##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES
    EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED NOVEMBER 30,
    2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission File Number:
    000-20562
  COREL CORPORATION (Exact name of
    registrant as specified in its charter)
  Canada
 (State or other jurisdiction of
    incorporation and organization)
  98-0407194
    (I.R.S. Employer Identification No.)
  1600 Carling
    Avenue
    Ottawa, Ontario
    Canada K1Z 8R7
 (Address of principal executive
    offices, including zip code)
  (613) 728-0826
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to
    Section 12(b) of the Act:Common Shares, no par value
    (together with associated rights to
    purchase additional Common Shares)(Title of class)

Name of exchange on which registered:The Nasdaq Global Market   Securities registered pursuant to Section 12(g) of the
    Act:
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K.  Yes þ o
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ




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##### 





TABLE OF
    CONTENT
   
 PagePART IITEM 1.


BUSINESS


1ITEM 1A.


RISK FACTORS


13ITEM 1B.


UNRESOLVED STAFF COMMENTS


26ITEM 2.


PROPERTIES


26ITEM 3.


LEGAL PROCEEDINGS


26ITEM 4.


SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS


27PART IIITEM 5.


MARKET FOR REGISTRANTS COMMON EQUITY,
    RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES


28ITEM 6.


SELECTED FINANCIAL DATA


32ITEM 7.


MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS


35ITEM 7A.


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


69ITEM 8.


FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


70ITEM 9.


CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE


112ITEM 9A.


CONTROLS AND PROCEDURES


112ITEM 9B.


OTHER INFORMATION


112PART IIIITEM 10.


DIRECTORS AND EXECUTIVE OFFICERS OF THE
    REGISTRANT


113ITEM 11.


EXECUTIVE COMPENSATION


117ITEM 12.


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
    AND MANAGEMENT


123ITEM 13.


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


129ITEM 14.


PRINCIPAL ACCOUNTANT FEES AND SERVICES


129PART IVITEM 15.


EXHIBITS AND FINANCIAL STATEMENT
    SCHEDULES


130EX-10.6: EMPLOYMENT AGREEMENT WITH KRIS HAGERMANEX-10.7: EMPLOYMENT AGREEMENT WITH JEFF HASTINGSEX-10.8: EMPLOYMENT AGREEMENT WIT KEVIN THORNTONEX-10.16: SEPARATION AGREEMENTEX-10.17: AMENDED 2006 EQUITY INCENTIVE PLANEX-21.1: SUBSIDIARIES OF COREL CORPORATIONEX-23.1: CONSENT OF PRICEWATERHOUSECOOPERS LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATIONEX-99.1: SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS   i




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##### Table of Contents



INFORMATION
    REGARDING FORWARD-LOOKING STATEMENTS
  Form 10-K
     PART I  ITEM 1.
    BUSINESS  e-Stores,
   1




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##### Table of Contents



Graphics
    and Productivity
  CorelDRAW Graphics Suite, Corel Painter, CorelDESIGNER
    Technical Suite, WinZip iGrafx WordPerfect
    Office Suite. CorelDRAW Graphics Suite Corel Painter CorelDESIGNER Technical Suite WinZip iGrafx WordPerfect
    Office
  Digital
    Media
  Corel Paint Shop Pro Photo, Corel MediaOne, Corel
    Photo Album, PhotoImpact. Corel Paint Shop Pro Photo Corel MediaOne point-and-shoot Corel Photo Album VideoStudio.
    VideoStudio DVD Movie Factory and DVD Movie
    Writer. WinDVD DVD Factory and DVD
    Movie Writer
  Corporate
    History
  Canada Business
    Corporations Act CorelDRAW WordPerfect Business Corporations Act
    (Ontario).
  Corel Paint Shop Pro Photo Corel Photo
    Album
  WinZip
   2




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##### Table of Contents



WinDVD, VideoStudio, DVD Factory, DVD
    Copy PhotoImpact.
  Fiscal
    2008 Activity
        Our
    Industry
   3




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##### Table of Contents



Our
    Strategy
    
    Expand presence in emerging markets.  We are
    expanding our presence in emerging markets, such as China,
    India, Eastern Europe and Latin America, by continuing to
    localize our products in additional languages, expanding our
    reseller network and direct sales force and developing
    additional regionally-focused versions of our
    e-Stores. We
    believe these markets represent attractive growth opportunities
    for us because they are characterized by first time users of low
    cost PCs and digital cameras who have not yet developed loyalty
    to a particular brand of software.
    Broaden our distribution network to capitalize on the rapid
    adoption of low cost technologies.  We view our
    relationships with OEMs, other distributors and online services
    companies as key growth drivers, and we are focused on forging
    new distribution relationships and broadening our existing
    relationships. To accomplish this goal, we have implemented a
    flexible channel friendly strategy of providing
    customized solutions tailored to the specific business needs of
    OEMs, other distributors and online services companies. We offer
    these parties:  
    attractive pricing;
    marketing and sales support and incentives;
    customized versions of our software; and
    private label packaging and customized promotional materials.  
    Continue to respond to user needs to better serve specific
    market sectors and increase loyalty.  We will
    continue to work with our current customer base to help us
    develop additional product innovations. A particular focus on
    improving user-experience will strengthen user loyalty while
    allowing our products to better serve the needs of specific
    market segments. We have had significant success through our
    offering of high quality products for specific markets such as
    the legal and education sectors, and, as we continue to expand,
    we plan to target additional markets.
    Continue to deliver high operating margins and positive cash
    flow.  We are committed to maximizing our
    operating margins and positive cash flow by keeping research and
    development activities focused on market driven, add-on
    functionality, utility and geographic reach of our existing
    product lines rather than pursuing speculative projects. We
    employ disciplined cost management policies and maintain
    stringent minimum
    return-on-investment
    criteria for our acquisition strategies. Our existing
    administrative, marketing and distribution infrastructure is
    highly scalable. We believe it will enable us to grow our
    revenues without experiencing a proportionate increase in fixed
    costs, and enabling us to continue to deliver high operating
    margins.
    Leverage existing platform and brands to maximize value from
    acquisitions.We are actively seeking to acquire
    complementary businesses to ours. Our acquisition and
    integration strategy is focused on acquisitions of companies
    with proven and complementary products and established user
    bases that we believe will be accretive to earnings shortly
    after the completion of the acquisition. As part of this
    strategy, in October 2004, we acquired Jasc to extend our reach
    in digital imaging software, in May 2006 we acquired WinZip to
    enhance our productivity software offerings, and in December
    2006 we acquired InterVideo and completed the acquisition of
    Ulead to expand our presence in the Digital Media software
    market by creating a broad portfolio of digital imaging and DVD
    video products. We analyze acquisition candidates and effect
    acquisition transactions to ensure they meet our strategic and
    operational objectives. We seek acquisition candidates that we
    believe can benefit from our existing global marketing, sales,
    distribution and general and administrative infrastructure. 4




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
    Increase upgrade conversion rates.  Increasing
    upgrade conversion rates represents a significant incremental
    revenue opportunity for us. We intend to increase upgrade
    conversion rates through a number of strategic initiatives,
    including:  
    increasing our database of registered users through on-line
    registration for new products; this allows us to market product
    upgrades to these users more effectively;
    embedding upgrade information directly in our software and
    employing other types of proactive marketing within our
    products, including access to Tips and Tricks, product
    tutorials, online communities and special offers from us and our
    partners; and
    offering products in tiers of functionality, such as
    entry-level, advanced and expert versions, enabling users at
    varying levels of product knowledge and sophistication to
    purchase the applications they need and then migrate to the more
    advanced versions over time.  Our
    Products
    Year of


FiscalInitial


Quarter of


CurrentRelease


Latest Release


VersionGraphics and Productivity:CorelDRAW Graphics Suite


1989



Q1 2008



14WinZip


1991



Q4 2008



12WordPerfect Office Suite


1982



Q2 2008



14iGrafx FlowCharter


1991



Q2 2007



12Corel Painter


1991



Q1 2007



10Corel DESIGNER Technical Suite


1995



Q3 2008



14Digital MediaWinDVD


1999



Q1 2008



9Paint Shop Pro Photo


1991



Q4 2008



12
(ultimate)DVD Movie Factory


2001



Q1 2007



6VideoStudio


1999



Q4 2008



12PhotoImpact


1996



Q1 2008



13MediaOne


2007



Q4 2007



2   Graphics
    and Productivity
  CorelDRAW,
    WinZip, WordPerfect Office Suite, iGrafx FlowCharter, Corel
    Painter, Corel DESIGNER Technical Suite
  CorelDRAW Graphics Suite CorelDRAW
    Graphics Suite
  WinZip. WinZip WinZip WinZip
    E-mail
    Companion WinZip Self Extractor. WinZip WinZip
 5




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WinZip WinZip
    E-Mail
    Companion WinZip WinZip Self Extractor WinZip
  WinZip WinZip WinZip WinZip
  WordPerfect Office Suite. Standard
    Edition WordPerfect Office Suite WordPerfect, Quattro Pro Presentations WordPerfect MAIL Paradox WordPerfect Quattro Pro Presentations WordPerfect MAIL e-mail, Paradox
  WordPerfect Office Suite WordPerfect Office Suite WordPerfect Office Suite
  iGrafx Flowcharter (iGrafx). iGrafx iGrafx iGrafxs iGrafx
  Corel Painter.  Corel Painter Corel Painter Corel Painter
  Corel Painter Essentials
  Corel DESIGNER Technical Suite.  Corel DESIGNER
    Technical Suite Corel DESIGNER Corel PHOTO-PAINT Corel PowerTRACE Corel DESIGNER Technical Suite Corel
    DESIGNER Technical Suite Corel
    DESIGNER Technical Suite
 6




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Corel DESIGNER Technical Suite
  Digital
    Media
  WinDVD, Corel Paint Shop
    Pro Photo DVD Movie Factory, VideoStudio, PhotoImpact Corel MediaOne, Photo Album.
  WinDVD.  WinDVD WinDVD WinDVD LinDVD LinDVD WinDVD
  Corel Paint Shop Pro Photo.  Corel Paint Shop Pro
    Photo Corel Paint Shop Pro Photo Corel Paint Shop Pro Photo
  DVD Factory. DVD Movie Factory DVD
    Factory
  VideoStudio. Video Studio Video Studio Plus Video Studio Video Studio Plus YouTube tm
  PhotoImpact.  PhotoImpact PhotoImpact PhotoImpact DVD Factory VideoStudio
  MediaOne. MediaOne all-in-one MediaOne MediaOne MediaOne
  Corel Photo Album.  Corel Photo Album Corel Photo Album back-ups Paint Shop Pro Photo Corel Photo Albums
 7




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Corel
    Photo Album
  Customer
    Support
    Distribution,
    Sales and Marketing
  Distribution
    OEMs.
  Internet Distribution. e-Stores e-Stores
  Retail and Reseller.
  
    retailers including Office Depot, Best Buy, CompUSA, Staples,
    Office Max, Future Shop, Amazon, Dixon System Group and Media
    Market, who sell our products to consumers and small businesses;
    software distributors, including Ingram Micro, Softbank, Navarre
    and Synnex, who sell our products to their retail customer base
    and license programs to their reseller partners;
    large account resellers, including CDW, Insight, Software House
    International, SoftChoice, ASAP and Softmart USA, who sell our
    software directly to large enterprises and government accounts,
    working closely with our direct sales force to help fulfill
    orders; and
    value-added resellers, including independent software vendors,
    consultants, system integrators and custom application
    developers, who generally service small to medium-sized
    businesses and provide varying degrees of technical support,
    implementation services and customization.  Direct Sales.
  Sales
    and Marketing
   8




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
    communicating our value proposition and the benefits of our
    products;
    designing and implementing incentive programs for our
    distributors to promote our products;
    identifying, establishing and developing relationships with OEMs
    and online services companies;
    ensuring that our distributors are prominently positioning our
    products and managing inventory levels effectively; and
    recruiting new resellers, retailers and distributors.    
    joint marketing and promotions with online services companies,
    OEMs and other distributors;
    selective, highly targeted advertising;
    direct mail; and
    public relations.  Internal
    Systems
  e-Stores, e-Stores,
  Outsourced
    Manufacturing
    Intellectual
    Property
     9




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Our
    success depends heavily on our ability to adequately protect our
    intellectual property
  Our
    business may be constrained by the intellectual property rights
    of others, and we have been and are currently subject to claims
    of intellectual property infringement, which are costly and
    time-consuming to defend
  Competition
      Research
    and Development
     10




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WordPerfect
    Office Suite Corel Painter Essentials CorelDRAW Graphics
    Suite X4 Corel DESIGNER
  CorelDRAW Corel Painter
  WinDVD, CorelDRAW Graphics
    Suite X4 Video Studio,
  CorelDRAW Graphics Suite Corel Media One Plus Painter Essentials
    Employees
     11




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Financial
    Information by Business Segment and Geographic Data
  Segment Reporting Form 10-K.
  Available
    Information
  Form 10-K, Form 10-Q, Form 8-K http://www.sec.gov http://www.corel.com. Form 10-K
 12




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ITEM 1A.
    RISK
    FACTORS  Risks
    Relating to our Business
  The
    recent disruption in the overall economy and the financial
    markets will adversely impact our business.
    We are
    subject to restrictive debt covenants that impose operating and
    financial restrictions on our operations and could limit our
    ability to grow our business.
      Our
    quarterly operating results may fluctuate depending on the
    timing and success of product releases, which may result in
    volatility of our stock price.
   13




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The
    long-term trend in our business reflects growth in revenues from
    acquisitions and not our existing products and that growth
    through acquisitions may not be representative of future
    growth.
      We
    have grown, and may continue to grow, through acquisitions that
    give rise to risks and challenges that could adversely affect
    our future financial results.
    
