Corel Announces Third Quarter Results.Business Editors OTTAWA--(BUSINESS WIRE)--Sept. 27, 2000 Corel Corporation (company) Corel Corporation - A software publisher best known for the CorelDraw application. Founded in June 1985 by Dr. Michael Cowpland, Corel Corporation was originally a systems integration company. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CORL CORL Corel Corporation (stock symbol) CORL Coalition of Reef Lovers CORL capital outlay revenue limit CORL change-orientated reflective listening (psychotherapy) CORL Central Ontario Ringette League ) (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :COR cor (kor) [L.] heart. acute cor pulmonale acute overload of the right ventricle due to pulmonary hypertension, usually due to acute pulmonary embolism. ) today announced results for its third quarter ended August 31, 2000. Revenues for the third quarter of fiscal year 2000 were $36.4 million, producing a net loss of $10.7 million or ($0.15) per share fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. . The company achieved a substantial drop in overall costs through employee reductions and decreases in expenditures related to advertising, marketing and market development costs, cost of sales and product-related expenses and other general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. . Loss from operations includes approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $6.2 million of one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges, including approximately $2.6 million of settlement charges, on which Corel (Corel Corporation, Ottawa, Ontario, www.corel.com) A leading Canadian software company, founded in 1985 by Dr. Michael Cowpland. For many years, it has been widely known for its award-winning CorelDRAW graphics programs for Windows, Mac and Unix. is awaiting confirmation of insurance proceeds, approximately $2.5 million of employee severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when related charges and approximately $1.1 million of asset write-offs and other costs associated with Corel's cost-restructuring plan. Cash at the end of the quarter stood at $11.6 million. During the second quarter of 2000, Corel reported revenues of $36.6 million, with a net loss of $23.6 million or ($0.36) per share. All figures are reported in US currency. "Our third quarter results demonstrate our previously-announced cost-restructuring plan is already having an impact on our bottom line," said John Blaine Blaine, city (1990 pop. 38,975), Anoka co., SE Minn., a suburb N of Minneapolis; settled 1862, inc. 1964. Diverse manufactures include medical equipment, gun parts, and optical components. The area was organized as a township in 1877 and was named in honor of James G. , chief financial officer at Corel Corporation. "Our revenues held firm from the previous quarter, our costs are down and we continue to make progress towards putting the company on a more solid financial footing." "We recognize that we have a lot more work to do to in order to return the company to profitability. However, these numbers are encouraging. They show we're we're Contraction of we are. we're we are on the right track," said Derek Derek is a male name of English and Old German origin, possibly derived from the Old German Theodoric,[1] meaning power of the tribe or ruler of the people. J. Burney Bur·ney , Frances Known as "Fanny." 1752-1840. British writer best known for her witty and sophisticated letters and diaries covering the years from 1768 until her death. , interim president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Corel Corporation. "We are putting the elements in place to improve our financial position so we can continue to deliver the top-quality products and services that our customers expect, while earning the respect and confidence of our shareholders." "We enjoyed some notable accomplishments during Q3," added Mr. Burney. "We launched several exciting products on multiple platforms Refers to two or more operating environments, which typically include the CPU family and operating system. For example, if versions of a program run on Windows and the Macintosh, the software is said to support multiple platforms. , including the latest release of our flagship This article is about the lead ship, store, or product of a group. For other uses, see Flagship (disambiguation). A flagship is the ship used by the commanding officer of a group of naval ships. graphics suite - CorelDRAW A drawing program for Windows and the Mac from Corel. Introduced in 1989, CorelDRAW has been Corel's flagship program, which became very popular due to its speed and features. CorelDRAW has been offered in various suites with other Corel programs, including at one time, the Corel VENTURA - for Windows and Linux Linux Nonproprietary operating system (OS) for digital computers. In 1991 Linus Torvalds of Finland began asking for volunteer programmers over the Internet to collaborate on the development of a UNIX-like OS for personal computers; the “1. , as well as Corel LINUX Corel Linux, also called Corel LinuxOS, was a Debian-based Linux distribution made by Corel that was released in late 1999. Corel later discontinued the distribution, but did not remove the former Corel Open Source Development website until March 2002. OS - SECOND EDITION. We continued to garner industry praise for our existing offerings and expanded our reach to customers through strategic partnerships with companies such as Hewlett-Packard See HP. Hewlett-Packard - (HP) Hewlett-Packard designs, manufactures and services electronic products and systems for measurement, computation and communications. The company's products and services are used in industry, business, engineering, science, medicine and and Wacom Wacom Co., Ltd. (株式会社ワコム Kabushiki-gaisha Wakomu ." Q3 Highlights Product Development
-- Corel launched CorelDRAW(R) 10 Graphics Suite - its biggest
upgrade ever - at Seybold in San Francisco, California. Among its many
enhancements, the professional graphics suite features a brand new
application: Corel R.A.V.E.(TM) (Real Animated Vector Effects), a
powerful Web animation tool with the familiar CorelDRAW interface for
creating Macromedia Flash(TM) SWF animation. CorelDRAW 10 Graphics
Suite will hit store shelves November 2000.
