2005 2004 Dividend yield — —

Risk-free interest rate . . . 4.00% 2.95% Expected volatility . . . 35.5% 45.0% Expected holding period (years) . . . 5.5 5.0 Stock Options

As of December 31, 2006, all stock options held by NCR employees engaged in Teradata’s business were granted under NCR’s stock plans. Prior to approval by NCR’s stockholders on April 26, 2006 of the NCR 2006 Stock Incentive Plan (“SIP”), the NCR Management Stock Plan (“MSP”) was the principal vehicle through which equity grants were made to such Teradata employees. The MSP provided for the grant of several different forms of stock-based benefits, including stock options to purchase shares of NCR common stock. Stock options under the MSP were generally granted at the fair market value of the common stock at the date of grant, had a ten-year term and vested within four years of the grant date. Grants that were issued before 1998 generally had a four-year vesting period, grants from 1998 through 2003 had a three-year vesting period, and grants issued in 2004 and after generally had a four-year vesting period. As a result of approval of the SIP by NCR’s

stockholders, NCR discontinued the MSP, except that awards previously granted and outstanding under the MSP remain outstanding. The SIP is now the principal vehicle through which equity grants are made to NCR’s employees and directors.

The SIP provides for the grant of several different forms of stock-based compensation, including stock options to purchase shares of NCR common stock. The Compensation and Human Resource Committee of NCR’s Board of Directors has discretion to determine the material terms and conditions of option awards under the SIP, provided that (i) the exercise price must be no less than the fair market value of NCR common stock (as defined as the SIP or otherwise determined by the NCR Compensation and Human Resource Committee) on the date of grant, (ii) the term must be no longer than ten years, and (iii) in no event shall the normal vesting

schedule provide for vesting in less than one year. Other terms and conditions of an award of stock options will be determined by NCR’s Compensation and Human Resource Committee as set forth in the agreement relating to that award. NCR’s Compensation and Human Resource Committee has authority to administer the SIP, except that the Committee on Directors and Governance of NCR’s Board of Directors will administer the SIP with respect to non-employee members of the Board of Directors.

The following table summarizes NCR’s stock option activity for awards granted to NCR employees engaged in Teradata’s business for the year ended December 31, 2006:

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, 2006 . . . 3,040 $20.26 Granted . . . 403 $39.34 Exercised . . . (975) $18.17 Canceled . . . (77) $24.31 Forfeited . . . (1) $38.97 Outstanding at December 31, 2006 . . . 2,390 $24.11 5.82 $45 Fully vested and expected to vest at December 31, 2006 . . . 2,300 $24.09 5.79 $43 Exercisable at December 31, 2006 . . . 1,715 $19.35 4.64 $40 The total intrinsic value of options exercised was $21 million in 2006, $32 million in 2005 and $21 million in 2004. The tax benefit realized from these exercises was $6 million in 2006, $10 million in 2005 and $6 million in 2004. As of December 31, 2006, there was $8 million of total unrecognized compensation cost related to unvested stock option grants to NCR employees engaged in Teradata’s business. That cost is expected to be recognized over a weighted-average period of 2.3 years.

Restricted Stock and Restricted Stock Units

As of December 31, 2006, all restricted stock awards held by NCR employees engaged in Teradata’s business were granted under NCR’s stock plans. The MSP provided for the issuance of restricted stock to certain employees as a form of long-term compensation, retention, promotion or other special circumstances. NCR’s restricted stock grants under the MSP were categorized as having service-based or performance-based vesting. The service-based shares typically vest over a three- to four-year period beginning on the date of grant. These grants are not subject to future performance measures. The cost of these awards, determined to be the fair market value of NCR’s shares at the date of grant, is expensed ratably over the period the restrictions lapse. 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. Performance-based grants are subject to future performance measurements, which included NCR’s achievement of Cumulative Net Operating Profit (as defined in the MSP) over a three-year period and return on capital over a three-year period. All performance-based shares will become vested at the end of three years provided that the employee is continuously employed by NCR and the applicable performance measures are met. Performance-based grants must be earned, based on performance, before the actual number of shares to be awarded is known. NCR considers the likelihood of meeting the performance criteria based upon management’s estimates and analysis of future earnings. As a result of approval of the SIP by NCR’s stockholders, NCR discontinued the MSP, except that awards previously granted and outstanding under the MSP remain outstanding.

The SIP also provides for the issuance of restricted stock, as well as restricted stock units. Performance goals may be established by NCR’s Compensation and Human Resource Committee in connection with the grant of restricted stock or restricted stock units. Any grant of restricted stock or restricted stock units will be subject to

a vesting period of at least three years, except that a one-year term of service may be required if vesting is conditioned upon achievement of performance goals. At the date of grant, a recipient of restricted stock has all the 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 but is subject to restrictions on transferability and risk of forfeiture. Other terms and conditions applicable to any award of restricted stock or restricted stock units will be determined by NCR’s Compensation and Human Resource Committee and set forth in the agreement relating to that award.

