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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 10–Q
 
x    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended May 31, 2002
 
OR
 
¨    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
For The Transition Period From              To             
 
Commission File Number 0-16006
 
COGNOS INCORPORATED
(Exact Name Of Registrant As Specified In Its Charter)
 
CANADA
  
98-0119485
(State Or Other Jurisdiction Of
Incorporation Or Organization)
  
(IRS Employer
Identification No.)
3755 Riverside Drive,
    
P.O. Box 9707, Station T,
    
Ottawa, Ontario, Canada
  
K1G 4K9
(Address Of Principal Executive Offices)
  
(Zip Code)
 
(613) 738-1440
(Registrant’s Telephone Number, Including Area Code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES x     NO ¨
 
The number of shares outstanding of the registrant’s only class of Common Stock as of June 30, 2002, was 88,008,372.

Table of Contents
COGNOS INCORPORATED
 
INDEX
 
           
PAGE
    
PART I—FINANCIAL INFORMATION
       
Item 1.
          
         
3
         
4
         
5
         
6
Item 2.
        
12
Item 3.
        
21
    
PART II—OTHER INFORMATION
       
Item 1.
        
22
Item 4.
        
23
Item 6.
        
24
         
25

2

Table of Contents
PART I—FINANCIAL INFORMATION
 
Item 1.     Consolidated Financial Statements
 
COGNOS INCORPORATED
 
CONSOLIDATED STATEMENTS OF INCOME
(US$000s except share amounts, U.S. GAAP)
(Unaudited)
 
      
Three months ended May 31,
  
      
2002
       
2001
  
Revenue
                      
Product license
     
$
49,835
 
     
$
43,104
 
Product support
     
 
48,179
 
     
 
41,843
 
Services
     
 
22,116
 
     
 
23,069
 
      
    
Total revenue
     
 
120,130
 
     
 
108,016
 
      
    
Operating expenses
                      
Cost of product license
     
 
734
 
     
 
1,106
 
Cost of product support
     
 
4,413
 
     
 
4,294
 
Selling, general, and administrative
     
 
82,265
 
     
 
88,873
 
Research and development
     
 
19,698
 
     
 
19,422
 
Special charges
     
 
—
 
     
 
12,798
 
      
    
Total operating expenses
     
 
107,110
 
     
 
126,493
 
      
    
Operating income (loss)
     
 
13,020
 
     
 
(18,477
)
Interest expense
     
 
(46
)
     
 
(84
)
Interest income
     
 
1,601
 
     
 
2,812
 
      
    
Income (loss) before taxes
     
 
14,575
 
     
 
(15,749
)
Income tax provision (benefit)
     
 
4,664
 
     
 
(4,647
)
      
    
Net income (loss)
     
$
9,911
 
     
$
(11,102
)
      
    
Net income (loss) per share
                      
Basic
     
 
$0.11
 
     
 
$(0.13
)
      
    
Diluted
     
 
$0.11
 
     
 
$(0.13
)
      
    
Weighted average number of shares (000s)
                      
Basic
     
 
88,000
 
     
 
88,023
 
      
    
Diluted
     
 
91,531
 
     
 
88,023
 
      
    
 
(See accompanying notes)

3

Table of Contents
COGNOS INCORPORATED
 
CONSOLIDATED BALANCE SHEETS
(US$000s, U.S. GAAP)
 
    
May 31, 2002
     
February 28, 2002
  
    
(Unaudited)
         
Assets
                  
Current assets
                  
Cash and cash equivalents
   
$
281,030
 
   
$
192,900
 
Short-term investments
   
 
57,229
 
   
 
121,629
 
Accounts receivable
   
 
80,210
 
   
 
114,059
 
Inventories
   
 
791
 
   
 
537
 
Prepaid expenses
   
 
7,126
 
   
 
6,765
 
Deferred tax assets
   
 
6,279
 
   
 
6,404
 
    
  
    
 
432,665
 
   
 
442,294
 
Fixed assets
   
 
61,914
 
   
 
59,008
 
Goodwill
   
 
15,270
 
   
 
15,230
 
Intangible assets
   
 
4,743
 
   
 
