<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

   [X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
          OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998


   [ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
          OF THE SECURITIES EXCHANGE ACT OF 1934

         FOR THE TRANSITION PERIOD FROM _____________ TO _______________

                      ------------------------------------

                         COMMISSION FILE NUMBER 0-21484

                         THE SANTA CRUZ OPERATION, INC.
             (Exact name of registrant as specified in its charter)

          CALIFORNIA                                              94-2549086
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

400 ENCINAL STREET, SANTA CRUZ, CALIFORNIA                          95060
 (Address of principal executive offices)                        (Zip Code)

        Registrant's telephone number, including area code (831) 425-7222

        Securities registered pursuant to Section 12(b) of the Act: NONE

           Securities registered pursuant to Section 12(g) of the Act:
           PREFERRED SHARE PURCHASE RIGHTS COMMON STOCK, NO PAR VALUE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.     Yes  [X]    No [ ]


Registrant became subject to such filing requirements on May 25, 1993 as a
result of its initial public offering.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment. [X]

The aggregate market value of the voting stock held by non-affiliates of the
registrant, based upon the closing sale price of the Common Stock on December
15, 1998 as reported on the Nasdaq National Market was approximately
$80,222,235. Shares of Common Stock held by each executive officer and director
and by each person who owns 5% or more of the outstanding Common Stock have been
excluded in that such persons may be deemed to be affiliates. This determination
of affiliate status is not necessarily a conclusive determination for other
purposes.

          As of December 15, 1998, registrant had 34,372,468 shares of
                           Common Stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the 1998 Annual Report to Shareholders are incorporated by
reference into Parts I, II and IV.

Portions of the definitive Proxy Statement dated on or about January 22, 1999 to
     be delivered to shareholders in connection with the Annual Meeting of
           Shareholders to be held February 23, 1999 are incorporated
                          by reference into Part III.



<PAGE>   2
                                     PART I


                         THE SANTA CRUZ OPERATION, INC.

                                    FORM 10-K
                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I                                                                           PAGE NUMBER
<S>                                                                              <C>
         Item 1.  Business                                                            1
         Item 2.  Properties                                                         14
         Item 3.  Legal Proceedings                                                  14
         Item 4.  Submission of Matters to a Vote of Security Holders                14
         Executive Officers of the Registrant                                        14

PART II

         Item 5.  Market for Registrant's Common Stock and Related 
                  Stockholder Matters                                                16
         Item 6.  Selected Financial  Data                                           16
         Item 7.  Management's Discussion and Analysis of Financial 
                  Condition and Results of Operations                                16
         Item 8.  Financial Statements and Supplementary Data                        16
         Item 9.  Changes in and Disagreement with Accountants on 
                  Accounting and Financial Disclosures                               16

PART III

         Item 10. Directors and Executive Officers of the Registrant                 17
         Item 11. Executive Compensation                                             17
         Item 12. Security Ownership of Certain Beneficial Owners and Management     17
         Item 13. Certain Relationships and Related Transactions                     17

PART IV

         Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K     18
         Signatures                                                                  20
</TABLE>



<PAGE>   3
                                     PART I

ITEM 1. BUSINESS

INTRODUCTION

The Santa Cruz Operation, Inc. (SCO or the Company) was incorporated in
California in 1979 and shipped its first product, SCO(R) XENIX(R) System V, a
packaged version of the UNIX(R) operating system, in 1983. In 1985, the Company
introduced its first operating system for the 32-bit Intel(R) microprocessor
environment, SCO XENIX 286, and followed with its SCO XENIX 386 in 1987. The
Company first shipped its UNIX trademarked commercial product, SCO UNIX System
V/386, for the Intel CPU-based platforms in 1989 and followed with an
integrated, graphical version of this product, SCO Open Desktop(R), in 1990. In
1993, the Company introduced two families of systems software--SCO
OpenServer(TM) products, a complete line of advanced server and SCO Open Desktop
products, a complete line of advanced workstation (client) operating systems. In
1995, SCO integrated these products into a single line, called the SCO
OpenServer family. SCO also introduced its SCO Vision family of
client-integration products, which integrate Windows(R) PC's with UNIX Servers
from all major UNIX vendors. SCO also created a Optional Services Products
division which has the mission of providing middleware that enhances the
capabilities of SCO OpenServer Systems, as well as UNIX Servers from other
vendors. In fiscal year 1996, SCO acquired the UnixWare(R) product line and UNIX
system technology from Novell, Inc.


In 1998, the Company launched UnixWare 7, began moving toward to a new
electronic distribution system and formed a new management team. Also in 1998,
SCO announced a that it had entered into a strategic business agreement with IBM
to jointly develop a UNIX system for the forthcoming Intel IA-64 processors. The
purpose of this alliance is to create a single product line that will run on
Intel IA-32, Intel IA-64 and IBM microprocessor systems that range from
entry-level servers to large enterprise environments.

SCO's mission is to provide the system software that system builders choose for
network computing. Designed specifically for network computing, SCO system
software products help organizations extend their business-critical applications
inside and outside the enterprise to employees, customers, and partners without
disrupting their current operations or replacing their current system. The two
key elements of Network Computing are, first, powerful, scalable and reliable
servers; and, second, support for a wide range of clients.

To facilitate network computing in the enterprise, SCO offers an Application
Broker for Network Computing- Tarantella. Tarantella runs on any UNIX server and
provides any Java client - NC, PC, terminal, or workstation with access to
existing applications running on any kind of server in the network - mainframe,
mini, UNIX or NT server. By leveraging SCO's core strengths - UNIX servers and
Tarantella - SCO can move businesses to Network Computing at their own pace,
enabling them to utilize their existing systems and giving them the broadest
choices of technologies and partners. SCO's product solutions are available
through a global network of more than 15,000 SCO distributors and resellers.
Through its strategic alliances with the world's leading computer vendors,
technology providers and support providers, SCO will continue to deliver the
industry's most advanced and reliable products, backed by expert local support
around the world.

This report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
reflect management's expectations only as of the date hereof. The Company
undertakes no obligation to publicly release the results of any revision to
these forward-looking statements, which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

INDUSTRY BACKGROUND

Traditionally, mainframes and minicomputers have formed the basis of enterprise
computing in large, complex organizations. These organizations have generally
used custom applications to perform business-critical tasks such as general
accounting, inventory management, transaction processing, manufacturing control
and branch management. These applications typically involve processing and
managing large quantities of data and must provide continuous availability of
data to many users, while ensuring data integrity and security. Despite their
performance and functionality, these mainframe and minicomputer "legacy" systems
are based on proprietary hardware and operating software architectures and are
increasingly perceived to be difficult, time-consuming, and expensive to
implement, maintain, and support. In addition, these systems provide limited
interoperability with 



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other information resources and systems commonly used in organizations today,
provide limited user access to data maintained in these systems, and often use
difficult, non-intuitive character-based user interfaces.

In the past fifteen years, Intel CPU-based computers have proliferated in both
large and small organizations primarily as a result of steadily improving
price-performance and the development of local-area networking software. Recent
generations of Intel processors, together with declining costs for both system
memory and data storage, have given PCs the power to process large volumes of
business-critical data. These developments have accelerated the emergence of a
new computing paradigm in which central processing on mainframes or
minicomputers is being replaced by processing distributed between desktop PC or
workstation "clients," which handle user interface and application logic, and
business critical servers responsible for shared access to enterprise data,
business-critical applications, database management, and data security. This
approach, in principle, combines the efficiency of desktop processing with
access to enterprise-wide data and applications. However, the leading operating
system for Intel CPU-based client PCs, (Microsoft Windows or Windows NT(R)) and
the leading networking operating system for PC-based local-area networks
(Novell(R) NetWare(R)) do not offer the performance, stability, scalability,
data security, network connectivity, or support for heterogeneous clients (not
only PCs, but also UNIX workstations, PDAs, and the emerging class of network
computers or NCs) required by many organizations for business critical servers.

As a result, most PC-based networks offer only a limited version of
client/server computing, in which the key functions of shared data access,
database management, data security and business-critical applications are
handled by mainframes and minicomputers acting as servers, or by
microprocessor-based servers utilizing reduced-instruction set (RISC)
architectures. Because of operating system and hardware limitations, as well as
high hardware costs, these server strategies fail to capture the
price-performance benefits of client/server computing.

A major drawback of the PC-centric client/server model is the high cost of
system administration, maintenance, and software updates. When businesses move
to a server-centric model of client/server computing, called Network Computing,
they can administer and update client software from the server, saving
inordinate amounts of time and money. This is why SCO supports the
server-centric Network Computing model.

SCO bases its system software for business critical servers on the UNIX System,
which has been in use since the 1970s. The UNIX System is a 32-bit native
multi-user, multitasking technology. Operating systems based on the UNIX System
allow application programs to be separated from operating system tasks such as
control of peripheral devices, communications, memory management and file
management, thus providing a standardized protected environment in which the
applications operate. The result is much higher reliability because multiple
applications and users cannot interfere with each other and easier application
development because many complex functions are handled by the operating system.

