Cognos(R) Reports Record Fourth Quarter and Full Year Results



    - Record license revenue of $130.5 million, 55 percent earnings growth in
Q4 -

    OTTAWA AND BURLINGTON, MASS., March 29 /CNW/ - Cognos Incorporated
(Nasdaq:   COGN; TSX: CSN - all figures in U.S. dollars and in accordance with
U.S. GAAP unless otherwise stated), the world leader in business intelligence
(BI) and performance management solutions, today announced financial results
for its fourth quarter and full fiscal year 2007, ended February 28, 2007.

    Revenue for the fourth quarter was $284.5 million, compared with $253.1
million for the same period of last fiscal year, an increase of 12 percent.
License revenue was $130.5 million, compared with $117.9 million a year ago,
an increase of 11 percent.

    Net income on a U.S. GAAP basis in the quarter was $60.9 million,
compared with $39.3 million for the same period last fiscal year, an increase
of 55 percent. Net income on a non-GAAP basis (excluding amortization of
acquisition-related intangible assets and stock-based compensation expense)
for the quarter was $66.9 million, compared with $45.2 million for the same
period last fiscal year, an increase of 48 percent. Earnings per diluted share
(EPS) on a U.S. GAAP basis for the quarter was $0.67, compared with $0.43 for
the same period last fiscal year. EPS on a non-GAAP basis (excluding
amortization of acquisition-related intangible assets and stock-based
compensation expense) for the quarter was $0.74, compared with $0.49 in the
fourth quarter of last fiscal year.

    Revenue for the full fiscal year 2007 was $979.3 million, compared with
$877.5 million for the previous fiscal year, an increase of 12 percent.
License revenue for the full fiscal year was $376.2 million, compared with
$343.2 million one year ago, an increase of 10 percent. Net income on a U.S.
GAAP basis for fiscal year 2007 was $115.7 million, compared with the prior
year's net income of $108.6 million, an increase of 7 percent. Net income on a
non-GAAP basis (excluding amortization of acquisition-related intangible
assets, stock-based compensation expense and restructuring charges) for fiscal
year 2007 was $159.9 million, compared with net income of $129.6 million a
year ago, an increase of 23 percent. EPS on a U.S. GAAP basis for the fiscal
year 2007 was $1.28, compared with $1.17 last fiscal year. EPS on a non-GAAP
basis (excluding amortization of acquisition-related intangible assets,
stock-based compensation expense and restructuring charges) for the fiscal
year 2007 was $1.77, compared with $1.40 last fiscal year.

    Fourth quarter non-GAAP results differ from results measured under U.S.
GAAP as they exclude $1.8 million of amortization of acquisition-related
intangible assets and $6.6 million of stock-based compensation expense, before
taxes. Compared to the GAAP results, this is an increase of $0.07 per share,
in the aggregate, after the effect of taxes. Non-GAAP results for the full
fiscal year 2007 differ from results measured under U.S. GAAP as they exclude
$6.9 million of amortization of acquisition-related intangible assets, $24.6
million of stock-based compensation expense and $26.7 million of restructuring
charges, before taxes. Compared to the GAAP results, this is an increase of
$0.49 per share, in the aggregate, after the effect of taxes. A reconciliation
of U.S. GAAP to non-GAAP results is included at the end of this press release.

    "These results reflect the strength of our vision, and our execution
against that vision, as the leading provider of Performance Management
solutions for the enterprise," said Rob Ashe, Cognos president and chief
executive officer. "Our double-digit license revenue growth for both the
quarter and the year, as well as record earnings and a solid cash performance
in the quarter are the result of sound execution in close partnership with our
customers and partners.

    "We continued to advance our leadership position this quarter with a very
strong license revenue performance of $92 million from Cognos 8, core BI
license revenue growth of 12 percent for both the quarter and the year, and
solid execution on large contracts. Overall, I remain very confident about the
strength of our business and the scope of our opportunity as we move into
fiscal year 2008."

    Fourth Quarter Highlights:

    --  25 contracts greater than $1 million, compared with 18 last year; 59
contracts for the full fiscal year, compared with 40 last year

    --  285 contracts greater than $200,000, an increase of 18 percent over
last year

    --  Cognos 8 license revenue of $91.9 million; $238.1 million in its
first full year of general availability

    --  U.S. GAAP operating margin of 23.8 percent; Non-GAAP operating margin
of 26.7 percent

    --  Acquired Celequest, a leader in operational dashboard solutions

    Cognos' balance sheet remains strong. Fourth quarter operating cash flow
was $118.8 million. As a result, the company exited the quarter with $691.9
million in cash, cash equivalents, and short-term investments. Days sales
outstanding for accounts receivable was 70 days in the quarter, compared with
77 days for the same period last year.

