---

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, |  
|-------------------------------------------- |  | ------------------------------ | - | ----------------------------- | -
|                                            
|                                             |  | 2003                           |   | 2002                          |  
|                                            
|Revenue                                      |  |                                |   |                               |  
|Product license                              |  | $   72,551                     |   | $   62,223                    |  
|Product support                              |  | 68,676                         |   | 52,853                        |  
|Services                                     |  | 31,000                         |   | 22,998                        |  
|                                            
|Total revenue                                |  | 172,227                        |   | 138,074                       |  
|                                            
|Cost of revenue                              | 
|Cost of product license                      |  | 1,121                          |   | 722                           |  
|Cost of product support                      |  | 7,051                          |   | 5,240                         |  
|Cost of services                             |  | 22,924                         |   | 17,599                        |  
|                                            
|Total cost of revenue                        |  | 31,096                         |   | 23,561                        |  
|                                            
|Gross margin                                 |  | 141,131                        |   | 114,513                       |  
|                                            
|Operating expenses                           | 
|Selling, general, and administrative         |  | 86,185                         |   | 67,492                        |  
|Research and development                     |  | 22,265                         |   | 18,264                        |  
|Amortization of intangible assets            |  | 2,375                          |   | 1,969                         |  
|Investment tax credits                       |  | (4,609                         | ) | (2,179                        | )
|                                            
|Total operating expenses                     |  | 106,216                        |   | 85,546                        |  
|                                            
|Operating income                             |  | 34,915                         |   | 28,967                        |  
|Interest expense                             |  | (552                           | ) | (211                          | )
|Interest income                              |  | 975                            |   | 1,521                         |  
|                                            
|Income before taxes                          |  | 35,338                         |   | 30,277                        |  
|Income tax provision                         |  | 11,412                         |   | 11,100                        |  
|                                            
|Net income                                   |  | 23,926                         |   | 19,177                        |  
|Retained earnings at beginning of the period |  | 245,629                        |   | 173,524                       |  
|Repurchase of shares                         |  | --                             |   | (6,234                        | )
|                                            
|Retained earnings at end of the period       |  | $ 269,555                      |   | $ 186,467                     |  
|                                            
|Net income per share                         | 
|Basic                                        |  | $0.27                          |   | $0.22                         |  
|                                            
|Diluted                                      |  | $0.26                          |   | $0.21                         |  
|                                            
|Weighted average number of shares (000s)     | 
|Basic                                        |  | 89,692                         |   | 87,845                        |  
|                                            
|Diluted                                      |  | 92,614                         |   | 89,882                        |  
|                                            

(See accompanying notes)

57

---

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

|                                                                 |  | November 30,2003 |   | February 28,2003 |  
|---------------------------------------------------------------- |  | ---------------- | - | ---------------- | -
|                                                                
|Assets                                                           |  | (Unaudited)      |   | (Note 1)         |  
|Current assets                                                   |  |                  |   |                  |  
|Cash and cash equivalents                                        |  | $ 166,227        |   | $ 162,588        |  
|Short-term investments                                           |  | 154,668          |   | 79,670           |  
|Accounts receivable                                              |  | 118,767          |   | 139,116          |  
|Prepaid expenses and other current assets                        |  | 11,801           |   | 8,884            |  
|Deferred tax assets                                              |  | 4,165            |   | 5,427            |  
|                                                                
|                                                                 |  | 455,628          |   | 395,685          |  
|Fixed assets                                                     |  | 72,599           |   | 63,467           |  
|Intangible assets                                                |  | 25,736           |   | 32,902           |  
|Goodwill                                                         |  | 170,475          |   | 169,991          |  
|                                                                
|                                                                 |  | $ 724,438        |   | $ 662,045        |  
|                                                                
|Liabilities                                                      | 
|Current liabilities                                              | 
|Accounts payable                                                 |  | $   25,623       |   | $   33,310       |  
|Accrued charges                                                  |  | 24,486           |   | 34,192           |  
|Salaries, commissions, and related items                         |  | 45,357           |   | 48,916           |  
|Income taxes payable                                             |  | 9,797            |   | 4,395            |  
|Deferred revenue                                                 |  | 129,882          |   | 146,008          |  
|                                                                
|                                                                 |  | 235,145          |   | 266,821          |  
|Long-term liabilities                                            |  | --               |   | 1,647            |  
|Deferred income taxes                                            |  | 20,430           |   | 14,868           |  
|                                                                
|                                                                 |  | 255,575          |   | 283,336          |  
|                                                                
|Stockholders' Equity                                             | 
|Capital stock                                                    | 
|Common shares and additional paid-in capital                     | 
|(November 30, 2003 - 89,915,921; February 28, 2003 - 88,124,914) |  | 200,600          |   | 173,363          |  
|Treasury shares                                                  | 
|(November 30, 2003 - 43,500; February 28, 2003 - 22,500)         |  | (1,065           | ) | (501             | )
|Deferred stock-based compensation                                |  | (870             | ) | (1,243           | )
|Retained earnings                                                |  | 269,555          |   | 215,714          |  
|Accumulated other comprehensive income                           |  | 643              |   | (8,624           | )
|                                                                
|                                                                 |  | 468,863          |   | 378,709          |  
|                                                                
|                                                                 |  | $ 724,438        |   | $ 662,045        |  
|                                                                