    Complexity, time, and costs associated with the integration of
    acquired business operations, workforce, products, and
    technologies into our existing business, sales force, employee
    base, product lines, and technology;
    Diversion of management time and attention from our existing
    business and other business opportunities;
    Loss or termination of employees, including costs associated
    with the termination or replacement of those employees;
    Assumption of debt or other liabilities of the acquired
    business, including litigation related to alleged liabilities of
    the acquired business;
    The risk that key customers and business relationships of the
    acquired company may not be maximized;
    The incurrence of additional acquisition-related debt as well as
    increased expenses and working capital requirements;
    Dilution of stock ownership of existing stockholders, or
    earnings per share;
    Increased costs and efforts in connection with compliance with
    Section 404 of the Sarbanes-Oxley Act (SOX) and the
    risk that the acquired company may not be SOX compliant which
    may in-turn cause us to be non-compliant; and
    Substantial accounting charges for restructuring and related
    expenses, write-off of in-process research and development,
    impairment of goodwill, amortization of intangible assets, and
    stock-based compensation expense. 14




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If we
    fail to manage our growth effectively, our business could be
    harmed.
    Our
    core products compete with products offered by Microsoft and
    Adobe, which have dominant market positions and other
    significant competitive advantages.
  WordPerfect Suite
    
    sales and marketing advantages;
    advantages in the recruitment and retention of skilled technical
    personnel;
    advantages in the establishment and negotiation of profitable
    strategic, distribution and customer relationships;
    advantages in the development and acquisition of innovative
    software technology and the acquisition of software companies;
    greater ability to pursue larger scale product development and
    distribution initiatives on a global basis; and
    operational advantages. 15




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and/or
  Our
    prices may decline, which could harm our operating
    results.
    Our
    success depends on our ability to offer products that are highly
    compatible with products offered by Microsoft and
    Adobe.
        We
    rely on relationships with a small number of companies for a
    significant percentage of our revenues, and if any of these
    companies terminates its relationship with us, our revenues
    could decline.
    Because
    there are a small number of large PC OEMs, we only have a
    limited number of potential new large OEM customers, which will
    cause revenue to grow at a slower rate.
    
    we lack control over the shipping dates or volume of systems
    shipped by OEMs;
    our OEM partners are generally not subject to minimum sales
    requirements or any obligation to market our products to their
    customers; 16




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
    our OEM partners may terminate or renegotiate their arrangements
    with us and new terms may be less favorable due, among other
    things, to an increasingly competitive relationship with certain
    partners;
    sales through our OEM partners are subject to changes in
    strategic direction, competitive risks, and other issues that
    could result in a reduction of OEM sales;
    the development work that we must generally undertake under our
    agreements with our OEM partners may require us to invest
    significant resources and incur significant costs with little or
    no associated revenues;
    the time and expense required for the sales and marketing
    organizations of our OEM partners to become familiar with our
    products may make it more difficult to introduce those products
    to the market;
    our OEM partners may develop, market, and distribute their own
    products and market and distribute products of our competitors,
    which could reduce our sales; and
    we rely on these OEM partners to self report license revenues
    payable to us based on their product sales. If the revenues from
    these reports are understated we could receive significantly
    less cash than we are entitled.  Slow
    growth, or negative growth, in the PC industry could reduce
    demand for our product, and reduce gross profit.
    If we
    fail to maintain strong relationships with our resellers and
    distributors, our ability to successfully deploy and sell our
    products may be harmed.
    Our
    business may be constrained by the intellectual property rights
    of others, and we have been and are currently subject to claims
    of intellectual property infringement, which are costly and
    time-consuming to defend.
  Legal Proceedings
 17




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Changes
    to the royalties we pay to third parties, or the requirement to
    pay other amounts in respect of third party intellectual
    property, could adversely effect our margins and
    profitability.
  Our business may be constrained by
    the intellectual property rights of others, and we have been and
    are currently subject to claims of intellectual property
    infringement, which are costly and time-consuming to
    defend
  Our
    success depends on our ability to adequately prevent piracy of
    the proprietary content owned by others which is accessed by
    customers through the use of our products.
  and/or
  We may
    be unable to maintain licenses to third-party technology that is
    integrated into our products.
   18




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Our
    success depends heavily on our ability to adequately protect our
    intellectual property.
        Our
    substantial indebtedness could affect our financing options and
    liquidity.
    
    limiting our ability to obtain additional financing in the
    future for working capital, capital expenditures or acquisitions;
    requiring a significant portion of our cash flow from operations
    to be dedicated to the payment of the principal of and interest
    on our indebtedness, thereby reducing funds available for other
    purposes;
    making us more vulnerable to economic downturns and limiting our
    ability to withstand competitive pressures; and
    making it more difficult to pay dividends on our common shares,
    if we decide to do so.  and/or Quantitative and Qualitative
    Disclosures about Market Risk  Interest Rate
    Risk.
  The
    packaged software industry is subject to rapid technological
    change, and if we fail to respond to dynamic market forces, our
    position within the industry will be harmed.
   19




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We
    face significant competitive threats from companies that may
    offer competitive software products at little or no cost to
    consumers to increase their market presence and user
    base.
    The
    manner in which packaged software is distributed is changing
    rapidly, which presents challenges to established software
    companies such as us and presents opportunities for potential
    competitors.
          With
    the growth in the Internet as a medium to download and purchase
    software, we expect to face increasing competition from smaller
    software providers.
   20




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Open
    source software and open standards may make us more vulnerable
    to competition because new market entrants and existing
    competitors could introduce similar products quickly and
    cheaply.
      Our
    products are complex and may contain errors or defects resulting
    from such complexity.
    An
    interruption of our supply of certain products or key components
    from our sole source supplier, or a price increase in those
    products or components, could hurt our business.
  just-in-time
  If we
    do not provide acceptable customer support, our reputation will
    suffer and it will be difficult to retain existing customers or
    to acquire new customers.
  higher-than-anticipated
 21




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We are
    subject to risks associated with international operations that
    may harm our business.
    
    foreign currency fluctuations;
    increased software piracy and uncertainty with respect to the
    enforcement of intellectual property rights;
    international economic and political conditions;
    labor and employment laws, particularly in Europe, which make it
    difficult to maintain flexible staffing levels;
    tariffs, quotas and other trade barriers and restrictions;
    difficulties and expenses in localizing our products,
    particularly in Asian markets;
    difficulties inherent in staffing and managing foreign
    operations; and
    the burdens of complying with a variety of foreign laws.    As a
    global business, we have a relatively complex tax structure, and
    there is a risk that tax authorities will disagree with our tax
    positions.
      Form 10-K.
  WinZip
 22




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Impairment
    of our intangible assets could result in significant charges
    that would adversely impact our future operating
    results.
    
    significant underperformance relative to historical or projected
    future operating results;
    significant changes in the manner of or use of the acquired
    assets or the strategy for our overall business;
    significant negative industry or economic trends;
    significant decline in our stock price for a sustained period;
    changes in our organization or management reporting structure
    could result in additional reporting units, which may require
    alternative methods of estimating fair values or greater
    desegregation or aggregation in our analysis by reporting
    unit; and
    a decline in our market capitalization below net book value.      We are
    exposed to fluctuations in foreign currency exchange
    rates.
   23




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We are
    potentially exposed to default risk on our interest rate swaps
    and our line of credit, and there are limitations on our ability
    to draw on that line of credit.
        Risks
    Related to an Investment in our Common Shares
  Our
    common share price is likely to be volatile.
    
    our quarterly operating results;
    sales of our common shares by principal shareholders;
    small trading volumes and small public float;
    future announcements concerning our or our competitors
    businesses;
    changes in financial forecasts and recommendations by securities
    analysts or the termination of coverage by one or more
    securities analysts;
    actions of our competitors;
    general market conditions, economic conditions including the
    recent downturn, and political conditions;
    natural disasters, terrorist attacks and acts of war; and
    the other risks described in this section.  Vector
    Capital has significant control over our business and an
    investor may not have the same corporate governance protections
    investors would have if we were not a controlled
    company.
     24




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##### Table of Contents




    that a majority of our Board consists of independent directors;
    that our prospective directors be nominated solely by
    independent directors; and
    that the compensation of our executive officers be determined
    solely by independent directors.    Vector
    Capitals ownership of a majority of our common shares,
    coupled with provisions contained in our articles of
    incorporation and Canadian law, reduce the likelihood that other
    investors will receive a premium upon a change of
    control.
  Competition Act Investment Canada Act
  Investors
    may be unable to enforce actions against the Company and certain
    of our directors under U.S. federal securities
    laws.
   25




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U.S.
    investors in our company could suffer adverse tax consequences
    if we are characterized as a passive foreign investment
    company.
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    Area


ExpirationLocation

Purpose

(in square feet)


YearOttawa, Canada

Corporate Head Office


82,224



2018Taipei, Taiwan

Research and Development/Sales,
    Marketing & Administration


50,525



2013Shanghai, China

Research and Development/Sales and Marketing


16,258



2010Mountain View, California

Sales and Marketing / General and Administrative


16,076



2014Tualitin, Oregon

Sales/Research and Development


10,908



2012Maidenhead, England

Sales and Administration


10,549



2015Mansfield, Connecticut

WinZipSales, Operations and Administration


8,890



2009Yokohama, Japan

Sales and Marketing


6,923



2012Munich, Germany

Sales and Administration


6,657



2012Beijing, China

Sales and Marketing/Research and Development


4,324



2010Munich, Germany

iGrafxSales and Administration


3,627



2013KaoHsuing, Taiwan

Research and Development


3,023



2009Makati City, Philippines

Customer Support


3,016



2010   ITEM 3.
    LEGAL
    PROCEEDINGS   26




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Victor
    Company of Japan, Ltd (JVC) v. Corel
    Corporation, InterVideo, Inc., Cyberlink Corp. et al,
  ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   27




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PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    NASDAQ [US$]


TSX [CDN$]High


Low


High


LowFiscal 2008Q1

$
11.40


$
7.15


$
11.81


$
8.25Q2

$
11.24


$
9.86


$
11.45


$
9.60Q3

$
10.92


$
9.17


$
11.50


$
9.27Q4

$
10.15


$
4.23


$
11.92


$
5.00Fiscal 2007Q1

$
14.32


$
12.20


$
16.77


$
14.29Q2

$
14.01


$
12.37


$
15.30


$
14.50Q3

$
14.24


$
12.16


$
14.97


$
12.95Q4

$
13.38


$
11.14


$
14.00


$
11.31     RECORD
    HOLDERS
    DIVIDEND
    POLICY
     28




---



##### Table of Contents



MATERIAL
    UNITED STATES FEDERAL AND CANADIAN INCOME TAX
    CONSEQUENCES
  General
    Material
    U.S. Federal Income Tax Consequences
  Form 10-K.
    Taxation
    of Dividends
     29




---



##### Table of Contents



Taxation
    of Dispositions
    Material
    Canadian Income Tax Consequences
      Taxation
    Of Dividends
    Taxation
    of Gain on Disposition
   30




---



##### Table of Contents



RECENT
    SALES OF UNREGISTERED SECURITIES
    PURCHASES
    OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
    PURCHASERS
    Regulation S-K Equity
    Incentive Plan and Other Compensation Plans.
  DISCLOSURE
    PURSUANT TO THE REQUIREMENTS OF NASDAQ
     31




---



##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA  SELECTED
    CONSOLIDATED FINANCIAL DATA
  Form 10-K.
    Form 10-K Form 10-K.
  32




---



##### Table of Contents



Fiscal Years Ended November 30,2004


2005


2006


2007


2008(In thousands, except per share data)Consolidated Statement of Operations Data:Revenues

$
111,692


$
164,044


$
177,191


$
250,480


$
268,230Gross margin


79,845



118,290



140,344



173,719



180,615Total operating expenses


71,454



101,404



106,187



166,809



157,199Income (loss) from operations


8,391



16,886



34,157



6,910



23,416Income tax expenses (recovery)


7,315



6,291



4,668



3,443



(136
)Net income (loss)


1,207



(8,753
)


9,251



(13,062
)


3,707Net income (loss) per Corel common share:Basic

$
N/A


$
N/A


$
0.41


$
(0.52
)

$
0.14Fully diluted

$
N/A


$
N/A


$
0.40


$
(0.52
)

$
0.14Weighted average number of Corel common shares used in per share
    calculations:Basic


N/A



N/A



22,410



24,951



25,631Fully diluted


N/A



N/A



23,156



24,951



26,189Net income (loss) per shareBasicClass A

$
0.08


$
(2.40
)


N/A



N/A



N/AClass B

$
0.08


$
(2.40
)


N/A



N/A



N/AWinZip common


N/A


$
136.90



N/A



N/A



N/AFully dilutedClass A

$
0.08


$
(2.40
)


N/A



N/A



N/AClass B

$
0.08


$
(2.40
)


N/A



N/A



N/AWinZip common


N/A


$
136.90



N/A



N/A



N/AWeighted average number of shares used in per share calculations:BasicClass A


8,218



3,737



N/A



N/A



N/AClass B


3,497



8,321



N/A



N/A



N/AWinZip common


N/A



20



N/A



N/A



N/AFully dilutedClass A


8,218



3,737



N/A



N/A



N/AClass B


3,497



8,321



N/A



N/A



N/AWinZip common


N/A



20



N/A



N/A



N/ACash Flow Data:Cash flow provided by operating activities

$
32,512


$
40,459


$
36,225


$
26,499


$
35,505Cash flow provided by (used in) financing activities

$
(5,329
)