    Business Outlook

    The company's outlook for the first quarter and full fiscal year 2008
assumes no significant changes in the economy, a U.S. GAAP tax rate of 22
percent and a Canadian dollar of $0.86 U.S. and a Euro of $1.32 U.S. for the
year.

    Management offers the following outlook for the first quarter of fiscal
year 2008 ending May 31, 2007:

    --  Revenue is expected to be in the range of $230 million to $240
million

    --  U.S. GAAP diluted earnings per share are expected to be in the range
of $0.19 to $0.24

    --  Non-GAAP diluted earnings per share are expected to be in the range
of $0.28 to $0.33

    Expected non-GAAP diluted earnings per share for the quarter ending May
31, 2007 exclude approximately $2.0 million of amortization of
acquisition-related intangible assets and approximately $8.4 million of
stock-based compensation expense, before taxes. This is an increase of
approximately $0.09 per share, in the aggregate, after the effect of taxes.

    Management offers the following outlook for the full fiscal year 2008
ending February 29, 2008:

    --  Revenue is expected to be in the range of $1.055 billion to $1.075
billion

    --  U.S. GAAP diluted earnings per share are expected to be in the range
of $1.66 to $1.73

    --  Non-GAAP diluted earnings per share are expected to be in the range
of $1.98 to $2.05

    Expected non-GAAP diluted earnings per share for fiscal year 2008 ending
February 29, 2008, exclude approximately $8.2 million of amortization of
acquisition-related intangible assets and approximately $31.6 million of
stock-based compensation expense, before taxes. This is an increase of
approximately $0.32 per share, in the aggregate, after the effect of taxes.

    Cognos management will host a conference call to present results for the
fourth quarter and full fiscal year 2007 and business outlook at 5:15 p.m.
Eastern Time, today, March 29, 2007.

    Listeners can access the conference call at 416-640-1907 or via Webcast
at http://www.cognos.com/company/investor/events/fy07q4. Presentation slides
for the call can be accessed at the Investor Relations area of the Cognos Web
site approximately 15 minutes prior to the start of the call.

    An archive of the Webcast can be accessed at
http://www.cognos.com/company/investor/events/fy07q4 following the conference
call.

    A replay of the conference call will be available from March 29 at 8:15
p.m. Eastern Time until April 12 at 11:59 p.m. Eastern Time. The replay can be
accessed at 416-640-1917. The passcode for the replay is 21222270#.

    Safe Harbor for Forward-Looking Statements

    Certain statements made in this press release that are not based on
historical information (including those in the section entitled "Business
Outlook") are forward-looking statements which are made pursuant to the safe
harbor provisions of Section 21E of the Securities Exchange Act of 1934 and
Section 138.4(9) of the Ontario Securities Act. Such forward-looking
statements relate to, among other things, the company's expectations with
respect to revenue and earnings per share (on both a GAAP and non-GAAP basis)
for the first quarter of fiscal year 2008 and the full fiscal year 2008; the
strength of Cognos' business and the market opportunity; the assumptions set
out in the "Business Outlook" including those relating to the economy, U.S.
GAAP tax rate, the exchange rate for the Canadian dollar and Euro in U.S.
currency; the amount and impact of amortization of acquisition-related
intangible assets, stock-based compensation before taxes; and other matters.
Certain assumptions were applied in making the forward-looking statements,
such as the business outlook, and material assumptions are set out above in
the section entitled "Business Outlook."

