---

Exhibit 99.1

COGNOS INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(US$000s except share amounts, CDN GAAP)(Unaudited)

|                                                   |  |                                |   |                               |   |            |   |            |  
|-------------------------------------------------- |  | ------------------------------ | - | ----------------------------- | - | ---------- | - | ---------- | -
|                                                   |  | Three months endedNovember 30, |   | Nine months endedNovember 30, |  
|                                                  
|                                                   |  | 2004                           |   | 2003                          |   | 2004       |   | 2003       |  
|                                                  
|                                                   |  |                                |   | (restated                     | ) |            |   | (restated  | )
|Revenue                                            |  |                                |   | Note 3                        |   |            |   | Note 3     |  
|Product license                                    |  | $   91,580                     |   | $   72,551                    |   | $ 233,012  |   | $ 192,586  |  
|Product support                                    |  | 81,031                         |   | 68,676                        |   | 231,974    |   | 198,965    |  
|Services                                           |  | 37,755                         |   | 31,000                        |   | 104,219    |   | 89,420     |  
|                                                  
|Total revenue                                      |  | 210,366                        |   | 172,227                       |   | 569,205    |   | 480,971    |  
|                                                  
|Cost of revenue                                    | 
|Cost of product license                            |  | 578                            |   | 1,121                         |   | 1,745      |   | 3,338      |  
|Cost of product support                            |  | 8,508                          |   | 7,051                         |   | 22,757     |   | 20,793     |  
|Cost of services                                   |  | 28,574                         |   | 22,924                        |   | 81,506     |   | 65,286     |  
|                                                  
|Total cost of revenue                              |  | 37,660                         |   | 31,096                        |   | 106,008    |   | 89,417     |  
|                                                  
|Gross margin                                       |  | 172,706                        |   | 141,131                       |   | 463,197    |   | 391,554    |  
|                                                  
|Operating expenses                                 | 
|Selling, general, and administrative               |  | 102,206                        |   | 85,959                        |   | 282,945    |   | 247,692    |  
|Research and development                           |  | 26,987                         |   | 22,265                        |   | 76,694     |   | 67,273     |  
|Amortization of stock based compensation           |  | 4,989                          |   | 5,905                         |   | 12,275     |   | 19,074     |  
|Amortization of intangible assets                  |  | 1,922                          |   | 2,601                         |   | 5,163      |   | 7,671      |  
|Investment tax credits                             |  | (4,411                         | ) | (4,609                        | ) | (12,005    | ) | (11,864    | )
|                                                  
|Total operating expenses                           |  | 131,693                        |   | 112,121                       |   | 365,072    |   | 329,846    |  
|                                                  
|Operating income                                   |  | 41,013                         |   | 29,010                        |   | 98,125     |   | 61,708     |  
|Interest expense                                   |  | (22                            | ) | (552                          | ) | (101       | ) | (877       | )
|Interest income                                    |  | 1,909                          |   | 975                           |   | 5,094      |   | 3,562      |  
|                                                  
|Income before taxes                                |  | 42,900                         |   | 29,433                        |   | 103,118    |   | 64,393     |  
|Income tax provision                               |  | 12,914                         |   | 11,412                        |   | 32,140     |   | 29,626     |  
|                                                  
|Net income                                         |  | $   29,986                     |   | $   18,021                    |   | $   70,978 |   | $   34,767 |  
|Retained earnings at beginning of the period       |  | 228,245                        |   | 245,629                       |   | 205,768    |   | 215,714    |  
|Retroactive adjustment due to change in accounting | 
|policy                                             |  | --                             |   | (90,939                       | ) | --         |   | (77,770    | )
|Repurchase of shares                               |  | (7,446                         | ) | --                            |   | (25,961    | ) | --         |  
|                                                  
|Retained earnings at end of the period             |  | $ 250,785                      |   | $ 172,711                     |   | $ 250,785  |   | $ 172,711  |  
|                                                  
|Net income per share                               | 
|Basic                                              |  | $0.33                          |   | $0.20                         |   | $0.79      |   | $0.39      |  
|                                                  
|Diluted                                            |  | $0.32                          |   | $0.19                         |   | $0.76      |   | $0.38      |  
|                                                  
|Weighted average number of shares (000s)           | 
|Basic                                              |  | 90,621                         |   | 89,692                        |   | 90,364     |   | 89,133     |  
|                                                  
|Diluted                                            |  | 93,235                         |   | 92,614                        |   | 92,925     |   | 91,779     |  
|                                                  