$
(38,552
)

$
(3,885
)

$
71,808


$
(3,060
)Cash flow provided by (used in) investing activities

$
(34,099
)

$
7,301


$
(1,906
)

$
(124,760
)

$
(6,625
)Other Financial Data:Adjusted EBITDA(1)

$
32,199


$
49,033


$
55,214


$
57,291


$
60,903   33




---



##### Table of Contents



As of November 30,2004


2005


2006


2007


2008(In thousands)Consolidated Balance Sheet Data:Cash, cash equivalents and short-term investments

$
21,788


$
20,746


$
51,030


$
24,615


$
50,260Working capital (deficit)


(19,417
)


(13,482
)


31,152



(15,219
)


(6,316
)Total assets


108,788



120,836



130,686



266,837



259,396Deferred revenue


10,020



13,840



14,734



18,072



17,594Total long-term debt


64,799



150,971



90,649



158,608



156,359Total shareholders equity (deficit)


1,537



(85,234
)


(11,807
)


(14,300
)


(8,363
)     (1)
    
    Adjusted EBITDA represents net
    income before interest, income taxes, depreciation and
    amortization, further adjusted to eliminate items specifically
    defined in our credit facility agreement. Adjusted EBITDA is not
    a measure of operating income, operating performance or
    liquidity under GAAP. We use this non-GAAP financial measure to
    confirm our compliance with covenants contained in our debt
    facilities, as a supplemental indicator of our operating
    performance and to assist in evaluation of our ongoing
    operations and liquidity and to determine appropriate levels of
    indebtedness. In particular, we have included a presentation of
    Adjusted EBITDA because certain covenants in our credit facility
    are tied to Adjusted EBITDA. If our Adjusted EBITDA were to
    decline below certain levels, it could result in, among other
    things, a default or mandatory prepayment under our current
    credit facility. The covenants in our credit facility are
    described under Managements Discussion and Analysis
    of Financial Condition and Results of Operations 
    Indebtedness. We believe Adjusted EBITDA is useful to
    investors in allowing for greater transparency with respect to
    supplemental information used by management in its financial and
    operational decision making. This measure does not have any
    standardized meaning prescribed by GAAP and therefore is not
    comparable to the calculation of similar measures used by other
    companies. Adjusted EBITDA should not be considered in
    isolation, and should not be viewed as an alternative to or
    substitute for measures of financial performance or changes in
    cash flows calculated in accordance with GAAP.    Fiscal Years Ended November 30,2004


2005


2006


2007


2008Cash flow provided by (used in) operating activities

$
32,512


$
40,459


$
36,225


$
26,499


$
35,505Change in operating assets and liabilities


1,683



(10,440
)


3,736



5,238



1,544Interest expense


2,709



12,786



12,309



16,978



14,711Interest income


(1,485
)


(178
)


(978
)


(724
)


(459
)Income tax expense (recovery)


7,315



6,291



4,668



3,443



(136
)Provision for bad debts


93



(529
)


(195
)


(252
)


(1,092
)Unrealized foreign exchange gains (losses) on forward contracts


27



(263
)


(150
)


(147
)


(126
)Deferred income taxes


(5,178
)


(830
)


(876
)


83



4,533Gain (loss) on interest rate swap recorded at fair value










(810
)


(392
)


7Gain (loss) on disposal of fixed assets


(3
)


20







(102
)


(196
)Gain on disposal of investments


















822Net gain on defined benefit plan


















184Predecessor legal settlement and tax refund


(8,994
)














Restructuring


3,520



834



810



1,447



2,878Integration costs










358



5,220



Expenses associated with evaluation of strategic alternatives


















2,728Reorganization costs






883



117







Adjusted EBITDA

$
32,199


$
49,033


$
55,214


$
57,291


$
60,903  34




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  The following discussion and analysis should be read together
    with our audited consolidated financial statements for the years
    ended November 30, 2008, 2007 and 2006 and accompanying
    notes set forth elsewhere in this report. All financial
    information is presented in U.S. dollars.
  Some of the statements set forth in this section are
    forward-looking statements relating to our future results of
    operations. Our actual results may vary from the results
    anticipated by these statements. Please see Information
    Regarding Forward-Looking Statements.
  OVERVIEW
  e-Stores,
    Graphics
    and Productivity
  CorelDRAW Graphics Suite, Corel Painter, CorelDESIGNER
    Technical Suite, WinZip iGrafx WordPerfect
    Office. CorelDRAW Graphics Suite Corel Painter CorelDESIGNER Technical Suite WinZip iGrafx WordPerfect
    Office
  Digital
    Media
  Corel Paint Shop Pro Photo, Corel MediaOne, Corel
    Photo Album, PhotoImpact. Corel Paint Shop Pro Photo Corel MediaOne point-and-shoot Corel Photo Album VideoStudio
 35




---



##### Table of Contents



DVD Movie Factory and DVD Movie Writer.
    WinDVD
  Corporate
    History
  Canada Business
    Corporations Act CorelDRAW WordPerfect Business Corporations Act
    (Ontario).
  Corel Paint Shop Pro Photo Corel Photo Album
  WinZip
    WinDVD, VideoStudio, DVD Factory, DVD
    Copy PhotoImpact. easy-to-use,
  Fiscal
    2008 Activity
   36




---



##### Table of Contents



Industry
    and Business Trends
  10-K Slow growth, or negative growth, in the
    PC industry could reduce demand for our product, and reduce
    gross profit.
      Operating
    Performance
  WinDVD Instant
 37




---



##### Table of Contents



On Paint Shop Pro
    Photo Corel Photo Album. CorelDRAW Graphics Suite WinZip, iGrafx,
    CorelDESIGNER Technical Suite, WordPerfect.
  10-K
  OPERATIONS
  Revenues
  e-Stores, CorelDRAW
    Graphics Suite Corel Painter, Corel Designer Technical
    Suite, WinZip, iGrafx Flow Charter WordPerfect Office
    Suite. Paint Shop Pro Photo, Media One Digital Video WinDVD, VideoStudio, DVD
    Factory, Instant ON PhotoImpact.
  10-K
  Item 1A-Risk Our quarterly operating results may
    fluctuate depending on the timing and success of product
    releases, which may result in volatility of our stock
    price
   38




---



##### Table of Contents



Cost
    of Revenues
    
    royalties paid and costs of licensing third party intellectual
    property;
    salaries, benefits, stock-based compensation and related costs
    of the manufacturing oversight staff;
    the cost of packaging and distribution of our packaged software
    products;
    the cost of related customer and technical support functions;
    credit card fees; and
    allocated facilities, depreciation and amortization and other
    related overhead.  e-Stores, WinDVD,
    
    salaries, benefits, stock-based compensation and related costs
    of customer and technical support functions; and
    allocated facilities, depreciation and amortization and other
    related overhead.      Sales
    and Marketing
    
    salaries, commissions, benefits and stock-based compensation
    related to sales and marketing personnel;
    travel and living expenses;
    marketing, such as co-marketing programs with our resellers and
    OEMs, trade shows and advertising; and
    allocated facilities, depreciation and amortization and other
    related overhead.  Research
    and Development
    
    salaries, benefits and stock-based compensation related to
    research and development personnel;
    allocated facilities, depreciation and amortization and other
    related overhead; and
    localization and contract development expenses.   39




---



##### Table of Contents



General
    and Administrative
    
    salaries, benefits and stock-based compensation related to
    general and administrative personnel;
    accounting, legal and other professional fees;
    allocated facilities, depreciation and amortization and other
    related overhead; and
    insurance costs.  Taxes
     40




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##### Table of Contents



RESULTS
    OF OPERATIONS
  Comparison
    of Fiscal Year Ended November 30, 2008 to Fiscal Year Ended
    November 30, 2007
      November 30,


Percentage2007


2008


2007


2008


Change(Dollars in thousands)RevenuesProduct

$
228,274


$
241,960



91.1
%


90.2
%


6.0
%Maintenance and services


22,206



26,270



8.9



9.8



18.3Total revenues


250,480



268,230



100.0



100.0



7.1Cost of revenuesCost of product(1)


49,846



61,453



21.8



25.4



23.3Cost of maintenance and services(1)


796



528



3.6



2.0



(33.7
)Amortization of intangible assets


26,119



25,634



10.4



9.6



(1.9
)Total cost of revenues


76,761



87,615



30.6



32.7



14.1Gross margin


173,719



180,615



69.4



67.3



4.0Operating expensesSales and marketing


71,563



76,791



28.6



28.6



7.3Research and development


46,368



44,513



18.5



16.6



(4.0
)General and administrative


34,380



33,017



13.7



12.3



(4.0
)Acquired in-process research and development


7,831







3.1



0.0



(100.0
)Integration expense


5,220







2.1



0.0



(100.0
)Restructuring


1,447



2,878



0.6



1.1



98.9Total operating expenses


166,809



157,199



66.6



58.6



(5.8
)Income from operations


6,910



23,416



2.8
%


8.7
%


238.9
%Other expenses (income)Interest expense, net


16,254



14,252




*



*



*Amortization of deferred financing fees


1,074



1,081




*



*



*Expenses associated with evaluation of strategic alternatives






2,728Other non-operating (income) expense


(799
)


1,784




*



*



*Income (loss) before income tax expense (recovery)


(9,619
)


3,571




*



*



*Income tax expense (recovery)


3,443



(136
)



*



*



*Net income (loss)

$
(13,062
)

$
3,707




*



*



*     (1)
    
    Percentage reflects percentage of related revenues.*
    
    Not Meaningful 41




---



##### Table of Contents



Revenues
  Year Ended November 30,


Percentage2007


2008


Change(Dollars in thousands)Product

$
228,274


$
241,960



6.0
%As a percent of revenue


91.1
%


90.2
%Maintenance and services


22,206



26,270



18.3
%As a percent of revenue


8.9
%


9.8
%Total


250,480



268,230



7.1
%   WinDVD Instant On Digital Video CorelDRAW
    Graphics Suite WinZip, iGrafx, CorelDESIGNER Technical
    Suite, WordPerfect.
      Total
    Revenues by Product Group
    Year Ended November 30,


Percentage2007


2008


Change(Dollars in thousands)Graphics and Productivity

$
141,692


$
149,513



5.5
%As a percent of revenue


56.6
%


55.7
%Digital Media


108,788



118,717



9.1
%As a percent of revenue


43.4
%


44.3
%   CorelDRAW Graphics Suite, WinZip, iGrafx, CorelDESIGNER Technical Suite WordPerfect Office. CorelDRAW Graphics Suite CorelDRAW Graphics
    Suite X4 CorelDRAW X4 WinZip CorelDESIGNER Technical Suite iGrafx
 42




---



##### Table of Contents



WordPerfect Office
  WinDVD Instant ON Corel Paint Shop Pro Photo Photo Album. WinDVD Instant On MediaOne Corel Paint Shop Pro Photo
  Total
    Revenues by Region
  Year Ended November 30,


Percentage2007


2008


2007


2008


Change(Dollars in thousands)Americas

$
125,979


$
129,037



50.3
%


48.1
%


2.4
%EMEA


72,932



79,164



29.1



29.5



8.5APAC


51,569



60,029



20.6



22.4



16.4Total

$
250,480


$
268,230



100.0
%


100.0
%


7.1
%   Digital Video WinDVD,
    iGrafx, Corel DESIGNER MediaOne, Paint Shop Pro Photo, Word Perfect Office WinZip. WinDVD iGrafx iGrafx CorelDESIGNER Technical Suite MediaOne Paint Shop Pro Photo WordPerfect Office WinZip
  CorelDRAW Graphics Suite,
    WinZip, iGrafx WinDVD Corel Paint Shop Pro Photo. CorelDRAW Graphics Suite X4 CorelDRAW Graphics Suite WinZip iGrafx WinDVD DVD
    Creator Paint Shop Pro Photo
 43




---



##### Table of Contents



WinDVD Instant
    ON, iGrafx WinDVD Instant On iGrafx
  Cost
    of Revenues
  Year EndedNovember 30,


Percentage2007


2008


Change(Dollars in thousands)Cost of product

$
49,846


$
61,453



23.3
%As a percent of product revenue


21.8
%


25.4
%Cost of maintenance and services


796



528



(33.7
)%As a percent of maintenance and service revenue


3.6
%


2.0
%Amortization of intangible assets


26,119



25,634



(1.9
)%As a percent of revenue


10.4
%


9.6
%   Cost of Product Revenues. WinDVD
  Cost of Maintenance and Services
    Revenues. WinZip
  Amortization of Intangible
    Assets.
 44




---



##### Table of Contents



Operating
    Expenses
    Year EndedNovember 30,


Percentage2007


2008


Change(Dollars in thousands)Sales and marketing

$
71,563


$
76,791



7.3
%As a percent of revenue


28.6
%


28.6
%Research and development


46,368



44,513



(4.0
)%As a percent of revenue


18.5
%


16.6
%General and administrative


34,380



33,017



(4.0
)%As a percent of revenue


13.7
%


12.3
%Restructuring


1,447



2,878



98.9
%As a percent of revenue


0.6
%


1.1
%Acquired in-process research and development


7,831







(100.0
)%As a percent of revenue


3.1
%


0.0
%InterVideo integration expenses


5,220







(100.0
)%As a percent of revenue


2.1
%


0.0
%   Sales and Marketing.
  Research and Development.
  General and Administrative.
 45




---



##### Table of Contents



Restructuring:
      InterVideo Integration Expense:
  Acquired in-process Research and
    Development.
  Other
    Expenses (Income)
  Year EndedNovember 30,2007