    These forward-looking statements are neither promises nor guarantees, but
involve risks, factors and uncertainties that may cause actual results to
differ materially from those in the forward-looking statements. Factors that
may cause such differences include, but are not limited to: a continuing
increase in the number of larger customer transactions and the related
lengthening of sales cycles and challenges in executing on these sales
opportunities; Cognos' transition to Cognos 8 and customer acceptance and
implementation of Cognos 8; the incursion of enterprise resource planning and
other major software companies into the BI market; continued BI and software
market consolidation and other competitive changes in the BI and software
market; currency fluctuations; the company's ability to identify, hire, train,
motivate, and retain highly qualified management/other key personnel
(including sales personnel) and its ability to manage changes and transitions
in management/other key personnel; the impact of the implementation of SFAS
No. 123R; the company's ability to predict the impact of its margin
improvement plan on expenses, employee retention and other matters; the
company's ability to develop, introduce and implement new products as well as
enhancements or improvements for existing products that respond to
customer/product requirements and rapid technological change; the impact of
global economic conditions on the company's business; the company's ability to
maintain or accurately forecast revenue or to anticipate and accurately
forecast a decline in revenue from any of its products or services; the
company's ability to compete in an intensely competitive market; new product
introductions and enhancements by competitors; the company's ability to select
and implement appropriate business models, plans and strategies and to execute
on them; fluctuations in the company's tax exposure; unauthorized use or
misappropriation of the company's intellectual property; claims by third
parties that the company's software infringes their intellectual property; the
risks inherent in international operations, such as the impact of the laws,
regulations, rules and pronouncements of foreign jurisdictions and their
interpretation by foreign courts, tribunals, regulatory and similar bodies;
the company's ability to identify, pursue, and complete acquisitions with
desired business results; the existence of regulatory barriers to integration;
the impact of the implementation of changes in the application of accounting
pronouncements and interpretations; as well as the risk factors discussed in
the company's most recent Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q, filed with the United States Securities and Exchange Commission
("SEC") and the Canadian Securities Administrators ("CSA"), as well as other
periodic reports filed with the SEC and the CSA. Readers should not place
undue reliance on any such forward-looking statements, which speak only as of
the date they are made. The company disclaims any obligation to publicly
update or revise any such statements to reflect any change in its expectations
or in events, conditions, or circumstances on which any such statements may be
based, or that may affect the likelihood that actual results will differ from
those contained in the forward-looking statements.

    Discussion of Non-GAAP Financial Measures

    In addition to our GAAP results, Cognos discloses adjusted operating
margin percentage, net income and net income per share, referred to
respectively as "non-GAAP operating margin percentage," "non-GAAP net income,"
and "non-GAAP net income per diluted share." These items, which are
collectively referred to as "Non-GAAP Measures," exclude the impact of
stock-based compensation and the amortization of acquisition-related
intangible assets. The Non-GAAP measures also exclude the restructuring
charges related to our margin improvement plan announced September 7, 2006, as
these charges are considered non-recurring. From time to time, subject to the
review and approval of the audit committee of the Board of Directors,
management may make other adjustments for expenses and gains that it does not
consider reflective of core operating performance in a particular period and
may modify the Non-GAAP Measures by excluding these expenses and gains.

    Management defines its core operating performance to be the revenues
recorded in a particular period and the expenses incurred within that period
which management has the capability of directly affecting in order to drive
operating income. Non-cash stock-based compensation, amortization of
acquisition-related intangible assets and restructuring charges are excluded
from our core operating performance because the decisions, which gave rise to
these expenses, were not made to drive revenue in a particular period, but
rather were made for our long-term benefit over multiple periods. While
strategic decisions, such as the decisions to issue stock-based compensation,
to acquire a company or to restructure the organization, are made to further
our long-term strategic objectives and do impact our income statement under
GAAP, these items affect multiple periods and management is not able to change
or affect these items within any particular period. Therefore, management
excludes these impacts in its planning, monitoring, evaluation and reporting
of our underlying revenue-generating operations for a particular period.

    Prior to the adoption of FAS 123R on March 1, 2006, the beginning of our
fiscal year 2007, management's practice was to exclude stock-based
compensation internally to evaluate performance. With the adoption of FAS
123R, management concluded that the Non-GAAP Measures could provide relevant
disclosure to investors as contemplated by Staff Accounting Bulletin 107. As
of the beginning of our current fiscal year, management also began excluding
amortization of acquisition-related intangible assets when assessing
appropriate adjustments for non-GAAP presentations. While both of these items
are recurring and affect GAAP net income, management does not use them to
assess the business' operational performance for any particular period
because: each item affects multiple periods and is unrelated to business
performance in a particular period; management is not able to change either
item in any particular period; and neither item contributes to the operational
performance of the business for any particular period.

    In the case of stock-based compensation, as disclosed in our Annual
Report on Form 10-K for the fiscal year ended February 28, 2006 ("2006 Form
10-K"), our compensation strategy is to use stock-based compensation "as a key
tool for ensuring that key employees and executives are engaged and motivated
to remain at the Company for the long term." Whether the grant of stock
options or Restricted Share Units are part of a Key Employee grant, are merit
based or are granted based on meeting specific performance criteria in a
measurement period, these grants vest over time and are aimed at long term
employee retention, rather than to motivate or reward operational performance
for any particular period. Thus, stock-based compensation expense varies for
reasons that are generally unrelated to operational performance in any
particular period. As further discussed in our 2006 Form 10-K, we use annual
cash bonus payouts for executives and other employees to motivate and reward
annual operational performance in the areas of revenue and operating margin
achievement. Since the beginning of fiscal year 2007, operating margin
achievement has been measured on a non-GAAP basis, excluding stock-based
compensation and amortization of acquisition-related intangible asset
expenses.