(See accompanying notes)

58

---

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

|                                                                  |  | Three months endedNovember 30, |   | Nine months endedNovember 30, |  
|----------------------------------------------------------------- |  | ------------------------------ | - | ----------------------------- | -
|                                                                 
|                                                                  |  | 2003                           |   | 2002                          |  
|                                                                 
|Cash flows from operating activities                              |  |                                |   |                               |  
|Net income                                                        |  | $   23,926                     |   | $   19,177                    |  
|Non-cash items                                                    | 
|Depreciation and amortization                                     |  | 7,744                          |   | 6,451                         |  
|Amortization of deferred stock-based compensation                 |  | 215                            |   | 148                           |  
|Amortization of other deferred compensation                       |  | 44                             |   | 119                           |  
|Deferred income taxes                                             |  | 1,057                          |   | 3,961                         |  
|Loss on disposal of fixed assets                                  |  | 76                             |   | 8                             |  
|                                                                 
|                                                                  |  | 33,062                         |   | 29,864                        |  
|Change in non-cash working capital                                | 
|Decrease (increase) in accounts receivable                        |  | (5,716                         | ) | (18,157                       | )
|Decrease (increase) in prepaid expenses and other current assets  |  | 2,327                          |   | 1,687                         |  
|Increase (decrease) in accounts payable                           |  | 837                            |   | 4,259                         |  
|Decrease in accrued charges                                       |  | (4,610                         | ) | (355                          | )
|Increase (decrease) in salaries, commissions, and related items   |  | 6,647                          |   | 3,390                         |  
|Increase (decrease) in income taxes payable                       |  | 3,967                          |   | 125                           |  
|Decrease in deferred revenue                                      |  | (7,314                         | ) | (5,484                        | )
|                                                                 
|Net cash provided by operating activities                         |  | 29,200                         |   | 15,329                        |  
|                                                                 
|Cash flows from investing activities                              | 
|Maturity of short-term investments                                |  | 88,663                         |   | 19,851                        |  
|Purchase of short-term investments                                |  | (144,406                       | ) | (139,146                      | )
|Additions to fixed assets                                         |  | (6,165                         | ) | (3,559                        | )
|Acquisition costs                                                 |  | (254                           | ) | --                            |  
|                                                                 
|Net cash used in investing activities                             |  | (62,162                        | ) | (122,854                      | )
|                                                                 
|Cash flows from financing activities                              | 
|Issue of common shares                                            |  | 8,896                          |   | 4,106                         |  
|Purchase of treasury shares                                       |  | --                             |   | --                            |  
|Repurchase of shares                                              |  | --                             |   | (6,850                        | )
|Decrease in long-term debt and long-term liabilities              |  | --                             |   | (2,361                        | )
|                                                                 
|Net cash provided by (used in) financing activities               |  | 8,896                          |   | (5,105                        | )
|                                                                 
|Effect of exchange rate changes on cash                           |  | 4,111                          |   | 72                            |  
|                                                                 
|Net increase (decrease) in cash and cash equivalents              |  | (19,955                        | ) | (112,558                      | )
|Cash and cash equivalents, beginning of period                    |  | 186,182                        |   | 289,100                       |  
|                                                                 
|Cash and cash equivalents, end of period                          |  | 166,227                        |   | 176,542                       |  
|Short-term investments, end of period                             |  | 154,668                        |   | 161,561                       |  
|                                                                 
|Cash, cash equivalents, and short-term investments, end of period |  | $ 320,895                      |   | $ 338,103                     |  
|                                                                 

(See accompanying notes)

59

---

COGNOS INCORPORATEDCONDENSED 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 the preparation of
interim financial information. The consolidated balance sheet at February 28, 2003 has
been extracted from the audited consolidated financial statements at that date.
Accordingly, these consolidated financial statements do not include all information and
footnotes as 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 Annual
Information Form for the fiscal year ended February 28, 2003.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 thousands of 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.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

