in our industry increasingly overlaps and the volume of issued software patents continues to grow. As a result, there is a risk that we could be subject to infringement claims which, regardless of their validity, could:
 
•	 	Be expensive, time consuming and divert management attention away from normal business operations;	
 
•	 	Require us to pay monetary damages or enter into non-standard royalty and licensing agreements;	
 
•	 	Require us to modify our product sales and development plans; or	
 
•	 	Require us to satisfy indemnification obligations to our customers.	
Regardless of whether these claims have any merit, they can be burdensome to defend or settle and can harm our business and reputation.
Open Source Software—The growing market acceptance of open source software presents benefits and challenges for our industry.
We have developed a version of the Teradata database software to operate on the LINUX open source platform and have incorporated other types of open source software into our products, allowing us to enhance certain solutions without incurring substantial additional research and development costs and expand our solution offerings. “Open source” software is made widely available by its authors and is licensed for a nominal fee or, in
 
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some cases, at no charge. For example, LINUX is a free UNIX-type operating system, and the source code for LINUX is freely available. While we believe our contractual obligations are limited with respect to such software, no assurances can be given that unanticipated problems arising from our use of open source software will not arise in the future.
Open source licenses typically mandate that proprietary software, when combined in specific ways with open source software, become subject to the open source license. We take steps to ensure that our proprietary software is not combined with, or does not incorporate, open source software in ways that would require our proprietary software to be subject to an open source license. However, few courts have interpreted the open source licenses, and the manner in which these licenses may be interpreted and enforced is therefore subject to uncertainty.
Additionally, there are certain open source software applications in the data analytics market that are being offered free of charge or for a nominal fee. Open source software offerings available in the marketplace such as Hadoop and others, can place additional competitive pressure on Teradata, even though we believe our offerings are unique and add value through software enhancements and services, and we may have difficulty in marketing our products to certain customers against available open source options.
International Operations—Generating substantial revenues from our multinational operations helps us to meet our strategic goals, but poses a number of risks.
In 2013, the percentage of our total revenues from outside of the United States was 44%. We believe that our geographic diversity may help to mitigate some risks associated with geographic concentrations of operations ( e.g. , adverse changes in foreign currency exchange rates and deteriorating economic environments or business disruptions due to economic or political uncertainties). However, our ability to sell our solutions internationally is subject to the following risks, among others:
 
•	 	General economic and political conditions in each country that could adversely affect demand for our solutions in these markets;	
 
•	 	Currency exchange rate fluctuations that could result in lower demand for our products as well as generate currency translation losses;	
 
•	 	The impact of civil and political unrest (relating to war, terrorist activity or other turmoil) on the economy or markets in general, or on our ability, or that of our suppliers, to meet commitments, which may occur in other countries such as Pakistan, where we have significant operations;	
 
•	 	Changes to and compliance with a variety of local laws and regulations that may increase our cost of doing business in these markets or otherwise prevent us from effectively competing in these markets;	
 
•	 	Cultural and management challenges with managing new and growing consulting services and engineering functions overseas in such countries as India, China, Russia and Pakistan;	
 
•	 	Difficulties in staffing and managing our foreign offices and the increased travel, infrastructure and legal and compliance costs associated with multiple international locations;	
 
•	 	Longer payment cycles for sales in foreign countries and difficulties in enforcing contracts and collecting accounts receivable;	
 
•	 	Tariffs or other restrictions on foreign trade or investment;	
 
•	 	Costs and delays associated with developing products in multiple languages;	
 
•	 	The impact of catastrophic weather or other negative effects of climate change on our facilities, operations and/or workforce, as well as those of our customers, supply chains and distribution channels, throughout the world, particularly those in coastal areas; and	
 
•	 	Changing competitive requirements and deliverables in developing and emerging markets.	
Our products are subject to U.S. export controls and, when exported from the United States, or re-exported to another country, must be authorized under applicable U.S. export regulations. Changes in our products or changes in export regulations may create delays in the introduction of our products in international markets, prevent our customers with international operations from deploying our products throughout their global systems or, in some cases, prevent the export of our products to certain countries or customers altogether. Any change in export
 
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regulations or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons or technologies targeted by these regulations could result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations.
Foreign Currency—Our revenue and operating income are subject to variability due to the effects of foreign currency fluctuations against the U.S. dollar
We have exposure to more than 30 functional currencies. The primary foreign currencies to which we are exposed include the euro, British pound, Japanese yen, the Australian dollar, the Canadian dollar and other Asian and South American currencies. A significant portion of our revenue and operating income is generated outside the United States, and therefore our financial results may fluctuate due to the effects of such foreign currency fluctuations, which are difficult to predict. For example, in the event that one or more European countries were to replace the euro with another currency, Teradata sales into such countries, or into Europe generally, would likely be adversely affected until stable exchange rates are established. In addition, currency variations can affect margins on sales of our products in countries outside of the United States and margins on sales of products that include components obtained from suppliers located outside of the United States.
Dependence on Key Employees—We depend on key employees and face competition in hiring and retaining qualified employees.
Our employees are critical to our success. Our future success depends on our ability to attract and retain the services of senior management and key personnel in all functional areas of our company, including engineering and development, marketing and sales professionals, and consultants. Competition for highly skilled personnel in the IT industry is intense. No assurance can be made that key personnel will remain with us, and it may be difficult and costly to replace such employees. Our failure to hire, retain and replace our key personnel could have a material adverse impact on our business operations.
Internal Controls—Inadequate internal control over financial reporting and accounting practices could lead to errors, which could adversely impact our ability to assure timely and accurate financial reporting.
Internal control over financial reporting, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control objectives will be met. These inherent limitations include system errors, the potential for human error and unauthorized actions of employees or contractors, inadequacy of controls, temporary lapses in controls due to shortfalls in transition planning and oversight or resources, and other factors. Consequently, such controls may not prevent or detect misstatements in our reported financial results as required under SEC and New York Stock Exchange (“NYSE”) rules, which could increase our operating costs or impair our ability to operate our business. Controls may also become inadequate due to changes in circumstances, and it is necessary to replace, upgrade or modify our internal information systems from time to time. In addition, unforeseen risks may arise in connection with financial reporting systems due to inefficient business processes or business process reengineering projects.
If management is not successful in maintaining a strong internal control environment, material weaknesses could occur, causing investors to lose confidence in our reported financial information. This could lead to a decline in our stock price, limit our ability to access the capital markets in the future, and require us to incur additional costs to improve our internal control systems and procedures.
Legal Contingencies and Regulatory Matters—Like other technology companies, we face uncertainties with regard to lawsuits, regulations and other related matters.
In the normal course of business, we are subject to proceedings, lawsuits, claims and other matters, including those that relate to the environment, health and safety, employee benefits, export compliance, intellectual property, and other regulatory compliance and general matters. See “Note 8—Commitments and Contingencies” in the Notes to Consolidated Financial Statements elsewhere in this Annual Report. Because such matters are
 
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subject to many uncertainties, their outcomes are not predictable. While we believe that amounts provided in our consolidated financial statements are currently adequate in light of the probable and estimable liabilities, there can be no assurances that the amounts required to satisfy alleged liabilities from such matters will not impact future operating results.
In addition, we are subject to diverse and complex laws and regulations, including those relating to corporate governance, public disclosure and reporting—which are rapidly changing and subject to many possible changes in the future. From time to time, we may conduct internal investigations in connection with our efforts to ensure compliance with such laws and regulations, the costs or results of which could impact our financial results. In addition, we may be subject to unexpected costs in connection with new public disclosure or other regulatory requirements that are issued from time to time, such as those recently adopted by the SEC regarding the use of conflict minerals. Laws and regulations impacting our customers, such as those relating to privacy, data protection and digital marketing, could also impact our future business. Because we do business in the government sector, we are generally subject to audits and investigations which could result in various civil or criminal fines, penalties or administrative sanctions, including debarment from future government business, which could negatively impact the Company’s results of operations or financial condition.
In addition, our facilities and operations, including former facilities and former operations for which we may have liabilities, are subject to a wide range of environmental protection laws. There have not been any known actual material effects that compliance with environmental provisions has had upon the capital expenditures, earnings or competitive position of the Company or its subsidiaries, and there are no material estimated capital expenditures for environmental remediation or liabilities planned. However, we do expect to incur some costs in connection with compliance with these matters and given the uncertainties inherent in such activities, there can be no assurances that the costs required to comply with applicable environmental laws will not adversely impact future operating results.
There is an increase in enforcement activities and focus by the SEC and other governmental authorities on the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act of 2010 (the “Bribery Act”) and similar anti-bribery, anti-corruption laws in other countries. Given the breadth and scope of our international operations, we may not be able to detect improper or unlawful conduct by our international partners and employees, despite our high ethics, governance and compliance standards, which could put the Company at risk regarding possible violations of such laws, including the FCPA or the Bribery Act.
Management time and resources are spent to understand and comply with changing laws, regulations and standards relating to such matters as corporate governance, accounting principles, public disclosure (including the Sarbanes-Oxley Act of 2002), SEC regulations, Basel III and the rules of the NYSE where our shares are listed. Although we do not believe that recent regulatory and legal initiatives will result in significant changes to our internal practices or our operations, rapid changes in accounting standards, and federal securities laws and regulations, among others, may substantially increase costs to our organization and could have an impact on our future operating results.
 
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 Item 1B.	UNRESOLVED STAFF COMMENTS	
None.
 
 Item 2.	PROPERTIES	
As of December 31, 2013, Teradata operated approximately 108 facilities consisting of approximately 1.5 million square feet throughout the world. Approximately 30% of this square footage is owned and 70% is leased. Within the total facility portfolio, Teradata operates 13 research and development facilities totaling approximately 500 thousand square feet, approximately 80% of which is owned. The remaining approximately one million square feet of space includes office, repair, warehouse and other miscellaneous sites, and is 100% leased. Teradata maintains facilities in approximately 43 countries. Teradata believes its facilities are suitable and adequate to meet its current needs. Teradata’s corporate headquarters is located in Dayton, Ohio.
 
 Item 3.	LEGAL PROCEEDINGS	
Information regarding legal proceedings is included in Item 8 of Part II of this Annual Report as part of “Note 8—Commitments and Contingencies” in the Notes to Consolidated Financial Statements, and is incorporated herein by reference.
 
 Item 4.	MINE SAFETY DISCLOSURES	
N/A.
 
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 PART II
 
 Item 5.	MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	
Teradata common stock trades on the New York Stock Exchange under the symbol “TDC.” There were approximately 73,000 registered holders of Teradata common stock as of February 7, 2014. The following table presents the high and low closing per share prices of Teradata common stock traded on the New York Stock Exchange during the calendar quarter indicated.

 	  	Common Stock	 	
 	  	Closing Market Price	 	
 	  	High	 	  	Low	 	
2013	  				  				
Fourth quarter	  	$	55.37	  	  	$	39.52	  	
Third quarter	  	$	64.77	  	  	$	50.02	  	
Second quarter	  	$	58.24	  	  	$	48.34	  	
First quarter	  	$	69.34	  	  	$	56.28	  	
			
2012	  				  				
Fourth quarter	  	$	 76.06	  	  	$	 57.94	  	
Third quarter	  	$	80.62	  	  	$	62.79	  	
Second quarter	  	$	77.14	  	  	$	64.64	  	
First quarter	  	$	69.38	  	  	$	47.37	  	
Teradata has not paid cash dividends and does not anticipate the payment of cash dividends to shareholders of Teradata common stock in the immediate future. The declaration of dividends in the future would be subject to the discretion of Teradata’s Board of Directors.
Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information as of December 31, 2013, regarding compensation plans (including individual compensation arrangements) under which equity securities of the Company are authorized for issuance.
Equity Compensation Plan Information

 	  	Number of securities	 	  	 	 	  	Number of securities remaining	 	
 	  	to be issued upon	 	  	Weighted-average	 	  	available for future issuance	 	
 	  	exercise of	 	  	exercise price of	 	  	under equity compensation	 	
 	  	outstanding options,	 	  	outstanding options,	 	  	plans (excluding securities	 	
Plan category	  	warrants and rights	 	  	warrants and rights	 	  	reflected in column (a))	 	
 	  	(a) (1)	 	  	(b)	 	  	(c) (2)	 	
Equity compensation plans approved by security holders	  	 	7,011,761	  	  	$	33.27	  	  	 	14,015,986	  	
Equity compensation plans not approved by security holders	  	 	N/A	  	  	 	N/A	  	  	 	N/A	  	
	  	 	 	 	  				  	 	 	 	
Total	  	 	7,011,761	  	  	$	33.27	  	  	 	14,015,986	  	

(1)  	Column (a) represents the number of shares of our common stock that may be issued in connection with the exercise of outstanding stock options granted under the Teradata Corporation 2007 Stock Incentive Plan and Teradata 2012 Stock Incentive Plan.	
(2)  	Column (c) represents the number of shares of our common stock available for issuance under the Teradata 2012 Stock Incentive Plan and the Teradata Corporation Employee Stock Purchase Plan, other than shares available for issuance in connection with the exercise of outstanding stock options.	
 
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The following graph compares the relative performance of Teradata stock, the Standard & Poor’s 500 Stock Index and the Standard & Poor’s Information Technology Index. This graph covers the five-year period from December 31, 2008 to December 31, 2013.

 
																									
Company/Index	  	31 Dec 2008	 	  	31 Dec 2009	 	  	31 Dec 2010	 	  	31 Dec 2011	 	  	31 Dec 2012	 	  	31 Dec 2013	 	
Teradata Corporation	  	$	100	  	  	$	212	  	  	$	278	  	  	$	327	  	  	$	417	  	  	$	307	  	
S&P 500 Index	  	$	100	  	  	$	126	  	  	$	146	  	  	$	149	  	  	$	172	  	  	$	228	  	
S&P Information Technology Index	  	$	100	  	  	$	162	  	  	$	178	  	  	$	183	  	  	$	210	  	  	$	269	  	

(1)  	In each case, assumes a $100 investment on December 31, 2008, and reinvestment of all dividends, if any.	
Purchases of Equity Securities by the Issuer and Affiliated Purchases
For the year ended December 31, 2013, the Company executed purchases for approximately 7.8 million shares of its common stock at an average price per share of $48.53 under the two share repurchase programs authorized by our Board of Directors in 2008. The first program (the “dilution offset program”) authorizes the Company to repurchase Teradata common stock to the extent of cash received from the exercise of stock options and the Teradata Employee Stock Purchase Plan (“ESPP”) to offset dilution from shares issued pursuant to these plans. On February 6, 2012, the board approved a new $300 million share repurchase authorization to replace a prior $300 million authorization under the Company’s second share repurchase program (the “general share repurchase program”), that was to expire on February 10, 2012. On December 10, 2012, Teradata announced that board approved an additional $300 million increase in the share repurchase authorization under the Company’s general share repurchase program. On October 14, 2013, the board approved an additional $300 million increase in the share repurchase authorization. As of December 31, 2013, the Company had $323 million of authorization remaining under the general share repurchase program to repurchase outstanding shares of Teradata common stock. Share repurchases made by the Company are reported on a trade date basis.
In addition to the share repurchase programs, Section 16 officers occasionally transfer vested shares of restricted stock to the Company at the current market price to cover their withholding taxes. For the year ended December 31, 2013, the total of these purchases was 167,037 shares at an average price of $53.83 per share.
 
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The following table provides information relating to the Company’s repurchase of common stock for the year ended December 31, 2013:

 	  	 	 	  	 	 	  	Total	 	  	Total	 	  	Maximum	 	  	Maximum	 	
 	  	 	 	  	 	 	  	Number	 	  	Number	 	  	Dollar	 	  	Dollar	 	
 	  	 	 	  	 	 	  	of Shares	 	  	of Shares	 	  	Value	 	  	Value	 	
 	  	 	 	  	 	 	  	Purchased	 	  	Purchased	 	  	that May	 	  	that May	 	
 	  	 	 	  	 	 	  	as Part of	 	  	as Part of	 	  	Yet Be	 	  	Yet Be	 	
 	  	 	 	  	Average	 	  	Publicly	 	  	Publicly	 	  	Purchased	 	  	Purchased	 	
 	  	Total	 	  	Price	 	  	Announced	 	  	Announced	 	  	Under the	 	  	Under the	 	
 	  	Number	 	  	Paid	 	  	Dilution	 	  	General Share	 	  	Dilution	 	  	General Share	 	
 	  	of Shares	 	  	per	 	  	Offset	 	  	Repurchase	 	  	Offset	 	  	Repurchase	 	
Period	  	Purchased	 	  	Share	 	  	Program	 	  	Program	 	  	Program	 	  	Program	 	
First quarter total	  	 	1,611,253	  	  	$	58.43	  	  	 	113,822	  	  	 	1,497,431	  	  	$	3,101,443	  	  	`$	288,814,961	  	
	  	 	 	 	  				  	 	 	 	  	 	 	 	  				  				
Second quarter total	  	 	1,631,780	  	  	$	53.73	  	  	 	155,320	  	  	 	1,476,460	  	  	$	1,577,840	  	  	$	209,264,703	  	
	  	 	 	 	  				  	 	 	 	  	 	 	 	  				  				
Third quarter total	  	 	25,700	  	  	$	49.90	  	  	 	25,700	  	  	 	—  	  	  	$	8,255,811	  	  	$	209,264,703	  	
	  	 	 	 	  				  	 	 	 	  	 	 	 	  				  				
October 2013	  	 	—  	  	  	$	—  	  	  	 	—  	  	  	 	—  	  	  	$	9,845,776	  	  	$	509,264,703	  	
November 2013	  	 	2,600,000	  	  	$	44.20	  	  	 	200,000	  	  	 	2,400,000	  	  	$	3,175,438	  	  	$	402,931,992	  	
December 2013	  	 	1,916,449	  	  	$	41.63	  	  	 	2,600	  	  	 	1,913,849	  	  	$	4,909,158	  	  	$	323,254,475	  	
	  	 	 	 	  				  	 	 	 	  	 	 	 	  				  				
Fourth quarter total	  	 	4,516,449	  	  	$	43.11	  	  	 	202,600	  	  	 	4,313,849	  	  	$	4,909,158	  	  	$	323,254,475	  	
	  	 	 	 	  				  	 	 	 	  	 	 	 	  				  				
2013 Full year total	  	 	7,785,182	  	  	$	48.53	  	  	 	497,442	  	  	 	7,287,740	  	  	$	4,909,158	  	  	$	323,254,475	  	
	  	 	 	 	  				  	 	 	 	  	 	 	 	  				  				
In addition, from January 1, 2014 through February 26, 2014, the Company purchased approximately 1.9 million shares for approximately $78 million.
 
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 Item 6.	SELECTED FINANCIAL DATA	

 	  	For the Year Ended	 	
 	  	December 31	 	
In millions, except per share and employee amounts	  	2013 (1)	 	 	2012 (2)	 	 	2011 (3)	 	  	2010	 	 	2009	 	
Revenue	  	$	2,692	  	 	$	2,665	  	 	$	2,362	  	  	$	1,936	  	 	$	1,709	  	
Income from operations	  	$	532	  	 	$	580	  	 	$	456	  	  	$	415	  	 	$	338	  	
Other (expense) income, net	  	$	(24	) 	 	$	(2	) 	 	$	25	  	  	$	(1	) 	 	$	(4	) 	
Income tax expense	  	$	131	  	 	$	159	  	 	$	128	  	  	$	113	  	 	$	80	  	
Net income	  	$	377	  	 	$	419	  	 	$	353	  	  	$	301	  	 	$	254	  	
Net income per common share	  				 				 				  				 				
Basic	  	$	2.31	  	 	$	2.49	  	 	$	2.10	  	  	$	1.80	  	 	$	1.48	  	
Diluted	  	$	2.27	  	 	$	2.44	  	 	$	2.05	  	  	$	1.77	  	 	$	1.46	  	
		
 	  	At December 31	 	
 	  	2013	 	 	2012	 	 	2011	 	  	2010	 	 	2009	 	
Total assets	  	$	3,096	  	 	$	3,066	  	 	$	2,616	  	  	$	1,883	  	 	$	1,569	  	
Debt	  	$	274	  	 	$	289	  	 	$	300	  	  	$	—  	  	 	$	—  	  	
Total stockholders’ equity	  	$	1,857	  	 	$	1,779	  	 	$	1,494	  	  	$	1,189	  	 	$	910	  	
Cash dividends	  	$	—  	  	 	$	—  	  	 	$	—  	  	  	$	—  	  	 	$	—  	  	
Number of employees	  	 	10,800	  	 	 	10,200	  	 	 	8,600	  	  	 	7,400	  	 	 	6,600	  	

(1)  	Includes $17 million for acquisition-related transaction, integration and reorganization costs and expenses, and $43 million for amortization of acquired intangible assets, $22 million for expenses related to a net loss on equity investments, with a cumulative offsetting tax impact of $33 million.	
(2)  	Includes $17 million for acquisition-related transaction, integration and reorganization costs and expenses, and $36 million for amortization of acquired intangible assets, with a cumulative offsetting tax impact of $17 million.	
(3)  	Includes $25 million for acquisition-related transaction, integration and reorganization costs and expenses, and $24 million for amortization of acquired intangible assets, offset by a $28 million gain on equity investments due to purchase and sale transactions, with a cumulative offsetting tax impact of $8 million.	
 
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 Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (“MD&A”)	
You should read the following discussion in conjunction with the consolidated financial statements and the notes to those statements included elsewhere in this Annual Report on Form 10-K (“Annual Report”). This Annual Report contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements contained in the MD&A are forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in other sections of this Annual Report. See “Risk Factors” and “Forward-looking Statements.”
BUSINESS OVERVIEW
Teradata is a leading provider of analytic data platforms, marketing and analytic applications, and consulting services. Our analytic data platforms are comprised of software, hardware, and related business consulting and support services – for data warehousing, active intelligence, big data analytics, and data discovery. Through our Teradata Unified Data Architecture (a comprehensive enterprise approach that integrates our analytic data platforms and multiple technologies, including third-party provided products, into a cohesive data architecture), we help customers access and manage data and extract ever greater business value and insight from their data. Our applications are designed to leverage data to: improve organizations’ effectiveness in marketing to their customers, determine customer and product profitability, forecast consumer demand, and discover new insights. Our consulting services help customers maximize use and leverage the value of their analytic data and marketing investments. Our services include a broad range of offerings including consulting, cloud (software as a service), hosting, platform management, and related installation services (collectively, “consulting services”) and support services.
Our analytic data platforms are designed to integrate an organization’s departmental and enterprise-wide data — about customers, financials, operations, and more — into a unified and cohesive view of the business. Through active intelligence, we extend the use of traditional data warehousing by integrating advanced analytics into enterprise business processes, allowing companies to combine the analysis of current and historical data so operations personnel can make decisions at the point of contact or service and take action as events occur. Our big data analytic platforms provide data collection and data discovery from ever increasing volumes of diverse, multi-structured data. Our range of analytic applications, the Teradata and Teradata Aster databases, workload-specific platforms, big data analytics and cloud-based solutions, help customers drive more complete and complex analytics to enhance both top- and bottom-line performance and extend their competitive advantage in today’s global marketplace. Our marketing applications leverage data to help organizations manage their marketing operations, plan and execute campaigns, and communicate with their customers across all channels. The explosion of data has created opportunities for our customers to significantly improve their effectiveness in marketing to their customers. Our consulting services are an important part of our business, with our consultants offering a combination of proven methodologies, deep industry expertise and years of hands-on experience. In addition, our customer services professionals provide a single source of support services for our analytic data platforms that allow customers to maximize use and leverage the value of their analytic data and marketing investments.
We serve customers across a broad set of industries from around the world, ranging from small departmental and corporate implementations to many of the world’s largest analytic data platforms and marketing applications. Teradata delivers its solutions primarily through direct sales channels, as well as through alliances with system integrators, other independent software vendors, value-added resellers and distributors. We provide our offerings on-premise or in the cloud (as a service).
Effective January 1, 2013, Teradata combined the management of the Europe, Middle East, Africa, Asia Pacific and Japan regions into a new International region. This larger International region has greater critical mass and leverage of resources for deployment of the Company’s integrated marketing management, big data analytics, and data
 
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warehouse solutions, and also possesses more knowledge depth for our numerous consulting and support services offers. As a result, Teradata now manages its business in two geographic regions, which are also the Company’s operating segments: (1) the Americas region (North America and Latin America); and (2) the International region (Europe, Middle East, Africa, Asia Pacific and Japan). Management evaluates the performance of its segments based on revenue and segment margin. Corporate-related costs are fully allocated to the segments, but for management reporting purposes assets are not allocated to the segments.
In 2011, Teradata completed its acquisitions of Aprimo, Inc. (“Aprimo”), a global provider of integrated marketing management software solutions, as well as Aster Data Systems, Inc. (“Aster Data”), a market leader in big data analytics, and the management of diverse, multi-structured data. In 2012, Teradata completed the acquisition of eCircle Beteiligungs GmbH (“eCircle”), a leading full-service digital marketing provider in Europe.
2013 FINANCIAL OVERVIEW
As more fully discussed in later sections of this MD&A, the following are the financial highlights for 2013:
 
•	Revenue increased 1% in 2013 from 2012, primarily due to increased services revenue offset by lower product revenue, due to macro-economic conditions in certain geographical territories throughout the world, extended sales cycles and a reduction in large customer orders in the current year.	
 
•	Gross margin was 54.7% in 2013, down from 55.9% in 2012, which was largely a result of less favorable product mix as services revenue increased while product revenue decreased.	
 
•	Operating income was $532 million in 2013, down from $580 million in 2012. The reduction was driven by lower overall gross margins against the prior-year period, as well as an increase in operating expenses, largely due to the addition of more sales territories partially offset by decreased variable incentive based compensation.	
 
•	Net income of $377 million in 2013 decreased from $419 million in 2012. Net income per common (diluted) share was $2.27 in 2013 compared to $2.44 in 2012. Net income for 2013 includes approximately $35 million in after-tax impacts of acquisition-related purchase accounting adjustments, transaction, integration and reorganization expenses, and amortization of acquired intangible assets, compared to $41 million of such costs and expenses, in 2012. Additionally, 2013 net income includes a $14 million after-tax net loss on equity investments.	
STRATEGY OVERVIEW
Teradata helps companies achieve competitive advantage and win in their markets by empowering them to become “data-driven businesses” capable of exploiting data for insight and value. With Teradata, companies can become more competitive by leveraging data insights to reduce costs, improve business processes, enhance customer relationships, and drive innovation. Companies can also engage in better data-driven marketing through Teradata’s industry-leading analytic data platforms, marketing applications and proven consulting experience and expertise.
Teradata’s strategy focuses on three large and growing markets: data warehousing, big data analytics, and marketing applications. We continue to focus on the following key initiatives to broaden our position in the market and take advantage of these market opportunities.
 
•	Invest to expand our leading Unified Data Architecture, data warehouse software and platform family, big data discovery platforms, Hadoop-based data management platforms, and marketing applications to address multiple market segments through internal development and targeted strategic acquisitions;	
 
•	Deliver our solutions via the cloud (as a service) or on premise with offerings that support applications as a service, data warehousing as a service, as well as discovery analytics as a service and data management as a service;	
 
•	Invest in partnerships to increase the number of solutions available on Teradata platforms, maximize customer value, and increase our market coverage, and	
 
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•	Continue to seek opportunities to strengthen our sales resources ( e.g. , by opportunistically hiring incremental sales account executives as well as technology and industry consultants, and sales support resources).	
Further discussion of our business strategy is included in the section entitled “Business” included in Item 1 of this Annual Report and incorporated herein by reference.
FUTURE TRENDS
We believe that demand for our analytic data platforms will continue to increase due to the continued growth of data volumes and types of data, the scale and complexity of business requirements, and the growing use of new data elements and more analytics over time. The adoption by customers of a broader set of analytics including predictive analytics, path analysis, network analysis/graph, and many others is driving more applications, usage and capacity. This increased breath of analytics also drives the need for an overall architecture to manage an increasingly complex analytics environment. As a result, we expect that Teradata’s leadership in analytic data platforms and Unified Data Architecture positions us well for future growth. In addition, we believe that our strong competitive position in integrated marketing management, including our marketing operations, campaign management and digital messaging offerings, will contribute to our growth and be increasingly synergistic with the Company’s big data analytics business as companies gain competitive advantage through data-driven marketing with their customers.
This growth, however, is not expected to be without its challenges from general economic conditions, competitive pressures, alternative technologies and other risks and uncertainties as outlined elsewhere in this Annual Report.
As a portion of the Company’s operations and revenue occur outside the United States, and in currencies other than the U.S. dollar, the Company is exposed to fluctuations in foreign currency exchange rates. In 2014, Teradata is expecting approximately one percentage point of adverse impact from currency translation on our reported revenue growth rate and a corresponding currency impact on operating income, based on currency rates as of February 7, 2014.
Since mid-2012, Teradata has seen a change in customers’ buying patterns, particularly in the U.S. market, with respect to large capital investments and related services due to a more budget-conscious environment in which such purchases are delayed, deferred or modified. While we believe that these macro-economic challenges, and the resulting effect on customer purchases, are likely to continue in 2014, customers continue to have a strategic focus and pent up need for analytics business intelligence and management of their growing data volumes. As described above, we believe that Teradata’s leading product and service offerings position us well to take advantage of market opportunities as economic conditions improve and companies expand their investments in these mission-critical analytical technologies.
Although we did not experience significant changes for the year ended December 31, 2013 due to competitive and/or pricing trends for our analytic data platforms, there is some risk that pricing and competitive pressures on our solutions could occur in the future, particularly to the extent that cost becomes a top priority in companies and lower cost alternatives are more seriously and frequently considered. However, such alternatives generally do not enable companies to perform mission-critical, complex business analytic workloads or provide a Unified Data Architecture to address mission-critical analytics, discovery analytics, and data management such as those enabled by Teradata’s offerings. We believe that analytics will remain a high priority for companies and will continue to drive growth for Teradata’s leading solutions. Moreover, we will continue to be committed to new product development and achieving a responsive yield from our research and development spending and resources, which are intended to drive future demand.
 
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RESULTS FROM OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011

 	  	 	 	  	% of	 	 	 	 	  	% of	 	 	 	 	  	% of	 	
In millions	  	2013	 	  	Revenue	 	 	2012	 	  	Revenue	 	 	2011	 	  	Revenue	 	
Product revenue	  	$	1,230	  	  	 	45.7	% 	 	$	1,297	  	  	 	48.7	% 	 	$	1,122	  	  	 	47.5	% 	
Service revenue	  	 	1,462	  	  	 	54.3	% 	 	 	1,368	  	  	 	51.3	% 	 	 	1,240	  	  	 	52.5	% 	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Total revenue	  	 	2,692	  	  	 	100	% 	 	 	2,665	  	  	 	100	% 	 	 	2,362	  	  	 	100	% 	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Gross margin	  				  				 				  				 				  				
Product gross margin	  	 	797	  	  	 	64.8	% 	 	 	881	  	  	 	67.9	% 	 	 	741	  	  	 	66.0	% 	
Service gross margin	  	 	676	  	  	 	46.2	% 	 	 	610	  	  	 	44.6	% 	 	 	552	  	  	 	44.5	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	  				
Total gross margin	  	 	1,473	  	  	 	54.7	% 	 	 	1,491	  	  	 	55.9	% 	 	 	1,293	  	  	 	54.7	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	  				
Operating expenses	  				  				 				  				 				  				
Selling, general and administrative expenses	  	 	757	  	  	 	28.1	% 	 	 	728	  	  	 	27.3	% 	 	 	663	  	  	 	28.1	% 	
Research and development expenses	  	 	184	  	  	 	6.8	% 	 	 	183	  	  	 	6.9	% 	 	 	174	  	  	 	7.4	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	  				
Total operating expenses	  	 	941	  	  	 	35.0	% 	 	 	911	  	  	 	34.2	% 	 	 	837	  	  	 	35.4	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	  				
Operating income	  	$	532	  	  	 	19.8	% 	 	$	580	  	  	 	21.8	% 	 	$	456	  	  	 	19.3	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	  				
Revenue
Total revenue increased 1% in 2013 compared to 2012. The revenue increase included a 1% adverse impact from foreign currency fluctuations. Product revenue decreased 5% in 2013 from 2012, due primarily to macro-economic conditions in certain geographical territories throughout the world, extended sales cycles and a reduction in large customer orders. Additionally, service revenue in 2013 increased 7% from 2012, with an underlying 9% increase in maintenance services revenue, as compared to 2012. Consulting services revenue increased 5% in 2013 compared to 2012.
In 2012, Teradata revenue increased 13% from 2011. The revenue increase included a negative 2% impact from foreign currency fluctuations, and approximately 1% increase from acquisitions. Product revenue increased 16% in 2012 from 2011, led by growth in the Americas region. Service revenue increased 10% in 2012 from 2011, driven primarily by increases in consulting services revenue in the International region, which included revenue from the eCircle acquisition. Overall, consulting revenue increased 12% in 2012 from 2011, and maintenance services revenue increased 9% during the same period.
Gross Margin
Gross margin was 54.7% in 2013 down from 55.9% in 2012, as a result of a shift in the product mix. Product gross margin decreased to 64.8% in 2013, compared to 67.9% 2012, primarily the result of lower product revenue volume, product mix, and higher capitalized software amortization. Service gross margin increased to 46.2% in 2013 compared to 44.6% in 2012, driven by higher maintenance revenues and improved consulting margins.
In 2012, gross margin was 55.9% up from 54.7% in 2011, driven primarily by improved product margins in the Americas region, as well as the increased proportion of product revenue (as compared to services revenue). Product gross margin increased to 67.9% in 2012 from 66.0% in 2011. The improved product margins were driven primarily by improved product revenue mix, as well as $13 million less in acquisition-related costs. These improvements were offset in part by $4 million in additional amortization of capitalized software development costs. Services gross margin was roughly unchanged, at 44.6% in 2012 compared to 44.5% in 2011.
Operating Expenses
Total operating expenses, including Selling, General and Administrative (“SG&A”) and Research and Development (“R&D”) expenses, totaled $941 million in 2013 compared to $911 million in 2012. SG&A increased by $29 million, and was primarily driven by higher selling expense, resulting from our strategic initiative to add sales territories and related headcount, which was offset in part by lower variable incentive based compensation expense. R&D expenses increased $1 million and included $3 million less in capitalization of software development costs, which were offset by lower variable incentive based compensation expense.
 
