The SCO Group Announces Fourth Quarter and Fiscal 2004 Results

The SCO Group, Inc. (Nasdaq: SCOX), owner of the UNIX operating system and a leading provider of UNIX-based solutions, today reported results for its fiscal fourth quarter and
year ended October 31, 2004.

Revenue for the fourth quarter of fiscal year 2004 was $10,075,000 as compared to $24,290,000 from the comparable quarter of the prior year. The decrease in revenue in the fourth quarter of fiscal year 2004 from the comparable quarter of the prior year was primarily due to a decrease in SCOsource licensing revenue to $120,000 from $10,316,000 and from continued competitive pressures on the Company's UNIX products and services.

The net loss attributable to common stockholders for the fourth quarter of fiscal year 2004 was $6,516,000, or ($0.37) per diluted common share, as compared to a net loss attributable to common stockholders of $1,568,000, or ($0.12) per diluted common share for the comparable quarter of the prior year. Included in the net loss attributable to common stockholders for the fourth quarter of fiscal year 2004 were charges related to a restructuring of continuing operations, reductions in force and dispositions of long-lived assets totaling $2,702,000.

"Fourth Quarter achievements demonstrate continued progress at SCO," said Darl McBride, president and CEO, The SCO Group. "The management team has maintained its commitment to operate our core UNIX business profitably. With the benefit of additional efficiency improvements now in place, we expect the UNIX business will generate cash during fiscal year 2005. During the fourth quarter we also completed an agreement to cap the legal fees relating to the pending contract and intellectual property litigation. The combination of these two positive actions positions us well to pursue our strategy to protect our contractual and intellectual property rights on behalf of our customers, employees and shareholders."

For fiscal year 2004, revenue was $42,809,000 compared to revenue for fiscal year 2003 of $79,254,000. For fiscal year 2004, the net loss attributable to common stockholders was $16,227,000, or ($1.07) per diluted common share, compared to net income attributable to common stockholders of $5,304,000, or $0.34 per diluted common share. Cash and available-for-sale securities were $31,449,000 at October 31, 2004. In addition, $5,000,000 was
placed in an escrow account and is classified as a component of restricted cash as of October 31, 2004. This cash will be used to pay for certain expenses associated with our intellectual property litigation.

UNIX Business Highlights

The fourth quarter of fiscal year 2004 marked the third consecutive quarter of stable revenue for the UNIX business. The Company's management team continued to make operating improvements in this business to help it generate positive cash flow in fiscal year 2005. Additionally, the Company anticipates releasing the next version of its OpenServer product, code-named Legend, during the first half of 2005. This product will mark the culmination
of a significant product development effort and reinforces the Company's investment in its ongoing UNIX business.

During the fourth quarter, the Company launched a new version to its collaboration product, SCOoffice Server 4.1, which has been gaining acceptance in various markets throughout the world. In addition, the Company launched its SCO Marketplace initiative targeted to third-party developers who wish to participate with the Company in development projects that will benefit and enhance future SCO products.

Litigation Agreement

On November 4, 2004 the Company filed a Form 8-K with the Securities and Exchange Commission indicating it had finalized an amended engagement agreement with the law firms representing the Company in its current litigation. The revised engagement agreement limits the Company's attorneys fees after September 1, 2004 associated with its intellectual property
litigation to approximately $31 million (other than contingency fees) and will enable the Company to finance the litigation through to its conclusion, including any necessary appeals. The revised engagement agreement will also lower the Company's ongoing quarterly costs associated with its intellectual property litigation.

Outlook

The following statements are forward looking and actual results may differ materially. See the discussion of certain risks and uncertainties related to this financial outlook at the end of this release under "Forward-Looking Statements."

With the attorneys fees associated with the Company's litigation capped and a core UNIX business expected to generate positive cash flow during fiscal year 2005, the Company is in position to pursue its existing litigation through to its conclusion. The Company will continue to protect its UNIX contractual and intellectual property rights and to aggressively pursue its
claims through the judicial system.

Forward-Looking Statements
This press release, particularly the "Outlook" section, contains forward-looking statements representing our current expectations and beliefs, including, among other things: (i) the expectation that we will continue to pursue our strategy to protect our intellectual property rights and that we are well positioned to do so; (ii) the expectation that we will generate
positive cash flow from our UNIX business in fiscal year 2005; (iii) the expectation that our revised engagement agreement with the law firms representing us in our intellectual property litigation will lower our ongoing quarterly litigation costs and enable us to finance the litigation through to its conclusion, including appeals; and (iv) the anticipated release of the
next version of OpenServer in the first half of 2005. These forward-looking statements and related assumptions are subject to risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking statements contained herein. These risks and uncertainties include, without limitation: (a) risks that we will not be successful in our efforts to protect and enforce our intellectual property rights; (b) risks that our core UNIX business may continue to decline; (c) risks that we will face increasing competition from competing providers of operating system products and services, particularly Linux; (d) risks that the U.S. and international economic and political conditions will worsen and adversely affect technology purchases; (e) risks that our SCOsource licensing initiatives will yield fewer
licenses or less licensing revenue than anticipated or that such licensing revenue will not be generated when or in amounts currently anticipated; (f) risks that we will require more capital to sustain our business objectives than we have and that such capital may not be available; and (g) other risks and uncertainties set forth in our filings with the Securities and Exchange
Commission. These forward-looking statements speak only as of the date hereof, and we undertake no obligation to update such forward-looking statements after the date hereof.

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