The SCO Group Reports Operating Results for First-Quarter Fiscal 2003

Feb 26, 2003, 00:00 ET from The SCO Group

    LINDON, Utah, Feb. 26 /PRNewswire-FirstCall/ -- For the first quarter of
 fiscal 2003 ended January 31, 2003, The SCO Group (Nasdaq:   SCOX) reported a
 net loss of $724,000, or $0.06 per share, on revenue of $13.5 million,
 compared to a net loss of $11.0 million, or $0.77 per share, on revenue of
 $17.9 million for the comparative quarter of the prior year.  The Company's
 current fiscal year ends October 31, 2003.
     (Photo: )
     "We are pleased with the Company's progress during the past several
 quarters as we approach profitability," said Darl McBride, president and CEO.
 "For the first time in the Company's history we generated positive EBITDA
 (earnings before interest, taxes, depreciation, and amortization)."  The
 Company's EBITDA for the first quarter of fiscal 2003 was $361,000 compared to
 negative $9.2 million in the comparable period a year ago (which is reconciled
 to net loss in the attached financial statements).
     McBride continued, "Even though a sluggish economy and lower IT spending
 continues to hamper revenue, we have made significant progress in becoming
 profitable.  Based on the products introduced during the last two quarters and
 our focus on SCOx and SCOsource, our two new strategic initiatives, we are
 confident in our future growth opportunities."
     "Based on current conditions," added McBride, "we expect that revenue for
 our second quarter, ending April 30, 2003, will be in the range of $23 million
 to $25 million.  These projections are based on anticipated revenue from our
 current operating platforms of $13 million to $15 million, and $10 million
 from the SCOsource licensing initiative.  While we anticipate significant
 revenue from SCOsource activities this quarter, we are currently unable to
 estimate the level of potential revenue from this initiative in future
     Conference Call
     As previously announced, the Company will host a conference call at 9 a.m.
 MST today, February 26, 2003, to discuss first-quarter fiscal 2003 results.
 To participate in the teleconference, please call 800-406-5356 approximately
 five minutes prior to the time stated above.  There will be a subsequent
 replay of the teleconference available at
 48 hours after the conference call.
     About SCO
     The SCO Group (Nasdaq:   SCOX), a DBA of Caldera International, Inc., helps
 millions of customers in more than 82 countries around the world grow their
 businesses everyday through the company's UNIX, Linux and Windows business
 solutions.  Headquartered in Lindon, Utah, SCO has a network of more than
 16,000 resellers and 8,000 developers.  SCO Global Services provides reliable
 localized support and services to partners and customers.  For more
 information on SCO products and services, visit .
     SCO and the associated SCO logo are trademarks or registered trademarks of
 Caldera International, Inc. in the U.S. and other countries.  All other brand
 or product names are or may be trademarks of, and are used to identify
 products or services of, their respective owners.
     Forward Looking Statements
     The statements set forth above include forward-looking statements that
 involve risks and uncertainties.  The Company wishes to advise readers that a
 number of important factors could cause actual results to differ materially
 from those projected in the forward-looking statements.  These factors include
 the ability of the Company to enter into licensing agreements; the
 effectiveness of the Company's new branding efforts; the ability of the
 Company to successfully roll out its new services and solutions to service
 providers in its existing channels; the acceptance of such offerings by
 existing service providers and others; the acceptance of new products and
 services by the ultimate customers; the ability of the Company to successfully
 meet its revenue projections, which are based in part, on the continued
 acceptance in the marketplace of historical products; the ability of the
 Company to continue to manage its cost reductions without adversely affecting
 customer service and employee productivity; the ability of recently introduced
 and new products to operate as designed, including compatibility with various
 platforms and the absence of other defects; the Company's ability to compete
 effectively with other solutions providers; the Company's reliance on
 developers in the open source community; new and changing technologies and
 customer acceptance of those technologies; failure of our brand to achieve the
 broad recognition necessary to succeed; unenforceability of the GNU general
 public license and other Open Source licenses; our reliance on third party
 developers of components of our software offerings; and claims of infringement
 of third-party intellectual property rights.  These and other factors, which
 could cause actual results to differ materially, are discussed in more detail
 in the Company's filings with the Securities and Exchange Commission.
                           (unaudited, in thousands)
                                                   January 31,   October 31,
                                                      2003           2002
     Cash and cash equivalents                       $4,942         $6,589
     Restricted cash                                  1,250          1,428
     Accounts receivable, net                         9,489          8,622
     Other current assets                             3,902          4,483
         Total current assets                        19,583         21,122
     Property and equipment, net                      1,742          2,021
     Intangibles, net                                10,473         11,258
     Other assets                                     2,064          3,005
         Total assets                               $33,862        $37,406
     Accounts payable                                $2,051         $2,467
     Accrued expenses                                 5,700          7,632
     Deferred revenue                                 9,802         10,056
     Other current liabilities                        5,816          7,299
         Total current liabilities                   23,369         27,454
     Long-term liabilities                            2,340          1,625
     Minority interest                                  150            150
     Stockholders' equity                             8,003          8,177
         Total liabilities and
          stockholders' equity                      $33,862        $37,406
                (unaudited, in thousands, except per share data)
                                                        Three Months Ended
                                                           January 31,
                                                       2003           2002
     Revenue                                          $13,540        $17,913
     Cost of revenue                                    2,878          5,680
         Gross margin                                  10,662         12,233
     Sales and marketing                                6,440          8,371
     Research and development                           2,650          5,367
     General and administrative                         1,650          2,724
     Restructuring charges                               (252)         4,336
     Amortization of intangibles                          700            756
     Stock-based compensation                             212            265
     Loss on disposition and write-
      downs of long-term assets                            --          1,328
         Total operating expenses                      11,400         23,147
     Loss from operations                                (738)       (10,914)
     Equity in loss of affiliate                          (25)            --
     Other income, net                                     44             70
     Loss before income taxes                            (719)       (10,844)
     Provision for income taxes                            (5)          (162)
     Net loss                                           $(724)      $(11,006)
     Basic and diluted net loss per common share       $(0.06)        $(0.77)
     Weighted average common shares outstanding        11,244         14,355
                        Reconciliation of EBITDA to Net Loss
     Net loss                                           $(724)      $(11,006)
     Interest income (expense), net                        39             24
     Taxes                                                  5            162
     Depreciation                                         341            843
     Amortization                                         700            756
         EBITDA                                          $361        $(9,221)