SCO believes, however, that UNIX technology is only the beginning of the
solution, and that considerable value must be added to the basic technology in
order to create a family of products that solve complex customer requirements
for business critical servers. Business and government organizations are
increasingly demanding adherence to standards-based open systems to protect
their computing investment and avoid reliance on a single vendor's hardware or
software. For such customers, the proprietary implementations of the UNIX System
that dominate the technical and scientific workstation market are unacceptable.
These proprietary versions of UNIX systems run on hardware architectures that
are expensive relative to PCs, are tied to the proprietary hardware of
particular vendors and have failed to meet the increasing demand for
hardware-independent, Intel CPU-based systems. Business and government
organizations also require broad availability of third-party applications
software so that they can use predefined solutions and, to the extent possible,
avoid having to develop custom applications. When custom applications are
required, these customers need a development environment and tools which enable
such applications to be easily produced and implemented and run across multiple
hardware architectures. Lastly, these customers require a high level of customer
support in the form of consulting and training, as well as continual product
enhancements to incorporate new technology and industry standards.

SCO has focused on Intel CPU-based computers because of their dominant position
in the microprocessor-based computer market and their potential in the emerging
client/server market. SCO's years of experience in supporting each successive
generation of Intel processors has resulted in highly reliable and stable UNIX
operating system products. The Company's extensive engineering capabilities and
product enhancement programs support complex, networked business critical
servers across the full range of Intel microprocessors, including the Pentium
and Pentium Pro(R) processors. The Company's software is compatible with Intel
CPU-based computers offered by virtually all of the major hardware vendors.
Because SCO products support multiple processors and can execute multiple
applications simultaneously, they are especially well suited for business
critical servers that provide data access and business-critical applications to
users throughout the enterprise.



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THE SCO SOLUTION

SCO brings the power of the UNIX System and the freedom of open systems to the
Intel CPU-based server environment. Since introducing its first operating
software in 1983, SCO has shipped about 2.3 million licenses to multi-user
computer environments worldwide. The Company's innovations have included
shipping a packaged version of the UNIX System in 1983, shipping a graphical,
32-bit UNIX operating system for Intel PCs in 1990 and shipping a packaged UNIX
operating system for Intel CPU-based multiprocessing computers in 1993. The
Company introduced a family of client-integration and layered server software in
1995. In 1996, the Company introduced its Internet family of server products. In
1997, the Company introduced the world's first Application Broker for Network
Computing, and announced a release strategy for its next-generation UNIX
operating system, which is initially targeted at high-end departmental computing
and enterprise environments. Based on its experience in the marketplace, the
Company believes that its products support more Intel CPU-based computers,
applications, networks, and peripherals than those of any other UNIX System
software.



Business critical servers running SCO software are especially designed to
support networked applications running on traditional client/server
architectures and on the new server-centric Internet/intranet architecture,
enabling organizations ranging from small businesses to large corporations and
government agencies to implement enterprise-wide computing solutions. SCO has
developed significant expertise in implementing powerful and stable UNIX
operating systems for business critical servers, and has built a multi-tiered
distribution channel of direct sales personnel, value-added resellers (VARs),
original equipment manufacturers (OEMs) and distributors to reach and support
thousands of end-user customers.


SCO BUSINESS CRITICAL SERVERS

Business critical servers running SCO system software combine the best qualities
of stand-alone PCs (personal productivity, ease of use and price-performance
value) with the traditional strengths of UNIX System servers (business-critical
applications, data management, security, and network administration). SCO
business critical servers feature the following performance characteristics to
meet customer requirements: 1) support for business-critical, transaction-based
applications, 2) capabilities for providing a permanent, auditable history of
operations, 3) top performance and scalability at the lowest cost, 4) support
for multiple users performing multiple tasks, 5) high-level security, 6)
reliability and manageability, 7) support for a wide range of client devices,
including not only Microsoft Windows PC desktops and laptops, but also UNIX
workstations, PDAs, and the new network computers known as NCs, and 8) expert
service and support.


STRATEGY

The Company's strategy is to continue providing the most reliable and robust
system software for business critical servers that run the critical day-to-day
business operations of large and small organizations. That includes Network
Computing environments. The Company's success depends in large part on the
continued growth of the UNIX System market for business and governmental
organizations as well as the Company's ability to continue to license additional
products and product enhancements to existing customers and to identify and
market its products to new markets and customers. There can be no assurance that
the Company will be able to achieve revenue growth and profitability on a
quarterly or annual basis. SCO's strategy includes 10 key elements:


1) FOCUSING ON TARGET MARKETS

SCO focuses its products, industry relationships, distribution and support
strategy on three key business opportunities: primary information systems for
small and medium-sized businesses; replicated systems for use in distributed
information systems in medium-sized and large organizations, including Fortune
1000 corporations; and business-critical enterprise systems for large and
medium-sized businesses. Key targeted industries include retail and
telecommunications.

2) INTEGRATING WINDOWS PCS AND DIVERSE CLIENTS WITH UNIX SERVERS

SCO intends to provide the best server for Network Computing, which means
providing the best server for a wide range of client devices, including not only
Microsoft Windows PC desktops and laptops, but also UNIX workstations,
Xterminals, character-based terminals, PDAs (Personal Digital Assistants), and
network computers or 



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NCs. The goal of this strategy is to enable organizations to take full advantage
of cost-effective client devices that can run the new Java-based applications
and exchange information across the Internet and corporate intranets.

SCO continues to support its Windows Integration strategy. The four cornerstones
of this strategy are solutions for: connectivity between SCO servers and Windows
desktops; manageability of Windows desktops from SCO servers; the ability to
take advantage of users' Windows skills by making SCO UNIX System applications
appear and behave like those on Windows; and interoperability between Windows
and UNIX System applications. SCO provides a full line of Windows Integration
Products, called the SCO Vision Family.


In addition, SCO now offers Tarantella, the Company's new Application Broker for
Network Computing. Tarantella enables customers to deliver both new and existing
applications to any Java technology-enabled client. These applications include
Windows, UNIX system, and mainframe applications. The clients can be palmtop
devices, Web TV, a mobile phone, an NC, a character terminal, or a PC.

3) SUPPORTING A WIDE RANGE OF APPLICATIONS

Because purchase decisions are often driven by the availability of applications,
SCO has positioned its products as a strategic platform for developers of
business applications. Developers write software compatible with SCO's products
because of SCO's leadership in the UNIX market for Intel CPU-based computers and
its support for a wide range of hardware vendors. Applications written for the
SCO environment run on over 2,700 types of computers and peripherals, and can be
readily ported to proprietary or other RISC-based UNIX systems, thus expanding
the market opportunity for the developer. SCO places particular emphasis on
ensuring that SCO business critical servers provide optimal support for the
leading client/server applications, the new Java system-based applications, and
the leading relational database management systems. Major software vendors that
offer application software for the SCO environment include Banyan, Inprise,
Computer Associates, Informix, Lotus, Microsoft, Oracle, Novell, Progress, and
Sybase. In total, SCO UNIX Systems are supported by over 12,000 independent
software vendors (ISVs), representing over 15,000 business-critical
applications.


4) DELIVERING COMPREHENSIVE SUPPORT SERVICES

SCO continues to expand its delivery of support services to meet the needs of
customers using complex, multivendor computer systems. SCO also works closely
with resellers and OEMs to offer channel-delivered support programs to meet the
needs of customers in its target markets. SCO Services offerings include a range
of telephone support options, a CD-based SCO Support Library, on-line services,
and high-level consulting and engineering services. These flexible services give
customers a choice of support plans and pricing models. In addition,
comprehensive education and training programs for resellers and end users are
available though the Company's Advanced Education Centers. Information on these
programs is available on the Services and Support page of the SCO Web site.


5) SUPPLYING MIDDLEWARE FOR MULTIPLE HARDWARE PLATFORMS

Middleware products and technologies represent a class of system software that
enhances the basic operating system. SCO's Optional Service Products division is
tasked with providing middleware for SCO OpenServer Systems, as well as other
UNIX servers.


6) PROVIDING TRUE OPEN SYSTEMS PRODUCTS

Because customers are increasingly reluctant to be restricted to a single
computer vendor, the Company has designed its software products to support
industry-accepted open systems standards. Open systems are those systems which
conform to established industry standards such as I20, XPG-4, Spec 1170, DCE and
OSF/Motif(R) from The Open Group, POSIX(R) from IEEE, Federal Information
Processing Standard (FIPS) from the National Institute of Standards (NIST), and
Internet standards. SCO continuously works with standards organizations such as
The Open Group to assure continued conformance to open systems standards.
Industry standards may be established by organizations composed of vendors, by
government agencies, by academic institutions, or by market acceptance. Industry
standards typically are based on specifications which allow competing
implementations. Because these standards are open, competitors can readily
access the technology to include in their products. Industry standards offer the
customer a cost-effective computing solution by providing a high degree of
compatibility and interoperability among hardware, software, network and
peripheral products. Based on published directories listing 



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vendors and applications, the Company believes there are currently over 15,000
business-critical software solutions compatible with SCO's products.