-- Corel delivered the next key pieces in its strategy to bring
the power of Linux(R) to the desktop with the launch of two products
at LinuxWorld in San Jose, California: Corel(R) LINUX(R) OS - SECOND
EDITION, a new and enhanced version of Corel's award-winning Linux
distribution, and CorelDRAW Graphics Suite for Linux, the company's
world-renowned illustration, photo-editing and painting suite now
available on the Linux platform. Corporate News
-- Dr. Michael Cowpland announced his resignation as president,
chief executive officer and chair of the board of Corel Corporation in
order to dedicate his time and resources to new start-up
opportunities. Dr. Cowpland will no longer be involved in the
operations of the company but will continue as a director and as a
technology advisor to Corel. Derek J. Burney, formerly executive
vice-president, engineering and chief technology officer of Corel has
been appointed interim CEO and president. In addition, Mr. James
Baillie and Mr. Larry O'Brien have been appointed to the board of
directors following the acceptance of the resignation from the board
of directors of Mr. William G. Davis for personal reasons. Mr. Baillie
is counsel to Torys. Mr. O'Brien is chairman of CALIAN Technology Ltd.
Mr. Baillie has been appointed as chair of the board of directors and
Mr. Lyle Blair as vice-chair.
Partnerships and Acquisitions
-- Corel announced the sale of its GraphicCorp(TM) division, as
well as its collection of premium and stock digital photographic
images, to Hemera Technologies Inc. In return, Corel received a 23 per
cent equity interest in Hemera.
-- Corel announced two worldwide OEM agreements with
Hewlett-Packard Company. HP is bundling Corel Print House(TM) 2000
(PC) with its ScanJet(R) 4300C scanner, targeting the home market. In
addition, HP is bundling Corel PHOTO-PAINT(R) 8 for Power Macintosh(R)
OEM version and Corel Print Office(TM) 2000 OEM version with its
ScanJet 5370C scanner, which targets the small office and home office
market.
-- Corel entered into a worldwide bundling agreement with Wacom
Technology Co., a manufacturer and international distributor of
graphics tablets. Corel(R) Painter(TM) Classic will be bundled with
Wacom's Intuos(TM) and Graphire(TM) graphic tablets. It was the first
OEM agreement Corel has signed involving the recently-acquired
MetaCreations Corporation family of products.
Industry Recognition
-- Corel's products continued to garner industry praise.
WordPerfect(R) Office 2000 for Linux(R) (Deluxe) was placed on
Winmag.com's exclusive WinList. It placed first in the category of
Software - Business Suites. In addition, Corel LINUX OS and CorelDRAW
9 Graphics Suite won PC World's 2000 World Class Award for the Most
Promising Software Newcomer and Best Drawing Software, respectively.
