<PAGE>

--------------------------------------------------------------------------------

                                 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 November 30, 2000

                                      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           (IRS Employer Identification No.)
     Incorporation Or Organization)

           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 December 31, 2000, was 88,461,355.

--------------------------------------------------------------------------------
<PAGE>

                              COGNOS INCORPORATED

                                     INDEX

<TABLE>
<CAPTION>
                                                                                                                      PAGE
<S>                                                                                                                   <C>
                                                  PART I - FINANCIAL INFORMATION

Item 1.       Consolidated Financial Statements

              Consolidated Statements of Income for the three and nine months
                ended November 30, 2000 and November 30, 1999......................................................     3

              Consolidated Balance Sheets as of November 30, 2000
                and February 29, 2000..............................................................................     4

              Consolidated Statements of Cash Flows for the nine months
                ended November 30, 2000 and November 30, 1999......................................................     5

              Condensed Notes to the Consolidated Financial Statements.............................................     6

Item 2.       Management's Discussion and Analysis of Financial Condition
                and Results of Operations..........................................................................    11

Item 3.       Quantitative and Qualitative Disclosure about Market Risk............................................    24


                                                    PART II - OTHER INFORMATION

Item 1.       Legal Proceedings....................................................................................    25

Item 2.       Changes in Securities................................................................................    25

Item 6.       Exhibits and Reports on Form 8-K.....................................................................    26

Signature  ........................................................................................................    27
</TABLE>

                                       2
<PAGE>

PART I - FINANCIAL INFORMATION
------------------------------

Item 1.  Consolidated Financial Statements

                              COGNOS INCORPORATED

                       CONSOLIDATED STATEMENTS OF INCOME

                   (US$000s except share amounts, U.S. GAAP)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                Three months ended                Nine months ended
                                                                    November 30,                     November 30,
------------------------------------------------------------------------------------------------------------------------
                                                                 2000            1999             2000            1999
------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>               <C>             <C>             <C>
Revenue
   Product license                                           $ 64,832         $51,483         $183,050        $134,841
   Product support                                             37,635          29,707          106,610          85,473
   Services                                                    22,171          16,563           61,889          47,212
------------------------------------------------------------------------------------------------------------------------
Total revenue                                                 124,638          97,753          351,549         267,526
------------------------------------------------------------------------------------------------------------------------

Operating expenses
   Cost of product license                                      1,925           1,456            5,367           3,511
   Cost of product support                                      4,551           3,608           12,896          10,039
   Selling, general, and administrative                        81,339          61,513          229,895         167,914
   Research and development                                    16,854          13,574           49,215          38,616
   Acquired in-process technology                               3,000               -            3,000               -
------------------------------------------------------------------------------------------------------------------------
Total operating expenses                                      107,669          80,151          300,373         220,080
------------------------------------------------------------------------------------------------------------------------

Operating income                                               16,969          17,602           51,176          47,446
Interest expense                                                 (230)           (148)            (540)           (481)
Interest income                                                 3,355           1,784            9,034           5,189
------------------------------------------------------------------------------------------------------------------------

Income before taxes                                            20,094          19,238           59,670          52,154
Income tax provision                                            6,467           5,387           17,548          14,603
------------------------------------------------------------------------------------------------------------------------

Net income                                                   $ 13,627         $13,851         $ 42,122        $ 37,551
========================================================================================================================

Net income per share
   Basic                                                     $   0.15         $  0.16         $   0.48        $   0.44
========================================================================================================================
   Diluted                                                   $   0.15         $  0.16         $   0.46        $   0.43
========================================================================================================================

Weighted average number of shares (000s)
   Basic                                                       88,249          85,262           87,647          85,970
========================================================================================================================
   Diluted                                                     92,646          87,324           92,170          87,324
========================================================================================================================
</TABLE>

                           (See accompanying notes)

                                       3
<PAGE>

                              COGNOS INCORPORATED

                          CONSOLIDATED BALANCE SHEETS

                             (US$000s, U.S. GAAP)

<TABLE>
<CAPTION>
                                                                  November 30,        February 29,
                                                                         2000                2000
---------------------------------------------------------------------------------------------------
<S>                                                               <C>                 <C>
Assets                                                             (Unaudited)

Current assets
  Cash and cash equivalents                                         $  89,854            $132,435
  Short-term investments                                              116,534              64,284
  Accounts receivable                                                 129,330             107,823
  Inventories                                                             820                 806
  Prepaid expenses                                                      9,518               7,840
---------------------------------------------------------------------------------------------------
                                                                      346,056             313,188
Fixed assets                                                           71,465              44,835
Other assets                                                           35,252              21,863
---------------------------------------------------------------------------------------------------
                                                                    $ 452,773            $379,886
===================================================================================================
Liabilities

Current liabilities
  Accounts payable                                                  $  24,741            $ 22,908
  Accrued charges                                                      24,456              17,540
  Salaries, commissions, and related items                             24,650              24,024
  Income taxes payable                                                  6,783               3,548
  Current portion of long-term debt                                        36               2,176
  Deferred revenue                                                     74,030              76,537
---------------------------------------------------------------------------------------------------
                                                                      154,696             146,733
Long-term liabilities                                                   4,348               2,699
Deferred income taxes                                                  16,127              15,150
---------------------------------------------------------------------------------------------------
                                                                      175,171             164,582
---------------------------------------------------------------------------------------------------
Stockholders' Equity

Capital stock

  Common shares           (November 30, 2000 - 88,485,818;
                           February 29, 2000 - 86,657,578)            133,298             106,936
Retained earnings                                                     154,748             114,601
Other accumulated comprehensive items                                 (10,444)             (6,233)
---------------------------------------------------------------------------------------------------
                                                                      277,602             215,304
---------------------------------------------------------------------------------------------------
                                                                    $ 452,773            $379,886
===================================================================================================
</TABLE>

                           (See accompanying notes)

