* Their asset value has dropped by almost HALF since October 2004. At the
rate they are burning cash they may not be a going concern before the
trial with IBM starts.
SWB
----------
The SCO Group Announces Third Quarter Fiscal 2005 Results
LINDON, Utah, Sept 07, 2005 /PRNewswire-FirstCall via COMTEX/ -- The SCO
Group, Inc. (Nasdaq: SCOX), a leading provider of UNIX(R) software
technology for distributed, embedded and network-based systems, today
reported results for its fiscal third quarter ended July 31, 2005.
Revenue for the third quarter of fiscal year 2005 was $9,353,000 as
compared to $11,205,000 for the comparable quarter of the prior year. The
decrease in revenue in the third quarter of fiscal year 2005 from the
comparable quarter of the prior year was primarily due to continued
competitive pressures on the Company's UNIX products and services and a
decrease in SCOsource licensing revenue.
The net loss attributable to common stockholders for the third quarter of
fiscal year 2005 was $(2,372,000), or $(0.13) per diluted common share, as
compared to net income available to common stockholders of $7,501,000 or
$0.38 per diluted common share for the comparable quarter of the prior
year. Included in the net income available to common stockholders for the
third quarter of fiscal year 2004 was a one-time contribution of capital
of $14,924,000 recorded as a dividend. Exclusive of this dividend, the net
loss for the third quarter of fiscal year 2004 was $(7,423,000).
"The third quarter was a productive quarter for SCO," said Darl McBride,
President and CEO of The SCO Group. "Our UNIX business operated profitably
for the third consecutive quarter and we launched SCO OpenServer 6 which
has received many favorable reviews and is showing traction with
customers. We also recently concluded our annual SCO Forum event in Las
Vegas and received positive feedback on our UNIX business from the
partners, resellers and customers who attended the event."
McBride concluded, "Finally, we remain committed to pursuing our legal
strategy in the courtroom and look forward to presenting our case in
February 2007."
Revenue for the nine months ended July 31, 2005 was $27,476,000 as
compared to $32,734,000 for the nine months ended July 31, 2004. The net
loss attributable to common stockholders for the first nine months of
fiscal year 2005 was $(7,295,000), or $(0.41) per diluted common share, as
compared to a net loss attributable to common stockholders of
$(9,711,000), or $(0.67) per diluted common share for the first nine
months of fiscal year 2004.
Cash and cash equivalents and available-for-sale securities were
$12,602,000 as of July 31, 2005. In addition, $3,579,000 is held in an
escrow account and is classified as a component of restricted cash as of
July 31, 2005, to be used to pay for certain expenses associated with our
litigation.
UNIX Business
The Company released SCO OpenServer 6 on June 22, 2005 at an event for
SCO's software and hardware partners, customers, and members of the media
and analyst community in New York City at Yankee Stadium.
SCO OpenServer 6 has been the subject of numerous positive reviews by
analysts and the media including eWeek, Networkworld and UnixReview. SCO
resellers have received a high level of interest in this upgrade from
their customers due to the product's increased performance, support for
more powerful hardware and a broader array of applications as well as
significant security and stability enhancements.
The Company's UNIX business was profitable during the third quarter. This
marks the third consecutive quarter of profitability for the UNIX
business, and SCO's executive team remains committed to running a
profitable UNIX business in future quarters.
Conference Call
As previously announced, The SCO Group will host a conference call at 5:00
p.m. EDT today, September 7, 2005 to discuss its third quarter results. To
participate in the teleconference, please call toll free 877-502-9276 or
use the toll number 913-981-5591; confirmation code: 7700475,
approximately five minutes prior to the time stated above. A listen-only
Web cast of the call will be broadcast live with a replay available the
following day. The Web cast and replay may be accessed from
http://ir.sco.com/medialist.cfm.
Forward-Looking Statements
The statements contained in this press release regarding (i) our legal
strategy and (ii) the future profitability of our UNIX business that are
not historical facts are forward-looking statements and are made under the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. These statements are based on management's current expectations and
are subject to risks and uncertainties. We wish to advise readers that a
number of important factors could cause actual results to differ
materially from historical results or those anticipated in such
forward-looking statements. These factors include, but are not limited to,
continued competitive pressure on its operating system products which
could impact the profitability of the UNIX business, unforeseen legal
costs related to our litigation, our inability to develop new products and
services, and our inability to see our litigation through to its
conclusion. These and other factors could cause actual results to differ
materially from those anticipated are discussed in more detail in the
Company's filings with the Securities and Exchange Commission. These
forward-looking statements speak only as of the date on which such
statements are made, and SCO undertakes no obligation to update such
statements to reflect events or circumstances arising after such date.
