##### 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,
    2007oro

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.)
     (Address of principal executive
    offices, including zip code)
  (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
  Rule 12b-2
  o þ o o
   Rule 12b-2 o þ




---



##### 





TABLE OF
    CONTENT
  
  PagePART IITEM 1.


BUSINESS


1ITEM 1A.


RISK FACTORS


13ITEM 1B.


UNRESOLVED STAFF COMMENTS


25ITEM 2.


PROPERTIES


25ITEM 3.


LEGAL PROCEEDINGS


25ITEM 4.


SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


26PART IIITEM 5.


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


27ITEM 6.


SELECTED FINANCIAL DATA


31ITEM 7.


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


35ITEM 7A.


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


65ITEM 8.


FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


66ITEM 9.


CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE


107ITEM 9A.


CONTROLS AND PROCEDURES


107ITEM 9B.


OTHER INFORMATION


107PART IIIITEM 10.


DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT


108ITEM 11.


EXECUTIVE COMPENSATION


113ITEM 12.


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


117ITEM 13.


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


123ITEM 14.


PRINCIPAL ACCOUNTANT FEES AND SERVICES


123PART IVITEM 15.


EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


124EX-21.1: SUBSIDIARIESEX-23.1: CONSENT OF PRICEWATERHOUSECOOPERS LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.1: CERTIFICATIONEX-99.1: SCHEDULE II   i




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##### Table of Contents



INFORMATION
    REGARDING FORWARD-LOOKING STATEMENTS
  Form 10-K
   PART I  ITEM 1.
    BUSINESS  e-Stores,
    Graphics
    and Productivity
  CorelDRAW
    Graphics Suite, Corel Painter, Corel DESIGNER, WinZip iGrafx WordPerfect Office Suite. CorelDRAW
    Graphics Suite Corel Painter ® Corel DESIGNER Technical
    Suite WinZip iGrafx WordPerfect
    Office Suite
 1




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##### Table of Contents



Digital
    Media
  Corel Paint Shop
    Pro Corel Media One WinDVD, VideoStudio, DVD Movie Factory, DVD
    Copy PhotoImpact. Corel Paint Shop Pro Corel Media One WinDVD VideoStudio DVD Movie Factory DVD Copy Photo Impact
  Corporate
    History
  Canada Business
    Corporations Act CorelDRAW WordPerfect Business Corporations Act (Ontario).
  Corel Paint Shop Pro Corel Photo Album
  Canada Business Corporations Act. WinZip
  Fiscal
    2007 Activity
  Acquisition
    of InterVideo
     2




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##### Table of Contents



WinDVD, VideoStudio, DVD Movie Factory, DVD Copy PhotoImpact.
      CorelDRAW
    Graphics Suite, Corel Painter, Corel DESIGNER, WinZip iGrafx WordPerfect Office Suite. Paint Shop Pro, MediaOne
  November
    2007 Restructuring
    Our
    Industry
    Our
    Strategy
    
    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 3




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##### Table of Contents



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 graphics and 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.  
    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.  
    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.  
    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-Store. 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. However, expansion of our
    operations in these emerging markets will involve a number of
    risks, challenges and uncertainties. See
    Item 1A  Risk Factors  We
    are subject to risks associated with international operations
    that may harm our business.
    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 4




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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.  Our
    Products
    Year of


FiscalInitial


Quarter of


CurrentRelease


Latest Release


VersionGraphics and Productivity:CorelDRAW Graphics Suite


1989



Q1 2008



14Corel Designer Technical Suite


1995



Q2 2005



12Corel Painter


1991



Q1 2007



10WinZip


1991



Q4 2006



11iGrafx FlowCharter


1991



Q2 2007



12WordPerfect Office Suite


1982



Q1 2006



13Digital MediaPaint Shop Pro


1991



Q4 2007



12MediaOne


2007



Q4 2007



2WinDVD


1999



Q4 2006



8VideoStudio


1999



Q2 2007



11DVD Movie Factory


2001



Q1 2007



6DVD Copy


2003



Q3 2006



5PhotoImpact


1996



Q3 2006



12   Graphics
    and Productivity
  CorelDRAW,
    Corel Painter, Corel Designer Technical Suite, WinZip, iGrafx
    FlowCharter, WordPerfect Office Suite
  CorelDRAW Graphics Suite.  CorelDRAW Graphics Suite CorelDraw Graphics Suite
  CorelDRAW Graphics Suite CorelDRAW
    Graphics Suite
  Corel Painter.  Corel Painter Corel Painter
 5




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##### Table of Contents



Corel Painter Corel Painter
  Corel Painter Essentials
  Corel DESIGNER Technical Suite.  Corel DESIGNER
    Technical Suite Corel DESIGNER Corel PHOTO-PAINT Corel TRACE Corel DESIGNER Professional Corel DESIGNER Technical Suite Corel DESIGNER Technical Suite Corel DESIGNER Technical Suite
  WinZip. WinZip WinZip WinZip
    E-mail
    Companion WinZip Self Extractor. WinZip WinZip WinZip WinZip
    E-Mail
    Companion WinZip WinZip Self Extractor WinZip
  WinZip WinZip WinZip WinZip
  iGrafx Flowcharter (iGrafx). iGrafx iGrafx iGrafxs iGrafx
  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
 6




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##### Table of Contents



WordPerfect Office
    Suite
  Digital
    Media
  Corel Paint Shop Pro Corel Photo Album, MediaOne WinDVD,
    VideoStudio, DVD Movie Factory, DVD Copy PhotoImpact.
  Corel Paint Shop Pro.  Corel Paint Shop Pro Corel Paint
    Shop Pro Corel Paint Shop
    Pro
  MediaOne Plus. MediaOne Plus all-in-one MediaOne Plus MediaOne Plus
  WinDVD.  WinDVD WinDVD WinDVD
  VideoStudio. Video Studio Video Studio Plus Video Studio Video Studio Plus YouTube tm
  DVD MovieFactory. DVD Movie Factory DVD Movie
    Factory
  DVD Copy.  DVD Copy DVD Copy iPhone tm
  PhotoImpact.  PhotoImpact PhotoImpact PhotoImpact DVD MovieFactory VideoStudio
  Corel Photo Album.  Corel Photo Album Corel Photo Album
 7




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##### Table of Contents



back-ups Corel
    Photo Album Corel Photo
    Album
  LinDVD.  LinDVD
  Customer
    Support
    Distribution,
    Sales and Marketing
  Distribution
    OEMs.
  Internet Distribution. e-Stores e-Store e-Store
  Retail and Reseller.
  
    retailers including Office Depot, Best Buy, CompUSA, Staples,
    Office Max, The Source by Circuit City, Future Shop, Amazon,
    Dixon System Group and Media Market, who sell our products to
    consumers and small businesses;
    software distributors, including Ingram Micro, Tech Data and
    Navarre, 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. 8




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Direct Sales.
  Sales
    and Marketing
      
    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-Store,
  Outsourced
    Manufacturing
    Intellectual
    Property
   9




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Our
    success depends heavily on our ability to adequately protect our
    intellectual property
  Competition
      Research
    and Development
      Ulead DVD
    Movie Factory 6
 10




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##### Table of Contents



Ulead Video Studio 11 Plus YouTube tm DVD Copy 6 Plus iPhone,
    iPod®,
    PSP®,
    Zune tm Nintendo
    DS tm
  Corel MediaOne WinDVD DVD Copy
    6
  CorelDRAW WordPerfect
  Corel MediaOne WordPerfect WinZip Paint Shop Pro Photo X2
  WordPerfect
    Lightning CorelDRAW Graphics Suite Corel Media One Plus Painter Essentials
    Employees
    We
    rely on our ability to recruit and retain qualified
    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.corel.com Form 10-K
 12




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ITEM 1A.
    RISK
    FACTORS  Risks
    Relating to 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.
    The
    long-term trend in our business reflects growth in revenues from
    acquisitions and not our existing products.
    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 13




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
    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.        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.  and/or
 14




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Our
    recent growth through acquisitions may not be representative of
    future growth.
      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 original equipment
    manufacturers, we only have a limited number of potential new
    large original equipment manufacturer customers, which will
    cause revenue to grow at a slower rate.
    
    our lack of control over the shipping dates or volume of systems
    shipped;
    our OEM partners are generally not subject to minimum sales
    requirements or any obligation to market our products to their
    customers;
    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 reduction of OEM sales; 15




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
    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; and
    our OEM partners may develop, market, and distribute their own
    products and market and distribute products of our competitors,
    which could reduce our sales.  Slow
    growth, or negative growth, in the PC industry could reduce
    demand for our product, and reduce gross profit.
    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.
       16




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With
    the growth in the Internet as a medium to download and purchase
    software, we expect to face increasing competition from smaller
    software providers.
    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
  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.
   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
    success depends on our ability to offer products that are highly
    compatible with products offered by Microsoft and
    Adobe.
        Our
    products are complex and may contain errors or defects resulting
    from such complexity.
    We
    rely on the accuracy of our customers sales reports for
    collecting and reporting revenue. If these reports are not
    accurate, our reported revenue will be inaccurate.
    If we
    fail to manage our growth effectively, our business could be
    harmed.
   18




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If we
    fail to maintain strong relationships with our resellers and
    distributors, our ability to successfully deploy and sell our
    products may be harmed.
    We may
    incur losses associated with currency fluctuations and may not
    effectively reduce our exposure.
    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.
       19