                                       4
<PAGE>

                              COGNOS INCORPORATED

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (US$000s, U.S. GAAP)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                              Nine months ended
                                                                                                November 30,
---------------------------------------------------------------------------------------------------------------------
                                                                                                2000            1999
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>              <C>
Cash provided by (used in) operating activities
   Net income                                                                              $  42,122       $  37,551
   Non-cash items
     Depreciation and amortization                                                            18,009          14,074
     Deferred income taxes                                                                     1,916           1,751
     Write-off of in-process technology                                                        3,000               -
     Loss on disposal of fixed assets                                                            215             100
---------------------------------------------------------------------------------------------------------------------
                                                                                              65,262          53,476
   Change in non-cash working capital
     Increase in accounts receivable                                                         (25,579)        (11,600)
     Increase in inventory                                                                       (58)            (64)
     Decrease (increase) in prepaid expenses                                                  (2,297)            425
     Increase (decrease) in accounts payable                                                   3,131          (1,990)
     Increase in accrued charges                                                               5,993             221
     Increase (decrease) in salaries, commissions, and related items                           1,736          (3,995)
     Increase (decrease) in income taxes payable                                               3,607            (924)
     Increase in deferred revenue                                                                 71           4,557
---------------------------------------------------------------------------------------------------------------------
                                                                                              51,866          40,106
---------------------------------------------------------------------------------------------------------------------
Cash provided by (used in) investing activities
   Additions to fixed assets                                                                 (42,998)        (19,180)
   Maturity of short-term investments                                                        139,069         132,394
   Purchase of short-term investments                                                       (193,207)       (140,506)
   Acquisition costs                                                                         (11,260)         (2,562)
   Proceeds from the sale of fixed assets                                                          -               -
---------------------------------------------------------------------------------------------------------------------
                                                                                            (108,396)        (29,854)
---------------------------------------------------------------------------------------------------------------------
Cash provided by (used in) financing activities
   Issue of common shares (net)                                                               20,014           4,883
   Repurchase of shares                                                                       (2,041)        (26,014)
   Repayment of long-term debt                                                                (1,757)           (483)
   Long-term payments                                                                           (657)             67
---------------------------------------------------------------------------------------------------------------------
                                                                                              15,559         (21,547)
---------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash                                                       (1,610)          1,474
---------------------------------------------------------------------------------------------------------------------

Net decrease in cash and cash equivalents                                                    (42,581)         (9,821)

Cash and cash equivalents, beginning of period                                               132,435          93,617
---------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                                      89,854          83,796
Short-term investments, end of period                                                        116,534          64,488
---------------------------------------------------------------------------------------------------------------------

Cash, cash equivalents, and short-term investments, end of period                          $ 206,388       $ 148,284
=====================================================================================================================
</TABLE>

                           (See accompanying notes)

                                       5
<PAGE>

                              COGNOS INCORPORATED

           CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
        (All amounts in United States dollars, unless otherwise stated)
                        (In accordance with U.S. 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 generally accepted accounting principles (GAAP) in the
     U.S., applied on a consistent basis. 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
     Report for the fiscal year ended February 29, 2000.

     The preparation of these unaudited consolidated financial statements in
     conformity with GAAP 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.


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 recognized net of an allowance for estimated returns provided
     all the requirements of SOP 97-2 have been met.

     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 are deferred and expensed in the period the
     related revenue is recognized.

     Revenue from education, consulting, and other services is recognized at the
     time such services are rendered.

                                       6
<PAGE>

                              COGNOS INCORPORATED

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

     For contracts with multiple obligations (e.g. deliverable and undeliverable
     products, support obligations, education, consulting and other services),
     the Corporation allocates revenue to each element of the contract based on
     objective evidence, specific to the Corporation, of the fair value of the
     element.

3.   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.

4.   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)

<TABLE>
<CAPTION>
                                                                  Three months ended              Nine months ended
                                                                     November 30,                    November 30,
                                                                ----------------------         ------------------------
                                                                   2000           1999             2000            1999
                                                                --------       -------          -------         -------
<S>                                                             <C>            <C>              <C>             <C>
     Basic Net Income per Share

        Net income                                              $13,627        $13,851          $42,122         $37,551
                                                                =======        =======          =======         =======

        Weighted average number of shares outstanding
                                                                 88,249         85,262           87,647          85,970
                                                                =======        =======          =======         =======

        Basic net income per share                              $  0.15        $  0.16          $  0.48         $  0.44
                                                                =======        =======          =======         =======

     Diluted Net Income per Share

        Net income                                              $13,627        $13,851          $42,122         $37,551
                                                                =======        =======          =======         =======

        Weighted average number of shares outstanding
                                                                 88,249         85,262           87,647          85,970

        Dilutive effect of stock options                          4,397          2,062            4,523           1,354
                                                                =======        =======          =======         =======

        Adjusted weighted average number of shares
        outstanding                                              92,646         87,324           92,170          87,324
                                                                =======        =======          =======         =======

        Diluted net income per share                            $  0.15        $  0.16          $  0.46         $  0.43
                                                                =======        =======          =======         =======
</TABLE>

                                       7
<PAGE>

                              COGNOS INCORPORATED

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


5.   Comprehensive Income

     Comprehensive Income includes net income and "other comprehensive income."
     Other comprehensive income refers to changes in the balances of revenues,
     expenses, gains and losses that are recorded directly as a separate
     component of Stockholders' Equity and excluded from net income.

     For the quarter ended November 30, 2000, the Corporation had other
     comprehensive expense of $2,985,000 compared to other comprehensive income
     of $765,000 for the quarter ended November 30, 1999. These amounts relate
     to foreign currency translation adjustments from those subsidiaries not
     using the U.S. dollar as their functional currency. Total comprehensive
     income was $10,642,000 and $14,616,000 for the quarters ended November 30,
     2000 and 1999, respectively.

     The Corporation had other comprehensive expense of $4,211,000 for the nine
     months ended November 30, 2000 and other comprehensive income of $1,341,000
     for the nine months ended November 30, 1999. Total comprehensive income was
     $37,911,000 and $38,892,000 for the nine months ended November 30, 2000 and
     1999, respectively.

6.   Segmented Information

     The Corporation has one reportable segment--computer software products.

7.   Acquisitions

     On June 1, 2000, the Corporation acquired Powerteam OY, the Corporation's
     distributor in Finland. The shareholders of Powerteam OY will receive
     approximately $2.3 million in cash over two years and could also receive
     cash payments not to exceed $0.5 million over the next three years.

     On September 21, 2000, the Corporation acquired NoticeCast Software Ltd.,
     based in Twickenham, United Kingdom. NoticeCast's Enterprise Event
     Management Software monitors business processes and delivers timely
     business intelligence notifications to business users across the enterprise
     via e-mail on their personal computer, hand-held or wireless device. The
     shareholders of NoticeCast Software Ltd. received approximately $9,000,000
     in cash on closing and will receive 148,468 shares of the Corporation's
     common stock valued at approximately $4,820,000. The shares are being held
     in escrow by the Corporation and will be released on the second anniversary
     of the closing of the transaction. For valuation purposes, the shares were
     appropriately discounted. An independent appraisal valued the in-process
     research and development at $3,000,000. In the opinion of management and
     the appraiser, the acquired in-process research and development had not yet
     reached technological feasibility

                                       8
<PAGE>

                              COGNOS INCORPORATED

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


     and had no alternative future uses. Accordingly, the Corporation recorded a
     special charge of $3,000,000 (or $0.03 per share) in the third quarter
     ended November 30, 2000 to write off the in-process technology.

     On November 1, 2000, the Corporation completed the acquisition of Johnson &
     Michaels, Inc. (JAMI), a leading provider of business intelligence
     consulting services. The shareholders of JAMI will receive total cash
     consideration of approximately $3,915,000 over three years and 104,230
     shares of the Corporation's common stock valued at $4,250,000 over the same
     period. Approximately $1,406,000 was paid and 39,085 shares were issued on
     closing; the remaining shares, all of which were issued, are being held in
     escrow by the Corporation and will be released on the first (33%), second
     (33%), and third (34%) anniversary of the closing of the transaction. The
     deferred shares, valued at $2,656,000, are accounted for as an offset to
     capital stock.