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In 2012, total operating expenses including SG&A and R&D expenses, totaled $911 million compared to $837 million in 2011. The $65 million increase in SG&A expenses was driven by higher selling expense, due primarily to our strategic initiative to add sales headcount, in addition to the impact of additional headcount and infrastructure brought on by the acquisition of eCircle. The $9 million increase in R&D expenses was primarily due to higher engineering headcount expenses, including new engineering headcount from the acquisition of eCircle. These increases were offset in part by $12 million more in capitalization of software development cost as compared to the prior-year period, as well as lower incentive-based compensation expenses.
Other (Expense) Income, net
Other expense was $24 million in 2013 compared to $2 million in 2012. The increase in other expense is due to a $22 million net loss on equity investments in 2013 arising from an impairment of carrying value, partially offset by a gain on sale.
In 2012, other expense was $2 million compared to $25 million of other income in 2011. Other income in 2011 resulted primarily from $28 million in gains on the sales of equity investments.
Income Taxes
The effective income tax rate was 25.8%, 27.5% and 26.6% for the years ended December 31, 2013, 2012 and 2011, respectively. The tax rate for 2013 included a $4 million discrete tax benefit for the 2012 U.S. Federal Research and Development Tax Credit (the “R&D tax credit”), that was recognized in January of 2013 when the tax credit was retroactively reinstated. Due to a change in tax law enacted in the state of California in the fourth quarter of 2012, the Company established a valuation allowance to partially offset its California Research & Development tax credit carryforward deferred tax asset, as the Company expects to continue to generate excess California Research & Development tax credits into the foreseeable future. However, the discrete tax impact of establishing the valuation allowance was fully offset with a favorable discrete tax impact resulting from a decrease in the Company’s effective state tax rate resulting from the California change in tax law, resulting in no material net impact to the Company’s overall effective tax rate for the fourth quarter and full year ended December 31, 2012. The effective tax rate for 2011 was impacted by a $4 million discrete tax benefit related to the book gain recorded on the Company’s previous equity investment in Aster Data, which was reflected as a permanent non-taxable item in the second quarter of 2011.
We currently estimate our full-year effective tax rate for 2014 to be approximately 26.5%. This estimate takes into consideration, among other things, the forecasted earnings mix by jurisdiction for 2014, and assumes that the R&D tax credit, which expired as of December 31, 2013, will be retroactively reinstated sometime during 2014. If the credit is not reinstated during 2014, we estimate our effective tax rate will be negatively impacted by approximately 60 basis points. The provision for income taxes is based on the pre-tax earnings mix by jurisdiction of Teradata and its subsidiaries under the Company’s current structure. For additional information, see “Note 4—Income Taxes” in the Notes to Consolidated Financial Statements elsewhere in this Annual Report.
Revenue and Gross Margin by Operating Segment
Teradata manages its business in two geographic regions, which are also the Company’s operating segments: the Americas and International regions. Teradata believes this format is useful to investors because it allows analysis and comparability of operating trends by operating segment. It also includes the same information that is used by Teradata management to make decisions regarding the segments and to assess our financial performance. The discussion of our segment results describes the changes in results as compared to the prior-year period.
 
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The following table presents revenue and operating performance by segment for the years ended December 31:

 	  	 	 	  	% of	 	 	 	 	  	% of	 	 	 	 	  	% of	 	
In millions	  	2013	 	  	Revenue	 	 	2012	 	  	Revenue	 	 	2011	 	  	Revenue	 	
Revenue	  				  				 				  				 				  				
Americas	  	$	1,633	  	  	 	61	% 	 	$	1,619	  	  	 	61	% 	 	$	1,436	  	  	 	61	% 	
International	  	 	1,059	  	  	 	39	% 	 	 	1,046	  	  	 	39	% 	 	 	926	  	  	 	39	% 	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Total revenue	  	$	2,692	  	  	 	100	% 	 	$	2,665	  	  	 	100	% 	 	$	2,362	  	  	 	100	% 	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Gross margin	  				  				 				  				 				  				
Americas	  	$	947	  	  	 	58.0	% 	 	$	967	  	  	 	59.7	% 	 	$	837	  	  	 	58.3	% 	
International	  	 	526	  	  	 	49.7	% 	 	 	524	  	  	 	50.1	% 	 	 	456	  	  	 	49.2	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	  				
Total gross margin	  	$	1,473	  	  	 	54.7	% 	 	$	1,491	  	  	 	55.9	% 	 	$	1,293	  	  	 	54.7	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	  				
Americas: Revenue increased $14 million or 1%, in 2013 from 2012, with an underlying 7% increase in services revenue offset in part by a 4% decrease in product revenue. The revenue increase was not materially impacted by foreign currency fluctuations. Gross margins were 58.0% for 2013, down from 59.7% in 2012, as higher maintenance services margins and improved consulting services margins were more than offset by a greater proportion of services revenue (in relation to product revenue), compared to the prior-year period.
In 2012, revenue increased 13% from 2011, led by a 17% increase in product revenue. The revenue increase was not significantly impacted by foreign currency fluctuations. Gross margin increased to 59.7% in 2012, from 58.3% in 2011, driven primarily by improved product margins and the greater proportion of product revenue (versus services revenue), as compared to the prior-year period.
International: Revenue increased $13 million or 1%, in 2013 from 2012, as a 7% increase in services revenue was largely offset by a 7% reduction in product revenue. The increase in services revenue was largely driven by revenue from the acquisition of eCircle. The revenue increase includes a 3% adverse impact from foreign currency fluctuations. Gross margins decreased slightly to 49.7% in 2013, down from 50.1% in 2012, as improved consulting services and maintenance services margins were more than offset by a greater proportion of services (in relation to product revenue), compared to the prior-year period.
In 2012, revenue increased 13% from 2011, led by an 18% increase in consulting services revenue. The increase in consulting revenue was largely driven by revenue from the acquisition of eCircle, which was completed in 2012. The revenue increase included a negative 5% impact from foreign currency fluctuations. Gross margin increased to 50.1% in 2012, from 49.2% in 2011, driven by improvements in both product and services margins, offset in part by a greater proportion of consulting services revenue (compared to product revenue), as compared to the prior-year period.
 
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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Teradata ended 2013 with $695 million in cash and cash equivalents, a $34 million decrease from the December 31, 2012 balance, after using approximately $382 million for repurchases of Company common stock, and approximately $36 million for acquisitions and investment activities which were completed during the year. Cash provided by operating activities decreased by $65 million to $510 million in 2013. The decrease in cash provided by operating activities was primarily due to lower net income and timing of working capital transactions.
Teradata’s management uses a non-GAAP measure called “free cash flow,” which is not a measure defined under accounting principles generally accepted in the United States of America (“GAAP”). We define free cash flow as net cash provided by operating activities less capital expenditures for property and equipment, and additions to capitalized software, as one measure of assessing the financial performance of the Company, and this may differ from the definition used by other companies. The components that are used to calculate free cash flow are GAAP measures taken directly from the Consolidated Statements of Cash Flows. We believe that free cash flow information 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 available after capital expenditures for, among other things, investments in the Company’s existing businesses, strategic acquisitions and repurchase of Teradata common stock. Free cash flow does not represent the residual cash flow available for discretionary expenditures since there may be other non-discretionary expenditures that are not deducted from the measure. This non-GAAP measure should not be considered a substitute for, or superior to, cash flows from operating activities under GAAP.
The table below shows net cash provided by operating activities and capital expenditures for the following periods:

In millions	  	2013	 	 	2012	 	 	2011	 	
Net income	  	$	377	  	 	$	419	  	 	$	353	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	$	510	  	 	$	575	  	 	$	513	  	
Less:	  				 				 				
Expenditures for property and equipment	  	 	(60	) 	 	 	(67	) 	 	 	(42	) 	
Additions to capitalized software	  	 	(78	) 	 	 	(81	) 	 	 	(68	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Free cash flow	  	$	372	  	 	$	427	  	 	$	403	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Financing activities and certain other investing activities are not included in our calculation of free cash flow. In 2013, these other investing activities primarily consisted of immaterial business acquisitions and investment activities that were closed during the year. Other investing activities in 2012 primarily consisted of Teradata’s acquisition of eCircle, as well as other smaller investment activities. Other investing activities in 2011 primarily consisted of Teradata’s acquisitions of Aprimo and Aster Data as discussed further below.
Teradata’s financing activities for the years ended December 31, 2013 and 2012 primarily consisted of cash outflows for share repurchases. Teradata’s financing activities for the year ended December 31, 2011 primarily consisted of $300 million in proceeds from a new 5 year term loan, as discussed below, as well as repurchases of the Company’s common stock. The Company purchased 7.8 million shares of its common stock at an average price per share of $48.53 in 2013, 4.5 million shares at an average price per share of $62.53 in 2012 and 2.5 million shares at an average price per share of $50.78 in 2011. Share repurchases were made under two share repurchase programs initially authorized by our Board of Directors in 2008. The first program (the “dilution offset program”) authorizes the Company to repurchase Teradata common stock to the extent of cash received from the exercise of stock options and the Teradata Employee Stock Purchase Plan (“ESPP”) to offset dilution from shares issued pursuant to these plans. On February 6, 2012, the board approved a new $300 million share repurchase authorization to replace a prior $300 million authorization under the Company’s second share repurchase program (the “general share repurchase program”) that was to expire on February 10, 2012. On December 10, 2012, Teradata announced that the board approved an additional $300 million increase in the share repurchase authorization under the Company’s general share repurchase program. On October 14, 2013, the board approved an additional $300 million increase in the share repurchase authorization. As of December 31, 2013, the Company had $323 million of authorization remaining
 
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under the general share repurchase program to repurchase outstanding shares of Teradata common stock. Share repurchases made by the Company are reported on a trade date basis. Our share repurchase activity depends on factors such as our working capital needs, our cash requirements for capital investments, our stock price, and economic and market conditions. Proceeds from the ESPP and the exercise of stock options were $28 million in 2013, $55 million in 2012 and $25 million in 2011. These proceeds are included in Other Financing Activities, Net in the Consolidated Statements of Cash Flows.
Our total cash and cash equivalents held outside the United States in various foreign subsidiaries was $615 million as of December 31, 2013 and $497 million as of December 31, 2012. The remaining balance held in the United States was $80 million as of December 31, 2013 and $232 million as of December 31, 2012. Under current tax laws and regulations, if cash and cash equivalents held outside the United States are distributed to the United States in the form of dividends or otherwise, we would be subject to additional U.S. income taxes (subject to an adjustment for foreign tax credits) and potential foreign withholding taxes. As of December 31, 2013, we have not provided for the U.S. federal tax liability on approximately $1 billion of foreign earnings that are considered permanently reinvested outside of the United States.
In June 2012, Teradata entered into a new five-year revolving credit agreement (the “Credit Facility”), under which the Company may borrow up to $300 million. The Credit Facility replaces a similar revolving credit agreement in the same maximum principal amount entered into by Teradata in 2007. The new Credit Facility expires on June 15, 2017, 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. The interest rate charged on borrowings pursuant to the Credit Facility can vary depending on the interest rate option the Company chooses to utilize and the Company’s leverage ratio at the time of the borrowing. In the near term, Teradata would anticipate choosing a floating rate based on the London Interbank Offered Rate (“LIBOR”). If the facility had been fully drawn at December 31, 2013, the spread over the LIBOR would have been 98 basis points (for an interest rate of 1.324%, assuming a 6 month borrowing term) given Teradata’s leverage ratio at that date. The Credit Facility is unsecured and contains certain representations and warranties, conditions, affirmative, negative and financial covenants, and events of default customary for such facilities. As of December 31, 2013, the Company had no outstanding borrowings from the Credit Facility, and was in compliance with all covenants.
In January 2011, Teradata in connection with the acquisition of Aprimo, funded part of purchase price of this all-cash acquisition by drawing down the full $300 million borrowing capacity from the Company’s prior credit facility. The $300 million in credit facility borrowings were repaid in full during the second quarter of 2011.
In April 2011, Teradata in connection with the acquisition of Aster Data, entered into a new $300 million five-year, unsecured term loan, and used a portion of these funds to finance the Aster Data acquisition. The outstanding principal amount of the term loan agreement 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 December 31, 2013, the term loan principal outstanding was $274 million, and carried an interest rate of 1.1875%.
Management believes current cash, Company cash flows from operations and its $300 million Credit Facility will be sufficient to satisfy future working capital, research and development activities, capital expenditures, pension contributions, and other financing requirements for at least the next twelve months. The Company principally holds its cash and cash equivalents in bank deposits and highly-rated money market funds.
The Company’s ability to generate positive cash flows from operations is dependent on general economic conditions, competitive pressures, and other business and risk factors described elsewhere in this Annual Report. If the Company is unable to generate sufficient cash flows from operations, or otherwise to comply with the terms of the credit facility and term loan agreement, the Company may be required to seek additional financing alternatives.
Contractual and Other Commercial Commitments. In the normal course of business, we enter into various contractual obligations that impact, or could impact, our liquidity. The following table and discussion outlines our material obligations at December 31, 2013, with projected cash payments in the periods shown:
 
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 	  	Total	 	  	 	 	  	2015-	 	  	2017-	 	  	2019 and	 	
In millions	  	Amounts	 	  	2014	 	  	2016	 	  	2018	 	  	Thereafter	 	
Principal payments on long-term debt	  	$	274	  	  	$	26	  	  	$	248	  	  	$	—  	  	  	$	—  	  	
Interest payments on long-term debt	  	 	7	  	  	 	3	  	  	 	4	  	  	 	—  	  	  	 	—  	  	
Lease obligations	  	 	81	  	  	 	22	  	  	 	33	  	  	 	18	  	  	 	8	  	
Purchase obligations	  	 	9	  	  	 	5	  	  	 	4	  	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total debt, lease and purchase obligations	  	$	371	  	  	$	56	  	  	$	289	  	  	$	18	  	  	$	8	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Our principal payments on long-term debt represent the expected cash payments on our $300 million term loan and do not include any fair value adjustments or discounts and premiums. Our interest payments on long-term debt represent the estimated cash interest payments based on the prevailing interest rate on our $300 million term loan as of December 31, 2013. Our lease obligations in the above table include Company facilities in various domestic and international locations. Purchase obligations are committed purchase orders and other contractual commitments for goods and services, and include contractual payments in relation to service agreements with various vendors for ongoing telecommunications, and other services.
Additionally, the Company has $34 million in total uncertain tax positions recorded as noncurrent liabilities on its balance sheet as of December 31, 2013. These items are not included in the table of obligations shown above. The settlement period for these income tax liabilities cannot be reasonably estimated as the timing and the amount of the payments, if any, will depend on possible future tax examinations with the various tax authorities; however, it is not expected that any payments will be due within the next 12 months.
We also have product warranties and guarantees to third parties, as well as postemployment and international pension obligations that may affect future cash flow. These items are not included in the table of obligations shown above. Product warranties and third-party guarantees are described in detail in “Note 8—Commitments and Contingencies” in the Notes to Consolidated Financial Statements. Postemployment and pension obligations are described in detail in “Note 6—Employee Benefit Plans” in the Notes to Consolidated Financial Statements.
Off-Balance Sheet Arrangements. We do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our financial statements are prepared in accordance with GAAP. In connection with the preparation of these financial statements, we are required to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosure of contingent liabilities. These assumptions, estimates and judgments are based on historical experience and assumptions that are believed to be reasonable at the time. However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgment. Our critical accounting policies are those that require assumptions to be made about matters that are highly uncertain. Different estimates could have a material impact on our financial results. Judgments and uncertainties affecting the application of these policies and estimates may result in materially different amounts being reported under different conditions or circumstances. Our management periodically reviews these estimates and assumptions to ensure that our financial statements are presented fairly and are materially correct.
In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require significant management judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result. The significant accounting policies and estimates that we believe are the most critical to aid in fully understanding and evaluating our reported financial results are discussed in the paragraphs below. Teradata’s senior management has reviewed these critical accounting policies and related disclosures with the Audit Committee of Teradata’s Board of Directors. For additional information regarding our accounting policies and other disclosures required by GAAP, see “Note 1—Description of Business, Basis of Presentation and Significant Accounting Policies” in the Notes to Consolidated Financial Statements.
 
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Revenue Recognition
Teradata’s solution offerings typically include software, software subscriptions (unspecified when-and-if-available upgrades), hardware, maintenance support services, and other consulting, implementation and installation-related (“consulting”) services. Teradata records revenue when it is realized, or realizable, and earned. Teradata considers these requirements met when:
 
•	Persuasive evidence of an arrangement exists	
 
•	The products or services have been delivered to the customer	
 
•	The sales price is fixed or determinable and free of contingencies or significant uncertainties	
 
•	Collectibility is reasonably assured	
Teradata reports revenue net of any taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions. The Company assesses whether fees are fixed or determinable at the time of sale. Standard payment terms may vary based on the country in which the agreement is executed, but are generally between 30 and 90 days. Payments that are due within six months are generally deemed to be fixed or determinable based on a successful collection history on such arrangements, and thereby satisfy the required criteria for revenue recognition. Teradata delivers its solutions primarily through direct sales channels, as well as through alliances with system integrators, other independent software vendors and distributors, and value-added resellers (collectively referred to as “resellers”). In assessing whether the sales price to a reseller is fixed or determinable, the Company considers, among other things, past business practices with the reseller, the reseller’s operating history, payment terms, return rights and the financial wherewithal of the reseller. When Teradata determines that the contract fee to a reseller is not fixed or determinable, that transaction is deferred and recognized upon sell-through to the end customer.
The Company’s deliverables often involve delivery or performance at different periods of time. Revenue for software is generally recognized upon delivery with the hardware once title and risk of loss have been transferred. Revenue for software subscriptions, which provide for unspecified upgrades or enhancements on a when-and-if-available basis, is recognized straight-line over the term of the subscription arrangement. Revenue for maintenance support services is also recognized on a straight-line basis over the term of the contract. Revenue for other consulting, implementation and installation services is recognized as services are provided. In certain instances, acceptance of the product or service is specified by the customer. In such cases, revenue is deferred until the acceptance criteria have been met. Delivery and acceptance generally occur in the same reporting period. The Company’s arrangements generally do not include any customer negotiated provisions for cancellation, termination or refunds that would significantly impact recognized revenue.
The Company evaluates all deliverables in an arrangement to determine whether they represent separate units of accounting. A deliverable constitutes a separate unit of accounting when it has standalone value, and if the contract includes a general right of return relative to the delivered item, delivery or performance of the undelivered items is considered probable and substantially in the control of Teradata. Most of the Company’s products and services qualify as separate units of accounting and are recognized upon meeting the criteria as described above.
For multiple deliverable arrangements that contain non-software related deliverables, the Company allocates revenue to each deliverable based upon the relative selling price hierarchy and if software and software-related deliverables are also included in the arrangement, to those deliverables as a group based on the best estimate of selling price (“BESP”) for the group. The selling price for a deliverable is based on its vendor-specific objective evidence of selling price (“VSOE”) if available, third-party evidence of selling price (“TPE”) if VSOE is not available, or BESP if neither VSOE nor TPE is available. The Company then recognizes revenue when the remaining revenue recognition criteria are met for each deliverable. For the software group or arrangements that contain only software
 
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and software-related deliverables, the revenue is allocated utilizing the residual or fair value method. Under the residual method, the VSOE of the undelivered elements is deferred and accounted for under the applicable revenue recognition guidance, and the remaining portion of the software arrangement fee is allocated to the delivered elements and is recognized as revenue. The fair value method is similar to the relative selling price method used for non-software deliverables except that the allocation of each deliverable is based on VSOE. For software groups or arrangements that contain only software and software-related deliverables in which VSOE does not exist for each deliverable (fair value method) or does not exist for each undelivered element (residual method), revenue for the entire software arrangement or group is deferred and not recognized until delivery of all elements without VSOE has occurred, unless the only undelivered element is postcontract customer support (“PCS”) in which case the entire software arrangement or group is recognized ratably over the PCS period.
Teradata’s analytic database software and hardware products are sold and delivered together in the form of a “Node” of capacity as an integrated technology solution. Because both the analytic database software and hardware platform are necessary to deliver the analytic data platform’s essential functionality, the database software and hardware (Node) are excluded from the software rules and considered a non-software related deliverable. Teradata software applications and related support are considered software-related deliverables. Additionally, the amount of revenue allocated to the delivered items utilizing the relative selling price or fair value method is limited to the amount that is not contingent upon the delivery of additional items or meeting other specified performance conditions (the non-contingent amount).
VSOE is based upon the normal pricing and discounting practices for those products and services when sold separately. Teradata uses the stated renewal rate approach in establishing VSOE for maintenance and subscriptions (collectively referred to as PCS). Under this approach, the Company assesses whether the contractually stated renewal rates are substantive and consistent with the Company’s normal pricing practices. Renewal rates greater than the lower level of our targeted pricing ranges are considered to be substantive and, therefore, meet the requirements to support VSOE. In instances where there is not a substantive renewal rate in the arrangement, the Company allocates revenue based upon BESP, using the minimum established pricing targets as supported by the renewal rates for similar customers utilizing the bell-curve method. Teradata also offers consulting and installation-related services to its customers, which are considered non-software deliverables if they relate to the nodes. These services are rarely considered essential to the functionality of the data warehouse solution deliverable and there is never software customization of the proprietary database software. VSOE for consulting services is based on the hourly rates for standalone consulting services projects by geographic region and are indicative of the Company’s customary pricing practices. Pricing in each market is structured to obtain a reasonable margin based on input costs.
In nearly all multiple-deliverable arrangements, the Company is unable to establish VSOE for all deliverables in the arrangement. This is due to infrequently selling each deliverable separately (such is the case with our nodes), not pricing products or services within a narrow range, or only having a limited sales history. When VSOE cannot be established, attempts are made to establish TPE of the selling price for each deliverable. TPE is determined based on competitor prices for similar deliverables when sold separately. However, Teradata’s offerings contain significant differentiation such that the comparable pricing of products with similar functionality cannot typically be obtained. This is because Teradata’s products contain a significant amount of proprietary technology and its solutions offer substantially different features and functionality than other available products. As Teradata’s products are significantly different from those of its competitors, the Company is unable to establish TPE for the vast majority of its products.
When the Company is unable to establish selling prices using VSOE or TPE, the Company uses BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service was sold on a standalone basis. The Company determines BESP for a product or service by considering multiple factors including, but not limited to, geographies, market conditions, product life cycles, competitive landscape, internal costs, gross margin objectives, purchase volumes and pricing practices.
 
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The primary consideration in developing BESP for the Company’s nodes is the bell-curve method based on historical transactions. The BESP analysis is at the geography level in order to align it with the way in which the Company goes to market and establishes pricing for its products. The Company has established discount ranges off of published list prices for different geographies based on strategy and maturity of Teradata’s presence in the respective geography. There are distinctions in each geography and product group which support the use of geographies and markets for the determination of BESP. For example, the Company’s U.S. market is relatively mature and most of the large transactions are captured in this market, whereas the International markets are less mature with generally smaller deal size. Additionally, the prices and margins for the Company’s products vary by geography and by product class. BESP is analyzed on a quarterly basis using a rolling previous 4-quarters of data, which the Company believes best reflects most recent pricing practices in a changing marketplace.
The Company reviews VSOE, TPE and its determination of BESP on a periodic basis and updates it, when appropriate, to ensure that the practices employed reflect the Company’s recent pricing experience. The Company maintains internal controls over the establishment and updates of these estimates, which includes review and approval by the Company’s management. For the twelve months ended December 31, 2013 there was no material impact to revenue resulting from changes in VSOE, TPE or BESP, nor does the Company expect a material impact from such changes in the near term.
Revenue recognition for complex contractual arrangements requires a greater degree of judgment, including a review of specific contracts, past experience, creditworthiness of customers, international laws and other factors. We must also apply judgment in determining all deliverables of the arrangement, and in determining the relative selling price of each deliverable, considering the price charged for each product when sold on a standalone basis, and applicable renewal rates for services. Changes in judgments about these factors could impact the timing and amount of revenue recognized between periods.
Perpetual licenses, term licenses, hosting arrangements and software as a service. Teradata’s application offerings include perpetual licenses, term licenses, hosting arrangements and software as a service. For software arrangements that include a perpetual license, the residual method is typically used because the Company does not have VSOE for its perpetual licenses. This is because the perpetual license is never sold standalone. If the license is of limited life and does not require the Company to host the software for the customer, the software is considered a term license. Teradata’s term licenses are typically offered for application software and include a right-to-use license, PCS and consulting services. The revenue for these arrangements are typically recognized ratably over the contract term. The term of these arrangements varies between one and five years and may or may not include hosting services. In most arrangements the pricing is bundled to the customer. If the term license is hosted, the customer has the right to take possession of the software at any time during the hosting period. The customer’s rights to the software in these circumstances are not dependent on additional software payments or significant penalties, and the customer can feasibly run the software on its own hardware or contract with another party to host the software. If these criteria are not met, the hosting arrangement is accounted for outside the software rules as a software as a service arrangement. Under a software as a service arrangement, the license, PCS and hosting fee are recognized ratably over the term of the contract.
Contract accounting. If an arrangement involves significant production, modification or customization of the application software or the undelivered services are essential to the functionality of the delivered software then the Company uses the percentage-of-completion or completed-contract method of accounting. The percentage-of-completion method is used when estimates of costs to complete and extent of progress toward completion are reasonably dependable. The Company typically uses labor hours or costs incurred to date as a percentage of the total estimated labor hours or costs to fulfill the contract as the most reliable and meaningful measure that is available for determining a project’s progress toward completion. In circumstances when reasonable and reliable cost estimates for a project cannot be made, the completed-contract method is used whereas no revenue is recognized until the project is complete. When total cost estimates exceed revenues, the Company accrues the estimated losses immediately. For purposes of allocation of the arrangement consideration, any products for which the services are not essential are separated utilizing the relative selling price method discussed above. PCS is also separated and allocated based on VSOE and then recognized ratably over the term. The remaining contract value, which typically includes application software and essential services, is then recognized utilizing the percentage-of-completion or completed-contract methods discussed above.
 
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Capitalized Software
Costs incurred internally in researching and developing a computer software product is charged to expense until technological feasibility has been established. Technological feasibility is established when planning, designing and initial coding activities that are necessary to establish the product can be produced to meet its design specifications are complete. In the absence of a detailed program design, a working model is used to establish technological feasibility. Once technological feasibility is established, all development costs are capitalized until the product is available for general release to customers. Judgment is required in determining when technological feasibility of a product is established. The timing of when various research and development projects become technologically feasible or ready for release can cause fluctuation in the amount of research and development costs that are expensed or capitalized in any given period, thus impacting our reported profitability for that period.
Income Taxes
In accounting for income taxes, we recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities. The deferred tax assets and liabilities are determined based on the enacted tax rates expected to apply in the periods in which the deferred tax assets or liabilities are expected to be settled or realized.
The Company’s intention is to permanently reinvest its foreign earnings outside of the United States. As a result, the effective tax rates 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. These jurisdictions apply a broad range of statutory income tax rates; the U.S. statutory corporate income tax rate is currently 35% as compared to the overall statutory effective tax rate of our various foreign jurisdictions of approximately 12%. As of December 31, 2013, the Company has not provided for federal income taxes on earnings of approximately $1 billion from its foreign subsidiaries.
We account for uncertainty in income taxes by prescribing thresholds and attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. We record any interest and/or penalties related to uncertain tax positions in the income tax expense line on our Consolidated Statements of Income. As of December 31, 2013, the Company has a total of $34 million of unrecognized tax benefits, of which $20 million is included in the “Other liabilities” section of the Company’s consolidated balance sheet. The remaining balance of $14 million of unrecognized tax benefits relates to certain tax attribute carryforwards which were both generated by the Company and acquired in various acquisitions, which are netted against the underlying deferred tax assets recorded on the balance sheet.
We regularly review our deferred tax assets for recoverability and establish a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. We had $11 million and $9 million recorded in valuation allowances as of December 31, 2013 and 2012, respectively. Due to a change in tax law enacted in the state of California in the fourth quarter of 2012, the Company established a valuation allowance to partially offset its California Research & Development tax credit carryforward deferred tax asset, as the Company expects to continue to generate excess California Research & Development tax credits into the foreseeable future. However, the discrete tax impact of establishing the valuation allowance was fully offset with a favorable discrete tax impact resulting from a decrease in the Company’s effective state tax rate resulting from the California change in tax law, resulting in no material net impact to the Company’s overall effective tax rate for the fourth quarter and full year ended December 31, 2012.
 
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Stock-based Compensation
We measure compensation cost for stock awards at fair value and recognize compensation expense over the service period for which awards are expected to vest. We utilize pricing models, including the Black-Scholes option pricing model and Monte Carlo simulation model, to estimate the fair value of stock-based compensation at the date of grant. These valuation models require the input of subjective assumptions, including expected volatility and expected term. Further, we estimate forfeitures for options granted which are not expected to vest. The estimation of stock awards that will ultimately vest requires judgment, and to the extent that actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period in which estimates are revised. We consider many factors when estimating expected forfeitures including types of awards and historical experience. Actual results and future changes in estimates may differ substantially from our current estimates.
In addition, we issue performance-based awards that vest only if specific performance conditions are satisfied. The number of shares that will be earned can vary based on actual performance. No shares will vest if the threshold objectives are not met. In the event the objectives are exceeded additional shares will vest up to a maximum payout. The cost of these awards is expensed over the performance period based upon management’s estimate and analysis of the probability of meeting the performance criteria. Because the actual number of shares to be awarded is not known until the end of the performance period, the actual compensation expense related to these awards could differ from our current expectations.
Goodwill and Other Intangible Assets
The company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The guidance on goodwill impairment requires the company to perform a two-step impairment test. In the first step, the company compares the fair value of each reporting unit to its carrying value. The company determines the fair value of its reporting units based on the income approach. Under the income approach, the company calculates the fair value of a reporting unit based on the present value of estimated future cash flows. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the second step of the impairment test is performed in order to determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then the company records an impairment loss equal to the difference. Teradata reviewed four reporting units in its 2013 goodwill impairment assessment, as each geographic operating segment consisted of separate reporting units for data warehouse and application software activities.
Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, discount rates and future economic and market conditions. The company’s estimates are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. These valuations require the use of management’s assumptions, which would not reflect unanticipated events and circumstances that may occur.
Additionally, the acquisition method of accounting for business combinations requires the company to estimate the fair value of assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree to properly allocate any excess purchase price consideration between net assets and goodwill. Impairment testing for assets, other than goodwill, requires the allocation of cash flows to those assets or group of assets and if required, an estimate of fair value for the assets or group of assets. The company’s estimates are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. These valuations require the use of management’s assumptions, which would not reflect unanticipated events and circumstances that may occur.
The annual goodwill impairment analysis, which the company performed during the fourth quarter of 2013, did not result in an impairment charge. There were also no impairment charges recognized in 2013 as a result of assessments of intangible assets acquired as a result of business combinations (or otherwise purchased from other companies). As of December 31, 2013, Teradata had $946 million in goodwill and $149 million in acquired intangible assets on its consolidated balance sheet.
 