2008(Dollars in thousands)Expenses associated with evaluation of strategic alternatives

$



$
2,728Interest expense, net


16,254



14,252Amortization of deferred financing fees


1,074



1,081Other non-operating (income) expenses


(799
)


1,784Total non-operating expenses

$
16,529


$
19,845   Expenses Associated with Evaluation of Strategic
    Alternatives:
   46




---



##### Table of Contents



Interest (Income) Expense, Net.
  Amortization of Deferred Financing Fees.
  Other non-operating expense (income):
  Income Tax Expense (Recovery).
      Comparison
    of Fiscal Year Ended November 30, 2007 to Fiscal Year Ended
    November 30, 2006
     47




---



##### Table of Contents



November 30,


Percentage2006


2007


2006


2007


Change(Dollars in thousands)RevenuesProduct

$
157,319


$
228,274



88.8
%


91.1
%


45.1
%Maintenance and services


19,872



22,206



11.2



8.9



11.7Total revenues


177,191



250,480



100.0



100.0



41.4Cost of revenuesCost of product(1)


21,339



49,846



13.6



21.8



133.6Cost of maintenance and services(1)


1,142



796



5.7



3.6



(30.3
)Amortization of intangible assets


14,366



26,119



8.1



10.4



81.8Total cost of revenues


36,847



76,761



20.8



30.6



108.3Gross margin


140,344



173,719



79.2



69.4



23.8Operating expensesSales and marketing


54,851



71,563



31.0



28.6



30.5Research and development


25,883



46,368



14.6



18.5



79.1General and administrative


24,285



34,380



13.7



13.7



41.6Acquired in-process research and development






7,831



0.0



3.1



n/aIntegration expense


358



5,220



0.2



2.1



1358.1Restructuring


810



1,447



0.5



0.6



78.6Total operating expenses


106,187



166,809



59.9



66.6



57.1Income from operations


34,157



6,910



19.3
%


2.8
%


(79.8
)%Other expenses (income)Loss on debt retirement


8,292








*



*



*Interest expense, net


11,331



16,254




*



*



*Amortization of deferred financing fees


1,180



1,074




*



*



*Other non-operating (income) expense


(565
)


(799
)



*



*



*Income (loss) before income tax expense (recovery)


13,919



(9,619
)



*



*



*Income tax expense


4,668



3,443




*



*



*Net income (loss)

$
9,251


$
(13,062
)



*



*



*     (1)
    
    Percentage reflects percentage of related revenues.*
    
    Not Meaningful 48




---



##### Table of Contents



Revenues
  Year Ended November 30,


Percentage2006


2007


Change(Dollars in thousands)Product

$
157,319


$
228,274



45.1
%As a percent of revenue


88.8
%


91.1
%Maintenance and services


19,872



22,206



11.7
%As a percent of revenue


11.2
%


8.9
%Total


177,191



250,480



41.4
%   WinZip,
    CorelDraw, iGrafx, Corel Painter. WordPerfect Digital Imaging
  WordPerfect Digital Imaging , WinZip, CorelDRAW,
    iGrafx Corel Painter WordPerfect WordPerfect Office X3 Digital Imaging Snapfire Paint Shop Pro Photo Paint Shop Pro
    Photo X1 Photo Impact Photo Express Paint Shop Pro
    Photo WinZip iGrafx CorelDRAW CorelDRAW Corel
    Painter e-Stores
   49




---



##### Table of Contents



Total
    Revenues by Product Group
  Year Ended November 30,


Percentage2006


2007


Change(Dollars in thousands)Graphics and Productivity

$
137,741


$
141,692



2.9
%As a percent of revenue


77.7
%


56.6
%Digital Media


39,450



108,788



175.8
%As a percent of revenue


22.3
%


43.4
%   WordPerfect Office WinZip, CorelDRAW, iGrafx Corel Painter WinZip iGrafx CorelDRAW Corel Painter e-Stores WordPerfect WordPerfect
    Office X3
  Digital Imaging MediaOne, Paint Shop Pro Photo Photo Impact MediaOne.
  Total
    Revenues by Region
  Year Ended November 30,


Percentage2006


2007


2006


2007


Change(Dollars in thousands)Americas

$
104,447


$
125,979



58.9
%


50.3
%


20.6
%EMEA


58,253



72,932



32.9



29.1



25.2APAC


14,491



51,569



8.2



20.6



255.9Total

$
177,191


$
250,480



100.0
%


100.0
%


41.4
%   InterVideo WordPerfect Digital Imaging WordPerfect WordPerfect Office X3 Digital Imaging Digital Imaging
 50




---



##### Table of Contents



Photo Impact MediaOne. Paint Shop Pro Photo
  InterVideo CorelDRAW Graphics Suite WinZip WordPerfect Digital Imaging . CorelDRAW Graphics Suite
  InterVideo WinZip iGrafx. iGrafx WinZip
  Cost
    of Revenues
  Year EndedNovember 30,


Percentage2006


2007


Change(Dollars in thousands)Cost of product

$
21,339


$
49,846



133.6
%As a percent of product revenue


13.6
%


21.8
%Cost of maintenance and services


1,142



796



(30.3
)%As a percent of maintenance and service revenue


5.7
%


3.6
%Amortization of intangible assets


14,366



26,119



81.8
%As a percent of revenue


8.1
%


10.4
%   Cost of Product Revenues.
  Cost of Maintenance and Services
    Revenues. WinZips
  Amortization of Intangible
    Assets.
 51




---



##### Table of Contents



Operating
    Expenses
    Year EndedNovember 30,


Percentage2006


2007


Change(Dollars in thousands)Sales and marketing

$
54,851


$
71,563



30.5
%As a percent of revenue


31.0
%


28.6
%Research and development


25,883



46,368



79.1
%As a percent of revenue


14.6
%


18.5
%General and administrative


24,285



34,380



41.6
%As a percent of revenue


13.7
%


13.7
%Restructuring


810



1,447



78.6
%As a percent of revenue


0.5
%


0.5
%Acquired in-process research and development






7,831



n/aAs a percent of revenue


0.0
%


3.1
%InterVideo integration expenses


358



5,220



1358.1
%As a percent of revenue


0.2
%


2.1
%   Sales and Marketing.
  Research and Development.
  General and Administrative.
  Acquired in-process Research and
    Development.
  InterVideo Integration Expense:
 52




---



##### Table of Contents



Restructuring.
    Non-Operating
    (Income) Expense
  Year EndedNovember 30,2006


2007(Dollars in thousands)Loss on debt retirement

$
8,292


$
Interest expense, net


11,331



16,254Amortization of deferred financing fees


1,180



1,074Other non-operating (income) expenses


(565
)


(799
)Total non-operating expenses

$
20,238


$
16,529   Loss on Debt Retirement.
  Interest (Income) Expense, Net.
  Amortization of Deferred Financing Fees.
  Other non-operating income:
  Income Tax Expense.
   53




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##### Table of Contents



LIQUIDITY
    AND CAPITAL RESOURCES
      Risk
    Factors
       54




---



##### Table of Contents



10-K, We are potentially exposed to default risk on our
    interest rate swaps and our line of credit.
      Working
    Capital
        Cash
    Flows
  Year Ended November 30,2006


2007


2008(In thousands)Cash provided by operating activities

$
36,225


$
26,499


$
35,505Cash provided by (used in) financing activities


(3,885
)


71,808



(3,060
)Cash provided by (used in) investing activities


(1,906
)


(124,760
)


(6,625
)   Year
    ended November 30, 2008 compared to year ended
    November 30, 2007.
   55




---



##### Table of Contents



Indebtedness
     56




---



##### Table of Contents




    a maximum total leverage ratio, which is defined as the ratio of
    total debt to trailing four quarter consolidated Adjusted
    EBITDA, as defined in the credit agreement, to be less than
    specified amounts over the term of the facility as follows:  Period

RatioThrough to November 29, 2007


3.50November 30, 2007 through November 29, 2008


3.25November 30, 2008 through November 29, 2009


3.00November 30, 2009 through November 29, 2010


2.75November 30, 2010 through November 29, 2011


2.50November 30, 2011, thereafter


2.25   
    a minimum fixed charge coverage ratio, which is defined as the
    ratio of trailing four quarter consolidated Adjusted EBITDA to
    fixed charges (fixed charges include interest paid, scheduled
    repayment of principal on long-term debt, capital expenditures
    and taxes paid) as follows:  Period

RatioThrough to Nov 29, 2010


2.00November 30, 2010 through November 29, 2011


2.25November 30, 2011, thereafter


2.50     Principal


Interest


Total2009


19,095



11,723



30,8182010


1,596



10,590



12,1862011


1,596



9,622



11,2182012


134,072



3,133



137,205Total

$
156,359


$
35,068


$
191,427    57




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##### Table of Contents



Year-Ended November 302006


2007


2008(In thousands)Cash flow provided by operations

$
36,225


$
26,499


$
35,505Change in operating assets and liabilities


3,736



5,238



1,544Interest expense, net


11,331



16,254



14,252Income tax expense


4,668



3,443



(136
)Provision for bad debts


(195
)


(252
)


(1,092
)Unrealized foreign exchange losses on forward contracts


(150
)


(147
)


(126
)Deferred income taxes


(876
)


83



4,533Gain (loss) on interest rate swap recorded at fair value


(810
)


(392
)


7Gain (loss) on disposal of fixed assets






(102
)


(196
)Gain on sale of investment










822Gain from defined benefit pension plan










184Restructuring


810



1,447



2,878Expenses related to evaluation of strategic alternatives










2,728Integration costs


358



5,220



Reorganization costs


117







Adjusted EBITDA

$
55,214


$
57,291


$
60,903   Contractual
    Obligations and Commitments
        Less than








More than1 Year


2-3 Years


4-5 Years


5 Years


Total(In thousands)Long-term debt

$
30,818


$
23,404



137,205


$



$
191,427Capital leases


720



887



147







1,754Defined pension benefit obligations














1,431



1,431Operating leases


4,574



8,811



7,147



6,373



26,905Total

$
36,112


$
33,102


$
144,499


$
7,804


$
221,517  58




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##### Table of Contents



10-K We are subject to restrictive debt covenants
    that impose operating and financial restrictions on our
    operations and could limit our ability to grow our
    business.
  Off-Balance
    Sheet Arrangements
  Accounting for
    Contingencies Guarantors Accounting and Disclosure Requirements for
    Guarantees, Including Indirect Guarantees of Indebtedness of
    Others
  CRITICAL
    ACCOUNTING POLICIES AND ESTIMATES
      Revenue
    Recognition
  97-2, Software Revenues Recognition, SOP 98-9, Modification of
    97-2,
    Software Recognition with Respect to Certain Transactions Revenues Recognition in Financial Statements,
    SOP 97-2 post-delivery when-and-if-available
 59




---



##### Table of Contents



when-and-if-available when-and-if-available.
            Allowance
    for Product Returns and Rebate Programs
      Accounting Changes and Error Corrections
 60




---



##### Table of Contents



Accounting
    for Income Taxes
             61




---



##### Table of Contents



Business
    Combinations
  Business Combinations
          Impairment
    of Goodwill
  Goodwill and Other Intangible Assets
   62




---



##### Table of Contents



Long-lived
    Assets
  Accounting for the Impairment or Disposal of Long-Lived
    Assets
       63




---



##### Table of Contents



Stock
    Option Accounting
  Share Based Payment
           64




---



##### Table of Contents



Fair
    Value Measurements
                Accelerated
    Debt Payments
   65




---



##### Table of Contents



RECENTLY
    ISSUED ACCOUNTING PRONOUNCEMENTS
  Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133.
  Business Combinations
  142-3, Determination of the Useful Life of Intangible Assets FAS 142-3 FAS 142-3 FAS 142-3
 66




---



##### Table of Contents



QUARTERLY
    FINANCIAL DATA
  Quarter Ended2008

Feb. 28


May. 31


Aug. 30


Nov. 30


Total Year(Unaudited)(Dollars in thousands, except number of shares and per share
    amounts)Revenue:Product

$
59,362


$
60,249


$
59,725


$
62,624


$
241,960Maintenance and service


6,182



6,795



6,503



6,790



26,270Total revenue


65,544



67,044



66,228



69,414



268,230Cost of revenues:Cost of products


15,227



14,008



15,218



17,000



61,453Cost of maintenance and services


167



132



113



116



528Amortization of intangible assets


6,414



6,418



6,418



6,384



25,634Total cost of revenues


21,808



20,558



21,749



23,500



87,615Gross margin


43,736



46,486



44,479



45,914



180,615Operating expenses:Sales and marketing


19,684



20,748



17,941



18,418



76,791Research and development


12,091



11,716



10,610



10,096



44,513General and administration


8,811



8,640



8,378



7,188



33,017Restructuring


178



447



293



1,960



2,878Total operating expenses


40,764



41,551



37,222



37,662



157,199Income from operations


2,972



4,935



7,257



8,252



23,416Other expenses (income):Interest expense, net


4,288



2,933



3,540



3,491



14,252Amortization of deferred financing fees


270



270



270



271



1,081Expenses associated with evaluation of strategic alternatives






705



992



1,031



2,728Other non-operating (income) expense


(1,464
)


102



1,034



2,112



1,784Income (loss) before taxes


(122
)


925



1,421



1,347



3,571Income tax expense (recovery)


(92
)


(5
)


(177
)


138



(136
)Net income (loss)

$
(30
)

$
930


$
1,598


$
1,209


$
3,707Other comprehensive income (loss):

$
(3,605
)

