Darl McBride: Ok thanks Blake and thanks everyone for joining us on todays call.  Uh building on a positive 3rd quarter and pleased to say that we have continued to further our business objectives in the 4th quarter, and ended the year on an upbeat note.  With greater detail to come, we are pleased to note that our core unix business is generating meaningful cash flow and is poised to continue that trend into our 2005 fiscal year.  As an organization during Q4 we continued to innovate and introduce new programs like SCO Marketplace, and we successfully capped our attorneys fees.  The combination of the solid operating results in our unix business and the cap on the cost of litigation will insure we can remain steadfastly focused on driving success in both the marketplace, and in the courtroom, and demonstrate our focus on taking whatever steps are necessary to insure success in both areas.  I'll turn the call over now to Bert Young for an overview of the companies financial results.  Bert.

Bert Young: Thanks Darl, good afternoon everyone.  The company reported revenue in quarter 4 of 10.1 million for this 4th quarter fiscal year 2004 as compared to revenue of 24.3 million for the comparable quarter of the prior year.  The net loss for the 4th quarter was 6.5 million, or .37 cents per diluted common share, compared to a net loss of 1.6 million or .12 cents per diluted common share, reported in the comparable quarter the prior year.  Included in our 4th quarter net loss to common stockholders, was 2.7 million in charges related to a restructuring of our operations, reductions in force, and dispositions of long lived assets, which equates to .15 cents a share for that restructuring charge.  Nearly all of our quarterly revenue of 10.1 million came from our unix business.  Unix revenue however was down year over year primarily as a result of continued competitive pressures, for operating systems and was essentially flat sequentially.  The remaining revenue for the 4th quarter was derived from 120,000 in scosource licensing, which represents a significant year over year decrease given the 4th quarter of 2003 was an exceptional quarter in which the company closed two large licenses.  As we stated in previous quarters we have cautioned that predicting this revenue stream of scosource is very challenging and will continue to be difficult to predict.  For fiscal year 2004 revenue was 42.8 million compared to revenue for fiscal year 2003 of 79.3 million.  For fiscal year 2004 the net loss to common shareholders was 16.2 million or 1.07 per diluted common share compared to net income attributable to common stockholders of 5.3 million or .34 cents per diluted common share.  Cash and available for sale securities worth 31.4 million at October 31 2004.  In addition 5 million was placed in an escrow account and is classified as restricted cash that will be used to pay for certain expenses associated with our intellectual property litigation.  I will speak more on the cash situation in a minute.  For the 4th quarter the cost of revenue for the unix business was 1.7 million, resulting in gross margin of 8.2 million, or 83%.  Cost and expenses for the unix business excluding the restructure and other, uh losses on asset dispositions were 7.6 million.  Continue to trend downward as we expect, these costs these operating costs will be even lower in quarter 1 of fiscal year 2005 as a result of our recent restructuring of ongoing operations.  As a management team we're pleased with the progress we've made in the unix business, despite a challenging and competitive operating environment.  As in previous quarters we're continuing to classify the legal and professional fees, and other costs and expenses that relate directly to the enforcement of our intellectual property rights, as cost of revenue.  