SCO Comments on Insider Trading

Thursday, August 14 2003 @ 12:18 PM EDT

Contributed by: PJ

They have a press release here:

"The SCO Group, Inc. (Nasdaq: SCOX) encourages its directors and executive officers to sell the stock held by them through plans designed to qualify for the protections provided by Rule 10b5-1 under the Securities Exchange Act of 1934.

"The 10b5-1 plans provide for future sales of stock, at predetermined times and in amounts and under conditions specified in the plans, without subsequent instructions from the participants. These plans have been adopted by the following individuals: Robert Bench, CFO; Jeff Hunsaker, Sr. VP Marketing; Reg Broughton, Sr. VP International Sales; and Michael Olson, VP Finance/Controller. These plans have been implemented primarily for the purpose of providing liquidity to the participants to meet sizable personal tax liabilities resulting from the vesting of restricted stock awards.

"During the three months ended July 31, 2003, individuals selling under approved 10b5-1 plans sold 88,000 shares of the Company's common stock. Two other executive officers sold 29,616 shares during the same three-month period in Company approved open trading windows. For the upcoming three-month period to end on October 31, 2003, the above-referenced executive officers may sell up to 141,000 shares of the Company's common stock under current 10b5-1 plans if the conditions of the various plans are met. No other directors or executive officers have implemented a 10b5-1 trading plan to sell shares of the Company's stock during the next three months.

"Our directors and executive officers beneficially hold approximately 6,005,000 shares and options to acquire an additional 2,016,000 shares."

Their third-quarter financial results press release:

"For the third quarter of fiscal 2003 ended July 31, The SCO Group, Inc. (Nasdaq: SCOX) reported net income of $3.1 million, or $0.19 per diluted share, on revenue of $20.1 million, compared to a net loss of $4.5 million, or $0.35 per diluted share, on revenue of $15.4 million for the comparable quarter of the prior year. Revenue for the third quarter of fiscal 2003 from the Company's operating system platforms was $12.8 million, and revenue from its SCOsource licensing initiative was $7.3 million, both within the range of previous guidance.

"For the first nine months of fiscal 2003, the Company reported net income of $6.9 million, or $0.47 per diluted share, on revenue of $55.0 million, compared to a net loss of $22.1 million, or $1.58 per diluted share, on revenue of $48.8 million for the comparable nine-month period of fiscal 2002. The Company's current fiscal year ends October 31, 2003.

'During the quarter ended July 31, 2003, SCOsource, our division for licensing and protecting the Company's UNIX(R) intellectual property, generated $7.3 million in revenue and contributed $5.6 million to gross margin. Our SCOsource initiative continues to gain momentum as we pursue enforcement of the Company's intellectual property rights,' said Darl McBride, president and CEO.

"McBride continued, 'This is our second consecutive quarter with net income and positive cash generated from operations. These results have strengthened our balance sheet and overall financial position. We intend to use this capital to continue our intellectual property protection and licensing initiative as well as for launching SCOx, our Web services strategy.'

"'We expect that revenue for our fourth quarter, ending October 31, 2003, will be in the range of $22 to 25 million. The magnitude of our SCOsource licensing opportunities and our confidence in the SCOsource revenue pipeline is growing each quarter,' said McBride."

Their webcast requires either RealPlayer or Windows Media Player. I don't use either. Evidently GNU/Linux and Apple folks are not invited.