    Management views amortization of acquisition-related intangible assets,
such as the amortization of an acquired company's research and development
efforts, customer lists and customer relationships, as items arising during
the time that preceded the acquisition. It is a cost determined at the time of
the acquisition. While it is continually viewed for impairment, amortization
of the cost is a static expense, one that is typically not affected by
operations during any particular period, and does not contribute to
operational performance in any particular period.

    The margin improvement plan reflects a fundamental realignment of our
business, including significant personnel reductions within higher levels of
management. The restructuring charges are excluded in our Non-GAAP Measures
because they are significantly different in magnitude and character from
routine personnel adjustments that management makes when monitoring and
conducting the Company's core operations during any particular period. The
restructuring decision and related expenses are not related to operating
performance for any particular period, and are not subject to change by
management in any particular period. Instead, the restructuring is intended to
align our business model and expense structure to our position in the market
we are experiencing, and expect to experience, over the long term.

    Management also uses these Non-GAAP Measures to operate the business
because the excluded expenses are not under the control of, and, accordingly,
not used in evaluating the performance of, operations personnel within their
respective areas of responsibility. In the case of stock-based compensation
expense, the award of stock options is governed by the human resources and
compensation committee of the Board of Directors. With respect to
acquisition-related intangible assets and charges associated with the margin
improvement plan, these charges arise from acquisitions and a restructuring
that are the result of strategic decisions which are not the responsibility of
most levels of operational management. The restructuring charges, like our
stock-based compensation charges and amortization of acquisition-related
intangible assets, are excluded in management's internal evaluations of our
operating results and are not considered for management compensation purposes.

    Ultimately, stock-based compensation, amortization of acquisition-related
intangible assets and restructuring expenses are incurred to further our
long-term strategic objectives, rather than to achieve operational performance
objectives for any particular period. As such, supplementing GAAP disclosure
with non-GAAP disclosure using the Non-GAAP Measures provides management with
an additional view of operational performance by excluding expenses that are
not directly related to performance in any particular period. Further,
management considers this supplemental information to be beneficial to
shareholders because it shows our operating performance without the impact of
charges that are largely unrelated to the performance of our underlying
revenue-generating operations during the period in which the charges are
recorded. Including such disclosure in our filings also provides investors
with greater transparency on period-to-period performance and the manner in
which management views, conducts and evaluates the business.

    Because the Non-GAAP Measures are not calculated in accordance with GAAP,
they are used by management as a supplement to, and not an alternative to, or
superior to, financial measures calculated in accordance with GAAP. There are
a number of limitations on the Non-GAAP Measures, including the following:

    
     -- The Non-GAAP Measures do not have standardized meanings and may
         not be comparable to similar non-GAAP measures used or reported
         by other software companies.

     -- The Non-GAAP Measures do not reflect all costs associated with our
         operations determined in accordance with GAAP. For example:

        -- Non-GAAP operating margin performance and non-GAAP net income
            do not include stock-based compensation expense related to
            equity awards granted to our workforce. Cognos' stock
            incentive plans are important components of our employee
            incentive compensation arrangements and are reflected as
            expenses in our GAAP results under FAS 123R. While we include
            the dilutive impact of such equity awards in weighted average
            shares outstanding, the expense associated with stock-based
            awards is excluded from our Non-GAAP Measures.

        -- While amortization of acquisition-related intangible assets
            does not directly impact our current cash position, such
            expense represents the declining value of the technology or
            other intangible assets that we have acquired. These assets
            are amortized over their respective expected economic lives or
            impaired, if appropriate. The expense associated with this
            decline in value is excluded from our non-GAAP disclosures and
            therefore our Non-GAAP Measures do not include the costs of
            acquired intangible assets that supplement our research and
            development.

        -- Restructuring charges primarily represent severance charges
            associated with our margin improvement plan, which was
            announced September 7, 2006. These charges are a significant
            expense from a GAAP perspective and the costs associated with
            the restructuring would be operational in nature absent the
            margin improvement plan. Most of the charges are cash
            expenditures, which are excluded from our Non-GAAP Measures.