For the 4th quarter of fiscal year 2004 these costs were 4.3 million, which was down significantly from the prior quarter as a result of our revised arrangement with BSF.  For the year costs associated with the defense of our unix intellectual property, classified as costs of revenue totaled 19.7 million.  As we look ahead to fiscal year 2005, we anticipate ongoing legal fees classified as costs of revenue, will be approximately 3 million per quarter.  As we have previously indicated our attorney fees have now been capped.  We're signed, we've signed and completed an agreement with BSF that caps our legal fees and insures we have their representation through the conclusion of the IBM litigation including the appeal process.  The revised fee agreement limits the overall cash cost of the legal fees associated with our litigation from September 1st 2004 to a total of 31 million, other than any contingency fees.  In return for this new fee arrangement we have agreed to increase the contingency associated with any reward on a scale basis from 20 to 33%, depending on the overall size of the judgment or settlement.  The revised agreement reinforces the commitment that BSF has in our cases.  Now turning back to our current cap situation, let me break down the cash and the litigation cost so you can understand these in more detail.  Of the approximate 31 million to be paid to Boies as a result of the new agreement, we paid 1.7 million in the 4th quarter, and as was previously mentioned have placed 5 million in escrow, leaving a balance of approximately of 24.3 million that we need to pay Boies as at the end of the quarter.  If you subtract the 24.3 million from our closing cash balance of 31.4 as of October 31, we have approximately 7 million left over to operate the business going forward.  Now switching gears lets take a look at some of the changes that have occurred.  The restructuring continuing forward from previous efficiencies we continue to be focused on bringing an added level of financial discipline to the company.  In the 4th quarter we made additional operational adjustments to both the unix and scosource businesses, that will reduce ongoing operating expenses by approximately 10% per quarter, and will further increase the efficiency of the companies operations.  And finally moving out of discussion of Q4 and 2004, let me mention something that has happened in quarter 1 and will be uh reported as part of our quarter 1 2005 results.  We recently concluded an intellectual property asset sale that was originally consummated in April 2003 with center7.  Under the original agreement, from April 2003 SCO assigned center7 the copyright, applications, trademark, patents and contracts related to volution authentication, volution online and volution manager update service.  As consideration for this assignment, center7 issued to the company a $500,000 non-recourse promissory note, secured by the assigned software, that was originally due on April 30th, 2005.  During the time the company was developing the assigned software it had expensed all amounts for research and development efforts.  As a result at the time the promissory note was executed, the company had no recorded basis in the assigned software.  Because the transfer of the assigned software was to a related party, in exchange for promissory note, no gain was recognized by the company until the note was to be paid.  In November 2004 we agreed with vintela, the successor company to center7, to forgo any interest charges in return for an immediate payment of the 500,000.  On December 9th the company received the $500,000 payment from vintela and will record the transaction in fiscal Q1.  With that I'll now turn the call back over to Darl.

