Corel Returns To Profitability in Second Quarter Fiscal 1999: Best Quarterly Earnings in Almost Four Years.OTTAWA--(BUSINESS WIRE)--June 21, 1999-- Corel Corp. (Nasdaq: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. ) Monday announced results for its second quarter ended May 31, 1999, which were consistent with its preliminary release on June 18, 1999. Revenues for the second quarter of fiscal year 1999 were $70.5 million, compared with $63 million in the second quarter of fiscal 1998. Net profit for the quarter was $9.2 million or $0.14 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. , compared with a net loss of $8.3 million or ($0.14) per share in the same period last year. Cash at the end of the quarter stood at $16.5 million. All figures are reported in U.S. currency. "Earnings for this quarter are the best that Corel has reported since the third quarter of 1995," said Michael O'Reilly, Corel's executive vice president, finance and chief financial officer. "Notwithstanding the first quarter shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. , when both versions of our flagship products A primary product of a company, which is typically why the company was founded and/or what made it well known. For example, MS-DOS, Windows and the Microsoft Office suite have been flagship products of Microsoft. CorelDRAW is a flagship product of Corel Corporation. were at the end of their cycles, Q2 is an important sign that Corel will continue to benefit from the significant restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). changes it implemented throughout 1998." "Every employee at Corel has worked hard to implement the business plan that we put into place last year, and that makes the results for this quarter particularly satisfying," said Dr. Michael Cowpland Michael Cowpland (born April 23, 1943) is a Canadian entrepreneur, businessman, and the founder and one-time president, chairman and CEO of Corel, a Canadian software company. Cowpland was born in Bexhill, Sussex, England and obtained a BSc. , president and chief executive officer of Corel Corp. "We remain confident that we can deliver on our plan of profitable growth for the balance of the year and beyond. "This is the first time that we've ever launched our two flagship products in the same quarter," said Dr. Cowpland. "Both WordPerfect Office A suite of office applications for Windows from Corel that includes WordPerfect, Quattro Pro, Corel Presentations, Paradox and CorelCENTRAL (PIM, scheduling, etc.). It is the successor to Corel WordPerfect Suite, which was the successor to Corel Office. 2000 and CorelDRAW 9 launched to many positive reviews and have already won a number of awards worldwide. "We will continue to focus on our core competencies A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
2nd Quarter 1999 Achievements -- Corel shipped the latest versions of its two flagship products, CorelDRAW and the WordPerfect Suite See WordPerfect Office. , to many positive reviews at the end of the second quarter of fiscal 1999. This is the first time that Corel has shipped new versions of both products in the same quarter. -- When CorelDRAW 9 and WordPerfect Office 2000 started shipping near the end of the second quarter, Corel simultaneously began shipping multiple language versions of the Suites. It is a tribute to Corel's office in Dublin that five language versions of CorelDRAW 9 and three language versions of WordPerfect Office 2000 were ready within 60 days of the release of the International English International English is the concept of the English language as a global means of communication in numerous dialects, and also the movement towards an international standard for the language. It is also referred to as Global English, World English, Common English, General English. versions. -- In the second quarter of fiscal 1999, Corel continued to penetrate the sub-$1,000 and sub-$500 PC markets: -- On March 30, 1999, Corel announced a strategic alliance with PC Chips Group, the world's largest computer motherboard Also called the "system board," it is the main printed circuit board in an electronic device, which contains sockets that accept additional boards. In a desktop computer, the motherboard contains the CPU, chipset, PCI bus slots, AGP slot, memory sockets and controller circuits for the manufacturer. Corel(R) WordPerfect Suite 8 OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and will be shipped with an estimated 18 million machines, annually, worldwide. -- On April 20, 1999, Corel announced a bundling agreement with Microworkz Computer Corp. that will see Corel WordPerfect Suite See WordPerfect Office. 