60

---

COGNOS INCORPORATEDCONDENSED 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 the
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. 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. |  | Stock-based
Compensation
|-- |  | ------------------------

| | The
Corporation applies CICA Handbook section 3870, Stock-based Compensation and Other
Stock-Based Payments, (CICA 3870) in accounting for its stock option, stock purchase,
and restricted share unit plans. Except for certain options assumed on the acquisition of
Adaytum, Inc. (Adaytum) where compensation cost has been recognized in the financial
statements, the exercise price of all stock options is equal to the market price of the
stock on the trading day preceding the date of grant. Where the exercise price of stock
options is equal to the market price of the stock on the trading day preceding the date of
grant, no compensation cost has been recognized in the financial statements for its stock
option and stock purchase plans. For restricted share units, the fair value of each unit
is calculated at the date of grant. Compensation cost relating to the restricted share
unit plan is recognized in the financial statements over the vesting period.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

61

---

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

| | If
the fair values of the options granted had been recognized as compensation expense on a
straight-line basis over the vesting period of the grant, stock-based compensation costs
would have reduced net income, basic net income per share and diluted net income per share
as indicated in the table below (000s, except per share amounts):
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                    |  | Three months endedNovember 30, |   | Nine months endedNovember 30, |  
|----------------------------------- |  | ------------------------------ | - | ----------------------------- | -
|                                   
|                                    |  | 2003                           |   | 2002                          |  
|                                   
|Net income:                         |  |                                |   |                               |  
|As reported                         |  | $ 23,926                       |   | $ 19,177                      |  
|Add: Stock-based employee           | 
|compensation included above         |  | 215                            |   | 148                           |  
|Less: Stock-based employee          | 
|compensation using fair value based | 
|method                              |  | (5,435                         | ) | (7,392                        | )
|                                   
|Pro forma                           |  | $ 18,706                       |   | $ 11,933                      |  
|                                   
|Basic net income per share:         | 
|As reported                         |  | $0.27                          |   | $0.22                         |  
|Add: Stock-based employee           | 
|compensation included above         |  | --                             |   | --                            |  
|Less: Stock-based employee          | 
|compensation using fair value based | 
|method                              |  | (0.06                          | ) | (0.08                         | )
|                                   
|Pro forma                           |  | $0.21                          |   | $0.14                         |  
|                                   
|Diluted net income per share:       | 
|As reported                         |  | $0.26                          |   | $0.21                         |  
|Add: Stock-based employee           | 
|compensation included above         |  | --                             |   | --                            |  
|Less: Stock-based employee          | 
|compensation using fair value based | 
|method                              |  | (0.06                          | ) | (0.08                         | )
|                                   
|Pro forma                           |  | $0.20                          |   | $0.13                         |  
|                                   
|Weighted average number of shares:  |  |                                |   |                               |  
|Basic                               |  | 89,692                         |   | 87,845                        |  
|                                   
|Diluted                             |  | 92,614                         |   | 89,882                        |  
|                                   

62

---

COGNOS INCORPORATEDCONDENSED 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 a Black-Scholes
option-pricing model with the following weighted average assumptions:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                 |  | Three months endedNovember 30, |   | Nine months endedNovember 30, | 
|-------------------------------- |  | ------------------------------ | - | ----------------------------- | 
|                                
|                                 |  | 2003                           |   | 2002                          | 
|                                
|Risk-free interest rates         |  | 3.0                            | % | N/A*                          | 
|Expected life of options (years) |  | 4.3                            |   | N/A*                          | 
|Expected volatility              |  | 57.1                           | % | N/A*                          | 
|Dividend yield                   |  | 0.0                            | % | N/A*                          | 



| | *
There were no options granted during the three months ended November 30, 2002.
| | --------------------------------------------------------------------------------

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

| | During
the three and nine months ended November 30, 2003, there were additions to goodwill of
$254,000 and $484,000, respectively. During the three and nine months ended November 30,
2002, there were additions to goodwill of $115,000 and $293,000, respectively. All
additions during the three and nine months ended November 30, 2003 and November 30, 2002
were related to additional consideration paid to the former shareholders of Teijin Cognos
Incorporated (TCI). The consideration was based on the net revenue of TCI during each
quarter as per the original 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, 2003. Based on this test, goodwill is not considered to be impaired.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                  |  | Three months endedNovember 30, |  | Nine months endedNovember 30, | 
|----------------- |  | ------------------------------ |  | ----------------------------- | 
|                 
|                  |  | 2003                           |  | 2002                          | 
|                 
|                  |  | ($000s)                        |  | ($000s)                       | 
|Beginning balance |  | $170,221                       |  | $15,408                       | 
|Additions         |  | 254                            |  | 115                           | 
|                 
|Closing balance   |  | $170,475                       |  | $15,523                       | 
|                 