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##### Table of Contents



Financial
    Statements and Supplementary Data  Notes to the
    Consolidated Financial Statements   Note 11:
    Income Taxes.
  WinZip
  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 Quantitive and Qualitative
    Disclosures about Market Risk  Interest Rate
    Risk.
  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.   20




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An
    interruption of our supply of certain products of key components
    from our sole source supplier, or a price increase in such
    products or complements, could hurt our business.
  just-in-time
  Our
    prices may decline, which could harm our operating
    results.
    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.
      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.
     21




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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
  WinDVD and/or WinDVD
  We may
    be unable to maintain licenses to third-party technology that is
    integrated into our products.
    Our
    success depends heavily on our ability to adequately protect our
    intellectual property.
       22




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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.
    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;
    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, economic and political conditions;
    natural disasters, terrorist attacks and acts of war; and
    the other risks described in this section.  Future
    sales or the possibility of future sales, of a substantial
    amount of common shares may depress the price of the common
    shares.
    Form S-8
  Vector
    Capital has significant control over our business and you may
    not have the same corporate governance protections you would
    have if we were not a controlled company.
   23




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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 you
    will receive a premium upon a change of control.
  Competition Act Investment Canada Act
  You
    may be unable to enforce actions against us and certain of our
    directors under U.S. federal securities laws.
   24




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##### Table of Contents



U.S.
    investors in our company could suffer adverse tax consequences
    if we are characterized as a passive foreign investment
    company.
  Material United States Federal
    and Canadian Income Tax Consequences.
  ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    Area


ExpirationLocation

Purpose

(in square feet)


YearOttawa, Canada

Corporate Head Office


82,224



2018Taipei, Taiwan

R&D/Sales, Marketing & Administration


50,525



2013Fremont, California

Research and Development/Sales and Marketing


35,069



2010Eden Prairie, Minnesota

Sales and Development


24,126



2008Shanghai, China

Research and Development/Sales and Marketing


16,252



2008Tualitin, Oregon

Sales and Development


10,908



2012Maidenhead, England

Sales and Administration


10,549



2015KaoHsuing, Taiwan

Research and Development


9,992



2009Mansfield, Connecticut

Sales, Operations and Administration


8,890



2009Yokohoma, Japan

Sales and Marketing


6,923



2012Munich, Germany

Sales and Administration


6,657



2012Munich, Germany

iGrafxSales and Administration


3,152



2008   ITEM 3.
    LEGAL
    PROCEEDINGS    Simon Systems v. Corel
    Corporation.
 25




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Disc Link Corporation v. H&R Block Digital Tax
    Solutions, Corel Corporation, Corel Inc., et
    al.
  ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   26




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##### Table of Contents



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


TSX [C$]High


Low


High


LowFiscal 2006Q2

$
16.15


$
13.19


$
16.15


$
13.96Q3

$
12.90


$
9.40


$
14.09


$
10.62Q4

$
14.15


$
11.10


$
15.92


$
12.71Fiscal 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
     27




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##### Table of Contents



MATERIAL
    UNITED STATES FEDERAL AND CANADIAN INCOME TAX
    CONSEQUENCES
  General
    Material
    U.S. Federal Income Tax Consequences
      Taxation
    of Dividends
     28




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Taxation
    of Dispositions
    Material
    Canadian Income Tax Consequences
      Taxation
    Of Dividends
   29




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##### Table of Contents



Taxation
    of Gain on Disposition
      RECENT
    SALES OF UNREGISTERED SECURITIES
    PURCHASES
    OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
    PURCHASERS
    Regulation S-K Share
    Option and Other Compensation Plans.
  DISCLOSURE
    PURSUANT TO THE REQUIREMENTS OF NASDAQ
  ADDITIONAL
     30




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ITEM 6.
    SELECTED
    FINANCIAL DATA  SELECTED
    CONSOLIDATED FINANCIAL DATA
  Form 10-K.
    Form 10-K Form 10-K.
 31




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##### Table of Contents



December 1,


August 29,2002 Through


2003 Through


Fiscal Years EndedAugust 28,


November 30,


November 30,2003(1)


2003


2004


2005


2006


2007(In thousands, except per share data)Consolidated Statement of Operations Data:Revenues

$
85,386


$
23,806


$
111,692


$
164,044


$
177,191


$
250,480Gross margin


62,102



15,852



79,845



118,290



140,344



173,790Total operating expenses


88,215



24,974



71,454



101,404



106,187



166,880Income (loss) from operations


(26,113
)


(9,122
)


8,391



16,886



34,157



6,910Income tax expenses (recovery)


(3,895
)


555



7,315



6,291



4,668



3,443Net income (loss)


(27,895
)


(9,272
)


1,207



(8,753
)


9,251



(13,062
)Net income (loss) per Corel common share:Basic

$
N/A


$
N/A


$
N/A


$
N/A


$
0.41


$
(0.52
)Fully diluted

$
N/A


$
N/A


$
N/A


$
N/A


$
0.40


$
(0.52
)Weighted average number of Corel common shares used in per share
    calculations:Basic


N/A



N/A



N/A



N/A



22,410



24,951Fully diluted


N/A



N/A



N/A



N/A



23,156



24,951Net income (loss) per shareBasicClass A

$
(0.30
)

$
(0.87
)

$
0.08


$
(2.40
)

$
N/A


$
N/AClass B

$
N/A


$
N/A


$
0.08


$
(2.40
)

$
N/A


$
N/AWinZip common

$
N/A


$
N/A


$
N/A


$
136.90


$
N/A


$
N/AFully dilutedClass A

$
(0.30
)

$
(0.87
)

$
0.08


$
(2.40
)

$
N/A


$
N/AClass B

$
N/A


$
N/A


$
0.08


$
(2.40
)

$
N/A


$
N/AWinZip common

$
N/A


$
N/A


$
N/A


$
136.90


$
N/A


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


91,853



11,677



8,218



3,737



N/A



N/AClass B


N/A



N/A



3,497



8,321



N/A



N/AWinZip common


N/A



N/A



N/A



20



N/A



N/AFully dilutedClass A


91,853



11,677



8,218



3,737



N/A



N/AClass B


N/A



N/A



3,497



8,321



N/A



N/AWinZip common


N/A



N/A



N/A



20



N/A



N/ACash Flow Data:Cash flow provided by (used in) operating activities

$
(10,792
)

$
8,671


$
32,512


$
40,459


$
36,225


$
26,499Cash flow provided by (used in) financing activities


(240
)


(47,516
)


(5,329
)


(38,552
)


(3,885
)


71,808Cash flow provided by (used in) investing activities


6,418



43,143



(34,099
)


7,301



(1,906
)


(124,760
)Other Financial Data:EBITDA(3)

$
(23,151
)

$
(3,428
)

$
29,183


$
39,531


$
42,405


$
45,136Adjusted EBITDA(3)


(14,561
)


(2,290
)


32,199



49,033


$
55,214


$
57,291   32




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##### Table of Contents



As of November 30,2003


2004


2005


2006


2007(In thousands)Consolidated Balance Sheet Data:Cash, cash equivalents and short-term investments

$
24,683


$
21,788


$
20,746


$
51,030


$
24,615Working capital (deficit)


(3,556
)


(19,417
)


(13,482
)


31,152



(15,219
)Total assets


101,400



108,788



120,836



130,686



266,837Deferred revenue


8,026



10,020



13,840



14,734



18,072Total long-term debt


26,895



64,799



150,971



90,649



158,608Total shareholders equity (deficit)


38,579



1,537



(85,234
)


(11,807
)


(14,300
)     (1)
    
    Reflects data prior to us being
    acquired by Vector Capital. The predecessor financial data is
    not comparable with financial data for periods subsequent to
    August 28, 2003 due to the application of push-down
    accounting effective August 29, 2003 and the adoption of
    SFAS No. 123 R, Share-based payments (revised
    2004) (SFAS 123(R)) relating to the
    accounting for stock-based compensation effective
    December 1, 2003. In predecessor periods, stock-based
    compensation was accounted for in accordance with Accounting
    Principles Board Opinion No. 25, Accounting for Stock
    Issued to Employees (APB 25).(2)
    
    Financial data for our fiscal year
    ended November 30, 2005 is not comparable to prior periods
    due to the combination of financial data of WinZip from
    January 18, 2005 to November 30, 2005, which reflects
    the period that WinZip and we were under common control by
    Vector Capital.(3)
    
    EBITDA represents net income before
    interest, income taxes, depreciation and amortization. Adjusted
    EBITDA represents EBITDA, further adjusted to eliminate items
    specifically defined in our credit facility agreement. EBITDA
    and Adjusted EBITDA are not measures of operating income,
    operating performance or liquidity under GAAP. We have included
    a presentation of EBITDA because we understand it is used by
    some investors to determine a companys historical ability
    to service indebtedness, and it is a starting point for
    calculating Adjusted EBITDA. 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. Additionally, management uses EBITDA and
    Adjusted EBITDA as supplementary non-GAAP measures to assist in
    its overall evaluation of our liquidity and to determine
    appropriate levels of indebtedness. Neither EBITDA nor Adjusted
    EBITDA should be considered in isolation or as a substitute for
    cash flow from operations (as determined in accordance with
    GAAP) as an indicator of our operating performance, or of
    operating income (as determined in accordance with GAAP). EBITDA
    and Adjusted EBITDA are not necessarily comparable to similarly
    titled measures used by other companies. 33




