Corel Corporation Reports Third Quarter Results.

Revenue Increases 7%; GAAP Net Income of $0.22 Per Diluted Share;

Non-GAAP Adjusted Net Income of $0.36 Per Diluted Share

OTTAWA -- Corel Corporation (NASDAQ:CREL) (TSX:CRE) today reported financial results for its third quarter ended August 31, 2006. Revenues in the third quarter of fiscal 2006 were $41.3 million, an increase of 7% over revenues of $38.5 million in the third quarter of fiscal 2005. GAAP net income in the third quarter of fiscal 2006 was $5.5 million, or $0.22 per diluted share. This compares to a GAAP net loss of $(3.0) million, or $(0.15) per share in the third quarter of fiscal 2005.

Non-GAAP adjusted net income for the third quarter of fiscal 2006 was $9.2 million, or $0.36 per diluted share, an increase of 88% compared to non-GAAP adjusted net income for the third quarter of fiscal 2005 of $4.9 million, or $0.24 per diluted share. Non-GAAP adjusted EBITDA in the third quarter of fiscal 2006 was $12.4 million, a 16% increase compared to $10.7 million in the third quarter of fiscal 2005. A reconciliation of GAAP net income to non-GAAP adjusted net income and non-GAAP adjusted EBITDA is provided in the notes to the financial statements included in this press release.

"Corel continued to execute against all aspects of our strategy in the third quarter," said David Dobson, CEO of Corel Corporation. "Our announced acquisition of InterVideo and recent launches of Snapfire and Paint Shop Pro Photo XI show that we are focused on delivering the products and value that customers and partners demand. We also showed our discipline around driving profits as earnings growth outpaced revenue growth. With strong revenue performance, new global partnerships, and increasing traction in developing and emerging markets, Corel is successfully executing its strategy to deliver long-term, shareholder value."

Fourth Quarter Fiscal 2006 Guidance

Corel provided guidance for the fourth quarter ending November 30, 2006.

The Company currently expects:

* Revenue in the range of $46 million to $48 million.

* GAAP net income of $6.7 million to $7.8 million and non-GAAP adjusted net income of $10.4 million to $11.5 million.

* GAAP EPS of $0.26 to $0.30 per share and non-GAAP EPS of $0.40 to $0.45 per share.

Fiscal 2006 Guidance

Corel provided guidance for the year ending November 30, 2006.

The Company currently expects:

* Revenue in the range of $175.8 million to $177.8 million

* GAAP net income of $6.6 million to $7.7 million and non-GAAP adjusted net income of $ 34.8 million to $ 35.9 million.

* GAAP EPS of $0.28 to $0.33 per share and non-GAAP EPS of $1.48 to $1.52 per share.

Corel will host a conference call to discuss the results at 4:30 p.m. Eastern Time today. To access the conference call, please dial [phone] or [phone]. A live webcast and replay of the call will also be available through Corel's Investor Relations website at http://investor.corel.com/events.cfm.

Forward-Looking Statements:

This news release includes forward-looking statements that are based on certain assumptions and reflect our current expectations. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements to differ materially from any future results, performance, or achievements discussed or implied by such forward-looking statements. Such risks include competitive threats from well-established software companies that have significantly greater market share and resources than us, new entrants that benefit from industry trends, such as the increasing importance of Internet distribution and open source software, and from online services companies that are increasingly seeking to provide software products at little or no incremental cost to their customers to expand their Internet presence and build consumer loyalty. We rely on a small number of key strategic relationships for a significant percentage of our revenue and these relationships can be modified or terminated at any time. In addition, our core products have been marketed for many years and the packaged software market in North America and Europe is relatively mature and characterized by modest growth. Accordingly, we must successfully complete acquisitions, penetrate new markets or increase penetration of our installed base to achieve revenue growth. In addition, we face risks related to our proposed acquisition of InterVideo, Inc., including the risk that the proposed acquisition may not be completed in a timely manner, if at all, and disruption from the transaction making it more difficult to maintain relationships with customers, employees, or suppliers. These and other risks, uncertainties andother important factors are described in our Prospectus dated April 25, 2006, filed with the Securities and Exchange Commission (The SEC) pursuant to Rule 462(b) of the rules and regulations under the Securities Act of 1933 and our other filings with the SEC under the caption "Risk Factors" and elsewhere. A copy of the Prospectus and such other filings can be obtained on our website or on the SEC's website at http://www.sec.gov. Certain of such risks are also included in our Canadian supplemented PREP prospectus dated April 25, 2006, available at http://www.sedar.com. Risks related to InterVideo's business can be found in InterVideo's reports filed with the SEC under the caption "Risk Factors" and elsewhere, including InterVideo's 10-Q for the quarter ended June 30, 2006, which can be found on InterVideo's website or on the SEC's website at http://www.sec.gov. Forward-looking statements speak only as of the date of the document in which they are made. We disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances on which the forward-looking statement is based.

Financial Presentation and Use of Non-GAAP Measures:

Our financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, which differ in certain material respects from Canadian generally accepted accounting principles. In addition, our financial statements and information in this release are presented in U.S. Dollars, unless otherwise indicated. This news release includes certain non-GAAP financial measures, such as adjusted net income and adjusted EBITDA. We use these non-GAAP financial measures to confirm our compliance with covenants contained in our debt facilities, as supplemental indicators of our operating performance and to assist in evaluation of our liquidity. These measures do not have any standardized meanings prescribed by GAAP and therefore are not comparable to the calculation of similar measures used by other companies, and should not be viewed as alternatives to measures of financial performance or changes in cash flows calculated in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the closes GAAP measures are set out in the notes to the financial statements attached to this news release.

About Corel Corporation

Corel is a leading global packaged software company with over 40 million users. The Company provides full-featured, easy-to-use productivity, graphics and digital imaging software and enjoys a favorable market position among consumers and small businesses. The Company's award-winning product portfolio features popular, globally recognized brands, including CorelDRAW[R] Graphics Suite, Corel[R] Paint Shop[R] Pro, Corel Painter[TM], Corel DESIGNER[R], Corel[R] WordPerfect[R] Office, WinZip[R], and iGrafx[R]. With hundreds of industry awards for leadership in software innovation, design and value, Corel's products have built a loyal following of customers and partners around the globe. Corel's products are sold in over 75 countries through an international network of resellers and retailers, original equipment manufacturers (OEMs), and Corel's global websites.

[c]2006 Corel Corporation. All rights reserved. Corel, CorelDRAW, Paint Shop, Painter, Designer, WordPerfect, WinZip, iGrafx and the Corel logo are trademarks or registered trademarks of Corel Corporation and/or its subsidiaries.

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