OTTAWA, ONTARIO--(Canadian Corp News, January 18, 2000)--Corel
Corporation (NASDAQ: CORL, TSE: COR) today announced results for its
fourth quarter ended November 30, 1999. Revenues for the fourth quarter
of fiscal year 1999 were $60.9 million, compare d tofiscal 1998. Net
profit for the quarter was $4.6 million or $0.07 per share fully
diluted, compared to a profit of $6.8 million or $0.11 per share in the
same period last year. Revenues for fiscal 1999 totaled $243.1 million
compared to $246.8 mill
ion infiscal 1998. Net profit for the fiscal year 1999 was $16.7
million or $0.26 per share fully diluted, compared with a loss of $30.4
million ($0.51) or per share reported for fiscal year 1998. All figures
are reported in US currency.Corel pre-an nounced December 22, 1999 that
based on preliminary estimates, the Company would report a loss of
approximately $0.14 per share and the results from operations were
consistent with that announcement. In the time following that
announcement, the Company
was able to recognize the tax value of certain losses and investment
tax credits which had been deferred pending the outcome of a Revenue
Canada review of Corel's 1993 to 1995 taxation years."This review,
which has been in progress for approximately three years, precluded
Corel from recognizing certain tax attributes which had arisen in the
taxation years subsequent to those under review," said Michael
O'Reilly, Corel's executive vice president, finance and chief financial
officer. "It has now bec
ome possible to quantify these amounts and as a result, Corel is able
to report a positive adjustment totaling $14.5 million for the fourth
quarter of fiscal 1999."Earlier this month, Mr. O'Reilly announced his
intention to resign as Corel's chief
financial officer. Mr. O'Reilly has now agreed to stay with Corel until
June 30, 2000 as a financial consultant and advisor.As previously
announced, Corel's operational results for the quarter were negatively
affected by sales below anticipated levels , primarily in the North
American retail channel for Corel's productivity applications.
Additionally, the Company incurred higher than anticipated expenses in
a number of areas including cost of goods sold, advertising and
selling, general and administ
rative (SG&A) costs."Overall, Corel has made significant progress in
restoring its financial base while at the same time, maintaining the
momentum of its flagship CorelDRAW and WordPerfect brands," said Mr.
O'Reilly. "It is now in a strategic posit ion to move forward
aggressively to leverage those strengths into the Linux marketplace."
Corel enjoyed strong inaugural sales of the new Corel(r) LINUX(r) OS,
totaling $3.2 million for the quarter."It should now be clear to
everyone that Corel is financially among the top Linux players," said
Dr. Michael Cowpland, Corel's president and chief executive officer.
"Not only is Corel LINUX OS the most popular Linux software download on
the CNET site, it is also one of the most popular Linux distributions
among consumers. With Corel WordPerfect 8 for Linux continuing to be
the second-most popular Linux download, we think this provides
tremendous promise for the launching of our Linux application suites in
the next few months."
During the fourth quarter, Corel continued to expand and augment its
Linux strategy, ramping up its affiliates program and bringing together
tremendous expertise to make Corel a comprehensive, end-to-end Linux
products and services provider.Deals b
egun in the fourth quarter and now completed include LinuxForce, Newlix
and OE/ONE.com, adding to existing relationships with Rebel.com and
GraphOn Corp."Corel's affiliates let us maintain our focus on providing
the best desktop Linux OS and the deli very of mainstream, marquee
applications for Linux such as WordPerfect and CorelDRAW," said Dr.
Cowpland. "At the same time, we are able to create tight integration
with all other elements of Linux from technical support to software and
hardware server needs, thin client connectivity and seamless access
between Linux and Windows applications and as of today, the stellar
opportunities in the Information Appliance arena."
4th Quarter 1999 Achievements
@ In September, Corel announced the formation of a strategic alliance
with Inprise Corporation, to accelerate commercial mainstreaming of
Linux(r) technology. As part of the alliance, the companies formed a
research-and-development partnership to faci
litate the development of Corel's office productivity applications and
Inprise's application development tools and enterprise solutions for
the Linux operating system.@ In September, Corel entered into a
licensing agreement with Ultimatte Corporatio n. The agreement grants
Corel the worldwide, perpetual right to distribute the PC and Macintosh
versions of Ultimatte's KnockOut(tm) software application on a
stand-alone basis and as part of Corel applications.
@ In October, Corel announced that it had signed a licensing agreement
with GraphOn Corporation to include GraphOn's WinBridge(tm)
web-enabling software in Corel applications. By adding WinBridge to its
applications, Corel can provide an instant deplo
yment solution that will allow users to access Corel's Windows(r)
applications over any network connection, including the Internet,
regardless of the operating system on their desktop.@ In November,
Corel joined the fast-growing Application Service Provider (ASP)
Industry Consortium, an international advocacy group dedicated to
fostering greater understanding and guidelines for the fast-emerging
application service provider segment ofthe computer industry.
