Hi Mark,
Corel Corporation Releases Better than Predicted 1998 Second Quarter Results and Announces Consolidation
Ottawa, Canada - June 24, 1998 - Corel Corporation today released better than predicted financial results for its second quarter of fiscal 1998 ended May 31, 1998. All amounts are reported in US currency. At the same time, the company announced a major consolidation, blending its Utah operations into Ottawa in order to increase R&D synergies across its product line. This move will strengthen the company both financially and from a product perspective.
Corel reported net sales of $63 million and a net loss of $8.3 million or $(0.14) per share for the second quarter. At May 31, 1998 the Company's current asset position stood at $72.6 million, including $17.3 million in cash and short-term investments.
"We said we would strategically contain costs, control inventory and optimize product levels in our distribution channels. We have done these things," said Michael O'Reilly, Corel Corporation's vice president finance and chief financial officer. "Our Q2 results, which are better than most analysts predicted, clearly demonstrate the fulfillment of our commitment to return to financial stability and we are now ready to complete the next steps in our business efficiency program," he added.
A major element of Corel's consolidation plan, which will result in estimated savings of $33M annually, is the transfer of research and development from Corel's Orem, Utah engineering center to engineering facilities in Ottawa. This move will reduce the total workforce by approximately 20%. At the same time Corel Computer Corporation (CCC) will be reintegrated as a division of Corel Corporation. These changes will be undertaken immediately.
"This decision was not taken lightly, rather with the best interests of our customers and shareholders in mind. We'll see increased R&D synergies across product lines and substantial cost savings from this consolidation. It strengthens our products, strengthens our fiscal outlook and sets the stage for the next two years," said Dr. Michael Cowpland, president and chief executive officer of Corel Corporation.
Under Corel's consolidation plan the Company will transfer development of Corelr Word Perfectr, Corelr Quattror Pro, Corelr PresentationsT and OpenJT, which is currently co-developed by both sites, to its Ottawa office, which currently produces Corelr Paradoxr, Corel VENTURAT, CorelDRAWT, Corelr Print OfficeT, the Corel Print HouseT Magic line, Corel GALLERYT Magic, and Corelr Professional Photos.
In addition, the international product localization performed in Orem will be consolidated with the bulk of Corel's localization work currently done at its facility in Dublin, Ireland. Corel's engineering facility in New Hampshire will continue to develop the innovative new Corel jBridgeT tool that makes it possible to deploy unmodified Windowsr applications across networks to a number of different operating systems.
In Orem the consolidation will result in the majority of 530 positions being phased out over the next two months, while Ottawa, New Hampshire and Dublin will see the creation of approximately 190 jobs. Approximately 150 of these jobs will be in Ottawa. The Company will offer outplacement services to Utah employees as well as the opportunity to apply for positions at Corel's other engineering centers.
"This orderly transition will be seamless to our customers. The products produced in Orem have reached an ideal level of maturity and our Ottawa site has senior engineers leading teams with expertise in transferring and further developing such products," Dr. Cowpland said.
This press release contains statements that are forward looking as that term is defined by the US Private Securities Litigation Reform Act 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 customer demand, product ship schedules, PC shipment growth, product mix, competitive products and pricing, technological shifts and other issues discussed in the Company's Report on Form 10-K and other reports filed with the Securities and Exchange Commission
corel.com
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