7) LEVERAGING RESEARCH AND DEVELOPMENT

SCO has developed extensive expertise in sourcing, enhancing and integrating
third-party technologies to provide true open system software solutions. For
example, the SCO OpenServer Enterprise System seamlessly integrates open system
technologies from a number of different third-party software providers to
produce a package that operates as one cohesive product. In this way, SCO
leverages its engineering resources by building upon the technologies developed
by the technical staffs at numerous other companies.


8) DISTRIBUTING PRODUCTS WORLDWIDE

In contrast to operating system software for stand-alone PCs and small networks,
system software for business critical servers requires sophisticated
distribution and support. Over the past 12 years, SCO has developed a highly
trained, multi-tiered, value-added distribution and support infrastructure. This
worldwide network includes over 15,000 resellers and distributors. These parties
implement and support specific solutions for corporate, government and smaller
business customers by integrating SCO's products with those of other vendors.
SCO and its distribution network work together to provide comprehensive support
services ranging from engineering and consulting services to technical support
and training and education.


9) EVANGELIZING TO DEVELOPERS AND EDUCATIONAL INSTITUTIONS

SCO maintains developer and reseller programs to assist independent software
developers (ISVs) and channel partners in both the development and marketing of
SCO business critical servers. SCO developer and reseller programs include joint
marketing campaigns, information exchange, and special access to product
updates, enhancements, and new releases. The Company has established a program
to focus on the use of SCO products at schools and universities, and makes free
copies of its UNIX server licenses available to non-commercial organizations.


10) EXECUTING GLOBAL STRATEGY

The Company's products are designed to support customers throughout the world,
with local language versions available for Europe, Asia, and Latin America. SCO
maintains sales, distribution and representative offices throughout the world
including those in the U.K., France, Germany, Italy, Denmark, Australia,
Singapore, Japan, Canada, Hong Kong, China, Mexico, and throughout the U.S. In
addition, the Company has established design and development centers in the U.K.
and the U.S. to meet company-wide and local product development requirements.


PRODUCTS AND PRODUCT ARCHITECTURE

PRODUCT ARCHITECTURE

SCO provides a family of products for business critical servers, as well as for
specialized business and development workstations used with business critical
servers in many client/server installations. These products are based on a UNIX
System kernel to which SCO has added extensive capabilities. The Company's
products include the following components: operating systems, networking, user
interfaces, client integration software, middleware and development tools.
Operating systems are the instructions which interact with the microprocessor in
a computer, allowing it to perform basic functions such as displaying
information, processing inputs and storing and retrieving data. Operating
systems also provide a platform for running applications which perform useful
functions for end users, including database access, communications services,
spreadsheets, and various utilities. Networking systems support numerous
third-party local and wide-area networking products to allow enterprise-wide
distributed computing. SCO's user interfaces provide an easy-to-use graphical
desktop environment that enables users to access an organization's entire
computing environment. SCO's Client Integration software integrates client
devices, such as Windows PCs and NCs, with UNIX servers. Middleware adds
additional capabilities, such as networking, system and network management,
software distribution and backups. Development tools enable developers and
customers to develop and maintain applications on SCO systems.



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The Company has structured its product families to take advantage of the modular
nature of the overall architecture. Depending on their requirements, customers
can purchase packages ranging from a basic multi-user host system to a
comprehensive enterprise server system, all of which operate with the Company's
development tools.


PRODUCTS

The Company offers three categories of products: (1) UNIX server operating
system products, which include optional server products, (2) Tarantella, the
world's first Application Broker, and 3) client-integration products.

SCO UNIXWARE PRODUCTS

Designed from the ground up to support distributed network computing, UnixWare 7
delivers purpose-built operating system configurations designed to power
departmental databases, application servers, intranet servers, mail and
messaging servers and environments specifically tailored to run
telecommunications and other embedded environments. UnixWare 7 is supported by
leading enterprise application vendors, and backed by more enterprise hardware
manufacturers than any other UNIX server environment.

As an applications server, SCO UnixWare 7 provides all of the facets of business
critical computing -- including built-in security, reliability, and fault
tolerance -- on a standard, cost-effective, and high-performance Intel single-
or multi-processor hardware platform. It supports thousands of enterprise,
commercial, and industrial-grade applications and has established performance
levels running leading database systems from Oracle, Sybase, and Informix.

One of the striking things about the SCO UnixWare system's consistent record
breaking performance is that these records were not established on proprietary
hardware from a single supplier, but on standard technology components from
several vendors. With Intel's establishment of its MP Spec, hardware vendors can
compete in developing increasingly high-performance systems that will
automatically support the SCO UnixWare system.

With the SCO UnixWare 7 system providing an open, standards-based operating
platform, and numerous hardware manufacturers supporting an open SMP(TM)
implementation, customers are assured of increasing performance, increasing
value, and the luxury of choice.

BASE UNIXWARE OPERATING SYSTEMS

UnixWare 7 Base Edition: Base-line services for the individual workstation user
or as a platform for building dedicated environments, such as a telephony or
embedded solution.

UnixWare 7 Enterprise Edition: A highly available, scalable, high-performance,
network-ready and secure operating environment to run enterprise-wide business
applications that manage, distribute and warehouse business critical
information.

UnixWare 7 Departmental Edition: A high-performance and reliable operating
environment that supports any client and runs applications that automate
business processes and reliably share business critical information.

UnixWare 7 Messaging Edition: Scalable, reliable and advanced mail and messaging
system that includes all of the components required to run a powerful Email
solution.


SCO OPENSERVER PRODUCTS

The SCO OpenServer system is today's leading UNIX server operating system for
Intel processor-based platforms. Businesses use SCO OpenServer systems to
simplify and speed business operations, better understand and respond to their
customers' needs, and achieve a competitive advantage. SCO OpenServer systems
are exceptional at running multi-user, transaction-based DBMS and business
applications, communications gateways, mail and messaging servers in both host
and client/server environments. SCO OpenServer Release 5 combines
minicomputer-level reliability and availability with the Intel platform's
exceptional price/performance, value and flexibility. Unlike other advanced
operating systems, SCO OpenServer Systems revolutionize business productivity
without obsoleting existing business critical systems, applications or data.
Designed expressly for business critical computing, SCO OpenServer systems
deliver what today's organizations are seeking - exceptional value and
price/performance, extensible networking with existing LANs and WANs, easy
integration with Windows desktops, built-in Internet access and services,
simplified administration and management, and outstanding scalability for long
term growth.


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  Base SCO OpenServer Operating Systems--

   SCO OpenServer Enterprise System: A 32-bit, multi-user, multitasking
X/Open(R) UNIX System-compliant operating system with integrated graphics,
multi-protocol networking, Internet services, mail and messaging services, and
remote systems administration and software management.

  SCO OpenServer Host System: A 32-bit, multi-user, multitasking, X/Open UNIX
System-compliant operating system with integrated graphics and simple PC
connectivity and mail and messaging services. It can be easily upgraded to the
Enterprise System when client/server or networking capabilities are required.

   SCO OpenServer Desktop System: An advanced, single-user operating system that
delivers secure workstation capabilities and performance on cost-effective Intel
platforms.



SCO OPTIONAL SERVICES PRODUCTS

SCO Optional Services Products include The SCO Internet Family of products, plus
SCO Advanced File and Print Server, SCO(R) ARCserve(R)/Open from Cheyenne(R),
and SCO Doctor(TM).

     The SCO Internet Family. The SCO Internet Family provides Internet access
for corporate LANs. By using the family of products as an Internet gateway,
organizations can provide users with access to the vast resources of the
Internet while providing advanced security; publish information for internal and
external audience; create corporate intranets, and conduct electronic commerce.
The SCO Internet Family provides everything needed to get up and running on the
web quickly. It includes multi-line PPP, multi-homing support, Netscape
Navigator(TM), and Netscape Communications Server(TM). Installation and
configuration are made simple via a HTML-based tool that guides the installer
painlessly through the entire install process. It also supports TCP/IP,
IPX/SPX(TM), NFS(R), NIS, DNS, PPP, SMTP, POP networking protocols, and includes
network install capability.

      Additional SCO Internet Family Product Options -- For customers with
existing SCO servers, or those who wish to extend their Internet functionality,
the SCO Internet Family also has a number of optional products. These include
Netscape Commerce Server(TM), Netscape Communications Server, The Netscape Proxy
Server(TM), Netscape Navigator, SCO Internet to NetWare Gateway, SCO Internet
Security Package, and SCO PPP from Morning Star.

      SCO Advanced File and Print Server - Seamless Integration of UNIX Servers
and Windows. The SCO Advanced File and Print Server, when used with SCO
OpenServer Release 5, creates a UNIX system based network operating system that
allows file and printer access to PCs running Microsoft Windows 95, Windows NT,
Windows 3.x, OS/2(R), and MS-DOS.

Fully backward compatible with LAN Manager Release 2.2, SCO Advanced File and
Print Server is based on the newest Microsoft NT networking technology and is
peer-to-peer compatible with Microsoft NT. Because Advanced File and Print
Server is actually based on NT technology, the server appears to the desktop
clients exactly as if it were an NT server.