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##### Table of Contents



December 1,


August 29,2002 Through


2003 Through


Fiscal Years EndedAugust 28,


November 30,


November 30,2003


2003


2004


2005


2006


2007Cash flow provided by (used in) operating activities

$
(10,792
)

$
8,671


$
32,512


$
40,459


$
36,225


$
26,499Change in operating assets and liabilities


2,030



(12,275
)


1,683



(10,440
)


3,736



5,238Interest expense






225



2,709



12,786



12,309



16,978Interest income


(1,383
)


(19
)


(1,485
)


(178
)


(978
)


(724
)Income tax expense (recovery)


(3,895
)


555



7,315



6,291



4,668



3,443Stock-based compensation










(225
)


(1,731
)


(3,232
)


(5,488
)Other non-cash charges














(2,242
)






Loss on debt retirement














(3,937
)


(8,292
)


Provision for bad debts


(755
)


(326
)


93



(529
)


(195
)


(252
)Unrealized foreign exchange gains (losses) on forward contracts


162



(22
)


27



(263
)


(150
)


(147
)Deferred income taxes


139



(237
)


(5,178
)


(830
)


(876
)


83Loss on interest rate swap recorded at fair value


















(810
)


(392
)Gain (loss) on disposal of fixed assets


(67
)






(3
)


20







(102
)(Impairment) gain on disposal of investments


(7,448
)






729



125







Share of loss of equity investments


(1,142
)


















Predecessor legal settlement and tax refund










(8,994
)










EBITDA

$
(23,151
)

$
(3,428
)

$
29,183


$
39,531


$
42,405


$
45,136Restructuring






1,138



3,520



834



810



1,447Stock-based compensation










225



1,731



3,232



5,488Integration costs


















358



5,220Impairment (gain on disposal) of investments


7,448







(729
)


(125
)






Share of loss of equity investments


1,142



















Other non-cash charges














2,242







Reorganization costs














883



117



Loss on debt retirement














3,937



8,292



Adjusted EBITDA

$
(14,561
)

$
(2,290
)

$
32,199


$
49,033


$
55,214


$
57,291  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, 2007, 2006 and 2005 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, Corel DESIGNER,
    WinZip iGrafx WordPerfect Office Suite.
    CorelDRAW Graphics Suite Corel Painter ® Corel DESIGNER Technical
    Suite WinZip iGrafx WordPerfect
    Office Suite
  Digital
    Media
  Corel Paint Shop
    Pro Corel Media One WinDVD, VideoStudio, DVD Movie Factory, DVD
    Copy PhotoImpact. Corel Paint Shop Pro Corel Media One WinDVD, VideoStudio DVD Movie Factory DVD Copy Photo Impact
 35




---



##### Table of Contents



Corporate
    History
  CorelDRAW WordPerfect
  Corel Paint Shop Pro Corel Photo Album
  WinZip
        Industry
    and Business Trends
   36




---



##### Table of Contents



Acquisition
    of InterVideo
    WinDVD, VideoStudio, DVD Movie Factory, Photo Impact, DVD Copy
     37




---



##### Table of Contents



Operating
    Performance
    InterVideo Corel Draw, Painter, WinZip, iGrafx, WordPerfect Digital Imaging products Paint Shop Pro Photo Photo Album.
    WordPerfect Digital Imaging InterVideo
    OPERATIONS
  Revenues
  CorelDRAW Graphics Suite Corel Painter,
    Corel Designer Technical Suite, WinZip, iGrafx Flow Charter WordPerfect Office Suite Paint Shop Pro, Media One InterVideo WinDVD, VideoStudio, DVD Movie Factory, DVD Copy PhotoImpact.
 38




---



##### Table of Contents



Current


Quarter of


Quarter ofVersion


Current Release


Prior ReleaseProductGraphics and Productivity:CorelDRAW Graphics Suite


14



Q1 2008



Q1 2006Corel Painter


10



Q1 2007



Q4 2004Corel Designer Technical Suite


12



Q2 2005



Q3 2003WinZip


11



Q4 2006



Q4 2005iGrafx FlowCharter


12



Q2 2007



Q1 2006WordPerfect Office Suite


13



Q1 2006



Q2 2004Digital MediaPaint Shop Pro


12



Q4 2007



Q4 2006MediaOne


2



Q4 2007



Q4 2006WinDVD


8



Q4 2006



Q2 2005VideoStudio


11



Q2 2007



Q2 2006DVD Movie Factory


6



Q1 2007



Q1 2006DVD Copy


5



Q3 2006



Q1 2006PhotoImpact


12



Q3 2006



Q4 2005   Our
    quarterly operating results may fluctuate depending on the
    timing and success of product releases
  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-Store,
    
    salaries, benefits, stock-based compensation and related costs
    of customer and technical support functions; and
    allocated facilities, depreciation and amortization and other
    related overhead. 39




---



##### Table of Contents



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.    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, 2007 to Fiscal Year Ended
    November 30, 2006
        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



49,775



13.6



21.8



133.3Cost 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



76,690



20.8



30.6



108.1Gross margin


140,344



173,790



79.2



69.4



23.8Operating expensesSales and marketing


54,851



70,587



31.0



28.2



28.7Research and development


25,883



44,712



14.6



17.9



72.7General and administrative


24,285



37,083



13.7



14.8



52.7Acquired 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



166,880



59.9



66.6



57.2Income 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 41




---



##### 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 Paint Shop Pro Photo X1 Photo
    Express Paint Shop Pro MediaOne Snapfire WinZip iGrafx CorelDRAW CorelDRAW Corel Painter e-store
   42




---



##### 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-store WordPerfect WordPerfect
    Office X3
  Digital Imaging MediaOne, Paint Shop Pro 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
%Europe, Middle East, and Africa (EMEA)


58,253



72,932



32.9



29.1



25.2Asia Pacific (APAC)


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
 43




---



##### Table of Contents



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


Percentage2006


2007


Change(Dollars in thousands)Cost of product

$
21,339


$
49,775



133.3
%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.
 44




---



##### Table of Contents



Operating
    Expenses
  Year Ended November 30,


Percentage2006


2007


Change(Dollars in thousands)Sales and marketing

$
54,851


$
70,587



28.7
%As a percent of revenue


31.0
%


28.2
%Research and development


25,883



44,712



72.7
%As a percent of revenue


14.6
%


17.9
%General and administrative


24,285



37,083



52.7
%As a percent of revenue


13.7
%


14.8
%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. Sarbanes-Oxley
  InterVideo Integration Expense:
  Acquired in-process Research and
    Development.
 45




---



##### Table of Contents



Restructuring.
    Non-Operating
    (Income) Expense
 Year Ended November 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.
   46




---



##### Table of Contents



Comparison
    of Fiscal Year Ended November 30, 2006 to Fiscal Year Ended
    November 30, 2005
   47




---



##### Table of Contents



Year Ended November 30,


Percentage2005


2006


2005


2006


Change(Dollars in thousands)RevenuesProduct

$
148,308


$
157,319



90.4
%


88.8
%


6.1
%Maintenance and services


15,736



19,872



9.6



11.2



26.3Total revenues


164,044



177,191



100.0



100.0



8.0Cost of revenuesCost of product(1)


18,461



21,339



12.4



13.6



15.6Cost of maintenance and services(1)


1,154



1,142



7.3



5.7



(1.0
)Amortization of intangible assets


26,139



14,366



15.9



8.1



(45.0
)Total cost of revenues


45,754



36,847



27.9



20.8



(19.5
)Gross margin


118,290



140,344



72.1



79.2



18.6Operating expenses:Sales and marketing


54,056



54,851



33.0



31.0



1.5Research and development


23,538



25,883



14.3



14.6



10.0General and administrative


19,851



24,285



12.1



13.7



22.3Other operating expense


3,125



358



1.9



0.2



(88.5
)Restructuring


834



810



0.5



0.5



(2.9
)Total operating expenses


101,404



106,187



61.8



59.9



4.7Income from operations


16,886



34,157



10.3
%


19.3
%


102.3
%Other expenses (income)Loss on debt retirement


3,937



8,292




*



*



*Interest expense, net


12,608



11,331




*



*



*Gain on disposal of investments


(125
)







*



*



*Amortization of deferred financing fees


1,756



1,180




*



*



*Other non-operating (income) expense


1,172



(565
)



*



*



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


(2,462
)


13,919




*



*



*Income tax expense


6,291



4,668




*



*



*Net income (loss)

$
(8,753
)

$
9,251




*



*



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




---



##### Table of Contents



Revenues
  Year Ended November 30,


Percentage2005


2006


ChangeProduct

$
148,308


$
157,319



6.1
%As a percent of revenue


90.4
%


88.8
%Maintenance and services


15,736



19,872



26.3
%As a percent of revenue


9.6
%


11.2
%Total


164,044



177,191



8.0
%   WinZip 10.0 Pro CorelDRAW iGrafx WordPerfect Corel Paint Shop Pro. WinZip WinZip
  WinZip when-and-if-available
  Total
    Revenues by Product Group
  Paint Shop Pro, Snapfire,
    Photo Album, MediaOne CorelDRAW
    Graphics Suite WinZip, WordPerfect Office Suite iGrafx.
  Year Ended November 30,