     The acquisitions have been accounted for using the purchase method. The
     results of operations of all three acquired companies prior to the
     acquisitions were not material, and thus pro forma information has not been
     provided. The results of the acquired companies have been combined with
     those of the Corporation from the date of the acquisition.

8.   Two-for-one Stock Split

     On April 6, 2000 the Board of Directors of the Corporation authorized a
     two-for-one stock split, effected in the form of a stock dividend, payable
     on or about April 27, 2000, to shareholders of record at the close of
     business on April 20, 2000. All share and per-share amounts have been
     adjusted for the split.

9.   Accounting Pronouncements

     In June 1998, the FASB issued Statement No. 133, Accounting for Derivative
     Instruments and Hedging Activities, as subsequently amended by FASB
     Statement No. 138, which establishes standards for derivative instruments
     and hedging activities. It requires that all derivatives be recognized as
     either assets or liabilities on the Balance Sheet and be measured at fair
     value. This Statement is effective for fiscal years beginning after June
     15, 2000, which is the fiscal year beginning March 1, 2001 for the
     Corporation. Prior periods should not be restated. The Corporation has not
     yet quantified the impact, if any, of this pronouncement on its
     consolidated financial statements.

     In December 1999, the Securities and Exchange Commission (SEC) issued Staff
     Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial
     Statements, which was amended in March 2000 by SAB 101A, and in June 2000
     by SAB 101B. The SAB summarizes certain of

                                       9
<PAGE>

                              COGNOS INCORPORATED

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


     the SEC staff views in applying generally accepted accounting principles to
     revenue recognition in financial statements. This SAB is effective
     beginning the Corporation's fourth fiscal quarter of fiscal 2001. The
     Corporation does not expect the adoption of this SAB to have a material
     impact on its results of operations or financial position.

                                       10
<PAGE>

Item 2.

                               COGNOS INCORPORATED

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        (in United States dollars, unless otherwise indicated, and in
                          accordance with U.S. GAAP)



The following information should be read in conjunction with the unaudited
Consolidated Financial Statements and Notes included in Item 1 of this Quarterly
Report and can also be read in conjunction with the audited Consolidated
Financial Statements and Notes, and Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in the Corporation's
Annual Report for the fiscal year ended February 29, 2000 (fiscal 2000).

RESULTS OF OPERATIONS
---------------------

Revenue for the quarter ended November 30, 2000 was $124.6 million, a 28%
increase from revenue of $97.8 million for the same quarter last year. Pretax
income for the quarter ended November 30, 2000 was $20.1 million compared to
pretax income of $19.2 million in the same quarter last year. Net income for the
current quarter was $13.6 million compared to net income of $13.9 million for
the same quarter last year. Diluted net income per share was $0.15 for the
current quarter, compared to $0.16 for the same quarter last year. Basic net
income per share was $0.15 and $0.16 for the quarters ending November 30, 2000
and November 30, 1999, respectively. The results for the quarter ended November
30, 2000 include the write-off of $3.0 million related to the in-process
technology acquired on the purchase of NoticeCast Software Ltd. Excluding the
effect of this item, net income and diluted net income per share for the quarter
would have been $16.6 million and $0.18, respectively, compared to $13.9 million
and $0.16, respectively, for the same period last year.

Revenue for the nine months ended November 30, 2000 was $351.5 million, a 31%
increase from revenue of $267.5 million for the same period last year. Pretax
income for the nine months ended November 30, 2000 was $59.7 million compared to
pretax income of $52.2 million in the same period last year. Net income for the
current nine months was $42.1 million compared to net income of $37.6 million
for the same period last year. Diluted net income per share was $0.46 for the
current nine months, compared to $0.43 for the same period last year. Basic net
income per share was $0.48 and $0.44 for the nine month periods ending November
30, 2000 and November 30, 1999, respectively. The results for the quarter ended
November 30, 2000 include the write-off of $3.0 million related to the
in-process technology acquired on the purchase of NoticeCast Software Ltd.
Excluding the effect of this item, net income and diluted net income per share
for the nine months ended November 30, 2000 would have been $45.1 million and
$0.49, respectively, compared to $37.6 million and $0.43, respectively, for the
same period last year.

Total operating expenses for the quarter ended November 30, 2000 were $107.7
million, a 34% increase from operating expenses of $80.2 million for the same
quarter last year. Operating margins for the quarter ended November 30, 2000
were 14%, compared to 18% for the same quarter last year. Excluding the effect
related to the in-process technology discussed above,

                                       11
<PAGE>

operating expenses in the quarter ended November 30, 2000 would have been $104.7
million, an increase of 31% from the same quarter last year. Operating margins
for quarter would have been 16%, compared to 18% for the same quarter last year.

Total operating expenses for the nine months ended November 30, 2000 were $300.4
million, a 36% increase from operating expenses of $220.1 million for the same
period last year. Operating margins for the nine months ended November 30, 2000
were 15%, compared to 18% for the same period last year. Excluding the effect
related to the in-process technology discussed above, operating expenses for the
nine months ended November 30, 2000 would have been $297.4 million, an increase
of 35% from the same period in the prior fiscal year. For the nine months ended
November 30, 2000, operating margins would have been 15%, compared to 18% for
the same period in the prior fiscal year.

The following table sets out, for the periods indicated, the percentage that
each income and expense item bears to revenue, and the percentage change of each
item as compared to the indicated prior period.


<TABLE>
<CAPTION>
                                                     Percentage of Revenue                           Percentage Change
                                       ---------------------------------------------------       --------------------------
                                         Three months ended             Nine months ended          Three             Nine
                                            November 30,                   November 30,            months           months
                                       -----------------------       ---------------------            ended November 30,
                                         2000           1999           2000          1999                1999 to 2000
                                       -------       ---------       -------       --------      --------------------------
<S>                                    <C>           <C>             <C>           <C>           <C>              <C>
Revenue.............................   100.0%          100.0%        100.0%         100.0%           27.5%          31.4 %
                                       -----         -------         -----         ------
Operating expenses
  Cost of product license...........     1.5             1.5           1.5            1.3            32.2           52.9
  Cost of product support...........     3.7             3.7           3.7            3.8            26.1           28.5
  Selling, general, and
    administrative..................    65.3            62.9          65.4           62.8            32.2           36.9
  Research and development..........    13.5            13.9          14.0           14.4            24.2           27.4
  Acquired in-process technology....     2.4             0.0           0.8            0.0           N/A            N/A
                                       -----         -------         -----         ------
Total operating expenses............    86.4            82.0          85.4           82.3            34.3           36.5
                                       -----         -------         -----         ------

Operating income....................    13.6            18.0          14.6           17.7            (3.6)           7.9
Interest expense....................    (0.2)           (0.1)         (0.2)          (0.2)           55.4           12.3
Interest income.....................     2.7             1.8           2.6            2.0            88.1           74.1
                                       -----         -------         -----         ------

Income before taxes.................    16.1            19.7          17.0           19.5             4.5           14.4
Income tax provision................     5.2             5.5           5.0            5.5            20.0           20.2
                                       -----         -------         -----         ------
Net income..........................    10.9%           14.2%         12.0%          14.0%           (1.6)%         12.2%
                                       =====         =======         =====         ======
</TABLE>

Revenue

The Corporation's total revenue was $124.6 million for the quarter ended
November 30, 2000, an increase of $26.9 million or 28%, compared to the quarter
ended November 30, 1999. The Corporation's total revenue was $351.5 million for
the nine months ended November 30, 2000, an increase of $84.0 million or 31%,
compared to the nine months ended November 30, 1999.