Corel Corporation Corel Corporation is an internationally recognized developer of award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" business productivity, graphics and operating system operating system (OS) Software that controls the operation of a computer, directs the input and output of data, keeps track of files, and controls the processing of computer programs. solutions on the Windows(R), Linux(R), UNIX UNIX Operating system for digital computers, developed by Ken Thompson of Bell Laboratories in 1969. It was initially designed for a single user (the name was a pun on the earlier operating system Multics). (R), Macintosh A family of desktop and laptop computers from Apple and the first computer to popularize the graphical user interface (GUI). The combination of Mac hardware and software has been consistent over the years, providing an ease of use that Mac users have enjoyed. (R) and Java Java (jä`və), island (1990 pop. 107,525,520), c.51,000 sq mi (132,090 sq km), Indonesia, S of Borneo, from which it is separated by the Java Sea, and SE of Sumatra across Sunda Strait. (TM) platforms. Corel also develops market-leading, Web-based solutions including applications, contents, e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. 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 Ottawa, city, Canada Ottawa (ŏt`əwə), city (1991 pop. 313,987), capital of Canada, SE Ont., at the confluence of the Ottawa and Rideau rivers. Hull, Que. , Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . Corel's common stock trades on the NASDAQ Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. (SM) under the symbol CORL and on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. under the symbol COR. This press release contains statements that are forward looking as that term is defined by the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 pricing, technological shifts and other variables. Readers are referred to Corel's most recent reports filed with the Securities and Exchange Commission. Corel, CorelDRAW, R.A.V.E., Print House, PHOTO-PAINT, Print Office, Painter painter, animal: see puma. A full-featured paint program for Macintosh and Windows from Corel. Part of Corel's illustration and design line of products, Painter is the most sophisticated paint program on the market with an array of tool palettes that is , WordPerfect See WordPerfect Office. 1. (text, tool, product) WordPerfect - A word processor for a wide range of computers. The first version was sold in 1980 for Data General machines, and by the end of 1993 versions were on sale for MS-DOS, Microsoft Windows and Macintosh and the Go further logo are trademarks or registered trademarks of Corel Corporation or Corel Corporation Limited. Linux is a registered trademark of Linus Torvalds Linus Benedict Torvalds (born December 28 1969 in Helsinki, Finland) is a Finnish software engineer best known for initiating the development of the Linux kernel. . All other products, fonts, company names and logos are trademarks or registered trademarks of their respective owners.
COREL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands of US$)
August 31, November 30,
2000 1999
ASSETS (unaudited) (audited)
------------ ------------
Current assets:
Cash and cash equivalents $ 11,557 $ 18,021
Accounts receivable
Trade 26,177 54,770
Other 1,664 3,954
Inventory 8,272 13,567
Income taxes recoverable - 5,135
Future income tax asset 1,713 1,642
Prepaid expenses 2,277 2,042
------------ ------------
Total current assets 51,660 99,131
------------ ------------
Investments 11,772 2,873
Capital assets 40,469 49,697
------------ ------------
Total assets $ 103,901 $ 151,701
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 34,235 $ 50,284
Current portion of long term debt 5,470 10,594
Income taxes payable 5,187 -
Deferred revenue 13,100 18,472
------------ ------------
Total current liabilities 57,992 79,350
Long term portion of Novell obligations 6,464 7,985
Shareholders' equity
Share capital 243,998 222,155
Contributed surplus 1,099 1,099
Deficit (205,652) (158,888)
------------ ------------
Total shareholders' equity 39,445 64,366
------------ ------------
Total liabilities and shareholders'
equity $ 103,901 $ 151,701
------------ ------------
------------ ------------
COREL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT (in thousands of
US$, except per share data) (unaudited)
Three months ended Nine months ended
August 31, August 31, August 31, August 31,
2000 1999 2000 1999
--------------------- ---------------------
Sales $ 36,357 $ 71,312 $ 117,137 $ 182,119