(See accompanying notes)

62

---

COGNOS INCORPORATEDCONSOLIDATED BALANCE
SHEETS(US$000s, CDN GAAP)

|                                                                 |  |                  |   |                  |  
|---------------------------------------------------------------- |  | ---------------- | - | ---------------- | -
|                                                                 |  | November 30,2004 |   | February 29,2004 |  
|                                                                
|Assets                                                           |  | (Unaudited       | ) | (Note 1          | )
|Current assets                                                   | 
|Cash and cash equivalents                                        |  | $ 313,937        |   | $ 224,830        |  
|Short-term investments                                           |  | 125,430          |   | 163,411          |  
|Accounts receivable                                              |  | 142,763          |   | 152,859          |  
|Prepaid expenses and other current assets                        |  | 14,832           |   | 16,668           |  
|Deferred tax assets                                              |  | 1,656            |   | 2,445            |  
|                                                                
|                                                                 |  | 598,618          |   | 560,213          |  
|Fixed assets                                                     |  | 73,622           |   | 71,292           |  
|Intangible assets                                                |  | 29,722           |   | 25,269           |  
|Goodwill                                                         |  | 222,883          |   | 172,323          |  
|                                                                
|                                                                 |  | $ 924,845        |   | $ 829,097        |  
|                                                                
|Liabilities                                                      | 
|Current liabilities                                              | 
|Accounts payable                                                 |  | $   33,415       |   | $   30,698       |  
|Accrued charges                                                  |  | 30,524           |   | 25,483           |  
|Salaries, commissions, and related items                         |  | 68,576           |   | 59,903           |  
|Income taxes payable                                             |  | 13,809           |   | 5,875            |  
|Deferred revenue                                                 |  | 153,137          |   | 178,752          |  
|                                                                
|                                                                 |  | 299,461          |   | 300,711          |  
|Deferred income taxes                                            |  | 22,932           |   | 18,730           |  
|                                                                
|                                                                 |  | 322,393          |   | 319,441          |  
|                                                                
|Stockholders Equity                                             | 
|Capital stock                                                    | 
|Common shares and additional paid-in capital                     | 
|(November 30, 2004 - 90,825,717; February 29, 2004 - 89,902,895) |  | 392,139          |   | 339,297          |  
|Treasury shares                                                  | 
|(November 30, 2004 - 46,375; February 29, 2004 - 43,500)         |  | (1,199           | ) | (1,065           | )
|Deferred stock-based compensation                                |  | (42,872          | ) | (32,903          | )
|Retained earnings                                                |  | 250,785          |   | 205,768          |  
|Accumulated other comprehensive income (loss)                    |  | 3,599            |   | (1,441           | )
|                                                                
|                                                                 |  | 602,452          |   | 509,656          |  
|                                                                
|                                                                 |  | $ 924,845        |   | $ 829,097        |  
|                                                                

(See accompanying notes)

63

---

COGNOS INCORPORATEDCONSOLIDATED STATEMENTS
OF CASH FLOWS(US$000s, CDN GAAP)(Unaudited)