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Pension and Postemployment Benefits
We have pension and postemployment benefit costs and credits, which are developed from actuarial valuations. Actuarial assumptions attempt to anticipate future events and are used in calculating the expense and liability relating to these plans. These factors include assumptions we make about interest rates, expected investment return on plan assets, total and involuntary turnover rates, and rates of future compensation increases. In addition, our actuarial consultants also use subjective factors such as withdrawal rates and mortality rates to develop our valuations. We review and update these assumptions on an annual basis at the beginning of each fiscal year. We are required to consider current market conditions, including changes in interest rates, in making these assumptions. The actuarial assumptions that we use may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates, or longer or shorter life spans of participants. These differences may result in a significant impact to the measurement of our pension and postemployment benefit obligations, and to the amount of pension and postemployment benefits expense we have recorded or may record. For example, as of December 31, 2013, a one-half percent increase/decrease in the discount rate would change the projected benefit obligation of our pension plans by approximately $6 million, and a one-half percent increase/decrease in our involuntary turnover assumption would change our postemployment benefit obligation by approximately $13 million.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
A discussion of recently issued accounting pronouncements is described in “Note 1—Description of Business, Basis of Presentation and Significant Accounting Policies” in the Notes to Consolidated Financial Statements elsewhere in this Annual Report, and we incorporate such discussion by reference.
 
 Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	
The Company employs a foreign currency hedging strategy to limit potential losses in earnings or cash flows from adverse foreign currency exchange rate movements. Foreign currency exposures arise from transactions denominated in a currency other than the Company’s functional currency and from foreign denominated revenue and profit translated into U.S. dollars. The primary currencies to which the Company is exposed include the euro, the British pound, the Japanese yen, the Australian dollar, the Canadian dollar and other Asian and South American currencies. Exposures are hedged with foreign currency forward contracts with maturity dates of twelve months or less. The potential loss in fair value at December 31, 2013, for such contracts resulting from a hypothetical 10% adverse change in all foreign currency exchange rates is approximately $2 million. This loss would be mitigated by corresponding gains on the underlying exposures. For additional information regarding the Company’s foreign currency hedging strategy, see “Note 7— Derivative Instruments and Hedging Activities” in the Notes to Consolidated Financial Statements elsewhere in this Annual Report.
 
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 Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	
Management’s Responsibility for Financial Statements
We are responsible for the preparation, integrity and objectivity of our consolidated financial statements and other financial information presented in this Annual Report. The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include certain amounts based on currently available information and our judgment of current conditions and circumstances.
PricewaterhouseCoopers LLP, our independent registered public accounting firm, is engaged to perform audits of our consolidated financial statements and the effectiveness of the internal control over financial reporting. These audits are performed in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our independent registered public accounting firm was given unrestricted access to all financial records and related data, including minutes of all meetings of stockholders, the Board of Directors, and committees of the board.
The Audit Committee of the Board of Directors, consisting entirely of independent directors who are not employees of Teradata, monitors our accounting, reporting, and internal control structure. Our independent registered public accounting firm, internal auditors, and management have complete and free access to the Audit Committee, which periodically meets directly with each group to ensure that their respective duties are being properly discharged.

/s/ Michael F. Koehler	 		 	/s/ Stephen M. Scheppmann	
Michael F. Koehler	 		 	Stephen M. Scheppmann	
President and Chief Executive Officer	 		 	Executive Vice President and Chief Financial Officer	
 
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 Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Teradata Corporation:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows present fairly, in all material respects, the financial position of Teradata Corporation and its subsidiaries at December 31, 2013 and December 31, 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing in Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under item 9A. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP	
PricewaterhouseCoopers LLP	
Atlanta, GA	
February 27, 2014	
 
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TERADATA CORPORATION
 Consolidated Statements of Income
In millions, except per share amounts

 	  	For the Year Ended December 31	 	
 	  	2013	 	 	2012	 	 	2011	 	
Revenue	  				 				 				
Product revenue	  	$	1,230	  	 	$	1,297	  	 	$	1,122	  	
Service revenue	  	 	1,462	  	 	 	1,368	  	 	 	1,240	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	  	 	2,692	  	 	 	2,665	  	 	 	2,362	  	

Costs and operating expenses	  				 				 				
Cost of products	  	 	433	  	 	 	416	  	 	 	381	  	
Cost of services	  	 	786	  	 	 	758	  	 	 	688	  	
Selling, general and administrative expenses	  	 	757	  	 	 	728	  	 	 	663	  	
Research and development expenses	  	 	184	  	 	 	183	  	 	 	174	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total costs and operating expenses	  	 	2,160	  	 	 	2,085	  	 	 	1,906	  	

Income from operations	  	 	532	  	 	 	580	  	 	 	456	  	
Other (expense) income, net	  	 	(24	) 	 	 	(2	) 	 	 	25	  	

Income before income taxes	  	 	508	  	 	 	578	  	 	 	481	  	
				
Income tax expense	  	 	131	  	 	 	159	  	 	 	128	  	

Net income	  	$	377	  	 	$	419	  	 	$	353	  	

Net income per common share	  				 				 				
Basic	  	$	2.31	  	 	$	2.49	  	 	$	2.10	  	
Diluted	  	$	2.27	  	 	$	2.44	  	 	$	2.05	  	
				
Weighted average common shares outstanding	  				 				 				
Basic	  	 	163.4	  	 	 	168.2	  	 	 	168.1	  	
Diluted	  	 	166.4	  	 	 	171.7	  	 	 	171.9	  	
The accompanying notes are an integral part of the consolidated financial statements.
 
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TERADATA CORPORATION
 Consolidated Statements of Comprehensive Income
In millions

 	  	For the Year Ended December 31	 	
 	  	2013	 	  	2012	 	 	2011	 	
				
Net income	  	$	377	  	  	$	419	  	 	$	353	  	
				
Other comprehensive income:	  				  				 				
Foreign currency translation adjustments	  	 	2	  	  	 	9	  	 	 	(6	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	
Defined benefit plans:	  				  				 				
Defined benefit plan adjustment, before tax	  	 	2	  	  	 	7	  	 	 	12	  	
Defined benefit plan adjustment, tax portion	  	 	0	  	  	 	(3	) 	 	 	(2	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	
Defined benefit plan adjustment, net of tax	  	 	2	  	  	 	4	  	 	 	10	  	

Other comprehensive income	  	 	4	  	  	 	13	  	 	 	4	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
Comprehensive income	  	$	381	  	  	$	432	  	 	$	357	  	
	  	 	 	 	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of the consolidated financial statements.
 
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TERADATA CORPORATION
 Consolidated Balance Sheets
In millions, except per share amounts

 	  	At December 31	 	
 	  	2013	 	 	2012	 	
Assets	  				 				
Current Assets	  				 				
Cash and cash equivalents	  	$	695	  	 	$	729	  	
Accounts receivable, net	  	 	717	  	 	 	668	  	
Inventories	  	 	56	  	 	 	47	  	
Other current assets	  	 	95	  	 	 	90	  	

Total current assets	  	 	1,563	  	 	 	1,534	  	
Property and equipment, net	  	 	161	  	 	 	150	  	
Capitalized software, net	  	 	195	  	 	 	173	  	
Goodwill	  	 	946	  	 	 	932	  	
Acquired intangible assets, net	  	 	149	  	 	 	186	  	
Deferred income taxes	  	 	24	  	 	 	29	  	
Other assets	  	 	58	  	 	 	62	  	

Total assets	  	$	3,096	  	 	$	3,066	  	

Liabilities and stockholders’ equity	  				 				
Current liabilities	  				 				
Accounts payable	  	$	114	  	 	$	141	  	
Payroll and benefits liabilities	  	 	136	  	 	 	158	  	
Deferred revenue	  	 	390	  	 	 	375	  	
Other current liabilities	  	 	136	  	 	 	132	  	

Total current liabilities	  	 	776	  	 	 	806	  	
Long-term debt	  	 	248	  	 	 	274	  	
Pension and other post employment plan liabilities	  	 	76	  	 	 	73	  	
Long-term deferred revenue	  	 	25	  	 	 	30	  	
Deferred tax liabilities	  	 	87	  	 	 	83	  	
Other liabilities	  	 	27	  	 	 	21	  	

Total liabilities	  	 	1,239	  	 	 	1,287	  	

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 December 31, 2013 and 2012, respectively	  	 	0	  	 	 	0	  	
Common stock: par value $0.01 per share, 500.0 shares authorized, 190.9 and 189.5 shares issued at December 31, 2013 and 2012, respectively	  	 	2	  	 	 	2	  	
Paid-in capital	  	 	973	  	 	 	898	  	
Treasury stock: 31.6 and 23.8 shares at December 31, 2013 and 2012, respectively	  	 	(1,184	) 	 	 	(806	) 	
Retained earnings	  	 	2,033	  	 	 	1,656	  	
Accumulated other comprehensive income	  	 	33	  	 	 	29	  	

Total stockholders’ equity	  	 	1,857	  	 	 	1,779	  	

Total liabilities and stockholders’ equity	  	$	3,096	  	 	$	3,066	  	
	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of the consolidated financial statements.
 
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TERADATA CORPORATION
 Consolidated Statements of Cash Flows
In millions

 	  	For the Year Ended December 31	 	
 	  	2013	 	 	2012	 	 	2011	 	
Operating activities	  				 				 				
Net income	  	$	377	  	 	$	419	  	 	$	353	  	
Adjustments to reconcile net income to net cash provided by operating activities:	  				 				 				
Depreciation and amortization	  	 	147	  	 	 	126	  	 	 	102	  	
Stock-based compensation expense	  	 	49	  	 	 	43	  	 	 	35	  	
Excess tax benefit from stock-based compensation	  	 	(7	) 	 	 	(37	) 	 	 	(14	) 	
Deferred income taxes	  	 	18	  	 	 	77	  	 	 	71	  	
Loss (gain) on investments	  	 	25	  	 	 	0	  	 	 	(28	) 	
Changes in assets and liabilities:	  				 				 				
Receivables	  	 	(46	) 	 	 	(165	) 	 	 	(65	) 	
Inventories	  	 	(9	) 	 	 	14	  	 	 	3	  	
Current payables and accrued expenses	  	 	(63	) 	 	 	105	  	 	 	28	  	
Deferred revenue	  	 	9	  	 	 	42	  	 	 	45	  	
Other assets and liabilities	  	 	10	  	 	 	(49	) 	 	 	(17	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	 	510	  	 	 	575	  	 	 	513	  	

Investing activities	  				 				 				
Expenditures for property and equipment	  	 	(60	) 	 	 	(67	) 	 	 	(42	) 	
Additions to capitalized software	  	 	(78	) 	 	 	(81	) 	 	 	(68	) 	
Business acquisitions and other investing activities, net	  	 	(36	) 	 	 	(274	) 	 	 	(722	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	(174	) 	 	 	(422	) 	 	 	(832	) 	

Financing activities	  				 				 				
Proceeds from long-term borrowings	  	 	0	  	 	 	0	  	 	 	600	  	
Repayments of long-term borrowings	  	 	(15	) 	 	 	(11	) 	 	 	(300	) 	
Repurchases of common stock	  	 	(382	) 	 	 	(277	) 	 	 	(127	) 	
Excess tax benefit from stock-based compensation	  	 	7	  	 	 	37	  	 	 	14	  	
Other financing activities, net	  	 	28	  	 	 	55	  	 	 	25	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in) provided by financing activities	  	 	(362	) 	 	 	(196	) 	 	 	212	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Effect of exchange rate changes on cash and cash equivalents	  	 	(8	) 	 	 	0	  	 	 	(4	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Decrease in cash and cash equivalents	  	 	(34	) 	 	 	(43	) 	 	 	(111	) 	
Cash and cash equivalents at beginning of year	  	 	729	  	 	 	772	  	 	 	883	  	

Cash and cash equivalents at end of year	  	$	695	  	 	$	729	  	 	$	772	  	

Supplemental data	  				 				 				
Cash paid during the year for:	  				 				 				
Income taxes	  	$	124	  	 	$	54	  	 	$	56	  	
Interest	  	$	4	  	 	$	4	  	 	$	3	  	
The accompanying notes are an integral part of the consolidated financial statements.
 
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TERADATA CORPORATION
 Consolidated Statements of Changes in Stockholders’ Equity
In millions

 	  	Common Stock	 	  	Treasury Stock	 	 	Paid-in	 	  	Retained	 	  	Accumulated
Other
Comprehensive	 	 	 	 	
 	  	Shares	 	  	Amount	 	  	Shares	 	 	Amount	 	 	Capital	 	  	Earnings	 	  	Income (Loss)	 	 	Total	 	
December 31, 2010	  	 	185	  	  	$	2	  	  	 	(17	) 	 	($	399	) 	 	$	690	  	  	$	884	  	  	$	12	  	 	$	1,189	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Net income	  				  				  				 				 				  	 	353	  	  				 	 	353	  	
Employee stock compensation, employee stock purchase programs and option exercises	  	 	2	  	  				  				 				 	 	60	  	  				  				 	 	60	  	
Income tax benefit from stock compensation plans	  				  				  				 				 	 	15	  	  				  				 	 	15	  	
Purchases of treasury stock, not retired	  				  				  	 	(2	) 	 	 	(127	) 	 				  				  				 	 	(127	) 	
Pension and postemployment benefit plans, net of tax	  				  				  				 				 				  				  	 	10	  	 	 	10	  	
Currency translation adjustment	  				  				  				 				 				  				  	 	(6	) 	 	 	(6	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
December 31, 2011	  	 	187	  	  	 	2	  	  	 	(19	) 	 	 	(526	) 	 	 	765	  	  	 	1,237	  	  	 	16	  	 	 	1,494	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Net income	  				  				  				 				 				  	 	419	  	  				 	 	419	  	
Employee stock compensation, employee stock purchase programs and option exercises	  	 	3	  	  				  				 				 	 	95	  	  				  				 	 	95	  	
Income tax benefit from stock compensation plans	  				  				  				 				 	 	38	  	  				  				 	 	38	  	
Purchases of treasury stock, not retired	  				  				  	 	(5	) 	 	 	(280	) 	 				  				  				 	 	(280	) 	
Pension and postemployment benefit plans, net of tax	  				  				  				 				 				  				  	 	4	  	 	 	4	  	
Currency translation adjustment	  				  				  				 				 				  				  	 	9	  	 	 	9	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
December 31, 2012	  	 	190	  	  	 	2	  	  	 	(24	) 	 	 	(806	) 	 	 	898	  	  	 	1,656	  	  	 	29	  	 	 	1,779	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Net income	  				  				  				 				 				  	 	377	  	  				 	 	377	  	
Employee stock compensation, employee stock purchase programs and option exercises	  	 	1	  	  				  				 				 	 	68	  	  				  				 	 	68	  	
Income tax benefit from stock compensation plans	  				  				  				 				 	 	7	  	  				  				 	 	7	  	
Purchases of treasury stock, not retired	  				  				  	 	(8	) 	 	 	(378	) 	 				  				  				 	 	(378	) 	
Pension and postemployment benefit plans, net of tax	  				  				  				 				 				  				  	 	2	  	 	 	2	  	
Currency translation adjustment	  				  				  				 				 				  				  	 	2	  	 	 	2	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
December 31, 2013	  	 	191	  	  	$	2	  	  	 	(32	) 	 	($	1,184	) 	 	$	973	  	  	$	2,033	  	  	$	33	  	 	$	1,857	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of the consolidated financial statements.
 
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 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Description of Business, Basis of Presentation and Significant Accounting Policies
Description of the Business. Teradata Corporation (“Teradata” or “the Company”) is a global leader in analytic data platforms, marketing and analytic applications, and consulting services. The Company’s analytic data platforms are comprised of software, hardware, and related business consulting and support services.
Basis of Presentation. The financial statements are presented on a consolidated basis and include the accounts of the Company and its wholly-owned subsidiaries in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period reported. On an ongoing basis, management evaluates these estimates and judgments, including those related to allowances for doubtful accounts, the valuation of inventory to net realizable value, impairments, stock-based compensation, pension and other postemployment benefits, and income taxes and any changes will be accounted for on a prospective basis. Actual results could differ from those estimates.
Revenue Recognition. Teradata’s solution offerings typically include software, software subscriptions (unspecified when-and-if-available upgrades), hardware, maintenance support services, and other consulting, implementation and installation-related (“consulting”) services. Teradata records revenue when it is realized, or realizable, and earned. Teradata considers these requirements met when:
 
•	 	Persuasive evidence of an arrangement exists	
 
•	 	The products or services have been delivered to the customer	
 
•	 	The sales price is fixed or determinable and free of contingencies or significant uncertainties	
 
•	 	Collectibility is reasonably assured	
Teradata reports revenue net of any taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions. The Company assesses whether fees are fixed or determinable at the time of sale. Standard payment terms may vary based on the country in which the agreement is executed, but are generally between 30 and 90 days. Payments that are due within six months are generally deemed to be fixed or determinable based on a successful collection history on such arrangements, and thereby satisfy the required criteria for revenue recognition. Teradata delivers its solutions primarily through direct sales channels, as well as through alliances with system integrators, other independent software vendors and distributors, and value-added resellers (collectively referred to as “resellers”). In assessing whether the sales price to a reseller is fixed or determinable, the Company considers, among other things, past business practices with the reseller, the reseller’s operating history, payment terms, return rights and the financial wherewithal of the reseller. When Teradata determines that the contract fee to a reseller is not fixed or determinable, that transaction is deferred and recognized upon sell-through to the end customer.
The Company’s deliverables often involve delivery or performance at different periods of time. Revenue for software is generally recognized upon delivery with the hardware once title and risk of loss have been transferred. Revenue for software subscriptions, which provide for unspecified upgrades or enhancements on a when-and-if-available basis, is recognized straight-line over the term of the subscription arrangement. Revenue for maintenance support services is also recognized on a straight-line basis over the term of the contract. Revenue for other consulting, implementation and installation services is recognized as services are provided. In certain instances, acceptance of the product or service is specified by the customer. In such cases, revenue is deferred until the acceptance criteria have been met. Delivery and acceptance generally occur in the same reporting period. The Company’s arrangements generally do not include any customer negotiated provisions for cancellation, termination or refunds that would significantly impact recognized revenue.
 
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The Company evaluates all deliverables in an arrangement to determine whether they represent separate units of accounting. A deliverable constitutes a separate unit of accounting when it has standalone value, and if the contract includes a general right of return relative to the delivered item, delivery or performance of the undelivered items is considered probable and substantially in the control of Teradata. Most of the Company’s products and services qualify as separate units of accounting and are recognized upon meeting the criteria as described above.
For multiple deliverable arrangements that contain non-software related deliverables, the Company allocates revenue to each deliverable based upon the relative selling price hierarchy and if software and software-related deliverables are also included in the arrangement, to those deliverables as a group based on the best estimate of selling price (“BESP”) for the group. The selling price for a deliverable is based on its vendor-specific objective evidence of selling price (“VSOE”) if available, third-party evidence of selling price (“TPE”) if VSOE is not available, or BESP if neither VSOE nor TPE is available. The Company then recognizes revenue when the remaining revenue recognition criteria are met for each deliverable. For the software group or arrangements that contain only software and software-related deliverables, the revenue is allocated utilizing the residual or fair value method. Under the residual method, the VSOE of the undelivered elements is deferred and accounted for under the applicable revenue recognition guidance, and the remaining portion of the software arrangement fee is allocated to the delivered elements and is recognized as revenue. The fair value method is similar to the relative selling price method used for non-software deliverables except that the allocation of each deliverable is based on VSOE. For software groups or arrangements that contain only software and software-related deliverables in which VSOE does not exist for each deliverable (fair value method) or does not exist for each undelivered element (residual method), revenue for the entire software arrangement or group is deferred and not recognized until delivery of all elements without VSOE has occurred, unless the only undelivered element is postcontract customer support (“PCS”) in which case the entire software arrangement or group is recognized ratably over the PCS period.
Teradata’s analytic database software and hardware products are sold and delivered together in the form of a “Node” of capacity as an integrated technology solution. Because both the analytic database software and hardware platform are necessary to deliver the analytic data platform’s essential functionality, the database software and hardware (Node) are excluded from the software rules and considered a non-software related deliverable. Teradata software applications and related support are considered software-related deliverables. Additionally, the amount of revenue allocated to the delivered items utilizing the relative selling price or fair value method is limited to the amount that is not contingent upon the delivery of additional items or meeting other specified performance conditions (the non-contingent amount).
VSOE is based upon the normal pricing and discounting practices for those products and services when sold separately. Teradata uses the stated renewal rate approach in establishing VSOE for maintenance and subscriptions (collectively referred to as PCS). Under this approach, the Company assesses whether the contractually stated renewal rates are substantive and consistent with the Company’s normal pricing practices. Renewal rates greater than the lower level of our targeted pricing ranges are considered to be substantive and, therefore, meet the requirements to support VSOE. In instances where there is not a substantive renewal rate in the arrangement, the Company allocates revenue based upon BESP, using the minimum established pricing targets as supported by the renewal rates for similar customers utilizing the bell-curve method. Teradata also offers consulting and installation-related services to its customers, which are considered non-software deliverables if they relate to the nodes. These services are rarely considered essential to the functionality of the data warehouse solution deliverable and there is never software customization of the proprietary database software. VSOE for consulting services is based on the hourly rates for standalone consulting services projects by geographic region and are indicative of the Company’s customary pricing practices. Pricing in each market is structured to obtain a reasonable margin based on input costs.
In nearly all multiple-deliverable arrangements, the Company is unable to establish VSOE for all deliverables in the arrangement. This is due to infrequently selling each deliverable separately (such is the case with our nodes), not pricing products or services within a narrow range, or only having a limited sales history. When VSOE cannot be established, attempts are made to establish TPE of the selling price for each deliverable. TPE is determined based on competitor prices for similar deliverables when sold separately. However, Teradata’s offerings contain significant differentiation such that the comparable pricing of products with similar functionality cannot typically be obtained. This is because Teradata’s products contain a significant amount of proprietary technology and its solutions offer substantially different features and functionality than other available products. As Teradata’s products are significantly different from those of its competitors, the Company is unable to establish TPE for the vast majority of its products.
 
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When the Company is unable to establish selling prices using VSOE or TPE, the Company uses BESP in its allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service was sold on a standalone basis. The Company determines BESP for a product or service by considering multiple factors including, but not limited to, geographies, market conditions, product life cycles, competitive landscape, internal costs, gross margin objectives, purchase volumes and pricing practices.
The primary consideration in developing BESP for the Company’s nodes is the bell-curve method based on historical transactions. The BESP analysis is at the geography level in order to align it with the way in which the Company goes to market and establishes pricing for its products. The Company has established discount ranges off of published list prices for different geographies based on strategy and maturity of Teradata’s presence in the respective geography. There are distinctions in each geography and product group which support the use of geographies and markets for the determination of BESP. For example, the Company’s U.S. market is relatively mature and most of the large transactions are captured in this market, whereas the International markets are less mature with generally smaller deal size. Additionally, the prices and margins for the Company’s products vary by geography and by product class. BESP is analyzed on a quarterly basis using a rolling previous 4-quarters of data, which the Company believes best reflects most recent pricing practices in a changing marketplace.
The Company reviews VSOE, TPE and its determination of BESP on a periodic basis and updates it, when appropriate, to ensure that the practices employed reflect the Company’s recent pricing experience. The Company maintains internal controls over the establishment and updates of these estimates, which includes review and approval by the Company’s management. For the twelve months ended December 31, 2013 there was no material impact to revenue resulting from changes in VSOE, TPE or BESP, nor does the Company expect a material impact from such changes in the near term.
Perpetual licenses, term licenses, hosting arrangements and software as a service. Teradata’s application offerings include perpetual licenses, term licenses, hosting arrangements and software as a service. For software arrangements that include a perpetual license, the residual method is typically used because the Company does not have VSOE for its perpetual licenses. This is because the perpetual license is never sold standalone. If the license is of limited life and does not require the Company to host the software for the customer, the software is considered a term license. Teradata’s term licenses are typically offered for application software and include a right-to-use license, PCS and consulting services. The revenue for these arrangements are typically recognized ratably over the contract term. The term of these arrangements varies between one and five years and may or may not include hosting services. In most arrangements the pricing is bundled to the customer. If the term license is hosted, the customer has the right to take possession of the software at any time during the hosting period. The customer’s rights to the software in these circumstances are not dependent on additional software payments or significant penalties, and the customer can feasibly run the software on its own hardware or contract with another party to host the software. If these criteria are not met, the hosting arrangement is accounted for outside the software rules as a software as a service arrangement. Under a software as a service arrangement, the license, PCS and hosting fee are recognized ratably over the term of the contract.
Contract accounting. If an arrangement involves significant production, modification or customization of the application software or the undelivered services are essential to the functionality of the delivered software then the Company uses the percentage-of-completion or completed-contract method of accounting. The percentage-of-completion method is used when estimates of costs to complete and extent of progress toward completion are reasonably dependable. The Company typically uses labor hours or costs incurred to date as a percentage of the total estimated labor hours or costs to fulfill the contract as the most reliable and meaningful measure that is available for determining a project’s progress toward completion. In circumstances when reasonable and reliable cost estimates for a project cannot be made, the completed-contract method is used whereas no revenue is recognized until the project is complete. When total cost estimates exceed revenues, the Company accrues the estimated losses
 
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immediately. For purposes of allocation of the arrangement consideration, any products for which the services are not essential are separated utilizing the relative selling price method discussed above. PCS is also separated and allocated based on VSOE and then recognized ratably over the term. The remaining contract value, which typically includes application software and essential services, is then recognized utilizing the percentage-of-completion or completed-contract methods discussed above.
Shipping and Handling. Product shipping and handling costs are included in cost of products in the Consolidated Statements of Income.
Cash and Cash Equivalents. All short-term, highly-liquid investments having original maturities of three months or less are considered to be cash equivalents.
Allowance for Doubtful Accounts. Teradata establishes provisions for doubtful accounts using both percentages of accounts receivable balances to reflect historical average credit losses and specific provisions for known issues.
Inventories. Inventories are stated at the lower of cost or market. Cost of service parts is determined using the average cost method. Finished goods inventory is determined using actual cost.
Long-Lived Assets
Property and Equipment . Property and equipment, leasehold improvements and rental equipment are stated at cost less accumulated depreciation. Depreciation is computed over the estimated useful lives of the related assets primarily on a straight-line basis. Equipment is depreciated over three to twenty years and buildings over 25 to 45 years. Leasehold improvements are depreciated over the life of the lease or the asset, whichever is shorter. Total depreciation expense on the Company’s property and equipment for the years ended December 31, 2013, 2012 and 2011 was $48 million, $41 million and $33 million, respectively.
Capitalized Software . Direct development costs associated with internal-use software are capitalized and amortized over the estimated useful lives of the resulting software. The costs are capitalized when both the preliminary project stage is completed and it is probable that computer software being developed will be completed and placed in service. Teradata typically amortizes capitalized internal-use software on a straight-line basis over three years beginning when the asset is substantially ready for use.
Costs incurred for the development of data warehousing software that will be sold, leased or otherwise marketed are capitalized when technological feasibility has been established. Technological feasibility is established when planning, designing and initial coding activities that are necessary to establish the product can be produced to meet its design specifications. In the absence of a program design, a working model is used to establish technological feasibility. These costs are included within capitalized software and are amortized over the estimated useful lives of four years using the greater of the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product or the straight-line method over the remaining estimated economic life of the product beginning when the product is available for general release. Costs capitalized include direct labor and related overhead costs. Costs incurred prior to technological feasibility and after general release are expensed as incurred. The following table identifies the activity relating to capitalized software:

 	  	Internal-use Software	 	 	External-use Software	 	
In millions	  	2013	 	 	2012	 	 	2011	 	 	2013	 	 	2012	 	 	2011	 	
Beginning balance at January 1	  	$	12	  	 	$	11	  	 	$	11	  	 	$	161	  	 	$	129	  	 	$	105	  	
Capitalized	  	 	6	  	 	 	6	  	 	 	5	  	 	 	72	  	 	 	75	  	 	 	63	  	
Amortization	  	 	(6	) 	 	 	(5	) 	 	 	(5	) 	 	 	(50	) 	 	 	(43	) 	 	 	(39	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ending balance at December 31	  	$	12	  	 	$	12	  	 	$	11	  	 	$	183	  	 	$	161	  	 	$	129	  	

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The aggregate amortization expense (actual and estimated) for internal-use and external-use software for the following periods is:

 	  	Actual	 	  	For the year ended (estimated)	 	
In millions	  	2013	 	  	2014	 	  	2015	 	  	2016	 	  	2017	 	  	2018	 	
Internal-use software amortization expense	  	$	6	  	  	$	5	  	  	$	4	  	  	$	2	  	  	$	1	  	  	$	0	  	
External-use software amortization expense	  	$	50	  	  	$	62	  	  	$	54	  	  	$	41	  	  	$	21	  	  	$	5	  	
Estimated expense is based on capitalized software at December 31, 2013 and does not include any new capitalization for future periods.
Valuation of Long-Lived Assets. Long-lived assets such as property and equipment, acquired intangible assets and internal capitalized software are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment loss would be recognized when estimated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition are less than the carrying amount.
Goodwill . Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill amounts are not amortized, but rather are tested for impairment annually or upon occurrence of an event or change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company did not recognize any goodwill impairment charges in 2013, 2012 or 2011.
Warranty. Provisions for product warranties are recorded in the period in which the related revenue is recognized. The Company accrues warranty reserves using percentages of revenue to reflect the Company’s historical average warranty claims.
Research and Development Costs. Research and development costs are expensed as incurred (with the exception of the capitalized software development costs discussed above). Research and development costs primarily include labor-related costs, contractor fees, and overhead expenses directly related to research and development support.
Pension and Postemployment Benefits. The Company accounts for its pension and postemployment benefit obligations using actuarial models. The measurement of plan obligations was made as of December 31, 2013. Liabilities are computed using the projected unit credit method. The objective under this method is to expense each participant’s benefits under the plan as they accrue, taking into consideration salary increases and the plan’s benefit allocation formula. Thus, the total pension or postemployment benefit to which each participant is expected to become entitled is broken down into units, each associated with a year of past or future credited service.
The Company recognizes the funded status of its pension and postemployment plan obligations in its consolidated balance sheet and records in other comprehensive income certain gains and losses that arise during the period, but are deferred under pension accounting rules.
Foreign Currency. Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment are translated into U.S. dollars at period-end exchange rates. Income and expense accounts are translated at daily exchange rates prevailing during the period. Adjustments arising from the translation are included in accumulated other comprehensive income, a separate component of stockholders’ equity. Gains and losses resulting from foreign currency transactions are included in determining net income.
Income Taxes. Income tax expense is provided based on income before income taxes in the various jurisdictions in which the Company conducts its business. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. These deferred taxes are determined based on the enacted tax rates expected to apply in the periods in which the deferred assets or liabilities are expected to be settled or realized. Teradata recognizes tax benefits from
 
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uncertain tax positions only if it is more likely than not the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company records valuation allowances related to its deferred income tax assets when it is more likely than not that some portion or all of the deferred income tax assets will not be realized.
Stock-based Compensation. Stock-based payments to employees, including grants of stock options, restricted stock and restricted stock units, are recognized in the financial statements based on their fair value.
The fair value of each stock option award on the grant date is estimated using the Black-Scholes option-pricing model with the following assumptions: expected dividend yield, expected stock price volatility, weighted-average risk-free interest rate and weighted average expected term of the options. As of October 2011, the Company’s expected volatility assumption used in the Black-Scholes option-pricing model is based on a blend of peer group volatility and Teradata volatility. Prior to that date, because the Company did not have a sufficient trading history as a stand-alone public company, the volatility was purely based on the peer group volatility. The expected term assumption is based on the simplified method under GAAP, which is based on the vesting period and contractual term for each vesting tranche of awards. The mid-point between the vesting date and the expiration date is used as the expected term under this method. The risk-free interest rate used in the Black-Scholes model is based on the implied yield curve available on U.S. Treasury zero-coupon issues at the date of grant with a remaining term equal to the Company’s expected term assumption. The Company has never declared or paid a cash dividend.
Treasury Stock. Shares of the Company’s common stock repurchased through the share repurchase programs are held as treasury stock. Treasury stock is accounted for using the cost method.
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 added from stock options, restricted stock awards and other stock awards. Refer to Note 5 for share information on the Company’s stock compensation plans.
The components of basic and diluted earnings per share are as follows:

 	  	For the year ended December 31	 	
In millions, except earnings per share	  	2013	 	  	2012	 	  	2011	 	
Net income available for common stockholders	  	$	377	  	  	$	419	  	  	$	353	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Weighted average outstanding shares of common stock	  	 	163.4	  	  	 	168.2	  	  	 	168.1	  	
Dilutive effect of employee stock options and restricted stock	  	 	3.0	  	  	 	3.5	  	  	 	3.8	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Common stock and common stock equivalents	  	 	166.4	  	  	 	171.7	  	  	 	171.9	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Earnings per share:	  				  				  				
Basic	  	$	2.31	  	  	$	2.49	  	  	$	2.10	  	
Diluted	  	$	2.27	  	  	$	2.44	  	  	$	2.05	  	
Options to purchase 0.9 million shares of common stock for 2013 were not included in the computation of diluted earnings per share because their exercise prices were greater than the average market price of the common shares and, therefore, the effect would have been anti-dilutive. No stock options were excluded from the computation of diluted earnings per share for the twelve months ended December 31, 2012 and 2011.
Recently Issued Accounting Pronouncements
In February 2013, the Financial Accounting Standards Board (“FASB”) issued new guidance regarding the disclosure of comprehensive income. Under the new guidance, entities are required to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, entities are required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but
 
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only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. This new guidance was adopted by the Company as of January 1, 2013 and did not have an impact on the Company’s consolidated financial position, results of operations or cash flows. The Company included enhanced footnote disclosures for the year ended December 31, 2013 in Note 13.
In July 2013, the FASB issued new guidance requiring the financial statement presentation of an unrecognized tax benefit in a particular jurisdiction, or a portion thereof, as a reduction to a deferred tax asset for a net operating loss (“NOL”) carryforward, a similar tax loss, or a tax credit carryforward, unless the uncertain tax position is not available to reduce, or would not be used to reduce, the NOL or carryforward under the tax law in the same jurisdiction; otherwise, the unrecognized tax benefit should be presented as a gross liability and should not be combined with a deferred tax asset. This new guidance is effective for interim and annual periods beginning after December 15, 2013. The Company is currently evaluating the impact of this guidance on its consolidated financial position, results of operations and cash flows.
Other recently issued accounting pronouncements not effective until after December 31, 2013 are not expected to have a material impact on our financial position or results of operations.
 