About SCO
The SCO Group, Inc. (Nasdaq: SCOX) is a leading provider of UNIX software
technology for distributed, embedded and network-based systems, offering
SCO OpenServer for small to medium business and UnixWare for enterprise
applications and digital network services. SCO's highly innovative and
reliable solutions help millions of customers to grow their businesses
every day, from SCO OpenServer on main street to UnixWare on Wall Street,
and beyond. SCO owns the core UNIX operating system originally developed
by AT&T/Bell Labs and is the exclusive licensor to UNIX-based system
software providers.
Headquartered in Lindon, Utah, SCO has a worldwide network of thousands of
resellers and developers. SCO Global Services provides reliable localized
support and services to partners and customers. For more information on
SCO products and services, visit http://www.sco.com.
SCO and the associated SCO logo are trademarks or registered trademarks of
The SCO Group, Inc. in the U.S. and other countries. UNIX is a registered
trademark of The Open Group. All other brand or product names are or may
be trademarks of, and are used to identify products or services of, their
respective owners.
Condensed Consolidated Balance Sheets Data
(unaudited, in thousands)
July 31, October
31,
2005 2004
Assets:
Cash and cash equivalents $6,526
$12,693
Restricted cash 4,004
8,283
Available-for-sale securities 6,076
18,756
Accounts receivable, net 4,947
6,638
Other current assets 2,376
1,870
Total current assets 23,929
48,240
Property and equipment, net 578
649
Intangibles, net 3,383
5,413
Other assets 1,118
1,098
Total assets $29,008
$55,400
Liabilities:
Accounts payable $1,337
$7,854
Accrued payroll and accrued expenses 5,449
7,224
Accrued compensation to law firms --
7,956
Deferred revenue 4,021
4,877
Other current liabilities 2,059
4,916
Total current liabilities 12,866
32,827
Long-term liabilities 340
343
Common stock subject to rescission 1,104
528
Stockholders' equity 14,698
21,702
Total liabilities and stockholders' equity $29,008
$55,400
Condensed Consolidated Statements of Operations Data
(unaudited, in thousands, except per share data)
Three Months Ended Nine Months
Ended
July 31, July 31,
2005 2004 2005
2004
Products revenue $7,953 $8,929 $23,095
$27,056
SCOsource licensing
revenue 32 678 132
709
Services revenue 1,368 1,598 4,249
4,969
Total revenue 9,353 11,205 27,476
32,734
Cost of products revenue 695 741 1,902
2,364
Cost of SCOsource
licensing revenue 3,085 7,396 9,467
15,486
Cost of services revenue 700 878 2,195
3,273
Total cost of revenue 4,480 9,015 13,564
21,123
Gross margin 4,873 2,190 13,912
11,611
Operating expenses:
Sales and marketing 2,935 4,233 8,835
13,952
Research and
development 1,940 2,592 6,137
8,167
General and
administrative 1,647 1,889 5,446
5,793
Loss on impairment of
long-lived assets -- -- --
2,139
Severance and
exit costs -- -- --
682
Amortization of
intangibles 593 593 1,779
1,973
Stock-based compensation -- 270 22
868
Total operating
expenses 7,115 9,577 22,219
33,574
Loss from operations (2,242) (7,387) (8,307)
(21,963)
Equity in income (loss)
of affiliate (19) 41 51
115
Other income
(expense), net (27) 99 1,282
6,284
Loss before income taxes (2,288) (7,247) (6,974)
(15,564)
Provision for
income taxes (84) (176) (321)
(1,270)
Net loss (2,372) (7,423) (7,295)
(16,834)
Contribution from
(dividends on)
convertible preferred
stock -- 14,924 --
7,123
Net income available
(loss applicable) to
common stockholders $(2,372) $7,501 $(7,295)
$(9,711)
Basic net income (loss)
per common share $(0.13) $0.49 $(0.41)
$(0.67)
Diluted net income
(loss) per
common share $(0.13) $0.38 $(0.41)
$(0.67)
Weighted average basic
common shares
outstanding 17,993 15,242 17,885
14,389
Weighted average
diluted common shares
outstanding 17,993 19,912 17,885
14,389
SOURCE The SCO Group, Inc.
Blake Stowell of The SCO Group, +1-801-932-5703, bstowell@sco.com; or
Anton Nicholas
of Sloane & Company, +1-212-446-1889, anicholas@sloanepr.com, for The SCO
Group,
Inc.
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