Prior to the mid-1990s, the packaged software industry was characterized by high annual growth rates, rapid technological innovation and a relatively large number of viable software providers within each product category. Over the past decade the industry has matured, growth rates have become more stable and market share within each major product category has become highly concentrated, with one or two companies having a dominant market position.

t is believed that Microsoft Office has in excess of 97% of the North American market for productivity software and that Adobe, after giving effect to its acquisition of Macromedia, has in excess of 70% of the global packaged graphics and digital imaging software market. Despite this concentration of market share, a number of smaller software companies have been able to offer products that have large user bases within certain sectors of the overall market.

The Standard Edition of WordPerfect Office Suite includes the WordPerfect, Quattro Pro and Presentations applications. Depending on the version of the suite, WordPerfect MAIL and Paradox are also available. WordPerfect is an easy-to-use word processing application that includes the ability to integrate charts, tables, images and graphics. Quattro Pro is a spreadsheet and database application with 3D chart functionality. WordPerfect MAIL is an e-mail, calendaring and contact management application. Paradox is a database application.

The WinZip product line includes three primary products: WinZip, WinZip Companion for Outlook and WinZip Self Extractor. WinZip is a widely used compression utility for the Windows platform, allowing users to temporarily reduce the size of their computer files for more effective transmission and storage. WinZip Companion for Outlook extends WinZip’s functionality to Microsoft’s Outlook email application, automating the compression and encryption of email file attachments.

The Company’s iGrafx products allow enterprises to analyze, streamline and optimize their business processes. iGrafx’s main products are iGrafx FlowCharter and iGrafx Process. Uses of iGrafx FlowCharter include visually depicting the elements of a business process such as a supply chain solution. Uses of iGrafx Process include identifying, simulating and visually presenting how a business can improve its business processes. iGrafx products are currently available in six languages.

The Company’s graphics products include lDRAW Graphics Suite, DESIGNER Technical Suite and Painter. lDRAW Graphics Suite is an industry-leading vector illustration software application and has received over 300 industry awards throughout the 17 years it has been on the market. The software allows users to create, manipulate and publish drawings and images in a variety of media including in print and on the web. lDraw Graphics Suite consists of applications for illustration and page layout, digital imaging and motion graphics creation. DESIGNER Technical Suite offers users a graphics application for creating or updating complex technical illustrations. Painter is a digital painting application that, when used with a pen tablet, simulates natural media, such as watercolors, inks, oil paints, chalks and pastels. Users include commercial artists, professional photographers, fine artists and professional digital artists who wish to create new works of art or enhance existing images.

Cost of product revenues increased 29.9% to $18.5 million in fiscal year ended November 30, 2005 from $14.2 million in fiscal year ended November 30, 2004.

Sales and marketing expenses increased 40.4% to $54.0 million in fiscal year ended November 30, 2005 from $38.5 million in fiscal year ended November 30, 2004.

Research and development expenses increased 61.8% to $23.5 million in fiscal year ended November 30, 2005 from $14.6 million in fiscal year ended November 30, 2004.