                                       12
<PAGE>

The Corporation operates internationally, with a substantial portion of its
business conducted in foreign currencies. Accordingly, the Corporation's results
are affected by year-over-year exchange rate fluctuations of the United States
dollar relative to various European currencies, to the Canadian dollar, and to a
lesser extent, other foreign currencies. Foreign exchange rate fluctuations
reduced the overall revenue increase by seven and six percentage points for the
quarter and the nine months ended November 30, 2000, respectively.

The Corporation's growth in total revenue was derived primarily from the
increased revenue attributable to the licensing, supporting and servicing of the
Corporation's business intelligence products solution, including PowerPlay(R),
Impromptu(R), Cognos Query, Cognos Visualizer, DecisionStream(TM), Scenario(TM),
Cognos Finance, Cognos e-Applications and Cognos Accelerator(TM) for SAP. Total
revenue (license, support, and services revenue) derived from these products was
$112.8 million in the quarter ended November 30, 2000, an increase of $29.0
million or 35%, and was $314.8 million for the nine months ended November 30,
2000 an increase of $91.7 million or 41% when compared to the corresponding
periods in the prior fiscal year. Total revenue from these business intelligence
products was 90% and 86% of total revenue for the quarters ended November 30,
2000 and November 30, 1999, respectively, whereas these percentages on a
year-to-date basis were 90% and 83%, respectively.

The Corporation believes that its business intelligence products address the
current market need for distributing corporate information to the end user's
desktop in an extended enterprise environment of corporate intranets, extranets,
and client/server networks. In earlier years the Corporation addressed this
opportunity with the release of Web-based products: PowerPlay Web, Impromptu Web
Reports and Cognos Query. While the Corporation believes that there is a market
opportunity for Web-based decision support solutions, there can be no assurance
of the rate or extent of growth of this market, or that the Corporation will be
successful in continuing to develop products that will effectively address this
market.

Total revenue (license, support, and services revenue) from the Corporation's
application development tools, PowerHouse(R) and Axiant(R), was $11.9 million
for the quarter ended November 30, 2000, a decrease of $2.2 million or 15% from
the corresponding period in the prior fiscal year, and was $36.7 million for the
nine months ended November 30, 2000, a decrease of $7.7 million or 17% when
compared to the corresponding nine month period in fiscal 2000. The Corporation
believes that, in the long-term, revenues from these products will continue to
decline.

The growth in total revenue from the three revenue categories in the quarter
ended November 30, 2000 from November 30, 1999 was as follows: a 26% increase in
product license revenue, a 27% increase in product support revenue, and an 34%
increase in services revenue. The growth for the same categories for the nine
months was as follows: 36%, 25% and 31%, respectively.

Product License Revenue
-----------------------
Product license revenue was $64.8 million in the quarter ended November 30,
2000, an increase of $13.3 million or 26%, and was $183.1 million for the nine
months ended November 30, 2000, an increase of $48.2 million or 36% compared to
the corresponding periods in the prior fiscal year. The increase in product
license revenue for both periods was predominantly due to the performance of the
Corporation's business intelligence products. Product license revenue

                                       13
<PAGE>

accounted for 52% of total revenue in the quarter ended November 30, 2000,
compared to 53% for the corresponding quarter in the prior fiscal year, and
accounted for 52% of total revenue for the nine months ended November 30, 2000,
compared to 50% for the corresponding period in the prior fiscal year.

Product license revenue from the business intelligence products was $61.8
million for the quarter ended November 30, 2000, an increase of $14.3 million or
30%, and was $172.8 million for the nine months ended November 30, 2000, an
increase of $51.3 million or 42% compared to the corresponding periods in the
prior fiscal year. Product license revenue from these business intelligence
products accounted for 95% and 92% of total product license revenue for the
quarters ended November 30, 2000 and 1999, respectively. On a year-to-date
basis, the Corporation derived 94% of product license revenue from these
products, compared to 90% in the corresponding period last year. The growth in
product license revenue from the business intelligence products in the quarter
was less than the growth rates reported in the last four quarters. The
Corporation believes that this was due to less than expected sales results in
the Scandinavian market, and delays in the closure of some prospective business.

Product license revenue from the application development tools was $3.1 million
for the quarter ended November 30, 2000, a decrease of $0.9 million or 23%, and
was $10.2 million for the nine months ended November 30, 2000, a decrease of
$3.1 million or 23% compared to the corresponding periods in the prior fiscal
year. Over several of the past fiscal years, the Corporation has been
experiencing a decline in product license revenue in this market which is
consistent, in the Corporation's view, with the market trend away from
proprietary systems and host-based computing toward industry-standard systems,
corporate intranets, extranets, client/server technology and packaged
applications products. The Corporation expects that, in the long term, the trend
of decreasing product license revenue from these products will continue.

There can be no assurance that increases in total product license revenue will
continue to occur, or occur to the same extent to which they have historically
occurred.

Product Support Revenue
-----------------------
Product support revenue was $37.6 million in the quarter ended November 30,
2000, an increase of $7.9 million or 27%, and was $106.6 million for the nine
months ended November 30, 2000, an increase of $21.1 million or 25% compared to
the corresponding periods in the prior fiscal year. The increase in the dollar
amounts was the result of the expansion of the Corporation's customer base, as
well as the renewal of support contracts. The product support revenue associated
with the expansion of the Corporation's customer base continues to exceed the
rate of non-renewals of support contracts.

Product support revenue accounted for 30% of the Corporation's total revenue for
both of the quarters ended November 30, 2000, and 1999 and accounted for 30% of
total revenue for the nine months ended November 30, 2000 and 32% for the
corresponding period in the prior fiscal year.

Total product support revenue from the business intelligence products comprised
78% and 67% of the total product support revenue for the quarters ended November
30, 2000, and November 30, 1999, respectively and comprised 76% and 65% of the
total product support revenue for the nine months ended November 30, 2000 and
November 30, 1999, respectively. Total support

                                       14
<PAGE>

revenue from the business intelligence products increased by 46% in the quarter
ended November 30, 2000, and total support revenue from the application
development tools decreased by 13%, compared to the corresponding quarter in the
prior fiscal year. For the nine months ended November 30, 2000, total support
revenue from the business intelligence products increased by 46%, whereas total
support revenue from the application development tools decreased by 15%,
compared to the corresponding period in the prior fiscal year.