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Note 2 Supplemental Financial Information

 	  	At December 31	 	
In millions	  	2013	 	 	2012	 	
Accounts receivable	  				 				
Trade	  	$	731	  	 	$	683	  	
Other	  	 	4	  	 	 	3	  	
	  	 	 	 	 	 	 	 	
Accounts receivable, gross	  	 	735	  	 	 	686	  	
Less: allowance for doubtful accounts	  	 	(18	) 	 	 	(18	) 	
	  	 	 	 	 	 	 	 	
Total accounts receivable, net	  	$	717	  	 	$	668	  	

Inventories	  				 				
Finished goods	  	$	39	  	 	$	26	  	
Service parts	  	 	17	  	 	 	21	  	
	  	 	 	 	 	 	 	 	
Total inventories	  	$	56	  	 	$	47	  	

Other current assets	  				 				
Current deferred tax assets	  	$	34	  	 	$	36	  	
Other	  	 	61	  	 	 	54	  	
	  	 	 	 	 	 	 	 	
Total other current assets	  	$	95	  	 	$	90	  	

Property and equipment	  				 				
Land	  	$	8	  	 	$	8	  	
Buildings and improvements	  	 	74	  	 	 	67	  	
Machinery and other equipment	  	 	309	  	 	 	280	  	
	  	 	 	 	 	 	 	 	
Property and equipment, gross	  	 	391	  	 	 	355	  	
Less: accumulated depreciation	  	 	(230	) 	 	 	(205	) 	
	  	 	 	 	 	 	 	 	
Total property and equipment, net	  	$	161	  	 	$	150	  	

Other current liabilities	  				 				
Sales and value-added taxes	  	$	34	  	 	$	28	  	
Current portion of long-term debt	  	 	26	  	 	 	15	  	
Other	  	 	76	  	 	 	89	  	
	  	 	 	 	 	 	 	 	
Total other current liabilities	  	$	136	  	 	$	132	  	

Deferred revenue	  				 				
Deferred revenue, current	  	$	390	  	 	$	375	  	
Long-term deferred revenue	  	 	25	  	 	 	30	  	
	  	 	 	 	 	 	 	 	
Total deferred revenue	  	$	415	  	 	$	405	  	
	  	 	 	 	 	 	 	 	
Note 3 Goodwill and Acquired Intangible Assets
The following table identifies the activity relating to goodwill by operating segment:

In millions	  	Balance
December 31,
2012	 	  	Additions	 	  	Currency
Translation
Adjustments	 	 	Balance
December 31,
2013	 	
Goodwill	  				  				  				 				
Americas	  	$	616	  	  	$	12	  	  	($	2	) 	 	$	626	  	
International	  	 	316	  	  	 	4	  	  	 	0	  	 	 	320	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total goodwill	  	$	932	  	  	$	16	  	  	($	2	) 	 	$	946	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
The change in goodwill for the twelve months ended December 31, 2013 was primarily due to immaterial acquisitions that were completed during the period. In the fourth quarter of 2013, the Company performed its annual impairment test of goodwill and determined that no impairment to the carrying value of goodwill was necessary, as the fair value of each reporting unit exceeded their respective carrying amounts, including goodwill. Teradata reviewed four reporting units in its 2013 goodwill impairment assessment, as both geographic operating segments consisted of separate reporting units for data warehouse and application software activities.
 
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Acquired intangible assets were specifically identified when acquired, and are deemed to have finite lives. The gross carrying amount and accumulated amortization for Teradata’s acquired intangible assets were as follows:

 	  	 	 	  	December 31, 2013	 	 	December 31, 2012	 	
In millions	  	Amortization
Life (in Years)	 	  	Gross Carrying
Amount	 	  	Accumulated
Amortization
and Currency
Translation
Adjustments	 	 	Gross Carrying
Amount	 	  	Accumulated
Amortization
and Currency
Translation
Adjustments	 	
Acquired intangible assets	  				  				  				 				  				
Intellectual property/developed technology	  	 	1 to 7	  	  	$	153	  	  	$	(70	) 	 	$	153	  	  	$	(48	) 	
Customer relationships	  	 	3 to 10	  	  	 	77	  	  	 	(23	) 	 	 	77	  	  	 	(14	) 	
Trademarks/trade names	  	 	1 to 5	  	  	 	15	  	  	 	(7	) 	 	 	15	  	  	 	(2	) 	
In-process research and development	  	 	5	  	  	 	5	  	  	 	(1	) 	 	 	5	  	  	 	0	  	
Non-compete agreements	  	 	1 to 3	  	  	 	1	  	  	 	(1	) 	 	 	1	  	  	 	(1	) 	
	  				  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Total	  	 	1 to 10	  	  	$	251	  	  	$	(102	) 	 	$	251	  	  	$	(65	) 	
	  				  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
The gross carrying amount of acquired intangible assets was reduced by certain intangible assets previously acquired that became fully amortized and were removed from the balance sheet. This decrease was offset by the addition of newly acquired intangible assets associated with immaterial acquisitions in the current year.
The aggregate amortization expense (actual and estimated) for acquired intangible assets for the following periods is:

 	  	Actual	 	  	For the year ended (estimated)	 	
In millions	  	2013	 	  	2014	 	  	2015	 	  	2016	 	  	2017	 	  	2018	 	
Amortization expense	  	$	44	  	  	$	45	  	  	$	37	  	  	$	27	  	  	$	18	  	  	$	7	  	
Note 4 Income Taxes
For the years ended December 31, income before income taxes consisted of the following:

In millions	  	2013	 	  	2012	 	  	2011	 	
Income before income taxes	  				  				  				
United States	  	$	362	  	  	$	388	  	  	$	309	  	
Foreign	  	 	146	  	  	 	190	  	  	 	172	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total income before income taxes	  	$	508	  	  	$	578	  	  	$	481	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
For the years ended December 31, income tax expense consisted of the following:

In millions	  	2013	 	 	2012	 	 	2011	 	
Income tax expense	  				 				 				
Current	  				 				 				
Federal	  	$	78	  	 	$	50	  	 	$	26	  	
State and local	  	 	10	  	 	 	9	  	 	 	3	  	
Foreign	  	 	26	  	 	 	23	  	 	 	29	  	
Deferred	  				 				 				
Federal	  	 	18	  	 	 	72	  	 	 	64	  	
State and local	  	 	2	  	 	 	7	  	 	 	8	  	
Foreign	  	 	(3	) 	 	 	(2	) 	 	 	(2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total income tax expense	  	$	131	  	 	$	159	  	 	$	128	  	

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The following table presents the principal components of the difference between the effective tax rate and the U.S. federal statutory income tax rate for the years ended December 31:

In millions	  	2013	 	 	2012	 	 	2011	 	
Income tax expense at the U.S. federal tax rate	  	 	35.0	% 	 	 	35.0	% 	 	 	35.0	% 	
Foreign income tax differential	  	 	(7.3	%) 	 	 	(8.1	%) 	 	 	(7.4	%) 	
State and local income taxes	  	 	0.4	% 	 	 	0.7	% 	 	 	1.3	% 	
U.S. permanent book/tax differences	  	 	(1.6	%) 	 	 	(0.5	%) 	 	 	(1.8	%) 	
Other, net	  	 	(0.7	%) 	 	 	0.4	% 	 	 	(0.5	%) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total income tax expense	  	 	25.8	% 	 	 	27.5	% 	 	 	26.6	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	
The tax rate for the twelve months ended December 31, 2013 included a discrete $4 million tax benefit associated with the U.S. Federal Research and Development (“R&D) tax credit for 2012, which was retroactively reinstated with the enactment of the American Taxpayer Relief Act of 2012 in January 2013. There were no material discrete tax items, nor any tax benefits associated with the 2012 U.S. Federal R&D Tax credit due to its expiration, reflected in the tax rate for the twelve months ended December 31, 2012. The tax rate for the twelve months ended December 31, 2011 included a $4 million tax benefit recorded in the second quarter of 2011 related to the book gain recorded on the Company’s previous equity investment in Aster Data, which was reflected as a permanent non-taxable item. The provision for income taxes is based on the pre-tax earnings mix by jurisdiction of Teradata and its subsidiaries under the Company’s current structure.
Deferred income tax assets and liabilities included in the balance sheets at December 31 were as follows:

In millions	  	2013	 	 	2012	 	
Deferred income tax assets	  				 				
Employee pensions and other liabilities	  	$	57	  	 	$	54	  	
Other balance sheet reserves and allowances	  	 	22	  	 	 	27	  	
Deferred revenue	  	 	2	  	 	 	4	  	
Tax loss and credit carryforwards	  	 	41	  	 	 	41	  	
Capitalized research and development	  	 	5	  	 	 	16	  	
Other	  	 	1	  	 	 	0	  	
	  	 	 	 	 	 	 	 	
Total deferred income tax assets	  	 	128	  	 	 	142	  	
Valuation allowance	  	 	(13	) 	 	 	(9	) 	
	  	 	 	 	 	 	 	 	
Net deferred income tax assets	  	 	115	  	 	 	133	  	

Deferred income tax liabilities	  				 				
Intangibles and capitalized software	  	 	117	  	 	 	123	  	
Property and equipment	  	 	29	  	 	 	26	  	
Other	  	 	0	  	 	 	5	  	
	  	 	 	 	 	 	 	 	
Total deferred income tax liabilities	  	 	146	  	 	 	154	  	
	  	 	 	 	 	 	 	 	
Total net deferred income tax liabilities	  	($	31	) 	 	($	21	) 	
	  	 	 	 	 	 	 	 	
As of December 31, 2013, Teradata had total net operating loss carryforwards in the United States and certain foreign jurisdictions of approximately $33 million (tax effected), some of which begin to expire in 2014. In addition, Teradata has Research and Development Tax Credit carryforwards of $22 million, some of which begin to expire in 2014. As of December 31, 2013, the Company has recorded $41 million (net of a $11 million valuation allowance related to California Research and Development tax credits) of these tax attributes on its balance sheet as deferred tax assets; the remaining $14 million of deferred tax assets are associated with certain tax attributes which were both generated by the Company and acquired from various acquisitions, which do not meet the recognition criteria for uncertain tax positions and therefore are not recorded for financial reporting purposes.
 
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The Company’s intention is to permanently reinvest its foreign earnings outside of the United States. As a result, the effective tax rates in the periods presented are largely based upon the pre-tax earnings mix and allocation of certain expenses in various taxing jurisdictions where the Company conducts its business; these jurisdictions apply a broad range of statutory income tax rates. At December 31, 2013 the Company had not provided for federal income taxes on earnings of approximately $1 billion from its foreign subsidiaries. Should these earnings be distributed in the form of dividends or otherwise, the Company would be subject to U.S. income taxes and potential withholding taxes in various international jurisdictions. The U.S. taxes would be partially offset by U.S. foreign tax credits. Determination of the amount of unrecognized deferred U.S. tax liability is not practical because of the complexities associated with this hypothetical calculation.
The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company reflects any interest and penalties recorded in connection with its uncertain tax positions as a component of income tax expense.
As of December 31, 2013, the Company’s uncertain tax positions totaled approximately $34 million, of which $20 million is reflected in the “Other liabilities” section of the Company’s balance sheet as a non-current liability. The remaining balance of $14 million of uncertain tax positions relates to certain tax attributes which were both generated by the Company and acquired in various acquisitions, which are netted against the underlying deferred tax assets recorded on the balance sheet. The entire balance of $34 million in uncertain tax positions would cause a decrease in the effective income tax rate upon recognition. Teradata has recorded $1 million of interest accruals related to its uncertain tax liabilities as of December 31, 2013.
Below is a rollforward of the Company’s liability related to uncertain tax positions at December 31:

In millions	  	2013	 	 	2012	 	
Balance at January 1	  	$	31	  	 	$	28	  	
Gross increases for prior period tax positions	  	 	1	  	 	 	0	  	
Gross decreases for prior period tax positions	  	 	(3	) 	 	 	(1	) 	
Gross increases for current period tax positions	  	 	5	  	 	 	4	  	
	  	 	 	 	 	 	 	 	
Balance at December 31	  	$	34	  	 	$	31	  	
	  	 	 	 	 	 	 	 	
The Company and its subsidiaries file income tax returns in the U.S. federal and various state jurisdictions, as well as numerous foreign jurisdictions. As of December 31, 2013, the Company has ongoing tax audits for its U.S. Federal tax filing for tax year 2011, as well as in a limited number of state and foreign jurisdictions; however, no material adjustments have been proposed or made in any of these examinations to date.
Note 5 Employee Stock-based Compensation Plans
The Company recorded stock-based compensation expense for the years ended December 31 as follows:

In millions	  	2013	 	 	2012	 	 	2011	 	
Stock options	  	$	14	  	 	$	15	  	 	$	14	  	
Restricted stock	  	 	32	  	 	 	28	  	 	 	21	  	
Employee share repurchase program (compensatory effective 1/1/13)	  	 	3	  	 	 	0	  	 	 	0	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total stock-based compensation before income taxes	  	 	49	  	 	 	43	  	 	 	35	  	
Tax benefit	  	 	(16	) 	 	 	(14	) 	 	 	(13	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total stock-based compensation, net of tax	  	$	33	  	 	$	29	  	 	$	22	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
The Teradata Corporation 2007 Stock Incentive Plan (the “2007 SIP”), as amended, and the Teradata 2012 Stock Incentive Plan (the “2012 SIP”) provide for the grant of several different forms of stock-based compensation. The 2012 SIP was adopted and approved by stockholders in April 2012 and no further awards may be made under the 2007 SIP after that time. A total of approximately 16.4 million shares were authorized to be issued under the 2012 SIP. New shares of the Company’s common stock are issued as a result of the vesting of restricted stock units and stock option exercises, and at the time of grant for restricted stock, for awards under both plans.
 
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As of December 31, 2013, the Company’s primary types of stock-based compensation were stock options, restricted stock, restricted stock units and the employee stock purchase program (the “ESPP”).
Stock Options
The Compensation and Human Resource Committee of Teradata’s Board of Directors had discretion to determine the material terms and conditions of option awards under both the 2007 SIP and the 2012 SIP (collectively, the “Teradata SIP”), provided that (i) the exercise price must be no less than the fair market value of Teradata common stock (as defined in both plans) on the date of grant, and (ii) the term must be no longer than ten years. Option grants generally have a four-year vesting period.
For the years ended December 31, 2013, 2012 and 2011, the weighted-average fair value of options granted for Teradata equity awards was $18.02, $22.31 and $18.12, respectively. The fair value of each option award on the grant date was estimated using the Black-Scholes option-pricing model with the following assumptions:

 	  	2013	 	 	2012	 	 	2011	 	
Dividend yield	  	 	0	  	 	 	0	  	 	 	0	  	
Risk-free interest rate	  	 	1.77	% 	 	 	0.87	% 	 	 	1.63	% 	
Expected volatility	  	 	37.6	% 	 	 	35.7	% 	 	 	39.5	% 	
Expected term (years)	  	 	6.3	  	 	 	6.3	  	 	 	6.3	  	
The expected volatility assumption was based on a blend of peer group volatility and Teradata volatility (see Note 1), and the expected term assumption is determined using the simplified method under GAAP, which is based on the vesting period and contractual term for each vesting tranche of awards. The mid-point between the vesting date and the expiration date is used as the expected term under this method. The risk-free interest rate for periods within the contractual life of the option is based on an average of the five-year and seven-year U.S. Treasury yield curve in effect at the time of grant.
The following table summarizes the Company’s stock option activity for the year ended December 31, 2013:

Shares in thousands	  	Shares
Under
Option	 	 	Weighted-
Average
Exercise
Price per
Share	 	  	Weighted-
Average
Remaining
Contractual
Term (in
years)	 	  	Aggregate
Intrinsic
Value (in
millions)	 	
Outstanding at January 1, 2013	  	 	6,638	  	 	$	30.69	  	  	 	6.7	  	  	$	207	  	
Granted	  	 	918	  	 	$	45.43	  	  				  				
Exercised	  	 	(460	) 	 	$	18.62	  	  				  				
Canceled	  	 	(18	) 	 	$	11.48	  	  				  				
Forfeited	  	 	(66	) 	 	$	50.50	  	  				  				
	  	 	 	 	 				  				  				
Outstanding at December 31, 2013	  	 	7,012	  	 	$	33.27	  	  	 	6.3	  	  	$	100	  	
Fully vested and expected to vest at December 31, 2013	  	 	6,974	  	 	$	33.17	  	  	 	6.3	  	  	$	100	  	
Exercisable at December 31, 2013	  	 	5,019	  	 	$	26.68	  	  	 	5.3	  	  	$	99	  	
The total intrinsic value of options exercised was $19 million in 2013, $113 million in 2012 and $38 million in 2011. Cash received by the Company from option exercises under all share-based payment arrangements was $9 million in 2013, $43 million in 2012 and $16 million in 2011. The tax benefit realized from these exercises was $6 million in 2013, $38 million in 2012 and $14 million in 2011. As of December 31, 2013, there was $36 million of total unrecognized compensation cost related to unvested stock option grants. That cost is expected to be recognized over a weighted-average period of 3.1 years.
 
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Restricted Stock and Restricted Stock Units
The Teradata SIP provides for the issuance of restricted stock, as well as restricted stock units. These grants consist of both service-based and performance-based awards. Service-based awards typically vest over a three-to four-year period beginning on the effective date of grant. These grants are not subject to future performance measures. The cost of these awards, determined to be the fair market value at the date of grant, is expensed ratably over the vesting period. For substantially all restricted stock grants, at the date of grant, the recipient has all rights of a stockholder, subject to certain restrictions on transferability and a risk of forfeiture. A recipient of restricted stock units does not have the rights of a stockholder and is subject to restrictions on transferability and risk of forfeiture. For both restricted stock grants and restricted stock units, any potential dividend rights would be subject to the same vesting requirements as the underlying equity award. As a result, such rights are considered a contingent transfer of value and consequently these equity awards are not considered participating securities. Performance-based grants are subject to future performance measurements over a one- to four-year period. All performance-based shares that are earned in respect of an award will become vested at the end of the performance and/or service period provided the employee is continuously employed by the Company and applicable performance measures are met. The fair value of each performance-based award is determined on the grant date, based on the Company’s stock price, and assumes that performance targets will be achieved. Over the performance period, the number of shares of stock that will be issued is adjusted upward or downward based upon management’s assessment of the probability of achievement of performance targets. The ultimate number of shares issued and the related compensation cost recognized as expense will be based on a comparison of the final achievement of performance metrics to the specified targets.
The following table reports restricted stock and restricted stock unit activity during the year ended December 31, 2013:

Shares in thousands	  	Number of
Shares	 	 	Weighted-
Average Grant
Date Fair Value
per Share	 	
Unvested shares at January 1, 2013	  	 	2,373	  	 	$	51.37	  	
Granted	  	 	995	  	 	$	48.24	  	
Vested	  	 	(704	) 	 	$	42.88	  	
Forfeited/canceled	  	 	(86	) 	 	$	53.75	  	
	  	 	 	 	 				
Unvested shares at December 31, 2013	  	 	2,578	  	 	$	50.30	  	
	  	 	 	 	 				
For the years ended December 31, 2013, 2012 and 2011, the weighted-average fair value of restricted stock units granted for Teradata equity awards was $48.24, $60.71 and $45.19, respectively.
The total fair value of shares vested was $30.0 million in 2013, $15 million in 2012 and $11 million in 2011. As of December 31, 2013, there was $68 million of unrecognized compensation cost related to unvested restricted stock grants. The unrecognized compensation cost is expected to be recognized over a remaining weighted-average period of 2.4 years.
The following table represents the composition of Teradata restricted stock unit grants in 2013:

Shares in thousands	  	Number of
Shares	 	  	Weighted-
Average Grant
Date Fair Value	 	
Service-based shares	  	 	911	  	  	$	46.90	  	
Performance-based shares	  	 	84	  	  	$	62.77	  	
	  	 	 	 	  				
Total stock grants	  	 	995	  	  	$	48.24	  	

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Approximately 0.3 million shares of the performance awards issued in December of 2012 also included a market-based component for certain key executives in connection with a restructuring of the Company’s management team. On March 1, 2013, these awards were amended to create two separate awards: (i) 70% of the units were allocated to 2016 performance-based restricted share units (“Special 2016 PBRSUs”); and (ii) 30% of the units were allocated to special long-term strategic performance-based restricted share units (“Long-Term Strategic PBRSUs”). This modification resulted in no incremental fair value on the date of modification. Consistent with a Type I modification, the original fair value was used to value the awards since the stock price and fair value was lower on the date of modification. Each recipient’s opportunity to earn the Special 2016 PBRSUs is based on the extent to which Teradata achieves certain challenging or “stretch” financial goals through 2016 based on a GAAP revenue and a non-GAAP earnings per share targets in 2016. Each recipient’s opportunity to earn the Long-Term Strategic PBRSUs generally is based on a subjective assessment of performance over a four-year period ending in 2016 relative to a mix of long-term strategic measures with respect to such matters as data warehousing technology and offerings and integrated marketing management solutions, among other things, provided that a stretch non-GAAP earnings per share threshold is achieved. There was no compensation expense related to the Special 2016 PBRSUs and Long-Term Strategic PBRSUs recorded in 2013 based on management’s determination that at December 31, 2013 it was not probable that performance targets for these awards would be achievable.
For the Special 2016 PBRSUs, payout in excess of target cannot occur unless the Company achieves certain non-GAAP earnings per share and stock price goals. In evaluating the fair value of the Special 2016 PBRSUs, the Company used a Monte Carlo simulation on the grant date and determined the fair value to be $26.78 per unit for the market component of the award. Compensation expense related to the performance portion of the award is valued based on the grant date stock price and is only recorded in a period when it is probable that the performance metrics will be met. Compensation expense related to the market portion is only recorded when it is probable that the performance metrics will be above target, regardless of the stock price. There was no compensation expense related to the market portion of these awards in 2013. The primary assumptions used in the valuation of the market component of the awards were as follows:

 	  	2012	 	
Grant date fair value per share of Company common stock	  	$	58.63	  	
Expected volatility	  	 	36.44	% 	
Risk-free interest rate	  	 	0.47	% 	
Dividend yield	  	 	0	  	
Performance vesting hurdle - future fair value per share of Company common stock	  	$	85.00	  	
Employee Stock Purchase Program
The Company’s ESPP, effective on October 1, 2007, and as amended effective as of January 1, 2013, provides eligible employees of Teradata and its designated subsidiaries an opportunity to purchase the Company’s common stock at a discount to the average of the highest and lowest sale prices on the last trading day of each month. As of January 1, 2013, the ESPP discount was 15% of the average market price and considered compensatory. Prior to 2013, the ESPP discount was 5% of the average market price and this plan was considered non-compensatory.
Employees may authorize payroll deductions of up to 10% of eligible compensation for common stock purchases. A total of 4 million shares were authorized to be issued under the ESPP, with approximately 2.4 million shares remaining under that authorization at December 31, 2013. The shares of Teradata common stock purchased by a participant on an exercise date (the last day of each month), for all purposes, are deemed to have been issued and sold at the close of business on such exercise date. Prior to that time, none of the rights or privileges of a stockholder exists with respect to such shares. Employees purchased approximately 0.4 million shares in 2013, 0.2 million shares in 2012 and 0.2 million shares in 2011, for approximately $20 million, $12 million and $9 million, respectively.
 
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Note 6 Employee Benefit Plans
Pension and Postemployment Plans. Teradata currently sponsors defined benefit pension plans for certain of its international employees. For those international pension plans for which the Company holds asset balances, those assets are primarily invested in common/collective trust funds (which include publicly traded common stocks, corporate and government debt securities, real estate indirect investments, cash or cash equivalents) and insurance contracts.
Postemployment obligations relate to benefits provided to involuntarily terminated employees and certain inactive employees after employment but before retirement. These benefits are paid in accordance with various foreign statutory laws and regulations, and Teradata’s established postemployment benefit practices and policies. Postemployment benefits may include disability benefits, supplemental unemployment benefits, severance, workers’ compensation benefits, continuation of health care benefits and life insurance coverage, and are funded on a pay-as-you-go basis.
Pension and postemployment benefit costs for the years ended December 31 were as follows:

 	  	2013	 	 	2012	 	  	2011	 	
In millions	  	Pension	 	 	Postemployment	 	 	Pension	 	 	Postemployment	 	  	Pension	 	 	Postemployment	 	
Service cost	  	$	10	  	 	$	3	  	 	$	9	  	 	$	4	  	  	$	9	  	 	$	4	  	
Interest cost	  	 	3	  	 	 	1	  	 	 	4	  	 	 	1	  	  	 	4	  	 	 	2	  	
Expected return on plan assets	  	 	(2	) 	 	 	0	  	 	 	(3	) 	 	 	0	  	  	 	(3	) 	 	 	0	  	
Settlement charge	  	 	1	  	 	 	0	  	 	 	1	  	 	 	0	  	  	 	3	  	 	 	0	  	
Employee contributions	  	 	(1	) 	 	 	0	  	 	 	(1	) 	 	 	0	  	  	 	(1	) 	 	 	0	  	
Amortization of actuarial loss (gain)	  	 	2	  	 	 	(1	) 	 	 	1	  	 	 	0	  	  	 	1	  	 	 	0	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Total costs	  	$	13	  	 	$	3	  	 	$	11	  	 	$	5	  	  	$	13	  	 	$	6	  	

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The underfunded amount of pension and postemployment obligations is recorded as a liability in the Company’s consolidated balance sheet. The following tables present the changes in benefit obligations, plan assets, funded status and the reconciliation of the funded status to amounts recognized in the consolidated balance sheets and in accumulated other comprehensive income at December 31:

 	  	Pension	 	 	Postemployment	 	
In millions	  	2013	 	 	2012	 	 	2013	 	 	2012	 	
Change in benefit obligation	  				 				 				 				
Benefit obligation at January 1	  	$	122	  	 	$	108	  	 	$	25	  	 	$	33	  	
Service cost	  	 	8	  	 	 	8	  	 	 	3	  	 	 	4	  	
Interest cost	  	 	4	  	 	 	4	  	 	 	1	  	 	 	1	  	
Plan participant contributions	  	 	1	  	 	 	1	  	 	 	0	  	 	 	0	  	
Actuarial loss (gain)	  	 	6	  	 	 	9	  	 	 	3	  	 	 	(11	) 	
Benefits paid	  	 	(6	) 	 	 	(7	) 	 	 	(4	) 	 	 	(2	) 	
Currency translation adjustments	  	 	(6	) 	 	 	(1	) 	 	 	(1	) 	 	 	0	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Benefit obligation at December 31	  	 	129	  	 	 	122	  	 	 	27	  	 	 	25	  	

Change in plan assets	  				 				 				 				
Fair value of plan assets at January 1	  	 	69	  	 	 	59	  	 	 	0	  	 	 	0	  	
Actual return on plan assets	  	 	9	  	 	 	5	  	 	 	0	  	 	 	0	  	
Company contributions	  	 	10	  	 	 	12	  	 	 	0	  	 	 	0	  	
Benefits paid	  	 	(6	) 	 	 	(7	) 	 	 	0	  	 	 	0	  	
Currency translation adjustments	  	 	(7	) 	 	 	(1	) 	 	 	0	  	 	 	0	  	
Plan participant contribution	  	 	1	  	 	 	1	  	 	 	0	  	 	 	0	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fair value of plan assets at December 31	  	 	76	  	 	 	69	  	 	 	0	  	 	 	0	  	

Funded status (underfunded)	  	$	(53	) 	 	$	(53	) 	 	$	(27	) 	 	$	(25	) 	

Amounts Recognized in the Balance Sheet	  				 				 				 				
Noncurrent assets	  	$	1	  	 	$	—  	  	 	$	—  	  	 	$	—  	  	
Current liabilities	  	 	(1	) 	 	 	(1	) 	 	 	(4	) 	 	 	(4	) 	
Noncurrent liabilities	  	 	(53	) 	 	 	(52	) 	 	 	(23	) 	 	 	(21	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net amounts recognized	  	$	(53	) 	 	$	(53	) 	 	$	(27	) 	 	$	(25	) 	

Amounts Recognized in Accumulated Other Comprehensive Income	  				 				 				 				
Net actuarial loss (gain)	  	$	26	  	 	$	32	  	 	$	(12	) 	 	$	(16	) 	
Prior service credit	  	 	(2	) 	 	 	(2	) 	 	 	0	  	 	 	0	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	  	$	24	  	 	$	30	  	 	$	(12	) 	 	$	(16	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The accumulated pension benefit obligation was $120 million at December 31, 2013 and $113 million at December 31, 2012. For pension plans with accumulated benefit obligations in excess of plan assets, the projected benefit obligation, accumulated benefit obligation and fair value of assets were $55 million, $49 million and $3 million, respectively, at December 31, 2013, and $98 million, $90 million and $45 million , respectively, at December 31, 2012.
The following table presents the pre-tax net changes in projected benefit obligations recognized in other comprehensive income during 2013 and 2012:

 	  	Pension	 	 	Postemployment	 	
In millions	  	2013	 	 	2012	 	 	2013	 	  	2012	 	
Actuarial (gain) loss arising during the year	  	($	1	) 	 	$	7	  	 	$	2	  	  	($	12	) 	
Amortization of (gain) loss included in net periodic benefit cost	  	 	(2	) 	 	 	(1	) 	 	 	1	  	  	 	0	  	
Recognition of loss due to settlement	  	 	(1	) 	 	 	(1	) 	 	 	0	  	  	 	0	  	
Foreign currency exchange	  	 	(1	) 	 	 	0	  	 	 	0	  	  	 	0	  	
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Total recognized in other comprehensive (income) expense	  	($	5	) 	 	$	5	  	 	$	3	  	  	($	12	) 	

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The following table presents the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost during 2014:

In millions	  	Pension	 	  	Postemployment	 	
Net loss (gain) to be recognized in other comprehensive income	  	$	2	  	  	($	1	) 	
	  	 	 	 	  	 	 	 	
The weighted-average rates and assumptions used to determine benefit obligations at December 31, 2013 and 2012, and net periodic benefit cost for the years ended December 31, 2013 and 2012, were as follows:

 	  	Pension Benefit Obligations	  	Pension Benefit Cost	
 	  	2013	  	2012	  	2013	  	2012	
Discount rate	  	3.0%	  	3.0%	  	3.0%	  	3.7%	
Rate of compensation increase	  	3.2%	  	3.3%	  	3.3%	  	3.3%	
Expected return on plan assets	  	N/A	  	N/A	  	3.4%	  	4.0%	
			
 	  	Postemployment Benefit Obligations	  	Postemployment Benefit Cost	
 	  	2013	  	2012	  	2013	  	2012	
Discount rate	  	3.8%	  	3.4%	  	3.4%	  	4.1%	
Rate of compensation increase	  	3.7%	  	3.8%	  	3.8%	  	3.7%	
Involuntary turnover rate	  	1.0%	  	1.0%	  	1.0%	  	1.5%	
The Company determines the expected return on assets based on individual plan asset allocations, historical capital market returns, and long-run interest rate assumptions, with input from its actuaries, investment managers, and independent investment advisors. The company emphasizes long-term expectations in its evaluation of return factors, discounting or ignoring short-term market fluctuations. Expected asset returns are reviewed annually, but are generally modified only when asset allocation strategies change or long-term economic trends are identified.
The discount rate used to determine year-end 2013 U.S. benefit obligations was derived by matching the plans’ expected future cash flows to the corresponding yields from the Citigroup Pension Liability Index. This yield curve has been constructed to represent the available yields on high-quality fixed-income investments across a broad range of future maturities. International discount rates were determined by examining interest rate levels and trends within each country, particularly yields on high-quality long-term corporate bonds, relative to our future expected cash flows.
Gains and losses have resulted from changes in actuarial assumptions and from differences between assumed and actual experience, including, among other items, changes in discount rates and differences between actual and assumed asset returns. These gains and losses (except those differences being amortized to the market-related value) are only amortized to the extent that they exceed 10% of the higher of the market-related value or the projected benefit obligation of each respective plan.
 