Darl McBride: Ok thanks Bert.  We can't overstate the importance of our finalized agreement with out legal team.  We've always believed in the merits of our claims and that we are well positioned in the litigation.  With this financial cap in place, we can now say without hesitation, that we are looking forward to having our case heard by a jury.  Importantly the strength of our legal team has allowed the rest of us at SCO to concentrate on running our business.  I'd like to spend the remainder of our call addressing our business performance and prospects.  We're please with the cost adjustments we've made in our unix business and that business's focus on generating positive cash flow despite a challenging business environment.  Between unix products and services we've provided support to many customers in Q4.  Some of the more notable customers include Unisys, Family Mart, China Post?, WebMD, CyberGaurd, Actevents?,  Eckard?, Citi, CBS Pharmacies, Thompson Financial, US Army, US Navy, FAA, ProQuest, Unisys, Spectel, McDonalds, Siemens, UK Ministry of Defense, Argos? and many others.  These deals are primarily related to our unixware and openserver technology.  SCO OfficeServer 4.1, the companies new email and collaboration product has begun to see interest in the marketplace.  During the 4th quarter the company shipped SCO OfficeServer 4.1 and has seen interest in customers and great reviews from the media.  In addition during Q4 SCO launched its SCO Marketplace site for 3rd party developers to participate with SCO in development projects that will benefit future SCO products.  We see this as a win win for SCO and the developer community, extending SCO's engineering team and providing new income opportunities for external developers.  On deck and on track for 2nd calender quarter of 2005 is a major upgrade to open server code named legend.  This is one of the most highly anticipated releases of sco openserver and represents significant development effort and investment by the company.  Last August we provided more that 600 attendees at SCOForum, our annual partners conference, with a sneak peek at many of the capabilities that will be added to this new version of openserver, and the feedback was overwhelmingly positive.  We believe the release of legend will strengthen the overall ecosystem of partners, developers, customers, and resellers that rely on openserver and will also present sco with opportunities to upgrade our current installed base.  On this I'll reiterate that we believe there is value in our unix licensing business and that we are offering our customers and potential customers a value they must be made aware of.  There is continued interest in the licensing of our unix technology, and we believe that when our legal claims are substantiated in a court of law we will see an increase in the demand for this licensing business.  Some end users have chosen to not wait for a court resolution and we've accommodated their request to license our intellectual property now.  Now moving on to a litigation update.  During the last quarter our litigation efforts have centered around discover and motion practice in the various cases.  We are awaiting rulings from the district court in Utah on IBM's motion for partial summary judgment on the 10th counterclaim related to IBM's linux activities, and our motion to dismiss the same counterclaim.  We are also waiting on rulings from the Federal Magistrate Judge on a request for additional discovery from IBM.  The parties are also currently submitting briefings to the court relating to IBM's motions for summary judgment on SCO's breach of contract claims and on IBM's 8th counterclaim for copyright infringement.  As well as concerning SCO's motion to amend its complaint to add an additional claim for copyright infringement relating to IBM's alleged use of unlicensed SCO code in AIX for power.  We have no indication of when rulings might be issued on those motions, otherwise we feel our case is developing well, and the specifics of this are laid out in our filings with the court.  In the Novell case, Novell's second motion to dismiss is scheduled for hearing on January 20th, the issues involved in that motion are set forth in the fla in the filings with the court.  The Red Hat case has been stayed by the I the court in Delaware pending developments in our resolution of the IBM matters.  No re no decision has been issued by the court on Red Hat's request for reconsideration of the order staying the case.  In SCO's case against Daimler Chrysler earlier this year the Michigan state court dismissed SCO's claim that Daimler had failed adequately to certify its compliance with its unix source code license, but let stand SCO's claim that Daimler's certification was not made timely.  After the court dismissed the certification claim we determined it would not be a wise use of resources to pursue the timeliness claim alone, therefore we moved to stay that claim pending further clarification of the issues on the IBM case.  The court in Michigan denied our motion to stay, but based on a stipulation of the parties the court entered an order of dismissal without prejudice, that permits us to refile our claim later if necessary.  We may now pursue an appeal of the courts certification ruling.  And then finally in the AutoZone case filed in federal court in Nevada, which is a claim for copyright infringement, the court granted AutoZone's motion to stay the case but allowed certain discovery to proceed to determine whether SCO is entitled to injunctive relief in the case.  We are currently evaluating that discovery.  So in summary then, we've accomplished a great deal during fiscal 2004 at SCO.  The companies unix business is generating cash flow and will remain so going forward into fiscal year 2005.  We have launched more new products in 2004 than in recent years, this effort continues to expand the way we work with our partners and for our customers.  And these products are being well received by the marketplace.  We consolidated our shareholder structure by removing the rights and preferences associated with BayStar, and retired their preferred shares.  And we have advanced our legal cases, with the most significant activity being the recent agreement inked with BSF that provides us newfound flexibility both in the business market and on the litigation front.  We look forward to having our cases heard in the courtroom.  So now I'll turn the call over to the operator to open up the phone lines for whatever questions you might have.