SCO Advanced File and Print Server provides a highly integrated environment
allowing PCs to access files and printers in the native Windows format while
accessing mission-critical business applications running on the server. UNIX
directories are accessed as Windows network drives and UNIX printers are
accessed as if they were connected directly to the desktop PC.

      SCO ARCserve/Open -- Multi-platform Network Backup and Restore. SCO
ARCserve/Open is an easy-to-use, high-performance, comprehensive data management
tool for enterprise networks. Developed by Cheyenne Software, the industry
leader in backup and restore technology, SCO ARCserve/Open delivers a business
critical data management system. SCO ARCserve/Open brings a unique combination
of ease-of-use, automation, high performance, and reliability to the SCO
platform. It provides the robust feature set that administrators require and the
simplicity necessary for end-users to do their own backups.

Utilizing an intuitive Motif interface, SCO ARCserve/Open makes managing the
backup of large servers and heterogeneous networks simple. Ease-of-use is
enhanced by the Auto Pilot feature, which provides full automation of the data
management process, including tape rotation. High throughput is provided by an
efficient backup engine which optimizes performance of each tape drive. Even
greater throughput is achieved with the Parallel Streaming feature, which
supports simultaneous backup to multiple tape devices.

      SCO Doctor -- Pro-Active Remote Systems Management. The SCO Doctor
advanced systems management tool is the first to address the many UNIX system
configurations in use today. SCO Doctor incorporates advanced process
monitoring, accurate diagnosis and automatic problem correction. Notification of
alerts can be 



                                       7
<PAGE>   10

communicated to the administrator via pop-ups on the Doctor console, the
built-in pager support, or by e-mail notices. Alerts, in turn, invoke
intelligent action programs to automatically correct the problem or notify the
system administrator that intervention is required. It supports diverse network
protocols. The Doctor agent collects data from a variety of sources including
the UNIX kernel, operating system configuration, the file system, standard UNIX
performance monitoring commands and local utilities, as well as third party
applications. SCO Doctor can be customized to meet a wide range of customer
requirements. Views, reports, action programs, alerts, data collection subagents
and file transfer programs can easily be customized using Tcl scripting
commands.

     SCO Doctor for Networks(TM) systems management tool is an enhanced version
of Doctor that can manage small networks or large installations of several
thousand systems over a LAN or WAN. If required, support staff can use the
"connect-back" capability of Doctor for Networks for live monitoring of the
remote system and perform further diagnosis of problems via the simultaneous
log-in facility. SCO Doctor Agent supports SNMP traps and provides extensive
system query information through the Doctor enterprise MIB. Doctor for Networks
supports everything from low-speed async dial-up modems to TCP/IP, PPP, SLIP and
e-mail-enabled transports. It provides uncompromised operation over regular
phone lines to ensure that the widest range of UNIX systems can, at last,
"afford" to be managed. It includes a full-featured set of facilities for file
transfer, remote command execution and remote login facilities. By incorporating
powerful remote communications features, the need to purchase a separate
communications product is eliminated.



TARANTELLA

Tarantella is the first application broker for network computing. Tarantella
provides any client device on the network with secure, Web browser access to any
server application on the network. This enables organizations to provide anyone,
inside or outside the enterprise, with secure access to their current
business-critical applications.

Running on any UNIX server -- including those from Sun, IBM, HP, and Siemens --
Tarantella software immediately enables any application to be accessed by any
user device with a Web browser (PC, network computer, graphical terminal,
palmtop computer, or other device). Unlike other client-integration solutions,
Tarantella usually requires no software to be installed on the user devices.
This dramatically reduces the cost, time, and labor of moving to Internet-based
network computing. Unlike competing products that provide access to only one
kind of application, Tarantella provides access to mainframe and minicomputer
applications, X applications, and even Windows applications.

Tarantella dramatically lowers the total cost of ownership by supporting
hardware and software already in use, by eliminating the cost of installing
software on clients, and by providing centralized system administration. With
Tarantella, organizations can move their current applications onto the network
without rewriting code or disrupting their current operations.



SCO CLIENT-INTEGRATION PRODUCTS / THE SCO VISION FAMILY

The SCO Vision family includes powerful and extensible Windows to UNIX Systems
integration products, providing a "best of both worlds" solution - the
reliability and scalability of UNIX Systems and the plug-and-play ease of
Microsoft Windows. These products are available and optimized for all Windows
platforms, including 3.1, NT, and Windows 95.

SCO Vision97 - Bringing together Windows, UNIX and the Internet

SCO Vision97 integrates Windows, UNIX and the Internet for just a little more
than the price of a PC-X server. SCO Vision97 is a new generation of Windows to
UNIX integration products, designed to bring the benefits of the new Internet
computing model to Windows PC users. Going beyond simply accessing UNIX
applications, SCO Vision97 adopts the principles of centralized management,
server deployment and Internet integration and cuts the cost of ownership of
existing PC networks. SCO Vison97 offers access to X and character-based
applications, server-based file and print sharing and ODBC middleware. Together
they form a tightly integrated suite that is designed for Network Computing.

   SCO SuperVision - Remote Management of Windows Desktops

SCO(R) SuperVision(TM) gives system administrators the power to remotely manage,
configure and control SCO Vision Family desktops on the corporate network. By
allowing updates to all desktops in a single stroke, SCO SuperVision can
dramatically cut the cost of managing and supporting large groups of Windows
users. SCO SuperVision will manage both PCs directly connected to the network
and those connected remotely over a modem link.



                                       8
<PAGE>   11

  SCO VisionFS - Microsoft File and Print Services

SCO VisionFS(TM) provides Microsoft file and print services from any UNIX server
(HP, Sun, IBM, Digital, SCO etc.) to Windows PCs. It makes a UNIX server appear
like any other Windows machine on the network. No software has to be installed
on the PC to allow access to files and printers on the UNIX server. Using the
SCO VisionFS smart server approach delivers dramatic cost savings in
installation, administration and maintenance of PCs, compared to NFS client
solutions.

   SCO TermVision - The Business Critical Terminal Emulator

SCO(R) TermVision(TM) is a powerful 32-bit terminal emulation package which
presents UNIX character-based applications, files and services in Windows terms
for Windows users. SCO TermVision increases efficiencies, flattens the learning
curve and reduces administration overhead with a combination of highly
configurable emulators, secure and intelligent communications, and facilities
for remote administration.

   SCO XVision - The Transparent PC X Server for Microsoft Windows

SCO(R) XVision(R) is the world's first transparent PC X server - designed so
that all users see is Microsoft Windows. Using a transparent interface, SCO
XVision can reduce the cost and need for training and support. Users can use
XVision and Windows applications side by side without even knowing it.

SCO SQL-Retriever - ODBC Middleware for Simultaneous Access to Multiple
Databases

SCO(R) SQL-Retriever(TM) is an Open Database Connectivity (ODBC) middleware
product designed to provide simultaneous access to a range of UNIX databases.
SCO SQL-Retriever also supports the Java Database Base Connectivity (JDBC)
protocol, for full access to databases across Internet/intranet networks. With
SCO SQL-Retriever users can link Windows spreadsheets, development tools, report
writers or Windows databases with all popular UNIX databases. PC users can take
advantage of Windows productivity tools to present their text-based databases
with all popular UNIX databases. PC users can take advantage of Windows
productivity tools to present their text-based database information in a more
flexible way. Developers can use SCO SQL-Retriever to create distributed
applications working with multiple hosts and databases without needing to buy
proprietary database tools for each.

   Premier Motif - The Business Critical Motif

Premier Motif, which provides Windows management technology, is a complete
service for Motif developers including software and support. SCO ensures that
users invest their time in developing applications rather than debugging or
developing Motif itself. Premier Motif has developed from over four years'
experience as the world's leading third party Motif supplier. Premier Motif
focuses on providing the highest quality Motif libraries, refining and enhancing
OSF/Motif and ensuring a robust and portable development base. SCO has taken
OSF/Motif and added numerous enhancements, many not found in any other vendor's
Motif implementation.


MARKETS

The Company targets three major market segments: (1) primary information systems
for small and medium-sized businesses, (2) replicated systems for use in
distributed information systems in medium-sized and large organizations,
including Fortune 1000 Corporations, and (3) business-critical enterprise
servers for large and medium-sized businesses.

The Company continues to drive the Small and Medium Business market forward with
new products, such as SCO OpenServer Release 5.0.5, which incorporates the
latest Internet and multimedia technologies, and the new UnixWare 7 Business
Edition, scheduled for release in 1999. Many of today's largest retail chains,
with numerous replicated sites, depend on SCO OpenServer to run their day-to-day
operations.

For enterprise environments, SCO this year launched UnixWare 7 - the most
advanced operating system for the Intel platform. It combines the power,
reliability, availability, and scalability of UNIX systems with the volume
economics of Intel processors.

