Corel Announces Q2 Results, Loss Widens to $6.3 Million

Press release from the issuing company

OTTAWA--June 27, 2002- Corel Corporation today announced results for its second quarter of fiscal 2002, ended May 31, 2002. All figures are reported in US currency. The company reported revenues for the second quarter of fiscal 2002 totaling $30.8 million, with a net loss of $6.3 million or $(0.07) per share, meeting consensus estimates. This compares with revenues of $31.2 million and a net loss of $3.1 million or $(0.04) per share for the previous quarter, as well as revenues of $36.0 million and a net income of $2.3 million or $0.02 per share fully diluted for the second quarter of fiscal 2001. Cash, cash equivalents, marketable securities and restricted cash amounts at the end of the second quarter stood at $105.3 million. For the year to date, revenues were $61.8 million compared with $68.6 million in the prior year. Net loss for the year to date is $9.48 million, compared to a net income of $2.86 million over the same period last year. The company reported year-to-date EBITDA of $212,000, compared with EBITDA of $8.5 million for the first six months of fiscal 2001. Based on current estimates, Corel Corporation expects results for the third quarter of fiscal 2002 to be consistent with second quarter 2002 results. In addition, for the fourth quarter of fiscal 2002, the company expects to grow its revenues by 15-20 per cent over its third quarter revenues as sales from new product releases begin to have an impact. The company will provide updated guidance on its fourth quarter expectations during its next quarterly financial reporting, scheduled for September 2002. Derek Burney, president and CEO of Corel Corporation, commented: "The strength of the Corel brand and the growth in our European sales have provided a stabilized level of revenues despite the continued weakness in the economy and our lack of new product releases for our core products. Year-to-date sales in Europe, the Middle East and Africa (EMEA) are 20 per cent greater than the prior year, offsetting the decline in the North American market which reflects the fact that our established product lines are in the latter part of their life cycles and customers are anticipating new releases. We will be releasing CorelDRAW Graphics Suite 11 within the next two months and anticipate a strong reception as we focus our sales efforts on the stable base of customers who appreciate the quality and capabilities of Corel's graphics products. In addition, we have several other new product introductions planned for Q3 and Q4 and we continue to expand our customer base through partnerships with other industry leaders." Mr. Burney added: "We recognize the need to continue our operational improvements by concurrently reducing our costs andimproving efficiencies while providing the support necessary to successfully launch our new products. We believe that the combination of these cost reductions with the upcoming product releases will put us well on the road to profitability by Q4 of this fiscal year. Over the longer term, we are on track to meet our goal of gaining further traction within the enterprise market with our smart graphics, cross-media publishing and process management solutions."