Corel Corporation Announces First Quarter Fiscal 1999 Results.

OTTAWA--(BUSINESS WIRE)--March 24, 1999--Corel Corporation (Nasdaq:COSFF) (TSE:COS) today announced results for its first quarter ended February 28, 1999 which were consistent with its preliminary release on March 17, 1999. Revenues for the first quarter of fiscal year 1999 were $40.3 million, compared to $45.5 million in the first quarter of fiscal 1998. Net loss for the quarter was $14.6 million or $0.24 per share, compared to a net loss of $21.1 million or $0.36 per share in the same period last year. Cash and short-term investments at the end of the quarter stood at $14.1 million. All figures are reported in US currency.

"When we reported our results for the fourth quarter of 1998, we indicated that Q1 would be a significant revenue challenge for Corel because we had reached the end of the product life cycles for both of the current versions of our flagship brands," said Michael O'Reilly, Corel's executive vice president, finance and chief financial officer. "As we stated last week, we remain disappointed by these results.

"However, we are pleased to be able to report costs for the quarter at 22 percent less than a year ago, even though we have been in the midst of preparing new versions of both major products. We believe this clearly indicates the degree of the company's success at streamlining operations over the past year," said Mr. O'Reilly.

"With CorelDRAW(R) 9 and WordPerfect(R) Office 2000 scheduled for release in the latter part of the current quarter, we fully expect the company to continue on track for a successful year," said Dr. Michael Cowpland, president and chief executive officer of Corel Corporation. "We have been carefully following a solid business strategy based on efficiency and effectiveness in all our development and marketing efforts.

"This approach applies to both our current slate of world-class products as well as our emerging technology efforts in high growth areas such as Linux. We are very positive about the outlook for the balance of 1999 and beyond," added Dr. Cowpland.

1st Quarter 1999 Achievements

-- Corel announced that the Canadian Department of Foreign Affairs

and International Trade purchased 6,800 maintenance licences for

Corel(R) WordPerfect(R) Suite 8. The Department plans to install

Corel WordPerfect Suite 8 in embassies and consulates in 132

countries around the world, and at its head office in Ottawa.

-- Corel announced that one of Canada's leading law firms, Gowling,

Strathy & Henderson, purchased 1,000 licences of Corel

WordPerfect Suite 8 Legal Edition. To date, this is the largest

deal Corel has put together in Canada for the legal suite.

Gowling, Strathy & Henderson found that the Legal Edition had

exceptional functionality for the kinds of things that its

lawyers do on a daily basis, and decided that the product would

be an excellent fit for all of its offices.

-- Corel has signed a significant bundling agreement with Lexmark.

Details on this agreement will be announced shortly.

-- Gateway introduced two new computer desktop product lines, which

will include Corel products. The Gateway(TM) Essential line of

desktop PCs and the Gateway(TM) Select system both include Corel

WordPerfect Suite 8 as part of the packages.

-- Corel signed a significant bundling agreement with CyberDyne

Micro Systems. Details on this agreement will be announced

shortly.

1st Quarter 1999 Awards

-- Corel products won 32 awards during the quarter. CorelDRAW 8 won

13 awards and Corel WordPerfect Suite 8 won six awards. A

sampling of the awards are as follows: CorelDRAW won a World

Class Award, a Reader's Choice Awards and a Best DTP Award; Corel

WordPerfect Suite 8 won a Top Product of the Year Award, a Top 20

Reader's Choice Award, a Peak Performer Award and a Killer App

Award for Corel WordPerfect Suite 8 for Linux at the LinuxWorld

Expo Conference.

This press release may contain certain 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.

Corel Corporation

Corel Corporation is an internationally recognized developer of award-winning graphics and business productivity applications. Development of market-leading products such as the CorelDRAW(TM) line of graphics applications and the Corel(R) WordPerfect(R) Suite of business tools is continually evolving to meet the demands of the corporate, retail and academic markets. Committed to performance, compatibility, value and open standards, Corel develops products for the Windows(R), Macintosh(R), UNIX(R), Linux(R) and Java(TM) platforms. Corel's common stock trades on The NASDAQ Stock Market(sm) under the symbol COSFF and on the Toronto Stock Exchange under the symbol COS. For more information visit Corel's Web site at www.corel.com.

Corel, WordPerfect, CorelDRAW 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. UNIX is a registered trademark of The Open Group. All other product and company names are trademarks or registered trademarks of their respective companies.

                          COREL CORPORATION
                  CONSOLIDATED FINANCIAL STATEMENTS
                   QUARTER ENDED FEBRUARY 28, 1999

                CONSOLIDATED STATEMENTS OF OPERATIONS
     (US dollars, 000s omitted except per share data, unaudited)

                                      Quarter ended
-----------------------------------------------------------------
                        February 28, 1999       February 28, 1998
-----------------------------------------------------------------
Sales                   $  40,306               $ 45,460
Cost of sales              11,560                 10,442
-----------------------------------------------------------------
 Gross profit              28,746                 35,018

Expenses
 Advertising                8,771                 11,168
 Selling, general and
  administrative           18,939                 18,417
 Research and development  13,460                 21,165
 Depreciation and
  amortization              1,630                  4,391
 Loss on foreign exchange     249                    283
-----------------------------------------------------------------
                           43,049                 55,424
-----------------------------------------------------------------
Loss from operations      (14,303)               (20,406)
Interest expense              137                    133
-----------------------------------------------------------------
Loss before income taxes  (14,440)               (20,539)
Income taxes                  199                    550
-----------------------------------------------------------------
Net loss                $ (14,639)             $ (21,089)
-----------------------------------------------------------------
Earnings per share
 Net loss per common share
  Basic and fully
   diluted              $   (0.24)             $   (0.36)

Weighted average number of
 common shares outstanding
 (000s)                    60,162                 59,346


                          COREL CORPORATION
                  CONSOLIDATED FINANCIAL STATEMENTS
                       AS AT FEBRUARY 28, 1999

                     CONSOLIDATED BALANCE SHEETS
                      (US dollars, 000s omitted)

-----------------------------------------------------------------
                        February 28, 1999       November 30, 1998
-----------------------------------------------------------------
                        (unaudited)             (audited)

ASSETS

Current assets
 Cash and short-term
  investments           $   14,052              $   24,506
 Accounts receivable
   - Trade                  33,274                  45,789
   - Other                   1,509                     877
 Inventory                  14,872                  17,098
 Deferred income taxes       2,334                   2,495
 Prepaid expenses            2,256                   4,618
-------------------------------------------------------------------
Total current assets        68,297                  95,383

Capital assets              43,892                  44,776

Investments                  3,351                      --
-------------------------------------------------------------------
Total assets             $ 115,540               $ 140,159
-------------------------------------------------------------------

                 LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
 Accounts payable and
  accrued liabilities    $  48,994               $  58,209
 Current portion of
  Novell obligations        11,800                  11,800
 Income taxes payable        3,485                   7,549
 Deferred revenue           19,536                  17,933
-------------------------------------------------------------------
Total current liabilities   83,815                  95,491

Novell obligations          14,031                  16,085

Shareholders' equity
 Share capital             206,838                 203,088
 Contributed surplus         1,099                   1,099
 Deficit                  (190,243)               (175,604)
-------------------------------------------------------------------
Total shareholder's
 equity                     17,694                  28,583
-------------------------------------------------------------------
Total liability and
 shareholder's equity    $ 115,540               $ 140,159
-------------------------------------------------------------------