Meanwhile, SCO is also accelerating its growth into the enterprise computing
market with Tarantella, the first application broker for network computing.
Tarantella provides virtually any client device on the network with secure, Web
browser access to any server application on the network.


                                       9
<PAGE>   12

SALES AND DISTRIBUTION

SCO has developed a highly trained and diverse sales and distribution channel of
over 15,000 resellers and distributors. These channel partners are selected for
their expertise and experience. In some cases, the contractual arrangements
require minimum purchases and are generally terminable by either party. The
Company permits selected resellers to return a limited amount of product for
stock balancing, provided a new equivalent order is received. In the event the
Company reduced product prices, the Company's standard terms for these resellers
provide credit for inventory ordered in the previous 180 days, which can be
applied against future purchases. The Company, as a matter of policy, does not
allow product returns for a refund. In the fourth fiscal quarter of 1995, the
Company increased its provision for exchange of products in its international
operations which adversely affected its operating results. During the third
fiscal quarter of 1997, the Company reduced its channel inventory across all
product lines resulting in reduced revenues. There can be no assurance that
stock balancing and exchanges in the future will not adversely affect the
Company's operating results. The SCO sales and distribution channels focus on
three major customer groups:

 Small and Medium-Sized Businesses. SCO works with VARs and authorized resellers
which develop and/or sell business solutions to small and medium-sized
businesses.

 Corporate Customers. In the U.S., and for selected customers across Europe, SCO
has developed a major account team that builds and manages the relationships
with customers in targeted industries as well as with the Company's channel
partners who support these customers. In smaller markets this role is filled by
major distributors. SCO provides direct support to major corporate customers. In
addition, support is provided by OEMs who market SCO solutions on their
hardware, systems integrators who develop project-specific solutions integrating
SCO products with other vendors' products, and VARs who provide
industry-specific, ready-to-use solutions.

Government Customers. In the U.S., SCO has a dedicated account team that manages
the relationships with government agencies. Government sales outside the U.S.
are managed by SCO regional management or by OEMs, major distributors or major
resellers. SCO also works with federal system integrators who integrate products
from various vendors and provide support services for complete projects.


CUSTOMER SUPPORT AND SERVICE

Because of the business-critical use of SCO's products, customer support and
services have become essential to achieve a high level of customer satisfaction.
The Company's services are designed to support its wide range of customers, from
small and medium-sized businesses to large enterprises, both at the end user and
reseller levels. The Company, through its worldwide customer support and service
staff and its authorized third-party education, support and channel partners,
offers a variety of support and services:

* Technical Support includes a variety of support offerings including online
support through the World Wide Web, a dial-up bulletin board and varying levels
of telephone support for channel partners and corporate accounts;

* Educational Services include courseware and instruction guides provided to
approximately 140 Authorized Education Centers, which in turn provide training
and education materials to both end users and resellers in local languages;

* Consulting Services consist of direct assistance, including on-site technical
personnel for extended assignment, and integration, implementation and
deployment of applications on SCO platforms for branch automation and other
large business environments;

* Developer Services include technical advisory and support services as well as
access to early product releases for application developers; and

* Engineering Services consist of engineering personnel who assist OEMs to port
and support SCO products on their hardware platforms.

The Company sells support services to end users on an annual contract or
as-needed basis. Options are available so that customers can tailor the support
solution to meet their specific needs. Electronic access is available through
the World Wide Web, remote or local bulletin boards and through discussion
groups on CompuServe and the Internet. Software updates, enhancements, and bug
fixes are also available electronically. SCO also supports end users via
Authorized Support Centers and Premier Service Centers. The Company also
provides its support services to distributors, VARs, OEMs and integrators.



                                       10
<PAGE>   13

PRODUCT DEVELOPMENT

Since its inception, the Company has focused considerable resources on the
development and integration of UNIX systems and open systems software
technologies and standards for Intel CPU-based computers. SCO has developed
skills in operating systems, user interfaces, networking, porting and
applications software support. The Company's development strategy is based upon
utilizing and building upon technologies it owns, such as UNIX Systems
technologies as well as products already available in the marketplace. In
December of 1995, SCO purchased the UNIX Systems technologies from Novell, Inc.
and is now a primary driving force behind this open systems platform.

During the third quarter of fiscal 1997, SCO restructured to increase overall
efficiency. SCO integrated the efforts of its various development teams to
deliver the features and functionality businesses expect from SCO systems faster
and more efficiently.

SCO devotes considerable resources to ongoing product testing and quality
assurance to support product reliability. The Company believes that its
abilities to integrate product technologies, to incorporate a wide variety of
standards into its products, and to continue to offer enhancements to its
existing products are essential to maintaining its competitiveness in the
marketplace. SCO has introduced development tools which allow developers to
write applications which take advantage of the increased power of the ongoing
Intel family of processors, including the Pentium, Pentium II and Pentium pro.
In addition, the Company now offers localized versions of its core business
critical servers, including SCO UnixWare products in English, French, Italian,
German, Spanish, and Japanese, and SCO Open Server products in French, German,
Chinese and Japanese.

SCO has taken strong steps to mitigate operating system date processing errors
that might occur with the onset of the Year 2000 (Y2K). SCO has: 

o       Issued a Year 2000 Date Processing Warranty that defines how we expect
        our products to perform when processing dates in the Year 2000.

o       Published the SCO Year 2000 Whitepaper detailing how Year 2000 affects
        SCO products and what products are covered by the Year 2000 Date
        Processing Warranty.

o       Performed Year 2000 testing of all current SCO products.

o       Prepared fixes for Year 2000 problems that have been detected in current
        SCO supported products.

SCO product development is comprised of one integrated organization that
implements SCO's two product strategies--UNIX servers and Client Integration
products.

The UNIX server development teams are responsible for the core operating systems
and services including SCO OpenServer, SCO UnixWare, and the forthcoming 64-bit
UNIX system, code-named Monterey64. They are also responsible for additional OS
services such as SCO(R) Merge(TM), Virtual Disk Manager and On Line Data Manager
(RAID subsystems), Development Systems, and new technology development projects
that are UNIX kernel-related such as clustering and NUMA support. In addition,
they are responsible for many layered server functions that extend the
capabilities of the core operating systems. These services include file and
print services, system management and backup services, and, most important,
Internet services.

The client integration development teams are responsible for SCO's "Windows
integration" and "any-client integration" products and services. SCO's strategy
is to integrate almost any client with almost any UNIX server. The teams build
the SCO Vision family of products which includes SCO Vision97, SCO XVision, SCO
TermVision, SCO SuperVision, SCO SQL-Retriever. They also develop Tarantella
products, which extend SCO's and "any-client" proposition to Network Computing
environments.

The market for the Company's products is characterized by rapidly changing
technology, evolution of new industry standards, and frequent introductions of
new products and product enhancements. The Company's success will depend upon
its continued ability to enhance its existing products, to introduce new
products on a timely and cost-effective basis to meet evolving customer
requirements, to achieve market acceptance for new product offerings, and to
respond to emerging industry standards and other technological changes. There
can be no assurance that the Company will be successful in developing new
products or enhancing its existing products or that such new or enhanced
products will receive market acceptance. The Company's success also depends upon
its ability to license from third parties and to incorporate into its products
new technologies that become industry standards. There can be no assurance that
the Company will continue to obtain such licenses on favorable terms or that it
will successfully incorporate such third-party technologies into its own
products.




                                       11
<PAGE>   14

The Company anticipates new releases of products in the fiscal year ending
September 30, 1999. There can be no assurance that such new releases will not be
affected by technical problems or "bugs", as is common in the software industry.
Furthermore, there can be no assurance that these or other future product
introductions will not be delayed. Delays in the availability, or a lack of
market acceptance, of new or enhanced products could have an adverse effect on
the Company's business. There can be no assurance that product introductions in
the future will not disrupt product revenues and adversely affect operating
results.

COMPETITION

The market for operating systems is very competitive and rapidly changing. The
Company encounters significant competition from a limited number of direct
competitors including Microsoft, Novell, IBM and Sun Microsystems, which offer
hardware-independent multi-user operating systems for Intel platforms, and from
OEMs such as AT&T, Compaq, Hewlett-Packard, IBM, Olivetti, Sun Microsystems and
Unisys, which offer their own versions of the UNIX System on a variety of RISC
and Intel CPU-based hardware. Over the past months competition from companies
selling versions of the Linux Operating System has increased. Many of these
hardware competitors also offer SCO's system software products, either through
direct OEM agreements or indirectly through the various distribution channels
used by the Company. In addition, to the extent the Company's products
increasingly penetrate the markets for larger and multiprocessor servers, SCO
will increasingly face competition from IBM's AS/400, Compaq's Alpha-based
servers, and Sequent servers.