There can be no assurance that increases in total product support revenue will
continue to occur, or occur to the same extent to which they have historically
occurred.

Services Revenue
----------------
Services revenue (training, consulting, and other revenue) was $22.2 million in
the quarter ended November 30, 2000, an increase of $5.6 million or 34%, and was
$61.9 million, an increase of $14.7 million or 31% for the nine months ended
November 30, 2000 compared to the corresponding periods in the prior fiscal
year. Services revenue accounted for 18% of the Corporation's total revenue for
both the quarter and nine months ended November 30, 2000, compared to 17% and
18% for the quarter and nine months ended, respectively, in the prior fiscal
year. The increase in the dollar amounts was primarily attributable to an
increase in consulting revenue, and, to a lesser extent, education revenue
associated with the Corporation's business intelligence products, consistent
with the trend in product license revenue for these products.

In the quarter ended November 30, 2000, services revenue associated with the
business intelligence products contributed $21.8 million, an increase of $5.6
million or 34%, and contributed $60.8 million, an increase of $14.8 million or
32% for the nine months ended November 30, 2000 compared to the corresponding
periods in the prior fiscal year. Total services revenue associated with the
Corporation's application development tools for the quarter was $0.4 million, an
immaterial increase in dollar terms and for the nine months ended November 30,
2000 was $1.1 million, a decrease of $0.2 million. Services revenue associated
with the business intelligence products contributed 98% of the total services
revenue for both the quarter and nine months ended November 30, 2000 compared to
98% and 97% for the corresponding periods in the prior fiscal year.

There can be no assurance that increases in total services revenue will continue
to occur, or occur to the same extent to which they have historically occurred.

Cost of Product License

The cost of product license consists primarily of royalties for technology
licensed from third parties, as well as the costs of materials and distribution
related to licensed software.

The cost of product license revenue was $1.9 million, an increase of $0.5
million or 32% in the quarter ended November 30, 2000, compared to the
corresponding period in the prior fiscal year and was $5.4 million, for the nine
months ended November 30, 2000, a 53% increase from the corresponding period in
the prior fiscal year. These costs represented 3% of product license revenue for
the three and nine months ended November 30, 2000, consistent with the three and

                                       15
<PAGE>

nine months ended November 30, 1999. The increases in both the quarter and the
nine months ended November 30, 2000 were the result of increases in royalty
costs.

Cost of Product Support

The cost of product support includes the costs associated with resolving
customer inquiries and other telesupport and websupport activities, royalties in
respect of technological support received from third parties, and the cost of
materials delivered in connection with enhancement releases.

The cost of product support revenue was $4.6 million, an increase of $0.9
million or 26% in the quarter ended November 30, 2000, and was $12.9 million, an
increase of $2.9 million or 28% for the nine months ended November 30, 2000,
compared to the corresponding periods in the prior fiscal year. The increase in
the dollar amounts for both periods was primarily due to increases in
telesupport and websupport costs, and to a lesser extent, royalty costs.

The cost of product support represented 12% of total product support revenue for
both the three and nine months ended November 30, 2000, consistent with the
corresponding periods in the prior fiscal year.

Selling, General, and Administrative

Selling, general, and administrative (SG&A) expenses were $81.3 million, an
increase of $19.8 million or 32% in the quarter ended November 30, 2000, and
were $229.9 million, an increase of $62.0 million or 37% for the nine months
ended November 30, 2000, compared to the corresponding periods in the prior
fiscal year. These costs increased as a percentage of revenue, representing 65%
for the three and nine months ended November 30, 2000 compared to 63% for both
corresponding periods in the prior fiscal year.

The increase in these expenses was predominantly because of increased staffing
and related compensation expenses. The increase in the average number of
employees within SG&A was 30% for both the three and nine months ended November
30, 2000, when compared to the corresponding periods in the prior fiscal year.
The Corporation has stepped up its investments in its products, distribution and
service strength to focus its actions on opportunities for revenue growth.

                                       16
<PAGE>

Research and Development

Gross research and development (R&D) costs were $17.2 million, an increase of
$3.4 million or 24% in the quarter ended November 30, 2000, and were $49.8
million, an increase of $10.7 million or 27% for the nine months ended November
30, 2000, compared to the corresponding periods in the prior fiscal year. The
increase was partly the result of increases associated with higher staffing
levels and related compensation expenses. Increases in services purchased
externally and other costs associated with the development of the Corporation's
product lines to meet foreign market requirements also contributed to the
increase in the quarter. The increase in the average number of employees within
R&D was 12% and 14% for the three and nine months ended November 30, 2000,
respectively, when compared to the corresponding periods in the prior fiscal
year.

During the quarter ended November 30, 2000 the Corporation continued to invest
in R&D activities for its business intelligence solutions, including further
development of e-Application packages and continued investment in the existing
Cognos enterprise business intelligence platform. During the quarter the
Corporation released a new version of Cognos Query, the Corporation's Web-based
database query and navigation tool. During the nine month period ended November
30, 2000 the Corporation released DecisionStream 6.5, the data mart creation
component of the BI platform which unites data from disparate sources and
consolidates it into data marts. In addition to the Corporation's e-Application
for Sales Analysis, Inventory Analysis and Financial Analysis, the Corporation
announced the e-Commerce Analysis application for the IBM WebSphere Commerce
Suite during this nine month period. The Corporation also announced version 5.0
of Cognos Finance, a solution that delivers integrated budgeting, forecasting,
consolidation and financial reporting and analysis in one comprehensive system,
and version 1.5 of Cognos Visualizer which has significant enhancements for
scorecarding and key performance indicator applications displaying these metrics
in a single presentation. As indicated in the preceding discussion on revenue,
the Corporation believes that its business intelligence products address the
current market need for distributing corporate information to the end user's
desktop in an extended enterprise environment of corporate intranets, extranets
and client/server networks.

Net R&D expenses were $16.9 million, an increase of $3.3 million or 24% in the
quarter ended November 30, 2000, and were $49.2 million, an increase of $10.6
million or 27% for the nine months ended November 30, 2000, compared to the
corresponding periods in the prior fiscal year. The increase was the result of
the increased gross R&D expenses as outlined above.

Software development costs are expensed as incurred unless they meet generally
accepted accounting criteria for deferral and amortization. Software development
costs incurred prior to the establishment of technological feasibility do not
meet these criteria, and are expensed as incurred. Capitalized costs are
amortized over a period not exceeding 36 months. No costs were deferred in
either quarter. Costs were not deferred in the period because either no projects
met the criteria for deferral or the period between (i) achieving technological
feasibility and (ii) the general availability of the product was short, and the
associated costs were immaterial.

                                       17
<PAGE>

The following table sets out the components of the Corporation's research and
development, as well as the percentages of revenue, for the periods indicated.