Larry Solomon with Capital Guardian: Uh Yes Darl, um the 24.3 million that you'll pay to BSF, when will that be paid?

Bert Young: Larry uh its Bert, maybe I can answer that.  We paid um, about 13 million of that already, right after we finished the quarter, and then there will be a remaining amount 2 million a quarter that will be paid over the next 5 quarters.

Larry Solomon: And whats the rationale for paying them, much of it up front, as opposed to paying them, along the way.

Bert Young: Well a good portion of the amount we paid them up front was for amounts of work they previously performed for us, if you will, and accounts payable was just money we owed them.   So we just paid 'em the amounts that we'd already uh expensed on our records and that they'd invoiced us for and we got those paid.

Larry: Right, thanks.

Dion Cornett of Decatur Jones: Hi Bert I just have uh a number of sort of quick admin questions.  Uh what would share count have been had you been profitable, what would share count be if you were acquired given the recent changes in control provisions, head count, and then finally it looks like you may have undersold how successful this quarter was by not providing a proforma number, which would have provided a sort of a .22 cent loss comparison instead of a [unintelligible] .37 cent loss comparison, why the change in your reporting?

Bert Young: Well we've we've not provided uh proforma reporting before, uh Dion, we've tried ta, as you've you've caught, in my comments I've tried to give the information so that you could see uh what the, the uh per share loss is without the restructure.  [Dion: ok] Um, but we've not provided proforma earnings uh releases that separate table before, and have chosen not to do it now just to be consistent and to keep it straightforward.  The share count, um, you know I, I don't have an estimate if we were profitable, the share count in the press release was uh 17.4 million shares.

Dion Cornett: But obviously that number is lower than it would be if your were profitable, per accounting rules.

Bert Young: Correct, yeah I guess I'd have to figure out how much profitability so we can get the weighted average there, but we haven't done that.

Dion Cornett: Then obviously investors look to calculate what their return could be on some large legal settlement, um, you know a fully diluted share count including vested options, uh, would be useful numbers as well.

Bert Young: Um, yeah it would be useful, we haven't provided that number before, um you know I'd have to go back and look at that and figure out what we could say about that.

Dion Cornett: How about head count at quarter of close.

Bert Young: Uh just under 200 in head count.

Dion Cornett: Ok, and was their summary classification between accounts payable and accrued expenses?  I noticed uh accounts payable shot up the quarter but accrued expenses dropped significantly.

Bert Young: Yeah we we had a big number last quarter in accrued expenses that we moved up into accounts payable, uh, and if I just mentioned to Larry Solomon, uh, much of that was paid to Boies right after the end of the quarter.

Dion Cornett: Why the uptake in accounts payable this quarter?

Bert Young: Well just moving from an accrued, an amount, from their bills, to getting the bills, and getting it booked and payables and getting ready to pay it.  We just moved it from one account to the other as we got more detail on their billing.

Dion Cornett: Ok, all right well congrats on the improvement on the core business.

Bert Young: Appreciate it.

Darl McBride: Thanks Dion.

Stephen Shankland from CNET:  Hi guys, you're talking obviously about your unix technology, specifically legend, the next version of openserver.  You guys said earlier that the 1st quarter of 2005, earlier this year, now its uh 2nd quarter, why the slip?

Darl McBride: We've gone through the, you know, the uh front end of the beta process, uh, getting feedback.  Um you know there's nothing [unintelligible] it's maybe a movement of a uh a couple of months, we're not talking about a big movement but, their their just gettin everything tightened down before it goes out.

Stephen Shankland:  Is that going to have any financial effect?

Darl McBride: No, I, I,  I believe the uh, you know the opportunity for legend is not going to be measured in weeks or months it's gonna be uh, we think a substantial upgrade opportunity, uh, for, for customers as we go forward.  Um, typically at the end of a quarter, uh, ya, this type of product you don't see a big rush of upgrade sales right at the beginning, it happens [unintelligible] take it [unintelligible] they'll go out and work with it.  Um, and, given that we're, we're targeting it to ship, still see it happening, the potential to have good impact on, on the year, um, but we don't see a substantial impact as it stands right now.

Tom Eisenberg with [unintelligible] Partners:  Yes hello, I'm relatively new to the company so I hope you excuse my fundamental, or preliminary type of questions.  Um, BayStar, I believe was their name, was a large shareholder and they been sort of selling stock continually, you also owed them some money.  Um, I don't know if I've seen the most recent balance sheet but you mentioned 31 million in cash plus 5 million in restricted cash.  That seems to be down more than what you used in operations and for legal fees in the past quarter since the, um, you know ah whatever it was the previous 10Q.  So did you pay off their loan, they had a 13 million loan, and what was your relationship with them and why are they disengaging, I realize I can ask them and probably, might.  Um, but I just thought I'd ask you now, um, sort of whats going on there in their sale of stock and then with debt and uh, thats really about it.

Bert Young: So Tom, Bert Young here, let me probably address that.  Um, I think you'd have to talk to Baystar about their selling, I can't speak for them on that.  But I can tell you what we talked about previously.  At the end of the last quarter, uh, we had agreed with Baystar to convert their previous stock position which was a preferred stock, ah, into shares of common stock, with ah also a cash payment, which we, you see booked there ah last quarter as a payable and we also had restricted cash of that amount.  When we finished uh quarter 3 and moved into quarter 4 we paid that amount to them, as part of the conversion of their preferred position into common stock.  So that position has been paid and closed, we've issued now common shares to them, and then as you note, they have done some selling this quarter and you'd probably have to talk to them about what their strategy and plan is for that.