Competitive systems not based on Intel microprocessors are offered by DEC,
Hewlett-Packard, IBM, and Sun Microsystems, among others. These systems are sold
with operating system software which is based upon the UNIX System and offer
many of the benefits of the Company's products. The Company also expects to
receive increasing direct competition on the Intel platform from OEM versions of
the UNIX System and from such hardware-independent operating systems as
Microsoft Windows NT and SunSoft's Solaris for Intel. The Company expects
Microsoft Windows NT (server and workstation) to continue to offer significant
and increasing competition to UNIX System products, including SCO products. Many
of these competitors and potential competitors have significantly greater
financial resources, more technical personnel and more extensive marketing and
distribution capabilities than the Company. The major factors that affect the
competitive market for the Company's products include product reliability,
availability of user applications, compliance with industry standards, ease of
use, networking capability, breadth of hardware compatibility, quality of
support and customer services, product performance and price.

Over recent years, operating systems such as GNU, Linux, FreeBSD and others
developed using collaborative and "open source" techniques have gained
popularity with highly technical users, and some integrators. Some of SCO's
competitors may exploit this technology to build competitive products, or the
market for SCO's products may be reduced by either technical users using these
products or the products becoming easier to use and more stable.

In addition, certain competitive products may have advantages compared to
certain SCO products. Microsoft Windows NT has greater name recognition than the
Company's products and is being designed to run on a greater range of
processors. The Company's exclusive focus on system software may be a
competitive disadvantage to those competitors which offer a wider range of
products. The Company may also be at a disadvantage relative to those
competitors who have greater financial resources, larger technical staffs, and
more extensive marketing and distribution capabilities. There can be no
assurance that either existing or new competitors will not develop products that
are superior to the Company's products for basic desktop and certain server
applications for the UNIX System. If competition were to cause the Company to
reduce its prices significantly, the Company's results of operations could be
adversely affected. The Company's future success will depend in large part on
the following conditions: the continued growth of the UNIX market for business
and governmental organizations, the Company's ability to continue to license
additional products and product enhancements to existing customers, and the
ability to identify and market its products to new markets and customers. There
can be no assurance that future competition will not have a material adverse
effect on the Company's results of operations.

The Company's strategy is to offer products that conform to industry standards.
Industry standards may be established by organizations composed of vendors, by
government agencies, by academic institutions, or by market acceptance. Industry
standards typically are based on specifications for which there can be competing
implementations. Because standards are open (not proprietary), competitors can
readily access the technology to include in their products, and SCO does not
believe that offering products conforming to industry standards will provide SCO
with a competitive advantage.

The Company's products are offered primarily for multi-user computer
environments on Intel CPU-based computers. The market for MS-DOS and Windows on
personal computers for personal productivity is substantially larger than 



                                       12
<PAGE>   15

the market for UNIX Systems on Intel CPU-based computers. Because the Company
competes in a smaller market than the personal productivity market addressed by
MS-DOS and Windows, the Company's potential for future growth will depend in
part on the extent to which the UNIX market continues to grow. The existence of
a number of different versions of UNIX operating systems may have adversely
affected the growth of the UNIX market compared to alternative operating
systems. However, the emergence of such technologies as the Internet, the World
Wide Web, Java, network computers and the TCP/IP networking protocol as de facto
industry standards has helped strengthen the position of UNIX system as an
operating system that functions consistently across a broad range of hardware
platforms and computing architectures such as Host, Client/Server and now
Network Computing. In addition, SCO is working with The Open Group, a major
international standards group, to support the implementation of standard
application programming interfaces (APIs) that will support applications
compatibility across different versions of UNIX systems. To date, SCO and other
major UNIX vendors have adopted varying schedules for compliance with these API
specifications, and there can be no assurance this effort will be successful.

SCO's Tarantella product faces competition from products using technologies to
deploy applications -- such as terminal emulation, compression systems, virtual
private networks -- and also faces competition from products taking a similar
approach to web-enabling applications. These include offerings from companies
such as WRQ, Hummingbird and GraphOn. In addition, products that deploy Windows
applications only can be configured with additional functions such as terminal
emulators to provide functional behavior similar to that of Tarantella. These
products include CITRIX, NCD WinCenter, and Microsoft Windows Terminal Server.
SCO is targeting Tarantella products and services into the enterprise market
where SCO does not have a strong range of partners and where the SCO brand is
little known, making alternative suppliers a competitive threat. SCO's
Tarantella products run on Solaris, AIX, HP/UX and other UNIX operating systems,
and therefore are dependant on continued use of these products in the target
markets. Tarantella aims to support many different server types and client
types, but it is possible that client or server vendors could "close" access to
their products to prevent customers from using Tarantella.


PROPRIETARY RIGHTS

The Company attempts to protect its software with a combination of copyright,
trademark, and trade secret laws, employee and third-party nondisclosure
agreements, license agreements, and other methods of protection. Despite these
precautions, it may be possible for unauthorized third parties to copy certain
portions of the Company's products or reverse engineer or obtain and use
information the Company regards as proprietary. While the Company's competitive
position may be affected by its ability to protect its intellectual property
rights, the Company believes that trademark and copyright protections are less
significant to the Company's success than other factors, such as the knowledge,
ability, and experience of the Company's personnel, name recognition, and
ongoing product development and support.

The Company's software products are generally licensed to end users on a
"right-to-use" basis pursuant to a perpetual license. The Company licenses its
products to end users primarily under "shrink-wrap" license (i.e., licenses
included as part of the product packaging). Shrink-wrap licenses, which are not
negotiated with or signed by individual end-user licensees, are intended to take
effect upon opening of the product package. Certain provisions of such licenses,
including provisions protecting against unauthorized use, copying, transfer, and
disclosure of the licensed product, may be unenforceable under the laws of
certain jurisdictions. In addition, the laws of some foreign countries do not
protect the Company's intellectual property rights to the same extent as do the
laws of the U.S.

As the number of software products in the industry increases and the
functionality of these products further overlaps, the Company believes that
software products will increasingly become subject to infringement claims. There
can be no assurance that third parties will not assert infringement claims
against the Company and/or against the Company's suppliers of technology. In
general, the Company's suppliers have agreed to indemnify the Company in the
event any such claim involves supplier-provided software or technology, but any
such claim, whether or not involving a supplier, could require the Company to
enter into royalty arrangements or result in costly litigation.

The Company depends on the availability of technology from third parties. Most
of the software licensed by the Company is written to comply with industry
standards and because the licensor is seeking to broaden its market it is made
widely available on a non-exclusive basis by the licensor. As a result, this
software is also readily available to competitors of the Company which want to
incorporate such software into their products. The loss of any significant
third-party license or the inability to license additional technology as
required, could have a materially adverse effect on the Company's results of
operations until such time as the Company could replace such technology.


                                       13
<PAGE>   16

EMPLOYEES

As of September 30, 1998, the Company had 1,136 employees, including 363 in
product development, 380 in sales and marketing, 152 in customer support
services, and 241 in finance, manufacturing and distribution services and
administration.

The Company's success depends in part on its executive officers, none of whom
are subject to long-term employment contracts. The loss of any current executive
officer could adversely affect the Company's business. The success of the
Company also depends in part on its ability to attract and retain qualified
technical, managerial, and marketing personnel. Competition for such personnel
is intense in the software industry and there can be no assurance that the
Company will be successful in attracting and retaining such personnel.


ITEM 2. PROPERTIES

The Company is headquartered in Santa Cruz, California, where it leases
administrative, sales and marketing, product development and distribution
facilities. The Company leases additional facilities for administration, sales
and marketing and product development in Murray Hill, New Jersey and Watford,
England. The leases for the Company's facilities expire at various dates through
2020. The Company has renewal options, at fair market value, under many of these
leases and believes that in any event additional or alternative space adequate
to serve the Company's foreseeable needs would be available on commercially
reasonable terms.

The Company's field operations occupy leased facilities in 12 locations in the
United States. In addition, the Company's subsidiaries and sales and
representative offices in France, Germany, Italy, Spain, Sweden, Denmark,
Singapore, Australia, China and Mexico lease space for their operations.
Worldwide, the Company leases property in 38 locations consisting of an
aggregate of approximately 370,000 square feet. The Company believes that these
facilities are adequate for its needs in the foreseeable future.

ITEM 3.  LEGAL PROCEEDINGS

No material legal proceedings are pending to which the Company is a party or to
which any property of the Company is subject.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the fourth
fiscal quarter of 1998.

EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers of the Company as of September 30, 1998 were as follows:

<TABLE>
<CAPTION>
Name                       Age        Position with the Company
----                       ---        -------------------------
<S>                        <C>        <C>
Douglas L. Michels         44         President and Chief Executive Officer

Ray Anderson               40         Senior Vice President, Marketing

John Luhtala               55         Senior Vice President, Operations, and Chief Financial
                                      Officer

David McCrabb              50         Executive Vice President, Worldwide Sales and Field
                                      Operations

Jack Moyer                 49         Senior Vice President, Human Resources

Steve Sabbath              51         Senior Vice President, Law and Corporate Affairs, and
                                      Secretary

Geoff Seabrook             50         Senior Vice President, Corporate Development

James Wilt                 52         Senior Vice President, Products
</TABLE>



                                       14
<PAGE>   17

Mr. Michels was named President and Chief Executive Officer in April 1998. Mr.
Michels is the principal architect of the Company's technology strategy and
served as the head of product development between June 1997 and April 1998 and
as Chief Technical Officer between February 1993 and June 1997. Mr. Michels has
been a director of the Company since 1979 and served as the Company's Executive
Vice President between 1979, when he co-founded the Company, and April 1998. Mr.
Michels is one of the founders of Uniforum, a UNIX(R) user consortium, and
served as its President from 1989 to 1990.

