FireFox Gold Corp. press release
Corel Corporation Reports Third Quarter 2007 Financial Results
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OTTAWA, October 10 /CNW/ - Corel Corporation (NASDAQ:CREL) (TSX:CRE) today reported financial results for its third quarter ended August 31, 2007. Revenues in the third quarter of fiscal 2007 were $60.4 million, an increase of 46 percent over revenues of $41.3 million in the third quarter fiscal 2006. GAAP net loss in the third quarter of fiscal 2007 was $6.8 million, or $(0.27) per share, compared to GAAP net income of $5.5 million, or $0.22 per share, in the third quarter of fiscal 2006. GAAP net loss for the third quarter of 2007 includes a non-cash, one-time $5.0 million tax expense relating to the establishment of a valuation allowance against deferred tax assets acquired through the acquisition of InterVideo Inc.
Non-GAAP adjusted net income for the third quarter fiscal 2007 was $8.1 million, or $0.31 per diluted share, compared to non-GAAP adjusted net income for the third quarter of fiscal 2006 of $9.2 million, or $0.36 per diluted share. Non-GAAP adjusted EBITDA in the third quarter of 2007 was $13.5 million, compared to $12.4 million in the third quarter of fiscal 2006.
"Corel delivered another solid financial quarter, driven by our ability to successfully identify, acquire and integrate complementary companies and products," said David Dobson, CEO of Corel Corporation. "We were especially pleased with the performance of our Graphics and Productivity products where we experienced double digit year over year growth for CorelDraw Graphics Suite, WinZip, Painter, Designer and iGrafx. These results demonstrate the strong foundation that we derive from our diverse revenue mix across product categories, distribution channels and geographies."
Revenues for the nine months ended August 31, 2007 were $178.0 million, an increase of 37 percent over revenues of $129.8 million for the nine months ended August 31, 2006. GAAP net loss for the nine months ended August 31, 2007 was $16.3 million, or $(0.66) per share, compared to a GAAP net loss of $115,000, or $(0.01) per share, for the nine months ended August 31, 2006.
Non-GAAP adjusted net income for the nine months ended August 31, 2007 was $20.7 million, or $0.80 per diluted share, compared to non-GAAP adjusted net income for the nine months ended August 31, 2006 of $24.5 million, or $1.09 per diluted share. Non-GAAP adjusted EBITDA for the nine months ended August 31, 2007 was $37.4 million, compared to $40.5 million for the nine months ended August 31, 2006.
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 information included in this press release.
Financial Guidance
Fourth Quarter Fiscal 2007 Guidance
Corel provided guidance for the fourth quarter ending November 30, 2007. The Company currently expects:
-- Revenue in the range of $66 million to $70 million.
-- GAAP net income in the range of $3.0 million to $5.0 million and non-GAAP adjusted net income in the range of $11.5 million to $13.5 million.
-- GAAP earnings per share in the range of $0.12 to $0.19 and non-GAAP earnings per share in the range of $0.43 to $0.52.
Fiscal 2007 Guidance
Resulting guidance for the year ending November 30, 2007 is as follows:
-- Revenue in the range of $244 million to $248 million.
-- GAAP net loss of $(13.3) million to $(11.3) million and non-GAAP adjusted net income of $32 million to $34 million.
-- GAAP loss per share of $(0.51) to $(0.44) and non-GAAP earnings per share of $1.24 to $1.33.
Corel will host a conference call to discuss its financial results at 4:30 p.m. Eastern Time today. To access the conference call, please dial (888) 211-7311 or (913) 312-0946. 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. An audio replay of the call will be available between 7:30 p.m. (ET) October 10, 2007 and midnight (ET) October 24, 2007 by calling (888) 203-1112 or (719) 457-0820, Passcode: 8465039. The replay will also be available on our Investor Relations website. 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 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 the acquisition of InterVideo, Inc., including the risk that disruption from the transaction may make it more difficult to maintain relationships with customers, employees, or suppliers. We face potential claims from third parties who may hold patent and other intellectual property rights which purport to cover various aspects of our products and from certain of our customers who may be entitled to indemnification from us in respect of potential claims they may receive from third parties related to their use or distribution of our products.