|                                                                  |  |                                |   |                               |   |            |   |            |  
|----------------------------------------------------------------- |  | ------------------------------ | - | ----------------------------- | - | ---------- | - | ---------- | -
|                                                                  |  | Three months endedNovember 30, |   | Nine months endedNovember 30, |  
|                                                                 
|                                                                  |  | 2004                           |   | 2003                          |   | 2004       |   | 2003       |  
|                                                                 
|Cash flows from operating activities                              | 
|Net income                                                        |  | $   29,986                     |   | $   18,021                    |   | $   70,978 |   | $   34,767 |  
|Non-cash items                                                    | 
|Depreciation and amortization                                     |  | 7,909                          |   | 7,744                         |   | 21,411     |   | 23,182     |  
|Amortization of deferred stock-based compensation                 |  | 5,098                          |   | 6,120                         |   | 12,789     |   | 19,679     |  
|Amortization of other deferred compensation                       |  | --                             |   | 44                            |   | 7          |   | 168        |  
|Deferred income taxes                                             |  | (1,440                         | ) | 1,057                         |   | (86        | ) | 4,772      |  
|Loss on disposal of fixed assets                                  |  | 89                             |   | 76                            |   | 213        |   | 539        |  
|                                                                 
|                                                                  |  | 41,642                         |   | 33,062                        |   | 105,312    |   | 83,107     |  
|Change in non-cash working capital                                | 
|Decrease (increase) in accounts receivable                        |  | (14,405                        | ) | (5,716                        | ) | 22,056     |   | 26,181     |  
|Decrease (increase) in prepaid expenses and other current assets  |  | 3,980                          |   | 2,327                         |   | 4,151      |   | (1,533     | )
|Increase (decrease) in accounts payable                           |  | 3,864                          |   | 837                           |   | (3,121     | ) | (9,941     | )
|Decrease in accrued charges                                       |  | (2,346                         | ) | (4,610                        | ) | (4,243     | ) | (11,682    | )
|Increase (decrease) in salaries, commissions, and related items   |  | 8,580                          |   | 6,647                         |   | 1,305      |   | (7,141     | )
|Increase (decrease) in income taxes payable                       |  | 7,630                          |   | 3,967                         |   | 7,586      |   | 5,126      |  
|Decrease in deferred revenue                                      |  | (10,051                        | ) | (7,314                        | ) | (31,542    | ) | (22,665    | )
|                                                                 
|Net cash provided by operating activities                         |  | 38,894                         |   | 29,200                        |   | 101,504    |   | 61,452     |  
|                                                                 
|Cash flows from investing activities                              | 
|Maturity of short-term investments                                |  | 75,897                         |   | 88,663                        |   | 320,571    |   | 205,473    |  
|Purchase of short-term investments                                |  | (125,460                       | ) | (144,406                      | ) | (282,421   | ) | (277,445   | )
|Additions to fixed assets                                         |  | (4,261                         | ) | (5,784                        | ) | (11,971    | ) | (17,282    | )
|Additions to intangible assets                                    |  | (242                           | ) | (381                          | ) | (771       | ) | (1,067     | )
|Acquisition costs, net of cash and cash equivalents               |  | (49,706                        | ) | (254                          | ) | (49,706    | ) | (484       | )
|                                                                 
|Net cash used in investing activities                             |  | (103,772                       | ) | (62,162                       | ) | (24,298    | ) | (90,805    | )
|                                                                 
|Cash flows from financing activities                              | 
|Issue of common shares                                            |  | 12,978                         |   | 8,896                         |   | 32,143     |   | 27,005     |  
|Purchase of treasury shares                                       |  | --                             |   | --                            |   | (335       | ) | (564       | )
|Repurchase of shares                                              |  | (7,965                         | ) | --                            |   | (27,820    | ) | --         |  
|Decrease in long-term debt and long-term liabilities              |  | --                             |   | --                            |   | --         |   | (1,697     | )
|                                                                 
|Net cash provided by (used in) financing activities               |  | 5,013                          |   | 8,896                         |   | 3,988      |   | 24,744     |  
|                                                                 
|Effect of exchange rate changes on cash                           |  | 9,020                          |   | 4,111                         |   | 7,913      |   | 8,248      |  
|                                                                 
|Net increase (decrease) in cash and cash equivalents              |  | (50,845                        | ) | (19,955                       | ) | 89,107     |   | 3,639      |  
|Cash and cash equivalents, beginning of period                    |  | 364,782                        |   | 186,182                       |   | 224,830    |   | 162,588    |  
|                                                                 
|Cash and cash equivalents, end of period                          |  | 313,937                        |   | 166,227                       |   | 313,937    |   | 166,227    |  
|Short-term investments, end of period                             |  | 125,430                        |   | 154,668                       |   | 125,430    |   | 154,668    |  
|                                                                 
|Cash, cash equivalents, and short-term investments, end of period |  | $ 439,367                      |   | $ 320,895                     |   | $ 439,367  |   | $ 320,895  |  
|                                                                 

(See accompanying notes)