Mr. Anderson was named Senior Vice President, Marketing in April 1998. Between
June 1997 and April 1998, he served as Senior Vice President, Marketing,
Products Division. Between December 1994 and June 1997, Mr. Anderson served as
Senior Vice President and Managing Director, Client Integration Division. Mr.
Anderson was named Senior Vice President of SCO and Managing Director of IXI
Limited when SCO acquired IXI Limited in February 1993. Mr. Anderson was a
founder of IXI Limited and served as its Managing Director commencing in 1987.

Mr. Luhtala was named Senior Vice President and Chief Financial Officer in
January 1997. Prior to joining the Company, between May 1996 and December 1996,
Mr. Luhtala served as Chief Financial Officer and Vice President, Mergers,
Acquisitions and Joint Ventures at SyQuest Technology. From February 1987 to May
1996, Mr. Luhtala served in various financial management positions with Amdahl.

Mr. McCrabb was named Executive Vice President, Worldwide Sales and Field
Operations in April 1998. Between January 1995 and June 1997, he served as Vice
President, Marketing and Channel Sales, then as Senior Vice President, Market
Planning between July 1997 and April 1998 . Prior to joining the Company, Mr.
McCrabb served as Vice President and General Manager for Applied Digital Data
Systems, a wholly owned subsidiary of NCR, since February 1994. From November
1989 to February 1992, he served as Vice President, Sales and Marketing for
Primary Access Corporation.

Mr. Moyer was named Senior Vice President, Human Resources in January 1998. He
has served as Vice President, Human Resources since August 1995. Prior to
joining the Company, Mr. Moyer served as Vice President, Human Resources for the
following companies: Ore Ida Foods from 1992 to August 1995; Maspar Computer
Corporation from November 1991 until November 1992; Businessland from January
1985 until November 1991. Mr. Moyer's senior human resources management
experience also includes positions at National Mirconetics, Inc. and National
Semiconductor Corp.

Mr. Sabbath was named Senior Vice President, Law and Corporate Affairs, and
Secretary in January 1998. Between 1993 and 1997, he served as Vice President,
Law and Corporate Affairs, and Secretary and served as Vice President, Legal
Affairs between 1991 and 1993. Prior to joining the Company, between February
1988 and January 1991, Mr. Sabbath was the Deputy General Counsel for Sun
Microsystems, Inc., a manufacturer of UNIX system-based hardware and software.

Mr. Seabrook was named Senior Vice President, Corporate Development in April
1998. Since joining the Company in 1989, Mr. Seabrook has held a number of
strategic positions, including Senior Vice President and General Manager, EMEIA.
Prior to joining the Company, Mr. Seabrook served as Vice President
International Operations at Century Data Inc.

Mr. Wilt was named Senior Vice President, Products in April 1998. Since joining
the Company in 1983, Mr. Wilt has held a number of strategic positions both in
the U.S. and in Europe including those of Vice President, Business Development
and Vice President, International. Mr. Wilt formerly held management positions
in sales, marketing, and planning at Xerox, Honeywell and Amdahl.



                                       15
<PAGE>   18

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The following required information is filed as a part of the report:

The Company has not paid cash dividends on its common stock. The Company's
common stock is traded over-the-counter and is quoted on the Nasdaq National
Market under the symbol "SCOC". The following table sets forth the range of high
and low closing sale prices for the Common Stock:

<TABLE>
<CAPTION>
                                  Low Sale Price         High Sale Price
                                  --------------         ---------------
<S>                               <C>                    <C>
Fiscal 1997:
     First Quarter                     6-1/4                 7-3/8
     Second Quarter                    6-1/4                 8-1/2
     Third Quarter                     3-1/4                 6-5/16
     Fourth Quarter                    3-11/16               7-1/16

Fiscal 1998:
     First Quarter                     4                     6-3/8
     Second Quarter                    3-3/8                 5-5/16
     Third Quarter                     3-7/8                 6-3/8
     Fourth Quarter                    2-3/4                 4-15/16
</TABLE>

On December 15, 1998, there were approximately 7,200 holders of the Company's
Common Stock.

ITEM 6.  SELECTED FINANCIAL DATA

The information set forth on page 10 of the 1998 Annual Report to Shareholders
is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The information set forth on pages 11 through 17 of the 1998 Annual Report to
Shareholders is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following financial statements and supplementary financial information for
the Company and reports of independent accountants set forth on pages 18 through
33 of the 1998 Annual Report to Shareholders are incorporated herein by
reference.

        o       Consolidated Statements of Operations for each of the years in
                the three-year period ended September 30, 1998

        o       Consolidated Balance Sheets as of September 30, 1998 and 1997

        o       Consolidated Statements of Shareholders' Equity (Deficit) for
                each of the years in the three-year period ended September 30,
                1998

        o       Consolidated Statements of Cash Flows for each of the years in
                the three-year period ended September 30, 1998

        o       Notes to Consolidated Financial Statements

        o       Reports of Independent Accountants

        o       Quarterly Financial Information

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES

On December 30, 1997, the Company changed its independent auditors from KPMG
Peat Marwick LLP to PricewaterhouseCoopers LLP as previously reported on Form
8-K filed with the Securities and Exchange Commission on January 7, 1998 (File
No 0-21484). There were no disagreements with any of the Company's independent
accountants during the fiscal year ended September 30, 1998.


                                       16
<PAGE>   19

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information with respect to Directors may be found under the caption "Election
of Directors" of the Company's definitive Proxy Statement for the Annual Meeting
of Shareholders to be held February 23, 1999 (the "Proxy Statement"). Such
information is incorporated herein by reference. Information with respect to
Executive Officers and Officers may be found on pages 14 through 15 hereof,
under the caption "Executive Officers and Officers of the Registrant."


ITEM 11. EXECUTIVE COMPENSATION

The information set forth under the caption "Executive Compensation and Other
Matters" of the Company's Proxy Statement is incorporated herein by reference.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information set forth under the caption "Record Date and Principal Share
Ownership" of the Company's Proxy Statement is incorporated herein by reference.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information set forth under the captions "Certain Transactions with
Management" and "Compensation Committee Interlocks and Insider Participation" of
the Company's Proxy Statement is incorporated herein by reference.




                                       17
<PAGE>   20
                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K

(a)  Documents filed as part of Form 10-K

         1.        Financial Statements

                  The financial statements of the Company as set forth under
Item 8 of this report on Form 10-K are incorporated herein by reference.

         2.       Financial Statement Schedule

<TABLE>
<CAPTION>
                  Schedule                                                         Page
                  Number            Description                                   Number
                  ------            -----------                                   ------
<S>               <C>            <C>                                       
                    II           Valuation and Qualifying  Accounts                 22
</TABLE>

                  The independent auditors' report with respect to the
                  above-listed financial statement schedule appears on page 21
                  of this report on Form 10-K. Financial statement schedules
                  other than those listed above have been omitted since they are
                  either not required, not applicable, or the information is
                  shown in the financial statements or notes thereto.

         3.       Exhibit Listing

<TABLE>
<CAPTION>
              Exhibit
               Number   Description
              -------   -----------
<S>                     <C>

                2.0     Asset Purchase Agreement By and Between The Santa Cruz
                        Operation, Inc. and Novell, Inc. (4)

                3.1     Restated Articles of Incorporation of Registrant. (2)

                3.2     Bylaws of Registrant, as amended. (5)

                4.1     Specimen Common Stock Certificate of Registrant. (1)

                10.11   Software License Agreement with Locus Computing
                        Corporation effective January 11, 1989. (1)

                10.12   Lease with Encinal Partnership No. 1 commencing May 1,
                        1991 (100 Pioneer Street). (1)

                10.13   Lease with Encinal Partnership No. 1 commencing January
                        1, 1989 (425 Encinal Street). (1)

                10.14   Lease with Wave Crest Development, Inc. commencing
                        August 1, 1987 (440 Encinal Street). (1)

                10.15   Lease with Wave Crest Development, Inc. commencing June
                        1, 1988 (400 Encinal Street). (1)

                10.16   Lease with Wave Crest Development, Inc. commencing July
                        1, 1988 (399 Encinal Street). (1)

                10.17   Form of Indemnification Agreement. (1)

                10.18   Master Registration Rights Agreement as amended. (1)

                10.19   1993 Stock Purchase Plan and form of Stock Purchase
                        Agreement. (3)(7)

                10.20   1994 Incentive Stock Option Plan and form of Incentive
                        Stock Option Agreement. (3)(7)

                10.21   401(k) Plan, as amended. (1) (7)

                10.23   Revised 1993 Employee Stock Purchase Plan. (5) (7)

                10.24   1993 Director Stock Option Plan. (1) (7)

                10.34   Shareholders' Rights Agreement. (6)

                10.35   Change-in-control agreement between the Company and
                        certain key management. (7)

                10.36   Employment Agreement with Alok Mohan.

                13      Annual Report to Shareholders.

                21.1    Subsidiaries of Registrant.

</TABLE>                                       18
<PAGE>   21
<TABLE>
<CAPTION>
              Exhibit
               Number   Description
              -------   -----------
<S>                     <C>
                23.1    Consent of Independent Auditors.