These and other risks, uncertainties and other important factors are described in Corel's Annual Report dated February 23, 2007, filed with the Securities and Exchange Commission (SEC) and the Canadian Securities Administrators (CSA) and Corel's other filings including Corel's form 10-Q for the quarter ended May 31, 2007 under the caption "Risk Factors" and elsewhere. A copy of the Corel Annual Report and such other filings can be obtained on Corel's website, on the SEC's website at http://www.sec.gov or on the CSA's website at http://www.sedar.com. In addition, these and other risks can be found in InterVideo's previous reports filed with the SEC under the caption "Risk Factors" and elsewhere, including InterVideo's 10-Q for the quarter ended September 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
Corel is a leading developer of graphics, productivity and digital media software with more than 100 million users worldwide. The Company's product portfolio includes some of the world's most popular and widely recognized software brands including CorelDRAW(R) Graphics Suite, Corel(R) Paint Shop Pro(R), Corel(R) Painter(TM), Corel DESIGNER(R), Corel(R) WordPerfect(R) Office, WinZip(R) and iGrafx(R). In 2006, Corel acquired InterVideo, makers of WinDVD(R), and Ulead, a leading developer of video, imaging and DVD authoring software. Designed to help people become more productive and express their creative potential, Corel's software strives to set a higher standard for value with full-featured products that are easier to learn and use. The industry has responded with hundreds of awards recognizing Corel's leadership in software innovation, design and value.
Corel's products are sold in more than 75 countries through a well-established network of international resellers, retailers, original equipment manufacturers, online providers and Corel's global websites. The Company's headquarters are located in Ottawa, Canada with major offices in the United States, United Kingdom, Germany, China, Taiwan and Japan. Corel's stock is traded on the NASDAQ under the symbol CREL and on the TSX under the symbol CRE.
(C) 2007 Corel Corporation. All rights reserved. Corel, CorelDRAW, Paint Shop Pro, Painter, Corel DESIGNER, WordPerfect, WinZip, iGrafx, WinDVD, InterVideo, Ulead and the Corel logo are trademarks or registered trademarks of Corel Corporation and/or its subsidiaries. All other product names and any registered and unregistered mentioned are used for identification purposes only and remain the exclusive property of their respective owners.
Corel Corporation Quarterly Financial results For the quarter ended Aug 31, 2007 (in thousands, except per share data; unaudited)
Consolidated Condensed Statement of Operations
Three Months Nine Months ended August 31, ended August 31, 2007 2006 2007 2006
Revenues - Product $ 55,018 $ 36,362 $ 161,875 $ 115,011 Revenues - Maintenance and services 5,352 4,892 16,161 14,740 Total revenues 60,370 41,254 178,036 129,751
Cost of revenues - Product 12,143 5,338 34,640 15,392 Cost of revenues - Maintenance and services 244 287 663 877 Amortization of intangible assets 6,925 2,712 19,055 11,987 Total cost of revenues 19,312 8,337 54,358 28,256
Gross margin 41,058 32,917 123,678 101,495
Operating expenses Sales and marketing 17,231 11,810 51,827 40,337 Research and development 11,282 6,379 33,323 19,200 General and administration 8,803 5,833 27,085 17,421 Acquired in-process research and development - - 7,831 - InterVideo integration expense 2,220 - 3,865 - Restructuring - - - 811 Total operating expenses 39,536 24,022 123,931 77,769 Income (loss) from operations 1,522 8,895 (253) 23,726