Percentage2005


2006


2005


2006


Change(Dollars in thousands)Graphics and Productivity

$
123,126


$
137,741



75.1
%


77.7
%


11.9
%Digital Media


40,918



39,450



24.9



22.3



(3.6
)%Total

$
164,044


$
177,191



100.0
%


100.0
%


8.0
%   WinZip WinZip WinZip 10.0 WinZip 10.0 Pro WinZip iGrafx CorelDRAW CorelDRAW Graphics Suite
 49




---



##### Table of Contents



WordPerfect WordPerfect WordPerfect Quattro Pro Presentations WordPerfect WordPerfect X3. WordPerfect CorelDRAW Paint Shop Pro WinZip. Corel Painter Corel Designer Suite
  Corel PaintShop
  Total
    Revenues by Region
  Year Ended November 30,


Percentage2005


2006


2005


2006


Change(Dollars in thousands)Americas

$
98,412


$
104,447



60.0
%


58.9
%


6.1
%EMEA


52,965



58,253



32.3



32.9



10.0Asia Pacific


12,667



14,491



7.7



8.2



14.4Total

$
164,044


$
177,191



100.0
%


100.0
%


8.0
%     WinZip CorelDRAW WordPerfect
  e-stores.
  CorelDraw X3 WinZip.
 50




---



##### Table of Contents



Cost
    of Revenues
  Year Ended November 30,


Percentage2005


2006


Change(Dollars in thousands)Cost of product

$
18,461


$
21,339



15.6
%As a percent of product revenue


12.4
%


13.6
%Cost of maintenance and services


1,154



1,142



(1.0
)%As a percent of maintenance and service revenue


7.3
%


5.7
%Amortization of intangible assets


26,139



14,366



(45.0
)%As a percent of revenue


15.9
%


8.1
%   Cost of Product Revenues.
  Cost of Maintenance and Services
    Revenues.
  Amortization of Intangible
    Assets.
  Operating
    Expenses
  Year Ended November 30,


Percentage2005


2006


Change(Dollars in thousands)Sales and marketing

$
54,056


$
54,851



1.5
%As a percent of revenue


33.0
%


31.0
%Research and development


23,538



25,883



10.0
%As a percent of revenue


14.3
%


14.6
%General and administrative


19,851



24,285



22.3
%As a percent of revenue


12.1
%


13.7
%Restructuring


834



810



(2.9
)%As a percent of revenue


0.5
%


0.5
%Other operating expenses


3,125



358



(88.5
)%As a percent of revenue


1.9
%


0.2
%   Sales and Marketing. WordPerfect CorelDRAW Graphics Suite
 51




---



##### Table of Contents



Research and Development.
  General and Administrative.
  Other Operating Expense.
  Restructuring.
  Non-Operating
    (Income) Expense
  Year Ended November 30,2005


2006(Dollars in thousands)Loss on debt retirement

$
3,937


$
8,292Interest expense, net


12,608



11,331Amortization of deferred financing fees


1,756



1,180Other non-operating (income) expenses


1,172



(565
)Total non-operating expenses

$
19,473


$
20,238   Loss on Debt Retirement.
  Interest (Income) Expense, Net.
 52




---



##### Table of Contents



Amortization of Deferred Financing Fees.
  Other Non-Operating (Income) Expense.
  Income Tax Expense.
        LIQUIDITY
    AND CAPITAL RESOURCES
     53




---



##### Table of Contents



Risk
    Factors
    Working
    Capital
        Cash
    Flows
  Year Ended November 30,2005


2006


2007(In thousands)Cash provided by operating activities

$
40,459


$
36,225


$
26,499Cash provided by (used in) financing activities


(38,552
)


(3,885
)


71,808Cash provided by (used in) investing activities


7,301



(1,906
)


(124,760
)   Year
    ended November 30, 2007 compared to year ended
    November 30, 2006.
   54




---



##### Table of Contents



Indebtedness
       55




---



##### 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 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


Total2008

$
2,249


$
13,914


$
16,1632009


1,596



13,772



15,3682010


1,596



13,631



15,2272011


1,596



13,489



15,0852012


151,571



4,491



156,062Total

$
158,608


$
59,297


$
217,905      56




---



##### Table of Contents



Year-Ended November 302005


2006


2007(In thousands)Cash flow provided by operations

$
40,459


$
36,225


$
26,499Change in operating assets and liabilities


(10,440
)


3,736



5,238Interest expense, net


12,608



11,331



16,254Income tax expense


6,291



4,668



3,443Provision for bad debts


(529
)


(195
)


(252
)Unrealized foreign exchange losses on forward contracts


(263
)


(150
)


(147
)Deferred income taxes


(830
)


(876
)


83Loss on interest rate swap recorded at fair value






(810
)


(392
)Gain (Loss) on disposal of fixed assets


20







(102
)Restructuring


834



810



1,447Integration costs






358



5,220Reorganization costs


883



117



Adjusted EBITDA

$
49,033


$
55,214


$
57,291   Contractual
    Obligations and Commitments
        Less than








More than1 Year


2-3 Years


4-5 Years


5 Years


Total(In thousands)Long-term debt

$
16,163


$
30,595



171,147


$



$
217,905Capital Leases


966



1,785



549







3,300Operating leases


4,420



7,882



6,362



8,349



27,013Total

$
21,549


$
40,262


$
178,058


$
8,349


$
248,218     Off-Balance
    Sheet Arrangements
  Regulation S-K.
 57




---



##### Table of Contents



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 when-and-if-available
         58




---



##### Table of Contents



Allowance
    for Product Returns and Rebate Programs
      Accounting
    for Income Taxes
           59




---



##### Table of Contents



Business
    Combinations
  Business Combinations
        Impairment
    of Goodwill
  Goodwill and Other Intangible Assets
    (
  Long-lived
    Assets
  Accounting for
    the Impairment or Disposal of Long-Lived Assets
 60




---



##### Table of Contents



Stock
    Option Accounting
  Share BasedPayment
          RECENTLY
    ISSUED ACCOUNTING PRONOUNCEMENTS
  Accounting for
    Uncertainty in Income Taxes  An Interpretation of
    FASB Statement 109
 61




---



##### Table of Contents



Fair Value Measurements
  The Fair Value Option for Financial
    Assets and Financial Liabilities
  Business Combinations.
  Noncontrolling Interests in Consolidated
    Financial Statements  an amendment of ARB
    No. 51.
 62




---



##### Table of Contents



QUARTERLY
    FINANCIAL DATA
  Quarter Ended2006

Feb. 28


May. 31


Aug. 30


Nov. 30


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

$
39,498


$
39,151


$
36,362


$
42,308


$
157,319Maintenance and service


4,789



5,059



4,892



5,132



19,872Total revenue


44,287



44,210



41,254



47,440



177,191Cost of revenues:Cost of products


5,005



5,049



5,338



5,947



21,339Cost of maintenance and services


314



276



287



265



1,142Amortization of intangible assets


6,627



2,648



2,712



2,379



14,366Total cost of revenues


11,946



7,973



8,337



8,591



36,847Gross margin


32,341



36,237



32,917



38,849



140,344Operating expenses:Sales and marketing


14,504



14,023



11,810



14,514



54,851Research and development


6,181



6,640



6,379



6,683



25,883General and administration


5,395



6,193



5,833



6,864



24,285InterVideo integration costs














358



358Restructuring


560



251







(1
)


810Total operating expenses


26,640



27,107



24,022



28,418



106,187Income from operations


5,701



9,130



8,895



10,431



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






8,275



17







8,292Interest expense, net


3,863



3,207



2,334



1,927



11,331Amortization of deferred financing fees


444



357



188



191



1,180Other non-operating (income) expense


(120
)


(528
)


377



(294
)


(565
)Income (loss) before taxes


1,514



(2,181
)


5,979



8,607



13,919Income tax expense


3,152



1,791



485



(760
)


4,668Net (loss)

$
(1,638
)

$
(3,972
)

$
5,494


$
9,367


$
9,251Other comprehensive income (loss):Unrealized (loss) gain on securities


(48
)


(23
)


(36
)


(24
)


(131
)Total comprehensive loss

$
(1,686
)

$
(3,995
)

$
5,458


$
9,343


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

$
105.85



N/A



N/A



N/A



N/ACorel common

$
(0.25
)

$
(0.19
)

$
0.22


$
0.38


$
0.41Fully dilutedWinZip common

$
92.04



N/A



N/A



N/A



N/ACorel common

$
(0.25
)

$
(0.19
)

$
0.22


$
0.37


$
0.40   63




---



##### Table of Contents



Quarter Ended2007

Feb. 28


May. 31


Aug. 30


Nov. 30


Total Year(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


8,487



14,010



12,143



15,135



49,775Cost 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


14,442



20,604



19,312



22,332



76,690Gross margin


38,192



44,428



41,058



50,112



173,790Operating expenses:Sales and marketing


17,104



17,492



17,231



18,760



70,587Research and development


11,344



10,697



11,282



11,389



44,712General and administration


9,095



9,187



8,803



9,998



37,083Acquired 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


46,159



38,236



39,536



42,949



166,880Income 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
)  64




---



##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.  Qualitative
    and Quantitative Disclosure About Market Risk
    Interest
    Rate Risk
          Foreign
    Currency Risk
         65




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA    Managements Discussion
    and Analysis of Financial Condition and Results of
    Operations
 66




---



##### Table of Contents



Independent
    Auditors Report
      Consolidated
    Financial statements
        Internal
    control over financial reporting
  Internal Control 
    Integrated Framework
              67