<TABLE>
<CAPTION>
                                                  Three months ended     Nine months ended
                                                      November 30,         November 30,
                                                   ------------------   -------------------
                                                    2000       1999      2000        1999
                                                   -------    -------   -------     -------
                                                                  (US$000s)
   <S>                                            <C>         <C>       <C>         <C>
   Gross research and development costs........    $17,158    $13,787   $49,811     $39,096
   Government allowance........................       (304)      (213)     (596)       (480)
                                                   -------    -------   -------     -------
   Research and development expenses...........    $16,854    $13,574   $49,215     $38,616
                                                   =======    =======   =======     =======

   Percentage of total revenue
     Gross research and development............         14%        14%       14%         15%
     Research and development..................         14%        14%       14%         14%
</TABLE>

Acquired In-Process Technology

Powerteam OY
------------
On June 1, 2000, the Corporation acquired Powerteam OY, the Corporation's
distributor in Finland. The shareholders of Powerteam OY will receive
approximately $2.3 million in cash over two years and could also receive cash
payments not to exceed $0.5 million over the next three years. The acquisition
of Powerteam OY did not involve the purchase of acquired in-process technology.

NoticeCast Software Ltd.
------------------------
On September 21, 2000, the Corporation acquired NoticeCast Software Ltd., based
in Twickenham, United Kingdom. NoticeCast's Enterprise Event Management Software
monitors business processes and delivers timely business intelligence
notifications to business users across the enterprise via e-mail on their
personal computer, hand-held or wireless device. The shareholders of NoticeCast
Software Ltd. received approximately $9,000,000 in cash on closing and will
receive 148,468 shares of the Corporation's common stock valued at approximately
$4,820,000. The shares are being held in escrow by the Corporation and will be
released on the second anniversary of the closing of the transaction. For
valuation purposes, the shares were appropriately discounted. An independent
appraisal valued the in-process research and development at $3,000,000. In the
opinion of management and the appraiser, the acquired in-process research and
development had not yet reached technological feasibility and had no alternative
future uses. Accordingly, the Corporation recorded a special charge of
$3,000,000 (or $0.03 per share) in the third quarter ended November 30, 2000 to
write off the in-process technology.

At the time of acquisition, the NoticeCast product required integration with the
Cognos platform, enhancements to ensure that the scalability of the product
would be consistent with the Cognos platform as a whole, and also required
systems testing to ensure predictability of performance. It is anticipated that
the first Cognos version of the software would be available in the second
quarter of fiscal 2002. The Corporation currently estimates that development
efforts to complete this version of the software will cost approximately $4
million.

                                       18
<PAGE>

For the acquisition of NoticeCast, the fair value of NoticeCast's one in-process
research and technology project, emPower, was assessed by independent business
valuators at $3.0 million. The valuators used the income forecast method, with
the percentage completion approach to value the acquired in-process research and
development. The adjusted discount rate applied by the valuators to the
project's cash flows was 15%. The Corporation believes that emPower was
approximately 40% complete at the time of purchase. Cash inflows from this
project are expected to commence in Fiscal 2002.

With the integration of the NoticeCast technology into the Cognos solution, the
average price of the Corporation's products is expected to increase slightly.
However, the Corporation does not expect a material impact, from the integration
of this project, on the margin rates experienced historically.

The risks and uncertainties associated with completing the development of the
project are as follows:

     . The Corporation may be unable to integrate the project with the Cognos
       platform on a timely basis.
     . The Corporation may be unable to scale the project to align it with the
       Cognos platform.
     . The Corporation may be unable to complete testing on a timely basis.
     . Testing of the project may show that predictability of performance is not
       in line with Cognos quality standards.

If the project is not completed on schedule, our competition may introduce
similar products before us. This could result in a decline in our sales or a
loss of market acceptance of our products.

Johnson & Michaels, Inc.
------------------------
On November 1, 2000, the Corporation completed the acquisition of Johnson &
Michaels, Inc. (JAMI), a leading provider of business intelligence consulting
services. The shareholders of JAMI will receive total cash consideration of
approximately $3,915,000 over three years and 104,230 shares of the
Corporation's common stock valued at $4,250,000 over the same period.
Approximately $1,406,000 was paid and 39,085 shares were issued on closing; the
remaining shares, all of which were issued, are being held in escrow by the
Corporation and will be released on the first (33%), second (33%), and third
(34%) anniversary of the closing of the transaction. The deferred shares, valued
at $2,656,000, are accounted for as an offset to capital stock. The acquisition
of JAMI did not involve the purchase of acquired in-process technology.

The acquisitions have been accounted for using the purchase method. The results
of operations of all three acquired companies prior to the acquisitions were not
material. The results of the acquired companies have been combined with those of
the Corporation from the date of the acquisition.

                                       19
<PAGE>

Interest Income and Expense

Net interest income was $3.1 million in the quarter ended November 30, 2000, an
increase of $1.5 million or 91% for the quarter, and was $8.5 million, an
increase of $3.8 million or 80% for the nine months ended November 30, 2000,
compared to the corresponding periods in the prior fiscal year. The average
portfolio balances were higher in both current fiscal periods and effective
interest rates were higher as compared to the corresponding periods in the prior
fiscal year.

Income Tax Provision

The Corporation's tax rate is affected by the relative profitability of its
operations in various geographic regions. In the three and nine months ended
November 30, 2000, the Corporation recorded an income tax provision of $6.5
million and $17.5 million, respectively, which represents an effective income
tax rate of 32% for the quarter and 29% for the nine month period. The tax
expense was booked at 28% on $23.1 million of pre-tax income for the quarter as
the write-off of $3.0 million of the acquired in-process technology, related to
the purchase of NoticeCast Software Ltd., is not deductible for tax purposes.
The 28% rate is consistent with the effective rate used in the three and nine
months ended November 30, 1999.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

As of November 30, 2000 the Corporation had $206.4 million in cash, cash
equivalents, and short-term investments, a increase of $9.7 million from
February 29, 2000. In addition, the Corporation has an unsecured credit facility
that includes an operating line and foreign exchange conversion facilities. The
operating line permits the Corporation to borrow funds or issue letters of
credit or guarantee up to Cdn$15.0 (US$9.8) million, subject to certain
covenants. As of November 30, 2000, there were no direct borrowings under this
operating line. As discussed further below, the Corporation has foreign exchange
conversion facilities that allow it to hold foreign exchange contracts of
approximately Cdn$130.0 (US$84.7) million outstanding at any one time.

As of November 30, 2000, the Corporation had a total of $4.4 million of
long-term indebtedness (including the current portion of long-term debt),
consisting of long-term debt and other long-term liabilities. As of November 30,
2000, working capital was $191.4 million, an increase of $24.9 million from
February 29, 2000, primarily because of increases in accounts receivable,
short-term investments, and decreases in the current portion of long-term debt
and deferred product support revenue, which were partially offset by a decrease
in cash and increases in accrued charges and income taxes payable. The change in
working capital for the nine months ended November 30, 2000 included the use, by
the Corporation, of $2.0 million in cash for the repurchase of 50,000 of its
common shares of stock during the period.

