Forward-looking statements made by Corel in the 10-Q form filed for Q2 to the SEC.
Sales
Corel expects that the rate of growth in sales for the three months ended August 31, 1997 compared to the same period in fiscal 1996 will be generally similar to the rate of growth in sales experienced between the three-month periods ended May 31, 1996 and May 31, 1997, due primarily to the expected introduction in the third quarter of fiscal 1997 of Corel WordPerfect Suite 7 for Windows 3.1, Corel WordPerfect 4 for the MAC, and several foreign language versions of Corel WordPerfect Suite 8.
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Sales Channels
Corel intends to continue expanding its marketing efforts in the OEM channel and the corporate marketplace and anticipates that sales from both of these areas will increase in the future both in absolute dollars and as a percentage of revenues, although there can be no assurances that such increases will occur.
Corel intends to continue expanding its marketing efforts outside North America and anticipates that sales outside North America will increase in the future both in absolute dollars and as a percentage of revenues. Conducting business outside North America is typically subject to certain additional risks, including longer payment cycles, unexpected changes in regulatory requirements and tariffs, currency conversion risks, difficulties in staffing and managing foreign operations, greater difficulty in accounts receivable collection and potentially adverse tax consequences.
Because Corel ships a large portion of its products during the last two weeks of each quarter, Corel's distributors and dealers typically hold significant inventories of Corel's software products at the end of each quarter.
Corel has set its reserves for returns in accordance with historical experience. Setting reserves involves making judgments about future competitive conditions and product life cycles. Those judgments involve evaluating information that often is unclear and in conflict. Based upon returns experience, Corel's estimates have been materially accurate. However, there can be no assurance that historical experience will be an accurate guide for the future because the rate of returns is primarily a function of the competitive state of the market in the future and thus, in large part, is a function of the actions of Corel's competitors, which Corel cannot anticipate.
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Gross Profit
Corel expects that its gross margin, as a percentage of sales, will be somewhat less during the three months ending August 31, 1997 from the level experienced in the three months ended May 31, 1997 as the sales mix for the three months ending August 31, 1997 is expected to shift toward lower margin products with the anticipated launch of WordPerfect Suite 7 for Windows 3.1 and foreign language versions of WordPerfect Suite 8 in the third quarter of fiscal 1997. However, gross margin levels are subject to a number of risks, including product mix and Corel's ability to realize expected sales levels.
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Advertising Expense
Corel expects that these expenses will increase somewhat in absolute dollars and as a percentage of sales during the third quarter of fiscal 1997. The expected level of advertising expenses as a percentage of sales is subject to, among other things, Corel's level of sales.
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Selling, General and Administrative Expense
Corel expects that these expenses will increase somewhat in absolute
dollars and as a percentage of sales during the third quarter of fiscal 1997. The expected level of selling, general and administrative expenses as a percentage of sales is subject to, among other things, Corel's level of sales.
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Research and Development Expense
Corel expects that these expenses will increase somewhat in absolute dollars and as a percentage of sales during the third quarter of fiscal 1997. The expected level of research and development expenses as a percentage of sales is subject to, among other things, Corel's level of sales.
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Income Taxes
The Company expects that, under current tax laws, it will continue
to generate additional tax credits directly related to the Company's ongoing research and development efforts. Corel's effective tax rate will be affected by product mix and sales, operating expense, advertising expense, and research and development expense levels, which may vary.
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