@ In November, Corel and FutureLink Corp. announced a pilot program for
Corel's new online initiative - subscription pricing via the Internet.
FutureLink will remotely host WordPerfect(r) Office 2000 so that
FutureLink clients can purchase monthly ren tallicenses for the
software.
@ In November, Corel Corporation announced that it had signed a major
bundling agreement with Toshiba in the European market. Corel(r)
WordPerfect(r) Suite 8 OEM was to be bundled on Toshiba's consumer
notebooks in Europe.@ In November, Corel annou nced that it had signed
a deal to transfer substantially all of its assets related to the
CorelVIDEO(tm) product line to simply.com Inc. The sale of CorelVIDEO
completes the business plan that Corel put into place in 1998 to
concentrate on its core tec hnologies.
@ In November, Corel Corporation announced the availability of the
much-anticipated Corel(r) LINUX(r) OS. Corel LINUX OS is a major leap
forward in creating a large desktop market for Linux, and Corel
launched a landmark version of the most user-frien dlyLinux OS
distribution to date.
@ In November, Corel announced its first major Linux(r) OEM alliance,
which will see its Linux operating system, Corel(r) LINUX(r), bundled
with every computer motherboard package shipped worldwide by the PC
Chips group of companies. PC Chips will als
o ship Corel(r) WordPerfect(r) 8 for Linux and Corel WordPerfect Suite
8 OEM (for Windows(r)) with its motherboards.@ During the fourth
quarter, Corel launched the following products: Corel GALLERY(tm) 1,300,
000, Corel GALLERY(tm) 380,000, Corel Prin
t Office(tm) 2000, Corel Print Office(tm) 2000 for Macintosh(r),
WordPerfect(r) Family Pack, Print House(tm) 2000 for Macintosh(r),
Corel(r) Custom Photo for the Macintosh(r) and Corel(r) Custom Photo
for the PC.4th Quarter 1999 Awards
Corel products won 31 awards during the quarter. CorelDRAW 9 won 14
awards and Corel WordPerfect Office 2000 won six awards. A sampling of
the awards are as follows: CorelDRAW 9 won a Reader's Choice Award, a
Favorite Graphics Software award and an MV
P Finalist award. WordPerfect Office 2000 won an Editor's Choice award,
a Gold award and a Best Buy award.In November, Corel Corporation won
several awards at COMDEX/Fall '99 on the strength of its new Linux(r)
offerings and its core Windows(r) appl ications. On CNET, one of the
world's largest download portals, the Corel LINUX OS is the most
popular Linux download of any kind.
Corel Corporation
Corel Corporation is an internationally recognized developer of
award-winning business productivity, graphics and operating system
solutions on the Windows(r), Linux(r), UNIX(r), Macintosh(r) and
Java(tm) platforms. Corel also develops market-leading, Web-based
solutions including applications, contents, e-commerce and online
services. For access to these services and more information go to
www.corel.com or www.corelcity.com. Corel is headquartered in Ottawa,
Canada. Corel's common stock trades on
the NASDAQ Stock Market under the symbol CORL and on the Toronto Stock
Exchange under the symbol COR.This press release contains statements
that are forward looking as that term is defined by the United States
Private Securities Litigation Reform Ac t of 1995. These statements are
based on current expectations that are subject to risks and
uncertainties.Actual results will differ due to factors such as shifts
in customer demand, product shipment schedules, product mix,
competitive products and pri cing, technological shifts and other
variables. Readers are referred to Corel's most recent reports filed
with the Securities and Exchange Commission.
Corel, WordPerfect, CorelDRAW, Corel LINUX OS, PHOTO-PAINT, Corel
VENTURA Publisher, Print House, Print Office, Gallery, Custom Photo and
the Go Further logo are trademarks or registered trademarks of Corel
Corporation or Corel Corporation Limited. Li nuxis a registered
trademark of Linus Torvalds. UNIX is a registered trademark of The Open
Group. All other product names are trademarks of their respective
companies. All other brands and products referenced herein are the
trademarks or registered tra demarks of their respective holders.