64

---

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

|1. |  | Basis
of Presentation
|-- |  | ---------------------

| | The
accompanying unaudited consolidated financial statements have been prepared by the
Corporation in United States (U.S.) dollars and in accordance with
Canadian generally accepted accounting principles (GAAP) with respect
to interim financial statements applied on a consistent basis. The consolidated balance
sheet as at February 29, 2004 has been extracted from the audited consolidated financial
statements at that date. These consolidated financial statements do not include all of
the information and footnotes required in the preparation of annual consolidated
financial statements. These unaudited condensed notes to the consolidated financial
statements should be read in conjunction with the audited financial statements and notes
included in the Corporations Annual Information Form for the fiscal year ended
February 29, 2004.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
preparation of these unaudited consolidated financial statements requires management to
make estimates and assumptions that affect the amounts reported in the consolidated
financial statements and the accompanying notes. In the opinion of management, these
unaudited consolidated financial statements reflect all adjustments (which include only
normal, recurring adjustments) necessary to state fairly the results for the periods
presented. Actual results could differ from these estimates and the operating results for
the interim periods presented are not necessarily indicative of the results expected for
the full year.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | All
information is presented in U.S. dollars, unless otherwise stated. Consolidated financial
statements prepared in accordance with U.S. GAAP, in U.S. dollars, are made available to
all shareholders, and filed with various regulatory authorities.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. |  | Revenue
Recognition
|-- |  | -------------------

| | The
Corporation recognizes revenue in accordance with Statement of Position (SOP)
97-2, Software Revenue Recognition, issued by the American Institute of Certified
Public Accountants.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Substantially
all of the Corporations product license revenue is earned from licenses of
off-the-shelf software requiring no customization. Revenue from these licenses is
recognized when all of the following criteria are met: persuasive evidence of an
arrangement exists, delivery has occurred, the fee is fixed or determinable, and
collectibility is probable. If a license includes the right to return the product for
refund or credit, revenue is deferred, until the right of return lapses.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Revenue
from product support contracts is recognized ratably over the life of the contract.
Incremental costs directly attributable to the acquisition of product support contracts,
and that would not have been incurred but for the acquisition of that contract, are
deferred and expensed in the period the related revenue is recognized. These costs
include commissions payable on sales of support contracts.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

65

---

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

| | Services
revenue from education, consulting, and other services is recognized at the time such
services are rendered. Many of the Corporations sales include both software and
services. Where the service is (1) not essential to the functionality of any other
element of the transaction and (2) stated separately such that the total price of the
arrangement is expected to vary as a result of the inclusion or exclusion of the service,
the software element is accounted for separately from the service element. Where these
two criteria are not met, the entire arrangement is accounted for using the percentage of
completion method in accordance with SOP 81-1, Accounting for Performance of
Construction Type and Certain Production Type Contracts.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | For
contracts with multiple obligations (e.g., delivered and undelivered products, support
obligations, education, consulting, and other services), the Corporation allocates
revenue to the undelivered items of the contract based on objective and reliable evidence
of their fair value. Fair value is assigned to the delivered item using the residual
method as outlined in Emerging Issues Committee Abstract 142, Revenue Arrangement with
Multiple Deliverables. Under the residual method, the amount of consideration
allocated to the delivered item equals the total arrangement consideration less the fair
value of the undelivered items. Objective and reliable evidence of the fair value of
product support elements is the renewal rate for such contracts and, for service
elements, is the normal pricing and discounting practices for those products when they
are sold separately; the residual is then assigned to the license element of the
contract.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Changes
in Accounting Policy
|-- |  | ----------------------------

| | In
the fourth quarter of fiscal 2004, the Corporation adopted CICA Handbook section 3870, Stock-based
Compensation and OtherStock-based payments, (CICA 3870)
which requires the fair value based method of accounting for all stock-based compensation
earned during the year. Under this method, the fair value of options is estimated on the
date of grant and is recognized as compensation expense over the vesting period of the
options. For stock purchase plans, the discount offered to employees is also considered
as compensation expense and deducted from income. Prior to fiscal 2004, the Corporation
accounted for all grants of options to directors and employees in accordance with the
intrinsic value method of accounting for stock-based compensation which requires a
compensation expense to be recorded if the exercise price of each option was less than
the fair market value on the date immediately preceding the date of grant.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | This
change was applied retroactively effective March 1, 2003 to all stock options outstanding
at March 1, 2000. The results of operations for the three and nine-month periods ended
November 30, 2003 have been restated and an adjustment to the opening balance of retained
earnings at March 1, 2003 has been made to reflect the cumulative effect of the change on
prior periods. This is in accordance with the transitional provisions of CICA 3870.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
effect of this change was to decrease net earnings by $4,989,000 or $0.05 per share and
by $5,905,000 or $0.06 per share for the three-month periods ended November 30, 2004 and
November 30, 2003, respectively. For the nine-month periods ended November 30, 2004 and
November 30, 2003, net earnings decreased by $12,275,000 or $0.13 per share and by
$19,074,000 or $0.21 per share, respectively, due to this change. The opening retained
earnings at March 1, 2003 and September 1, 2003 have been reduced by $77,770,000 and
$90,939,000, respectively, due to this change in accounting policy.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