Cash provided by operating activities (after changes in non-cash working capital
items) for the nine months ended November 30, 2000 was $51.9 million, a $11.8
million increase when compared to the corresponding period in the prior fiscal
year. This increase as compared to the prior period was primarily due to an
increase in net income and increases in accounts payable, accrued charges,
salaries, commissions and related items and income taxes payable which were
offset by increases in the level of accounts receivable and prepaid expenses
during the current nine month period.

                                       20
<PAGE>

Cash used in investing activities was $108.4 million for the nine months ended
November 30, 2000 compared to $29.9 million used in investing activities for the
corresponding period in the prior fiscal year. During the current nine month
period, the Corporation invested $54.1 million related to the activity in
short-term investments (net of maturities) compared to investing $8.1 million in
the corresponding period in the prior fiscal year. There were acquisition costs
totaling $11.3 million in the nine months ended November 30, 2000 relating to
the Corporation's purchase of its distributor in Finland, the purchase of
NoticeCast Software Ltd. and the acquisition of Johnson & Michaels, Inc. In the
corresponding period in the prior fiscal year, the Corporation spent $2.6
million related to the purchase of the Corporation's distributor in Switzerland
and the purchase of the entire outstanding minority interest in the
Corporation's subsidiary in Singapore.

During fiscal 2000 the Corporation began the construction of a second building
on the site of its corporate headquarters in Ottawa. This expansion will
accommodate the continued growth of the Corporation and allows for the
consolidation of a number of corporate operations in the Ottawa area. The
Corporation has invested approximately $20.3 million in the current year and
prior fiscal year and it is anticipated that costs will total $21 million. The
construction of this new facility was substantially complete in December 2000
and the building is expected to be fully occupied by the end of the current
fiscal year.

The Corporation issued 1,878,000 common shares, valued at $26.7 million, during
the nine months ended November 30, 2000 compared to the issuance of 628,000
shares valued at $4.9 million for the same period in the prior fiscal year. The
issuance of shares in the current nine month period was pursuant to the
Corporation's stock purchase plan and the exercise of stock options by
employees, officers, and directors, and the issuance of shares related to the
acquisitions of NoticeCast Software Ltd. and Johnson & Michaels, Ltd. The
issuance of shares during the nine month period ended November 30, 1999 was
pursuant to the Corporation's stock purchase plan and the exercise of stock
options by employees, officers, and directors. The Corporation's financing
activities for both nine month periods also included the repurchase of its own
common shares in the open market. During the nine months ended November 30,
2000, the Corporation repurchased 50,000 of its own shares at a cost of $2.0
million compared to 2,286,000 shares repurchased at a cost of $26.0 million in
the corresponding period in the prior fiscal year.

The share repurchases made in the current nine month period were part of an open
market share repurchase program. The program adopted in October 1999 expired on
October 8, 2000. This program enabled the Corporation to purchase up to
4,200,000 (not more than 5% of those issued and outstanding) common shares
between October 9, 1999 and October 8, 2000. Under this program the Corporation
repurchased 50,000 of its shares for $2.0 million in the nine months ended
November 30, 2000. During the term of the program the Corporation repurchased a
total of 150,000 of its shares for $3.4 million; all repurchased shares were
cancelled. In October 2000, the Corporation adopted a new program that enables
it to purchase up to 4,403,510 common shares (not more than 5% of those issued
and outstanding) between October 9, 2000 and October 8, 2001. Purchases will be
made on the Nasdaq Stock Market at prevailing open market prices and paid out of
general corporate funds. This program does not commit the Corporation to make
any share repurchases. All repurchased shares will be cancelled. The Corporation
has not repurchased shares under this program during the nine months ended
November 30, 2000.

                                       21
<PAGE>

The Corporation's policy with respect to foreign currency exposure is to manage
its financial exposure to certain foreign exchange fluctuations with the
objective of neutralizing some of the impact of foreign currency exchange
movements. To achieve this objective, the Corporation enters into foreign
exchange forward contracts to hedge portions of the net investment in its
various subsidiaries. The Corporation enters into these foreign exchange forward
contracts with major Canadian chartered banks, and therefore does not anticipate
non-performance by these counterparties. The amount of the exposure on account
of any non-performance is restricted to the unrealized gains in such contracts.
As of November 30, 2000, the Corporation had foreign exchange forward contracts,
with maturity dates ranging from December 21, 2000 to April 26, 2001, to
exchange various foreign currencies in the amount of $11.4 million.

The Corporation anticipates that over the next twelve months its operations will
be financed by current cash balances and funds from operations. If the
Corporation were to require funds in excess of its current cash position to
finance its longer-term operations, the Corporation would expect to obtain such
funds from, one or a combination of, the expansion of its existing credit
facilities, or from public or private sales of equity or debt securities.

EUROPEAN ECONOMIC AND MONETARY UNION
------------------------------------

The euro currency was introduced on January 1, 1999, and the transition to this
new currency has associated with it many potential implications for businesses
operating in Europe including, but not limited to, products, information
technology, pricing, currency exchange rate risk and derivatives exposure,
continuity of material contracts, and potential tax consequences.

The new euro currency is being introduced in stages over the course of a 3 1/2
year transition period. The Corporation believes the transition to the euro will
have limited longer-term implications on the Corporation's business. The
Corporation has taken steps in the transition to the euro in the area of its
internal processes and systems through identifying, modifying, and testing these
processes and systems to handle transactions involving the euro in accordance
with the regulations. The Corporation's financial application systems represent
the most significant internal systems that are affected by the transition to the
euro. The Corporation upgraded these systems to a version that enables it,
together with certain process changes and modifications provided by the
application vendor to its supported customers, to handle the initial
requirements for transactions involving the euro. The Corporation continues to
identify and, where necessary, modify its systems and processes in order to
handle the various stages of the euro implementation. The Corporation is
continuing to monitor its pricing in Europe, giving consideration to the
transition to the euro.

The Corporation believes that the costs relating to the conversion of its
internal systems and processes incurred to date, along with any future costs
relating to such conversions, will not have a material adverse effect on its
business, results of operations, or financial condition.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
----------------------------------------------

This Form 10-Q contains forward-looking statements relating to: our expectations
concerning future revenues and earnings, including future growth rates, from the
licensing of our business intelligence and application development products and
related product support and services; the

                                       22
<PAGE>

sufficiency of capital to meet our working capital and capital expenditure
requirements; future prospects of our current and future products and our
ability to compete in an intensely competitive marketplace.