$
2,903


$
(648
)

$
(2,080
)

$
(3,430
)Total comprehensive loss

$
(3,635
)

$
3,833


$
950


$
(871
)

$
277Net income (loss) per share:BasicCorel common

$
(0.00
)

$
0.04


$
0.06


$
0.05


$
0.14Fully dilutedCorel common

$
(0.00
)

$
0.04


$
0.06


$
0.05


$
0.14   67




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##### Table of Contents



Quarter Ended2007

Feb. 28


May. 31


Aug. 30


Nov. 30


Total Year(Unaudited)(Dollars in thousands, except number of shares and per share
    amounts)Revenue:Product

$
47,304


$
59,553


$
55,018


$
66,399


$
228,274Maintenance and service


5,330



5,479



5,352



6,045



22,206Total revenue


52,634



65,032



60,370



72,444



250,480Cost of revenues:Cost of products


8,497



14,026



12,167



15,156



49,846Cost of maintenance and services


198



221



244



133



796Amortization of intangible assets


5,757



6,373



6,925



7,064



26,119Total cost of revenues


14,452



20,620



19,336



22,353



76,761Gross margin


38,182



44,412



41,034



50,091



173,719Operating expenses:Sales and marketing


17,275



17,715



17,590



18,983



71,563Research and development


11,596



11,070



11,939



11,763



46,368General and administration


8,662



8,575



7,763



9,380



34,380Acquired in-process research and development


7,831















7,831InterVideo integration expense


785



860



2,220



1,355



5,220Restructuring














1,447



1,447Total operating expenses


46,149



38,220



39,512



42,928



166,809Income (loss) from operations


(7,967
)


6,192



1,522



7,163



6,910Other expenses (income):Interest expense, net


3,921



3,718



4,195



4,420



16,254Amortization of deferred financing fees


265



269



270



270



1,074Other non-operating (income) expense


(632
)


479



(497
)


(149
)


(799
)Income (loss) before taxes


(11,521
)


1,726



(2,446
)


2,622



(9,619
)Income tax (recovery) provision


355



(587
)


4,314



(639
)


3,443Net income (loss)

$
(11,876
)

$
2,313


$
(6,760
)

$
3,261


$
(13,062
)Other comprehensive (loss) income










56



(731
)


(675
)Total comprehensive (loss) income

$
(11,876
)

$
2,313


$
(6,704
)

$
2,530


$
(13,737
)Net income (loss) per share:Basic

$
(0.48
)

$
0.09


$
(0.27
)

$
0.13


$
(0.52
)Fully Diluted

$
(0.48
)

$
0.09


$
(0.27
)

$
0.13


$
(0.52
)   Variance
    from Fourth Quarter Guidance
   68




---



##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.  Quantitative
    and Qualitative Disclosures About Market Risk
    Interest
    Rate Risk
          Accounting for Derivative Instruments and Hedging Activities
  Foreign
    Currency Risk
   69




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA    Form 10-K Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations
 70




---



##### Table of Contents



Independent
    Auditors Report
      Consolidated
    Financial statements
        Internal
    control over financial reporting
  Internal Control 
    Integrated Framework
     71




---



##### Table of Contents



72




---



##### Table of Contents



COREL
    CORPORATION
  CONSOLIDATED
    BALANCE SHEETS
 (In
    thousands, U.S. dollars)
  As of November 30,Note


2008


2007ASSETSCurrent assets:Cash and cash equivalents


3


$
50,260


$
24,615Restricted cash






159



217Accounts receivableTrade, net


4



33,241



41,092Other






2,932



118Inventory


6



1,562



729Income taxes recoverable


12



785



1,470Deferred tax assets


12



3,138



Prepaids and other current assets






2,456



3,276Total current assets






94,533



71,517Capital assets


8



10,549



8,971Intangible assets


8,9



67,029



92,010Goodwill


9,10



82,343



88,643Deferred financing and other long-term assets


2,7



4,942



5,696Total assets





$
259,396


$
266,837LIABILITIES AND SHAREHOLDERS DEFICITCurrent liabilities:Accounts payable and accrued liabilities


11


$
64,376


$
67,290Due to related parties


5



341



Income taxes payable


12



1,226



723Deferred revenue






15,190



15,707Current portion of long-term debt


13



19,095



2,249Current portion of obligation under capital leases


14



621



767Total current liabilities






100,849



86,736Deferred revenue






2,404



2,365Income taxes payable


12



12,960



11,693Deferred income tax liabilities


12



13,059



20,754Long-term debt


13



137,264



156,359Accrued pension benefit obligation


15



261



1,116Obligation under capital leases


14



962



2,114Total liabilities






267,759



281,137Commitments and contingencies


14Shareholders deficitShare capital:Corel Common Shares (par value: none; authorized: unlimited;
    issued and outstanding: 25,823 and 25,457 shares,
    respectively)


16



43,992



40,652Additional paid-in capital


16



9,198



5,926Accumulated other comprehensive loss






(4,151
)


(721
)Deficit






(57,402
)


(60,157
)Total shareholders deficit






(8,363
)


(14,300
)Total liabilities and shareholders deficit





$
259,396


$
266,837    73




---



##### Table of Contents



COREL
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 (In
    thousands, U.S. dollars, except per share data)
  Year Ended November 30,Note


2008


2007


2006RevenuesProduct





$
241,960


$
228,274


$
157,319Maintenance and services






26,270



22,206



19,872Total revenues


19



268,230



250,480



177,191Cost of revenuesCost of product






61,453



49,846



21,339Cost of maintenance and services






528



796



1,142Amortization of intangible assets






25,634



26,119



14,366Total cost of revenues






87,615



76,761



36,847Gross margin






180,615



173,719



140,344Operating expensesSales and marketing






76,791



71,563



54,851Research and development






44,513



46,368



25,883General and administration






33,017



34,380



24,285Acquired in-process research and development


9







7,831



InterVideo integration expense


9







5,220



358Restructuring


17



2,878



1,447



810Total operating expenses






157,199



166,809



106,187Income from operations






23,416



6,910



34,157Other expenses (income)Loss on debt retirement


13











8,292Interest income






(459
)


(724
)


(978
)Interest expense






14,711



16,978



12,309Amortization of deferred financing fees






1,081



1,074



1,180Expenses associated with evaluation of strategic alternatives


21



2,728







Other non-operating expense (income)






1,784



(799
)


(565
)Income (loss) before income taxes






3,571



(9,619
)


13,919Income tax expense (recovery)


12Current






4,397



3,526



3,411Deferred






(4,533
)


(83
)


1,257Total Income tax expense (recovery)






(136
)


3,443



4,668Net income (loss)





$
3,707


$
(13,062
)

$
9,251Other comprehensive loss, net of taxes of $nil






(3,430
)


(675
)


(131
)Comprehensive income (loss)





$
277


$
(13,737
)

$
9,120Net income (loss) per Corel common share:


18Basic





$
0.14


$
(0.52
)

$
0.41Fully diluted





$
0.14


$
(0.52
)

$
0.40Weighted average number of Corel common shares:Basic






25,631



24,951



22,410Fully diluted






26,189



24,951



23,156    74




---



##### Table of Contents



COREL
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (In
    thousands, U.S. dollars)
  Year Ended November 30,Note


2008


2007


2006Cash flow from operating activitiesNet income (loss)





$
3,707


$
(13,062
)

$
9,251Depreciation and amortization






4,458



3,477



1,609Amortization of deferred financing fees






1,081



1,074



1,180Amortization of intangible assets






25,634



26,119



14,366Stock-based compensation


16



6,301



5,488



3,232Provision for bad debts






1,092



252



195Deferred income taxes






(4,533
)


(83
)


876Unrealized foreign exchange loss on forward exchange contracts






126



147



150Acquired in-process research and development


9







7,831



Loss on disposal of fixed assets






196



102



Loss on early retirement of debt


13











8,292Gain on sale of investments






(822
)






Loss (gain) on interest rate swap recorded at fair value






(7
)


392



810Net gain from defined benefit pension plan






(184
)






Change in operating assets and liabilities


20



(1,544
)


(5,238
)


(3,736
)Cash provided by operating activities






35,505



26,499



36,225Cash flow from financing activitiesRestricted cash






58



500



249Proceeds from operating line of credit










48,000



Repayments of operating line of credit










(48,000
)


Proceeds from long-term debt


13







70,000



90,000Repayments of long-term debt


13



(2,249
)


(2,149
)


(150,323
)Repayments of capital lease obligations






(1,084
)


(315
)


Payments on deferred purchase price














Financing fees incurred










(1,685
)


(5,259
)Proceeds from public offering, net of costs of $5,176














69,132Proceeds from exercise of stock options






311



5,406



Dividends














(7,500
)Other financing activities






(96
)


51



(184
)Cash provided by (used in) financing activities






(3,060
)


71,808



(3,885
)Cash flow from investing activitiesProceeds on disposal of investments






475







Purchase of InterVideo, net of cash acquired


9







(120,912
)


Purchase of capital assets and licences






(7,100
)


(3,848
)


(1,906
)Cash used in investing activities






(6,625
)


(124,760
)


(1,906
)Effect of exchange rate changes on cash and cash equivalents






(175
)


38



(150
)Increase (decrease) in cash and cash equivalents






25,645



(26,415
)


30,284Cash and cash equivalents, beginning of period






24,615



51,030



20,746Cash and cash equivalents, end of period





$
50,260


$
24,615


$
51,030Supplemental disclosures:Cash paid for interest






13,817



16,488



9,613Cash paid for income taxes






3,973



3,208



5,526Share consideration on acquisitions














35,138Purchases of capital assets under capital lease


14







3,074



    75




---



##### Table of Contents



COREL
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF CHANGES IN SHAREHOLDERS (DEFICIT) EQUITY
 (In
    thousands, U.S. dollars)
  AccumulatedOther


Additional


Retained


TotalCorel Common


Comprehensive


Paid in


Earnings


ShareholdersNote


Shares


Loss


Capital


(Deficit)


DeficitBalances at November 30, 2006






24,535


$
30,722


$
(46
)

$
4,612


$
(47,095
)

$
(11,807
)Net loss





















$
(13,062
)

$
(13,062
)Other comprehensive loss













$
(675
)









$
(675
)Stock based compensation


16














$
5,488







5,488Acquisition of InterVideo options


9














$
719







719Options exercised, net of issue costs


16



922


$
9,930






$
(4,893
)






5,037Balances at November 30, 2007






25,457


$
40,652


$
(721
)

$
5,926


$
(60,157
)

$
(14,300
)Net income






















3,707



3,707Other comprehensive loss













$
(3,430
)









$
(3,430
)Stock based compensation


16














$
6,301







6,301Adjustment to Retained Earnings upon implementation of
    FIN 48


12


















$
(952
)

$
(952
)Options exercised


16



366


$
3,340






$
(3,029
)






311Balances at November 30, 2008






25,823


$
43,992


$
(4,151
)

$
9,198


$
(57,402
)

$
(8,363
)     2008


2007


2006Actuarial gain recognized for defined benefit plan (note 15)

$
506


$
931


$
Loss on interest rate swaps designated as hedges (note 2)


(3,614
)


(1,821
)


Unrealized losses on securities (note 7)


(322
)


215



(131
)Other comprehensive income (loss)

$
(3,430
)

$
(675
)

$
(131
)    76




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
    (All amounts in thousands, U.S. dollars, unless otherwise
    stated)
  1.
    Nature
    of Operations  CorelDRAW Graphics Suite, WinZip, WordPerfect Office
    Suite, iGrafx Flow Charter , Corel Painter, Corel DESIGNER
    Techinical Suite, WinDVD, Corel PaintShop Pro Photo, DVD Movie Factory,
    VideoStudio, Photo Impact MediaOne .
  2.
    Summary
    of Significant Accounting Policies  Basis
    of consolidation
    Estimates
    and assumptions
    Accounting Changes and Error Corrections
  Business
    combinations
    Software
    revenue recognition
  97-2, Software Revenue Recognition, SOP 98-9, Modification of
    97-2,
    Software Recognition with Respect to Certain
    Transactions
 77




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Revenue Recognition in Financial Statements,
    SOP 97-2
  when-and-if-available when-and-if-available.
            Cost
    of Revenues
   78




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Allowance
    for product returns and rebate programs
    No. 01-09
  Allowance
    for doubtful accounts
    Other
    comprehensive income (loss)
  Accounting for
    Derivative Instruments and Hedging Activities
  Foreign
    currency translation
   79




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Cash
    equivalents
    Restricted
    cash
    Investments
      Concentration
    of credit risk
        Interest
    rate risk
   80




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Fair
    value of financial instruments
          Fair
    value measurements
  Fair
    Value Measurements
         81




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    QuotedFair Value of


Prices in Active


SignificantAssets


Market for


Other


Significant(Liabilities) at


Identical Assets


Observable


UnobservableNovember 30,


(Liabilities)


Inputs


Inputs2008


(Level 1)


(Level 2)


(Level 3)Long-term investments(1)

$
96


$
96


$



$
Forward exchange contracts(2)


(126
)






(126
)


Interest rate swaps(3)


(6,630
)






(6,630
)


     (1)
    
    The fair value of our long-term investments is based on the
    closing market prices of the investments.(2)
    
    The fair value of our forward exchange contracts is based on
    foreign currency exchange rates as of November 30, 2008.
    The fair value of our interest rate swap agreements is based on
    the present value of expected future cash flows based on
    observable future LIBOR rates(3)
    
    using linear interpolation, inclusive of the risk of
    non-performance, using a discount rate appropriate for the
    duration.  Accelerated
    Debt Payments
    Forward
    exchange contracts
        Accounting for Derivative
    Instruments and Hedgind Activities,
 82




