Cognos Incorporated, the world leader in business intelligence (BI) and corporate performance management (CPM) solutions, today announced record results for the Company's first quarter of fiscal year 2005, ended May 31, 2004. Revenue was $173.6 million, an increase of 15 percent from the first quarter of last fiscal year, when revenue was $150.6 million. Net income for the first quarter of fiscal 2005 was $20.1 million, resulting in diluted earnings per share of $0.22. This is an increase of 62 percent compared with net income of $12.4 million and diluted earnings per share of $0.14 for the first quarter of last fiscal year. Cognos ReportNet and Enterprise Planning both displayed strong momentum, driving overall license revenue growth of 14 percent in the quarter. License revenue reached $66.1 million, compared to $57.8 million in the same period last year. Highlights of the Quarter -- Eight contracts greater than $1 million -- 569 contracts greater than $50,000, an increase of 28 percent over the first quarter of last fiscal year; 91 contracts greater than $200,000, up 57 percent over last year -- Strong customer and industry analyst response to corporate performance management, with growing customer adoption of the complete Cognos CPM solution -- Major customer wins across all geographies and verticals, including Abbott Laboratories, Austrian Airlines, Avaya, DaimlerChrysler, Electrolux, Florida Power and Light, Goodyear, Princeton University, RiteAid, Singapore Airlines, U.S. Department of Defense, and U.S. Marine Corps. "Cognos delivered an outstanding first quarter, with strong revenue growth, a significantly higher operating margin, and record profitability," said Cognos President and Chief Executive Officer Rob Ashe. "Our sales pipeline is healthy and our sales force is energized. And with our strong management team and new product pipeline, we are confident we can continue to build on our current business momentum. "Our vision remains clear and consistent, and is centered on customers, products, innovation and execution. With a strong product solution for our customers, a clear vision to build great relationships, and a focused team, we believe that the opportunity for Cognos has never been better." Cognos' balance sheet continues to strengthen. Cash flow from operations was $33.1 million. As a result, the Company increased cash, cash equivalents, and short-term investments by $28.1 million to $416.4 million at the end of the first quarter. Business Outlook Management offers the following outlook for the second quarter of fiscal 2005, ending August 31, 2004: -- Revenue is expected to be in the range of $180 million to $182 million; -- Diluted earnings per share are expected to be in the range of $0.25 to $0.26. Management offers the following outlook for the full fiscal year 2005, ending February 28, 2005: -- Revenue is expected to be about $775 million; -- Diluted earnings per share are expected to be about $1.22. SUPPLEMENTARY INFORMATION (unaudited): FY 2004 FY 2005 Q1 Q2 Q3 Q4 Q1 Revenue Statistics ($000s) Total License 57,801 62,234 72,551 93,542 66,070 Year-Over-Year Revenue Growth Statistics Total License 16% 13% 17% 18% 14% Geographic Distribution Total Revenue ($000s) Americas 90,117 96,168 96,079 114,564 104,831 Europe 47,043 47,459 58,838 74,701 54,989 Asia/Pacific 13,403 14,554 17,310 12,881 13,799 % of Total Americas 60% 61% 56% 57% 60% Europe 31% 30% 34% 37% 32% Asia/Pacific 9% 9% 10% 6% 8% Year-Over-Year Revenue Growth - Total Americas 14% 19% 14% 20% 16% Europe 40% 21% 34% 32% 17% Asia/Pacific 79% 60% 67% 10% 3% Pro Forma Year-Over-Year Revenue Growth - In Local Currency Americas 13% 18% 12% 17% 15% Europe 16% 9% 16% 14% 7% Asia/Pacific 61% 46% 42% (8%) (9%) Pro Forma Year-Over-Year Revenue Growth - Due to Foreign Currency Americas 1% 1% 2% 3% 1% Europe 24% 12% 18% 18% 10% Asia/Pacific 18% 14% 25% 18% 12% New vs Existing License Revenue - % of Total New 30% 32% 33% 31% 31% Existing 70% 68% 67% 69% 69% Channel - License Revenue - % of Total Direct 71% 69% 70% 80% 73% Third Party 29% 31% 30% 20% 27% Other Statistics Cash, cash equivalents, and short-term investments ($000s) 263,896 284,442 320,895 388,241 416,362 Days sales outstanding 63 62 62 68 55 Total employees 3,016 3,011 3,001 2,966 3,027 COGNOS INCORPORATED CONSOLIDATED STATEMENTS OF INCOME (US$000s except share amounts, U.S. GAAP) (Unaudited) Three months ended May 31, 2004 2003 -------- -------- Revenue Product