66

---

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

| | The
fair value of the options was estimated at the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                  |  | Three months endedNovember 30, | Nine months endedNovember 30,
| | -------------------------------- |  | ------------------------------ | -----------------------------
| |                                 
| |                                  |  | 2004                           | 2003                         
| |                                 
| | Risk-free interest rates         |  | 3                              | .2%                          
| | Expected volatility              |  | 51                             | .0%                          
| | Dividend yield                   |  | 0                              | .0%                          
| | Expected life of options (years) |  | 4                              | .3                           

|4. |  | Goodwill
|-- |  | --------

| | During
the three and nine months ended November 30, 2004, there were additions to goodwill in
the amount of $50,560,000 resulting from the acquisition of Frango AB (Frango).
See Note 11. During the three and nine months ended November 30, 2003, there were
additions to goodwill of $254,000 and $484,000, respectively. The additions during the
three and nine months ended November 30, 2003 were related to additional consideration
paid to the former shareholders of Teijin Cognos Incorporated (TCI).
This additional consideration was based on the net revenue of TCI during each quarter as
per the terms of the original purchase agreement. The Corporation has designated the
beginning of its fiscal year as the date for the annual impairment test, and performed
the required test as of March 1, 2004. Based on this test, goodwill is not considered to
be impaired.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                   |  | Three months endedNovember 30, | Nine months endedNovember 30,
| | ----------------- |  | ------------------------------ | -----------------------------
| |                  
| |                   |  | 2004                           | 2003                         
| |                  
| |                   |  | ($000s)                        | ($000s)                      
| | Beginning balance |  | $172,323                       |                              
| | Additions         |  | 50,560                         |                              
| |                  
| | Closing balance   |  | $222,883                       |                              
| |                  

67

---

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

|5. |  | Intangible
Assets
|-- |  | -----------------

| |                           |  | As at November 30,2004 | As at February 29,2004 
| | ------------------------- |  | ---------------------- | -----------------------
| |                          
| |                           |  | Cost                   | AccumulatedAmortization
| |                          
| |                           |  | ($000s)                | ($000s)                
| | Acquired technology       |  | $   40,419             |                        
| | In-process technology     |  | 38,400                 |                        
| | Deferred compensation     |  | 8,945                  |                        
| | Contractual relationships |  | 9,608                  |                        
| | Trademarks and patents    |  | 4,390                  |                        
| |                           |  |                        |                        
| |                           |  | 101,762                |                        
| |                           |  |                        |                        
| |                           |  | (72,040                | )                      
| |                           |  |                        |                        
| | Net book value            |  | $   29,722             |                        
| |                           |  |                        |                        

| | During
the three and nine months ended November 30, 2004, there were additions to acquired
technology and contractual relationships in the amount of $7,038,000 and $1,808,000,
respectively, resulting from the acquisition of Frango. See Note 11. During the three and
nine months ended November 30, 2004, there were additions to trademarks and patents in
the amount of $241,000 and $770,000, respectively.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Amortization
of intangible assets was $1,922,000 and $2,601,000 in the quarters ended November 30,
2004 and November 30, 2003, respectively, and was $5,163,000 and $7,671,000 in the nine
months ended November 30, 2004 and November 30, 2003, respectively. The estimated
amortization expense related to intangible assets is as follows ($000s):
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2005 (Q4)           |  | $2,050 | 
| | ------------------- |  | ------ | 
| | 2006                |  | 7,797  | 
| | 2007                |  | 7,060  | 
| | 2008                |  | 6,407  | 
| | 2009                |  | 2,883  | 
| | 2010                |  | 2,103  | 
| | 2011 and thereafter |  | 1,422  | 