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Plan Assets. The weighted-average asset allocations at December 31, 2013 and 2012, by asset category are as follows:

 	  	Actual Asset Allocation	 	 	 	 	
 	  	As of December 31	 	 	Target Asset	 	
 	  	2013	 	 	2012	 	 	Allocation	 	
Equity securities	  	 	34	% 	 	 	39	% 	 	 	36	% 	
Debt securities	  	 	37	% 	 	 	36	% 	 	 	41	% 	
Insurance (annuity) contracts	  	 	13	% 	 	 	11	% 	 	 	13	% 	
Real estate	  	 	6	% 	 	 	5	% 	 	 	3	% 	
Other	  	 	10	% 	 	 	9	% 	 	 	7	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total	  	 	100	% 	 	 	100	% 	 	 	100	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Fair Value. Fair value measurements are established utilizing a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are more fully described in Note 9.
The following is a description of the valuation methodologies used for pension assets as of December 31, 2013.
Common/collective trust funds (which include money market funds, equity funds, bond funds, real-estate indirect investment, etc) : Valued at the net asset value (“NAV”) of shares held by the Plan at year end, as reported to the Plan by the trustee, which represents the fair value of shares held by the Plan. Because the NAV of the shares held in the common/collective trust funds are derived by the value of the underlying investments, which are detailed in the table below, the Company has classified these underlying investments as Level 2 fair value measurements.
Insurance contracts: Valued by discounting the related future benefit payments using a current year-end market discount rate, which represents the fair value of the insurance contract. The Company has classified these contracts as Level 3 assets for fair value measurement purposes.
The following table sets forth by level, within the fair value hierarchy, the pension plan assets at fair value as of December 31, 2013:

 	  	 	 	  	Fair Value Measurements at Reporting Date Using	 	
 	  	 	 	  	Quoted Prices in	 	  	Significant	 	  	 	 	
 	  	 	 	  	Active Markets	 	  	Other	 	  	Signficant	 	
 	  	 	 	  	for Identical	 	  	Observable	 	  	Unobservable	 	
 	  	 	 	  	Assets	 	  	Inputs	 	  	Inputs	 	
In millions	  	December 31, 2013	 	  	(Level 1)	 	  	(Level 2)	 	  	(Level 3)	 	
Money market funds	  	$	3	  	  	$	0	  	  	$	3	  	  	$	0	  	
Equity funds	  	 	26	  	  	 	0	  	  	 	26	  	  	 	0	  	
Bond/fixed-income funds	  	 	28	  	  	 	0	  	  	 	28	  	  	 	0	  	
Real-estate indirect investment	  	 	5	  	  	 	0	  	  	 	5	  	  	 	0	  	
Commodities/Other	  	 	4	  	  	 	0	  	  	 	4	  	  	 	0	  	
Insurance contracts	  	 	10	  	  	 	0	  	  	 	0	  	  	 	10	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total Assets at fair value	  	$	76	  	  	$	0	  	  	$	66	  	  	$	10	  	

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The table below sets forth a summary of changes in the fair value of the pension plan level 3 assets for the year ended December 31, 2013:

In millions	  	Insurance
Contracts	 	
Balance as of January 1, 2013	  	$	8	  	
Purchases, sales and settlements, net	  	 	2	  	
	  	 	 	 	
Balance as of December 31, 2013	  	$	10	  	
	  	 	 	 	
The following table sets forth by level, within the fair value hierarchy, the pension plan assets at fair value as of December 31, 2012:

 	  	 	 	  	Fair Value Measurements at Reporting Date Using	 	
 	  	 	 	  	Quoted Prices in	 	  	Significant	 	  	 	 	
 	  	 	 	  	Active Markets	 	  	Other	 	  	Signficant	 	
 	  	 	 	  	for Identical	 	  	Observable	 	  	Unobservable	 	
 	  	 	 	  	Assets	 	  	Inputs	 	  	Inputs	 	
In millions	  	December 31, 2012	 	  	(Level 1)	 	  	(Level 2)	 	  	(Level 3)	 	
Money market funds	  	$	2	  	  	$	0	  	  	$	2	  	  	$	0	  	
Equity funds	  	 	27	  	  	 	0	  	  	 	27	  	  	 	0	  	
Bond/fixed-income funds	  	 	25	  	  	 	0	  	  	 	25	  	  	 	0	  	
Real-estate indirect investment	  	 	4	  	  	 	0	  	  	 	4	  	  	 	0	  	
Commodities/Other	  	 	3	  	  	 	0	  	  	 	3	  	  	 	0	  	
Insurance contracts	  	 	8	  	  	 	0	  	  	 	0	  	  	 	8	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total Assets at fair value	  	$	69	  	  	$	0	  	  	$	61	  	  	$	8	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The table below sets forth a summary of changes in the fair value of the pension plan level 3 assets for the year ended December 31, 2012:

In Millions	  	Insurance
Contracts	 	
Balance as of January 1, 2012	  	$	7	  	
Purchases, sales and settlements, net	  	 	1	  	
	  	 	 	 	
Balance as of December 31, 2012	  	$	8	  	
	  	 	 	 	
Investment Strategy. Teradata employs a number of investment strategies across its various international pension plans. In some countries, particularly where Teradata does not have a large employee base, the Company may use insurance (annuity) contracts to satisfy its future pension payment obligations, whereby the Company makes pension plan contributions to an insurance company in exchange for which the pension plan benefits will be paid when the members reach a specified retirement age or on earlier exit of members from the plan. In other countries, the Company may employ local asset managers to manage investment portfolios according to the investment policies and guidelines established by the Company, and with consideration to individual plan liability structure and local market environment and risk tolerances. The Company’s investment policies and guidelines primarily emphasize diversification across and within asset classes to maximize long-term returns subject to prudent levels of risk, with the overall objective of enabling the plans to meet their future obligations. The investment portfolios contain a diversified blend of equity and fixed-income investments. Furthermore, equity investments are diversified across domestic and international stocks, small and large capitalization stocks, and growth and value stocks. Fixed-income assets are diversified across government and corporate bonds. Where applicable, real estate investments are made through real estate securities, partnership interests or direct investment, and are diversified by property type and location. 
 
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Cash Flows Related to Employee Benefit Plans
Cash Contributions. The Company expects to contribute approximately $9 million to the international pension plans and $4 million for postemployment benefit obligations in 2014.
Estimated Future Benefit Payments. The Company expects to make the following benefit payments reflecting past and future service from its pension and postemployment plans:

 	  	Pension	 	  	Postemployment	 	
In millions	  	Benefits	 	  	Benefits	 	
Year	  				  				
2014	  	$	4	  	  	$	4	  	
2015	  	$	6	  	  	$	4	  	
2016	  	$	7	  	  	$	4	  	
2017	  	$	7	  	  	$	4	  	
2018	  	$	7	  	  	$	3	  	
2019-2023	  	$	32	  	  	$	15	  	
Savings Plans. U.S. employees and many international employees participate in defined contribution savings plans. These plans generally provide either a specified percent of pay or a matching contribution on participating employees’ voluntary elections. The Company’s matching contributions typically are subject to a maximum percentage or level of compensation. Employee contributions can be made pre-tax, after-tax or a combination thereof. The expense for the U.S. savings plan was $23 million in 2013, $21 million in 2012 and $19 million in 2011. The expense for international subsidiary savings plans was $17 million in 2013, $18 million in 2012 and $14 million in 2011.
Note 7 Derivative Instruments and Hedging Activities
As a portion of the Company’s operations and revenue occur outside the United States 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 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 exchange 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.
All derivatives are recognized in the Consolidated Balance Sheets at their fair value. 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. Changes in the fair value of derivative financial instruments, along with the loss or gain on the hedged asset or liability, are recorded in current period earnings. 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 exchanged by the parties and, therefore, are not a measure of the instruments. 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.
 
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The contract notional amount of the Company’s foreign exchange forward contracts was $152 million ($24 million on a net basis) at December 31, 2013, and $140 million ($53 million on a net basis) at December 31, 2012. The fair value derivative assets and liabilities recorded in other current assets and accrued liabilities at December 31, 2013 and 2012, were not material.
Gains and losses from the Company’s fair value hedges (foreign currency forward contracts and related hedged items) were immaterial for the years ended December 31, 2013, 2012 and 2011. 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 products or in other income, depending on the nature of the related hedged item.
Note 8 Commitments and Contingencies
In the normal 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.
As previously reported, in January 2013, the Company settled a civil litigation matter related to certain federal government contracts entered into prior to Teradata’s separation from NCR Corporation for $3 million, the amount previously accrued, and the court dismissed the action at that time.
Guarantees and Product Warranties.
Guarantees associated with the Company’s business activities are reviewed for appropriateness and impact to the Company’s financial statements. Periodically, the Company’s customers enter into various leasing arrangements coordinated with a leasing company. In some instances, the Company guarantees the leasing company a minimum value at the end of the lease term on the leased equipment. As of December 31, 2013, the maximum future payment obligation of this guaranteed value and the associated liability balance was $4 million.
The Company provides its customers a standard manufacturer’s warranty and records, at the time of the sale, a corresponding estimated liability for potential warranty costs. Estimated future obligations due to warranty claims are based upon historical factors such as labor rates, average repair time, travel time, number of service calls and cost of replacement parts. For each consummated sale, the Company recognizes the total customer revenue and records the associated warranty liability using pre-established warranty percentages for that product class.
The following table identifies the activity relating to the warranty reserve for the years ended December 31:

In millions	  	2013	 	 	2012	 	 	2011	 	
Warranty reserve liability	  				 				 				
Beginning balance at January 1	  	$	8	  	 	$	6	  	 	$	6	  	
Accruals for warranties issued	  	 	15	  	 	 	17	  	 	 	13	  	
Settlements (in cash or kind)	  	 	(15	) 	 	 	(15	) 	 	 	(13	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance at end of period	  	$	8	  	 	$	8	  	 	$	6	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
The Company also offers extended and/or enhanced coverage to its customers in the form of maintenance contracts. The Company accounts for these contracts by deferring the related maintenance revenue over the extended and/or enhanced coverage period. Costs associated with maintenance support are expensed as incurred. Amounts associated with these maintenance contracts are not included in the table above.
In addition, 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 products. 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
 
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obligations is 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, and as such the Company has 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.
Leases. Teradata conducts certain of its sales and administrative operations using leased facilities, the initial lease terms of which vary in length. Many of the leases contain renewal options and escalation clauses that are not material to the overall lease portfolio. Future minimum operating lease payments and committed subleases under non-cancelable leases as of December 31, 2013, for the following fiscal years were:

 	  	Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
In millions	  	Amounts	 	 	2014	 	 	2015	 	 	2016	 	 	2017	 	 	2018	 	
Operating lease obligations	  	$	73	  	 	$	22	  	 	$	20	  	 	$	13	  	 	$	10	  	 	$	8	  	
Sublease rentals	  	 	(11	) 	 	 	(3	) 	 	 	(3	) 	 	 	(3	) 	 	 	(2	) 	 	 	0	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total committed operating leases less sublease rentals	  	$	62	  	 	$	19	  	 	$	17	  	 	$	10	  	 	$	8	  	 	$	8	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The Company’s actual rental expense was $26 million, $25 million and $23 million for the years ended December 31, 2013, 2012 and 2011, respectively. The Company had no contingent rentals for these periods, but received sublease rental income of $3 million for each of the years ended December 31, 2013, 2012 and 2011.
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 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 December 31, 2013 and 2012.
The Company is also potentially subject to concentrations of supplier risk. Our hardware components are assembled exclusively by Flextronics International Ltd. (“Flextronics”). Flextronics procures a wide variety of components used in the manufacturing process on our behalf. Although many of these components are available from multiple sources, Teradata utilizes preferred supplier relationships to better ensure more consistent 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 Flextronics and to source certain components from single suppliers, a disruption in production at Flextronics or at a supplier could impact the timing of customer shipments and/or Teradata’s operating results.
Note 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.
 
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The Company’s assets and liabilities measured at fair value on a recurring basis include money market funds 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, forward foreign exchange contracts. The fair value of these contracts 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 gains for open contracts are recognized as assets and fair value losses are recognized as liabilities. The fair value derivative assets and liabilities recorded in other current assets and accrued liabilities at December 31, 2013 and 2012, were not material. Any realized gains or losses would be mitigated by corresponding gains or losses on the underlying exposures. Further information on the Company’s use of forward foreign exchange contracts is included in Note 7.
The Company’s assets measured at fair value on a recurring basis and subject to fair value disclosure requirements at December 31, 2013 and 2012 were as follows:

 	  	 	 	  	Fair Value Measurements at Reporting Date Using	 	
 	  	 	 	  	Quoted Prices in	 	  	Significant	 	  	 	 	
 	  	 	 	  	Active Markets	 	  	Other	 	  	Signficant	 	
 	  	 	 	  	for Identical	 	  	Observable	 	  	Unobservable	 	
 	  	 	 	  	Assets	 	  	Inputs	 	  	Inputs	 	
In millions	  	Total	 	  	(Level 1)	 	  	(Level 2)	 	  	(Level 3)	 	
Assets	  				  				  				  				
Money market funds, December 31, 2013	  	$	318	  	  	$	318	  	  	$	0	  	  	$	0	  	
Money market funds, December 31, 2012	  	$	260	  	  	$	260	  	  	$	0	  	  	$	0	  	
Note 10 Debt
In June 2012, Teradata entered into a new five-year revolving credit agreement (the “Credit Facility”), under which the Company may borrow up to $300 million. The Credit Facility replaces a similar revolving credit agreement in the same maximum principal amount entered into by Teradata in 2007. The new Credit Facility expires June 15, 2017, 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. The interest rate charged on borrowings pursuant to the Credit Facility can vary depending on the interest rate option the Company chooses to utilize and the Company’s leverage ratio at the time of the borrowing. In the near term, Teradata would anticipate choosing a floating rate based on the London Interbank Offered Rate (“LIBOR”). The Credit Facility is unsecured and contains certain representations and warranties, conditions, affirmative, negative and financial covenants, and events of default customary for such facilities.
As of December 31, 2013, the Company had no borrowings outstanding under the Credit Facility, leaving $300 million in additional borrowing capacity available. The Company was in compliance with all covenants at December 31, 2013.
In April 2011, Teradata obtained a senior unsecured $300 million five-year term loan. The term loan is payable in quarterly installments, commencing in June 2012, with all remaining principal due on April 5, 2016. The outstanding principal amount of the term loan agreement 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 December 31, 2013, the term loan principal outstanding was $274 million, and carried an interest rate of 1.1875% and the Company was in compliance with all covenants. Teradata’s term loan is recognized on the Company’s balance sheet at its unpaid principal balance, 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.
 
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Annual contractual maturities of principal on debt outstanding at December 31, 2013, are as follows:

In millions	  	 	 	
2014	  	$	26	  	
2015	  	 	53	  	
2016	  	 	195	  	
	  	 	 	 	
Total	  	$	274	  	
	  	 	 	 	
Interest expense on borrowings was $4 million for each of the twelve months ended December 31, 2013, 2012 and 2011.
Note 11 Segment, Other Supplemental Information and Concentrations
Teradata manages its business in two geographic regions, which are also the Company’s operating segments: (1) the Americas region (North America and Latin America); and (2) the International region (Europe, Middle East, Africa, Asia Pacific and Japan). Management evaluates the performance of its segments based on revenue and segment margin. Corporate-related costs are fully-allocated to the segments, but for management reporting purposes assets are not allocated to the segments.
The following table presents regional segment revenue and segment gross margin for the Company for the years ended December 31:

In millions	  	2013	 	 	2012	 	 	2011	 	
Segment revenue	  				 				 				
Americas (1)	  	$	1,633	  	 	$	1,619	  	 	$	1,436	  	
International	  	 	1,059	  	 	 	1,046	  	 	 	926	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	  	 	2,692	  	 	 	2,665	  	 	 	2,362	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Segment gross margin	  				 				 				
Americas	  	 	947	  	 	 	967	  	 	 	837	  	
International	  	 	526	  	 	 	524	  	 	 	456	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total gross margin	  	 	1,473	  	 	 	1,491	  	 	 	1,293	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	  	 	757	  	 	 	728	  	 	 	663	  	
Research and development expenses	  	 	184	  	 	 	183	  	 	 	174	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total income from operations	  	 	532	  	 	 	580	  	 	 	456	  	
Other (expense) income, net	  	 	(24	) 	 	 	(2	) 	 	 	25	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	  	$	508	  	 	$	578	  	 	$	481	  	

(1)  	The Americas region includes revenue from the United States of $1,511 million in 2013, $1,478 million in 2012 and $1,315 million in 2011.	
 
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The following table presents revenue by product and services revenue for the Company for the years ended December 31:

In millions	  	2013	 	  	2012	 	  	2011	 	
Products (software and hardware) (1)	  	$	1,230	  	  	$	1,297	  	  	$	1,122	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Consulting services	  	 	818	  	  	 	776	  	  	 	695	  	
Maintenance services	  	 	644	  	  	 	592	  	  	 	545	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total services	  	 	1,462	  	  	 	1,368	  	  	 	1,240	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total revenue	  	$	2,692	  	  	$	2,665	  	  	$	2,362	  	

(1)  	Our analytic database software and hardware products are often sold and delivered together in the form of a “node” of capacity as an integrated technology solution. Accordingly, it is impracticable to provide the breakdown of revenue from various types of software and hardware products.	
The following table presents property and equipment by geographic area at December 31:

In millions	  	2013	 	  	2012	 	
United States	  	$	131	  	  	$	121	  	
Americas (excluding United States)	  	 	3	  	  	 	3	  	
International	  	 	27	  	  	 	26	  	
	  	 	 	 	  	 	 	 	
Property and equipment, net	  	$	161	  	  	$	150	  	
	  	 	 	 	  	 	 	 	
Concentrations. No single customer accounts for more than 10% of the Company’s revenue. As of December 31, 2013, the Company is not aware of any significant concentration of business transacted with a particular customer that could, if suddenly eliminated, have a material adverse effect on the Company’s operations. The Company also has no concentration of available sources of labor, services, licenses or other rights that could, if suddenly eliminated, have a material adverse effect on its operations.
Note 12 Business Combinations
During 2013, the Company completed immaterial business acquisitions and other equity investment activities, accounted for under the cost method.
During 2012, the Company completed the all-cash acquisition of 100 percent of the equity of eCircle, a leading full service digital marketing provider in Europe, an immaterial business acquisition and other equity investment activities.
In January 2011, Teradata completed its acquisition of 100 percent of the stock of Aprimo, Inc. (“Aprimo”). Aprimo was a global provider of cloud-based integrated marketing management software solutions. The Aprimo organization now supports Teradata’s applications strategy, including development, marketing, sales and services.
In April 2011, Teradata completed its acquisition of all remaining equity of Aster Data. Prior to the acquisition Teradata held an 11.2% equity interest in Aster Data. Aster Data was a market leader in advanced analytics and the management of diverse, multi-structured data. The combination of Teradata and Aster Data technologies enables businesses to perform better analytics on large sets of multi-structured data, also known as “big data analytics.”
Other Activity. In 2013, the Company recognized a net loss of $22 million on equity investments arising from an impairment of carrying value, partially offset by a gain on sale. In 2011, the Company sold an equity investment and recognized a net gain of $17 million on the transaction. In addition, the Company recorded a gain in 2011 for $11 million related to its existing equity interest in Aster Data. The gains and losses for these transactions were recorded in other income and (expense) in the Consolidated Statements of Income.
 
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Note 13 Accumulated Other Comprehensive Income
The following table provides information on changes in accumulated other comprehensive income (“AOCI”), net of tax, for the three years ended December 31:

In millions	  	Defined benefit
plans	 	 	Foreign currency
translation
adjustments	 	 	Total AOCI	 	
Balance as of December 31, 2010	  	$	(19	) 	 	$	31	  	 	$	12	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income (loss) before reclassifications	  	 	6	  	 	 	(6	) 	 	 	0	  	
Amounts reclassified from AOCI	  	 	4	  	 	 	0	  	 	 	4	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net other comprehensive income (loss)	  	 	10	  	 	 	(6	) 	 	 	4	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance as of December 31, 2011	  	 	(9	) 	 	 	25	  	 	 	16	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income before reclassifications	  	 	2	  	 	 	9	  	 	 	11	  	
Amounts reclassified from AOCI	  	 	2	  	 	 	0	  	 	 	2	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net other comprehensive income	  	 	4	  	 	 	9	  	 	 	13	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance as of December 31, 2012	  	 	(5	) 	 	 	34	  	 	 	29	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income before reclassifications	  	 	0	  	 	 	2	  	 	 	2	  	
Amounts reclassified from AOCI	  	 	2	  	 	 	0	  	 	 	2	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net other comprehensive income	  	 	2	  	 	 	2	  	 	 	4	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance as of December 31, 2013	  	$	(3	) 	 	$	36	  	 	$	33	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
The following table presents the impact and respective location of AOCI reclassifications in the Consolidated Statements of Income:

In millions	  	 	  	For the year ended December 31	 	
AOCI Component	  	Location	  	2013	 	 	2012	 	  	2011	 	
Defined benefit plans	  	Cost of services	  	$	2	  	 	$	1	  	  	$	2	  	
Defined benefit plans	  	Selling, general and administrative expenses	  	 	1	  	 	 	0	  	  	 	0	  	
Defined benefit plans	  	Research and debelopment expenes	  	 	(1	) 	 	 	1	  	  	 	2	  	
	  		  	 	 	 	 	 	 	 	  	 	 	 	
Defined benefit plans	  	Net income	  	$	2	  	 	$	2	  	  	$	4	  	
	  		  	 	 	 	 	 	 	 	  	 	 	 	
Further information on the Company’s defined benefit plans is included in Note 6.
 
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Note 14 Quarterly Information (unaudited)

In millions, except per share amounts	  	First	 	  	Second	 	  	Third	 	  	Fourth	 	
2013	  				  				  				  				
Total revenues	  	$	587	  	  	$	670	  	  	$	666	  	  	$	769	  	
Gross margin	  	$	305	  	  	$	379	  	  	$	358	  	  	$	431	  	
Operating income	  	$	76	  	  	$	147	  	  	$	132	  	  	$	177	  	
Net income	  	$	59	  	  	$	108	  	  	$	98	  	  	$	112	  	
Net income per share:	  				  				  				  				
Basic	  	$	0.36	  	  	$	0.66	  	  	$	0.60	  	  	$	0.69	  	
Diluted	  	$	0.35	  	  	$	0.65	  	  	$	0.59	  	  	$	0.68	  	
					
2012	  				  				  				  				
Total revenues	  	$	613	  	  	$	665	  	  	$	647	  	  	$	740	  	
Gross margin	  	$	338	  	  	$	382	  	  	$	361	  	  	$	410	  	
Operating income	  	$	127	  	  	$	160	  	  	$	143	  	  	$	150	  	
Net income	  	$	91	  	  	$	112	  	  	$	104	  	  	$	112	  	
Net income per share:	  				  				  				  				
Basic	  	$	0.54	  	  	$	0.66	  	  	$	0.62	  	  	$	0.67	  	
Diluted	  	$	0.53	  	  	$	0.65	  	  	$	0.60	  	  	$	0.66	  	
 
 Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	
None.
 
 Item 9A.	CONTROLS AND PROCEDURES	
Evaluation of Disclosure Controls and Procedures
Teradata maintains a system of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) that are designed to provide reasonable assurance that information required to be disclosed in its reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including, as appropriate, the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective to provide reasonable assurance as of December 31, 2013.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) under the Exchange Act. Teradata’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of Teradata’s internal control over financial reporting as of the end of the period covered by this report. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (1992) . Based on our assessment and those criteria, management concluded that Teradata’s internal control over financial reporting was effective as of December 31, 2013.
Teradata’s independent registered public accounting firm has issued their report on the effectiveness of Teradata’s internal control over financial reporting, which appears in this Annual Report.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 Item 9B.	OTHER INFORMATION	
None.
 PART III
 
 Item 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	
Information required to be included in Part III Item 10 is set forth under the captions “Election of Directors” and “Additional Information Concerning the Board of Directors” in Teradata’s Notice of Annual Meeting of Stockholders and Proxy Statement to be filed with the SEC within 120 days after the end of our fiscal 2013 year (the “2014 Proxy Statement”) and is incorporated herein by reference. The information under the heading “Executive Officers of the Registrant” in Part I Item 1 of this Annual Report on Form 10-K is also incorporated by reference in this section.
 
 Item 11.	EXECUTIVE COMPENSATION	
Information required to be included in Part III Item 11 is set forth under the captions “Director Compensation,” “Compensation Discussion and Analysis,” “Compensation Tables,” “Potential Payments Upon Termination or Change in Control,” “Compensation and Human Resource Committee” and “Board Compensation and Human Resource Committee Report on Executive Compensation” in Teradata’s 2014 Proxy Statement and incorporated herein by reference.
 
 Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	
Information required to be included in Part III Item 12 is set forth under the captions “Stock Ownership” in Teradata’s 2014 Proxy Statement and incorporated herein by reference. The information under the heading “Current Equity Compensation Plan Information” in Part II Item 5 of this Annual Report on Form 10-K is also incorporated by reference in this section.
 
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 Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	
Information required to be included in Part III Item 13 is set forth under the captions “Related Person Transactions” and “Board Independence and Related Transactions” in Teradata’s 2014 Proxy Statement and incorporated herein by reference.
 
 Item 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	
Information required to be included in Part III Item 14 is set forth under the caption “Fees Paid to Independent Registered Public Accounting Firm” in Teradata’s 2014 Proxy Statement and incorporated herein by reference.
 PART IV
 
 Item 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	
 
(a)	Index	
1. Financial Statements: The consolidated financial statements of the Company and the Report of Independent Registered Public Accounting Firm as set forth in Part II, Item 8 of this Annual Report:

Report of Independent Registered Public Accounting Firm	  	 	48	  	
Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 2011	  	 	49	  	
Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 2012 and 2011	  	 	50	  	
Consolidated Balance Sheets at December 31, 2013 and 2012	  	 	51	  	
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011	  	 	52	  	
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December  31, 2013, 2012 and 2011	  	 	53	  	
Notes to Consolidated Financial Statements	  	 	54	  	
2. Financial Statement Schedule: Financial Statement Schedule II – Valuation and Qualifying Accounts is included in this Annual Report on page 88. All other schedules are not required under the related instructions or are not applicable.
3. Exhibits: See Index of Exhibits below for a listing of all exhibits to this Annual Report.
(b) Exhibits identified in parentheses below, on file with the SEC, are incorporated herein by reference as exhibits hereto.

Reference Number
per Item 601 of
Regulation S-K	  	Description	
2.1	  	Form of Separation and Distribution Agreement between Teradata Corporation and NCR Corporation (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated September 11, 2007 (SEC file number 001-33458)).	
		
3.1	  	Amended and Restated Certificate of Incorporation of Teradata Corporation as amended and restated on September 24, 2007 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K dated September 25, 2007 (SEC file number 001-33458)).	
		
3.2	  	Amended and Restated By-Laws of Teradata Corporation, as amended and restated on April 20, 2012 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K dated April 26, 2012).	
 
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  4.1	  	Common Stock Certificate of Teradata Corporation (incorporated by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q dated November 13, 2007 (SEC file number 001-33458)).	
		
10.1	  	Form of Tax Sharing Agreement between Teradata Corporation and NCR Corporation (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (SEC file number 001-00395) filed by NCR Corporation on September 25, 2007).	
		
10.2	  	Form of Technology Agreement (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form 10).	
		
10.3*	  	Teradata Corporation Employee Stock Purchase Plan, as amended and restated on January 31, 2012 (incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q dated August 3, 2012).	
		
10.4*	  	Teradata Corporation Management Incentive Plan (incorporated by reference to Exhibit 10.9 to the Registration Statement on Form 10).	
		
10.5*	  	Teradata Change in Control Severance Plan, as amended and restated on July 24, 2012 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated July 27, 2012).	
		
10.6*	  	Amended and Restated Teradata Corporation 2007 Stock Incentive Plan, dated February 3, 2009 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated February 9, 2009 (SEC file number 001-33458)).	
		
10.7*	  	Form of Stock Option Agreement under the Teradata Corporation 2007 Stock Incentive Plan for awards granted in 2007 (incorporated by reference to Exhibit 10.11 to the Registration Statement on Form 10).	
		
10.7.1*	  	Form of 2008 Stock Option Agreement under the Teradata Corporation 2007 Stock Incentive Plan, approved November 26, 2007 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated November 30, 2007 (SEC file number 001-33458)).	
		
10.7.2*	  	Form of 2011 Performance-Based Restricted Stock Unit Agreement under the Teradata Corporation 2007 Stock Incentive Plan, approved on November 29, 2010 (incorporated by reference to Exhibit 10.11.8 to the Annual Report on Form 10-K dated March 1, 2011).	
		
10.7.3*	  	Form of 2012 Performance-Based Restricted Stock Unit Agreement under the Teradata Corporation 2007 Stock Incentive Plan, approved on November 28, 2011 (incorporated by reference to Exhibit 10.11.9 to the Annual Report on Form 10-K dated February 29, 2012).	
		
10.7.4*	  	Form of Stock Option Agreement Under the Teradata Corporation 2007 Stock Incentive Plan, approved on December 2, 2008 and November 30, 2009 (incorporated by reference to Exhibit 10.11.8 to the Annual Report on Form 10-K dated March 2, 2009 (SEC file number 001-33458)).	
		
10.7.5*	  	Form of Stock Option Agreement Under the Teradata Corporation 2007 Stock Incentive Plan, approved on November 29, 2010 and November 28, 2011 (incorporated by reference to Exhibit 10.11.10 to the Annual Report on Form 10-K dated March 1, 2011).	
		
10.7.6*	  	Form of Restricted Stock Unit Agreement Under the Teradata Corporation 2007 Stock Incentive Plan, approved on December 1, 2008 and November 30, 2009 (incorporated by reference to Exhibit 10.11.9 to the Annual Report on Form 10-K dated March 2, 2009 (SEC file number 001-33458)).	
 
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10.7.7*	  	Form of Restricted Stock Unit Agreement Under the Teradata Corporation 2007 Stock Incentive Plan, approved on November 29, 2010 and November 28, 2011 (incorporated by reference to Exhibit 10.11.12 to the Annual Report on Form 10-K dated March 1, 2011).	
		
10.7.8*	  	Form of 2007 Director Option Grant Statement (incorporated by reference to Exhibit 10.11.6 to the Annual Report on Form 10-K dated March 3, 2008 (SEC file number 001-33458)).	
		
10.7.9*	  	Form of 2008 Director Option Grant Statement under the Teradata Corporation 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q dated May 15, 2008 (SEC file number 001-33458)).	
		
10.7.10*	  	Teradata Corporation Director Compensation Program, Amended and Restated, effective on April 26, 2011 (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q dated August 8, 2011).	
		
10.8*	  	Teradata 2012 Stock Incentive Plan, dated April 20, 2012 (incorporated by reference to Appendix A to the Proxy Statement of Teradata Corporation dated March 1, 2012).	
		
10.9*	  	Form of Stock Option Agreement Under the Teradata 2012 Stock Incentive Plan, approved on April 19, 2012 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K dated April 26, 2012).	
		
10.9.1*	  	Form of Restricted Share Unit Agreement Under the Teradata 2012 Stock Incentive Plan, approved on April 19, 2012 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K dated April 26, 2012).	
		
10.9.2*	  	Form of Performance-Based Restricted Share Unit Agreement Under the Teradata 2012 Stock Incentive Plan, approved on April 19, 2012 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K dated April 26, 2012).	
		