63

---

COGNOS INCORPORATEDCONDENSED 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 30,2003 |                          | As at February 28,2003 |                          |                   |   |          |  |              |  
|                         
|                          |  | Cost                   | Accumulated Amortization | Cost                   | Accumulated Amortization | Amortization Rate
|                         
|                          |  | ($000s)                |                          | ($000s)                |                          |                   |   |          |  |              |  
|Acquired technology       |  | $ 33,381               |                          | $16,627                |                          | $33,381           |   | $ 11,821 |  | 20           | %
|In-process technology     |  | 38,400                 |                          | 36,367                 |                          | 38,400            |   | 34,906   |  | 20           | %
|                          |  |                        |                          |                        |                          |                   |   |          |  | Compensation
|Deferred compensation     |  | 8,945                  |                          | 8,930                  |                          | 8,945             |   | 8,763    |  | Period      
|Contractual relationships |  | 7,800                  |                          | 866                    |                          | 7,800             |   | 134      |  | 12.5         | %
|                          |  |                        |                          |                        |                          |                   |   |          | 
|                          |  | 88,526                 |                          | $62,790                |                          | 88,526            |   | $55,624  | 
|                          |  |                        |                          |                        |                          |                   |   |          | 
|                          |  | (62,790                | )                        |                        |                          | (55,624           | )
|                          |  |                        |                          |                        |                          |                   |   |          | 
|Net book value            |  | $ 25,736               |                          |                        |                          | $32,902           |  
|                          |  |                        |                          |                        |                          |                   |   |          | 



| | Amortization
of intangible assets was $2,375,000 and $1,968,000 in the quarters ended November 30, 2003
and November 30, 2002, respectively, and was $7,166,000 and $6,962,000 in the nine months
ended November 30, 2003 and November 30, 2002, respectively. The estimated amortization
expense related to intangible assets is as follows ($000s):
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2004 (Q4)           |  | 2,193 | 
|------------------- |  | ----- | 
|2005                |  | 5,922 | 
|2006                |  | 5,498 | 
|2007                |  | 4,915 | 
|2008                |  | 4,375 | 
|2009                |  | 975   | 
|2010 and thereafter |  | 1,858 | 



|6. |  | 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. During the quarter
ended November 30, 2003, the Corporation reduced its estimated effective tax rate for
fiscal 2004 by 2 percentage points to reflect its current expectations for the full fiscal
year. This change in estimate had no effect on income before taxes but increased net
income for the three and nine month periods ended November 30, 2003 by $1,462,000. Basic
and diluted earnings per share for the three months ended November 30, 2003 would have
been $0.25 and $0.24, respectively, without this change, a decrease of $0.02. For the nine
months ended November 30, 2003, basic and diluted earnings per share would have been $0.59
and $0.57, respectively, a decrease of $0.01 and $0.02, respectively.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

64

---

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

|7. | 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, | 
|-------------------------------------------- |  | ------------------------------ |  | ----------------------------- | 
|                                            
|                                             |  | 2003                           |  | 2002                          | 
|                                            
|Basic Net Income per Share                   |  |                                |  |                               | 
|Net income                                   |  | $23,926                        |  | $19,177                       | 
|                                            
|Weighted average number of shares oustanding |  | 89,692                         |  | 87,845                        | 
|                                            
|Basic net income per share                   |  | $0.27                          |  | $0.22                         | 
|                                            
|Diluted Net Income per Share                 | 
|Net income                                   |  | $23,926                        |  | $19,177                       | 
|                                            
|Weighted average number of shares oustanding |  | 89,692                         |  | 87,845                        | 
|Dilutive effect of stock options             |  | 2,922                          |  | 2,037                         | 
|                                            
|Adjusted weighted average number of shares   | 
|outstanding                                  |  | 92,614                         |  | 89,882                        | 
|                                            
|Diluted net income per share                 |  | $0.26                          |  | $0.21                         | 
|                                            

|8. |  | 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 other than transactions
with stockholders. These changes are recorded directly as a separate component of
Stockholders Equity and excluded from net income. 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.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