8 OEM bundled on the Microworkz WEBzter family of personal computers. -- On April 29, 1999, Corel announced that it would enter the revolutionary arena of affordable, high-performance technology and software rentals with its new bundling agreement with Gobi Inc. The agreement would see Corel WordPerfect Suite 8 OEM bundled on all of Gobi's computers. -- On May 18, 1999, Corel announced bundling agreements with Micro Pro Inc., and Edge Corp. International. PC manufacturer Micro Pro is bundling Corel WordPerfect Suite 8 and Corel Print House(TM) Magic OEM with select computers. Edge Corp. International, an international distributor of computer products and manufacturer of OEM personal computer systems, will bundle Corel WordPerfect Suite 8 OEM, English and French, onto most of its computers that sell for U.S. $299 and over. -- During the quarter, Corel announced a worldwide bundling agreement with Lexmark International. The agreement, effective until July 31, 2000, provides for Corel Print House(TM) Magic 4 to be bundled with select Lexmark inkjet printers A printer that propels droplets of ink directly onto the medium. Today, almost all inkjet printers produce color. Low-end inkjets use three ink colors (cyan, magenta and yellow), but produce a composite black that is often muddy. , starting with the Lexmark Z51 Color Jetprinter. -- In April, Corel announced a strategic alliance between Corel, KDE (K Desktop Environment) A GUI-based user interface primarily for Unix and Linux machines, but also available for Windows and Mac. The source code is freely distributed and is maintained by developers around the world. and Debian to advance development of a 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. Desktop. Also in the quarter, Corel announced that the free Corel(R) WordPerfect(R) 8 for Linux(R) has surpassed one million download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. attempts on the Internet. Corel is on track to deliver WordPerfect Office 2000 for Linux by the end of this year. -- Corel officially unveiled WordPerfect(R) Office 2000 and CorelDRAW(R) 9 Graphics Suite at the Corel(R) Roadshow 1999. During a two-week period, more than 12,000 people across 34 cities attended the Road Show. -- Corel announced in April that it acquired GraphicCorp, to become the leading provider of electronic clipart and images to software and hardware companies. GraphicCorp, a division of Corel, has over two million Web images, Web animations, clipart images, photographs and downloadable applications in its collection and is acknowledged in the industry as the world's leading supplier of such OEM content. The GraphicCorp collection adds to Corel's vast collection of clipart and electronic images and puts Corel firmly in the top tier of digital content suppliers. 1999 Awards -- Corel products have won over 40 industry awards in the first half of 1999 alone. A sampling of the awards are as follows: The Corel(R) WordPerfect(R) Suite and the Corel WordPerfect See WordPerfect Office and WordPerfect Corporation. Stand Alone were declared winners in the 5th annual Reader's Choice Awards in the August '99 Edition of Law Office Computing computing - computer ; Corel Print House(TM) Magic "The Wizard of Oz Wizard of Oz reaches and departs from Oz in circus balloon. [Children’s Lit.: The Wonderful Wizard of Oz] See : Ballooning Wizard of Oz false wizard takes up residence in Emerald City. [Am. Lit. (TM)" Edition won a Top 100 Products award in the June '99 Edition of Curriculum Administrator Magazine; and Corel(R) WordPerfect(R) 8 for Linux won a "Killer App A software application that is exceptionally useful or exciting. Killer apps are innovative and often represent the first of a new breed, and they are extremely successful. For example, in the late 1970s, the VisiCalc spreadsheet was the killer app for the Apple II, providing reason Award" at the Linux World Expo in March of '99. Since the introduction of CorelDRAW(R) more than 10 years ago, it has won more than 300 industry awards. Corel Corp. Corel Corp. 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 Specifications for hardware and software that are developed by a standards organization or a consortium involved in supporting a standard. Available to the public for developing compliant products, open standards imply "open systems;" that an existing component in a system can be replaced , Corel develops products for the Windows(R), Macintosh(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), Linux(R) and Java(TM) platforms. 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. For more information visit Corel's Web site at www.corel.com. This news release may contain certain statements that are forward looking as that term is defined by the US 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 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . Note to Editors: Corel, WordPerfect, CorelDRAW and the Go further logo are trademarks or registered trademarks of Corel Corp. or Corel Corp. 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. . UNIX is a registered trademark of The Open Group. All other product and company names are trademarks or registered trademarks of their respective companies. -0-
COREL CORP.