10.9.3*	  	Form of Director Restricted Share Unit Grant Statement under the Teradata 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q dated August 3, 2012).	
		
10.9.4*	  	Form of Special 2016 Performance-Based Restricted Share Unit Agreement under the Teradata 2012 Stock Incentive Plan, approved on February 26, 2013 (incorporated by reference to Exhibit 10.12.4 to the Annual Report on Form 10-K dated February 28, 2013).	
		
10.9.5*	  	Form of Special Long-Term Strategic Performance-Based Restricted Share Unit Agreement under the Teradata 2012 Stock Incentive Plan, approved on February 26, 2013 (incorporated by reference to Exhibit 10.12.5 to the Annual Report on Form 10-K dated February 28, 2013).	
		
10.9.6*	  	Form of Stock Option Agreement Under the Teradata 2012 Stock Incentive Plan, approved on December 2, 2013.	
		
10.9.7*	  	Form of Stock Option Agreement For Non-U.S. Employees Under the Teradata 2012 Stock Incentive Plan, approved on December 2, 2013.	
		
10.9.8*	  	Form of Restricted Share Unit Agreement Under the Teradata 2012 Stock Incentive Plan, approved on December 2, 2013.	
		
10.9.9*	  	Form of Restricted Share Unit Agreement For Non-U.S. Employees Under the Teradata 2012 Stock Incentive Plan, approved on December 2, 2013.	
		
10.9.10*	  	Form of Performance-Based Restricted Share Unit Agreement Under the Teradata 2012 Stock Incentive Plan, approved on December 2, 2013.	
 
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10.10	  	Purchase and Manufacturing Services Agreement, effective April 27, 1998, by and between NCR Corporation and Solectron Corporation, now known as Flextronics International Ltd. (filed as Exhibit 10.1 to NCR Corporation’s Form 10-Q (SEC File No. 001-00395) for the fiscal quarter ended June 30, 1998 and incorporated herein by reference).	
		
10.10.1	  	Amendment No. 1 to Purchase and Manufacturing Services Agreement, dated January 29, 2000, between NCR Corporation and Solectron Corporation, now known as Flextronics International Ltd. (incorporated by reference to Exhibit 10.22 to the Registration Statement on Form 10).	
		
10.11*	  	Offer Letter to Michael Koehler (incorporated by reference to Exhibit 10.20 to the Registration Statement on Form 10).	
		
10.11.1*	  	Amendment to the Offer Letter from Teradata Corporation to Michael Koehler, dated October 7, 2008 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated October 14, 2008 (SEC file number 001-33458)).	
		
10.12*	  	Offer Letter to Stephen Scheppmann (incorporated by reference to Exhibit 10.23 to the Registration Statement on Form 10).	
		
10.12.1*	  	Amendment to the Offer Letter from Teradata Corporation to Stephen Scheppmann, dated October 7, 2008 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K dated October 14, 2008 (SEC file number 001-33458)).	
		
10.13*	  	Offer Letter from Teradata Corporation to Robert Fair dated September 20, 2007 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K dated February 9, 2009 (SEC file number 001-33458)).	
		
10.13.1*	  	Amendment to the Offer Letter from Teradata Corporation to Robert Fair effective December 31, 2008 (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K dated February 9, 2009 (SEC file number 001-33458)).	
		
10.14*	  	Offer Letter from Teradata Corporation to Daniel Harrington dated September 20, 2007 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K dated February 9, 2009 (SEC file number 001-33458)).	
		
10.14.1*	  	Amendment to the Offer Letter from Teradata Corporation to Daniel Harrington effective December 31, 2008 (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K dated February 9, 2009 (SEC file number 001-33458)).	
		
10.15*	  	Offer Letter from Teradata Corporation to Darryl McDonald dated September 20, 2007 (incorporated by reference to Exhibit 10.21 to the Annual Report on Form 10-K dated February 28, 2013).	
		
10.15.1*	  	Amendment to the Offer Letter from Teradata Corporation to Darryl McDonald effective December 31, 2008 (incorporated by reference to Exhibit 10.21.1 to the Annual Report on Form 10-K dated February 28, 2013).	
		
10.16*	  	Employment contract with Hermann Wimmer, effective as of January 1, 2013 (incorporated by reference to Exhibit 10.22 to the Annual Report on Form 10-K dated February 28, 2013).	
 
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10.17	  	Term Loan Agreement dated April 5, 2011 among Teradata Corporation, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A., as Syndication Agent, and the other lenders party thereto (incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K filed on April 6, 2011), including Exhibits A-F thereto (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed on May 6, 2011).	
		
10.18	  	Revolving Credit Agreement, dated June 15, 2012 between Teradata Corporation, Bank of America, N.A., as Administrative Agent, JPMorgan Chase Bank, N.A., as Syndication Agent, The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Citibank, N.A., as Co-Documentation Agents, and the lenders party thereto (incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K dated June 20, 2012).	
		
21	  	Subsidiaries of Teradata Corporation.	
		
23.1	  	Consent of Independent Registered Public Accounting Firm.	
		
31.1	  	Certification pursuant to Rule 13a-14(a) dated February 27, 2014.	
		
31.2	  	Certification pursuant to Rule 13a-14(a) dated February 27, 2014.	
		
32	  	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated February, 27, 2014.	
		
101	  	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Statement of Income for the twelve month periods ended December 31, 2013, 2012 and 2011, (ii) the Consolidated Statement of Comprehensive Income for the twelve month periods ended December 31, 2013, 2012 and 2011, (iii) the Consolidated Balance Sheet at December 31, 2013 and 2012, (iv) the Consolidated Statement of Cash Flows for the twelve month periods ended December 31, 2013, 2012 and 2011, (v) the Consolidated Statement of Changes in Stockholders’ Equity for the twelve month periods ended December 31, 2013, 2012 and 2011, (vi) Financial Statement Schedule II, and (vii) the notes to the Condensed Consolidated Financial Statements.	

*	Management contracts or compensatory plans, contracts or arrangements.	
 
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TERADATA CORPORATION
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
(In millions)

Column A	  	Column B	 	  	Column C	 	  	Column D	 	  	Column E	 	
Description	  	Balance at
Beginning
of Period	 	  	Additions
Charged
to Costs &
Expenses	 	  	Charged
to Other
Accounts*	 	  	Deductions	 	  	Balance
at End of
Period	 	
Allowance for doubtful accounts	  				  				  				  				  				
Year ended December 31, 2013	  	$	18	  	  	$	1	  	  	$	0	  	  	$	1	  	  	$	18	  	
Year ended December 31, 2012	  	$	13	  	  	$	2	  	  	$	3	  	  	$	0	  	  	$	18	  	
Year ended December 31, 2011	  	$	9	  	  	$	5	  	  	$	0	  	  	$	1	  	  	$	13	  	
						
Deferred tax valuation allowance	  				  				  				  				  				
Year ended December 31, 2013	  	$	9	  	  	$	4	  	  	$	0	  	  	$	0	  	  	$	13	  	
Year ended December 31, 2012	  	$	0	  	  	$	9	  	  	$	0	  	  	$	0	  	  	$	9	  	
Year ended December 31, 2011	  	$	0	  	  	$	0	  	  	$	0	  	  	$	0	  	  	$	0	  	

*	The allowance for doubtful accounts increased by $3 million for the year ended December 31, 2012 due to reserves from acquired entities	
 
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 	 	TERADATA CORPORATION	
			
Date: February 27, 2014	 	By:	 	/s/ Stephen M. Scheppmann	
	 		 	Stephen M. Scheppmann	
	 		 	Executive Vice President and Chief Financial Officer	
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Signature	  	Title	
		
/s/ Michael F. Koehler	  	Director, President and Chief Executive Officer	
Michael F. Koehler	  		
		
/s/ Stephen M. Scheppmann	  	Executive Vice President and Chief Financial Officer	
Stephen M. Scheppmann	  	(Principal Financial and Accounting Officer)	
		
/s/ James M. Ringler	  	Chairman of the Board of Directors	
James M. Ringler	  		
		
/s/ Edward P. Boykin	  	Director	
Edward P. Boykin	  		
		
/s/ Nancy E. Cooper	  	Director	
Nancy E. Cooper	  		
		
/s/ Cary T. Fu	  	Director	
Cary T. Fu	  		
		
/s/ David E. Kepler	  	Director	
David E. Kepler	  		
		
/s/ Victor L. Lund	  	Director	
Victor L. Lund	  		
		
/s/ John G. Schwarz	  	Director	
John G. Schwarz	  		
		
/s/ William S. Stavropoulos	  	Director	
William S. Stavropoulos	  		
Date: February 27, 2014
 
88

Exhibit 10.9.6
Form of Stock Option Agreement
Under the Teradata 2012 Stock Incentive Plan
(Non-Statutory Stock Option)
You have been granted an option (the “Option”) under the Teradata 2012 Stock Incentive Plan (the “Plan”) to purchase from Teradata a number of shares of common stock of Teradata (“Shares”) at the price per Share as described on the stock option information page on the website of Teradata’s third party Plan administrator, subject to the terms and conditions of this Stock Option Agreement (this “Agreement”) and the Plan. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan.
1. Your right to exercise this Option will expire on the tenth (10 th ) anniversary (the “Expiration Date”) of the date of grant of this Option (the “Date of Grant”), unless sooner terminated due to the termination of your employment as described below. If the Expiration Date falls on a Saturday, Sunday or holiday, it will be deemed to occur on the next following business day.
2. This Option will vest, and the vested Shares (“Option Shares”) may be exercised, in equal annual installments (subject to mathematical rounding performed by Teradata’s third party Plan administrator) over the four year period commencing on the Date of Grant, such that all of the shares represented by this Option shall be vested on the fourth anniversary of the Date of Grant. This vesting schedule is contingent upon your continuous employment with Teradata or any of its affiliate companies (collectively referred to in this Agreement as “Teradata”) as of and until each of the vesting dates. In the event your employment with Teradata terminates prior to the fourth (4 th ) anniversary of the Date of Grant, except as otherwise provided below, this Option will terminate with respect to the then unvested portions.
3. This Option will vest in full if you (a) die while actively employed by Teradata, or (b) cease to be actively employed by Teradata as a result of a disability for which you qualify for benefits from the Teradata Long-Term Disability Plan or another long-term disability plan sponsored by Teradata (“Disability”). In such cases, this Option may be exercised until the later of (x) the third (3 rd ) anniversary of the date of death or Disability, or (y) the Expiration Date.
4. If you voluntarily terminate employment with Teradata due to Retirement (as defined in this Section 4), the unvested portion of this Option will terminate and be forfeited, and the vested portion may be exercised until the earlier of (a) the third (3 rd ) anniversary of your Retirement, or (b) the Expiration Date. For purposes of this Agreement, “Retirement” means termination by you of employment at or after age 55 other than, if applicable to you, for Good Reason (as described below) following a Change in Control.
5. Notwithstanding any provision in this Agreement to the contrary, in the event a Change in Control occurs and this Option award is not assumed, converted or replaced by the continuing entity, the Option shall vest immediately prior to the Change in Control. In the event of a Change in Control wherein this Option award is assumed, if Teradata terminates your employment other than for Cause or Disability during the twenty-four (24) months following the Change in Control, this Option shall vest in full immediately upon your termination of employment, and the Option shall remain exercisable until the later of (a) the earlier of the one (1) year anniversary of your termination of employment or the Expiration Date, or (b) the applicable date determined under Sections 3 and 4 above. If you are a participant in the Teradata Change in Control Severance Plan, a Teradata Severance Policy or a similar arrangement that defines “Good Reason” in the context of a resignation following a Change in Control and you terminate your employment for Good Reason as so defined within twenty-four (24) months following a Change in Control, this Option shall vest immediately upon your termination of employment, and the Option Shares shall remain exercisable until the earlier of (a) the Expiration Date, or (b) the first anniversary of your termination of employment.

6. If your Teradata employment is involuntarily terminated for Cause at any time, this Option will automatically terminate and all unexercised vested and unvested Option Shares will be forfeited and will not be exercisable as of the date of such termination. Further, if your employment is terminated by Teradata for Cause, then, to the extent demanded by the Committee in its sole discretion and permitted by applicable law, you shall (a) return to Teradata all Option Shares that you have not disposed of that have been acquired pursuant to this Agreement, in exchange for payment by Teradata of any amount actually paid by you for the Option Shares; and (b) with respect to any Option Shares acquired pursuant to this Agreement that you have disposed of, pay to Teradata in cash the excess of (i) the Fair Market Value of such Option Shares on the date acquired, over (ii) any amount actually paid by you for the Option Shares.
7. In the event of termination of your employment with Teradata for any other reason, including but not limited to reduction-in-force, this Option will automatically terminate, any unvested Option Shares will be forfeited and the vested portion of this Option may be exercised no later than the earlier of (a) the 59 th day after the date of termination of your employment, or (b) the Expiration Date.
8. In the event that you die after your termination of employment by Teradata, but while this Option remains exercisable, this Option may be exercised, by your beneficiary or heir, until the one (1) year anniversary of the date of your death, regardless of the Expiration Date.
9. By accepting this award, except to the extent that disclosure is required or permitted by applicable law or regulation, you agree to keep this Agreement confidential and not to disclose its contents to anyone except your attorney, your immediate family, or your financial consultant, provided such persons agree in advance to keep such information confidential and not to disclose it to others. The Option will be forfeited if you violate the terms of this Section 9.
10. This Option will be cancelled if the Committee determines that you engaged in misconduct in connection with your employment with Teradata.
11. This Option shall be exercised in accordance with procedures established by the administrator of Teradata’s stock option program, including broker-assisted cashless exercises. In countries where deemed mandatory, upon exercise, the purchase price will be paid by simultaneous sale of the Option Shares exercised, in such a manner that Teradata is not subject to taxation upon grant of the option award. Any taxes required by law to be withheld or paid with respect to exercise of this Option shall be deducted from the proceeds of the Option exercise. If Teradata or the administrator of the stock option program is unable to withhold required taxes from the proceeds of the Option exercise, you or your legal representative or beneficiary will be required to pay such amounts, and Teradata may take any action necessary to satisfy such obligation, including but not limited to withholding cash from compensation otherwise due to you or your beneficiary, or withholding from the Option Shares exercised such numbers of Option Shares as it, in its sole discretion, shall determine to be required to satisfy such withholding requirements.
12. Within a reasonable period after any vested portion of this Option is exercised, Teradata will instruct its Transfer Agent and/or third party Plan administrator to credit you or your successor with the number of Option Shares you exercised. Neither you nor your legal representative shall be, or have any of the rights and privileges of, a stockholder of Teradata in respect of any Shares purchasable upon the exercise of this Option, in whole or in part, unless and until Teradata credits you with, or causes a credit to you of, such Option Shares.
13. This Option is not transferable by you other than by beneficiary designation, will or the laws of descent and distribution, and during your lifetime this Option may be exercised only by you or your guardian or legal representative.

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14. You may designate one or more beneficiaries to receive all or part of this Option in case of your death, and you may change or revoke such designation at any time. In the event of your death, any portion of this Option that is subject to such a designation will be distributed to such beneficiary or beneficiaries in accordance with this Agreement. Any other portion of this Option not designated by you shall be distributable to your estate. If there is any question as to the legal right of any beneficiary to receive a distribution hereunder, the Option Shares in question may be purchased by and distributed to your estate, in which event Teradata shall have no further liability to anyone with respect to such Option Shares.
15. In exchange for this Option, you agree that during your employment with Teradata and, to the extent permitted by applicable law, for a period of twelve (12) months after termination of your Teradata employment (or if applicable law mandates a maximum time that is shorter than twelve months, then for a period of time equal to that shorter maximum period), regardless of the reason for termination, you will not, without the prior written consent of the Chief Executive Officer of Teradata, (a) render services directly or indirectly to, or become employed by, any Competing Organization (as defined in this Section 15) to the extent such services or employment involves the development, manufacture, marketing, advertising, sale or servicing of any product, process, system or service which is the same or similar to, or competes with, a product, process, system or service manufactured, sold, serviced or otherwise provided by Teradata to its customers and upon which you worked or in which you participated during the last two (2) years of your Teradata employment; (b) directly or indirectly recruit, hire, solicit or induce, or attempt to induce, any exempt employee of Teradata to terminate his or her employment with Teradata or otherwise cease his or her relationship with Teradata; or (c) solicit the business of any firm or company with which you worked during the preceding two (2) years while employed by Teradata, including customers of Teradata. If you breach the terms of this Section 15, you agree that in addition to any liability you may have for damages arising from such breach, this Option will be immediately cancelled, all vested and unexercised Option Shares shall be forfeited, and, to the extent permitted by applicable law, you will pay to Teradata the difference between the exercise price and the Fair Market Value on the date of exercise of any Option Shares received in connection with the exercise of this Option on or after the date which is twelve (12) months prior to the date of the breach.
As used in this Section 15, “Competing Organization” means an organization identified as a Competing Organization by the Chief Executive Officer of Teradata at the beginning of the year in which your employment with Teradata terminates, and any other person or organization which is engaged in or about to become engaged in research on or development, production, marketing, leasing, selling or servicing of a product, process, system or service which is the same or similar to or competes with a product, process, system or service manufactured, sold, serviced or otherwise provided by Teradata to its customers. The list of Competing Organizations identified by the Chief Executive Officer is maintained by the Teradata Law Department.
16. By accepting this Option, you agree that, where permitted by local law, any controversy or claim arising out of or related to your employment relationship with Teradata shall be resolved by arbitration. If you are employed in the United States, the arbitration shall be pursuant to the Teradata dispute resolution policy and the then current rules of the American Arbitration Association and shall be held in the city of the location of the headquarters of Teradata. If you are employed outside the United States, where permitted by local law, the arbitration shall be conducted in the regional headquarters city of the business unit in which you work. The arbitration shall be held before a single arbitrator who is an attorney knowledgeable in employment law. The arbitrator’s decision and award shall be final and binding and may be entered in any court having jurisdiction. For arbitrations held in the United States, issues of arbitrability shall be determined in accordance with the federal substantive and procedural laws relating to arbitration; all other aspects shall be interpreted in accordance with the laws of the state in which the headquarters of Teradata is located. Each party shall bear its own attorney’s fees associated with the arbitration and other costs and expenses of the arbitration shall be borne as provided by the rules of the American Arbitration Association for an arbitration held in the United States, or similar applicable rules for an arbitration held outside the United States.

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Notwithstanding the preceding subparagraph, you acknowledge that if you breach Section 15, Teradata will sustain irreparable injury and will not have an adequate remedy at law. As a result, you agree that in the event of your breach of Section 15 Teradata may, in addition to any other remedies available to it, bring an action in a court of competent jurisdiction for equitable relief to preserve the status quo pending appointment of an arbitrator and completion of an arbitration. You stipulate to the exclusive jurisdiction and venue of the state and federal courts located in the location from which Teradata’s Option program is administered for any such proceedings.
17. By accepting this award, you acknowledge and agree that, notwithstanding any other provision of this Agreement to the contrary, you may be required to forfeit or repay any or all of the Option Shares pursuant to the terms of the Teradata Corporation Compensation Recovery Policy (or a successor policy), as the same may be amended to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act or any rules or regulations issued by the Securities and Exchange Commission rule or applicable securities exchange.
18. The provisions of this Agreement are severable. If any provision of this Agreement is held to be unenforceable or invalid by a court or other tribunal of competent jurisdiction (including an arbitration tribunal), it shall be severed and shall not affect any other part of this Agreement, which will be enforced as permitted by law.
19. The terms of this Option as evidenced by this Agreement may be amended by the Teradata Board of Directors or the Committee at any time.
20. This Option and the number and kind of Shares covered by this Agreement shall be subject to adjustment as provided in Section 14 of the Plan.
21. Nothing contained in this Agreement shall confer upon you any right with respect to continuance of employment by Teradata, nor limit or affect in any manner the right of Teradata to terminate your employment or adjust your compensation.
22. In the event of a conflict between the terms and conditions of this Agreement and the terms and conditions of the Plan, the terms and conditions of the Plan shall prevail, except that with respect to matters involving choice of law the terms and conditions of Section 16 of this Agreement shall prevail.
23. By accepting any benefit under this Agreement, you and each person claiming under or through you shall be conclusively deemed to have indicated their acceptance and ratification of, and consent to, all of the terms and conditions of this Agreement and the Plan and any action taken under this Agreement or the Plan by the Committee, the Board or Teradata, in any case in accordance with the terms and conditions of this Agreement.
24. Teradata may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by Teradata or a third party designated by Teradata.

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Exhibit 10.9.7
Form of Stock Option Agreement
For Non-U.S. Employees
Under the Teradata 2012 Stock Incentive Plan
(Non-Statutory Stock Option)
You have been granted an option (the “Option”) under the Teradata 2012 Stock Incentive Plan (the “Plan”) to purchase from Teradata a number of shares of common stock of Teradata (“Shares”) at the price per Share as described on the stock option information page on the website of Teradata’s third party Plan administrator, subject to the terms and conditions of this Stock Option Agreement (this “Agreement”) and the Plan. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan.
1. Your right to exercise this Option will expire on the tenth (10 th ) anniversary (the “Expiration Date”) of the date of grant of this Option (the “Date of Grant”), unless sooner terminated due to the termination of your employment as described below. If the Expiration Date falls on a Saturday, Sunday or holiday, it will be deemed to occur on the next following business day.
2. This Option will vest, and the vested Shares (“Option Shares”) may be exercised, in equal annual installments (subject to mathematical rounding performed by Teradata’s third party Plan administrator) over the four year period commencing on the Date of Grant, such that all of the shares represented by this Option shall be vested on the fourth anniversary of the Date of Grant. This vesting schedule is contingent upon your continuous employment with Teradata or any of its affiliate companies (collectively referred to in this Agreement as “Teradata”) as of and until each of the vesting dates. In the event your employment with Teradata terminates prior to the fourth (4 th ) anniversary of the Date of Grant, except as otherwise provided below, this Option will terminate with respect to the then unvested portions.
3. This Option will vest in full if you (a) die while actively employed by Teradata or (b) cease to be actively employed by Teradata as a result of a disability for which you qualify for benefits from the Teradata Long-Term Disability Plan or another long-term disability plan sponsored by Teradata (“Disability”). In such cases, this Option may be exercised until the later of (x) the third (3 rd ) anniversary of the date of death or Disability, or (y) the Expiration Date.
4. If you voluntarily terminate employment with Teradata due to Retirement (as defined in this Section 4), the unvested portion of this Option will terminate and be forfeited, and the vested portion may be exercised until the earlier of (a) the third (3 rd ) anniversary of your Retirement, or (b) the Expiration Date. For purposes of this Agreement, “Retirement” means termination by you of employment (other than, if applicable to you, for Good Reason (as described below) following a Change in Control) at or after age 55 with the consent of the Compensation & Human Resource Committee of the Teradata Board of Directors (the “Committee”), unless otherwise provided for by mandatory local law provisions.
5. Notwithstanding any provision in this Agreement to the contrary, in the event a Change in Control occurs and this Option award is not assumed, converted or replaced by the continuing entity, the Option shall vest immediately prior to the Change in Control. In the event of a Change in Control wherein this Option award is assumed, if Teradata terminates your employment other than for Cause or Disability during the twenty-four (24) months following the Change in Control, this Option shall vest in full immediately upon your termination of employment, and the Option shall remain exercisable until the later of (a) the earlier of the one (1) year anniversary of your termination of employment or the Expiration Date, or (b) the applicable date determined under Sections 3 and 4 above. If you are a participant in the Teradata Change in Control Severance Plan, a Teradata Severance Policy or a similar arrangement that defines “Good Reason” in the context of a resignation following a Change in Control and you terminate your employment for Good Reason as so defined within twenty-four (24) months following a Change in Control, this Option shall vest immediately upon your termination of employment, and the Options shall remain exercisable until the earlier of (a) the Expiration Date, or (b) the first anniversary of your termination of employment.

6. If your Teradata employment is involuntarily terminated for Cause at any time, this Option will automatically terminate and all unexercised vested and unvested Option Shares will be forfeited and will not be exercisable as of the date of such termination. Further, if your employment is terminated by Teradata for Cause, then, to the extent demanded by the Committee in its sole discretion and permitted by applicable law, you shall (a) return to Teradata all Option Shares that you have not disposed of that have been acquired pursuant to this Agreement, in exchange for payment by Teradata of any amount actually paid by you for the Option Shares; and (b) with respect to any Option Shares acquired pursuant to this Agreement that you have disposed of, pay to Teradata in cash the excess of (i) the Fair Market Value of such Option Shares on the date acquired, over (ii) any amount actually paid by you for the Option Shares.
7. If you terminate your employment with Teradata for any other reason, including but not limited to reduction-in-force, this Option will automatically terminate, any unvested Options will be forfeited and the vested portion of this Option may be exercised no later than the earlier of (a) the 59 th day after the date of termination of your employment or (b) the Expiration Date.
8. In the event that you die after your termination of employment by Teradata, but while this Option remains exercisable, this Option may be exercised, by your heirs or your estate, until the one (1) year anniversary of the date of your death, regardless of the Expiration Date.
9. By accepting this Award, except to the extent that disclosure is required or permitted by applicable law or regulation, you agree to keep this Agreement confidential and not to disclose its contents to anyone except your attorney, your immediate family, or your financial consultant provided such persons agree in advance to keep such information confidential and not to disclose it to others. The Option will be forfeited if you violate the terms of this Section 9.
10. This Option will be cancelled if the Committee determines that you engaged in misconduct in connection with your employment with Teradata.
11. This Option shall be exercised in accordance with procedures established by the administrator of Teradata’s stock option program, including broker-assisted cashless exercises.
12. Regardless of any action Teradata or your employer who is a Teradata affiliate (the “Employer”) takes with respect to any or all income tax, payroll tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you or deemed by Teradata or the Employer to be an appropriate charge to you even if technically due by Teradata or the Employer (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items is and remains your responsibility and may exceed the amount actually withheld by Teradata or the Employer. You also agree that you solely are responsible for filing all relevant documentation that may be required of you in relation to this Option or any Tax-Related Items, such as but not limited to personal income tax returns or reporting statements in relation to the grant, vesting or exercise of this Option or the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends. You further acknowledge that Teradata and/or the Employer: (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option grant, including the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (b) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate your liability for such Tax-Related Items or to achieve any particular tax result. Further, if you have become subject to tax in more than one jurisdiction between the Date of Grant and the date of any relevant taxable event, you acknowledge that Teradata and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
 
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Prior to any relevant taxable or tax withholding event, as applicable, you shall pay or make adequate arrangements satisfactory to Teradata or the Employer, to satisfy all Tax-Related Items. In this regard, you authorize Teradata and/or the Employer, or their respective agents, at their discretion and pursuant to such procedures as Teradata may specify from time to time, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:
(a) withholding from any wages or other cash compensation paid to you by Teradata and/or the Employer;
(b) withholding otherwise deliverable Shares to be issued upon exercise of the Option; or
(c) withholding from the proceeds of the sale of Shares acquired upon exercise of the Option either through a voluntary sale or through a mandatory sale arranged by Teradata (on your behalf pursuant to this authorization).
To avoid negative accounting treatment, Teradata may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, you shall be deemed to have been issued the full number of Shares subject to the exercised Option, notwithstanding that a number of Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of your participation in the Plan. You shall pay to Teradata and/or the Employer any amount of Tax-Related Items that Teradata and/or the Employer may be required to withhold as a result of your participation in the Plan that cannot be satisfied by the means previously described. Teradata may refuse to honor the exercise and/or deliver to you any Shares pursuant to your Option if you fail to comply with your obligations in connection with the Tax-Related Items as described in this Section 12.
13. Within a reasonable period after any vested portion of this Option is exercised, Teradata will instruct its Transfer Agent and/or third party Plan administrator to credit you or your successor with the number of Option Shares you exercised. Neither you nor your legal representative shall be, or have any of the rights and privileges of, a stockholder of Teradata in respect of any Shares purchasable upon the exercise of this Option, in whole or in part, unless and until Teradata credits you with, or causes a credit to you of, such Option Shares.
14. You understand and agree that any cross-border cash remittance made to exercise this Option or transfer of proceeds received upon the sale of Shares must be made through a locally authorized financial institution or registered foreign exchange agency and may require you to provide to such financial institution or agency certain information regarding the transaction. Moreover, you understand and agree that Teradata is neither responsible for any foreign exchange fluctuation between your local currency and the United States Dollar (US $) (or the selection by Teradata or the Employer in its sole discretion of an applicable foreign currency exchange rate) that may affect the value of this Option (or the calculation of income or any Tax-Related Items thereunder) nor liable for any decrease in the value of Shares or this Option. In addition, the ownership of Shares or assets and holding of a bank or brokerage account abroad may subject you to reporting requirements imposed by tax, banking, and/or other authorities in your country, and you understand and agree that you solely are responsible for complying with such requirements.
15. This Option is not transferable by you other than by will or the laws of descent and distribution, and during your lifetime this Option may be exercised only by you or your guardian or legal representative.
 
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16. In exchange for this Option, you agree that during your employment with Teradata and, to the extent permitted by applicable law, for a period of twelve (12) months after termination of your Teradata employment (or if applicable law mandates a maximum time that is shorter than twelve months, then for a period of time equal to that shorter maximum period), regardless of the reason for termination, you will not, without the prior written consent of the Chief Executive Officer of Teradata, (a) render services directly or indirectly to, or become employed by, any Competing Organization (as defined in this Section 16) to the extent such services or employment involves the development, manufacture, marketing, advertising, sale or servicing of any product, process, system or service which is the same or similar to, or competes with, a product, process, system or service manufactured, sold, serviced or otherwise provided by Teradata to its customers and upon which you worked or in which you participated during the last two (2) years of your Teradata employment; (b) directly or indirectly recruit, hire, solicit or induce, or attempt to induce, any exempt employee of Teradata to terminate his or her employment with Teradata or otherwise cease his or her relationship with Teradata; or (c) solicit the business of any firm or company with which you worked during the preceding two (2) years while employed by Teradata, including customers of Teradata. If you breach the terms of this Section 16, you agree that in addition to any liability you may have for damages arising from such breach, this Option will be immediately cancelled, all vested and unexercised Option Shares shall be forfeited, and, to the extent permitted by applicable law, you will pay to Teradata or the Employer, as directed, the difference between the exercise price and the Fair Market Value on the date of exercise of any Option Shares received in connection with the exercise of this Option on or after the date which is twelve (12) months prior to the date of the breach. You understand and agree that Teradata has the right to satisfy your obligation to refund the difference between the exercise price and Fair Market Value by any method or combination of methods described in Section 12.
As used in this Section 16, “Competing Organization” means an organization identified as a Competing Organization by the Chief Executive Officer of Teradata at the beginning of the year in which your employment with Teradata terminates, and any other person or organization which is engaged in or about to become engaged in research on or development, production, marketing, leasing, selling or servicing of a product, process, system or service which is the same or similar to or competes with a product, process, system or service manufactured, sold, serviced or otherwise provided by Teradata to its customers. The list of Competing Organizations identified by the Chief Executive Officer is maintained by the Teradata Law Department.
17. In accepting the grant, you acknowledge that: (a) the Plan is established voluntarily by Teradata, it is discretionary in nature and it may be modified, suspended or terminated by Teradata at any time; (b) the grant of the Options is voluntary and occasional and does not create any contractual or other right to receive future grants of Options, or benefits in lieu of Options, even if Options have been granted repeatedly in the past; (c) all decisions with respect to future Option grants, if any, will be at the sole discretion of Teradata; (d) your participation in the Plan shall not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate your employment relationship at any time; (e) your participation in the Plan is voluntary; (f) the Option and the Shares subject to the Option are not intended to replace any pension rights or compensation; (g) the Option is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to Teradata and which is outside the scope of your employment contract, if any; (h) the Options are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way, to past services for Teradata; (i) the Option grant and your participation in the Plan will not be interpreted to form an employment contract or relationship with Teradata; (j) the future value of the underlying Shares is unknown and cannot be predicted with certainty; (k) if the underlying Shares do not increase in value, the Option will have no value; (l) if you
 
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exercise your Option and obtain Shares, the value of those Shares acquired upon exercise may increase or decrease in value, even below the exercise price; (m) in consideration of the grant of the Option, no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting from termination of your employment by Teradata (for any reason whatsoever and whether or not in breach of local labor laws) and you irrevocably release Teradata from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting the Award, you shall be deemed irrevocably to have waived your entitlement to pursue such claim; (n) in the event of involuntary termination of your employment (whether or not in breach of local labor laws), your right to receive Options and vest in Options under the Plan, if any, will terminate effective as of the date that you are no longer actively employed and will not be extended by any notice period mandated under local law ( e.g., active employment would not include any period of “garden leave” or similar period pursuant to local law); furthermore, in the event of involuntary termination of employment (whether or not in breach of local labor laws), your right to exercise the Option after termination of employment, if any, will be measured by the date of termination of your active employment and will not be extended by any notice period mandated under local law; the Committee shall have the exclusive discretion to determine when you are no longer actively employed for purposes of your Option grant; (o) Teradata is not providing any tax, legal or financial advice, nor is Teradata making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares; and (p) you are hereby advised to consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan.
18. You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this Agreement and any other Option grant materials by and among, as applicable, the Employer and Teradata for the exclusive purpose of implementing, administering and managing your participation in the Plan.
You understand that Teradata and the Employer may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in Teradata, details of all Options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the purpose of implementing, administering and managing the Plan (“Data”).
You understand that Data will be transferred to any third parties assisting Teradata with the implementation, administration and management of the Plan. You understand the recipients of the Data may be located in your country, in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative. You authorize Teradata and the recipients which may assist Teradata (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing your participation in the Plan. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. You understand, however, that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.
 
