SCO Group files overdue annual report
Utah's SCO Group on Friday filed its long overdue annual report, a move it hopes will convince the Nasdaq stock exchange to grant the company's delisting appeal.
SCO also filed restated earnings reports for 2004's first three quarters with the Securities and Exchange Commission and said it expects to soon file an earnings report for 2005's first quarter.
Nasdaq moved to delist SCO's stock after the Lindon-based company missed two deadlines for filing its 2004 annual report. When the 2005 first-quarter report also was delayed, the exchange warned SCO also faced delisting for that failure.
The software company hoped to see its stock fully restored as a result of Friday's filing. "We will have done all we can," spokesman Blake Stowell said. "This is not an Enron-like situation. . . . It's more in the area of bookkeeping [or] clerical-type error."
SCO appealed Nasdaq's delisting during a March 17 hearing, and the exchange has not rendered a final decision. The appeal bought time for SCO auditors to correct errors in how the issuance of shares to its equity compensation plans had previously been reported.
Documents were filed after the markets closed Friday, so the immediate impact of the long-awaited report could not be gauged. SCO shares closed at $3.70, up 17 cents.
The company stressed that its restatements did not affect previously announced revenue or earnings, cash on hand or securities balances. However, the 2004 fiscal year report was not a good one.
The 10-K showed a net loss of $23.3 million on revenue of $42.8 million, down sharply from 2003's $5.4 million net income and $79.2 million revenue figures.
Further, SCO's efforts to sell licenses to Linux end-users - part of its SCOSource division - dropped from $25.8 million in 2003 to just $829,000 last year. Its core Unix products also suffered, dipping from $53.4 million to $41.9 million.
SCO blamed its 21 percent retreat in Unix business on "continued competition from other operating systems, particularly Linux. The heavy cost of SCO's continued litigation against IBM and several other companies over its Unix-Linux claims also was reflected: Included within the cost of its SCOSource licensing endeavors, legal costs were said to be "primarily attributable" to an increase of more than 100 percent to $19.7 million, compared with $9.5 million in 2003.
The report notes that with a recent cap on legal fees negotiated with SCO's litigators, attorney-related expenses are expected to decrease by an unspecified amount in the current fiscal year.