COREL CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
QUARTER AND YEAR ENDED NOVEMBER 30, 1999
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(US Dollars, 000s omitted except per share data)
Quarter ended Year Ended
November 30 November 30
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1999 1998 1999 1998
---------------------------------------------------------------------
Sales $ 60,932 $ 67,242 $ 243,051 $ 246,827
Cost of sales 18,398 14,879 59,516 51,561
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Gross profit 42,534 52,363 183,535 195,266
Expenses:
Advertising 15,606 11,454 47,964 41,826
Selling, general and
administrative 22,295 20,504 82,229 77,736
Research and development 3,523 12,024 40,049 71,935
Depreciation and
amortization 2,046 1,923 6,443 12,368
Restructuring charge - - - 15,880
Settlement proceeds - - (6,342) -
Loss (gain) on foreign
exchange (511) 236 (246) 911
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42,959 46,141 170,097 220,656
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Income (loss) from operations (425) 6,222 13,438 (25,390)
Interest expense (income) (93) 118 190 1,112
---------------------------------------------------------------------
Income (loss) before the
undernoted (332) 6,104 13,248 (26,502)
Income tax expense
(recovery) (5,221) (678) (3,946) 3,946
Loss on equity investment 307 - 478 -
---------------------------------------------------------------------
Net income (loss) 4,582 6,782 16,716 (30,448)
Deficit beginning
of period (163,470) (182,386) (175,604) (145,156)
---------------------------------------------------------------------
Deficit end of period $(158,888) $(175,604) $(158,888) $(175,604)
---------------------------------------------------------------------
---------------------------------------------------------------------
Earnings per share:
Net income (loss)
per common share
- Basic $ 0.07 $ 0.11 $ 0.27 $ (0.51)
- Fully diluted 0.07 0.10 0.26 (0.51)
Average number of
common shares
outstanding (000s)
- Basic 64,213 59,401 62,194 59,433
- Fully diluted 66,337 67,755 65,100 59,433
COREL CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
AS AT NOVEMBER 30, 1999
CONSOLIDATED BALANCE SHEETS
(US Dollars, 000s omitted)
---------------------------------------------------------------------
November 30
---------------------------------------------------------------------
1999 1998
---------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 18,021 $ 22,393
Short-term investments - 2,113
Accounts receivable - Trade 54,770 45,789
- Other 3,954 877
Inventory 13,567 17,098
Income taxes recoverable 5,135 -
Deferred income taxes 1,642 2,495
Prepaid expenses 2,042 4,618
---------------------------------------------------------------------
Total current assets 99,131 95,383
Investments 2,873 -
Capital assets 49,697 44,776
---------------------------------------------------------------------
Total assets $ 151,701 $ 140,159
---------------------------------------------------------------------
---------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 50,284 $ 58,209
Current portion of Novell obligations 10,594 11,800
Income taxes payable - 7,549
Deferred revenue 18,472 17,933
---------------------------------------------------------------------
Total current liabilities 79,350 95,491
---------------------------------------------------------------------
Novell obligations 7,985 16,085
Shareholders' equity:
Share capital 222,155 203,088
Contributed surplus 1,099 1,099
Deficit (158,888) (175,604)
---------------------------------------------------------------------
Total shareholders' equity 64,366 28,583
Total liabilities and shareholders' equity $ 151,701 $ 140,159
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---------------------------------------------------------------------
COREL CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
QUARTER AND YEAR ENDED NOVEMBER 30, 1999
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US Dollars, 000s omitted)
Quarter ended Year Ended
November 30 November 30
---------------------------------------------------------------------
1999 1998 1999 1998
---------------------------------------------------------------------
Cash and cash equivalents provided by (used for):
Operations:
Net income (loss) $ 4,582 $ 6,782 $ 16,716 $ (30,448)
Items which do not
involve cash or cash
equivalents:
Depreciation and
amortization 4,852 5,812 19,117 25,689
Loss on equity
investments 307 - 478 -
Write-down of
short-term investment - - - 1,908
Gain on sale of
short-term investment - - (809) -
Deferred income taxes - (698) 853 (142)
Restructuring charges - - - 3,086
Changes in non-cash
working capital (12,957) (1,022) (26,470) 16,183
---------------------------------------------------------------------
Cash flows from (used in)
operating activities (3,216) 10,874 9,885 16,276
Financing:
Issue of share capital 6,055 209 12,767 209
Shares purchased for
cancellation - - - (987)
Repayment of Novell
obligations (2,306) (2,534) (9,306) (9,659)
---------------------------------------------------------------------
Cash from (used in)
financing activities 3,749 (2,325) 3,461 (10,437)
Investments:
Proceeds on sale of
short-term investment - - 2,922 1,624
Purchase of equity
investment - - (1,561) -
Purchase of capital
assets (6,327) (4,121) (19,198) (10,359)
Proceeds on disposal
of assets 23 226 119 305
---------------------------------------------------------------------
Cash flows used in
investing activities (6,304) (3,895) (17,718) (8,430)
Net increase (decrease) in
cash and cash equivalents (5,771) 4,654 (4,372) (2,591)
Cash and cash equivalents
at beginning of year 23,792 17,739 22,393 24,984
---------------------------------------------------------------------
Cash and cash equivalents
at end of period $ 18,021 $ 22,393 $ 18,021 $ 22,393
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Toronto Stock Exchange SYMBOL: COR
NASDAQ SYMBOL: CORL
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