Financial statements for Q2 1998 & 1997
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as at November 30, 1997
and May 31, 1998........................................................3
Consolidated Statements of Operations and Retained Earnings (Deficit)
for the three months and for the six months ended May 31, 1997 and May
31, 1998................................................................4
Consolidated Statements of Changes in Financial Position
for the six months ended May 31, 1997 and May 31, 1998..................5
Notes to Consolidated Financial Statements................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................................10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...................................................21
Item 6. Exhibits and Reports on Form 8-K....................................21
SIGNATURES....................................................................23
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COREL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S.$)
<TABLE>
<CAPTION>
November 30, May 31,
1997 1998
------------ -----------
<S> <C> <C>
ASSETS (unaudited)
Current assets
Cash and short-term investments............... $ 30,629 $ 17,304
Accounts receivable (note 2)
Trade..................................... 50,951 34,693
Other..................................... 2,310 2,742
Inventory (note 3)............................ 11,412 12,820
Deferred income taxes......................... 2,353 2,766
Prepaid expenses.............................. 2,591 2,255
--------- ---------
100,246 72,580
Capital assets (note 4)............................ 63,497 54,565
--------- ---------
$ 163,743 $ 127,145
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities
(note 5)..................................... $ 48,063 $ 46,760
Current portion of long-term debt............. 13,500 13,500
Income taxes payable.......................... 4,203 5,419
Deferred revenue.............................. 14,124 12,160
--------- ---------
79,890 77,839
Long-term debt (note 6)............................ 24,044 19,880
Shareholders' equity
Share capital (note 7)........................ 204,235 202,879
Contributed surplus........................... 730 1,099
Deficit....................................... (145,156) (174,552)
--------- ---------
59,809 29,426
--------- ---------
$ 163,743 $ 127,145
========= =========
</TABLE>
(See accompanying Notes to Consolidated Financial Statements)
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COREL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS (DEFICIT)
(in thousands of U.S.$, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
May 31, May 31,
---------------------- ----------------------
1997 1998 1997 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales............................................. $ 87,413 $ 63,042 $ 168,131 $ 108,502
Cost of sales (note 8)............................ 18,828 11,308 42,851 21,750
--------- --------- --------- ---------
Gross profit................................... 68,585 51,734 125,280 86,752
--------- --------- --------- ---------
Expenses
Advertising.................................... 20,529 11,801 40,402 22,969
Selling, general and administrative............ 22,059 19,098 41,711 37,515
Research and development....................... 22,298 21,765 41,121 42,930
Depreciation and amortization.................. 7,282 3,589 14,176 7,980
Write-down of purchased software
and royalties........................... 113,674 - 113,674 -
Loss on foreign exchange....................... 834 470 1,017 753
--------- --------- --------- ---------
186,676 56,723 252,101 112,147
--------- --------- --------- ---------
Loss from operations.............................. (118,091) (4,989) (126,821) (25,395)
Interest expense.................................. 337 707 838 840
--------- --------- --------- ---------
Loss before income taxes.......................... (118,428) (5,696) (127,659) (26,235)
Income taxes
Current....................................... (3,673) 2,682 174 3,574
Deferred (reduction).......................... 2,867 (71) 1,043 (413)
--------- --------- --------- ---------
(806) 2,611 1,217 3,161
Net loss.......................................... (117,622) (8,307) (128,876) (29,396)
Retained earnings (deficit) beginning of period... 75,701 (166,245) (86,955) (145,156)
Premium on cancellation of shares................. (269) - (269) -
--------- --------- --------- ---------
Deficit end of period............................. $ (42,190) $(174,552) $ (42,190) $(174,552)
========= ========= ========= =========
Loss per share:
Net loss
Basic...................................... $ (1.96) $ (0.14) $ (2.15) $ (0.49)
Average number of Common Shares
Basic...................................... 60,082 59,346 60,075 59,616
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