Forward-looking statements are neither promises nor guarantees, but involve
risks and uncertainties that may cause future results to differ materially from
those in the forward looking statements. Factors that may cause such differences
include, but are not limited to: our ability to continue to grow at historical
growth rates or to anticipate a decline in revenue from any of our products;
fluctuations in quarterly and annual operating results based on historical
patterns, which may cause our stock price to fluctuate or decline; rapid
technological change and new product introductions and enhancements in the
business intelligence software market; our reliance on partners and other
distribution channels to market and distribute our products; unauthorized use of
our intellectual property; the loss of rights to use software licensed to us by
third parties; claims by third parties that our software infringes their
intellectual property; our ability to compete in an intensely competitive
marketplace; risks inherent in international operations such as currency
exchange rate fluctuations; our ability to identify, hire, train, motivate and
retain highly qualified management and other key personnel; our ability to
identify, pursue and complete acquisitions which could divert management
attention and financial resources and not produce desired business results; our
ability to appropriately value the acquired in-process research and development;
our ability to address issues relating to the transition to the euro; and
volatility and fluctuation of our stock price. As a result of these, and other
factors, we may experience material fluctuations in future operating results on
a quarterly and annual basis, which could materially and adversely affect our
business, financial condition, operating results and stock price. We typically
realize a larger percentage of our annual revenue and earnings in the fourth
quarter of each fiscal year, and lower revenue and earnings in the first quarter
of the next fiscal year. A detailed discussion of each of these risk factors is
contained under the heading "Certain Factors That May Affect Future Results" in
our most recent Annual Report on Form 10-K filed with the United States
Securities and Exchange Commission.

                                       23
<PAGE>

Item 3.   Quantitative and Qualitative Disclosure about Market Risk
          ---------------------------------------------------------

Market risk represents the risk of loss that may impact our financial position
due to adverse changes in financial market prices and rates. Our market risk
exposure is primarily a result of fluctuations in interest rates and foreign
currency exchange rates. We do not hold or issue financial instruments for
trading purposes.

Interest Rate Risk

Our exposure to market rate risk for changes in interest rates relates primarily
to our investment portfolio. The investment of cash is regulated by our
investment policy of which the primary objective is security of principal. Among
other selection criteria, the investment policy states that the term to maturity
of investments cannot exceed one year in length. We do not use derivative
financial instruments in our investment portfolio.

Interest income on our cash, cash equivalents, and short-term investments is
subject to interest rate fluctuations, but we believe that the impact of these
fluctuations does not have a material effect on our financial position due to
the short-term nature of these financial instruments. The amount of our
long-term debt is immaterial. Our interest income and interest expense are most
sensitive to the general level of interest rates in Canada and the United
States. Sensitivity analysis is used to measure our interest rate risk. For the
quarter and nine months ended November 30, 2000, a 100 basis-point adverse
change in interest rates would not have had a material effect on our
consolidated financial position, earnings, or cash flows.

Foreign Currency Risk

We operate internationally; accordingly, a substantial portion of our financial
instruments are held in currencies other than the United States dollar. Our
policy with respect to foreign currency exposure is to manage financial exposure
to certain foreign exchange fluctuations with the objective of neutralizing some
of the impact of foreign currency exchange movements. To achieve this objective,
we enter into foreign exchange forward contracts to hedge portions of the net
investment in various subsidiaries. The forward contracts are typically between
the United States dollar and the British pound, the German mark, and the
Australian dollar. Sensitivity analysis is used to measure our foreign currency
exchange rate risk. As of November 30, 2000, a 10% adverse change in foreign
exchange rates versus the U.S. dollar would not have had a material effect on
our reported cash, cash equivalents, and short-term investments.

                                       24
<PAGE>

PART II - OTHER INFORMATION
---------------------------

Item 1.   Legal Proceedings
          -----------------

On May 5, 2000 an action was filed in the United States District Court for the
Northern District of California against the Corporation and its subsidiary,
Cognos Corporation (collectively "Cognos") by Business Objects S.A.
("Complainant"), for alleged patent infringement. The complaint alleges that the
Corporation's Impromptu product infringes the Complainant's United States Patent
No. 5,555,403 entitled "Relational Database Access System using Semantically
Dynamic Objects". The complaint seeks relief in the form of an injunction
against the Corporation and unspecified damages. The Corporation believes the
complaint is without merit and intends to vigorously contest it. Based on the
preliminary stage of the proceedings, the Corporation cannot estimate the
financial impact, if any, at this time.

In addition, the Corporation and its subsidiaries may, from time to time be
involved in other legal proceedings, claims, and litigation that arise in the
ordinary course of business which the Corporation believes would not reasonably
be expected to have a material adverse effect on the financial condition of the
Corporation.

Item 2.   Changes in Securities
          ---------------------

c)   On September 21, 2000, the Corporation acquired NoticeCast Software Ltd.,
     based in Twickenham, United Kingdom. NoticeCast's Enterprise Event
     Management Software monitors business processes and delivers timely
     business intelligence notifications to business users across the enterprise
     via e-mail on their personal computer, hand-held or wireless device. The
     shareholders of NoticeCast Software Ltd. received approximately $9 million
     in cash on closing and 148,468 shares of the Corporation's common stock
     valued at approximately $4,820,000 over two years. The shares are being
     held in escrow by the Corporation and will be released on the second
     anniversary of the closing of the transaction. For valuation purposes, the
     shares were appropriately discounted. The shares were issued in reliance
     upon an exemption from registration pursuant to Section 4(2) of the
     Securities Act of 1933. This acquisition resulted in a charge against
     after-tax income of approximately $3 million, or $0.03 per share, as a
     write-off of in-process research and development under U.S. Generally
     Accepted Accounting Principles.

     On November 1, 2000, the Corporation completed the acquisition of Johnson &
     Michaels, Inc. (JAMI), a leading provider of business intelligence
     consulting services. The shareholders of JAMI will receive total cash
     consideration of approximately $3,915,000 over three years and 104,230
     shares of the Corporation's common stock valued at $4,250,000 over the same
     period. Approximately $1,406,000 was paid and 39,085 shares were issued on
     closing; the remaining shares, all of which were issued, are being held in
     escrow by the Corporation and will be released on the first (33%), second
     (33%), and third (34%) anniversary of the closing of the transaction. The
     shares were issued in reliance upon an exemption from registration pursuant
     to Section 4(2) of the Securities Act of 1933. The deferred shares, valued
     at $2,656,000, are accounted for as an offset to capital stock.

     The acquisitions will be accounted for using the purchase method. The
     results of the acquired company will be combined with those of the
     Corporation from the date of the acquisition.

                                       25
<PAGE>

Item 6.   Exhibits and Reports on Form 8-K
          --------------------------------

a)   Exhibits

          99  -  Selected Consolidated Financial Statements in U.S. Dollars and
                   in accordance with Canadian Generally Accepted Accounting
                   Principles

b)   Reports on Form 8-K

There were no reports on Form 8-K filed during the three months ended November
30, 2000.

                                       26
<PAGE>

                                    SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                          COGNOS INCORPORATED
                                           (Registrant)



     January 12, 2001                       /s/ Donnie M. Moore
--------------------------    -------------------------------------------------
           Date               Donnie M. Moore
                              Senior Vice President, Finance and Administration
                               (Principal Financial Officer and Chief Accounting
                               Officer)

                                       27
<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
     EXHIBIT NO.                                            DESCRIPTION                                           PAGE
     -----------                                            -----------                                           ----
     <S>                <C>                                                                                       <C>
          99            Selected Consolidated Financial Statements in U.S. Dollars and in accordance with
                        Canadian Generally Accepted Accounting Principles                                         29-31
</TABLE>

                                      28