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SCO's Latest Monthly Operating Reports, for March - Where Did All the Money Go?

By Pamela Jones et al.

SCO has filed its monthly operating reports for SCO Group and SCO Operations for the month of March, and it looks like SCO Group has achieved its goal of having no money left for Novell, although it's hard to tell, since the document for Group is almost blank.

I totally know nothing about accounting, so I'll just list what I notice, and you can figure out what it means. I see a net loss on page 5 of $59,811 for "China Investment Income". That is the "Net Profit/Loss". Then on page 7, we learn that SCO China, which didn't always exist, now has a "book value" of $488,544 and SCO Japan $765,366. Germany has $24,944; Canada $38,031 and UK and France have $43 and $70 respectively. A book value of $43? But the Mother Ship?

Page 6 lists $1,317,018 as "Total Assets" in the "Other" category. The rest is blank. No cash. No restricted cash. Just blanks. Then under the category of "Liabilities Subject to Compromise (prepetition)" SCO lists unsecured debt in the amount of $1,745,258. Then "Retained Earnings - Prepetition" is (352,922); "Retained Earnings - Postpetion" is (75,318); "Net Owner Equity" (428,240); for a "Total Liabilities and Owners' Equity" of $1,317,018.

So where's the rest of the money? SCO Operations lists $4,410,536 in cash at the end of the month of March; restricted cash for "Novell SVRx" of $386,163. I gather that may be their highest projected offer, they hope. Page 7 begins the very long list of professionals who got paid. A lot. And on page 9, we see a "Net Loss" of $966,820. And on page 11, SCO operations lists its total assets at $13,016,547, counting everything, office equipment, professional retainers, and the lot. Intercompany Receivables on page 12 are $1,745,258 from SCO Group and $369,259 from SCO Japan. So... wait. You don't suppose they intend to argue that SCO Group is who is being sued by Novell, not SCO Operations? Or is this just reflective of the reorganization, and only SCO Operations is intended to survive? I confess, I have no idea. SCO Operations lists a total for Postpetition Debts at $5,603,339, on page 13, by the way. I guess Novell can gnaw on some bones, but IBM? What is IBM supposed to get for all that litigation annoyance and badmouthing in the media?

Full post as published by Groklaw on April 22, 2008 (boomark / email).