FireFox Gold Corp. press release
Corel Corporation Reports Third Quarter Results
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Revenue Increases 7%; GAAP Net Income of $0.22 Per Diluted Share;
Non-GAAP Adjusted Net Income of $0.36 Per Diluted Share
OTTAWA, September 28 /CNW/ - 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 (800) 289-0572 or (913) 981-5543. 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.
<< Corel Corporation Quarterly Financial results For the quarter ended August 31, 2006 (in thousands, except per share data; unaudited)
Consolidated Condensed Statement of Operations
Three Months ended Nine Months ended August 31, August 31, 2006 2005 2006 2005
Revenues - Product $36,362 $34,360 $115,011 $106,870 Revenues - Maintenance and service 4,892 4,129 14,740 11,608 Total revenues 41,254 38,489 129,751 118,478
Cost of revenues - Product 5,338 4,263 15,392 13,068 Cost of revenues - Maintenance and service 287 257 877 898 Amortization of intangible assets 2,712 6,654 11,987 19,489 Total cost of revenues 8,337 11,174 28,256 33,455
Gross margin 32,917 27,315 101,495 85,023
Operating expenses Sales and marketing 11,810 12,938 40,337 37,926 Research and development 6,379 6,016 19,200 17,669 General and administrative 5,833 5,088 17,421 15,401 Restructuring - 68 811 680 Total operating expenses 24,022 24,110 77,769 71,676 Income from operations 8,895 3,205 23,726 13,347
Other expenses (income) Loss on debt retirement 17 - 8,292 3,937 Interest expense, net 2,334 3,549 9,404 8,926 Impairment (gain on disposal) of equity investment - (60) (60) Amortization of deferred financing fees 188 455 989 1,259 Other non-operating expense (income) 377 282 (271) 653 Income (loss) before taxes 5,979 (1,021) 5,312 (1,368) Income tax expense 485 1,969 5,427 3,984 Net income (loss) $ 5,494 $(2,990) $ (115) $ (5,352)
Net income (loss) per share Basic and diluted Class A $ N/A $ N/A $ N/A $ N/A Class B N/A N/A N/A N/A WinZip Common N/A N/A N/A N/A Corel Common 0.22 (0.15) (0.01) (0.27) Pro-forma basic 0.22 (0.15) (0.01) (0.27) Pro-forma diluted 0.22 (0.15) (0.01) (0.27)
Shares used in basic and diluted per share amounts Class A N/A N/A N/A N/A Class B N/A N/A N/A N/A WinZip Common N/A N/A N/A N/A Corel Common 25,348 19,485 21,708 19,485
Shares used in pro- forma per share amounts Basic 24,494 19,485 21,708 19,485 Diluted 25,348 19,485 21,708 19,485 >>
<< Consolidated Condensed Balance Sheet
August 31, November 30, 2006 2005 Assets Current assets: Cash and cash equivalents $ 34,554 $ 20,746 Restricted cash 718 966 Accounts receivable Trade, net 15,531 19,342 Due from related parties - 667 Other 251 311 Inventory 1,005 726 Defered tax assets, current portion 240 592 Prepaids and other current assets 2,367 2,343 Total current assets 54,666 45,693
Investments 226 334 Capital assets 3,564 3,532 Intangible assets 40,353 52,397 Goodwill 9,850 9,850 Deferred Income tax assets - 284 Deferred financing charges and other long-term assets 4,080 8,746 Total assets $ 112,739 $ 120,836
Liabilities and shareholders' deficit Current liabilities: Accounts payable & accrued liabilities $ 21,796 $ 30,152 Due to related party - 334 Income taxes payable 9,814 10,773 Deferred revenue 10,319 11,755 Current portion of promissory note 542 1,170 Current portion of term loan payable 900 15,764 Total current liabilities 43,371 69,948
Deferred revenue 1,842 2,085 Term loan payable 88,875 132,965 Promissory note and other long-term liabilities 591 1,072 Total liabilities 134,679 206,070
Shareholders' deficit Share capital 30,584 (73,793) Additional paid-in capital 3,960 7,427 Accumulated other comprehensive income (22) 85 Deficit (56,462) (18,953) Total shareholders' deficit (21,940) (85,234)
Total liabilities and shareholders' deficit $ 112,739 $ 120,836 >>
<< Consolidated Condensed Statement of Cash Flows
Three Months ended Nine Months ended August 31, August 31, 2006 2005 2006 2005