---



##### Table of Contents



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


2007


2006ASSETSCurrent assets:Cash and cash equivalents





$
24,615


$
51,030Restricted cash


2



217



717Accounts receivableTrade, net


3



41,092



18,150Other






118



808Inventory


5



729



914Income taxes recoverable






1,470



Prepaids and other current assets






3,276



2,300Total current assets






71,517



73,919Capital assets


7



8,971



3,651Intangible assets


7,8



92,010



37,831Goodwill


8,9



88,643



9,850Deferred financing and other long-term assets


2,6



5,696



5,435Total assets





$
266,837


$
130,686LIABILITIES AND SHAREHOLDERS (DEFICIT) EQUITYCurrent liabilities:Accounts payable and accrued liabilities


10


$
67,290


$
28,220Due to related parties


4







167Income taxes payable






723



235Deferred revenue






15,707



12,719Current portion of long-term debt


12



2,249



1,426Current portion of obligation under capital leases


13



767



Total current liabilities






86,736



42,767Deferred revenue






2,365



2,015Income taxes payable






11,693



8,488Deferred income tax liabilities


11



20,754



Long-term debt


12



156,359



89,223Accrued pension benefit obligation


15



1,116



Obligation under capital leases


13



2,114



Total liabilities






281,137



142,493Commitments and contingencies


13Shareholders (deficit) equityShare capital:Corel Common Shares (par value: none; authorized: unlimited;
    issued and outstanding: 25,457 and 24,535 shares,
    respectively)


14



40,652



30,722Additional paid-in capital






5,926



4,612Accumulated other comprehensive loss






(721
)


(46
)Deficit






(60,157
)


(47,095
)Total shareholders deficit






(14,300
)


(11,807
)Total liabilities and shareholders deficit





$
266,837


$
130,686    68




---



##### Table of Contents



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


2007


2006


2005RevenuesProduct





$
228,274


$
157,319


$
148,308Maintenance and services






22,206



19,872



15,736Total revenues






250,480



177,191



164,044Cost of revenuesCost of product






49,775



21,339



18,461Cost of maintenance and services






796



1,142



1,154Amortization of intangible assets






26,119



14,366



26,139Total cost of revenues






76,690



36,847



45,754Gross margin






173,790



140,344



118,290Operating expensesSales and marketing






70,587



54,851



54,056Research and development






44,712



25,883



23,538General and administration






37,083



24,285



19,851Acquired in-process research and development


8



7,831







InterVideo integration expense


8



5,220



358



3,125Restructuring


16



1,447



810



834Total operating expenses






166,880



106,187



101,404Income from operations






6,910



34,157



16,886Other expenses (income)Loss on debt retirement


12







8,292



3,937Interest income






(724
)


(978
)


(178
)Interest expense






16,978



12,309



12,786Gain on disposal of investments














(125
)Amortization of deferred financing fees






1,074



1,180



1,756Other non-operating expense (income)






(799
)


(565
)


1,172Income (loss) before income taxes






(9,619
)


13,919



(2,462
)Income tax expense (recovery)


11Current






3,526



3,411



5,461Deferred






(83
)


1,257



830Net income (loss)





$
(13,062
)

$
9,251


$
(8,753
)Other comprehensive income (loss), net of taxes of $nil






(675
)


(131
)


27Comprehensive income (loss)





$
(13,737
)

$
9,120


$
(8,726
)Net income (loss) per Corel common share:


17Basic





$
(0.52
)

$
0.41


$
N/AFully diluted





$
(0.52
)

$
0.40


$
N/AWeighted average number of Corel common shares:Basic






24,951



22,410



N/AFully diluted






24,951



23,156



N/A 69




---



##### Table of Contents



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


2007


2006


2005Net income (loss) per share:BasicClass A





$
N/A


$
N/A


$
(2.40
)Class B





$
N/A


$
N/A


$
(2.40
)WinZip common





$
N/A


$
N/A


$
136.90Fully dilutedClass A





$
N/A


$
N/A


$
(2.40
)Class B





$
N/A


$
N/A


$
(2.40
)WinZip common





$
N/A


$
N/A


$
136.90Income (loss) applicable to shareholders:Class ADistributed earnings to class





$
N/A


$
N/A


$
21,018Loss allocable to class





$
N/A


$
N/A


$
(29,991
)Class BDistributed earnings to class





$
N/A


$
N/A


$
46,800Loss allocable to class





$
N/A


$
N/A


$
(66,781
)WinZip commonDistributed earnings to class





$
N/A


$
N/A


$
12,000Loss allocable to class





$
N/A


$
N/A


$
(9,262
)Weighted average number of shares:Shares used in basic per share amountsClass A






N/A



N/A



3,737Class B






N/A



N/A



8,321WinZip common






N/A



N/A



20Shares used in diluted per share amountsClass A






N/A



N/A



3,737Class B






N/A



N/A



8,321WinZip common






N/A



N/A



20    70




---



##### Table of Contents



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


2007


2006


2005Cash flow from operating activitiesNet income (loss)





$
(13,062
)

$
9,251


$
(8,753
)Depreciation and amortization






3,477



1,609



1,490Amortization of deferred financing fees






1,074



1,180



1,756Amortization of intangible assets






26,119



14,366



26,139Stock-based compensation






5,488



3,232



1,731Other non-cash charges














2,242Provision for bad debts






252



195



529Deferred income taxes






(83
)


876



830Unrealized foreign exchange loss on forward exchange contracts






147



150



263Acquired in-process research and development


8



7,831







Loss (gain) on disposal of fixed assets






102







(20
)Loss on early retirement of debt


12







8,292



3,937Gain on disposal of investments














(125
)Loss on interest rate swap recorded at fair value






392



810



Change in operating assets and liabilities


19



(5,238
)


(3,736
)


10,440Cash provided by operating activities






26,499



36,225



40,459Cash flow from financing activitiesRestricted cash






500



249



1,257Proceeds from operating line of credit






48,000







Repayments of operating line of credit






(48,000
)






(2,500
)Proceeds from long-term debt


12



70,000



90,000



153,000Repayments of long-term debt


12



(2,149
)


(150,323
)


(83,575
)Repayments of capital lease obligations






(315
)






Payments on deferred purchase price














(750
)Financing fees incurred






(1,685
)


(5,259
)


(8,708
)Proceeds from public offering, net of costs of $5,176










69,132



Paid up capital distribution














(83,146
)Proceeds from exercise of stock options






5,406







Dividends










(7,500
)


(14,135
)Other financing activities






51



(184
)


5Cash provided by (used in) financing activities






71,808



(3,885
)


(38,552
)Cash flow from investing activitiesProceeds on disposal of assets














20Proceeds on disposal of investments














125Redemption of short-term investments














9,987Acquisition of Jasc














(898
)Purchase of InterVideo, net of cash acquired


8



(120,912
)






Purchase of long lived assets






(3,848
)


(1,906
)


(1,933
)Cash provided by (used in) investing activities






(124,760
)


(1,906
)


7,301Effect of exchange rate changes on cash and cash equivalents






38



(150
)


(19
)Increase (decrease) in cash and cash equivalents






(26,415
)


30,284



9,189Cash and cash equivalents, beginning of period






51,030



20,746



11,557Cash and cash equivalents, end of period





$
24,615


$
51,030


$
20,746Supplemental disclosures:Cash paid for interest






16,488



9,613



11,808Cash paid (recovered) for income taxes






3,208



5,526



1,561Share consideration on acquisitions










35,138



Purchases of capital assets under capital lease


13



3,074







    71




---



##### 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


WinZip Stock


Shares


Income


Capital


(Deficit)


DeficitBalances at December 1, 2005






20


$
20



15,167


$
(73,813
)

$
85


$
7,427


$
(18,953
)

$
(85,234
)Net income loss






























9,251



9,251Other comprehensive loss






















(131
)










(131
)Shares issued for services rendered














3



52















52Repurchase of options


























(427
)






(427
)Stock based compensation


























3,232







3,232WinZip dividends paid


























(5,480
)


(2,020
)


(7,500
)Shares issued on initial public offering














5,000



69,173















69,173Shares issued on WinZip acquisition


8



(20
)


(20
)


4,323



35,158











(35,373
)


(235
)Options Exercised, net of issue costs














42



152







(140
)






12Balances at November 30, 2006









$




24,535


$
30,722


$
(46
)

$
4,612


$
(47,095
)

$
(11,807
)Net income (loss)






























(13,062
)


(13,062
)Other comprehensive income (loss)






















(675
)










(675
)Stock based compensation


14























5,488







5,488Acquisition of InterVideo options


8























719







719Options exercised, net of issue costs


14











922



9,930







(4,893
)






5,037Balances at November 30, 2007









$




25,457


$
40,652


$
(721
)

$
5,926


$
(60,157
)

$
(14,300
)     November 30, 2007


November 30, 2006Actuarial gain recognized for defined benefit plan (note 15)

$
931


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


(1,821
)


Unrealized gains (losses) on securities (note 6)


215



(131
)Other comprehensive income (loss)

$
(675
)

$
(131
)    72




---



##### 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, Corel Paint Shop Pro, WordPerfect Office Suite,
    Corel Painter, WinZip, WinDVD, VideoStudio, DVD Movie Factory,
    DVD Copy, Photo Impact.
  2.
    Summary
    of Significant Accounting Policies  Basis
    of presentation
  The Company purchased Cayman Ltd.
    Basis
    of consolidation
    Estimates
    and assumptions
    Business
    combinations
    Software
    revenue recognition
  97-2, SOP 98-9, 97-2,
 73




