SANTA CRUZ, Calif., Jan. 30 /PRNewswire/ -- The Santa Cruz Operation, Inc. (Nasdaq: SCOC), today announced fiscal first quarter financial results for the period ending December 31, 2000. (Photo: http://www.newscom.com/cgi-bin/prnh/19990421/SCOLOGO ) Revenues for the first fiscal quarter of 2001 were $26,455,000 compared with $32,797,000 for the fourth fiscal quarter of 2000. The net loss for the first fiscal quarter was $7,897,000 or $0.20 per fully diluted share, compared with a net loss of $10,162,000, or $0.28 per fully diluted share (excluding one-time charges for restructuring and the reduction of deferred tax assets) reported for the fourth fiscal quarter of 2000. First quarter 2001 revenues declined on an annual basis when compared to revenues of $53,653,000 for the same quarter last year. First fiscal quarter losses can be compared to a profit of $2,875,000 and $.07 per fully diluted share in the same period in 2000. The company also reported that it is on track to close its pending sale of the Server Software and Professional Services Divisions to Caldera Systems during the second quarter of fiscal 2001. Doug Michels, President and CEO of SCO commented, "As with others in our industry, the results for the quarter were directly impacted by the reduction in IT investment by companies for application server software and service initiatives. Furthermore, our continued focus on the transaction with Caldera is having an undeniable impact on our business, employees and customers. We are confident the completion of this transaction will be a significant positive event, allowing the company to re-establish momentum and growth." First fiscal quarter revenues for the Tarantella Division were $3,178,000 compared with fourth fiscal quarter 2000 revenues of $4,315,000. The operating loss for the division was $6,524,000 compared with $5,960,000 in the prior quarter. Tarantella continued to grow its customer base, adding 58 new accounts during the quarter. New account sales are, for the most part, pilot program or initial quantity orders with potential for future larger deployment. Recent large enterprise wins included Safeway, Oracle Corporation, Detroit Edison, Bank of America, Caterpillar, Credit Suisse First Boston, Pemex, Schlumberger, GE Access, Novell, NTT and Hitachi. Additionally, many existing customers expanded their deployment of Tarantella including ABN AMRO Bank, Shell, Deutsche Telekom and MCI WorldCom. Tarantella also continued to develop key partnerships with industry leaders including Sun Microsystems, Compaq, IBM, Computer Associates and Nortel Networks. Mike Orr, president of the Tarantella Division commented, "While revenue figures for the division were disappointing, we are pleased with the momentum we are experiencing as we continue to expand our customer base. Year-over-year quarterly Tarantella product license revenues grew 79%, support revenues grew by 114%, while Vision Family licenses declined by 54%. This decline in the older Vision Family products tends to mask the growth rate of the Tarantella product line." Orr continued, "This quarter's results reflect the fluctuation we anticipate in Tarantella revenues based on the variable deployment schedules of our customers. While revenues were down sequentially for the division, it is not an accurate reflection of quarter over quarter growth, as revenues for the fiscal fourth quarter included a very large order from one of our major customers. As we continue filling the pipeline with enterprise customers in pilot programs, we expect to see variations in the timing of larger deployments, leading to significant fluctuations in sequential revenue growth rates going forward. However, we are currently taking actions that we believe will help speed up the deployment cycle." First fiscal quarter revenues for the Server Software Division were $23,026,000 compared to $28,304,000 in revenues for fourth fiscal quarter 2000. The division's revenue included $10,790,000 from sales of the company's SCO OpenServer product. The division's net loss for the quarter was $210,000 compared to a net loss of $2,521,000 in fiscal fourth quarter 2000. David McCrabb, president of the Server Software Division commented, "Although division revenues were down, we are encouraged by the continued growth in sales of our clustering platforms this quarter and by the improvement in operating results. Due to the expense reduction initiatives put in place last quarter, we achieved near break-even results for the division." Professional Services Division first fiscal quarter revenues were $861,000 compared to fiscal fourth quarter revenues of $1,181,000. The division's net loss for the quarter was $930,000 compared to a net loss of $833,000 reported for the prior quarter. Jim Wilt, president of the Professional Services Division said, "While revenues of the division slowed, we anticipate renewed momentum as Linux and Tarantella engagements become a larger part of our services business." Conclusion Michels stated, "We made significant efforts this quarter to lower expenses and are fully committed to returning the company to profitability. We are fine-tuning each division and positioning the company for the future. Our balance sheet, which includes over $13 million in cash, provides us with sufficient resources to continue focusing our efforts on growing the Tarantella business." Conference Call SCO will hold a conference call to discuss fiscal first quarter 2001 financial results, as well as provide an update on the company, at 1:45 p.m. PST today. The conference call may be accessed in listen-only mode by dialing 719-457-2630 and will also be broadcast live over the