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Interest
    rate swaps
           83




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Inventory
    Long-lived
    assets
    Capital assetsFurniture and fixtures

20-33.3% per year declining balanceComputer equipment  general

Three years straight lineComputer equipment  research and development

20-50% per year declining balanceComputer equipment under capital lease  general

Three years straight lineLeasehold improvements

Straight line over the term of the leaseIntangible assetsLicenses

Straight line over their useful lives, generally three to seven
    yearsAcquired technologies

Straight line over the remaining economic life, generally
    estimated to be two to seven yearsTradenames

Straight line over estimated life of five to seven yearsCustomer relationships

The pattern in which the economic benefits are expected to be
    realized, over an estimated life of seven years.Non-competition agreement

Straight line over two years, the term of the agreement       Goodwill
   84




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Goodwill and Other Intangible
    Assets
    Software
    development costs
      Deferred
    financing charges
    Income
    taxes
    Accounting for
    Uncertainty in Income Taxes
 85




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Investment
    tax credits
    Stock-based
    compensation
    Advertising
    costs
    Defined
    employee benefit plans
  Employers
    Accounting for Defined Benefit Pension and Other Post Retirement
    Plans
  Leases
      Earnings
    per share
    Recent
    accounting pronouncements
  Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133.
 86




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Business Combinations
  142-3, Determination of the Useful Life of Intangible Assets FAS 142-3 FAS 142-3 FAS 142-3
  3.
    Cash
    and Cash Equivalents    November 30, 2008


November 30, 2007Cash on deposit with banksCanadian institutions

$
20,122


$
5,169American institutions


6,451



10,434Other


7,679



4,775Commercial paper


15,983



Term deposits






4,188Other


25



49Cash and Cash Equivalents

$
50,260


$
24,615   4.
    Accounts
    Receivables and Allowance for Doubtful Accounts   87




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    November 30, 2008


November 30, 2007Gross accounts receivable

$
40,306


$
49,576Allowance for doubtful accounts


(1,357
)


(1,366
)Provisions for returns and rebates


(5,708
)


(7,118
)Trade receivables

$
33,241


$
41,092   5.
    Related
    Party Transactions    6.
    Inventory    November 30, 2008


November 30, 2007Product components

$
844


$
310Finished goods


718



419Inventory

$
1,562


$
729   7.
    Investments      Year Ended November 30,2008


2007


2006Equity securities:Fair value

$
96


$
418


$
203Gross unrealized gains


96



418



203Unrealized gains (losses) included in comprehensive income


(322
)


215



(131
)Realized gain on sale of securities










  88




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    Long-Lived
    Assets    November 30, 2008


November 30, 2007Accumulated





AccumulatedCost


Amortization


Cost


AmortizationCapital AssetsFurniture and fixtures

$
2,262


$
1,354


$
2,321


$
1,118Computer equipment  general


12,827



6,988



8,287



4,891Computer equipment  research and development


1,299



899



1,299



797Computer equipment under capital lease  general


2,861



799



3,074



294Leasehold improvements


2,028



688



1,372



28221,277



10,728



16,353



7,382Less: Accumulated amortization


10,728







7,382Net book value

$
10,549






$
8,971   November 30, 2008


November 30, 2007Accumulated





AccumulatedCost


Amortization


Cost


AmortizationIntangible AssetsLicenses

$
6,573


$
5,114


$
4,036


$
2,176Acquired technologies


115,108



70,704



116,378



55,324Trade names


32,368



16,183



32,348



10,956Customer relationships


10,999



6,018



10,999



3,295165,048



98,019



163,761



71,751Less: Accumulated amortization


98,019







71,751Net book value

$
67,029






$
92,010    89




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    EstimatedAmortizationExpense2009


24,8652010


18,5962011


17,0322012


5,8422013


694Total

$
67,029   9.
    Acquisitions  InterVideo
    Acquisition
      Business
    Combinations
  Purchase
    Price
    Cash consideration  InterVideo acquisition

$
198,624Cash consideration  acquisition of remaining interest
    in Ulead


21,731Fair value of stock options assumed


3,503Deferred stock-based compensation


(2,784
)Direct transaction costs


3,751Restructuring costs


3,490Total purchase price

$
228,315   Fair
    value of stock options assumed
   90




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Expected option life (years)

3 to 7Volatility

16.1% to 36.1%Risk free interest rate

4.77% to 4.80%Forfeiture rate

36.79% to 45.11%Dividend yield

Nil     Deferred
    stock-based compensation
      Expected term (in years)


4 to 7Volatility


19.7 to 34.2
%Risk free interest rate


4.45 to 4.49
%Forfeiture rate


36.79 to 45.11
%Dividend yield


Nil     Direct
    transaction costs
   91




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Restructuring
    costs
        Estimated Costsat Completion ofPurchase PriceAllocation on








Balance as atNovember 30,





Change in


November 30,2007


Cash Payments


Estimates


2008Termination benefits

$
2,118


$
2,118






$
Cost of closing redundant facilities


1,372



834



422



116Total

$
3,490


$
2,952


$
422


$
116   No. 95-3, Recognition of Liabilities in Connection with a
    Purchase Business Combination
    Purchase
    Price Allocation
    AmountCash, cash equivalents, and short-term investments

$
106,691Working capital


(26,966
)Capital and other long-term assets


4,056Identifiable definite lived intangible assets


86,577Deferred tax liability


(20,836
)Net assets acquired


149,522Total purchase price


228,315Goodwill from InterVideo acquisition


78,793  92




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Identifiable
    definite lived intangible assets:
    First Year


Estimated Weighted AverageAssigned Value


Amortization


Life (in years)Acquired existing technologies

$
57,520


$
10,874



4.8In-process research and development


7,831







Customer relationships


10,651



3,045



5.4Trade names


10,575



2,115



5.0Total

$
86,577


$
16,034     Deferred
    Tax Liability
    InterVideo
    Integration Expense
   93




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10.
    Goodwill    Balance, November 30, 2006

$
9,850Addition on acquisition of InterVideo (note 9)


78,793Balance, November 30, 2007

$
88,643Reduction of deferred tax liabilities related to Taiwan assumed
    in the InterVideo acquisition (note 12)


(2,761
)Recognition of deferred tax assets pertaining to tax loss
    carryforwards assumed in the Intervideo acquisition
    (note 12)


(3,539
)Balance, November 30, 2008

$
82,343       11.
    Accounts
    Payable and Accrued Liabilities    November 30,


November 30,2008


2007Accrued payroll

$
11,605


$
15,773Accrued interest


240



130Trade accounts payable


8,372



13,769Accrued royalties


30,345



26,816Unrealized losses on interest rate swaps


6,630



3,035Other accrued liabilities


7,184



7,767Accounts payable and accrued liabilities

$
64,376


$
67,290   12.
    Income
    Taxes       94




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Tax YearsCountry

Open for ExaminationCanada


2000 through 2008United States of America


2005 through 2008Taiwan


2003 through 2008       Year Ended November 30,2008


2007


2006Current:Canadian

$



$



$
736Foreign


4,397



3,526



2,6754,397



3,526



3,411Deferred:Canadian










381Foreign


(4,533
)


(83
)


876(4,533
)


(83
)


1,257Income tax expense

$
(136
)

$
3,443


$
4,668     Year Ended November 30,2008


2007


2006Income (loss) before income taxes

$
3,571


$
(9,619
)

$
13,919Expected statutory rate


33.5
%


36.1
%


36.1
%Expected tax expense (recovery)


1,196



(3,472
)


5,025Losses not previously benefited


(12,387
)


(529
)


(601
)Foreign tax rate differences


(9,385
)


(9,248
)


(3,258
)Change in valuation allowance


14,400



8,770



876Non-deductible expenses and non-taxable income


3,145



5,919



1,922Change in estimates


(1,498
)


(1,759
)


Withholding tax on foreign income


4,383



3,519



685Other


10



243



19Reported income tax expense

$
(136
)

$
3,443


$
4,668  95




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    November 30,


November 30,2008


2007Deferred tax assets (liabilities):Net operating losses carried forward

$
29,006


$
75,282Book and tax differences on assets


44,037



53,915Other


34,082



37,716Total deferred tax assets


107,125



166,913Basis difference in InterVideo intangible assets (note 8)


(13,059
)


(20,754
)Valuation allowance for tax assets


(103,987
)


(166,913
)Net deferred tax liability,presented as a current
    deferred tax asset of $3,138 (2007  $nil) and a long
    term deferred tax liability of $13,059 (2007  $20,754)

$
(9,921
)

$
(20,754
)              96




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    13.
    Long-term
    Debt      November 30, 2008


November 30, 2007Current


Long-term


Total


Current


Long-term


TotalTerm loan

$
19,095


$
137,264


$
156,359


$
1,596


$
156,359


$
157,955Promissory note














653







653Total

$
19,095


$
137,264


$
156,359


$
2,249


$
156,359


$
158,608Line of credit

$
75,000










$
75,000Outstanding balance  Letter of Credit


5,608











5,608Available line of credit

$
69,392










$
69,392       Principal


Interest


Total2009


19,095



11,723



30,8182010


1,596



10,590



12,1862011


1,596



9,622



11,2182012


134,072



3,133



137,205Total

$
156,359


$
35,068


$
191,427   Term
    Loan
   97




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            
    a maximum total leverage ratio, which is defined as the ratio of
    total debt to trailing four quarter consolidated Adjusted
    EBITDA, as defined in the credit agreement, to be less than
    specified amounts over the term of the facility as follows:  Period

RatioThrough to November 29, 2007


3.50November 30, 2007 through November 29, 2008


3.25November 30, 2008 through November 29, 2009


3.00November 30, 2009 through November 29, 2010


2.75November 30, 2010 through November 29, 2011


2.50November 30, 2011, thereafter


2.25  98




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  
    a minimum fixed charge coverage ratio, which is defined as the
    ratio of trailing four quarter consolidated Adjusted EBITDA to
    fixed charges (fixed charges include interest paid, scheduled
    repayment of principal on long-term debt, capital expenditures
    and taxes paid and witheld) as follows:  Period

RatioThrough to Nov 29, 2010


2.00November 30, 2010 through November 29, 2011


2.25November 30, 2011, thereafter


2.50     Promissory
    Note
    14.
    Commitments
    and Contingencies  Operating
    leases
        OperatingLeases2009

$
4,5742010


4,5222011


4,2892012


3,9602013


3,1872014 and thereafter


6,373$
26,905    99




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Obligations
    under Capital Leases
    CapitalLeases2009


7202010


6022011


2852012


147Total minimum lease payments

$
1,754Interest included in minimum payments at rates varying between
    6.94% to 7.89%


171Present value of minimum lease payments


1,583Less current portion


621Obligation under capital lease long-term

$
962   Customer
    Indemnification
  Guarantors Accounting and Disclosure
    Requirements for Guarantees, Including Indirect Guarantees of
    Indebtedness of Others
  Legal
    Proceedings
     100




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Victor Company of Japan, Ltd (JVC) v. Corel
    Corporation, InterVideo, Inc., Cyberlink Corp. et al.,
  15.
    Employee
    pension plans  Defined
    contribution and retirement savings plan
      Defined
    pension benefit plan
     101




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007Fair value as of December 1, 2007 and 2006, respectively

$
1,111


$
Fair value on acquisition date of December 12, 2006






967Actual return on plan assets


45



26Employer contributions


102



118Other


(88
)


Fair value of plan assets at November 30

$
1,170


$
1,111Projected benefit obligation at December 1, 2007 and 2006
    respectively

$
2,227


$
Projected benefit obligation on acquisition date of
    December 12, 2006






3,015Service cost


43



59Interest cost


60



84Actuarial gain


(501
)


(931
)Curtailment gains


(281
)


Other


(117
)


Projected benefit obligation at November 30

$
1,431


$
2,227Unfunded balance at November 30 (non-current)

$
261


$
1,116     2008


2007Average increase in compensation levels


4.00
%


4.50
%Discount rate


2.75
%


2.75
%     Other
    Comprehensive Income
     102




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Pension
    Benefit Expense (Income)
    2008


2007Service cost

$
43


$
59Interest cost


60



84Expected return on plan assets


(45
)


(26
)Curtailment gains


(212
)


Amortization and Deferrals


(30
)


Net periodic costs (gains) for the year ending November 30

$
(184
)

$
117     2008


2007Discount rate


2.75
%


2.75
%Average increase in compensation levels


4.50
%


6.00
%Expected long-term return on assets


2.75
%


2.75
%       16.
    Shareholders
    Equity    Corel
    Common Shares
  winding-up
    Corel
    preferred shares
   103




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    winding-up
  winding-up,
  Share
    Option Plans
    Year Ended November 30,2008


2007


2006Cost of products

$
23


$
47


$
26Cost of maintenance and services


8



9



8Sales and marketing


1,873



1,465



770Research and development


983



1,168



306General and administration


3,414



2,799



2,122Total stock-based compensation expense

$
6,301


$
5,488


$
3,232    104




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year Ended November 30,2008


2007


2006Expected option life (years)


7



7



7Volatility


29.60
%


31.25
%


36.13
%Risk free interest rate


3.20
%


4.60
%


4.33
%Dividend yield


Nil



Nil



NilForfeiture rate


16.50
%


16.46
%


16.82
%     2006
    Equity Incentive Plan
       105




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended November 30, 2008WeightedWeighted


AverageAverage


GrantExercise


Date FairOptions


Price


ValueOutstanding at beginning of period


2,714,465


$
12.60


$
4.66Options granted


928,081



10.31



3.12Options exercised


(32,052
)