The following table reports NCR’s restricted stock activity for awards granted to NCR employees engaged in Teradata’s business during the year ended December 31, 2006:

Shares in thousands

Number of Shares

Weighted- Average Grant Date Fair Value

per Share Unvested shares at January 1, 2006 . . . 358 $28.16 Shares granted . . . 226 $39.50 Shares vested and distributed . . . (64) $13.28 Shares forfeited . . . (16) $32.70 Unvested shares at December 31, 2006 . . . 504 $35.15 The total intrinsic value of NCR shares vested and distributed to NCR employees engaged in Teradata’s business was $3 million in 2006, $1 million in 2005 and $2 million in 2004. As of December 31, 2006, there was $12 million of unrecognized compensation cost related to unvested restricted stock grants to such employees. The unrecognized compensation cost is expected to be recognized over a remaining weighted-average period of 1.8 years.

The following table represents the composition of restricted stock grants in 2006:

Shares in thousands Number of Shares Weighted- Average Grant Date Fair Value Service-based shares . . . 126 $40.24 Performance-based shares . . . 100 $38.56 Total stock grants . . . 226 $39.50 Other Share-based Plans

The NCR ESPP enables eligible employees to purchase NCR’s common stock at a discount to the average of the highest and lowest sale prices on the last trading day of each month. In 2006, the ESPP discount was reduced from 15% to 5% of the average market price. As a result, this plan is considered non-compensatory in accordance with SFAS 123R. Employees may authorize payroll deductions of up to 10% of eligible

compensation for common stock purchases. The amount of NCR shares purchased by NCR employees engaged in Teradata’s business was not material in 2006, 2005 and 2004.

Impact of Separation

Prior to the distribution, the Teradata Board of Directors is expected to adopt, with approval of Teradata’s sole stockholder, the establishment of stock incentive plans providing for future awards to Teradata employees.

Options, performance shares, performance options, restricted stock, and restricted stock units will be treated as follows at the spin-off: (1) each option and other stock-based award based on shares of NCR common stock

that is held by an employee of NCR will, at the spin-off, be substituted for an option or award based on shares of NCR common stock with the number of shares and, in the case of a stock option, the exercise price being equitably adjusted to preserve the intrinsic value of the award or option as of immediately prior to the spin-off; (2) each option and other stock-based award based on shares of NCR common stock that is held by an employee of Teradata will, at the spin-off, be substituted for an option or award based on shares of Teradata common stock with the number of shares and, in the case of a stock option, the exercise price being equitably adjusted to preserve the intrinsic value of the award or option as of immediately prior to the spin-off; (3) each option based on shares of NCR common stock that is held by a retiree of NCR will, at the spin-off, be substituted for an option based on shares of NCR common stock and an option based on shares of Teradata common stock with the number of shares and the exercise price being equitably adjusted to preserve the intrinsic value of the option as of immediately prior to the spin-off and (4) each option and other stock-based award based on shares of NCR common stock that is held by a non-employee director of NCR will, at the spin-off be substituted for an option or award based on shares of NCR common stock and an option or award based on shares of Teradata common stock with the number of shares and, in the case of a stock option, exercise price being equitably adjusted to preserve the intrinsic value of the option or award as of immediately prior to the spin-off. For purposes of the paragraph, the term “intrinsic value” means the in-the-money value of the option (that is, the excess of the fair market value of the award over the aggregate exercise price thereof, in each case, at the applicable time). For any award described above that is subject to performance vesting conditions under a 2006-2008 performance cycle, to reflect estimated performance through the date on which the spin-off occurs: (1) two thirds of the number of shares subject to the award will vest as soon as practicable following the spin-off; (2) for performance shares only and, not only performance option, a new one-year, time based award will be made subsequent to the time of the spin-off for a number of shares that reflects the degree to which NCR exceeded the performance targets applicable to the vested two thirds of the award as of immediately before the spin-off, based on performance measured through the spin-off; and (3) the remaining one third of the number of shares subject to the award will be subject to a new one-year performance goal, except that, in the case of performance shares only, the number of shares subject to the award will be adjusted to reflect the degree to which NCR met the performance targets applicable to the award as of immediately before the spin-off, based on performance measured through the spin- off. For any performance share award described above that is subject to performance vesting conditions under a 2007-2009 performance cycle, the performance shares will be substituted with substantially identical awards based on new performance metrics applicable to each company. The performance period will begin at the time of the spin-off and will end on December 31, 2009.