Cost of sales 7,840 15,466 34,121 41,118
--------------------- ---------------------
Gross profit 28,517 55,846 83,016 141,001
--------------------- ---------------------
Expenses
Advertising 6,912 11,641 29,586 32,358
Selling, general and
administrative 18,602 19,377 64,421 59,934
Research and development 12,151 10,671 35,904 36,526
Depreciation and
amortization 1,832 1,895 5,398 4,568
Settlement proceeds - (6,342) - (6,342)
Loss on foreign exchange 727 319 1,196 265
--------------------- ---------------------
40,224 37,561 136,505 127,309
--------------------- ---------------------
Income (loss) from
operations (11,707) 18,285 (53,489) 13,692
Gain on investment 4,503 - 14,585 -
Interest income (expense) 191 46 254 (283)
--------------------- ---------------------
Income (loss) before
income taxes (7,013) 18,331 (38,650) (13,409)
Income tax expense (2,944) (737) (5,882) (1,275)
Share of loss in equity
investment (788) - (2,232) -
--------------------- ---------------------
Net Income (loss) $ (10,745) $ 17,594 $ (46,764) $ 12,134
Deficit beginning of
period (194,907) (181,064) (158,888) (175,604)
--------------------- ---------------------
Deficit end of period (205,652) (163,470) (205,652) (163,470)
--------------------- ---------------------
Earnings (loss) per share:
Basic $ (0.15) $ 0.28 $ (0.69) $ 0.20
Fully diluted $ (0.15) $ 0.26 $ (0.69) $ 0.18
Average number of Common
Shares outstanding
(In 000s)
Basic 71,335 62,793 68,152 61,519
Fully diluted 71,335 69,062 68,152 68,720
COREL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands of US$)
(unaudited)
Nine months ended
---------------------------
August 31, August 31,
2000 1999
------------ ------------
Cash flows from operating activities:
Net income (loss) $ (46,764) $ 12,134
Items which do not involve cash or
cash equivalents:
Depreciation and amortization 15,204 14,436
Write down of assets 934 -
Loss on disposal of assets 131 -
Future income tax asset (71) 853
Equity loss in investments 2,232 -
Gain on short-term investment - (809)
Gain on investment (14,585) -
Change in non-cash working capital 17,844 (13,513)
------------ ------------
Cash flows from (used in) operating
activities $ (25,075) $ 13,101
------------ ------------
Cash flows from financing activities:
Issue of share capital 21,843 6,712
Reduction of Novell Obligations (6,645) (7,000)
------------ ------------
Cash flows from (used in) financing
activities 15,198 (288)
------------ ------------
Cash flows from investing activities:
Purchase of investments (1,663) (1,561)
Purchase of capital assets (9,781) (12,871)
Proceeds on disposal of investment 14,585 -
Proceeds on sale of short-term investment - 2,922
Proceeds on disposal of assets 272 96
------------ ------------
Cash flows used in investing activities 3,413 (11,414)
------------ ------------
Net increase (decrease) in cash and cash
equivalents (6,464) 1,399
Cash and cash equivalents at beginning
of period 18,021 22,393
------------ ------------
Cash and cash equivalents at end
of period $ 11,557 $ 23,792
------------ ------------
------------ ------------
Schedule A
Notes to Q3 Interim financial statements
1. 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 three geographic
regions. A summary of sales by product, channel, region and by major
customer from consolidated operations is as follows:
Three months ended Nine months ended
August 31, August 31, August 31, August 31,
2000 1999 2000 1999
--------------------- ---------------------
By product
Professional & Consumer
Graphics software $ 17,235 $ 32,403 $ 53,854 $ 74,212
Productivity software 17,859 38,870 57,106 107,493
Linux operating system
and applications 1,263 - 6,179 -
Video Communications - 39 (2) 414
--------------------- ---------------------
Total sales $ 36,357 $ 71,312 $ 117,137 $ 182,119
--------------------- ---------------------
--------------------- ---------------------
By sales channel
Retail packaged products $ 17,133 $ 42,471 $ 58,927 $ 103,560
OEM licenses 4,313 8,464 13,168 21,835
Corporate licenses 14,911 20,377 45,042 56,724
--------------------- ---------------------
Total sales $ 36,357 $ 71,312 $ 117,137 $ 182,119
--------------------- ---------------------
--------------------- ---------------------
By region
North America $ 25,963 $ 48,191 $ 72,052 $ 120,266
Europe 5,814 14,690 28,754 45,937
Other international 4,580 8,431 16,331 15,916
--------------------- ---------------------
Total sales $ 36,357 $ 71,312 $ 117,137 $ 182,119
--------------------- ---------------------
--------------------- ---------------------
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