65

---

COGNOS INCORPORATEDCONDENSED 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, |  
|---------------------------------------- |  | ------------------------------ |  | ----------------------------- | -
|                                        
|                                         |  | 2003                           |  | 2002                          |  
|                                        
|Net income                               |  | $ 23,926                       |  | $ 19,177                      |  
|Other comprehensive income:              | 
|Foreign currency translation adjustments |  | 2,931                          |  | (286                          | )
|                                        
|Comprehensive income                     |  | $ 26,857                       |  | $ 18,891                      |  
|                                        



|9. |  | Segmented
Information
|-- |  | ---------------------

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

|10. |  | Stockholders Equity
|--- |  | --------------------

| | The
Corporation issued 543,000 common shares valued at $8.9 million, and 326,000 common shares
valued at $4.1 million during the quarters ended November 30, 2003 and November 30, 2002,
respectively. The Corporation issued 1,769,000 common shares valued at $27.0 million and
755,000 common shares, valued at $9.8 million during the nine months ended November 30,
2003 and November 30, 2002, respectively. The issuance of shares in both periods was
pursuant to the Corporations stock purchase plan and the exercise of stock options
by employees, officers and directors.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Corporation did not repurchase common shares during the quarter and nine months ended
November 30, 2003, but repurchased 342,000 common shares valued at $6.8 million and
910,000 common shares valued at $20.0 million during the three and nine months ended
November 30, 2002. Repurchased shares were part of an open market share repurchase
program, except 180,000 shares purchased during the quarter ended August 31, 2002 which
were purchased under a secondary offering of the Corporations common shares.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Stockholders
equity increased by $215,000 and $148,000 for the quarter ended November 30, 2003 and
November 30, 2002, respectively due to the amortization of the deferred compensation
related to the restricted share unit plan. For the nine month periods ended November 30,
2003 and November 30, 2002, stockholders equity increased by $605,000 and $518,000,
respectively because of this amortization.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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---

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

|11. |  | Liabilities
in Connection with Acquisition
|--- |  | ------------------------------------------

| | The
Corporation undertook a restructuring plan in conjunction with the acquisition of Adaytum
during January 2003. In accordance with Emerging Issues Committee (EIC) No. 42, Costs
Incurred On Business Combinations (EIC 42), the liability associated with this
restructuring is considered a liability assumed in the purchase price allocation. This
restructuring primarily relates to involuntary employee separations of approximately 90
employees of Adaytum, accruals for abandoning 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
paid during fiscal 2004. Outstanding balances for the lease payments will be paid over the
lease term unless settled earlier. The Corporation does not believe that any unresolved
contingencies, purchase price allocation issues, or additional liabilities exist that
would result in a material adjustment to the acquisition cost allocation.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|($000s)           |  | Employee separations | Other restructuring accruals | Total accrual | Asset write- downs | Total  
|----------------- |  | -------------------- | ---------------------------- | ------------- | ------------------ | -------
|                 
|Restructuring     |  | $ 3,888              |                              | $ 3,976       |                    | $ 7,864
|Cash payments     |  | (248                 | )                            | (11           | )                  | (259   
|Asset write-downs |  | --                   |                              | --            |                    | --     
|                 
|Balance as at     | 
|February 28, 2003 |  | $ 3,640              |                              | $ 3,965       |                    | $ 7,605
|Cash payments     |  | 3,384                |                              | 311           |                    | 3,695  
|                 
|Balance as at     | 
|November 30, 2003 |  | $    256             |                              | $ 3,654       |                    | $ 3,910
|                 



|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. The Corporation has updated its
income statement presentation to segregate from selling, general, and administrative
expenses $17,599,000 and $50,219,000 for the three and nine months ended November 30,
2002, respectively and created a new line item for the cost of providing services.
Additionally, the Corporation has segregated from selling, general, and administrative
expenses $1,969,000 and $6,962,000 for the three and nine months ended November 30, 2002,
respectively and created a new line item for amortization of intangible assets within
operating expenses. This reclassification was made to provide more information to the
users of the Corporations financial statements. This change in presentation does not
affect previously reported assets, liabilities, or results of operations.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

67

---

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

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

| | Stock-Based
Compensation and Other Stock-Based Payments
| | -------------------------------------------------------

| | During
September 2003, CICA Handbook section 3870 (CICA 3870), Stock-Based Compensation and
other Stock-Based Payments was amended. Under Canadian GAAP, this amendment requires a
fair value based method for accounting for stock-based compensation, and provides
alternative methods of transition for the change to this method. The provisions of this
amendment are effective for the Corporations fiscal year 2005 and apply to all
employee grants. The Corporation will voluntarily adopt the provisions of this statement
in the fourth quarter of fiscal 2004 retroactive to the beginning of the fiscal year. The
Corporation currently discloses the effects of expensing stock-based compensation costs
using the fair value based method of accounting in Note 3 to the consolidated financial
statements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

68