68

---

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

|6. |  | Commitments
and Contingencies
|-- |  | -----------------------------

| | Customer
Indemnification
| | ------------------------

| | The
Corporation has entered into licensing agreements with customers that include limited
intellectual property indemnification clauses. These clauses are typical in the software
industry and require the Corporation to compensate the customer for certain liabilities
and damages incurred as a result of third party intellectual property claims arising from
these transactions. The Corporation has not made any significant indemnification payments
as a result of these clauses and, in accordance with Accounting Standards Boards
Accounting Guideline (AcG) No. 14 Disclosure of Guarantees, has
not accrued any amounts in relation to these indemnification clauses.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Legal
Proceedings
| | -----------------

| | The
Corporation and its subsidiaries may, from time to time, be involved in legal
proceedings, claims, and litigation that arise in the ordinary course of business. In the
event that any such claims or litigation are resolved against Cognos, such outcomes or
resolutions could have a material adverse effect on the business, financial condition, or
results of operations of the Corporation.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. |  | Income
Taxes
|-- |  | ------------

| | The
Corporation provides for income taxes in its quarterly unaudited financial statements
based on the estimated effective tax rate for the full fiscal year.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|8. |  | Stockholders Equity
|-- |  | --------------------

| | The
Corporation issued 625,000 common shares for $13.0 million, and 543,000 common shares for
$8.9 million during the quarters ended November 30, 2004, and November 30, 2003,
respectively. The Corporation issued 1,727,000 common shares for $32.1 million and
1,769,000 common shares for $27.0 million during the nine months ended November 30, 2004,
and November 30, 2003, respectively. The issuance of shares in all periods was pursuant
to the Corporations stock purchase plan and the exercise of stock options by
employees and officers.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Corporation repurchases shares under a share repurchase program and under a restricted
share unit plan. During the three and nine months ended November 30, 2004, the
Corporation repurchased 217,000 shares at a value of $8.0 million and 804,000 shares at a
value of $27.8 million, respectively, in the open market under its share repurchase
program. During the three and nine months ended November 30, 2003, the Corporation did
not repurchase any shares under its stock repurchase program.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Corporation did not repurchase shares under its restricted share unit plan during the
three months ended November 30, 2004 and November 30, 2003. During the nine-month
periods ended November 30, 2004 and November 30, 2003, the Corporation repurchased 10,000
shares at a value of $0.3 million and 21,000 shares at a value of $0.6 million,
respectively, under its restricted share unit plan.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

69

---

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

| | Net
Income per Share
| | --------------------

| | The
reconciliation of the numerator and denominator for the calculation of basic and diluted
net income per share is as follows: (000s except per share amounts)
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                     |  | Three months endedNovember 30, | Nine months endedNovember 30,
| | ----------------------------------- |  | ------------------------------ | -----------------------------
| |                                    
| |                                     |  | 2004                           | 2003                         
| |                                    
| | Basic Net Income per Share          |  |                                |                              
| | Net income                          |  | $29,986                        |                              
| |                                    
| | Weighted average number of shares   | 
| | outstanding                         |  | 90,621                         |                              
| |                                    
| | Basic net income per share          |  | $0.33                          |                              
| |                                    
| | Diluted Net Income per Share        | 
| | Net income                          |  | $29,986                        |                              
| |                                    
| | Weighted average number of shares   | 
| | outstanding                         |  | 90,621                         |                              
| | Dilutive effect of stock options    |  | 2,614                          |                              
| |                                    
| | Adjusted weighted average number of | 
| | shares outstanding                  |  | 93,235                         |                              
| |                                    
| | Diluted net income per share        |  | $0.32                          |                              
| |                                    

|9. |  | Comprehensive
Income
|-- |  | --------------------

| | Comprehensive
income includes net income and other comprehensive income (OCI). OCI
refers to changes in net assets from transactions and other events, and circumstances not
included in net income and other than transactions with stockholders. These changes are
recorded directly as a separate component of Stockholders Equity. The only other
comprehensive income item for the Corporation relates to foreign currency translation
adjustments pertaining to those subsidiaries not using the U.S. dollar as their
functional currency net of derivative gains or losses. For Canadian GAAP, this would be
referred to as the currency translation account.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

