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Corel Restates Balance Sheet for Prior Years

Press release from the issuing company

OTTAWA---Sept. 7, 2001--Corel Corporation today announced that it has filed with the United States Securities and Exchange Commission ("SEC'') an amended Annual Report on Form 10-K for the year ended November 30, 2000. The Company has restated its balance sheets for the years ended November 30, 1996 through November 30, 1999 to remove the contingent liability related to the Novell royalty obligation described below and the corresponding acquired technology. The Company concluded, based on a review of its financial statements to be incorporated into a recently filed registration statement, that the accounting treatment and disclosure previously adopted was not appropriate. This restatement has no impact on the Company's previously reported results of operations or overall cash flows. The Novell royalty obligation arose pursuant to the March 1, 1996 acquisition of the WordPerfect® family of software programs and related technologies from Novell, Inc. The Company was obligated, at the date of acquisition, to pay royalties at a rate of 2 per cent of its net revenues to Novell to a maximum of a then present value of $30 million imputing a 10 per cent discount rate. The Company has recorded payments on this obligation as royalty expense included in cost of sales. On October 30, 2000, the Company agreed to pay Novell the total sum of $15 million representing the present value of the future royalty obligation referred to above. Three payments of $5 million each were made, in accordance with the agreement, on each of October 31, 2000, January 24, 2001 and April 23, 2001. This $15 million represents a prepayment of otherwise future payable royalties and the Company has deferred this amount accordingly. "This restatement has the effect of reducing previously reported assets and liabilities by an equal and offsetting amount in the years affected,'' said John Blaine, Chief Financial Officer of Corel. "This restatement has no impact on our previously reported results of operations or overall cash flows and also has no impact on our balance sheet for our most recently completed fiscal year.''

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