Other expenses (income) Loss on debt retirement - 17 - 8,292 Interest expense, net 4,195 2,334 11,834 9,404 Amortization of deferred financing fees 270 188 804 989 Other non-operating (income) expense (497) 377 (650) (271) Income (loss) before income taxes (2,446) 5,979 (12,241) 5,312 Income tax recovery (provision) (4,314) (485) (4,082) (5,427) Net income (loss) $ (6,760) $ 5,494 $(16,323) $ (115)
Net income (loss) per share: Basic $ (0.27) $ 0.22 $ (0.66) $ (0.01) Fully diluted $ (0.27) $ 0.22 $ (0.66) $ (0.01) Weighted average number of shares: Basic 25,041 24,494 24,828 21,708 Fully diluted 25,041 25,348 24,828 21,708Consolidated Condensed Balance Sheet
As of August 31, November 30, 2007 2006 Assets Current assets: Cash and cash equivalents $ 21,257 $ 51,030 Restricted cash 217 717 Accounts receivable Trade, net 24,309 18,150 Other 1,431 808 Inventory 856 914 Income taxes recoverable 1,024 - Prepaids and other current assets 4,419 2,300 Total current assets 53,513 73,919
Investments 218 203 Capital assets 9,156 3,651 Intangible assets 98,041 37,831 Goodwill 83,419 9,850 Deferred financing charges and other long-term assets 4,852 5,232 Total assets $ 249,199 $ 130,686
Liabilities and shareholders' deficit Current liabilities: Accounts payable and accrued liabilities $ 49,699 $ 28,220 Due to related parties - 167 Operating line of credit 7,000 - Income taxes payable - 235 Deferred revenue 13,333 12,719 Current portion of long-term debt 2,164 1,426 Current portion of obligation under capital leases 655 - Total current liabilities 72,851 42,767
Deferred revenue 2,285 2,015 Deferred income tax liability 22,189 - Obligation under capital leases 2,209 - Income taxes payable 12,528 8,488 Long-term debt 156,808 89,223 Total liabilities 268,870 142,493
Shareholders' deficit Share capital 37,526 30,722 Additional paid-in capital 6,211 4,612 Accumulated other comprehensive loss 10 (46) Deficit (63,418) (47,095) Total shareholders' deficit (19,671) (11,807)
Total liabilities and shareholders' deficit $ 249,199 $ 130,686 ----------------------------------------------------------------------Consolidated Condensed Statement of Cash Flows
Three Months Nine Months ended August 31, ended August 31, 2007 2006 2007 2006
Cash flow from operating activities Net income (loss) $ (6,760) $ 5,494 $ (16,323) $ (115) Depreciation and amortization 544 336 2,215 1,112 Amortization of deferred financing fees 270 188 804 989 Amortization of intangible assets 6,925 2,712 19,055 11,987 Stock-based compensation 1,770 805 4,068 2,451 Provision for bad debts 115 (24) 180 150 Deferred income taxes 3,667 - 1,352 636 Acquired in-process research and development - - 7,831 - Unrealized loss on forward exchange contracts (26) (43) 9 178 Loss on early retirement of debt - 17 - 8,292 Loss on disposal of fixed assets 48 - 102 - (Gain)/loss on interest rate swap recorded at fair value 337 - (245) - Change in operating assets and liabilities (6,387) (3,453) (3,321) (3,981) Cash flow provided by (used in) operating activities 503 6,032 15,727 21,699
Cash flow from financing activities Restricted cash 500 (1) 500 (1) Proceeds from operating line of credit - - 48,000 - Repayments on operating line of credit (6,000) - (41,000) - Proceeds from long-term debt - - 70,000 90,000 Repayments of long-term debt (399) (225) (1,479) (148,954) Repayments of capital lease obligations (128) - (128) - Financing fees incurred (4) (70) (1,681) (7,708) Net proceeds from public offering - (3,221) - 69,317 Proceeds from exercise of stock options 1,298 3 3,987 4 Dividends paid - - - (7,500) Other financing activities (272) (340) (221) (1,438) Cash flow provided by (used in) financing activities (5,005) (3,854) 77,978 (6,280)
