Corel Announces Results for Fourth Quarter & Fiscal.

Business Editors & High Tech Writers

OTTAWA, Canada--(BUSINESS WIRE)--Feb. 1, 2002

Corel Corporation (NASDAQ:CORL)(TSE:COR) today announced results for its fourth quarter and fiscal 2001, ended November 30, 2001. All figures are reported in US currency.

Revenues for fiscal 2001 totaled $134.3 million, producing a net loss of $7.3 million or $(0.10) per share. Included in those figures are a number of non-recurring costs totaling approximately $8.5 million in the fourth quarter. These results compare to fiscal 2000 revenues of $157.5 million, resulting in a net loss of $55.3 million or $(0.80) per share. While Corel's revenue for fiscal 2001 declined by $23.2 million from the previous year, the company achieved a $48-million positive gain to its bottom line, a direct result of measures instituted across all areas of its operations to reduce expenditures. EBITDA for fiscal 2001 was $10.5 million, compared to a loss before interest, taxes, depreciation and amortization of $43.1 million for fiscal 2000.

Revenues for the fourth quarter of fiscal 2001 were $31.6 million, producing a net loss of $10.7 million or $(0.14) per share. This compares to revenues of $40.4 million, producing a net loss of $8.6 million or $(0.12) per share for the same period in fiscal 2000.

Cash, cash equivalents, short-term investments and restricted cash amounts at the end of fiscal 2001 stood at $122.4 million, compared to $128.6 million at the end of fiscal 2000.

"As today's results indicate, we made significant improvements to our overall financial position during 2001," said John Blaine, chief financial officer at Corel Corporation. "The financial discipline we injected into the company resulted in three consecutive profitable quarters. While recent events and general economic conditions impacted our revenues during the fourth quarter of 2001, our strict cost controls, healthy cash position and strengthened balance sheet helped mitigate the impact of these external factors."

"2001 was a turning point for Corel. We consistently met the milestones we laid out for the first phase of the three-year growth strategy we unveiled at the beginning of 2001," said Derek Burney, president and CEO of Corel. "We demonstrated we could operate the business profitably and introduced an unprecedented number of new products, including procreate, a brand new line of software for creative professionals.

"These achievements provide Corel with a strong foundation to support the successful completion of the next phase of our strategy. Our two strategic acquisitions announced in 2001 will enhance our capacity to deliver customizable, intuitive and collaborative content solutions and professional services to enterprise customers. 2002 will see the company make further investments as we leverage this momentum and continue to deliver products designed around the needs of several clearly-defined market segments."

Q4 2001 Highlights:

New Product Releases

In the fourth quarter, Corel released a number of new products. They include:

-- Corel(R) GRAPHICS SUITE 10 for Macintosh(R): Designed to run on Mac(R) OS X
and classic Mac operating systems 8.6 to 9.2, this suite features the
award-winning applications CorelDRAW(R) 10, Corel PHOTO-PAINT(R) 10 and Corel
R.A.V.E.(TM) and supports Mac OS X technologies including an Aqua(R) interface,
Apple ColorSync(R) and QuickTime(R).

-- CorelDRAW 10 for Mac & Corel PHOTO-PAINT 10 for Mac: In keeping with Corel's
commitment to provide Mac-specific, professional tools for designers, this is
the first time Corel has offered the opportunity to purchase these standalone
applications.

-- procreate(TM) KPT(R) effects(TM): The second application in the
procreate(TM) line of creative enhancement tools and optimized for Mac OS X,
Apple's next generation operating system, procreate(TM) KPT effects is a
collection of nine new Adobe(R) Photoshop(R) compatible plug-ins designed to
quickly add effects to digital images.

-- procreate(TM) KnockOut 2: The third application in the procreate(TM) line of
creative enhancement tools, procreate(TM) KnockOut 2 leverages the strengths of
Mac OS X and enables creative professionals to quickly mask and preserve photo
objects with fine image details.

Corporate News

-- Corel participated with Microsoft at the launch of

Windows(R) XP in New York on October 24, 2001.

CorelDRAW(R) ESSENTIALS, the first graphics package

optimized for this new operating system, was showcased as

part of the launch activities. To mark the event, Derek

Burney joined Bill Gates, chairman and chief software

architect of Microsoft, and other technology leaders to

open trading for the day on The Nasdaq Stock Market.

-- Corel further strengthened its relationship with Apple by

announcing that the company intends to bring all future

Mac professional graphics applications to Mac OS X. During

2001, Corel delivered seven native Mac OS X graphics

products.

-- Corel finalized its acquisition of Micrografx. The deal

officially closed on October 30, 2001. The company also

worked towards the completion of its acquisition of

SoftQuad, Software Ltd., a deal which is now estimated to

close in early to mid March. With these two strategic

acquisitions, Corel is positioning itself to capture a

leadership position in the enterprise market.