5,620
 
    
  
    
 
514,592
 
   
 
522,152
 
    
  
Liabilities
                  
Current liabilities
                  
Accounts payable
   
 
20,474
 
   
 
26,387
 
Accrued charges
   
 
33,069
 
   
 
34,210
 
Salaries, commissions, and related items
   
 
33,457
 
   
 
37,453
 
Income taxes payable
   
 
3,377
 
   
 
6,167
 
Deferred revenue
   
 
109,217
 
   
 
110,504
 
    
  
    
 
199,594
 
   
 
214,721
 
Long-term liabilities
   
 
9,192
 
   
 
9,131
 
Deferred income taxes
   
 
2,900
 
   
 
3,127
 
    
  
    
 
211,686
 
   
 
226,979
 
    
  
Stockholders’ Equity
                  
Capital stock
                  
Common shares            (May 31, 2002 – 87,904,533;
              February 28, 2002 – 87,997,220)
   
 
154,910
 
   
 
151,637
 
Retained earnings
   
 
159,358
 
   
 
158,762
 
Accumulated other comprehensive income
   
 
(11,362
)
   
 
(15,226
)
    
  
    
 
302,906
 
   
 
295,173
 
    
  
    
$
514,592
 
   
$
522,152
 
    
  
 
(See accompanying notes)

4

Table of Contents
COGNOS INCORPORATED
 
C ONSOLIDATED STATEMENTS OF CASH FLOWS
(US$000s, U.S. GAAP)
(Unaudited)
 
      
Three months ended
May 31,
  
      
2002
       
2001
  
Cash provided by (used in) operating activities
                      
Net income (loss)
     
$
9,911
 
     
$
(11,102
)
Non-cash items
                      
Depreciation and amortization
     
 
4,699
 
     
 
7,158
 
Amortization of deferred stock-based compensation
     
 
185
 
     
 
577
 
Amortization of other deferred compensation
     
 
148
 
     
 
666
 
Deferred income taxes
     
 
(552
)
     
 
(227
)
Loss on disposal of fixed assets
     
 
97
 
     
 
215
 
      
    
      
 
14,488
 
     
 
(2,713
)
Change in non-cash working capital
                      
Decrease in accounts receivable
     
 
36,590
 
     
 
46,163
 
Decrease (increase) in inventories
     
 
(229
)
     
 
153
 
Decrease (increase) in prepaid expenses
     
 
(18
)
     
 
1,499
 
Increase in income tax assets
     
 
—
 
     
 
(8,392
)
Decrease in accounts payable
     
 
(6,671
)
     
 
(11,388
)
Increase (decrease) in accrued charges
     
 
(2,068
)
     
 
6,158
 
Increase (decrease) in salaries, commissions, and related items
     
 
(5,106
)
     
 
819
 
Decrease in income taxes payable
     
 
(2,778
)
     
 
(16,131
)
Decrease in deferred revenue
     
 
(3,780
)
     
 
(7,460
)
      
    
      
 
30,428
 
     
 
8,708
 
      
    
Cash provided by (used in) investing activities
                      
Maturity of short-term investments
     
 
113,186
 
     
 
118,336
 
Purchase of short-term investments
     
 
(47,626
)
     
 
(60,606
)
Additions to fixed assets
     
 
(4,269
)
     
 
(6,813
)
      
    
      
 
61,291
 
     
 
50,917
 
      
    
Cash provided by (used in) financing activities
                      
Issue of common shares
     
 
3,765
 
     
 
3,569
 
Repurchase of shares
     
 
(9,992
)
     
 
—
 
Increase in (repayment of) long-term debt and long-term liabilities
     
 
(16
)
     
 
96
 
      
    
      
 
(6,243
)
     
 
3,665
 
      
    
Effect of exchange rate changes on cash
     
 
2,653
 
     
 
(808
)
      
    
Net increase in cash and cash equivalents
     
 
88,129
 
     
 
62,482
 
Cash and cash equivalents, beginning of period
     
 
192,901
 
     
 
115,293
 
      
    
Cash and cash equivalents, end of period
     
 
281,030
 
     
 
177,775