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    SOP 97-2
  when-and-if-available when-and-if-available.
            Allowance
    for product returns and rebate programs
   74




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    No. 01-09
  Allowance
    for doubtful accounts
    Other
    comprehensive income (loss)
    Foreign
    currency translation
    Cash
    equivalents
   75




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Restricted
    cash
    Investments
      Concentration
    of credit risk
        Interest
    rate risk
      Fair
    value of financial instruments
     76




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Forward
    exchange contracts
        Interest
    rate swaps
     77




---



##### 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 under capital lease  general

Three years straight lineComputer equipment  research and development

20-50% per year declining balanceLeasehold 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  78




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Goodwill
      Software
    development costs
      Deferred
    financing charges
    Income
    taxes
   79




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Investment
    tax credits
    Stock-based
    compensation
    Advertising
    costs
    Shipping
    and handling costs
    Defined
    employee benefit plans
    Leases
    Earnings
    per share
     80




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Recent
    accounting pronouncements
  Accounting for Uncertainty in Income
    Taxes  An Interpretation of FASB Statement 109
  Fair Value Measurements
  The Fair Value Option for Financial
    Assets and Financial Liabilities
  Business Combinations.
  Noncontrolling Interests in
    Consolidated Financial Statements  an amendment of
    ARB No. 51.
  3.
    Accounts
    Receivables and Allowance for Doubtful Accounts   81




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    November 30, 2007


November 30, 2006Gross accounts receivable

$
49,576


$
29,979Allowance for doubtful accounts


(1,366
)


(1,003
)Provisions for returns and rebates


(7,118
)


(10,826
)Trade receivables

$
41,092


$
18,150   4.
    Related
    Party Transactions        5.
    Inventory    November 30, 2007


November 30, 2006Product components

$
310


$
444Finished goods


419



470Inventory

$
729


$
914   6.
    Investments      Year Ended November 30,2007


2006


2005Equity securities:Fair value

$
418


$
203


$
334Gross unrealized gains


418



203



334Unrealized gains (losses) included in comprehensive income


215



(131
)


99Realized gain on sale of securities










72  82




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    Long-Lived
    Assets    November 30, 2007


November 30, 2006Accumulated





AccumulatedCost


Amortization


Cost


AmortizationCapital AssetsFurniture and fixtures

$
2,321


$
1,118


$
2,114


$
994Computer equipment  general


8,287



4,891



4,682



3,117Computer equipment  research and development


1,299



797



1,448



729Computer equipment under capital lease  general


3,074



294







Leasehold improvements


1,372



282



474



22716,353



7,382



8,718



5,067Less: Accumulated amortization


7,382







5,067Net book value

$
8,971






$
3,651   November 30, 2007


November 30, 2006Accumulated





AccumulatedCost


Amortization


Cost


AmortizationIntangible AssetsLicenses

$
4,036


$
2,176


$
2,428


$
1,735Acquired technologies


116,378



55,324



75,104



54,115Tradenames


32,348



10,956



21,772



5,818Customer relationships


10,999



3,295



348



163Non-competition agreement


150



150



150



140163,911



71,901



99,802



61,971Less: Accumulated amortization


71,901







61,971Net book value

$
92,010






$
37,831     EstimatedAmortizationExpense2008

$
26,2202009


24,5462010


17,7182011


16,6802012


5,849Thereafter


997Total

$
92,010  83




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    Acquisitions  InterVideo
    Acquisition
        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
      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  84




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    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
    Restructuring
    costs
     85




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Balance as atEstimate


Cash Payments


November 30, 2007Termination benefits

$
2,118


$
2,099


$
19Cost of closing redundant facilities


1,372



691



681Total

$
3,490


$
2,790


$
700   No. 95-3,
  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     Identifiable
    definite lived intangible assets:
   86




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    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
    Goodwill
    InterVideo
    Integration Expense
    Pro
    Forma Results
    
    additional amortization of intangible assets related to the
    acquisition of $13.2 million for the year ended
    November 30, 2006
    deferred tax recovery of $4.8 million for the year ended,
    related to the amortization of acquired intangible assets 87




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    additional interest expense of $9.3 million for the year
    ended, on additional debt financing for the acquisition
    reduced stock based compensation expense of $2.6 million
    elimination of minority interest loss of $1.0 million
    amortization of deferred financing fees of $0.3 million,
    for the year ended, related to acquisition financing    YearEndedNovember 30,2006Net revenues

$
293,879Net loss

$
(2,461
)Basic net loss per share

$
(0.11
)Diluted net loss per share

$
(0.11
)   WinZip
    Acquisition
       88




---



##### Table of Contents



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

$
2,497Capital assets


183Tradename


21,772Acquired technologies


5,704Non-competition agreements


150Customer relationships


348Goodwill on acquisition of Winzip by Vector


3,993Current liabilities


(858
)Fair value of net assets acquired by Vector Capital on
    January 18, 2005


33,789Fair value of shares issued to Vector Capital, recorded as a
    dividend


35,373Share issuance costs


235Purchase cost of WinZip acquisition

$
69,397     9.
    Goodwill    Balance, November 30, 2004

$
4,960Adjustment for channel inventory and Jasc acquisition costs


897Addition on WinZip combination (note 8)


3,993Balance, November 30, 2005 and 2006

$
9,850Addition on acquisition of InterVideo (note 8)


78,793Balance, November 30, 2007

$
88,643    89




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10.
    Accounts
    Payable and Accrued Liabilities    November 30,


November 30,2007


2006Accrued payroll

$
15,773


$
16,715Accrued interest


130



1,565Trade accounts payable


7,095



2,386Accrued royalties


26,816



1,043Other accrued liabilities


17,476



6,511Accounts payable and accrued liabilities

$
67,290


$
28,220   11.
    Income
    Taxes     Year Ended November 30,2007


2006


2005Current:Canadian

$



$
736


$
1,090Foreign


3,526



2,675



4,3713,526



3,411



5,461Deferred:Canadian






381



1,706Foreign


(83
)


876



(876
)(83
)


1,257



830Income tax expense

$
3,443


$
4,668


$
6,291     Year Ended November 30,2007


2006


2005Income (loss) before income taxes

$
(9,839
)

$
13,919


$
(2,462
)Expected statutory rate


36.1
%


36.1
%


36.0
%Expected tax expense (recovery)


(3,552
)


5,025



(886
)Losses not previously benefited


(529
)


(601
)


Foreign tax rate differences


(9,248
)


(3,258
)


214Change in valuation allowance


8,770



876



5,052Non-deductible expenses and non-taxable income


5,919



1,922



1,264Settlement of prior year audits










(334
)Change in estimates


(1,759
)






Withholding tax on foreign income


3,519



685



930Other


323



19



51Reported income tax expense

$
3,443


$
4,668


$
6,291  90




---



##### Table of Contents



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


November 30,2007


2006Deferred tax assets (liabilities):Net operating losses carried forward

$
75,282


$
76,652Book and tax differences on assets


53,915



57,794Other


37,716



18,513Total deferred tax assets


166,913



152,959Basis difference in InterVideo intangible assets (note 8)


(20,754
)


Valuation allowance for tax assets


(166,913
)


(152,959
)Net deferred tax liability

$
(20,754
)

$
         12.
    Long
    Term Debt    November 30, 2007


November 30, 2006Current


Long Term


Total


Current


Long Term


TotalTerm loan

$
1,596


$
156,359


$
157,955


$
900


$
88,650


$
89,550Promissory note


653







653



526



573



1,099Total

$
2,249


$
156,359


$
158,608


$
1,426


$
89,223


$
90,649Line of credit

$
75,000










$
75,000Outstanding balance













$
Available line of credit

$
75,000










$
75,000  91




---



##### Table of Contents



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


Interest


Total2008


2,249



13,914



16,1632009


1,596



13,772



15,3682010


1,596



13,631



15,2272011


1,596



13,489



15,0852012


151,571



4,491



156,062Total

$
158,608


$
59,297


$
217,905   Term
    Loan
           92




---



##### 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   
    a minimum fixed charge coverage ratio, which is defined as the
    ratio of trailing four quarter consolidated Adjusted EBITDA to
    fixed charges 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
    13.
    Commitments
    and Contingencies  Operating
    leases
     93




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    OperatingLeases2008

$
4,2562009


3,8352010


3,8822011


3,5962012


2,7662013 and thereafter


8,349$
26,684     Obligations
    under Capital Leases
    CapitalLeases2008


9662009


9562010


8292011


3712012


178Thereafter


NilTotal minimum lease payments

$
3,300Interest included in minimum payments at rates varying between
    6.94% to 7.89%


419Present value of minimum lease payments


2,881Less current portion


767Obligation under capital lease long term

$
2,114   Customer
    Indemnification
  Guarantors Accounting and Disclosure
    Requirements for Guarantees, Including Indirect Guarantees of
    Indebtedness of Others
 94




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Legal
    Proceedings
          Disc Link Corporation (Disc Link) v.
    H&R Block Digital Tax Solutions, Corel Corporation, Corel
    Inc., et al.
  Simon Systems (Simon) v. Corel
    Corporation.
   95




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    14.
    Shareholders
    Equity    Corel
    Common Shares
  winding-up
      Corel
    preferred shares
    winding-up
  winding-up,
 96




