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 in 2018. Costs incurred were $26 million in 2017 and $129 million in 2016.

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 previous 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 of accelerated depreciation for right-to-use assets under ASC 842, and


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

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

Costs incurred for the plans listed above, are included in the table below:



In millions	2018		2017		2016
Employee severance and other employee related cost	$	—	$	2	$	14
Asset write-downs	—		—		80
Professional services, legal and other associated cost	—		24		35
Employee severance and other employee-related costs related to headquarter transition and business transformation	14		—		—
Transition support and other exit related costs for the headquarter transition and business transformation	9		—		—
Total reorganization and business transformation cost	$	23	$	26	$	129

Of the $23 million total costs in 2018, $11 million was paid out in cash and the remaining $12 million was accrued under other current liabilities at December 31, 2018. The majority of the costs were attributable to the Americas reporting unit and recorded as selling, general and administrative expenses with no impact on our segment gross profit.

The charges for asset write-downs in 2016 were for non-cash write-downs of goodwill, acquired intangibles and other assets. In addition to the costs and charges incurred above, the Company made cash payments of less than $1 million in 2018 and 2017, and $20 million in 2016 related to the 2015 business transformation initiative for employee severance that did not have a material impact on its Statement of Operations due to Teradata accounting for its postemployment benefits under Accounting Standards Codification 712, Compensation - Nonretirement Postemployment Benefits (“ASC 712”), which uses actuarial estimates and defers the immediate recognition of gains or losses.