Caldera and SCO Expand Acquisition Agreement to Include SCO OpenServer Technology

Feb 09, 2001, 00:00 ET from Caldera Systems, Inc.

    OREM, Utah and SANTA CRUZ, Calif., Feb. 9 /PRNewswire/ -- Caldera Systems,
 Inc., (Nasdaq:   CALD) and The Santa Cruz Operation, Inc. (SCO) (Nasdaq:   SCOC)
 today announced they have amended the agreement to purchase the SCO Server
 Software and Professional Services divisions by Caldera Systems.  Under the
 terms of the new agreement, the SCO OpenServer product line will be included
 as part of the proposed SCO Server Software Division acquisition, giving
 Caldera complete ownership of SCO's operating system products.  In the
 original agreement announced on August 2, 2000, SCO retained the SCO
 OpenServer intellectual property and Caldera purchased the rest of the SCO
 server business and acted as sole distributor for SCO OpenServer products.
     (Photo: )
     As a result of the new agreement, the companies will file an amended Joint
 Proxy Statement/Prospectus with the Securities and Exchange Commission.  Due
 to the revised transaction terms, the companies expect the transaction to
 close during the second calendar quarter of 2001, instead of the previously
 anticipated first calendar quarter.
     The terms of the new agreement call for Caldera to pay SCO cash
 consideration of $23 million at the close of the transaction as well as a note
 for $8 million due in four quarterly installments beginning in the second year
 following the close of the transaction.  Additionally, SCO will receive
 16 million shares of the resulting company, Caldera International, Inc.  The
 companies have also agreed to share revenue from SCO OpenServer products for a
 period of three years, if sales exceed pre-defined levels during that time.
 Caldera will also receive an assignment by SCO of its accounts receivable from
 certain long-term agreements that become due subsequent to the close of the
 transaction.  These receivables will vary depending on the timing of the
 transaction and product usage by customers, currently estimated to be
 $3-4 million.
     The terms of the previous agreement called for $7 million in cash at
 closing and approximately 18 million shares, of which approximately 2 million
 would be used to fund options for SCO employees transferring to Caldera.  In
 the new agreement, Caldera will provide for options to those employees.
     Ransom Love, president of Caldera Systems, commented, "With the SCO
 OpenServer technology purchase, Caldera will not only have created the first
 and largest combined UNIX and Linux channel, it will be able to provide all
 current SCO Server Software Division customers with new and existing solutions
 from one source.  The purchase further simplifies Caldera's internal
 administration, roadmap control and communication, allowing better service to
 its customers."
     Doug Michels, CEO of SCO said, "I am pleased that the simplification of
 the transaction will help SCO achieve its goal of creating a pure-play company
 focused on our Tarantella products.  The overall consideration and increased
 cash component will enable us to proceed with our plan to reinvent ourselves
 around our Tarantella business and drive Tarantella, Inc. to be the leading
 provider of web-enabling software."
     About SCO OpenServer technology
     SCO OpenServer products are cost effective and reliable commercial UNIX
 server systems for small to medium businesses and major retail replicated
 sites.  SCO OpenServer products deliver high quality UNIX applications on the
 Intel processor-based hardware platform and are the cornerstone of a
 leadership role that SCO has played in the UNIX-on-Intel market.
     Caldera Systems, Inc.
     Caldera Systems, Inc. (Nasdaq:   CALD) is the "Unifying UNIX with Linux for
 Business" technology leader in developing and marketing successful Linux-based
 business solutions, including its award-winning OpenLinux, NetWare for Linux,
 Linux technical training, certification and support-with free 30-day phone
 support and on-site consulting.  Caldera OpenLearning Providers offer
 exceptional distribution-neutral Linux training and certification based on
 Linux Professional Institute (LPI(TM)) certification standards.  Caldera
 Systems supports the open source community and is a leader in, and advocate of
 Linux Standard Base (LSB(TM)) and LPI(TM).
     Caldera, Inc. was co-founded in 1994 by Ransom Love.  Caldera Systems,
 Inc. was founded by Ransom Love in 1998 to develop Linux-based business
 solutions.  Based in Orem, UT, Caldera Systems has offices and 1000+ resellers
 worldwide.  For more information, see or in the US call
 888-GO-Linux (888-465-4689).
     The Santa Cruz Operation, Inc.
     With headquarters in Santa Cruz, CA, The Santa Cruz Operation, Inc. is
 comprised of three independent divisions -- Tarantella, Inc., the Server
 Software Division, and the Professional Services Division.  The Server
 Software Division is a leading provider of UNIX server operating systems.
 Tarantella, Inc. promotes a range of software technologies and products that
 web-enable any application instantly, for access by users anywhere.  The
 Professional Services Division helps organizations create and deploy
 personalized IT strategies.  The three divisions sell and support their
 products and services through a worldwide network of distributors, resellers,
 systems integrators, and OEMs.  For more information, visit SCO's home page at and