     -- Excluded expenses for stock-based compensation and amortization of
         acquisition-related intangible assets will recur and will impact
         our GAAP results. While restructuring costs are non-recurring
         activities, their occasional occurrence will impact GAAP results.
         As such, the Non-GAAP Measures should not be construed as an
         inference that the excluded items are unusual, infrequent or non-
         recurring.
    

    Because of these limitations, management recognizes that the Non-GAAP
Measures should not be considered in isolation or as an alternative to our
results as reported under GAAP. Management compensates for these limitations
by relying on the Non-GAAP Measures only as a supplement to our GAAP results.

    About Cognos:

    Cognos, the world leader in business intelligence and performance
management solutions, provides world-class enterprise planning and BI software
and services to help companies plan, understand and manage financial and
operational performance.

    Cognos brings together technology, analytical applications, best
practices, and a broad network of partners to give customers a complete
performance system. The Cognos performance system is an open and adaptive
solution that leverages an organization's ERP, packaged applications, and
database investments. It gives customers the ability to answer the questions -
How are we doing? Why are we on or off track? What should we do about it? -
and enables them to understand and monitor current performance while planning
future business strategies.

    Cognos serves more than 23,000 customers in more than 135 countries, and
its top 100 enterprise customers consistently outperform market indexes.
Cognos performance management solutions and services are also available from
more than 3,000 worldwide partners and resellers. For more information, visit
the Cognos Web site at http://www.cognos.com.

    Cognos and the Cognos logo are trademarks or registered trademarks of
Cognos Incorporated in the United States and/or other countries. All other
names are trademarks or registered trademarks of their respective companies.

    Note to Editors: Copies of previous Cognos press releases and Corporate
and product information are available on the Cognos Web site at
www.cognos.com, and at Business Wire's site at www.businesswire.com

    
    SUPPLEMENTARY INFORMATION (unaudited):

                              FY 2006                FY 2007
                              -------- -----------------------------------
                                 Q4       Q1       Q2       Q3       Q4
                              -------- -------- -------- -------- --------

    Total License Revenue
     ($000s)                  117,942   73,735   78,005   93,994  130,477

    Year-Over-Year License
     Revenue Growth               (9)%      4 %     (1)%     24 %     11 %

    Geographic Distribution:
    Total Revenue ($000s)
    Americas                  147,560  129,913  137,155  140,783  161,448
    Europe                     87,474   72,225   72,311   85,788  101,724
    Asia/Pacific               18,095   14,902   20,424   21,228   21,363
    % of Total
    Americas                      58 %     60 %     60 %     56 %     57 %
    Europe                        35 %     33 %     31 %     35 %     36 %
    Asia/Pacific                   7 %      7 %      9 %      9 %      7 %
    Year-Over-Year Revenue
     Growth - Total
    Americas                       5 %     12 %     12 %     15 %      9 %
    Europe                        (7)%      9 %      7 %     18 %     16 %
    Asia/Pacific                 (14)%    (18)%     (7)%     24 %     18 %
    Year-Over-Year Revenue
     Growth - In Local
     Currency
    Americas                       3 %     11 %     11 %     15 %     10 %
    Europe                         4 %     11 %      2 %      8 %      6 %
    Asia/Pacific                  (9)%    (15)%     (7)%     20 %     14 %

    Orders (License, Support,
     Services)
    (greater than) $ 1M                         18       13       10       11 
     25
    (greater than) $200K                       242      118      120      140 
    285
    (greater than) $ 50K                     1,241      728      819      806 
  1,437

    Average Selling Price
     (License Orders Only)
     ($000s)
    (greater than) $ 50K                       192      186      181      222 
    198

    New vs Existing License
     Revenue - % of Total
    New                            27%      29%      31%      23%      29%
    Existing                       73%      71%      69%      77%      71%

    Channel - License Revenue
     - % of Total
    Direct                         77%      70%      72%      73%      70%
    Third Party                    23%      30%      28%      27%      30%

    Other Statistics
    Cash, cash equivalents,
     and short-term
     investments ($000s)      551,002  610,184  618,084  599,273  691,893
    Days sales outstanding         77       58       57       61       70
    Total employees             3,574    3,622    3,662    3,494    3,557
    

    
                             COGNOS INCORPORATED
                      CONSOLIDATED STATEMENTS OF INCOME
                  (US$000s except share amounts, U.S. GAAP)