Cash flow from operating activities Net income (loss) $ 5,494 $ (2,990) $ (115) $ (5,352) Depreciation 336 327 1,112 1,096 Amortization of deferred financing fees 188 455 989 1,259 Amortization of intangible assets 2,712 6,654 11,987 19,489 Stock-based compensation 805 755 2,451 994 Accrued interest 161 (180) (100) 353 Provision for bad debts (24) 216 150 409 Deferred income taxes - 426 636 739 Unrealized losses on foreign exchange contracts (43) (31) 178 262 Gain on disposal of fixed assets - (2) - (16) Loss on early retirement of debt 17 - 8,292 3,937 Gain on disposal of investments - (54) - (125) Operating Assets (3,614) (341) (3,881) (450) Cash flow provided by operating activities 6,032 5,235 21,699 22,595
Cash flow from financing activities Restricted cash (1) (500) (1) 857 Proceeds from term loan - 23,000 90,000 153,000 Repayments of term loan (225) (16,895) (148,954) (81,200) Financing fees incurred (70) (956) (7,708) (8,624) Proceeds from public offering (3,221) - 69,317 - Proceeds from issuance of common shares 3 - 4 - Paid up capital distribution - - - (83,113) Dividends - (8,000) (7,500) (14,135) Other financing (340) (250) (1,438) (3,000) Cash flow provided by (used in) financing activities (3,854) (3,601) (6,280) (36,215)
Cash flow from investing activities Proceeds from redemption of investments - 54 - 10,112 Acquisition of Jasc - (170) - (354) Purchase of long lived assets, net of proceeds (616) (538) (1,471) (1,006) Cash flow provided by (used in) investing activities (616) (654) (1,471) 8,752
Effect of exchange rate changes on cash (29) (10) (140) (29)
Increase (decrease) in cash and cash equivalents 1,533 970 13,808 (4,897) Opening cash and cash equivalents 33,021 5,690 20,746 11,557 Closing cash and cash equivalents $ 34,554 $ 6,660 $ 34,554 $ 6,660 >>
<< Non-GAAP Results (In thousands, except per share data)
Three Months ended Nine Months ended August 31, August 31, 2006 2005 2006 2005
Non-GAAP Adjusted Net Income Calculation: Net income (loss) $ 5,494 $(2,990) $ (115) $ (5,352) Amortization of intangible assets 2,712 6,654 11,987 19,489 Stock based compensation 805 755 2,451 994 Restructuring - 68 811 680 Impairment gain on disposal of investments - (54) - (125) Reorganization costs - - 117 883 Amortization of deferred financing fees 188 455 989 1,259 Loss on debt retirement 17 - 8,292 3,937 Non-GAAP Adjusted Net Income $ 9,216 $ 4,888 $ 24,532 $ 21,765 Percentage of revenue 22.3% 12.7% 18.9% 18.4%
Pro-forma diluted non-GAAP adjusted net income per share $ 0.36 $ 0.24 $ 1.09 $ 1.09
Shares used in computing proforma diluted non-GAAP adjusted net income per share 25,348 20,253 22,492 19,959
Non-GAAP Adjusted EBITDA Calculation: Cash flow provided by operating activities $ 6,032 $ 5,235 $ 21,699 $ 22,595 Change in operating assets and liabilities 3,614 341 3,881 450 Interest Expense 2,334 3,549 9,404 8,926 Income tax expense, net 485 1,969 5,427 3,984 Accrued interest (161) 180 100 (353) Provision for bad debts 24 (216) (150) (409) Unrealized losses on foreign exchange contracts 43 31 (178) (262) Deferred income taxes (426) (636) (739) Gain on disposal of fixed assets 2 16 Restructuring - 68 811 680 Reorganizational costs 117 883 Non-GAAP Adjusted EBITDA $ 12,371 $10,733 $ 40,475 $ 35,771 Percentage of revenue 30.0% 27.9% 31.2% 30.2%
Other Supplemental Information
Revenue by Product Segment Productivity $ 20,265 $17,756 $ 59,228 $ 49,656 Graphics and Digital Imaging 20,989 20,733 70,523 68,822 Total $ 41,254 $38,489 $129,751 $118,478
As percentage of revenues Productivity 49.1% 46.1% 45.6% 41.9% Graphics and Digital Imaging 50.9% 53.9% 54.4% 58.1% Total 100.0% 100.0% 100.0% 100.0%
Revenue by Geography Americas $ 26,559 $25,583 $ 79,141 $ 73,404 Europe, Middle East, Africa 10,887 9,703 40,336 36,800 Asia-Pacific 3,808 3,203 10,274 8,274 Total $ 41,254 $38,489 $129,751 $118,478
As percentage of revenues Americas 64.4% 66.5% 61.0% 62.0% Europe, Middle East, Africa 26.4% 25.2% 31.1% 31.0% Asia-Pacific 9.2% 8.3% 7.9% 7.0% Total 100.0% 100.0% 100.0% 100.0%
Allocation of Stock-Based Compensation Expense Cost of revenues - Product $ 4 $ 4 $ 19 $ 12 Cost of revenues - Maintenance and service 2 1 6 3 Sales and marketing 231 290 543 392 Research and development 101 74 217 145 General and administrative 467 386 1,666 442 Total $ 805 $ 755 $ 2,451 $ 994 >>
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