                27.1    Financial Data Schedule

</TABLE>


(1)     Incorporated by reference to Registration Statement 33-60548 on Form
        S-1.

(2)     Incorporated by reference to the Form 10-K filed on December 24, 1993.

(3)     Incorporated by reference to the Form 10-K filed on December 23, 1994.

(4)     Incorporated by reference to the Form 8-K filed on December 20, 1995.

(5)     Incorporated by reference to the Form 10-K filed on December 22, 1995.

(6)     Incorporated by reference to the Form 8-A12G filed on September 18,
        1997.

(7)     Designates management contracts or compensatory plans, contracts or
        arrangements.

(b)      Reports on Form 8-K.

             No reports on Form 8-K were filed during the last quarter of
         fiscal 1998.




                                       19
<PAGE>   22
                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Annual Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                       THE SANTA CRUZ OPERATION, INC.

By: /s/  John W. Luhtala               By: /s/  Steven M. Sabbath
    ----------------------------------     -----------------------------------
    John W. Luhtala                        Steven M. Sabbath
    Senior Vice President, Operations,     Senior Vice President,
    and  Chief Financial Officer           Law and Corporate Affairs & Secretary
    Date: December 23, 1998                Date: December 23, 1998

KNOW ALL PERSONS BY THEIR PRESENCE, that each person whose signature appears
below constitutes and appoints Steven M. Sabbath, his attorney-in-fact, with the
power of substitution, for him in any and all capacities, to sign any amendments
to this report on Form 10-K and to file the same, with exhibits thereto other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:


 /s/ Douglas L. Michels
----------------------------------
Douglas L. Michels
President, Chief Executive Officer 
and Director
Date: December 23, 1998


/s/ Alok Mohan                         /s/  Robert M. McClure
----------------------------------     ----------------------------------------
Alok Mohan                             Robert M. McClure
Chairman of the Board of Directors     Director
Date: December 23, 1998                Date: December 23, 1998


 /s/  Glenn Ricart                     /s/  Gilbert P. Williamson
----------------------------------     ----------------------------------------
Glenn Ricart                           Gilbert P. Williamson
Director                               Director
Date: December 23, 1998                Date: December 23, 1998


 /s/  Ronald Lachman                    /s/  Jean-Francois Heitz
----------------------------------     ----------------------------------------
Ronald Lachman                         Jean-Francois Heitz
Director                               Director
Date: December 23, 1998                Date: December 23, 1998


 /s/  Ninian Eadie                     /s/  R. Duff Thompson
----------------------------------     ----------------------------------------
Ninian Eadie                           R. Duff Thompson
Director                               Director
Date: December 23, 1998                Date: December 23, 1998




                                       20
<PAGE>   23

                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Shareholders of The Santa Cruz Operation, Inc.:


Under date of October 23, 1998, except for Note 7 which is as of December 11,
1998, we reported on the consolidated balance sheet of The Santa Cruz Operation,
Inc. and subsidiaries as of September 30, 1998, and the related consolidated
statements of operations, shareholders' equity (deficit), and cash flows for the
year ended September 30, 1998, as contained in the 1998 annual report to
shareholders. These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the year 1998.
In connection with our audit of the aforementioned consolidated financial
statements, we also have audited the related financial statement schedule as
listed in the accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.


                                   /s/  PricewaterhouseCoopers LLP


San Jose, California
October 23, 1998


The Board of Directors and Shareholders of The Santa Cruz Operation, Inc.:


Under date of October 22, 1997, we reported on the consolidated balance sheet of
The Santa Cruz Operation, Inc. and subsidiaries as of September 30, 1997, and
the related consolidated statements of operations, shareholders' equity
(deficit), and cash flows for each of the years in the two-year period ended
September 30, 1997. These consolidated financial statements and our report
thereon are incorporated by reference in the annual report on Form 10-K for the
year 1998. In connection with our audits of the aforementioned consolidated
financial statements, we also audited the related financial statement schedule
as of and for each of the years in the two-year period ended September 30, 1997,
as listed in the accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein of and for
each of the years in the two-year period ended September 30, 1997.


                                   /s/  KPMG Peat Marwick LLP


Mountain View, California
October 22, 1997


                                       21
<PAGE>   24
                         THE SANTA CRUZ OPERATION, INC.
                              SCHEDULE II/RULE 5-04
                        VALUATION AND QUALIFYING ACCOUNTS

                  YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996

                                  (In thousands)

<TABLE>
<CAPTION>
                                              BALANCE AT        CHARGED TO                            BALANCE
                                              BEGINNING        REVENUES OR                           AT END OF
DESCRIPTION                                   OF PERIOD          EXPENSES          DEDUCTIONS          PERIOD
                                              ----------       ------------        ----------        ---------
<S>                                           <C>              <C>                 <C>               <C>     
Year Ended September 30, 1998
      Allowance for returns                    $  9,136          $ 18,200           $ 17,093          $ 10,243
      Allowance for doubtful accounts             1,743              (132)                66             1,545
                                               --------          --------           --------          --------
          Total allowance                      $ 10,879          $ 18,068           $ 17,159          $ 11,788
                                               ========          ========           ========          ========

Year Ended September 30, 1997
      Allowance for returns                    $  9,245          $ 33,115           $ 33,224          $  9,136
      Allowance for doubtful accounts             1,885               349                491             1,743
                                               --------          --------           --------          --------
          Total allowance                      $ 11,130          $ 33,464           $ 33,715          $ 10,879
                                               ========          ========           ========          ========

Year Ended September 30, 1996
      Allowance for returns                    $ 11,110          $ 24,643           $ 26,508          $  9,245
      Allowance for doubtful accounts             2,285               635              1,035             1,885
                                               --------          --------           --------          --------
          Total allowance                      $ 13,395          $ 25,278           $ 27,543          $ 11,130
                                               ========          ========           ========          ========
</TABLE>



                                       22
<PAGE>   25

                               INDEX TO EXHIBITS
<TABLE>
<CAPTION>
              Exhibit
               Number   Description
              -------   -----------
<S>                     <C>

                 2.0    Asset Purchase Agreement By and Between The Santa Cruz
                        Operation, Inc. and Novell, Inc. (4)

                 3.1    Restated Articles of Incorporation of Registrant. (2)

                 3.2    Bylaws of Registrant, as amended. (5)

                 4.1    Specimen Common Stock Certificate of Registrant. (1)

                10.11   Software License Agreement with Locus Computing
                        Corporation effective January 11, 1989. (1)

                10.12   Lease with Encinal Partnership No. 1 commencing May 1,
                        1991 (100 Pioneer Street). (1)

                10.13   Lease with Encinal Partnership No. 1 commencing January
                        1, 1989 (425 Encinal Street). (1)

                10.14   Lease with Wave Crest Development, Inc. commencing
                        August 1, 1987 (440 Encinal Street). (1)

                10.15   Lease with Wave Crest Development, Inc. commencing June
                        1, 1988 (400 Encinal Street). (1)

                10.16   Lease with Wave Crest Development, Inc. commencing July
                        1, 1988 (399 Encinal Street). (1)

                10.17   Form of Indemnification Agreement. (1)

                10.18   Master Registration Rights Agreement as amended. (1)

                10.19   1993 Stock Purchase Plan and form of Stock Purchase
                        Agreement. (3)(7)

                10.20   1994 Incentive Stock Option Plan and form of Incentive
                        Stock Option Agreement. (3)(7)

                10.21   401(k) Plan, as amended. (1)(7)

                10.23   Revised 1993 Employee Stock Purchase Plan. (5)(7)

                10.24   1993 Director Stock Option Plan. (1)(7)

                10.34   Shareholders' Rights Agreement. (6)

                10.35   Change-in-control agreement between the Company and
                        certain key management. (7)

                10.36   Employment Agreement with Alok Mohan.

                13      Annual Report to Shareholders.

                21.1    Subsidiaries of Registrant.

                23.1    Consent of Independent Auditors.

                27.1    Financial Data Schedule


</TABLE>

(1)     Incorporated by reference to Registration Statement 33-60548 on Form
        S-1.

(2)     Incorporated by reference to the Form 10-K filed on December 24, 1993.

(3)     Incorporated by reference to the Form 10-K filed on December 23, 1994.

(4)     Incorporated by reference to the Form 8-K filed on December 20, 1995.

(5)     Incorporated by reference to the Form 10-K filed on December 22, 1995.

(6)     Incorporated by reference to the Form 8-A12G filed on September 18,
        1997.

(7)     Designates management contracts or compensatory plans, contracts or
        arrangements.