                                   Three months ended      Years ended
                                      February 28,        February 28,
                                   ------------------- -------------------
                                     2007      2006      2007      2006
                                   --------- --------- --------- ---------
                                       (Unaudited)
    Revenue
      Product license              $130,477  $117,942  $376,211  $343,247
      Product support               111,259    96,988   422,473   371,985
      Services                       42,799    38,199   180,580   162,268
    ----------------------------------------------------------------------
    Total revenue                   284,535   253,129   979,264   877,500
    ----------------------------------------------------------------------
    Cost of revenue
      Cost of product license         1,808     1,934     6,783     6,297
      Cost of product support        11,182     9,809    46,770    36,911
      Cost of services               39,020    31,795   160,927   129,917
    ----------------------------------------------------------------------
    Total cost of revenue            52,010    43,538   214,480   173,125
    ----------------------------------------------------------------------
    Gross margin                    232,525   209,591   764,784   704,375
    ----------------------------------------------------------------------
    Operating expenses
      Selling, general, and
       administrative               130,993   134,652   504,229   460,447
      Research and development       32,094    31,218   135,678   118,790
      Amortization of acquisition-
       related intangible assets      1,757     1,697     6,861     6,655
    ----------------------------------------------------------------------
    Total operating expenses        164,844   167,567   646,768   585,892
    ----------------------------------------------------------------------
    Operating income                 67,681    42,024   118,016   118,483
    Interest and other income, net    7,109     7,544    24,903    17,163
    ----------------------------------------------------------------------
    Income before taxes              74,790    49,568   142,919   135,646
    Income tax provision             13,934    10,274    27,222    27,070
    ----------------------------------------------------------------------
    Net income                     $ 60,856  $ 39,294  $115,697  $108,576
    ----------------------------------------------------------------------
    Net income per share
      Basic                        $   0.68  $   0.44  $   1.29  $   1.20
    ----------------------------------------------------------------------
      Diluted                      $   0.67  $   0.43  $   1.28  $   1.17
    ----------------------------------------------------------------------
    Weighted average number of
     shares (000s)
      Basic                          89,708    90,015    89,674    90,564
    ----------------------------------------------------------------------
      Diluted                        91,015    91,421    90,563    92,605
    ----------------------------------------------------------------------
    

    
                             COGNOS INCORPORATED
                         CONSOLIDATED BALANCE SHEETS
                             (US$000s, U.S. GAAP)

                                                 February 28, February 28,
                                                         2007         2006
    ----------------------------------------------------------------------
    Assets
    Current assets
     Cash and cash equivalents                   $   376,762  $   398,634
     Short-term investments                          315,131      152,368
     Accounts receivable                             221,393      216,850
     Income taxes receivable                           2,274        1,363
     Prepaid expenses and other current assets        29,724       31,978
     Deferred tax assets                              13,768       12,936
    ----------------------------------------------------------------------
                                                     959,052      814,129
    Fixed assets, net                                 72,256       75,821
    Intangible assets, net                            17,767       22,125
    Other assets                                       5,642        6,096
    Deferred tax assets                                5,950        6,928
    Goodwill                                         232,094      225,709
    ----------------------------------------------------------------------
                                                 $ 1,292,761  $ 1,150,808
    ----------------------------------------------------------------------
    Liabilities
    Current liabilities
     Accounts payable                            $    36,970  $    33,975
     Accrued charges                                  36,628       30,799
     Salaries, commissions, and related items         96,970       73,229
     Income taxes payable                              8,743        6,009
     Deferred income taxes                             6,363        4,118
     Deferred revenue                                284,896      246,562
    ----------------------------------------------------------------------
                                                     470,570      394,692
    Deferred income taxes                             30,751       30,344
    ----------------------------------------------------------------------
                                                     501,321      425,036
    ----------------------------------------------------------------------
    Commitments and Contingencies
    Stockholders' Equity
    Capital stock
     Common shares and additional paid-in
      capital (2007 - 89,725,774; 2006 -
      89,826,706)                                    535,589      439,680
     Treasury shares (2007 - 617,369; 2006 -
      55,970)                                        (22,064)      (1,563)
    Retained earnings                                273,575      283,168
    Accumulated other comprehensive income             4,340        4,487
    ----------------------------------------------------------------------
                                                     791,440      725,772
    ----------------------------------------------------------------------
                                                 $ 1,292,761  $ 1,150,808
    ----------------------------------------------------------------------
    

    
                             COGNOS INCORPORATED
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (US$000s, U.S. GAAP)