Internet. Interested parties can obtain access through the SCO website at http://investor.sco.com or at www.streetevents.com. Please access the website at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. A replay of the call will be available via the web at http://investor.sco.com, beginning at approximately 4:00 p.m. on January 30th, until February 12th. For SCO Investors This release contains forward-looking statements, including statements relating to SCO's expectations for market share growth, demand for its products, technologies and services, generating momentum in its customer base, stability of the sales channel, and the pending sale of SCO's Server Software and Professional Services divisions to Caldera Systems, Inc., which are based on current expectations, that involve risks and uncertainties. SCO's actual results may differ materially from the results discussed in these forward-looking statements. Factors that may contribute to such a difference include, but are not limited to, uncertainty in domestic and international markets, changes in customer implementation plans, the ability to reduce expenses, risks of dependence upon third-party suppliers, impact and success of industry partnerships, conclusion or success of strategic opportunities, timely availability of products, market acceptance of new products, including internet-related products, the impact of competitive products, general market conditions including SCO's ability to compete in the highly competitive and rapidly changing marketplace, and other risks detailed from time to time in SCO's SEC filings, including forms 10-Q and 10-K. SCO disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. About 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 www.sco.com. NOTE: The Santa Cruz Operation, SCO, Tarantella, and SCO OpenServer 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. Linux is a registered trademark of Linus Torvalds in the U.S. 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 THE SANTA CRUZ OPERATION, INC. December 31, September 30, CONSOLIDATED BALANCE SHEETS 2000 2000 (In thousands) (Unaudited) Assets Current assets: Cash and cash equivalents $10,009 $20,879 Short-term investments 3,100 5,567 Receivables, net 22,155 24,269 Available-for-sale equity securities 5,313 7,119 Other current assets 6,001 4,358 Total current assets 46,578 62,192 Property and equipment, net 7,906 9,012 Purchased software and technology licenses, net 5,030 5,830 Other assets 3,692 5,168 Total assets $63,206 $82,202 Liabilities and Shareholders' Equity Current liabilities: Trade accounts payable $4,205 $5,521 Royalties payable 2,362 4,530 Income taxes payable 2,178 1,964 Accrued restructuring charges 2,903 5,964 Accrued expenses and other current liabilities 19,795 20,225 Deferred revenues 6,174 7,334 Total current liabilities 37,617 45,538 Long-term lease obligations 346 545 Long-term deferred revenues 1,626 1,397 Other long-term liabilities 3,516 3,520 Total long-term liabilities 5,488 5,462 Shareholders' Equity Common stock, no par value, net, authorized 100,000 shares Issued and outstanding 39,445 and 39,346 shares 118,947 118,940 Accumulated other comprehensive income 2,275 5,486 Accumulated deficit (101,121) (93,224) Total shareholders' equity 20,101 31,202 Total liabilities and shareholders' equity $63,206 $82,202 THE SANTA CRUZ OPERATION, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except amounts per share) Three Months Ended December 31, 2000 1999 (Unaudited) Net revenues Licenses $22,861 $49,438 Services 3,594 4,215 Total net revenues 26,455 53,653 Cost of revenues Licenses 3,479 6,692 Services 3,602 5,140 Total cost of revenues 7,081 11,832 Gross margin 19,374 41,821 Operating expenses: Research and development 6,432 10,578 Sales and marketing 16,331 25,299 General and administrative 4,267 3,836 Total operating expenses 27,030 39,713 Operating income (loss) (7,656) 2,108 Other income (expense): Interest income, net 194 600 Other income (expense), net 181 837 Income (loss) before income taxes (7,281) 3,545 Income taxes 616 670 Net income (loss) (7,897) 2,875 Other comprehensive income (loss), net of tax Unrealized gain (loss) on available-for-sale equity securities (3,158) 55,863 Foreign currency translation adjustment (53) 1 Comprehensive income (loss) $(11,108) $58,739 Earnings (loss) per share: Basic $(0.20) $0.08 Diluted $(0.20) $0.07 Shares used in earnings (loss) per share calculation: Basic 39,443 34,713 Diluted 39,443 41,258 THE SANTA CRUZ OPERATION, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except earnings per share) Three Months Ended Dec. 31, Sept. 30, 2000 2000 (Unaudited) Net revenues Licenses $22,861 $28,767 Services 3,594 4,030 Total net revenues 26,455 32,797 Cost of revenues Licenses 3,479 5,707 Services 3,602 4,320 Total cost of revenues 7,081 10,027 Gross margin 19,374 22,770 Operating expenses: Research and development 6,432 7,931 Sales and marketing 16,331 19,322 General and administrative 4,267 4,835 Restructuring charges -- 4,796 Total operating expenses 27,030 36,884 Operating loss (7,656) (14,114) Other income (expense): Interest income, net 194 79 Other expense, net 181 (758) Loss before income taxes (7,281) (14,793) Income taxes 616 5,986 Net loss (7,897) (20,779) Other comprehensive income (loss), net of tax Unrealized gain (loss) on available-for-sale equity securities (3,158) 201 Foreign currency translation adjustment (53) (235) Comprehensive income $(11,108) $(20,813) Earnings (loss) per share: Basic $(0.20) $(0.56) Diluted $(0.20) $(0.56) Shares used in earnings (loss) per share calculation: Basic 39,443 36,789 Diluted 39,443 36,789
SOURCE Santa Cruz Operations, Inc.