-- Corel welcomed two new members to its executive management

team: Gary Klembara, formerly executive vice-president,

sales, at Micrografx, who became Corel's executive

vice-president, sales; and Amanda Bedborough, formerly

vice-president Europe, Middle East and Africa Operations

(EMEA) for 3dfx Interactive, Inc., who was appointed to

executive vice-president EMEA Operations at Corel. In

addition to the appointment of Ms. Bedborough, the company

made other significant investments in its EMEA Operations,

designed to expand its global profile and drive revenues

in these key markets.

-- Corel established a new team within the company, a

strategic relations group, to further enhance its

influence and profile with customers and partners in its

targeted markets. Steve Houck, formerly executive

vice-president, sales, is leading this new group as

executive vice-president, strategic relations.

-- Corel welcomed new members to its board of directors. They

are James L. Hopkins, former chairman, president, and CEO

of Micrografx and David A. Galloway, president and CEO of

Torstar. In addition, Germaine Gibara joined the board as

a consultant to participate fully in all board

deliberations pending her nomination for board membership.

Ms. Gibara is scheduled to be nominated for board

membership at Corel's next meeting of shareholders,

scheduled for the Spring of 2002. Ms. Gibara is president

of Avvio Management Inc., a management consulting firm,

and has served on the board of directors of a number of

public companies.

Industry Recognition

Corel and its products continued to garner industry praise. Recent awards include:

-- Derek Burney was recognized by MacDirectory as one of the

10 most influential people in the Macintosh(R) community

in 2001. The MacDirectory Ten is an annual listing of top

influencers in the Mac(R) industry, as chosen by the

publication's staff and readers.

-- procreate(TM): MacAddict's Extremely Unofficial MacExpo

Awards: Most Effective Marketing award, October 2001

-- procreate(TM) Painter 7(TM): CNET Rating 9 out of 10 -

Editor's Choice, December 2001; MacAddict "Freakin'

Awesome" Rating, November 2001; MacHome, 4.5 out of 5

Rating, November 2001

-- Corel(R) GRAPHICS SUITE 10 for Mac(R): Macworld (UK),

MacExpo: Macworld Best of Show, November 2001

-- Bryce(R) 5: Amazon.com, Best of 2001: Macintosh Software,

4.5 out of 5 rating, November 2001; MacAddict's Spiffy

Award, 4.5 out of 5 rating, October 2001; Editor's Choice

award, CADence, December 2001

-- CorelDRAW(R) 10 Graphics Suite: Reader's Choice 2001, Top

50 Products & Technologies, Digital Output, August 2001

Corel Corporation

Corel Corporation provides its customers with the creative tools they need to unleash their imaginations. With its heritage of software innovation and a solid franchise of loyal customers worldwide, Corel has earned its reputation as an internationally recognized developer of award-winning graphics and business productivity applications on multiple platforms, including Windows(R) and Macintosh(R). Corel will continue to expand its support of the Web, delivering the Internet's versatility to customers through exciting Web-based applications, content and services. Corel will also be developing applications for Microsoft's .NET platform as part of its commitment to provide customers with a full range of applications and services over the Internet. With its headquarters in Ottawa, Canada, Corel continues to be one of Silicon Valley North's most exciting and influential software companies. Corel's common stock trades on the NASDAQ Stock Market under the symbol CORL and on the Toronto Stock Exchange under the symbol COR. For more information on Corel Corporation, please visit www.corel.com

This press release contains forward-looking statements as defined by the United States Private Securities Litigation Reform Act of 1995, involving the company's expectations about future financial results and other matters. These statements reflect management's current forecast of certain aspects of the company's future business. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results of operations to differ materially from historical results or current expectations. The words "plan", "expect", "believe", "intend", "anticipate", "forecast", "target", "estimate" and similar expressions identify forward-looking statements. Risk factors include shifts in customer demand, product shipment schedules, product mix, competitive products and pricing, technological shifts and other variables. Readers are referred to Corel's most recent reports filed with the Securities and Exchange Commission for a more complete discussion of the other risks and uncertainties. The factors underlying forecasts are dynamic and subject to change. As a result, forecasts speak only as of the date they are given and do not necessarily reflect the company's outlook at any other point in time. The company does not undertake to update or review these forward-looking statements.

(C) 2002 Corel Corporation. All rights reserved. Corel, CorelDRAW, Corel PHOTO-PAINT, Corel R.A.V.E., Bryce, procreate, KPT, effects, Painter 7 and the Corel logo are trademarks or registered trademarks of Corel Corporation or Corel Corporation Limited in Canada, the United States and/or other countries. All other product, font and company names and logos are trademarks or registered trademarks of their respective companies.