70

---

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

| | The
components of comprehensive income were as follows ($000s):
| | ----------------------------------------------------------------

| |                                          |  | Three months endedNovember 30, | Nine months endedNovember 30,
| | ---------------------------------------- |  | ------------------------------ | -----------------------------
| |                                         
| |                                          |  | 2004                           | 2003                         
| |                                         
| | Net income                               |  | $29,986                        |                              
| | Other comprehensive income:              | 
| | Foreign currency translation adjustments |  | 5,373                          |                              
| |                                         
| | Comprehensive income                     |  | $35,359                        |                              
| |                                         

|10. |  | Segmented
Information
|--- |  | ---------------------

| | The
Corporation operates in one business segmentcomputer software solutions.
| | -----------------------------------------------------------------------------

|11. |  | Acquisitions
|--- |  | ------------

| | Frango
| | ------

| | On
September 29, 2004, the Corporation announced that it had successfully completed a tender
offer for the shares of Frango, a Stockholm Sweden based company with global operations.
The acquisition was accounted for using the purchase method of accounting in accordance
with CICA Handbook section 1581, Business Combinations. Frango specializes in
consolidation and financial reporting solutions. The Corporation acquired Frango
primarily to add Frangos consolidation and financial reporting software to its
product suite and also to access Frangos workforce and distribution channels in
Europe and Asia, all part of the Corporations broader strategy to lead the CPM
market. The acquisition of Frango further strengthens the Corporations product
offering to the office of finance, a key entry point with its customers. The aggregate
purchase consideration was approximately $53,088,000 paid in cash. Direct costs
associated with the acquisition were approximately $1,916,000.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | An
independent appraisal valued the in-process research and development at an immaterial
amount, and therefore the purchase of Frango did not involve the write-off of any
in-process research and development.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
purchase price allocation is not yet final, particularly as it relates to the fair
valuation of certain items such as accounts receivable, intangibles, deferred revenue,
and accrued liabilities, the restructuring plan as discussed below and goodwill.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Based
on an independent appraisal, an initial estimate of $8,846,000 of the purchase price was
allocated to intangible assets, subject to amortization. Of this amount, $7,038,000 was
allocated to acquired technology and $1,808,000 was allocated to contractual
relationships. Neither intangible asset is expected to have any residual value. The
amortization period for the acquired technology is five years whereas the amortization
period for the contractual relationships is approximately eight years. The weighted
average amortization for these intangible assets acquired is approximately six years. The
fair values of these intangible assets were assigned using the discounted cashflow
method, which discounts the present value of the free cashflows expected to be generated
by the assets. The amortization periods were determined using the estimated economic
useful life of the asset.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

71

---

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

| | In
the allocation of purchase price, an initial estimate of $50,560,000 was assigned to
goodwill. This represents the excess of the purchase price paid for Frango over the fair
value of the net tangible and identifiable intangible assets acquired. Goodwill will not
be amortized but will be subject to annual impairment testing, in accordance with the
Corporations accounting policy. The goodwill is not deductible for tax purposes.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
purchase price, which is subject to final adjustment, is allocated to the assets and
liabilities based upon their estimated fair value at the date of acquisition, as noted
below: ($000s)
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                         |  | Frango AB | 
| | --------------------------------------- |  | --------- | 
| | Assets acquired:                        |  |           | 
| | Cash                                    |  | $  3,382  | 
| | Accounts receivable, net                |  | 8,896     | 
| | Prepaid expenses                        |  | 2,220     | 
| | Fixed assets                            |  | 647       | 
| | Intangible assets                       |  | 8,846     | 
| |                                        
| |                                         |  | 23,991    | 
| |                                        
| | Liabilities assumed:                    | 
| | Accrued expenses                        |  | 3,174     | 
| | Deferred revenue                        |  | 1,523     | 
| | Other current liabilities               |  | 8,596     | 
| | Restructuring                           |  | 5,074     | 
| | Deferred tax liabilities on intangibles |  | 3,096     | 
| |                                        
| |                                         |  | 21,463    | 
| |                                        
| | Net assets acquired                     |  | 2,528     | 
| | Goodwill                                | 
| |                                         |  | 50,560    | 
| |                                        
| | Purchase price                          |  | $53,088   | 
| |                                        
| | Purchase price consideration            | 
| |                                        
| | Cash                                    |  | $53,088   | 
| |                                        

