The Lindon, Utah-based company, which is better known these days for its legal threats against IBM Corp and Linux, said the restatement is not expected to affect the previously reported net loss of earnings per share for the year ended October 31.
SCO already facing a possible delisting from the Nasdaq SmallCap market after it failed to file its annual results with the Securities and Exchange Commission last month. The company blamed the failure on the need of its auditors, KPMG LLP, to examine the matters related to common stock issued under its equity compensation plans.
A hearing with the Nasdaq listings panel has been scheduled for March 17, but in the meantime it plans to restate results for the first, second, and third quarters of fiscal 2004 following its assessment that the published results for those quarters should no longer be relied upon.
Specifically, the company said it will reclassify $272,000 in the first quarter, $231,000 in the second quarter, and $557,000 in the third quarter, related to certain shares of common stock that the company may have used under its equity compensation plans without complying with the registration requirements of federal and applicable state securities laws from permanent equity to temporary equity.
SCO will also reclassify $879,000 in the first quarter and $1.6m in the second quarter from equity to current liabilities related to accrued dividends from shares issued to former investor BayStar Capital II LP.
Finally, the company will also restate $233,000 of stock-based compensation expense that was previously recorded in the second quarter but was incurred in the first quarter.
The company said it would file amendments to its quarterly reports for the period as soon as it and KPMG complete their analysis of its annual results for full-year 2004. SCO previously reported a net loss of $16.3m for the year on revenue down 46% at $42.8m as the ongoing costs of its legal battles compounded reduced sales of its Unix operating system products.
The company claims it holds rights over Unix code that has been contributed to Linux, and is suing IBM for breach of contract concerning its contribution of Unix code to the open source operating system.
SCO last month avoided an IBM motion for summary judgment that its Linux activities do not breach SCO’s copyright, but was heavily criticized by the judge hearing the case for not presenting evidence to back up its claims.