Cash flow from investing activities Purchase of InterVideo Inc, net of cash acquired (203) - (121,357) - Purchase of long lived assets, net of proceeds (1,441) (616) (2,159) (1,471) Cash flow used in investing activities (1,644) (616) (123,516) (1,471)
Effect of exchange rate changes on cash and cash equivalents (7) (29) 38 (140)
Increase (decrease) in cash and cash equivalents (6,153) 1,533 (29,773) 13,808 Cash and cash equivalents, beginning of period 27,410 33,021 51,030 20,746 Cash and cash equivalents, end of period $ 21,257 $ 34,554 $ 21,257 $ 34,554 ----------------------------------------------------------------------Non-GAAP Results (In thousands, except per share data)
Three Months Nine Months ended August 31, ended August 31, 2007 2006 2007 2006
Non-GAAP Adjusted Net Income Calculation: Net income (loss) $ (6,760) $ 5,494 $(16,323) $ (115) Amortization of intangible assets 6,925 2,712 19,055 11,987 Tax benefit on amortization of intangible assets (1,340) (3,655) Tax expense on write-off of deferred tax asset 5,007 5,007 Stock-based compensation 1,770 805 4,068 2,451 Restructuring - - - 928 InterVideo integration expense 2,220 - 3,865 - Acquired in-process research and development - - 7,831 - Loss on debt retirement - 17 - 8,292 Amortization of deferred financing fees 270 188 804 989 Non-GAAP Adjusted Net Income $ 8,092 $ 9,216 $ 20,652 $ 24,532 Percentage of revenue 13.4% 22.3% 11.6% 18.9%
Pro-forma diluted non-GAAP adjusted net income per share $ 0.31 $ 0.36 $ 0.80 $ 1.09
Shares used in computing proforma diluted non-GAAP adjusted net income per share 25,888 25,348 25,716 22,492
Non-GAAP Adjusted EBITDA Calculation: Cash flow provided by (used in) operating activities $ 503 $ 6,032 $ 15,727 $ 21,699 Change in operating assets and liabilities 6,387 3,453 3,321 3,981 Interest expense, net 4,195 2,334 11,834 9,404 Income tax provision 4,314 485 4,082 5,427 Deferred income taxes (3,667) - (1,352) (636) Provision for bad debts (115) 24 (180) (150) Unrealized losses on forward exchange contracts 26 43 (9) (178) (Gain)/loss on interest rate swap recorded at fair value (337) - 245 - Loss on disposal of fixed assets (48) - (102) - InterVideo integration expense 2,220 - 3,865 - Restructuring - - - 928 Non-GAAP Adjusted EBITDA $ 13,478 $ 12,371 $ 37,431 $ 40,475 Percentage of revenue 22.3% 30.0% 21.0% 31.2%Other Supplemental Information
Three Months Nine Months ended August 31, ended August 31, 2007 2006 2007 2006 Revenue by Product Segment Graphics and Productivity $ 33,683 $ 32,619 $102,265 $103,330 Digital Media 26,687 8,635 75,771 26,421 Total $ 60,370 $ 41,254 $178,036 $129,751
As percentage of revenues Graphics and Productivity 55.8% 79.1% 57.4% 79.6% Digital Media 44.2% 20.9% 42.6% 20.4% Total 100.0% 100.0% 100.0% 100.0%
Revenue by Geography Americas $ 31,426 $ 26,559 $ 91,634 $ 79,141 Europe, Middle East, Africa 14,566 10,887 49,332 40,336 Asia-Pacific 14,378 3,808 37,070 10,274 Total $ 60,370 $ 41,254 $178,036 $129,751
As percentage of revenues Americas 52.1% 64.4% 51.5% 61.0% Europe, Middle East, Africa 24.1% 26.4% 27.7% 31.1% Asia-Pacific 23.8% 9.2% 20.8% 7.9% Total 100.0% 100.0% 100.0% 100.0%
Allocation of Stock-Based Compensation Expense Cost of revenues - Product $ 15 $ 4 $ 33 $ 19 Cost of revenues - Maintenance and service 3 2 7 6 Sales and marketing 468 231 1,049 543 Research and development 369 101 857 217 General and administration 915 467 2,122 1,666 Total $ 1,770 $ 805 $ 4,068 $ 2,451
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