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Dividends
    and paid-up
    capital reductions
    paid-up
  Share
    Option Plans
    Year Ended November 30,2007


2006


2005Cost of products

$
47


$
26


$
15Cost of maintenance and services


9



8



4Sales and marketing


1,465



770



583Research and development


1,168



306



197General and administration


2,799



2,122



932Total stock-based compensation expense

$
5,488


$
3,232


$
1,731       Year Ended November 30,2007


2006


2005Expected option life (years)


7



7



7Volatility


31.25
%


36.13
%


39.18
%Risk free interest rate


4.60
%


4.33
%


4.36
%Dividend yield


Nil



Nil



NilForfeiture rate


16.46
%


16.82
%


Nil    97




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2006
    Equity Incentive Plan
         98




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    November 30, 2007WeightedWeighted


AverageAverage


GrantExercise


Date FairOptions


Price


ValueOutstanding at beginning of period


513,333


$
9.56


$
6.26Options granted


2,060,764



13.01



4.95Options assumed in the acquisition of InterVideo (note 9)


1,700,717



12.95



2.06Options exercised


(504,252
)


10.21



4.87Options forfeited


(1,096,097
)


13.78



3.09Outstanding at end of period


2,674,465


$
12.59


$
4.67Exercisable at end of period


546,187


$
12.26


$
3.66Options vested during the year


497,376






$
4.56Weighted average remaining life of the outstanding options


8.80 YearsWeighted average remaining life of the exercisable options


6.87 YearsTotal intrinsic value of the exercisable options

$
661Total intrinsic value of the outstanding options

$
1,207   Year Ended November 30,2007


2006Weighted average fair value of options granted

$
4.95


$
6.26Intrinsic value of options exercised


1,460



20Fair value of shares vested


2,267



291    99




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    November 30, 2007WeightedAverageGrantDate FairOptions


ValueOutstanding at beginning of period

N/A$



$
N/ARestricted stock units granted


150,000



13.23Restricted stock units converted to common shares


(7,500
)


14.06Restricted stock units forfeited


Nil



N/AOutstanding at end of period


142,500


$
13.19Exercisable at end of period


NilRestricted stock units vested during the year


7,500


$
14.06Weighted average remaining life of the outstanding options


9.69 YearsWeighted average remaining life of the exercisable restricted
    stock units


N/ATotal intrinsic value of the exercisable restricted stock units


NilTotal intrinsic value of the outstanding restricted stock units

$
1,587Intrinsic value of restricted stock units exercised

$
95Fair value of options vested

$
105   2003 Share
    Option and Phantom Share Unit Plan
         100




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      November 30, 2007


WeightedWeighted


AverageAverage


GrantExercise


Date FairUnits


Price


ValueOutstanding at beginning of period


1,320,714


$
1.98


$
7.24Units granted


Nil



n/a



n/aUnits exercised


(409,658
)


1.17



6.53Units repurchased


Nil



n/a



n/aUnits forfeited


(97,116
)


2.42



7.54Outstanding at end of period


813,940


$
2.31


$
7.24Exercisable at end of period


627,954


$
1.87


$
5.43Units vested during the year


360,109






$
6.51Weighted average remaining life of the outstanding units


7.07 YearsWeighted average remaining life of exercisable units


6.93 YearsTotal intrinsic value of exercisable units

$
5,954Total intrinsic value of outstanding units

$
7,473   Year Ended November 30,2007


2006


2005Weighted average fair value of units granted

$
N/A


$
7.54


$
9.13Intrinsic value of units exercised


4,760



415



63Fair value of units vested


2,346



1,897



1,747   15.
    Employee
    pension plans  Defined
    contribution and retirement savings plan
     101




---



##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Defined
    pension benefit plan
      Implementation
    of FAS 158
      Change
    in fair value of plan assets and benefit
    obligation
  Fair value on acquisition date of December 12, 2006

$
967Actual return on plan assets


26Employer contributions


118Fair value of plan assets at November 30, 2007

$
1,111Projected benefit obligation on acquisition date of
    December 12, 2006

$
3,015Service cost


59Interest cost


84Actuarial gain


(931
)Benefit obligation at November 30, 2007

$
2,227Funding deficiency at November 30, 2007

$
1,116       Average increase in compensation levels


4.50
%Discount rate


2.75
%     Other
    Comprehensive Income
   102




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##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Pension
    Benefit Expense
    Service cost

$
59Interest cost


84Actual return on plan assets


(26
)Net periodic benefit costs for the year endingNovember 30, 2007

$
117     Discount rate:


2.75
%Average increase in compensation levels


6.00
%Expected long-term return on assets


2.75
%     16.
    Restructuring
    Charges         103




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##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  17.
    Earnings
    (loss) per share    Year Ended November 30,2007


2006


2005Net income (loss)

$
(13,062
)

$
9,251


$
(8,753
)Less: dividends and paid up capital distributions










(97,281
)Total income (loss) allocable to shareholders


(13,062
)


9,251


$
(106,034
)Class A Common SharesNumeratorDistributed earnings to class

$
N/A


$
N/A


$
21,018Loss allocable to class


N/A



N/A



(29,991
)Numerator for basic and diluted earnings (loss) per share


N/A



N/A



(8,973
)DenominatorWeighted average number of shares


N/A



N/A



3,737Class B Common SharesNumeratorDistributed earnings to class

$
N/A


$
N/A


$
46,800Loss allocable to class


N/A



N/A



(66,781
)Numerator for basic and diluted earnings (loss) per share


N/A



N/A



(19,981
)DenominatorWeighted average number of shares


N/A



N/A



8,321WinZip Common SharesNumeratorDistributed earnings to class

$
N/A


$
N/A


$
12,000Loss allocable to class


N/A



N/A



(9,262
)Numerator for basic and diluted earnings per share


N/A



N/A



2,738DenominatorWeighted average number of shares


N/A



N/A



20     18.
    Segment
    Reporting  Disclosures About Segments of an Enterprise and Related
    Information
 104




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##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Graphics and Productivity Digital Media.
  Productivity Digital Media and Graphics
            Year Ended November 30,2007


2006


2005By product:Graphics and Productivity

$
141,692


$
137,741


$
123,126Digital Media


108,788



39,450



40,918$
250,480


$
177,191


$
164,044By geographic region:AmericasCanada

$
10,122


$
8,682


$
7,745United States


111,116



91,571



87,090Other


4,741



4,194



3,577Europe, Middle East, Africa (EMEA)


72,932



58,253



52,965Asia-Pacific


51,569



14,491



12,667$
250,480


$
177,191


$
164,044  105




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##### Table of Contents



COREL
    CORPORATION
  NOTES TO
    THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  19.
    Changes
    in operating assets and liabilities    Year Ended November 30,2007


2006


2005Accounts receivable


(8,532
)


500



1,130Due to/from related parties


(167
)


73



(289
)Inventory


1,534



(188
)


613Prepaids and other current assets


413



43



(2,405
)Accounts payable and accrued liabilities


(2,314
)


(3,389
)


3,874Taxes payable


654



(1,669
)


3,969Deferred revenue


3,174



894



3,548Total

$
(5,238
)

$
(3,736
)

$
10,440  106




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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.
  
    Migration from InterVideo financial reporting system to our
    financial reporting system
    Additional review and sign-offs of subsidiary workbooks
    Hired additional staff to ensure adequate oversight of financial
    functions      ITEM 9B.
    OTHER
    INFORMATION   107




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##### Table of Contents



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

Age

PositionDavid Dobson(4)


45


Chief Executive Officer, DirectorDouglas McCollam


54


Chief Financial OfficerRandall Eisenbach


57


Executive Vice-President, OperationsJeffrey Hastings


43


President and General Manager, Digital MediaNicholas Davies


45


Vice President and General Manager, Graphics and ProductivityAmanda Bedborough


38


Executive Vice President, EMEA and APAC OperationsKevin Thornton


40


Senior Vice President, Sales and Marketing, AmericasGraham Brown


44


Executive Vice President, Software DevelopmentChristopher DiFrancesco


44


Senior Vice President, Legal and General CounselJonathan Kissane


38


Senior Vice President, Corporate DevelopmentJeremy Liang


51


Senior Vice President, Digital Media DevelopmentShawn Cadeau


36


Vice President, Global MarketingPhilip Wilson


52


Vice President, Global Human ResourcesSteven Cohen(1)(2)(3)


42


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


50


DirectorAmish Mehta(3)


34


DirectorAlexander Slusky(3)(4)


40


DirectorDaniel T. Ciporin(1)(2)


50


Director     (1)
    
    Independent director(2)
    
    Member of Audit Committee(3)
    
    Member of Compensation Committee(4)
    
    Member of Nominating and Corporate Governance Committee  David Dobson
  Douglas McCollam
  Randall Eisenbach
 108




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##### Table of Contents



Jeffrey Hastings
  Nicholas Davies
  Amanda Bedborough
  Kevin Thornton Coca-Cola
  Graham Brown
  Christopher DiFrancesco
  Jonathan Kissane
  Jeremy Liang
  Shawn Cadeau
 109




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##### Table of Contents



e-business
  Philip Wilson Steven Cohen
  Steven Cohen
   J. Ian Giffen
  Amish Mehta
  Alexander Slusky
  Daniel T. Ciporin
   110




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##### Table of Contents



Board of
    Directors
      Committees
    of the Board
    Audit Committee and Audit Committee Financial
    Expert.
    