                          Corel Corporation
                     Consolidated Balance Sheets
                        (in thousands of US$)

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                                                 As at November 30
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                                                 2001         2000
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                                                    (Unaudited)
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Assets
Current assets:
  Cash and cash equivalents                     $24,924     $127,430
  Restricted cash                                19,367        1,136
  Short-term investments                         78,076
  Accounts receivable
    Trade                                        18,689       28,620
    Other                                         1,272          773
  Inventory                                         799        3,117
  Future tax asset                                  479
  Prepaid expenses                                1,779        1,050
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Total current assets                            144,906      162,605

Investments                                       9,886       11,996
Future tax asset                                                 965
Deferred financing charges                          250          550
Capital assets                                   43,123       42,471
Goodwill                                         37,534
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Total assets                                   $235,699     $218,587
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Liabilities and shareholders' equity Current liabilities:
  Accounts payable and accrued liabilities      $27,862      $28,441
  Participation rights obligation                16,338
  Current portion of Novell obligations                       10,000
  Income taxes payable                            4,749        6,595
  Deferred revenue                               10,160       10,907
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Total current liabilities                        59,109       55,943
Future income tax liabilities                     4,967
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Total Liabilities                               $64,076      $55,943

Commitments and contingencies

Shareholders' equity
Share capital
  Preferred shares: Series A
  (2001 - 24,000; 2000 - 24,000)
  Common shares (2001 - 80,709; 2000 - 73,641) $388,193     $371,890
  Contributed surplus                             4,990        4,990
  Deficit                                      (221,560)    (214,236)
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Total shareholders' equity                      171,623      162,644
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Total liabilities and
 shareholders' equity                          $235,699     $218,587
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                          Corel Corporation
                Consolidated Statements of Operations
        (in thousands of US$, except share and per share data)

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                                   For the three        For the
                                    months ended       year ended
                                    November 30,      November 30,
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                                   2001     2000     2001     2000
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                                    (Unaudited)        (Unaudited)
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Revenue                         $31,619  $40,350 $134,320 $157,487
Cost of sales                     6,045   12,904   25,927   47,025
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Gross profit                     25,574   27,446  108,393  110,462

Expenses:
  Advertising                     6,418    3,672   22,091   33,258
  Selling, general and
   administrative                17,406   20,954   61,828   85,662
  Research and development        7,282    7,963   25,251   43,867
  Depreciation and amortization   1,334    2,094    5,577    7,354
  Settlement proceeds                                (409)
  Loss (gain) on foreign exchange  (286)     175      (71)   1,371
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                                 32,154   34,858  114,267  171,512
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Income (loss) from operations    (6,580)  (7,412)  (5,874) (61,050)
Gain (loss) on investments       (1,359)           (2,359)  14,585
Interest revenue (expense)          981   (1,559)   5,420   (1,305)
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Income (loss) before
 the undernoted                  (6,958)  (8,971)  (2,813) (47,770)

Less:
Income tax expense (recovery)     3,599     (888)   4,039    4,705
Share of loss of
 equity investments                 125      502      472    2,873
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Net income (loss)              $(10,682) $(8,585) $(7,324)$(55,348)
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Income (loss) per share:
Basic                            $(0.14)  $(0.12)  $(0.10)  $(0.80)
Diluted                          $(0.14)  $(0.12)  $(0.10)  $(0.80)

Weighted average
 number of common shares
outstanding (000's):
Basic                            76,184   73,584   74,325   69,498
Diluted                          76,184   73,584   74,325   69,498


                          Corel Corporation

                        Segmented information

      The Company has only one global operating segment, as detailed in
the consolidated financial statements included herein. The Company
sells its products worldwide from four geographic regions. A summary
of sales by product group, sales channel, region and major customer
from consolidated operations is as follows:

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                               For the three             For the
                               months ended             year ended
                                November 30             November 30
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                            2001        2000        2001        2000
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By product

  Creative Products      $16,186     $20,684     $73,949     $75,919
  Business Applications   14,770      20,322      58,624      78,917
  Other                      663        (656)      1,747       2,651
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  Total sales            $31,619     $40,350    $134,320    $157,487
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By sales channel

  Retail packaged
   products              $15,944     $21,249     $77,838     $80,069
  OEM licenses             2,678       4,330      11,475      17,640
  Corporate licenses      12,997      14,771      45,007      59,778
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  Total sales            $31,619     $40,350    $134,320    $157,487
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By region

  United States          $16,894     $25,331     $76,287     $83,355
  Canada                   1,782       3,359       7,666      13,181
  EMEA                     9,361      10,720      35,313      42,453
  Other international      3,582         940      15,054      18,498
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  Total sales            $31,619     $40,350    $134,320    $157,487
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