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19. You understand and agree that you are responsible at all times for understanding and following Teradata’s policies with respect to insider trading, as well as any insider trading restrictions imposed by local law.
20. The provisions of this Agreement are severable. If any provision of this Agreement is held to be unenforceable or invalid, in whole or in part, it shall be severed and shall not affect any other part of this Agreement, which will be enforced as permitted by law.
21. The terms of this Option as evidenced by this Agreement may be amended by the Teradata Board of Directors or the Committee at any time.
22. This Option and the number and kind of Shares covered by this Agreement shall be subject to adjustment as provided in Section 14 of the Plan.
23. In the event of a conflict between the terms and conditions of this Agreement and the terms and conditions of the Plan, the terms and conditions of the Plan shall prevail.
24. The Option and the provisions of this Agreement are governed by, and subject to, the laws of the State of Delaware, U.S.A., without reference to principles of conflicts of law, as provided in the Plan.
For purposes of litigating any dispute that arises under this grant or this Agreement, the parties hereby submit and consent to the exclusive jurisdiction of the State of Ohio and agree that such litigation shall be conducted only in the courts of Montgomery County, Ohio or the federal courts for the United States for the Southern District of Ohio, and no other courts, where this grant of Options is made and/or to be performed.
25. Teradata may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by Teradata or a third party designated by Teradata.
26. If you have received this Agreement or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control.
27. Notwithstanding any provision herein, your participation in the Plan shall be subject to any special terms and conditions as set forth in any appendix for your country (the “Appendix”). Moreover, if you relocate to one of the countries included in the Appendix, the special terms and conditions for such country will apply to you, to the extent Teradata determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.
28. Teradata reserves the right to impose other requirements on your participation in the Plan, on the Options and any Shares acquired under the Plan, to the extent Teradata determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
29. By accepting any benefit under this Agreement, you and each person claiming under or through you shall be conclusively deemed to have indicated their acceptance and ratification of, and consent to, all of the terms and conditions of this Agreement and the Plan and any action taken under this Agreement or the Plan by the Committee, the Board or Teradata, in any case in accordance with the terms and conditions of this Agreement.
 
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30. By accepting this award, you acknowledge and agree that, notwithstanding any other provision of this Agreement to the contrary, you may be required to forfeit or repay any or all of the Option Shares pursuant to the terms of the Teradata Corporation Compensation Recovery Policy (or a successory policy), as the same may be amended to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act or any rules or regulations issued by the Securities and Exchange Commission rule or applicable securities exchange.
 
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APPENDIX
Form of Stock Option Agreement
For Non-U.S. Employees
Under the Teradata 2012 Stock Incentive Plan
(Non-Statutory Stock Option)
This Appendix includes additional terms and conditions that govern the Option granted to you under the Plan if you reside outside the U.S. and/or in one of the countries listed below. Certain capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan and/or the Agreement.
This Appendix may also include information you should be aware of with respect to your participation in the Plan. The information is based on the securities, exchange control and other laws in effect as of April 2012; however, such laws are often complex and change frequently. As a result, Teradata strongly recommends that you not rely on the Appendix as the only source of information relating to the consequences of your participation in the Plan because the information may be out of date at the time that you exercise your Option or sell Shares acquired under the Plan. In addition, the information contained herein is general in nature and may not apply to your particular situation, and Teradata is not in a position to assure you of any particular result. Accordingly, you are advised to seek appropriate professional legal and tax advice as to how the relevant laws in your country may apply to your situation. Finally, if you are a citizen or resident of a country other than the one in which you are currently working, the information contained herein may not be applicable to you.
Securities Law Notice: Neither Teradata nor the Shares are registered with any local stock exchange or under the control of any local securities regulator outside the U.S. This Agreement (of which this Appendix is a part), the Plan, and any other communications or materials that you may receive regarding participation in the Plan do not constitute advertising or an offering of securities outside the U.S. The issuance of securities described in any Plan-related documents is not intended for offering or public circulation in your jurisdiction.
 
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Exhibit 10.9.8
Form of Restricted Share Unit Agreement
Under the Teradata 2012 Stock Incentive Plan
You have been awarded a number of restricted Share Units (the “Share Units”) under the Teradata 2012 Stock Incentive Plan (the “Plan”), as described on the restricted share unit information page on the website of Teradata’s third party Plan administrator, subject to the terms and conditions of this Restricted Share Unit Agreement (this “Agreement”) and the Plan. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan.
1. The Share Units will become non-forfeitable (“Vested”) on the third anniversary of the Date of Grant (the “Vesting Date”), provided that you are continuously employed by Teradata or any of its affiliate companies (referred to collectively herein as “Teradata”) until the Vesting Date.
2. If your employment with Teradata terminates prior to your Vesting Date due to (i) your death, or (ii) cessation of active employment by Teradata as a result of a disability for which you qualify for benefits under the Teradata Long-Term Disability Plan or another long-term disability plan sponsored by Teradata (“Disability”), then, upon such termination of employment, your Share Units will become fully Vested. If your employment with Teradata terminates prior to your Vesting Date due to (a) your Retirement, or (b) reduction-in-force; then, upon such termination of employment, a pro rata portion of the Share Units will become fully Vested. For purposes of this Agreement, “Retirement” means termination by you of your employment with Teradata (other than, if applicable to you, for Good Reason (as described below) following a Change in Control) at or after age 55 with the consent of the Compensation & Human Resource Committee of the Teradata Board of Directors (the “Committee”). The pro rata portion of the Share Units that will become fully Vested will be determined by multiplying the total number of the Share Units awarded pursuant to this Agreement by a fraction, the numerator of which is the number of full and partial months of employment that you completed after the date of grant of this award (the “Date of Grant”), and the denominator of which is the total number of months during the period beginning on the Date of Grant and ending on your Vesting Date.
Notwithstanding any provision in this Agreement to the contrary, in the event a Change in Control occurs and this restricted Share Unit award is not assumed, converted or replaced by the continuing entity, the Share Units shall become fully Vested immediately prior to the Change in Control. In the event of a Change in Control wherein this restricted Share Unit award is assumed, if your employment is terminated by Teradata other than for Cause or Disability during the twenty-four (24) months following the Change in Control, the Share Units shall become fully Vested immediately upon your termination of employment. If you are a participant in the Teradata Change in Control Severance Plan, a Teradata Severance Policy or a similar arrangement that defines “Good Reason” in the context of a resignation following a Change in Control and you terminate your employment for Good Reason as so defined within twenty-four (24) months following a Change in Control, the Share Units shall become fully Vested immediately upon your termination of employment.
3. Except as may be otherwise provided in this Section 3, when Vested, the Share Units will be paid to you within 30 days after the Vesting Date in Shares (such that one Share Unit equals one Share) or, in Teradata’s sole discretion, in an amount of cash equal to the Fair Market Value of such number of Shares as of the Vesting Date (or such earlier date upon which the Share Units have become Vested pursuant to Section 2 of this Agreement), or a combination thereof.
To the extent that the Share Units become Vested pursuant to Section 2 of this Agreement and your right to receive payment of Vested Share Units constitutes a “deferral of compensation” within the meaning of Section 409A of the Code, then payment of such Share Units shall be subject to the following

rules: (i) the Share Units will be paid to you within 30 days after the earlier of (a) your “separation from service” within the meaning of Section 409A of the Code, or (b) the Vesting Date; (ii) notwithstanding the foregoing, if the Share Units become payable as a result of your “separation from service” within the meaning of Section 409A of the Code (other than as a result of death), and you are a “specified employee” as determined under Teradata’s policy for determining specified employees on the date of separation from service, the Share Units shall be paid on the first business day after the date that is six months following your “separation from service” within the meaning of Section 409A of the Code; and (iii) Teradata may, in its sole discretion and to the extent permitted by Treasury Regulation § 1.409A-3(j)(4)(ix)(B), terminate this Agreement and pay all outstanding Share Units to you within 30 days before or 12 months after a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of Teradata within the meaning of Section 409A of the Code.
4. By accepting this award, unless disclosure is required or permitted by applicable law or regulation, you agree to keep this Agreement confidential and not to disclose its contents to anyone except your attorney, your immediate family, or your financial consultant, provided such persons agree in advance to keep such information confidential and not disclose it to others. The Share Units will be forfeited if you violate the terms and conditions of this Section 4.
5. At all times before your Vesting Date, the Share Units may not be sold, transferred, pledged, assigned or otherwise alienated, except by beneficiary designation, will or by the laws of descent and distribution upon your death. As soon as practicable after your Vesting Date, if Share Units are to be paid in the form of Shares, Teradata will instruct its Transfer Agent and/or its third party Plan administrator to record on your account the number of Shares underlying the number of Share Units to be paid to you in Shares and such Shares will be freely transferable.
6. Any cash dividends declared before your Vesting Date on the Shares underlying the Share Units shall not be paid currently, but shall be converted into additional Share Units. Any Share Units resulting from such conversion (the “Dividend Units”) will be considered Share Units for purposes of this Agreement and will be subject to all of the terms, conditions and restrictions set forth herein. As of each date that Teradata would otherwise pay the declared dividend on the Shares underlying the Share Units (the “Dividend Payment Date”) in the absence of the reinvestment requirements of this Section 6, the number of Dividend Units will be determined by dividing the amount of dividends otherwise attributable to the Share Units but not paid on the Dividend Payment Date by the Fair Market Value of Teradata’s common stock on the Dividend Payment Date.
7. Teradata has the right to deduct or cause to be deducted from, or collect or cause to be collected, with respect to the taxation of any Share Units, any federal, state, local, foreign or other taxes required by the laws of the United States or any other country to be withheld or paid with respect to the Share Units, and you or your legal representative or beneficiary will be required to pay any such amounts. By accepting this award, you consent and direct that, if you are paid through Teradata’s United States payroll system at the time the Share Units vest, Teradata’s stock plan administrator may withhold or sell the number of Share Units from your award as Teradata, in its sole discretion, deems necessary to satisfy such withholding requirements. If you are paid through a non-United States Teradata payroll system, you agree that Teradata may satisfy any withholding obligations by withholding cash from your compensation otherwise due to you or by any other action as it may deem necessary to satisfy any withholding obligation.
8. The Share Units will be forfeited if your employment is terminated by Teradata for Cause or if the Committee determines that you engaged in misconduct in connection with your employment with Teradata. Further, if your employment is terminated by Teradata for Cause, then, to the extent demanded

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by the Committee in its sole discretion and permitted by applicable law, you shall (a) return to Teradata all Shares that you have not disposed of that have been acquired pursuant to this Agreement, and (b) with respect to any Shares acquired pursuant to this Agreement that you have disposed of, pay to Teradata in cash the Fair Market Value of such Shares on the date acquired.
9. In exchange for the Share Units, you agree that during your employment with Teradata and, to the extent permitted by applicable law, for a period of twelve (12) months after the termination of employment (or if applicable law mandates a maximum time that is shorter than twelve months, then for a period of time equal to that shorter maximum period), regardless of the reason for termination, you will not, without the prior written consent of the Chief Executive Officer of Teradata, (a) render services directly or indirectly to, or become employed by, any Competing Organization (as defined in this Section 9 below) to the extent such services or employment involves the development, manufacture, marketing, sale, advertising or servicing of any product, process, system or service which is the same or similar to, or competes with, a product, process, system or service manufactured, sold, serviced or otherwise provided by Teradata to its customers and upon which you worked or in which you participated during the last two (2) years of your Teradata employment; (b) directly or indirectly recruit, hire, solicit or induce, or attempt to induce, any exempt employee of Teradata to terminate his or her employment with or otherwise cease his or her relationship with Teradata; or (c) solicit the business of any firm or company with which you worked during the preceding two (2) years while employed by Teradata, including customers of Teradata. If you breach the terms of this Section 9, you agree that in addition to any liability you may have for damages arising from such breach, any unvested Share Units will be immediately forfeited, and, to the extent permitted by applicable law, you agree to pay to Teradata the Fair Market Value of any Share Units that Vested or cash paid to you in lieu of such Share Units during the twelve (12) months prior to the date of your termination of employment. Such Fair Market Value shall be determined as of your Vesting Date.
As used in this Section 9, “Competing Organization” means an organization identified as a Competing Organization by the Chief Executive Officer of Teradata for the year in which your employment with Teradata terminates, and any other person or organization which is engaged in or about to become engaged in research on or development, production, marketing, leasing, selling or servicing of a product, process, system or service which is the same or similar to or competes with a product, process, system or service manufactured, sold, serviced or otherwise provided by Teradata to its customers. The list of Competing Organizations identified by the Chief Executive Officer is maintained by the Teradata Law Department.
10. By accepting this award, you agree that, where permitted by local law, any controversy or claim arising out of or related to your employment relationship with Teradata shall be resolved by first exhausting any Teradata internal dispute resolution process and policy, and then by arbitration pursuant to such policy. If you are employed in the United States, the arbitration shall be pursuant to the Teradata dispute resolution policy and the then current rules of the American Arbitration Association and shall be held in the city of the location of the headquarters of Teradata. If you are employed outside the United States, where permitted by local law, the arbitration shall be conducted in the regional headquarters city of the business unit in which you work. The arbitration shall be held before a single arbitrator who is an attorney knowledgeable in employment law. The arbitrator’s decision and award shall be final and binding and may be entered in any court having jurisdiction. For arbitrations held in the United States, issues of arbitrability shall be determined in accordance with the federal substantive and procedural laws relating to arbitration; all other aspects shall be interpreted in accordance with the laws of the state in which the headquarters of Teradata is located. Each party shall bear its own attorney’s fees associated with the arbitration, and other costs and expenses of the arbitration shall be borne as provided by the rules of the American Arbitration Association for an arbitration held in the United States, or similar applicable rules for an arbitration held outside the United States.

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Notwithstanding the preceding subparagraph, you acknowledge that if you breach Section 9, Teradata will sustain irreparable injury and will not have an adequate remedy at law. As a result, you agree that in the event of your breach of Section 9 Teradata may, in addition to any other remedies available to it, bring an action in a court of competent jurisdiction for equitable relief to preserve the status quo pending appointment of an arbitrator and completion of an arbitration. You stipulate to the exclusive jurisdiction and venue of the state and federal courts located in the location from which Teradata’s equity program is administered, for any such proceedings.
11. You may designate one or more beneficiaries to receive all or part of any Share Units to be distributed in case of your death, and you may change or revoke such designation at any time. In the event of your death, any Share Units distributable hereunder that are subject to such a designation will be distributed to such beneficiary or beneficiaries in accordance with this Agreement. Any other Share Units not designated by you will be distributable to your estate. If there is any question as to the legal right of any beneficiary to receive a distribution hereunder, the Share Units in question may be transferred to your estate, in which event Teradata will have no further liability to anyone with respect to such Share Units.
12. The provisions of this Agreement are severable. If any provision of this Agreement is held to be unenforceable or invalid by a court or other tribunal of competent jurisdiction (including an arbitration tribunal), it shall be severed and shall not affect any other part of this Agreement, which will be enforced as permitted by law.
13. The terms of this award of Share Units as evidenced by this Agreement may be amended by the Teradata Board of Directors or the Committee.
14. The number of Share Units and the number and kind of Shares covered by this Agreement shall be subject to adjustment as provided in Section 14 of the Plan.
15. In the event of a conflict between the terms and conditions of this Agreement and the terms and conditions of the Plan, the terms and conditions of the Plan shall prevail, except that with respect to matters involving choice of law the terms and conditions of Section 10 of this Agreement shall prevail.
16. You shall not possess any incidents of ownership (including, without limitation, dividend and voting rights) in the Shares underlying the Share Units until such Shares have been delivered to you in accordance with Section 3 of this Agreement. The obligations of Teradata under this Agreement will be merely that of an unfunded and unsecured promise of Teradata to deliver Shares in the future following Vesting of the Share Units, and your rights will be no greater than those of an unsecured general creditor. No assets of Teradata will be held or set aside as security for the obligations of Teradata under this Agreement.
17. Nothing contained in this Agreement shall confer upon you any right with respect to continuance of employment by Teradata, nor limit or affect in any manner the right of Teradata to terminate your employment or adjust your compensation.
18. By accepting any benefit under this Agreement, you and each person claiming under or through you shall be conclusively deemed to have indicated their acceptance and ratification of, and consent to, all of the terms and conditions of this Agreement and the Plan and any action taken under this Agreement or the Plan by the Committee, the Board or Teradata, in any case in accordance with the terms and conditions of this Agreement.
19. Teradata may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by Teradata or a third party designated by Teradata.

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Exhibit 10.9.9
Form of Restricted Share Unit Agreement
For Non-U.S. Employees
Under the Teradata 2012 Stock Incentive Plan
You have been awarded a number of restricted share units (the “Share Units”) under the Teradata 2012 Stock Incentive Plan (the “Plan”), as described on the restricted share unit information page on the website of Teradata’s third party Plan administrator, subject to the terms and conditions of this Restricted Share Unit Agreement (this “Agreement”) and the Plan. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan.
1. The Share Units will become non-forfeitable (“Vested”) on the [second/third] anniversary of the Date of Grant (“Vesting Date”), provided that you are continuously employed by Teradata or any of its affiliate companies (referred to collectively herein as “Teradata”) until the Vesting Date.
2. If your employment with Teradata terminates prior to your Vesting Date due to (i) your death, or (ii) cessation of active employment by Teradata as a result of a disability for which you qualify for benefits under the Teradata Long-Term Disability Plan or another long-term disability plan sponsored by Teradata (“Disability”), then, upon such termination of employment, your Share Units will become fully Vested. If your employment with Teradata terminates prior to your Vesting Date due to your (a) Retirement, or (b) reduction-in-force, then, upon such termination of employment, a pro rata portion of the Share Units will become fully Vested. For purposes of this Agreement, “Retirement” means termination by you of employment (other than, if applicable to you, for Good Reason (as described below) following a Change in Control) at or after age 55 with the consent of the Compensation & Human Resource Committee of the Teradata Board of Directors (the “Committee”), unless otherwise provided for by mandatory local law provisions. The pro rata portion of the Share Units that will become fully Vested will be determined by multiplying the total number of the Share Units awarded pursuant to this Agreement by a fraction, the numerator of which is the number of full and partial months of employment that you completed after the date of grant of this award (the “Date of Grant”), and the denominator of which is the total number of months during the period beginning on the Date of Grant and ending on your Vesting Date.
Notwithstanding any provision in this Agreement to the contrary, in the event a Change in Control occurs and this restricted Share Unit award is not assumed, converted or replaced by the continuing entity, the Share Units shall become fully Vested immediately prior to the Change in Control. In the event of a Change in Control wherein this restricted Share Unit award is assumed, if your employment is terminated by Teradata other than for Cause or Disability during the 24 months following the Change in Control, the Share Units shall become fully Vested immediately upon your termination of employment. If you are a participant in the Teradata Change in Control Severance Plan, a Teradata Severance Policy or a similar arrangement that defines “Good Reason” in the context of a resignation following a Change in Control and you terminate your employment for Good Reason as so defined within 24 months following a Change in Control, the Share Units shall become fully Vested immediately upon your termination of employment.
3. Except as may be otherwise provided in this Section 3, when Vested, the Share Units will be paid to you within 30 days after the Vesting Date in Shares (such that one Share Unit equals one share of Teradata Common Stock) or, in Teradata’s sole discretion, in an amount of cash equal to the Fair Market Value of such number of Shares as of the Vesting Date (or such earlier date upon which the Share Units have become Vested pursuant to Section 2 of this Agreement), or a combination thereof.

To the extent that you are a U.S. taxpayer, the Share Units become Vested pursuant to Section 2 of this Agreement and your right to receive payment of Vested Share Units constitutes a “deferral of compensation” within the meaning of Section 409A of the Code, then payment of such Share Units shall be subject to the following rules: (i) the Share Units will be paid to you within 30 days after the earlier of (a) your “separation from service” within the meaning of Section 409A of the Code, or (b) the Vesting Date; (ii) notwithstanding the foregoing, if the Share Units become payable as a result of your “separation from service” within the meaning of Section 409A of the Code (other than as a result of death), and you are a “specified employee” as determined under Teradata’s policy for determining specified employees on the date of separation from service, the Share Units shall be paid on the first business day after the date that is six months following your “separation from service” within the meaning of Section 409A of the Code; and (iii) Teradata may, in its sole discretion and to the extent permitted by Treasury Regulation § 1.409A-3(j)(4)(ix)(B), terminate this Agreement and pay all outstanding Share Units to you within 30 days before or 12 months after a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of Teradata within the meaning of Section 409A of the Code.
4. By accepting this Award, unless disclosure is required or permitted by applicable law or regulation, you agree to keep this Agreement confidential and not to disclose its contents to anyone except your attorney, your immediate family, or your financial consultant, provided such persons agree in advance to keep such information confidential and not disclose it to others. The Share Units will be forfeited if you violate the terms and conditions of this Section 4.
5. At all times before your Vesting Date, the Share Units may not be sold, transferred, pledged, assigned or otherwise alienated, except by will or by the laws of descent and distribution upon your death. As soon as practicable after your Vesting Date, if Share Units are to be paid in the form of Shares, Teradata will instruct its Transfer Agent and/or its third party Plan administrator to record on your account the number of Shares underlying the number of Share Units and such Shares will be freely transferable.
6. Any cash dividends declared before your Vesting Date on the Shares underlying the Share Units shall not be paid currently, but shall be converted into additional Share Units. Any Share Units resulting from such conversion (the “Dividend Units”) will be considered Share Units for purposes of this Agreement and will be subject to all of the terms, conditions and restrictions set forth herein. As of each date that Teradata would otherwise pay the declared dividend on the Shares underlying the Share Units (the “Dividend Payment Date”) in the absence of the reinvestment requirements of this Section 6, the number of Dividend Units will be determined by dividing the amount of dividends otherwise attributable to the Share Units but not paid on the Dividend Payment Date by the Fair Market Value of Teradata’s Common Stock on the Dividend Payment Date.
7. Regardless of any action Teradata or your employer who is a Teradata affiliate (the “Employer”) takes with respect to any or all income tax, payroll tax, payment on account or other tax-related items related to your participation in the Plan and legally applicable to you or deemed by Teradata or the Employer to be an appropriate charge to you even if technically due by Teradata or the Employer (“Tax-Related Items”), you acknowledge that the ultimate liability for all Tax-Related Items is and remains your responsibility and may exceed the amount actually withheld by Teradata or the Employer. You also agree that you solely are responsible for filing all relevant documentation that may be required of you in relation to this Award or any Tax-Related Items, such as but not limited to personal income tax returns or reporting statements in relation to the grant or vesting of this Award or the subsequent sale of Shares acquired pursuant to such Award and the receipt of any dividends or Dividend Units. You further acknowledge that Teradata and/or the Employer: (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Share Unit grant, including the grant, vesting or settlement of the Share Units, the issuance of Shares upon settlement of the Share Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends
 
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and/or Dividend Units; and (b) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Share Units to reduce or eliminate your liability for such Tax-Related Items or to achieve any particular tax result. Further, if you have become subject to tax in more than one jurisdiction between the Date of Grant and the date of any relevant taxable event, you acknowledge that Teradata and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
Prior to any relevant taxable or tax withholding event, as applicable, you shall pay or make adequate arrangements satisfactory to Teradata or the Employer, to satisfy all Tax-Related Items. In this regard, you authorize Teradata and/or the Employer, or their respective agents, at their discretion and pursuant to such procedures as Teradata may specify from time to time, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:
(a) withholding from any wages or other cash compensation paid to you by Teradata and/or the Employer;
(b) withholding otherwise deliverable Shares to be issued upon vesting/settlement of the Share Units; or
(c) withholding from the proceeds of the sale of Shares acquired upon vesting/settlement of the Share Units either through a voluntary sale or through a mandatory sale arranged by Teradata (on your behalf pursuant to this authorization).
To avoid negative accounting treatment, Teradata may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, you shall be deemed to have been issued the full number of Shares subject to the Vested Share Units, notwithstanding that a number of Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of your participation in the Plan. You shall pay to Teradata and/or the Employer any amount of Tax-Related Items that Teradata and/or the Employer may be required to withhold as a result of your participation in the Plan that cannot be satisfied by the means previously described. Teradata may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if you fail to comply with your obligations in connection with the Tax-Related Items as described in this Section 7.
8. You understand and agree that any cross-border cash remittance made in relation to this Award, including the transfer of proceeds received upon the sale of Shares, must be made through a locally authorized financial institution or registered foreign exchange agency and may require you to provide to such financial institution or agency certain information regarding the transaction. Moreover, you understand and agree that Teradata is neither responsible for any foreign exchange fluctuation between your local currency and the United States Dollar (or the selection by Teradata or the Employer in its sole discretion of an applicable foreign currency exchange rate) that may affect the value of this Award (or the calculation of income or any Tax-Related Items thereunder) nor liable for any decrease in the value of Shares or this Award. In addition, the ownership of Shares or assets and holding of bank or brokerage account abroad may subject you to reporting requirements imposed by tax, banking, and/or other authorities in your country, and you understand and agree that you solely are responsible for complying with such requirements.
9. The Share Units will be forfeited if your employment is terminated by Teradata for Cause or if the Committee determines that you engaged in misconduct in connection with your employment with Teradata. Further, if your employment is terminated by Teradata for Cause, then, to the extent demanded by the Committee in its sole discretion and permitted by applicable law, you shall (a) return to Teradata
 
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all Shares that you have not disposed of that have been acquired pursuant to this Agreement, and (b) with respect to any Shares acquired pursuant to this Agreement that you have disposed of, pay to Teradata in cash the Fair Market Value of such Shares on the date acquired.
10. In exchange for the Share Units, you agree that during your employment with Teradata and, to the extent applicable by law, for a period of 12 months after the termination of employment (or if applicable law mandates a maximum time that is shorter than twelve months, then for a period of time equal to that shorter maximum period), regardless of the reason for termination, you will not, without the prior written consent of the Chief Executive Officer of Teradata: (a) render services directly or indirectly to, or become employed by, any Competing Organization (as defined in this Section 10 below) to the extent such services or employment involves the development, manufacture, marketing, sale, advertising or servicing of any product, process, system or service which is the same or similar to, or competes with, a product, process, system or service manufactured, sold, serviced or otherwise provided by Teradata to its customers and upon which you worked or in which you participated during the last two (2) years of your Teradata employment; (b) directly or indirectly recruit, hire, solicit or induce, or attempt to induce, any exempt employee of Teradata to terminate his or her employment with or otherwise cease his or her relationship with Teradata; or (c) solicit the business of any firm or company with which you worked during the preceding two (2) years while employed by Teradata, including customers of Teradata. If you breach the terms of this Section 10, you agree that in addition to any liability you may have for damages arising from such breach, any unvested Share Units will be immediately forfeited, and, to the extent permitted by applicable law, you agree to pay to Teradata or the Employer, as directed, the Fair Market Value of any Share Units that Vested or cash paid to you in lieu of such Share Units during the 12 months prior to the date of your termination of employment. Such Fair Market Value shall be determined as of your Vesting Date. You understand and agree that Teradata has the right to satisfy your obligation to refund the Fair Market Value of any Share Units that Vested or cash paid in lieu of such Share Units by any method or combination of methods described in Section 7.
As used in this Section 10, “Competing Organization” means an organization identified as a Competing Organization by the Chief Executive Officer of Teradata for the year in which your employment with Teradata terminates, and any other person or organization which is engaged in or about to become engaged in research on or development, production, marketing, leasing, selling or servicing of a product, process, system or service which is the same or similar to or competes with a product, process, system or service manufactured, sold, serviced or otherwise provided by Teradata to its customers. The list of Competing Organizations identified by the Chief Executive Officer is maintained by the Teradata Law Department.
11. In accepting the grant, you acknowledge that: (a) the Plan is established voluntarily by Teradata, it is discretionary in nature and it may be modified, suspended or terminated by Teradata at any time; (b) the grant of the Share Units is voluntary and occasional and does not create any contractual or other right to receive future grants of Share Units, or benefits in lieu of Share Units, even if Share Units have been granted repeatedly in the past; (c) all decisions with respect to future Share Unit grants, if any, will be at the sole discretion of Teradata; (d) your participation in the Plan shall not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate your employment relationship at any time; (e) your participation in the Plan is voluntary; (f) the Share Unit grant and the Shares subject to the Share Units are not intended to replace any pension rights or compensation; (g) the Share Unit grant is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to Teradata and which is outside the scope of your employment contract, if any; (h) the Share Units are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any
 
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way, to past services for Teradata; (i) the Share Unit grant and your participation in the Plan will not be interpreted to form an employment contract or relationship with Teradata; (j) the future value of the underlying Shares is unknown and cannot be predicted with certainty; (k) in consideration of the grant of the Share Unit, no claim or entitlement to compensation or damages shall arise from forfeiture of the Share Unit resulting from termination of your employment by Teradata (for any reason whatsoever and whether or not in breach of local labor laws) and you irrevocably release Teradata from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting the Award, you shall be deemed irrevocably to have waived your entitlement to pursue such claim; (l) in the event of involuntary termination of your employment (whether or not in breach of local labor laws), your right to receive Share Units and vest in Share Units under the Plan, if any, will terminate effective as of the date that you are no longer actively employed and will not be extended by any notice period mandated under local law ( e.g., active employment would not include any period of “garden leave” or similar period pursuant to local law); the Committee shall have the exclusive discretion to determine when you are no longer actively employed for purposes of your Share Unit grant; (m) Teradata is not providing any tax, legal or financial advice, nor is Teradata making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares; and (n) you are hereby advised to consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan.
12. You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this Agreement and any other Share Unit grant materials by and among, as applicable, the Employer and Teradata for the exclusive purpose of implementing, administering and managing your participation in the Plan.
You understand that Teradata and the Employer may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in Teradata, details of all Share Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the purpose of implementing, administering and managing the Plan (“Data”).
You understand that Data will be transferred to any third parties assisting Teradata with the implementation, administration and management of the Plan. You understand the recipients of the Data may be located in your country, in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative. You authorize Teradata and the recipients which may assist Teradata (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing your participation in the Plan. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. You understand, however, that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.
 
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13. You understand and agree that you must at all times for understanding and following Teradata’s policies with respect to insider trading, as well as any insider restrictions imposed by local law.
14. The provisions of this Agreement are severable. If any provision of this Agreement is held to be unenforceable or invalid, in whole or in part, it shall be severed and shall not affect any other part of this Agreement, which will be enforced as permitted by law.
15. The terms of this award of Share Units as evidenced by this Agreement may be amended by the Teradata Board of Directors or the Committee.
16. The number of Share Units and the number and kind of Shares covered by this Agreement shall be subject to adjustment as provided in Section 14 of the Plan.
17. In the event of a conflict between the terms and conditions of this Agreement and the terms and conditions of the Plan, the terms and conditions of the Plan shall prevail.
18. You shall not possess any incidents of ownership (including, without limitation, dividend and voting rights) in the Shares underlying the Share Units until such shares of common stock have been delivered to you in accordance with Section 3 of this Agreement. The obligations of Teradata under this Agreement will be merely that of an unfunded and unsecured promise of Teradata to deliver Shares in the future following Vesting of the Share Units, and your rights will be no greater than those of an unsecured general creditor. No assets of Teradata will be held or set aside as security for the obligations of Teradata under this Agreement.
19. The Share Units and the provisions of this Agreement are governed by, and subject to, the laws of the State of Delaware, U.S.A. without reference to principles of conflicts of law, as provided in the Plan.
For purposes of litigating any dispute that arises under this grant or this Agreement, the parties hereby submit and consent to the exclusive jurisdiction of the State of Ohio and agree that such litigation shall be conducted only in the courts of Montgomery County, Ohio or the federal courts for the United States for the Southern District of Ohio, and no other courts, where this grant of Share Units is made and/or to be performed.
20. Teradata may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by Teradata or a third party designated by Teradata.
21. If you have received this Agreement or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control.
22. Notwithstanding any provision herein, your participation in the Plan shall be subject to any special terms and conditions as set forth in any appendix for your country (the “Appendix”). Moreover, if you relocate to one of the countries included in the Appendix, the special terms and conditions for such country will apply to you, to the extent Teradata determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.
 