license $ 66,070 $ 57,801 Product support 74,787 64,127 Services 32,762 28,635 -------- -------- Total revenue 173,619 150,563 -------- -------- Cost of revenue Cost of product license 621 1,111 Cost of product support 7,175 6,855 Cost of services 25,475 20,859 -------- -------- Total cost of revenue 33,271 28,825 -------- -------- -------- -------- Gross margin 140,348 121,738 -------- -------- Operating expenses Selling, general, and administrative 90,509 80,238 Research and development 24,325 23,294 Amortization of intangible assets 1,372 2,105 -------- -------- Total operating expenses 116,206 105,637 -------- -------- Operating income 24,142 16,101 Interest expense (71) (171) Interest income 1,404 1,044 -------- -------- Income before taxes 25,475 16,974 Income tax provision 5,350 4,583 -------- -------- Net income $ 20,125 $ 12,391 ======== ======== Net income per share Basic $0.22 $0.14 ======== ======== Diluted $0.22 $0.14 ======== ======== Weighted average number of shares (000s) Basic 90,091 88,527 ======== ======== Diluted 92,692 90,924 ======== ======== COGNOS INCORPORATED CONSOLIDATED BALANCE SHEETS (US$000s, U.S. GAAP) May 31, February 29, 2004 2004 -------- ---------- (Unaudited) Assets Current assets Cash and cash equivalents $327,441 $224,830 Short-term investments 88,921 163,411 Accounts receivable 106,431 152,859 Prepaid expenses and other current assets 15,601 16,668 Deferred tax assets 2,032 2,445 -------- -------- 540,426 560,213 Fixed assets 68,171 71,292 Intangible assets 22,341 23,643 Goodwill 172,323 172,323 -------- -------- $803,261 $827,471 ======== ======== Liabilities Current liabilities Accounts payable $ 23,573 $ 30,698 Accrued charges 22,087 25,483 Salaries, commissions, and related items 43,360 59,903 Income taxes payable 3,550 5,875 Deferred revenue 164,620 178,752 -------- -------- 257,190 300,711 Deferred income taxes 18,514 18,098 -------- -------- 275,704 318,809 -------- -------- Stockholders' Equity Capital stock Common shares and additional paid-in capital (May 31, 2004 - 90,238,463; February 29, 2004 - 89,902,895) 216,146 206,499 Treasury shares (May 31, 2004 - 40,375; February 29, 2004 - 43,500) (980) (1,065) Deferred stock-based compensation (650) (730) Retained earnings 316,197 305,399 Accumulated other comprehensive loss (3,156) (1,441) -------- -------- 527,557 508,662 -------- -------- $803,261 $827,471 ======== ======== COGNOS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (US$000s, U.S. GAAP) (Unaudited) Three months ended May 31, 2004 2003 -------- -------- Cash flows from operating activities Net income $ 20,125 $ 12,391 Non-cash items Depreciation and amortization 6,498 7,148 Amortization of deferred stock-based compensation 185 169 Amortization of other deferred compensation 7 62 Deferred income taxes 1,016 (2,954) Loss on disposal of fixed assets 1 454 -------- -------- 27,832 17,270 Change in non-cash working capital Decrease in accounts receivable 44,933 37,006 Decrease (increase) in prepaid expenses and other current assets 870 (3,088) Decrease in accounts payable (6,967) (8,625) Decrease in accrued charges (3,195) (5,809) Decrease in salaries, commissions, and related items (15,743) (15,793) Decrease in income taxes payable (2,092) (138) Decrease in deferred revenue (12,549) (10,282) -------- -------- Net cash provided by operating activities 33,089 10,541 -------- -------- Cash flows from investing activities Maturity of short-term investments 145,593 63,752 Purchase of short-term investments (71,395) (44,700) Additions to fixed assets (3,073) (6,409) Additions to intangible assets (69) (321) Business acquisitions - (108) -------- -------- Net cash provided by investing activities 71,056 12,214 -------- -------- Cash flows from financing activities Issue of common shares 10,289 12,466 Purchase of treasury shares - (564) Repurchase of shares (9,989) - Decrease in long-term debt and long-term liabilities - (1,697) -------- -------- Net cash provided by financing activities 300 10,205 -------- -------- Effect of exchange rate changes on cash (1,834) 5,122 -------- -------- Net increase in cash and cash equivalents 102,611 38,082 Cash and cash equivalents, beginning of period 224,830 162,588 -------- -------- Cash and cash equivalents, end of period 327,441 200,670 Short-term investments, end of period 88,921 63,226 -------- -------- Cash, cash equivalents, and short-term investments, end of period $416,362 $263,896 ======== ========