    the integrity of our financial statements;
    our compliance with legal and regulatory matters;
    our independent auditors qualifications and
    independence; and
    the performance of our internal audit function and our
    independent auditors.    
    compensating, retaining and overseeing the work of our
    independent auditors;
    recommending to the board of directors that the audited annual
    financial statements be included in our 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
    auditors;
    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.     111




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##### Table of Contents



Compensation Committee.
  
    to review and approve goals and objectives relating to the
    compensation of our chief executive officer and, based upon a
    performance evaluation, to determine and approve the
    compensation of the 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;
    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.
 112




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##### Table of Contents



Form 8-K
  ITEM 11.
    EXECUTIVE
    COMPENSATION  Regulation S-K, Form 20-F
  Summary
    Compensation Table
    Long Term CompensationSecurities


UnitsAnnual Compensation(1)


Underlying


Subject toName And Principal










Other Annual


Options


Resale


LTIP


All OtherPosition

Fiscal Year


Salary


Bonus


Compensation


Granted


Restrictions


Payments


CompensationDavid Dobson(2)(3)


2007


$
385,566


$
323,700


$
56,051



200,000














Chief Executive Officer


2006



376,820



369,284


$
679,676


















2005



140,754



203,500







413,971














Douglas McCollam


2007



232,269



178,800







30,000











Chief Financial Officer


2006



227,000



245,160



















2005



203,500



183,150







8,540











Randall Eisenbach


2007



300,000



169,500







20,000














Executive Vice President, Operations


2006



260,000



181,400






















2005



260,000



97,500







61,910














Amanda Bedborough(4)


2007



344,972



367,826







40,000











Executive VP, International Operations


2006



305,688



203,254



















2005



398,805



85,937







44,831











104,772Patrick Morley


2007



300,000



240,000







50,000














Former Chief Operating Officer


2006



300,000



175,500



















2005



52,308



50,000







85,394











     (1)
    
    Excludes perquisites and other benefits because such
    compensation did not exceed the lesser of C$50,000 and 10% of
    the total annual salary and bonus for any of the Named Executive
    Officers.(2)
    
    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 the
    year.(3)
    
    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. See
    Item 13  Certain Relationships and
    Related Transactions.(4)
    
    Ms. Bedboroughs salary for our fiscal year ended
    November 30, 2005 includes $19,532 of retirement plan
    payments and $85,240 of insurance premiums 113




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##### Table of Contents



Option
    Grants During the Fiscal Year Ended November 30, 2007 to
    Named Executive Officers
    % of Total





Market ValueNumber of Shares


Options Granted


Exercise Price


of SecuritiesUnderlying Options


to Employees


Per Share


Underlying


ExpirationName

Granted(1)


in Fiscal Year(2)


($/Security)


Options(3)


DateDavid Dobson


200,000



9.0



13.73



Nil



July 17,2017Douglas McCollam


30,000



1.4



13.03



Nil



April 24,2017Randall Eisenbach


30,000



1.4



0.00



334,200



Jan 3, 2017Amanda Bedborough


40,000



1.8



6.52



222,800



April 24,2017Patrick Morley


50,000



2.3



13.03



Nil



April 24,2017     (1)
    
    Some named executive officers received grants of restricted
    stock units which are included in the totals above. Randall
    Eisenbach and Amanda Bedborough, received restricted stock units
    in the amount of 30,000 and 20,000 units respectively. The
    options vest as to 25% on the first anniversary of the date of
    grant and as to an additional 6.25% at the completion of each
    three-month period thereafter.(2)
    
    The total amount of options granted of 2,210,765 units,
    includes 150,000 restricted stock units.(3)
    
    Based on the difference between the exercise price per share and
    the market price per share as at November 30, 2007 of
    $11.14.  Aggregate
    Options Exercised During the Fiscal Year Ended November 30,
    2007, Most Recently Completed Financial Year and Option Values
    at November 30, 2007 for Named Executive Officers
    Value of UnexercisedUnexercised Options at


In-the-Money Options as atShares Acquired


Aggregate Value


November 30, 2007


November 30, 2007(1)Name

on Exercise


Realized


Exercisable


Unexercisable


Exercisable


UnexercisableDavid Dobson


174,379


$
1,981,262



157,365



259,531


$
1,568,929


$
593,534Douglas McCollam


Nil



Nil



78,684



39,234



784,479



92,063Randall Eisenbach


51,503



610,097



23,143



30,073



230,736



326,153Amanda Bedborough


Nil



Nil



72,606



51,915



723,882



341,593Patrick Morley


42,698



486,323



Nil



Nil



Nil



Nil     (1)
    
    Based on the difference between the exercise price per share and
    the market price per share as at November 30, 2007 of
    $11.14.  Compensation
    Committee Interlocks and Insider Participation
    Compensation
    of Directors and Executive Officers
   114




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##### Table of Contents



Material
    Terms and Conditions of Employment Agreements
    David Dobson. Certain Relationships and
    Related Party Transactions  Other Related Party
    Transactions
  Douglas McCollam.
  Randall Eisenbach.
  Amanda Bedborough.
 115




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##### Table of Contents



Patrick Morley.
  Composition
    of the Compensation Committee
      Report on
    Executive Compensation
    
    oversee the Companys compensation and benefits policies
    generally;
    oversee and set compensation for the Companys executive
    officers;
    evaluate executive officer performance and review the
    Companys management succession plan; and
    review compensation related disclosure to be filed or submitted
    by the Company.  http://investor.corel.com/documents.cfm (613) 728-0826.
         116




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##### Table of Contents



Performance
    Graphs
    Candian Dollar

US Dollar   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 117




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##### Table of Contents




    all members of our Board and our executive officers as a group.    Principal
    Shareholders Table
  Name and Address of Beneficial Owner(1)

Number of Common Shares


Percent of ClassFive Percent ShareholderVector Capital


17,657,614(2
)


69.36
%Executive Officers and DirectorsAlexander Slusky(3)


17,681,898(3
)


69.46
%David Dobson


272,208(4
)


1.07
%Douglas McCollam


84,182(5
)


*Randall Eisenbach


78,512(6
)


*Amanda Bedborough


73,314(7
)


*Amish Mehta(9)


6,405(8
)


*Steven Cohen


7,205(10
)


*J. Ian Giffen


11,405(11
)


*Daniel T. Ciporin


Nil



*All directors and executive officers as a group (18 persons)


660,024
(12)


2.59
%     *
    
    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 24,284 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    November 30, 2007 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. 118




---



##### Table of Contents



(4)
    
    Consists of 97,829 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    November 30, 2007 all of which are vested, and 174,379
    common shares held by him subsequent to the exercise of options.(5)
    
    Consists of 84,182 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    November 30, 2007 all of which are vested.(6)
    
    Consists of 22,739 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    November 30, 2007 all of which are vested and 55,773 common
    shares held by him subsequent to the exercise of options.(7)
    
    Consists of 73,314 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    November 30, 2007 all of which are vested.(8)
    
    Consists of 6,405 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    November 30, 2007 all of which are vested.(9)
    
    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.(10)
    
    Consists of 7,205 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    November 30, 2007 all of which are vested.(11)
    
    Consists of 11,405 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    November 30, 2007 all of which are vested.(12)
    
    Includes 396,054 common shares issuable upon the exercise of
    options that are exercisable within 60 days of
    November 30, 2007 all of which are vested, and 263,970
    common shares held by the group subsequent to the exercise of
    options.  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


813,940


$
2.31



2006 Equity Incentive Plan


2,816,965


$
11.95



1,519,592Totals




3,630,905


$
9.79



1,519,592   Share
    Option and Other Compensation Plans
  Equity
    Incentive Plan
    Share Reserve.
 119




---



##### Table of Contents



Administration of Awards. Rule 16b-3
  Stock options.
  Share Appreciation Rights.
 120




---



##### Table of Contents



Restricted Shares.
  Restricted Share Units.
  Performance Share Units.
  Deferred Share Units.
  Other Share-Based Awards.
  Effect of a Significant Event.
 121




---



##### 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 our company, 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
       122




---



##### Table of Contents



ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS    Form 10-K),
      ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    Audit
    Fees
  Form F-1,
  Tax
    Fees
    All Other
    Fees
     123




---



##### 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, 20052
.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, 200510
.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 Inc. and Randall Eisenbach,
    incorporated by reference to exhibit 10.4 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 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
.7

Employment Agreement between Corel Inc. and Patrick Morley,
    incorporated by reference to exhibit 10.16 of the
    registrants Annual Report on
    Form 10-K
    filed February 23, 2007 124




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##### Table of Contents



ExhibitNumber

Exhibit10
.8

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
.9

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
.10

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
.11

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
.12

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
.13

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
.14

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, 200621
.1*

Subsidiaries of Corel Corporation23
.1*

Consent of PricewaterhouseCoopers LLP24
.1*

Powers of Attorney, incorporated by reference to the signature
    page to this Annual Report on
    Form 10-K31
.1*

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

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

Section 1350 Certification of the Chief Executive Officer32
.2*

Section 1350 Certification of the Chief Financial Officer99
.1*

Schedule II  Valuation and Qualifying Accounts     *
    
    Filed herewith. 125




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##### Table of Contents



SIGNATURES
      By:
    /s/  DAVID
    DOBSON       SIGNATURE

TITLES/s/  DAVID
    DOBSONDavid
    Dobson

Chief Executive Officer and Director (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  126