                                 Three Months Ended       Years Ended
                                    February 28,         February 28,
                                   2007      2006       2007       2006
    ----------------------------------------------------------------------
    Cash flows from operating        (Unaudited)
     activities
     Net income                  $ 60,856  $ 39,294  $ 115,697  $ 108,576
     Non-cash items
       Depreciation and
        amortization                7,706     7,653     30,407     29,362
       Amortization of deferred
        stock-based compensation    4,645     5,805     19,912     19,500
       Deferred income taxes        1,185     5,236      7,622      5,197
       Loss on disposal of fixed
        assets                         10       166        326        521
    ----------------------------------------------------------------------
                                   74,402    58,154    173,964    163,156
     Change in non-cash working
      capital
       Decrease (increase) in
        accounts receivable       (52,675)  (58,358)       409    (30,245)
       Decrease (increase) in
        income tax receivable       5,088     6,206       (888)      (261)
       Decrease (increase) in
        prepaid expenses and
        other current assets       (7,118)  (10,472)     3,501     (7,563)
       Increase in accounts
        payable                     8,966     7,963      2,283      3,409
       Increase (decrease) in
        accrued charges              (804)    5,012      4,898       (714)
       Increase (decrease) in
        salaries, commissions,
        and related items           7,308    16,269     22,230    (16,168)
       Increase (decrease) in
        income taxes payable        3,886    (3,139)     2,298    (15,461)
       Increase in deferred
        revenue                    79,717    71,362     22,303     30,606
    ----------------------------------------------------------------------
    Net cash provided by
     operating activities         118,770    92,997    230,998    126,759
    ----------------------------------------------------------------------
    Cash flows from investing
     activities
     Maturity of short-term
      investments                  82,634   117,948    602,211    450,727
     Purchase of short-term
      investments                 (56,938)  (44,187)  (762,489)  (458,543)
     Additions to fixed assets     (3,533)   (4,766)   (18,711)   (21,840)
     Additions to intangible
      assets                         (435)     (468)    (1,497)    (1,125)
     Decrease in other assets         182       311         50        426
     Acquisition costs, net of
      cash and cash equivalents   (10,516)        -    (10,516)    (4,546)
    ----------------------------------------------------------------------
    Net cash provided by (used
     in) investing activities      11,394    68,838   (190,952)   (34,901)
    ----------------------------------------------------------------------
    Cash flows from financing
     activities
     Issue of common shares        41,632     6,455     82,441     32,504
     Purchase of treasury shares   (2,727)     (713)   (21,185)      (890)
     Repurchase of shares         (49,984)  (24,144)  (125,057)   (97,527)
    ----------------------------------------------------------------------
    Net cash used in financing
     activities                   (11,079)  (18,402)   (63,801)   (65,913)
    ----------------------------------------------------------------------
    Effect of exchange rate
     changes on cash                 (600)   (1,929)     1,883     (5,659)
    ----------------------------------------------------------------------
    Net increase (decrease) in
     cash and cash equivalents    118,485   141,504    (21,872)    20,286
    Cash and cash equivalents,
     beginning of period          258,277   257,130    398,634    378,348
    ----------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                376,762   398,634    376,762    398,634
    Short-term investments, end
     of period                    315,131   152,368    315,131    152,368
    ----------------------------------------------------------------------
    Cash, cash equivalents, and
     short-term investments, end
     of period                   $691,893  $551,002  $ 691,893  $ 551,002
    ----------------------------------------------------------------------
    

    
                             Cognos Incorporated
               Unaudited Reconciliation of Non-GAAP Adjustments
                  (US$000s except share amounts, U.S. GAAP)

    The following tables reflect selected Cognos' non-GAAP results
     reconciled to GAAP results:

                                   Three months ended          Years ended
                                         February 28,         February 28,
                                   ---------------------------------------
                                     2007      2006     2007       2006
                                   ---------------------------------------
    Operating Income
    GAAP Operating Income          $ 67,681  $42,024  $118,016  $ 118,483
    Plus:
     Amortization of acquisition-
      related intangible assets       1,757    1,697     6,861      6,655
     Stock-based compensation
      expense                         6,633    5,803    24,594     19,500
     Restructuring charge              (185)       -    26,713          -
                                   ---------------------------------------
    Non-GAAP Operating Income      $ 75,886  $49,524  $176,184  $ 144,638
                                   ---------------------------------------