72

---

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

| | The
Corporation undertook a restructuring plan in conjunction with the acquisition of Frango.
In accordance with Emerging Issues Committee (EIC) No. 114, Liability
Recognition for Costs Incurred on Purchase Business Combinations, the
liability associated with this restructuring is considered a liability assumed in the
purchase price allocation. This restructuring was primarily related to involuntary
employee separations of approximately 20 employees of Frango and accruals for vacating
leased premises of Frango. The employee separations impacted all functional groups,
primarily in Europe. The restructuring accrual is included on the balance sheet as
accrued charges and salaries, commissions, and related items. The plan is not yet
finalized and as a result, there may be unresolved contingencies, purchase price
allocation issues, or additional liabilities that could result in a material adjustment
to the acquisition cost allocation.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                             |  |                     |                            |        |  |        | 
| | ------------------------------------------- |  | ------------------- | -------------------------- | ------ |  | ------ | 
| | ($000s)                                     |  | Employeeseparations | Otherrestructuringaccruals | Total 
| |                                            
| | Restructuring accrual at September 30, 2004 |  | $2,311              |                            | $2,763 |  | $5,074 | 
| | Cash payments                               |  | --                  |                            | --     |  | --     | 
| | Foreign Exchange Adjustment                 |  | 135                 |                            | 164    |  | 299    | 
| |                                            
| | Balance as at November 30, 2004             |  | $2,446              |                            | $2,927 |  | $5,373 | 
| |                                            

| | The
Corporation has elected not to disclose pro-forma combined results of operations as they
are not material to the financial statements.
| | ------------------------------------------------------------------------------------------------------------------------------------------

| | Adaytum
| | -------

| | The
Corporation undertook a restructuring plan in conjunction with the acquisition of Adaytum
in January 2003. In accordance with EIC No. 42, Costs Incurred on Business Combinations, the liability associated with this
restructuring is considered a liability assumed in the purchase price allocation. The
Corporation recorded restructuring costs of approximately $9.2 million in relation to
this restructuring plan. These restructuring costs primarily relate to involuntary
employee separations of approximately 90 employees of Adaytum, accruals for vacating
leased premises of Adaytum, and related write-downs of leasehold improvements as well as
asset write-downs of Adaytum. The employee separations impact all functional groups and
geographic regions of Adaytum. The remaining accrual is included on the balance sheet as
accrued charges and salaries, commissions, and related items. All amounts excluding lease
payments are expected to be settled in fiscal 2005. Outstanding balances for lease
payments will be paid over the lease term unless settled earlier. Settlement of
obligations at an amount lower than that currently accrued will result in an adjustment
to goodwill, settlement at a higher amount would be expensed in the period in which the
determination is made.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

73

---

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

| | The
following table sets forth the activity in the Corporations restructuring accrual
for the nine-month period ended November 30, 2004: ($000s)
| | -------------------------------------------------------------------------------------------------------------------------------------------------

| |                                     |  | Employeeseparations | Otherrestructuringaccruals | Total 
| | ----------------------------------- |  | ------------------- | -------------------------- | ------
| |                                    
| | Balance as at February 29, 2004     |  | $ 945               |                            | $3,498
| | Cash payments during the first nine | 
| | months of fiscal 2005               |  | (563                | )                          | (193  
| |                                    
| | Balance as at November 30, 2004     |  | $ 382               |                            | $3,305
| |                                    

|12. |  | Comparative
Results
|--- |  | -------------------

| | Certain
of the prior periods figures have been reclassified in order to conform to the
presentation adopted during the current fiscal year. This change in presentation does not
affect previously reported assets, liabilities, or results of operations.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13. |  | New
Accounting Pronouncements
|--- |  | -----------------------------

| | During
October 2003, CICA Handbook section 1100, Generally Accepted Accounting Principles (CICA
1100), was issued and is effective for the Corporations fiscal year
beginning March 1, 2004. CICA 1100 establishes standards for financial reporting in
accordance with generally accepted accounting principles and clarifies the relative
authority of various accounting pronouncements and other sources within GAAP. The
adoption of CICA 1100 did not have a material impact on the Corporations financial
condition or results of operations.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
June 2003, the CICA issued Accounting Guideline No.15, Consolidation of Variable
Interest Entities (AcG-15). AcG-15 requires the primary
beneficiary of a variable interest entity to consolidate the variable interest entity. A
variable interest entity is any legal structure used for business purposes that either
(a) does not have equity investors or has equity investors that lack characteristics of
control; or (b) the equity investment at risk does not provide sufficient financial
resources for the entity to support its activities. AcG 15 is effective for reporting
periods beginning on or after November 1, 2004 but may be adopted beforehand. The
Corporation has determined that it owns a minority interest in an undercapitalized
distributor that qualifies as a variable interest entity. The Corporation adopted AcG 15
on May 31, 2004 and its adoption did not have a material impact on the Corporations
financial condition or results of operations.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

74