Tom Eisenberg: What was your what was your relationship in the beginning did they help fund you and all that, and make loans etcetera?

Bert Young: Yeah what happened is a little over a year ago uh baystar and another uh shareholder with them, RBC Capital, invested $50 million in the company, for this preferred stock position.  And then over this year, uh that position's been converted into common stock and then 13 million payment back to them.  [Darl: in return for lifting the preferred ] yeah, in return for turning preferred into common stock.  So that's kind of a quick history of the last year.

Tom Eisenberg: Allright, just trying to go back.  Did you just release a balance sheet, a gentleman was talking about accounts payable and all, maybe I missed it?

Bert Young: In the press release, attached to our press release is a balance sheet comparative year over year and a um quarterly and year end P and L.

Tom Eisenberg: Interesting [mumble]

Bert Young: Should be attached to the press release that was released about an hour and a half ago.

Tom Eisenberg: Yeah just bare with me one minute I don't know why I'm not um, getting that on my PR newswire.  Here we go, all right.  So how much was your cash down from the last quarter?

Bert Young:  From the last quarter um, if you don't include restricted cash ah to Baystar, ah we're down just over 6 million.  That 6 million is made up of, as I mentioned, 2.7 in restructuring, 4.5 million spent on the scosource, and then we offset, you know we had some working capital changes and then unix generated cash during the quarter.

Tom Eisenberg: Oh huh.  So from operations, what was the net cash use, in the quarter, or was it cash positive?  Just from the operations, leaving aside the charge, and the legal fees, and all that.

Darl McBride: [unintelligible]

Bert Young: It'll be um, 4 million in operations cash used.

Tom Eisenberg: 4 million.  So, and that doesn't include legal?

Bert Young:  That does include the legal.

Tom Eisenberg: All right, but umm.

Bert Young: So if you take the legal out we uh generate positive cash of half a million dollars.

Tom Eisenberg: You did, all right.  So the 6, 7 million that you have in cash remaining for the business, not earmarked for the legal, or baystar, you believe you are cash flow positive now so you shouldn't in theory need to touch that?

Bert Young: Yeah

Darl McBride: That's correct.  And we, we did make as we said earlier some adjustments to the business towards the end of the quarter, that we feel like we are in good shape to continue to uh add cash on a quarter by quarter basis as we go throughout this year.  So, if you really think of our business in two simple buckets, you've got the core business bucket and then you've got the litigation bucket.  The litigation bucket is now funded, has a set of funds over there, and the fees are capped with the law firm, and now it's a matter of going out of having those claims heard in front of a court.  Then you come back to the core business, the core business is cash flow positive, and we're coming out with some new products there, so, we're, we're actually fairly excited about going into this new year with the increased flexibility we have, in terms of having our legal fees capped and you know, some [mumble] strong claims over there in front the various courts and at the same time being able to come out take our cash flow unix operations and then build on that.

Tom Eisenberg: If the litigation takes more than two years, um and you sort of run out the, the earmarked legal money, then Boies just pays for it themselves?

Darl McBride: That's correct.  He'd then uh, converts over to his, his pocketbook, [mumble], again, significant for us, uh, that that he is a joint partner with us in this and uh that includes all the way through the appeal process.  So, uh, we don't know how long it's gonna take to have these claims heard, we do know we are set to be in front of a jury trial in, in Utah in the IBM case on November 1st of 2005, is where it's scheduled right now. [Tom: good] Um, and so we're inside of 11 months on that as we stand.  You know, you go through that process, you have if there are appeals, so, the point is we're making progress here, we're approaching two years from when it started, we're now inside of a year from when it's set to go to trial.  But if it does extend beyond that, uh, we have one of the most prominent litigators in America that is stepping up with as a partner, who will help us see this through to full conclusion.

Tom Eisenberg: Right, and I know you mentioned this before but I'm now looking at the balance sheets finally, there were two press releases and one didn't have the balance sheet, but the other did, I found it.  Um the restricted cash 8 million is earmarked for legal expenses, um then you got [Bert Young: 5 million of that is.]  Uh huh, what about the other 3?