5.00



5.36Options forfeited


(826,463
)


12.99



4.34Outstanding at end of period


2,784,031


$
11.81


$
4.21Exercisable at end of period


1,100,619


$
12.19


$
4.26Options vested during the year


669,056






$
4.94Weighted average remaining life of the outstanding options


8.34 YearsWeighted average remaining life of the exercisable options


7.68 YearsTotal intrinsic value of the exercisable options

$
127Total intrinsic value of the outstanding options

$
182   Year EndedNovember 30,2008


2007


2006Intrinsic value of options exercised


142



1,460



20Fair value of shares vested


3,306



2,267



291  106




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended November 30, 2008WeightedAverageGrantDate FairOptions


ValueOutstanding at beginning of period

$
102,500


$
13.26Restricted share units granted


59,000



9.78Restricted share units converted to common shares


(55,000
)


13.45Restricted share units forfeited


Nil



N/AOutstanding at end of period


106,500


$
11.24Exercisable at end of period


10,000


$
10.10Restricted share units vested during the year


62,500


$
13.52Weighted average remaining life of the outstanding restricted
    share units


9.23 YearsWeighted average remaining life of the exercisable restricted
    share units


9.27 YearsTotal intrinsic value of the exercisable restricted share units


42Total intrinsic value of the outstanding restricted share units

$
450   Year Ended November 30,2008


2007


2006Intrinsic value of restricted share units exercised


553



95



n/aFair value of restricted share units vested


845



105



n/a   2003 Share
    Option and Phantom Share Unit Plan
     107




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Year EndedNovember 30, 2008


WeightedWeighted


AverageAverage


GrantExercise


Date FairUnits


Price


ValueOutstanding at beginning of period


813,940


$
2.31


$
7.24Units granted


Nil



n/a



n/aUnits exercised


(286,079
)


1.17



8.06Units forfeited


(23,362
)


9.82



6.20Outstanding at end of period


504,499


$
2.61


$
5.35Exercisable at end of period


468,464


$
2.24


$
5.14Units vested during the year


207,624






$
7.43Weighted average remaining life of the outstanding units


5.88 YearsWeighted average remaining life of exercisable units


5.81 YearsTotal intrinsic value of exercisable units

$
1,327Total intrinsic value of outstanding units

$
1,389   Year Ended November 30,2008


2007


2006Intrinsic value of units exercised


2,541



4,760



415Fair value of units vested


1,542



2,346



1,897   17.
    Restructuring
    Charges   108




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              Costs of ClosingTermination


RedundantBenefits


Facilities


TotalBalance accrued as of December 1, 2007

$
1,184


$
263


$
1,447Activity during the year ended November 31, 2008Additional restructuring charges


3,308



15



3,323Changes in estimates


(201
)


(244
)


(445
)Cash payments


(3,780
)


(34
)


(3,814
)Balance accrued as of November, 2008

$
511


$
nil


$
511   18.
    Earnings
    (loss) per share    19.
    Segment
    Reporting  Disclosures about Segments of an Enterprise and Related
    Information
 109




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Graphics and Productivity Digital Media.
            Year Ended November 30,2008


2007


2006By product:Graphics and Productivity

$
149,513


$
141,692


$
137,741Digital Media


118,717



108,788



39,450$
268,230


$
250,480


$
177,191By geographic region:AmericasCanada

$
6,931


$
10,122


$
8,682United States


116,453



111,116



91,571Other


5,653



4,741



4,194Europe, Middle East, Africa (EMEA)


79,164



72,932



58,253Asia-PacificJapan


42,920



36,164



8,753Other


17,109



15,405



5,738$
268,230


$
250,480


$
177,191  110




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##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  20.
    Changes
    in operating assets and liabilities    Year Ended November 30,2008


2007


2006Accounts receivable


4,292



(8,532
)


500Due to/from related parties


341



(167
)


73Inventory


(833
)


1,534



(188
)Prepaids and other current assets


172



413



43Accounts payable and accrued liabilities


(6,622
)


(2,314
)


(3,389
)Income taxes


1,584



654



(1,669
)Deferred revenue


(478
)


3,174



894Total

$
(1,544
)

$
(5,238
)

$
(3,736
)   21.
    Expenses
    Associated with Evaluation of Strategic
    Alternatives          22.
    Prior
    Period Balances   111




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##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Evaluation of Disclosure Controls and
    Procedures. Rule 13a-15(e)
  Form 10-K,
  Managements Report on Internal Control over Financial
    Reporting. Rule 13a-15(f)
  Internal Control  Integrated Framework.
  Form 10-K.
  Changes in Internal Control over Financial
    Reporting.
  ITEM 9B.
    OTHER
    INFORMATION   112




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##### Table of Contents



PART III  ITEM 10.
    DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT    Name

Age

PositionKris Hagerman


44


Interim Chief Executive OfficerDouglas McCollam


55


Chief Financial OfficerJeffrey Hastings


44


President and General Manager, Digital MediaNicholas Davies


46


Senior Vice President and General Manager, Graphics and
    ProductivityAmanda Bedborough


39


Executive Vice President, International OperationsKevin Thornton


41


Senior Vice President, Sales and Marketing, AmericasKazuo Sakai


57


Senior Vice President, Asia Pacific and Japan Operations and
    President, Corel JapanGraham Brown


45


Chief Technology OfficerJeremy Liang


52


Senior Vice President, Digital Media DevelopmentShawn Cadeau


37


Senior Vice President, Corporate MarketingSteven Cohen(1)(2)(3)


43


DirectorJ. Ian Giffen(1)(2)(4)


51


DirectorAmish Mehta(3)


35


DirectorAlexander Slusky(3)(4)


41


Chairman, Board of DirectorsDaniel T. Ciporin(1)(2)


51


Director     (1)
    
    Independent director(2)
    
    Member of Audit Committee(3)
    
    Member of Compensation Committee(4)
    
    Member of Nominating and Corporate Governance Committee  Kris Hagerman go-to-market
  Douglas McCollam
  Jeffrey Hastings
 113




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##### Table of Contents



Nicholas Davies
  Amanda Bedborough
  Kevin Thornton Coca-Cola
  Kazuo Sakai
  Graham Brown
  Jeremy Liang
  Shawn Cadeau e-business
  Steven Cohen
 114




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##### Table of Contents



J. Ian Giffen
  Amish Mehta
  Alexander Slusky
  Daniel T. Ciporin
    Board of
    Directors
      Committees
    of the Board
   115




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##### Table of Contents



Audit Committee and Audit Committee Financial
    Expert.
    
    the integrity of our financial statements;
    our compliance with legal and regulatory matters;
    our independent registered public accounting firms
    qualifications and independence; and
    the performance of our internal audit function and independent
    registered public accounting firm.    
    compensating, retaining and overseeing the work of our
    independent registered public accounting firm;
    recommending to the Board of Directors that the audited annual
    financial statements be included in the Companys annual
    report of
    Form 10-K
    for the last fiscal year;
    establishing procedures for (a) receipt and treatment of
    complaints on accounting and other related matters and
    (b) submission of confidential employee concerns regarding
    questionable accounting or auditing matters;
    pre-approving any non-audit services by our independent
    registered public accounting firm;
    reviewing and discussing the audited financial statements with
    management;
    discussing with the independent auditors the matters required by
    Auditing Standards No. 61; and
    receiving written disclosures and the letter from the
    independent accountants required by ISB No. 1 and
    discussing with the independent accountants their independence.      Compensation Committee.
  
    to review and approve goals and objectives relating to the
    compensation of our interim chief executive officer and, based
    upon a performance evaluation, to determine and approve the
    compensation of the interim chief executive officer;
    to make recommendations to our Board of Directors on the
    compensation of other executive officers and on incentive
    compensation and equity-based plans; and
    to produce reports on executive compensation to be included in
    our public filings to the extent required by applicable
    securities laws or listing requirements.  Nominating and Corporate Governance
    Committee.
  
    to identify individuals qualified for membership on our Board of
    Directors and to select, or recommend for selection, director
    nominees; 116




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##### Table of Contents




    to develop and recommend to our Board of Directors a set of
    corporate governance principles; and
    to oversee the evaluation of our Board of Directors and
    management.  Disclosure
    Policy
    
    articulates legal obligations with respect to confidential
    corporate information;
    identifies spokespersons who are the persons authorized to
    communicate with third parties such as analysts, media and
    investors;
    provides guidelines on the disclosure of forward-looking
    information;
    establishes procedures for reviewing disclosure, prohibiting
    selective disclosure of material information and addressing
    inadvertent disclosure; and
    establishes periods prior to the disclosure of certain financial
    information and material changes during which trading in our
    common shares by insiders is prohibited.  Section 16(a)
    Beneficial Ownership Reporting Compliance
  Rule 3a12-3
  Code of
    Ethics
  http://investor.corel.com/documents.cfm (613) 728-0826. Form 8-K
  ITEM 11.
    EXECUTIVE
    COMPENSATION  Regulation S-K, Form 20-F
 117




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##### Table of Contents



Summary
    Compensation Table
    Long-Term CompensationSecurities


SharesAnnual Compensation(1)


Underlying


Subject toName And Principal










Other Annual


Options


Resale


LTIP


All OtherPosition

Fiscal Year


Salary


Bonus


Compensation


Granted


Restrictions


Payments


CompensationKris Hagerman


2008


$
336,000


$
224,000







326,760











Interim Chief Executive OfficerDavid Dobson


2008


$
239,634


$
247,340


















$
194,928
(2)Former Chief Executive Officer


2007


$
385,566


$
323,700



56,051
(3)


200,000











2006



376,820



369,284


$
679,676
(4)














Douglas McCollam


2008



249,634



202,602



















Chief Financial Officer


2007



232,269



178,800







30,000











2006



227,000



245,160



















Jeff Hastings


2008



300,000



294,983







40,000











President and General Manager, Digital Media


2007



92,400



92,400







200,000
(5)










Amanda Bedborough


2008



342,025



263,961







30,000











Executive VP, International Operations


2007



344,972



367,826







40,000
(6)










2006



305,688



203,254



















Kevin Thornton


2008



264,000



215,515







25,000











Senior Vice President, Sales and Marketing, Americas


2007



66,000



44,000







40,000











     (1)
    
    Excludes perquisites and other benefits because such
    compensation is less then CDN$50,000 and 10% of the total annual
    salary and bonus for any of the Named Executive Officers.(2)
    
    In fiscal 2008, subsequent to his resignation as our Chief
    Executive Officer, Mr. Dobson received CDN$200,000, or
    US$194,928 based on the exchange rate at the time, for
    consulting services that he completed for the Special Committee
    which evaluated the Vector Capital purchase offer.(3)
    
    In fiscal 2007, Mr. Dobson received other annual
    compensation of $56,051 relating to housing benefits of $35,482,
    vehicle allowance of $7,519, and travelling allowances of
    $13,050 for travel between his primary residence and our
    corporate head office during 2007.(4)
    
    In fiscal 2006, Mr. Dobson received other annual
    compensation of $252,324 relating to loans forgiven in our
    fiscal year ended November 30, 2006, and $4,844 for
    retirement plan payments. In addition, during fiscal 2006, we
    repurchased options from Mr. Dobson that were previously
    granted to him pursuant to the terms of his employment
    agreement, for an aggregate amount of $427,352, of which half
    was applied as a repayment against a loan and half to help
    defray additional expenses incurred in connection with his
    relocation to Canada.(5)
    
    These grants include 50,000 restricted share units(6)
    
    These grants include 20,000 restricted share units 118




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##### Table of Contents



Option
    Grants during the Fiscal Year Ended November 30, 2008 to
    Named Executive Officers
    % of Total





Market ValueNumber of Shares


Options Granted


Exercise Price


of SecuritiesUnderlying Options


to Employees


Per Share


Underlying


ExpirationName

Granted


in Fiscal Year(1)


($/Security)


Options(2)


DateKris Hagerman


326,760



33.1



10.87



Nil



May 8,2018David Dobson


Nil



n/a



n/a



Nil



n/aDouglas McCollam


Nil



n/a



n/a



Nil



n/aJeff Hastings


40,000



4.1



10.10



Nil



March 6, 2018Amanda Bedborough


30,000



3.0



10.10



Nil



March 6, 2018Kevin Thornton


25,000



2.5



10.10



Nil



March 6, 2018     (1)
    
    In fiscal 2008, options were granted representing a total of
    987,051 underlying shares of which 59,000 were designated as
    restricted share units. None of the above grants were for
    restricted share units.(2)
    
    Based on the difference between the exercise price per share and
    the closing market price per share on the NASDAQ as at
    November 30, 2008, of $4.23.  Aggregate
    Options Exercised During the Fiscal Year Ended November 30,
    2008, Most Recently Completed Financial Year and Option Values
    at November 30, 2008 for Named Executive Officers
    Value of UnexercisedUnexercised Options at


In-the-Money Options as atShares Acquired


Aggregate Value


November 30, 2008


November 30, 2008(1)Name

On Exercise


Realized


Exercisable


Unexercisable


Exercisable


UnexercisableKris Hagerman


Nil



Nil



163,380



163,380


$
Nil


$
NilDavid Dobson


203,357


$
1,776,922



13,540



Nil



41,432



NilDouglas McCollam


Nil



Nil



97,031



20,887



262,490



6,539Jeff Hastings


25,000
(2)


240,094



37,500



177,500
(2)


Nil



105,750
(2)Amanda Bedborough


5,000
(3)


54,100



78,672



60,270
(3)