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23. By accepting any benefit under this Agreement, you and each person claiming under or through you shall be conclusively deemed to have indicated their acceptance and ratification of, and consent to, all of the terms and conditions of this Agreement and the Plan and any action taken under this Agreement or the Plan by the Committee, the Board or Teradata, in any case in accordance with the terms and conditions of this Agreement.
24. Teradata reserves the right to impose other requirements on your participation in the Plan, on the Share Units and any Shares acquired under the Plan, to the extent Teradata determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
 
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APPENDIX
Form of Restricted Share Unit Agreement
For Non-U.S. Employees
Under the Teradata 2012 Stock Incentive Plan
This Appendix includes additional terms and conditions that govern the Share Units granted to you under the Plan if you reside outside the U.S. Certain capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan and/or the Agreement.
This Appendix may also include information you should be aware of with respect to your participation in the Plan. The information is based on the securities, exchange control and other laws in effect as of April 2012; however, such laws are often complex and change frequently. As a result, the Company strongly recommends that you not rely on the Appendix as the only source of information relating to the consequences of your participation in the Plan because the information may be out of date at the time that your Share Units vest or you sell Shares acquired under the Plan. In addition, the information contained herein is general in nature and may not apply to your particular situation, and the Company is not in a position to assure you of any particular result. Accordingly, you are advised to seek appropriate professional legal and tax advice as to how the relevant laws in your country may apply to your situation. Finally, if you are a citizen or resident of a country other than the one in which you are currently working, the information contained herein may not be applicable to you.
Securities Law Notice: Neither the Company nor the Shares are registered with any local stock exchange or under the control of any local securities regulator outside the U.S. This Agreement (of which this Appendix is a part), the Plan, and any other communications or materials that you may receive regarding participation in the Plan do not constitute advertising or an offering of securities outside the U.S. The issuance of securities described in any Plan-related documents is not intended for offering or public circulation in your jurisdiction.
 
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Exhibit 10.9.10
PERFORMANCE-BASED RESTRICTED SHARE UNIT AGREEMENT
Under the Teradata 2012 Stock Incentive Plan
You have been awarded the contingent right to receive a credit of share units (the “Share Units”) under the Teradata 2012 Stock Incentive Plan (the “Plan”), upon the terms and subject to the conditions of this Performance-Based Restricted Share Unit Agreement (this “Agreement”) and the Plan. Please refer to the share unit information page on the website of Teradata’s third party Plan administrator for your “Target Number of Share Units.” Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan.
1. Crediting of Share Units .
(a) In General . Your right to receive a credit of all, a portion, or a multiple of the Target Number of Share Units shall be contingent upon the extent to which Teradata Corporation (the “Company”) achieves the performance goals set forth on the attached Exhibit A (the “Performance Goals”) for the performance period commencing                     ,              and ending                     ,              (the “Performance Period”), in accordance with the payout levels set forth on the attached Exhibit A (the “Performance Metrics”). The Compensation and Human Resource Committee of the Company’s Board of Directors (the “Committee”) may establish special adjustments that will be applied in calculating the extent to which the Performance Goals have been satisfied, provided that the adjustments are set forth in writing no later than 90 days after the beginning of the Performance Period.
(b) Crediting to Account . After the end of the Performance Period, the Committee shall determine in writing the extent, if any, to which each of the Performance Goals has been satisfied and shall determine the percentage, if any, of the Target Number of Share Units that shall be credited to a book entry account established on your behalf (the “Account”), based on the payout level identified in the Performance Metrics. Each Share Unit credited to your Account under this Section 1(b) shall represent the contingent right to receive one Share and shall at all times be equal in value to one Share.
(i) If, upon the conclusion of the Performance Period, the Company achieves less than 25% of the target level of a Performance Goal, then you shall not receive a credit of any Share Units with respect to that Performance Goal, and if the Company achieves less than 25% of the target level for both Performance Goals, this Agreement shall terminate immediately without further action or notice.
(ii) If, upon the conclusion of the Performance Period, the Company achieves 25% or more of the target level of a Performance Goal, then you shall be credited with a number of Share Units with respect to such Performance Goal, effective on the day in which the Committee certifies the achievement of the Performance Goal as provided in this Section 1(b) (the “Crediting Date”), equal to the product of (A) your Target Number of Share Units, multiplied by (B) the combined weighted average of the payout levels for both Performance Goals as identified in the Performance Metrics (subject to such rounding conventions as may be implemented from time-to-time by Teradata’s third party Plan administrator).

(c) Forfeiture of Share Units . Except as otherwise provided in Section 3, your right to receive a credit of Share Units shall be forfeited automatically without further action or notice in the event that you cease to be employed by the Company or any of its affiliate companies (referred to collectively herein as “Teradata”) through the end of the Performance Period.
2. Vesting, Forfeiture and Payment of Share Units .
(a) Vesting . The Share Units, if any, credited to your Account in accordance with Section 1 above shall be subject to the following vesting schedule:
(i) One-third of the Share Units shall vest on each of the following dates (subject to such rounding conventions as may be implemented from time to time by Teradata’s third party Plan administrator): (A) the Crediting Date, (B) the first anniversary of the Crediting Date, and (C) the second anniversary of the Crediting Date (each a “Vesting Date”), provided that you are continuously employed by Teradata until the applicable Vesting Date.
(ii) If you cease to be employed by Teradata due to (A) your death, or (B) your Disability (defined by reference to Teradata’s long-term disability plan that covers you), in either case after the end of the Performance Period but prior to a Vesting Date, then the Share Units shall become fully vested upon such termination.
(iii) If you cease to be employed by Teradata prior to a Change in Control due to (A) your Retirement (defined as termination by you of your employment with Teradata at or after age 55 with the consent of the Committee); or (B) a reduction-in-force, in either case after the end of the Performance Period but prior to a Vesting Date, then a portion of the Share Units credited to your Account that have not yet vested shall become fully vested upon such termination, determined by multiplying (I) the number of unvested Share Units credited to your Account on the date of termination that would have vested on the next Vesting Date had you remained employed with Teradata through such date, by (II) a fraction, the numerator of which is the number of full and partial months of employment you completed commencing with the Vesting Date that occurred immediately prior to your termination, and the denominator of which is 12 months (with the resulting product rounded to the nearest whole number); provided that if your termination occurs during the period commencing immediately after the end of the Performance Period but prior to the Crediting Date, the fraction described above shall be deemed to be 12/12. The remaining number of Share Units shall be forfeited without further action or notice.
(iv) If a Change in Control occurs after the end of the Performance Period and prior to a Vesting Date, and the Share Units are not assumed, converted or replaced by the continuing entity, then the Share Units shall vest upon the Change in Control.
(v) If a Change in Control occurs after the end of the Performance Period and prior to a Vesting Date, and the Share Units are assumed, converted or replaced by the continuing entity, then the Share Units shall continue to vest in accordance with Section 2(a)(i); provided, however, that if you cease to be employed by Teradata due to (A) termination of your employment by Teradata without Cause, (B) termination of your employment with

Teradata on account of death, Disability, Retirement, or a reduction-in-force, or (C) if you are a participant in the Teradata Change in Control Severance Plan, a Teradata Severance Policy or a similar arrangement that defines “Good Reason” in the context of a resignation following a Change in Control (a “CIC Plan”), termination of your employment with Teradata for “Good Reason” as defined in the CIC Plan within the two-year period commencing on the Change in Control, then the Share Units credited to your Account that have not yet vested shall vest in full upon such termination.
(b) Forfeiture . The Share Units credited to your Account that have not yet vested pursuant to Section 2(a) shall be forfeited automatically without further action or notice if you cease to be employed by Teradata prior to a Vesting Date other than as provided in Sections 2(a)(ii), (iii) or (v).
(c) Payment . Except as otherwise provided in Section 3 or Section 4 of this Agreement, the Company shall deliver the Shares underlying the vested Share Units credited to your Account in accordance with this Agreement within seventy (70) days after the earlier of (i) the applicable Vesting Date(s), or (ii) your termination of employment.
3. Certain Events During Performance Period .
(a) Certain Terminations . If during the Performance Period you cease to be employed by Teradata prior to a Change in Control due to death, Disability, Retirement or a reduction-in-force, then the Company shall credit to your Account a pro-rated number of Share Units, which shall be fully vested, and which shall be calculated by multiplying (i) the actual number of Share Units that would have been credited to your Account in accordance with Section 1 of this Agreement had you continued in employment throughout the Performance Period, determined based on the actual performance of the Company during such Performance Period, by (ii) a fraction, the numerator of which is the number of full and partial months of employment you completed commencing with January 1, 2012, and the denominator of which is 36 months (subject to such rounding conventions as may be implemented from time-to-time by Teradata’s third party Plan administrator). Except as otherwise provided in Section 4 of this Agreement, the Company shall deliver to you the Shares underlying the pro-rated number of Share Units within seventy (70) days after the end of the Performance Period.
(b) Change in Control .
(i) If a Change in Control occurs during the Performance Period, and this award is not assumed, converted or replaced by the continuing entity, then the Target Number of Share Units shall be credited to your Account, as of the date of the Change in Control, and the units shall be fully vested at that time. The Company shall deliver to you the Shares underlying the Target Number of Share Units within 30 days after such Change in Control. Notwithstanding the foregoing, to the extent that your right to receive such Shares constitutes a “deferral of compensation” within the meaning of Section 409A of the Code (“Section 409A”), the Company shall deliver to you the Shares underlying the Target Number of Share Units within seventy (70) days after the earlier of (i) the end of the Performance Period, or (ii) your termination of employment (except as otherwise provided in Section 4 of this Agreement).

(ii) If a Change in Control occurs during the Performance Period, and this award is assumed, converted or replaced by the continuing entity, then the Target Number of Share Units shall be credited to your Account, as of the date of the Change in Control, and the Share Units shall continue to vest in accordance with Section 2(a)(i); provided, however, that if you cease to be employed by Teradata due to (A) termination of your employment by Teradata without Cause, (B) termination of your employment with Teradata on account of death, Disability, Retirement, or a reduction-in-force, or (C) if you are a participant in a CIC Plan, termination of your employment with Teradata for “Good Reason” as defined in the CIC Plan within the two-year period commencing on the Change in Control, then the Share Units credited to your Account that have not yet vested shall vest in full upon such termination. If the Target Number of Share Units credited to your Account in accordance with this Section 3(b)(ii) becomes vested by reason of a termination of your employment that occurs on or prior to the end of the Performance Period, then, except as otherwise provided in Section 4 of this Agreement, the Company shall deliver to you the Shares underlying the Target Number of Share Units within seventy (70) days after the end of the Performance Period. If the Target Number of Share Units credited to your Account in accordance with this Section 3(b)(ii) becomes vested after the end of the Performance Period, then except as otherwise provided in Section 4 of this Agreement, the Company shall deliver the Shares underlying the vested Target Number of Share Units credited to your Account within seventy (70) days after the earlier of (x) the applicable Vesting Date(s), or (y) your termination of employment.
4. Section 409A Compliance . The intent of the parties is that payments under this Agreement comply with Section 409A of the Code or are exempt therefrom and this Agreement shall be interpreted, administered and governed in accordance with such intent.
(a) Termination of Employment . To the extent that you are a U.S. taxpayer, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of Shares subject to Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A and you are no longer providing services (at a level that would preclude the occurrence of a “separation from service” within the meaning of Section 409A) to Teradata as an employee or consultant, and for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service” within the meaning of Section 409A.
(b) Payment Delay for Specified Employees . If you are a “specified employee,” as determined under the Company’s policy for identifying specified employees on the date of termination, then to the extent required in order to comply with Section 409A, all payments made under this Agreement that constitute a “deferral of compensation” within the meaning of Section 409A that are provided as a result of a “separation from service” within the meaning of Section 409A for any reason other than your death and that would otherwise be paid or provided during the first six months following such separation from service shall be accumulated through and paid within 30 days after the first business day that is more than six months after the date of your separation from service (or, if you die during such six-month period, within 30 days after your death).

(c) Acceleration of Payment . Notwithstanding anything to the contrary contained in this Agreement, the Committee shall have the right, at any time in its sole discretion, to accelerate the time of a payment under this Agreement to a time otherwise permitted under Section 409A in accordance with the requirements, restrictions and limitations of Treasury Regulation Section 1.409A-3(j).
5. Confidentiality . By accepting this award, unless disclosure is required or permitted by applicable law or regulation, you agree to keep this Agreement confidential and not to disclose its contents to anyone except your attorney, your immediate family, or your financial consultant, provided such persons agree in advance to keep such information confidential and not disclose it to others. The Share Units will be forfeited if you violate the terms and conditions of this Section 5.
6. Transferability . At all times before payment, the Share Units may not be sold, transferred, pledged, assigned or otherwise alienated, except by beneficiary designation, will or by the laws of descent and distribution upon your death. Any purported transfer or encumbrance in violation of the provisions of this Section 6 shall be void, and the other party to any such purported transaction shall not obtain any rights to or interest in such Share Units.
7. Dividend Equivalents . From and after the Crediting Date and until the earlier of (a) the time when the Share Units are paid in accordance with this Agreement or (b) the time when your rights in the Share Units are forfeited in accordance with Section 2(b) hereof, on the date that Teradata pays a cash dividend (if any) to holders of Shares generally, you shall receive additional Share Units equal to (x) the number of Share Units held by you as of the date of record for such dividend, provided that the record date occurs on or after the Crediting Date; multiplied by (y) the per Share cash dividend amount; divided by (z) the Fair Market Value per Share on the dividend payment date. The additional Share Units shall be subject to the same terms and conditions as the Share Units covered by this Agreement, including without limitation the forfeiture provisions of Section 2(b) of this Agreement; provided, however, that for purposes of Section 2(a)(i) of this Agreement (i) any such additional Share Units issued between the Crediting Date and the first anniversary of the Crediting Date shall vest in two equal installments on the first anniversary of the Crediting Date and the second anniversary of the Crediting Date, provided that you are continuously employed by Teradata through each such date, and (ii) any such additional Share Units issued between the first anniversary of the Crediting Date and the second anniversary of the Crediting Date shall vest on the second anniversary of the Crediting Date, provided that you are continuously employed by Teradata through such date.
8. Misconduct; Termination for Cause . The Share Units will be forfeited if your employment is terminated by Teradata for Cause or if the Committee determines that you engaged in misconduct in connection with your employment with Teradata. Further, if your employment is terminated by Teradata for Cause, then, to the extent demanded by the Committee in its sole discretion and permitted by applicable law, you shall (a) return to Teradata all Shares that you have not disposed of that have been acquired pursuant to this Agreement, and (b) with respect to any Shares acquired pursuant to this Agreement that you have disposed of, pay to Teradata in cash the Fair Market Value of such Shares on the date acquired.

9. Withholding . Teradata has the right to deduct or cause to be deducted from, or collect or cause to be collected, with respect to the taxation of any Share Units, any federal, state, local, foreign or other taxes required by the laws of the United States or any other country to be withheld or paid with respect to the Share Units, and you or your legal representative or beneficiary will be required to pay any such amounts. By accepting this award, you consent and direct that, if you are paid through Teradata’s United States payroll system at the time the Share Units are settled, Teradata’s stock plan administrator will withhold or sell the number of Shares underlying the Share Units as Teradata, in its sole discretion, deems necessary to satisfy such withholding requirements; provided, however, that if Teradata is required to withhold any taxes prior to settlement of the Share Units, then you agree that Teradata may satisfy those withholding obligations by withholding cash from your compensation otherwise due to you or by any other action as it may deem necessary to satisfy the withholding obligation. In no event shall the Fair Market Value of the Shares of common stock to be surrendered pursuant to this section to satisfy applicable withholding taxes exceed the minimum amount of taxes required to be withheld or such other amount that will not result in a negative accounting impact. If you are paid through a non-United States Teradata payroll system, you agree that Teradata may satisfy any withholding obligations by withholding cash from your compensation otherwise due to you or by any other action as it may deem necessary to satisfy the withholding obligation. You acknowledge that the ultimate liability for all taxes and tax-related items is and remains your responsibility and may exceed the amount actually withheld by Teradata or the Employer. You also agree that you solely are responsible for filing all relevant documentation that may be required of you in relation to this award or any tax-related items, such as but not limited to personal income tax returns or reporting statements in relation to the grant or vesting of this award or the subsequent sale of Shares acquired pursuant to such award and the receipt of any dividends or dividend equivalents.
10. Restrictive Covenants . In exchange for the Share Units, you agree that during your employment with Teradata and, to the extent permitted by applicable law, for a period of twelve (12) months after the termination of employment (or if applicable law mandates a maximum time that is shorter than twelve months, then for a period of time equal to that shorter maximum period), regardless of the reason for termination, you will not, without the prior written consent of the Chief Executive Officer of Teradata, (a) render services directly or indirectly to, or become employed by, any Competing Organization (as defined in this Section 10 below) to the extent such services or employment involves the development, manufacture, marketing, sale, advertising or servicing of any product, process, system or service which is the same or similar to, or competes with, a product, process, system or service manufactured, sold, serviced or otherwise provided by Teradata to its customers and upon which you worked or in which you participated during the last two (2) years of your Teradata employment; (b) directly or indirectly recruit, hire, solicit or induce, or attempt to induce, any exempt employee of Teradata to terminate his or her employment with or otherwise cease his or her relationship with Teradata; or (c) solicit the business of any firm or company with which you worked during the preceding two (2) years while employed by Teradata, including customers of Teradata. If you breach the terms of this Section 10, you agree that in addition to any liability you may have for damages arising from such breach, any unvested Share Units will be immediately forfeited, and, to the extent permitted by applicable law, you agree to pay to Teradata the Fair Market Value of any Share Units that vested and that were paid during the twelve (12) months prior to the date of termination of your employment. Such Fair Market Value shall be determined as of the date that the Share Units become vested. If you breach the terms of this Section 10 prior to the end of the Performance Period but after you incur a termination described in Section 3(a) of this Agreement, your award will be forfeited and you will not receive the pro-rata portion of the Share Units.

As used in this Section 10, “Competing Organization” means an organization identified as a Competing Organization by the Chief Executive Officer of Teradata for the year in which your employment with Teradata terminates, and any other person or organization which is engaged in or about to become engaged in research on or development, production, marketing, leasing, selling or servicing of a product, process, system or service which is the same or similar to or competes with a product, process, system or service manufactured, sold, serviced or otherwise provided by Teradata to its customers. The list of Competing Organizations identified by the Chief Executive Officer is maintained by the Teradata Law Department.
11. Arbitration . By accepting this award, you agree that, where permitted by local law, any controversy or claim arising out of or related to your employment relationship with Teradata shall be resolved by first exhausting any Teradata internal dispute resolution process and policy, and then by arbitration pursuant to such policy. If you are employed outside the United States, where permitted by local law, the arbitration shall be conducted in the regional headquarters city of the business unit in which you work. The arbitration shall be held before a single arbitrator who is an attorney knowledgeable in employment law. The arbitrator’s decision and award shall be final and binding and may be entered in any court having jurisdiction. For arbitrations held in the United States, issues of arbitrability shall be determined in accordance with the federal substantive and procedural laws relating to arbitration; all other aspects shall be interpreted in accordance with the laws of the state in which the headquarters of Teradata is located. Each party shall bear its own attorney’s fees associated with the arbitration and other costs and expenses of the arbitration shall be borne as provided by the rules of the American Arbitration Association for an arbitration held in the United States, or similar applicable rules for an arbitration held outside the United States.
Notwithstanding the preceding subparagraph, you acknowledge that if you breach Section 10, Teradata will sustain irreparable injury and will not have an adequate remedy at law. As a result, you agree that in the event of your breach of Section 10 Teradata may, in addition to any other remedies available to it, bring an action in a court of competent jurisdiction for equitable relief to preserve the status quo pending appointment of an arbitrator and completion of an arbitration. You stipulate to the exclusive jurisdiction and venue of the state and federal courts located in the location from which Teradata’s equity programs are administered, for any such proceedings.
12. Compensation Recovery Policy . By accepting this award, you acknowledge and agree that, notwithstanding any other provision of this Agreement to the contrary, you may be required to forfeit or repay any or all of the Share Units pursuant to the terms of the Teradata Corporation Compensation Recovery Policy (or a successor policy), as the same may be amended to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act or any rules or regulations issued by the Securities and Exchange Commission or applicable securities exchange.

13. Beneficiaries; Successors .
(a) Without limiting Section 6 of this Agreement, you may designate one or more beneficiaries to receive all or part of any Share Units to be distributed in case of your death, and you may change or revoke such designation at any time. In the event of your death, any Share Units distributable hereunder that are subject to such a designation will be distributed to such beneficiary or beneficiaries in accordance with this Agreement. Any other Share Units not designated by you will be distributable to your estate. If there is any question as to the legal right of any beneficiary to receive a distribution hereunder, the Share Units in question may be transferred to your estate, in which event Teradata will have no further liability to anyone with respect to such Share Units.
(b) The provisions of this Agreement shall inure to the benefit of, and be binding upon, your successors, administrators, heirs, legal representatives and assigns, and the successors and assigns of the Company.
14. Severability . The provisions of this Agreement are severable. If any provision of this Agreement is held to be unenforceable or invalid by a court or other tribunal of competent jurisdiction (including an arbitration tribunal), it shall be severed and shall not affect any other part of this Agreement, which will be enforced as permitted by law.
15. Amendment . The terms of this award of Share Units as evidenced by this Agreement may be amended by the Teradata Board of Directors or the Committee.
16. Adjustments . The number of Share Units and the number and kind of shares of stock covered by this Agreement shall be subject to adjustment as provided in Section 14 of the Plan.
17. Plan Governs . In the event of a conflict between the terms and conditions of this Agreement and the terms and conditions of the Plan, the terms and conditions of the Plan shall prevail, except that with respect to matters involving choice of law, the terms and conditions of Section 10 of this Agreement shall prevail.
18. Dividend; Voting Rights . You shall not possess any incidents of ownership (including, without limitation, dividend and voting rights) in the Shares underlying the Share Units credited to your Account until such Shares have been delivered to you in accordance with Section 2, Section 3 or Section 4 hereof. The obligations of the Company under this Agreement will be merely that of an unfunded and unsecured promise of the Company to deliver Shares in the future, and your rights will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as security for the obligations of the Company under this Agreement.
19. No Employment Contract or Acquired Rights . Nothing contained in this Agreement shall confer upon you any right with respect to continuance of employment by Teradata, nor limit or affect in any manner the right of Teradata to terminate your employment or adjust your compensation. Furthermore, nothing contained in this Agreement shall confer upon you any right to receive any future Share Units or awards under the Plan or the inclusion of the value of any awards in the calculation of severance payments, if any, upon termination of employment.

20. Non-U.S. Employees . Notwithstanding any provision herein, if the Plan or your employment with Teradata is subject to the rules and regulations of one or more non-United States jurisdictions, then your participation in the Plan shall be subject to any such rules and regulations and any special terms and conditions as set forth in any appendix for your country (the “ Appendix ”). Moreover, if you relocate to one of the countries included in the Appendix, the special terms and conditions for such country will apply to you, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Company also reserves the right to impose other requirements on your participation in the Plan to the extent the Company determines it necessary or advisable in order to comply with local law or facilitate the administration of the Plan and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. The Appendix constitutes part of this Agreement.
You also understand and agree that any cross-border cash remittance made in relation to this award, including the transfer of proceeds received upon the sale of Shares, must be made through a locally authorized financial institution or registered foreign exchange agency and may require you to provide to such financial institution or agency certain information regarding the transaction. Moreover, you understand and agree that the Company is neither responsible for any foreign exchange fluctuation between your local currency and the United States Dollar (or the selection by Teradata or the Employer in its sole discretion of an applicable foreign currency exchange rate) that may affect the value of this award (or the calculation of income or any Tax-Related Items thereunder) nor liable for any decrease in the value of Shares or this award. In addition, the ownership of Shares or assets and holding of bank or brokerage account abroad may subject you to reporting requirements imposed by tax, banking, and/or other authorities in your country, and you understand and agree that you solely are responsible for complying with such requirements.
21. Acceptance of Terms . By accepting any benefit under this Agreement, you and each person claiming under or through you shall be conclusively deemed to have indicated their acceptance and ratification of, and consent to, all of the terms and conditions of this Agreement and the Plan and any action taken under this Agreement or the Plan by the Committee, the Board or Teradata, in any case in accordance with the terms and conditions of this Agreement.
22. Communications and Electronic Delivery . Teradata may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by Teradata or a third party designated by Teradata. If you have received this Agreement or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control.

23. Data Privacy Consent . You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this Agreement and any other Share Unit grant materials by and among, as applicable, the Employer and Teradata for the exclusive purpose of implementing, administering and managing your participation in the Plan.
You understand that Teradata and the Employer may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in Teradata, details of all Share Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the purpose of implementing, administering and managing the Plan (“Data”).
You understand that Data will be transferred to any third parties assisting Teradata with the implementation, administration and management of the Plan. You understand the recipients of the Data may be located in your country, in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative. You authorize Teradata and the recipients which may assist Teradata (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing your participation in the Plan. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. You understand, however, that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.

EXHIBIT A
PERFORMANCE-BASED RESTRICTED SHARE UNIT AGREEMENT
PERFORMANCE METRICS
[TO BE DETERMINED]

Exhibit 21
Subsidiaries of Teradata Corporation
December 31, 2013

Entity	  	Organized under the laws of	
Teradata International, Inc.	  	Delaware	
Teradata US, Inc.	  	Delaware	
Teradata Operations, Inc.	  	Delaware	
Teradata Government Systems LLC	  	Delaware	
Teradata Taiwan LLC	  	Delaware	
Teradata Argentina Holdings LLC	  	Delaware	
Teradata Belgium Holdings LLC	  	Delaware	
Teradata Bermuda Holdings LLC	  	Delaware	
Teradata Brazil Holdings LLC	  	Delaware	
Teradata Chile Holdings LLC	  	Delaware	
Teradata Colombia Holdings LLC	  	Delaware	
Teradata Egypt Holdings LLC	  	Delaware	
Teradata India Holdings LLC	  	Delaware	
Teradata Indonesia Holdings LLC	  	Delaware	
Teradata International Services LLC	  	Delaware	
Teradata Mexico Holdings LLC	  	Delaware	
Teradata Netherlands Holdings LLC	  	Delaware	
Teradata New Zealand Holdings LLC	  	Delaware	
Teradata Philippines LLC	  	Delaware	
Teradata Ukraine Holdings LLC	  	Delaware	
TD Nameholder Corporation	  	Delaware	
Teradata de Argentina S.R.L.	  	Argentina	
Teradata Australia Pty Ltd	  	Australia	
Teradata GmbH	  	Austria	
Teradata Bermuda IP Holdings L.P.	  	Bermuda	
Teradata Financing Holdings L.P.	  	Bermuda	
Teradata Bermuda Holdings ULC	  	Bermuda	
Teradata Bermuda Operations Holdings ULC	  	Bermuda	
Teradata Belgium SNC	  	Belgium	
TRDT Brasil Tecnologia Ltda.	  	Brazil	
TRDT Brasil Holdings Ltda.	  	Brazil	
Teradata Information Systems (Beijing) Limited	  	China	
Teradata Canada ULC	  	Canada	
Teradata Chile Tecnologías de Información Limitada	  	Chile	
TDC Colombia Limitada	  	Colombia	
Teradata Czeska republika spol. s r.o.	  	Czech Republic	
Teradata Danmark ApS	  	Denmark	
eCircle Nordic ApS	  	Denmark	
Teradata Egypt WLL	  	Egypt	
Teradata Finland Oy	  	Finland	
Teradata France S.A.S.	  	France	
eCircle France SARL	  	France	
Teradata GmbH	  	Germany	
Teradata Germany Holdings GmbH	  	Germany	
eCircle GmbH	  	Germany	
Teradata (Hong Kong) Limited	  	Hong Kong	
Protagona Worldwide Limited	  	Hong Kong	

			
Entity	  	Organized under the laws of	
Teradata Magyarorszag Kft.	  	Hungary	
Teradata India Private Limited	  	India	
Lunexa Advantage Knowledge Processing Services Private Limited	  	India	
PT. Tdata Indonesia	  	Indonesia	
Teradata Ireland Limited	  	Ireland	
Teradata Ireland Holdings L.P.	  	Ireland	
Teradata Ireland Operations L.P.	  	Ireland	
Teradata International Sales Limited	  	Ireland	
Teradata Italia S.r.l.	  	Italy	
eCircle S.r.l. con socio unico	  	Italy	
Teradata Japan Ltd.	  	Japan	
TeraWarehouse Korea Co., Ltd.	  	Korea	
TData Corporation (Malaysia) Sdn. Bhd.	  	Malaysia	
Teradata Holdings México, S. de R. L. de C.V.	  	Mexico	
Teradata Solutions México, S. de R.L. de C.V.	  	Mexico	
Teradata de México, S. de R.L. de C.V.	  	Mexico	
Teradata Holdings B.V.	  	Netherlands	
Teradata Finance Company B.V.	  	Netherlands	
Teradata Netherlands B.V.	  	Netherlands	
eCircle Netherlands B.V.	  	Netherlands	
Teradata (NZ) Corporation	  	New Zealand	
Teradata Norge AS	  	Norway	
Teradata Pakistan (Private) Limited	  	Pakistan	
Teradata Global Consulting Pakistan (Private) Limited	  	Pakistan	
Teradata Philippines, LLC, Manila Branch	  	Philippines	
Teradata GCC (Philippines), Inc.	  	Philippines	
Teradata Polska Sp. z o.o.	  	Poland	
eCircle Poland sp. z o.o.	  	Poland	
“Teradata” LLC	  	Russia	
Teradata Saudi Arabia LLC	  	Saudi Arabia	
Teradata (Singapore) Pte. Ltd.	  	Singapore	
Teradata Iberia SL	  	Spain	
eCircle Spain, S.L.U.	  	Spain	
Teradata Sweden AB	  	Sweden	
Teradata (Schweiz) GmbH	  	Switzerland	
Teradata Taiwan LLC, Taiwan branch	  	Taiwan	
Teradata (Thailand) Co., Ltd.	  	Thailand	
Teradata Bilisim Sistemleri Limited Sirketi	  	Turkey	
Teradata (UK) Limited	  	United Kingdom	
eCircle Ltd.	  	United Kingdom	
NewFrontiers Europe Ltd.	  	United Kingdom	
Teradata Ukraine LLC	  	Ukraine	

Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-146409, No. 333-146410, No. 333-146475 and No. 333-181217) of Teradata Corporation of our report dated February 27, 2014 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.
PricewaterhouseCoopers LLP
Atlanta, Georgia
February 27, 2014

Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECURITIES EXCHANGE ACT RULE 13a-14
I, Michael F. Koehler, certify that:
1. I have reviewed this annual report on Form 10-K of Teradata Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 27, 2014	 		 	/s/ Michael F. Koehler	
	 		 	Michael F. Koehler	
	 		 	President and Chief Executive Officer	

Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECURITIESEXCHANGE ACT RULE 13a-14
I, Stephen M. Scheppmann, certify that:
1. I have reviewed this annual report on Form 10-K of Teradata Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 27, 2014	 		 	/s/ Stephen M. Scheppmann	
	 		 	Stephen M. Scheppmann	
	 		 	Executive Vice President and Chief Financial Officer	

Exhibit 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TOSECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Teradata Corporation, a Delaware corporation (the “Company”), on Form 10-K for the year ended December 31, 2013 as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company does hereby certify, pursuant to 18 U.S.C. § 1350 (section 906 of the Sarbanes-Oxley Act of 2002), that:
 
 	(1)	the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and	
 
 	(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	
The foregoing certification (i) is given to such officers’ knowledge, based upon such officers’ investigation as such officers reasonably deem appropriate; and (ii) is being furnished solely pursuant to 18 U.S.C. § 1350 (section 906 of the Sarbanes-Oxley Act of 2002) and is not being filed as part of the Report or as a separate disclosure document.

Dated: February 27, 2014	 		 	/s/ Michael F. Koehler	
	 		 	Michael F. Koehler	
	 		 	President and Chief Executive Officer	
			
Dated: February 27, 2014	 		 	/s/ Stephen M. Scheppmann	
	 		 	Stephen M. Scheppmann	
	 		 	Executive Vice President and Chief Financial Officer	
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to Teradata Corporation and will be retained by Teradata Corporation and furnished to the United States Securities and Exchange Commission or its staff upon request.