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
QUARTER AND SIX MONTHS ENDED MAY 31, 1999
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars, 000s omitted except per-share data, unaudited)
Quarter ended May 31 Six months ended May 31
1999 1998 1999 1998
Sales $70,501 $63,042 $110,807 $108,502
Cost of sales 14,092 11,308 25,652 21,750
Gross Profit 56,409 51,734 85,155 86,752
Expenses:
Advertising 11,946 11,801 20,717 22,969
Selling, general and
administrative 21,618 19,098 40,557 37,515
Research and
development 12,395 21,765 25,855 42,930
Depreciation and
amortization 1,043 3,589 2,673 7,980
Loss (gain) on foreign
exchange (303) 470 (54) 753
46,699 56,723 89,748 112,147
Income (loss) from
operations 9,710 (4,989) (4,593) (25,395)
Interest expense 192 707 329 840
Income (loss) before
income taxes 9,518 (5,696) (4,922) (26,235)
Income taxes 339 2,611 538 3,161
Net income
(loss) $9,179 $(8,307) $(5,460) $(29,396)
Deficit beginning
of period (190,243) (166,245) (175,604) (145,156)
Deficit end of
period $(181,064) $(174,552) $(181,064) $(174,552)
Earnings per share:
Earnings (loss) per common share
Basic $0.15 $(0.14) $(0.09) $(0.49)
Fully Diluted $0.14 $(0.14) $(0.09) $(0.49)
Weighted average number of common
shares outstanding (000s)
Basic 61,560 59,346 60,860 59,616
Fully Diluted 69,193 59,346 60,860 59,616
COREL CORP.
CONSOLIDATED FINANCIAL STATEMENTS
AS AT MAY 31, 1999
CONSOLIDATED BALANCE SHEETS
(U.S. dollars, 000s omitted)
May 31, 1999 November 30, 1998
(unaudited) (audited)
ASSETS
Current assets:
Cash and short-term
investments $16,465 $24,506
Accounts receivable - Trade 37,686 45,789
- Other 2,265 877
Inventory 14,068 17,098
Deferred income taxes 1,686 2,495
Prepaid expenses 1,563 4,618
Total current assets 73,733 95,383
Investments 3,351 -
Capital Assets 53,306 44,776
Total assets $ 130,390 $ 140,159
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued liabilities $ 52,618 $ 58,209
Current portion of Novell
obligations 11,800 11,800
Income taxes payable 3,028 7,549
Deferred revenue 18,053 17,933
Total current liabilities 85,499 95,491
Novell obligations 11,555 16,085
Shareholders' equity:
Share capital 213,301 203,088
Contributed surplus 1,099 1,099
Deficit (181,064) (175,604)
Total shareholders' equity 33,336 28,583
Total liability and
shareholders' equity $ 130,390 $ 140,159
COREL CORP.
CONSOLIDATED FINANCIAL STATEMENTS
QUARTER AND SIX MONTHS ENDED MAY 31, 1999
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(U.S. dollars, 000s omitted, unaudited)
Quarter ended Six months ended
May 31 May 31
1999 1998 1999 1998
Cash provided by (used for):
Operations:
Net income (loss) $ 9,179 $ (8,307) $ (5,460) $ (29,396)
Items which do not involve cash:
Depreciation and
amortization 4,255 6,801 8,695 14,349
Gain on disposal
of assets (47) (7) (47) (11)
Deferred income taxes 648 (71) 809 (413)
Changes in non-cash working
capital (1,987) 7,295 2,808 12,703
12,048 5,711 6,805 (2,768)
Financing:
Issue of share
capital 6,463 - 10,213 -
Shares repurchased for
cancellation - - - (987)
Repayment of Novell
obligations (2,476) (3,393) (4,530) (4,164)
3,987 (3,393) 5,683 (5,151)
Investments:
Purchase of
investment - - (3,351) -
Purchase of capital
assets (13,669) (3,969) (17,241) (5,417)
Proceeds on disposal
of assets 47 7 63 11
(13,622) (3,962) (20,529) (5,406)
Net increase (decrease)
in cash 2,413 (1,644) (8,041) (13,325)
Cash at beginning
of period 14,052 18,948 24,506 30,629
Cash at end
of period $ 16,465 $ 17,304 $ 16,465 $ 17,304
Cash is defined as cash and short-term investments.
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