     Caldera is a registered trademark of Caldera Systems, Inc.  All other
 products, services, companies, events and publications are trademarks,
 registered trademarks or servicemarks of their respective owners in the U.S.
 and/or other countries.  Linux is a registered trademark of Linus Torvalds in
 the US and other countries.
     The Santa Cruz Operation, SCO, SCO OpenServer, and Tarantella are
 trademarks or registered trademarks of The Santa Cruz Operation, Inc. in the
 USA and other countries.  UNIX is a registered trademark of The Open Group in
 the US and other countries.  All other brand or product names are or may be
 trademarks of, and are used to identify products or services of, their
 respective owners.
     Forward Looking Statements
     The statements set forth above include forward-looking statements that
 involve risks and uncertainties.  All forward-looking statements included in
 this release are based upon information available to Caldera and SCO as of the
 date of the release, and neither Caldera, SCO nor the combined companies
 assume any obligation to update any such forward-looking statement.  These
 statements are not guarantees of future performance and actual results could
 differ materially from current expectations.  Factors that could cause or
 contribute to such differences include, but are not limited to 1) the
 potential disruption of Caldera's and SCO's businesses that might result from
 employee or customer uncertainty, and lack of focus following announcement of
 the amended acquisition agreement in connection with integrating the
 operations of Caldera and SCO; 2) product integration risk due to overlapping
 products and technologies; 3) the possibility that the transactions described
 herein might not be consummated; 4) the effects of the public announcement of
 the amended acquisition agreement on Caldera's and SCO's stock prices, their
 sales and operating results, their ability to attract and retain key personnel
 and the progress of certain of their development projects; 5) the risk that
 the announcement of the amended acquisition agreement could result in
 decisions by customers to defer purchases of products of Caldera or SCO;
 6) the substantial charges to be incurred due to the amended acquisition
 agreement, primarily in the second and third quarters of the year; 7) the risk
 that redundancy in staffing and infrastructure could reduce efficiency and
 increase costs; 8) the difficulties of managing geographically dispersed
 operations; and 9) the risk that other benefits sought to be achieved by the
 amended acquisition agreement will not be achieved.  These and other factors
 are risks associated with Caldera's and SCO's businesses that may affect their
 operating results and are discussed in SCO's Annual Report on Form 10-K for
 the fiscal year ended September 30, 2000 filed with the Securities and
 Exchange Commission ("SEC") on December 18, 2000, Caldera's Annual Report on
 Form 10-K for the fiscal year ended October 31, 2000 filed with the SEC on
 January 29, 2001, and Caldera's and SCO's quarterly reports on Form 10-Q filed
 with the SEC.
     Additional Information and Where to Find It:  The parties urge investors
 and security holders to review the following documents regarding the
 acquisition, including amendments that may be made to them, because they
 contain important information:
      --  Caldera's Registration Statement on SEC Form S-4 and
      --  Caldera and SCO's Joint Proxy Statement/Prospectus.
     These documents and amendments to these documents have been or will be
 filed with the United States Securities and Exchange Committee.  Investors and
 security holders are urged to read the Registration Statement and the Joint
 Proxy Statement/Prospectus carefully as they are available.  The Registration
 Statement and the Joint Proxy Statement/Prospectus will contain important
 information about Caldera, SCO, the acquisition, the persons soliciting
 proxies relating to the acquisition, their interests in the acquisition, and
 related matters.  Investors and security holders will be able to obtain free
 copies of these documents, as they are available, through the Web site
 maintained by the SEC at
     Free copies of the Joint Proxy Statement/Prospectus and these other
 documents may also be obtained from Caldera by directing a request through the
 Investors Relations portion of Caldera's Web site at or
 by mail to Caldera Systems, Inc., 240 West Center Street, Orem, Utah 84057,
 attention:  Investor Relations, telephone (801) 765-4999; or from SCO by
 directing a request through the Investors Relations portion of SCO's Web site
 at or by mail to The Santa Cruz Operation, Inc.,
 425 Encinal Street, Santa Cruz, California 95061, attention:  Investor
 Relations, telephone (831) 427-7399.
     In addition to the Registration Statement and the Joint Proxy
 Statement/Prospectus, Caldera and SCO file annual, quarterly and special
 reports, proxy statements and other information with the SEC.  You may read
 and copy any reports, statements or other information filed by Caldera or SCO
 at the SEC public reference rooms at 450 Fifth Street, N.W., Washington, D.C.
 20549 or at any of the SEC's other public reference rooms in New York, New
 York and Chicago, Illinois.  Please call the SEC at 1-800-SEC-0330 for further
 information on the public reference rooms.

SOURCE Caldera Systems, Inc.