225,436



64,276
(3)Kevin Thornton


Nil



Nil



10,000



55,000



Nil



Nil     (1)
    
    Based on the difference between the exercise price per share and
    the closing market price per share on the NASDAQ as at
    November 30, 2008 of $4.23.(2)
    
    All of the shares acquired by Mr. Hastings were through the
    exercise of restricted share units. As of November 30,
    2008, Mr. Hastings has 25,000 unexercisable restricted
    share units which have a value of $105,750.(3)
    
    All of the shares acquired by Ms. Bedborough were through
    the exercise of restricted share units. As of November 30,
    2008, Ms. Bedborough has 15,000 unexercisable restricted
    share units which have a value of $64,276.  Compensation
    Committee Interlocks and Insider Participation
   119




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##### Table of Contents



Compensation
    of Directors and Executive Officers
        Material
    Terms and Conditions of Employment Agreements
    Kris Hagerman.
  David Dobson.
  Douglas McCollam.
 120




---



##### Table of Contents



Amanda Bedborough.
  Jeff Hastings.
  Kevin Thornton.
  Key
    Resource Bonus
    Composition
    of the Compensation Committee
     121




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##### Table of Contents



Report on
    Executive Compensation
    
    oversee our compensation and benefits policies generally;
    oversee and set compensation for our executive officers;
    evaluate executive officer performance and review our management
    succession plan; and
    review compensation related disclosure to be filed or submitted
    by us.  http://investor.corel.com/documents.cfm (613) 728-0826.
                    122




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##### Table of Contents



Performance
    Graphs
    Canadian Dollar

US Dollar(LINE GRAPH)

(LINE GRAPH)   Indebtedness
    of Directors, Officers and Others
  Certain Relationships and Related Transactions
  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
    MANAGEMENT  Beneficial
    Ownership
    
    each person who is known by us to own beneficially 5% or more of
    our common shares;
    each member of our Board;
    each of the Named Executive Officers; and
    all members of our Board and our executive officers as a group.   123




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##### Table of Contents



Principal
    Shareholders Table
  Name and Address of Beneficial Owner(1)

Number of Common Shares


Percent of ClassFive Percent ShareholderVector Capital


17,657,614
(2)


68.38
%Executive Officers and DirectorsAlexander Slusky(3)


17,691,662
(3)


68.51
%Kris Hagerman


272,300
(4)


1.05
%David Dobson


13,540
(5)


*Douglas McCollam


99,440
(6)


*Jeff Hastings


63,125
(7)


*Amanda Bedborough


88,942
(8)


*Kevin Thornton


18,750
(9)


*Amish Mehta(10)


16,169
(11)


*Steven Cohen


16,969
(12)


*J. Ian Giffen


32,732
(13)


*Daniel T. Ciporin


21,875
(14)


*All directors and executive officers as a group (17 persons)


18,427,856
(15)


71.35
%     *
    
    Less than 1%.(1)
    
    Except as otherwise indicated, the address for each beneficial
    owner is
    c/o Corel
    Corporation, 1600 Carling Avenue, Ottawa, Ontario, Canada
    K1Z 8R7.(2)
    
    All of these shares are held, directly or indirectly by Corel
    Holdings, L.P., a Cayman Islands limited partnership. The sole
    general partner of Corel Holdings, L.P. is Vector Capital
    Partners II International Ltd., which is wholly owned by
    VCPII International LLC. The managing member of VCPII
    International LLC is Alexander Slusky. The address for Corel
    Holdings, L.P. is
    c/o Vector
    Capital, 456 Montgomery Street, 19th Floor, San Francisco,
    California 94104.(3)
    
    Includes 34,048 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    January 28, 2009 all of which are vested. With respect to
    the remaining 17,657,614 shares, Mr. Slusky, a
    principal of Vector Capital, has voting and investment power
    over the common shares owned by Vector Capital and therefore
    beneficially owns the common shares held by Vector Capital.
    Mr. Slusky, however, disclaims beneficial ownership of
    these common shares, except to the extent of his pecuniary
    interest in them. The address for Mr. Slusky is
    c/o Vector
    Capital, 456 Montgomery Street, 19th Floor, San Francisco
    California 94104(4)
    
    Consists of 272,300 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    January 28, 2009, all of which are vested.(5)
    
    Consists of 13,540 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    January 28, 2009, all of which are vested.(6)
    
    Consists of 99,440 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    January 28, 2009, all of which are vested.(7)
    
    Consists of 63,125 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    January 28, 2009, all of which are vested.(8)
    
    Consists of 88,942 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    January 28, 2009, all of which are vested. 124




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##### Table of Contents



(9)
    
    Consists of 18,750 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    January 28, 2009, all of which are vested.(10)
    
    Mr. Mehta, a principal of Vector Capital, does not have
    voting or investment power over the common shares beneficially
    owned by Vector Capital. The address for Mr. Mehta is
    c/o Vector
    Capital, 456 Montgomery Street, 19th Floor,
    San Francisco, California 94104.(11)
    
    Consists of 16,169 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    January 28, 2009, all of which are vested.(12)
    
    Consists of 16,969 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    January 28, 2009, all of which are vested.(13)
    
    Consists of 32,732 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    January 28, 2009, all of which are vested.(14)
    
    Consists of 21,875 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    January 28, 2009, all of which are vested.(15)
    
    Includes 766,242 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    January 28, 2009, all of which are vested, and the
    17,657,614 common shares of Vector Capital which are
    beneficially owned by Alexander Slusky.  Securities
    Authorized For Issuance Under Equity Compensation
    Plans
    Number of SecuritiesNumber of Common





Remaining AvailableShares to be Issued


Weighted-Average


for Future Issuanceupon Exercise of


Exercise Price of


under EquityPlan Category

Name of Plan

Outstanding Options


Outstanding Options


Compensation PlanOption Plans approved by our Shareholders

2003 Share Option and Phantom Share Unit Plan


504,499


$
2.61



2006 Equity Incentive Plan


2,890,531
(1)

$
11.37



3,358,974Totals




3,395,030


$
10.07



3,358,974     (1)
    
    Included in this balance are options granted by InterVideo to
    its employees prior to our acquisition of InterVideo, which
    options, upon exercise, are convertible into 300,103 of our
    common shares.  Equity
    Incentive Plan and Other Compensation Plans
  Equity
    Incentive Plan
    Share Reserve.
 125




---



##### Table of Contents



Administration of Awards. Rule 16b-3
  Stock options.
  Share Appreciation Rights.
 126




---



##### Table of Contents



Restricted Shares.
  Restricted Share Units.
  Performance Share Units.
  Deferred Share Units.
  Other Share-Based Awards.
  Effect of a Significant Event.
 127




---



##### Table of Contents




    a person or group of persons (other than Vector Capital and its
    affiliates) becomes the beneficial owner of securities
    constituting 50% or more of our voting power;
    50% of our current Board (including any successors approved by
    50% of our current Board) cease to constitute 50% of the Board;
    a merger, consolidation, amalgamation or arrangement (or a
    similar transaction) involving us occurs, unless after the
    event, 50% or more of the voting power of the combined company
    is beneficially owned by stockholders who owned all of our
    common shares immediately before the event; or
    our shareholders approve a plan of complete liquidation or
    winding-up
    of us, or the sale or disposition of all or substantially all
    our assets (other than a transfer to an affiliate).  Transferability.
  Section 162(m) Provisions.
  Additional Provisions.
  Prior
    Incentive Plans
       128




---



##### Table of Contents



ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS    Form 10-K),
    ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES  Form 10-K.
  Audit
    Fees
  Form F-1,
  Tax
    Fees
    All Other
    Fees
     129




---



##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES      Form 10-K.
        ExhibitNumber

Exhibit2
.1

Stock Purchase Agreement dated May 1, 2006 by and among
    Vector CC Holdings IV, SRL, WinZip Computing LLC, Cayman Ltd.
    Holdco and Corel Corporation, incorporated by reference to
    exhibit 2.2 of the Companys
    Form 10-Q
    filed with the Commission on May 5, 20062
.2

Agreement and Plan of Merger, dated as of August 28, 2006,
    among Corel Corporation, Iceland Acquisition Corporation and
    InterVideo Inc., incorporated by reference to exhibit 2.1
    to the Companys
    Form 8-K
    filed with the Commission on August 31, 20063
.1

Certificate and Articles of Continuance, incorporated by
    reference to exhibit 3.1 of the Companys Registration
    Statement on
    Form F-1
    filed with the Commission on April 25, 20063
.2

Articles of Amendment, incorporated by reference to
    exhibit 3.2 of the Companys Registration Statement on
    Form F-1
    filed with the Commission on April 25, 20063
.3

By-laws, incorporated by reference to exhibit 3.2 of the
    Companys Registration Statement on
    Form F-1
    filed with the Commission on April 25, 20064
.1

Form of Registration Rights Agreement by and among Corel
    Corporation and the stockholders named therein, incorporated by
    reference to exhibit 4.1 of the Companys Registration
    Statement on
    Form F-1
    filed with the Commission on April 25, 20064
.2

Form of Corel Corporation Share Certificate, incorporated by
    reference to exhibit 4.2 of the Companys Registration
    Statement on
    Form F-1
    filed with the Commission on April 25, 200610
.1

Form of Credit Agreement by and among Corel Corporation, Corel
    US Holdings, LLC, Morgan Stanley Senior Funding Inc.,
    J.P. Morgan Securities Inc. and Deutsche Bank Securities
    Inc. and a syndicate of financial institutions, incorporated by
    reference to exhibit 2.2 of the Companys
    Form 10-Q
    filed with the Commission on May 5, 200610
.2

First Amendment and Waiver to Credit Agreement dated as of
    December 12, 2006, incorporated by reference to
    exhibit 99.1 of the Companys
    Form 8-K
    filed with the Commission on December 14, 200610
.3

Employment Agreement between Corel Corporation and David Dobson,
    incorporated by reference to exhibit 10.2 of the
    Companys Registration Statement on
    Form F-1
    filed with the Commission on April 25, 200610
.4

Employment Agreement between Corel Corporation and Douglas
    McCollam, incorporated by reference to exhibit 10.3 of the
    Companys Registration Statement on
    Form F-1
    filed with the Commission on April 25, 200610
.5

Employment Agreement between Corel Corporation and Amanda
    Bedborough, incorporated by reference to exhibit 10.5 of
    the Companys Registration Statement on
    Form F-1
    filed with the Commission on April 25, 200610
.6*

Employment Agreement between Corel Corporation and Kris Hagerman10
.7*

Employment Agreement between Corel Corporation and Jeff Hastings10
.8*

Employment Agreement between Corel Corporation and Kevin
    Thornton 130




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##### Table of Contents



ExhibitNumber

Exhibit10
.9

2003 Share Option and Phantom Unit Plan, incorporated by
    reference to exhibit 10.7 of the Companys
    Registration Statement on
    Form F-1
    filed with the Commission on April 25, 200610
.10

2006 Equity Incentive Plan, incorporated by reference to
    exhibit 10.8 of the Companys Registration Statement
    on
    Form F-1
    filed with the Commission on April 25, 200610
.11

Form of Equity Award, incorporated by reference to
    exhibit 10.9 of the Companys Registration Statement
    on
    Form F-1
    filed with the Commission on April 25, 200610
.12

InterVideo, Inc. 1998 Stock Plan, incorporated by reference to
    exhibit 99.1 of the Companys Registration Statement
    on
    Form S-8
    filed with the Commission on December 14, 200610
.13

InterVideo, Inc. 2003 Stock Plan, incorporated by reference to
    exhibit 99.2 of the Companys Registration Statement
    on
    Form S-8
    filed with the Commission on December 14, 200610
.14

Form of Officer and Director Indemnification Agreement,
    incorporated by reference to exhibit 10.10 of the
    Companys Registration Statement on
    Form F-1
    filed with the Commission on April 25, 200610
.15

Advisory Services Expense Reimbursement Agreement, incorporated
    by reference to exhibit 10.12 of the Companys
    Registration Statement on
    Form F-1
    filed with the Commission on April 25, 200610
.16*

Transition Agreement with former chief executive officer David
    Dobson10
.17*

Amended 2006 Equity Incentive Plan (amended for an additional
    2,000,000 common shares to be made available for issuance, as
    authorized in May 2008)21
.1*

Subsidiaries of Corel Corporation23
.1*

Consent of PricewaterhouseCoopers LLP31
.1*

Rule 13a-14(a)/15d-14(a)
    Certification of the Interim Chief Executive Officer31
.2*

Rule 13a-14(a)/15d-14(a)
    Certification of the Chief Financial Officer32
.1*

Section 1350 Certification of the Interim Chief Executive
    Officer32
.2*

Section 1350 Certification of the Chief Financial Officer99
.1*

Schedule II  Valuation and Qualifying Accounts     *
    
    Filed herewith. 131




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##### Table of Contents



SIGNATURES
      By:
    /s/  KRIS
    HAGERMAN       SIGNATURE

TITLES/s/  KRIS
    HAGERMANKris
    Hagerman

Interim Chief Executive Officer (principal executive officer)/s/  DOUGLAS
    MCCOLLAMDouglas
    McCollam

Chief Financial Officer (principal financial and accounting
    officer)/s/  DANIEL
    J. CIPORINDaniel
    J. Ciporin

Director/s/  STEVEN
    COHENSteven
    Cohen

Director/s/  J.
    IAN GIFFENJ.
    Ian Giffen

Director/s/  AMISH
    MEHTAAmish
    Mehta

Director (authorized representative in the United States)/s/  ALEXANDER
    SLUSKYAlexander
    Slusky

Director  132