Bert Young: The other 3 is uh, royalty agreements were, that we collect on behalf of Novell and then send to them.  So it's basically just a pass through here in the company.  We have that every quarter.

Ronna Abramson of thestreet.com: Hi I have just two questions.  Um did um Boies did they also get some sort of options as part of the agreement?  And then also I'm just wondering if you could talk a little bit about the significance of the discovery motion in your overall case and how crucial you think it is, and what role it plays.

Darl McBride: Well, with respect to did he get options in this latest agreement no, the answer to that is no.  With respect to the discovery, um obviously we've put our claims in front of the court, we had a hearing on that on, on a October 19th, uh the judge has taken that under advisement.  Um, and you know we look forward to her ruling on that, um, you know we have a number of uh, issues going on in the various cases we have here.  Uh, we have been moving those cases and the issues in those cases down the field, and at this point its, its sort of a waiting game waiting to hear for the judge, the judges decision on these issues.

Ronna Abramson: OK

Al Petrofsky of ?? Investments?: Oh hello, uh I guess I had a question for Bert Young, just on the um, on the liabilities that shows a accrued compensation to law firms of uh, $7,956,000.  I believe that, that showed up there originally from a transaction in October 2003, were you going to issue 400,000 shares to Boies Schiller.  Is that correct, and did that ever happen?  What is going on with that?

Bert Young: That is correct, the 400,000 shares uh were never issued.  And uh as part of this new fee agreement we've agreed to pay that in cash and not issues those shares.  So the shares were never issued, and um, your right, that's what that original agreement refers to.

Al Petrofsky: So that will disappear in the first quarter?

Bert Young: Pardon me?

Al Petrofsky: So that will gone from the next statement?

Bert Young: Correct.  Yea, so thats the amount thats been paid now into the, in this new quarter, along with the amounts uh that were in accounts payable.  So this new agreement is superseded that previous agreement.

Al Petrofsky: Um ok if I could just speak in an unrelated thing here, to Darl, you said that um, your motion to amend the IBM case you wanted to add a claim of copyright infringement, is that correct?

Darl McBride: Correct.

Al Petrofsky: Ok.

Darl McBride: In in a, with respect to the, what we assert is uh unlicensed use of our SCO code inside of AIX for power.

Al Petrofsky: Ok.  And you're just trying to add one copyright infringement claim,

Darl McBride: Thats correct.

Al Petrofsky: not really change the rest of the complaint.

Darl McBride: Thats correct.  A standalone claim th that we're uh uh waiting on.

Al Petrofsky: Ok, thank you very much.

Darl McBride: Thanks Al.

[UPDATE: - following added by JCausey on 12/23/2004]

Call coordinator: That is all the time we have for questions today. If anyone has any further questions or would like to follow up on any point, please contact the public relations team at SCO. I'd like to turn the conference back over to (unintelligible) Mr. McBride for any additional closing remarks.

Darl McBride: Again we thank you for joining us today. uh, It was an interesting year, a little bit of a roller coaster year, I guess you could say, in 2004, uh, but we like how it ended, and the we like the position that we're in going forward, uh, I'd like to reiterate one more time, that by having the cap, I believe it was the last caller who had a number of questions coming in my direction around the notion of "well what happens if you run out of cash ... you might have $10 million in cash right now, but uh, is that enough to fight the whole thing all the way to the end?" Uh, by having this cap in place, by having the Boies team in partnership with us, uh that question goes away and we're set fully to take these, these cases to full conclusion and and we have a lot of confidence in in those cases. We look forward to the outcome of them.

Uh, so then, again as we head into this new year we really do as a management team look forward to spending more direct time innovating the products, uh, we have some interesting things we're working on now that that we'll talk to you about in the future and uh, you know, we look forward to heading into the new year.

Thanks again for joining us today, thank you from all of us at SCO. We'd like to wish you all of you happy holidays and we'll talk to you on the other side of the new year. Thanks.

Call coordinator: And once again, this will conclude SCO conference call 4th quarter and year end 2004 conference. We appreciate you being with us today. You may disconnect at this time.