    Operating Margin Percentage
    GAAP Operating Margin
     Percentage                       23.8 %    16.6%     12.1%      13.5%
    Plus:
     Amortization of acquisition-
      related intangible assets         0.6      0.7       0.7        0.8
     Stock-based compensation
      expense                           2.3      2.3       2.5        2.2
     Restructuring charge              (0.0)       -       2.7          -
                                   ---------------------------------------
    Non-GAAP Operating Margin
     Percentage                       26.7 %    19.6%     18.0%      16.5%
                                   ---------------------------------------

    Net Income
    GAAP Net Income                $ 60,856  $39,294  $115,697  $ 108,576
    Plus:
     Amortization of acquisition-
      related intangible assets       1,757    1,697     6,861      6,655
     Stock-based compensation
      expense                         6,633    5,803    24,594     19,500
     Restructuring charge              (185)       -    26,713          -
    Less:
      Income tax effect of
       amortization of
       acquisition-related
       intangible assets               (646)    (640)   (2,562)    (2,512)
      Income tax effect of stock-
       based compensation expense    (1,532)    (956)   (5,099)    (2,595)
      Income tax effect of
       restructuring charge              58        -    (6,313)         -
                                   ---------------------------------------
    Non-GAAP Net Income            $ 66,941  $45,198  $159,891  $ 129,624
                                   ---------------------------------------

    Net Income per diluted share
    GAAP Net Income per diluted
     share                         $   0.67  $  0.43  $   1.28  $    1.17
    Plus:
     Amortization of acquisition-
      related intangible assets        0.02     0.02      0.08       0.07
     Stock-based compensation
      expense                          0.07     0.06      0.27       0.21
     Restructuring charge             (0.00)       -      0.29          -
    Less:
      Income tax effect of
       amortization of
       acquisition-related
       intangible assets              (0.01)   (0.01)    (0.03)     (0.02)
      Income tax effect of stock-
       based compensation expense     (0.01)   (0.01)    (0.05)     (0.03)
      Income tax effect of
       restructuring charge            0.00        -     (0.07)         -
                                   ---------------------------------------
    Non-GAAP Net Income per
     diluted share                 $   0.74  $  0.49  $   1.77  $    1.40
                                   ---------------------------------------

    Shares used in computing
     diluted net income per share    91,015   91,421    90,563     92,605
    

    
    The following table shows the classification of stock-based
     compensation expense:

                                      Three months ended       Years ended
                                            February 28,      February 28,
                                      ------------------------------------
                                        2007      2006     2007     2006
                                      ------------------------------------
    Cost of Product Support           $    100  $   144  $   355  $   505
    Cost of Services                       205      247      766      897
    Selling, General and
     Administrative                      5,726    4,308   21,441   14,048
    Research and Development               602    1,104    2,032    4,050
                                      ------------------------------------
    Total                             $  6,633  $ 5,803  $24,594  $19,500
                                      ------------------------------------
    

    
    The following table shows the classification of the restructuring
     charge:

                                      Three months ended        Year ended
                                       February 28, 2007 February 28, 2007
                                      ------------------ -----------------
    Cost of Product Support                     $   (12)          $ 1,339
    Cost of Services                               (180)            5,181
    Selling, General and
     Administrative                                 112            15,368
    Research and Development                       (105)            4,825
                                      ------------------ -----------------
    Total                                       $  (185)          $26,713
                                      ------------------ -----------------
    

    
                             COGNOS INCORPORATED
                    Reconciliation of US GAAP to Non-GAAP
               Diluted Earnings per Share for Business Outlook
                                 (Unaudited)

                                  Three Months ending Twelve Months ending
                                         May 31, 2007    February 29, 2008
                                  ------------------- --------------------
    Projected US GAAP Diluted
     Earnings per Share                $0.19 - $0.24        $1.66 - $1.73
    Plus:
     Amortization of acquisition-
      related intangible assets                 0.02                 0.09
     Stock-based compensation
      expense                                   0.09                 0.35
    Less:
     Income tax effect of non-
      GAAP adjustments                         (0.02)               (0.12)
                                  ------------------- --------------------
    Projected non-GAAP Diluted
     Earnings per Share                $0.28 - $0.33        $1.98 - $2.05
                                  ------------------- --------------------
    




For further information:

For further information: Cognos Investor Relations: John Lawlor,
613-738-3503 john.lawlor@cognos.com or Media Contacts: Cognos Sean Reid,
613-738-1440 Sean.reid@cognos.com or LP&P Kristen Orfanos, 781-782-5852
Kristen_Orfanos@lpp.com

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