Reorganization and Business Transformation

In 2015, the Company announced a plan to realign Teradata’s business by reducing its cost structure and focusing on the Company’s core data and analytics business. This business transformation included exiting the marketing applications business, rationalizing costs, and modifying the Company’s go-to-market approach. No costs were incurred related to this business transformation plan for the six months ended June 30, 2018.

On June 4, 2018, the Company approved a plan to consolidate certain of its operations, including transitioning its corporate headquarters to San Diego, California from its current location in Dayton, Ohio. This plan, which is being executed in connection with Teradata’s comprehensive business transformation from a data warehouse company to a data analytics platform company, is intended to better align the Company’s skills and resources to effectively pursue opportunities in the marketplace. The Company expects that the costs relating to this consolidation plan will include employee separation benefits, transition support, and other exit-related costs. The employee separation benefit costs are being expensed over the time period that the employees have to work to earn them.

The Company expects that it will incur costs and charges, which are substantially all cash expenditures, in the range of approximately $35 to $45 million related to the plan, consisting primarily of the following types of items:


•	$21 to $26 million for employee severance and other employee-related costs,


•	$6 to $8 million charge for facilities lease related costs, and


•	$8 to $11 million for outside service, legal and other associated costs.

The Company expects to incur these costs and charges in 2018 and 2019, with the majority of the cash expenditures in 2019. The Company expects the actions related to the plan will be completed by 2019.

Costs incurred for the plans listed above, for the six months ended June 30, 2018 and 2017 are included in the table below.



	Six months Ended June 30,
In millions	2018		2017
Employee severance and other employee related cost	$	—	$	2
Asset write-downs	—		6
Professional services, legal and other transformation costs	—		18
Employee separation benefits costs related to headquarter transition and business transformation	2		—
Transition support and other exit related costs for the headquarter transition and business transformation	3		—
Total reorganization and business transformation cost	$	5	$	26

For the six months ended June 30, 2017, costs incurred above include $8 million for an inventory charge and other associated transformation costs related to the discontinuation of Teradata's prior hardware platforms.