Exhibit 99





COGNOS INCORPORATED





CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS


(US$000s except share amounts, CDN GAAP)


(Unaudited)





Three months ended May 31,2002


2001RevenueProduct license

$
49,835


$
43,104Product support


48,179



41,843Services


22,116



23,069Total revenue


120,130



108,016Operating expensesCost of product license


734



1,106Cost of product support


4,413



4,294Selling, general, and administrative


84,090



90,793Research and development


19,698



19,422Investment tax credits


(1,327
)


(1,271
)Special charges






12,798Total operating expenses


107,608



127,142Operating income (loss)


12,522



(19,126
)Interest expense


(46
)


(84
)Interest income


1,601



2,812Income (loss) before taxes


14,077



(16,398
)Income tax provision (benefit)


5,323



(4,077
)Net income (loss)


8,754



(12,321
)Retained earnings at beginning of the period


164,144



175,946Repurchase of shares


(9,315
)


Retained earnings at end of the period

$
163,583


$
163,625Net income (loss) per shareBasic


$0.10



$(0.14
)Diluted


$0.10



$(0.14
)Weighted average number of shares (000s)Basic


88,000



88,023Diluted


91,531



88,023





(See accompanying notes)




27




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COGNOS INCORPORATED





CONSOLIDATED BALANCE SHEETS


(US$000s, CDN GAAP)





May 31, 2002


February 28, 2002(Unaudited)AssetsCurrent assetsCash and cash equivalents

$
281,030


$
192,900Short-term investments


57,229



121,629Accounts receivable


80,210



114,059Inventories


791



537Prepaid expenses


7,126



6,765Deferred tax assets


6,279



6,404432,665



442,294Fixed assets


61,914



59,008Goodwill


15,270



15,230Intangible assets


11,501



14,203$
521,350


$
530,735LiabilitiesCurrent liabilitiesAccounts payable

$
20,474


$
26,387Accrued charges


33,069



34,210Salaries, commissions, and related items


33,457



37,453Income taxes payable


3,377



6,167Deferred revenue


109,217



110,504199,594



214,721Longterm liabilities


9,192



9,131Deferred income taxes


5,433



6,328214,219



230,180Stockholders EquityCapital stockCommon shares            (May 31, 2002 
87,904,533; February 28, 2002 
87,997,220)


154,910



151,637Retained earnings


163,583



164,144Accumulated other comprehensive income


(11,362
)


(15,226
)307,131



300,555$
521,350


$
530,735





(See accompanying notes)




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COGNOS INCORPORATED





CONSOLIDATED STATEMENTS OF CASH FLOWS


(US$000s, CDN GAAP)


(Unaudited)





Three months ended May
31,2002


2001Cash provided by (used in) operating activitiesNet income (loss)

$
8,754


$
(12,321
)Non-cash itemsDepreciation and amortization


6,525



9,078Amortization of deferred stock-based compensation


185



577Amortization of other deferred compensation


148



666Deferred income taxes


(1,221
)


(928
)Loss on disposal of fixed assets


97



21514,488



(2,713
)Change in non-cash working capitalDecrease in accounts receivable


36,590



46,163Decrease (increase) in inventories


(229
)


153Decrease (increase) in prepaid expenses


(18
)


1,499Increase in income tax assets






(8,392
)Decrease in accounts payable


(6,671
)


(11,388
)Increase (decrease) in accrued charges


(2,068
)


6,158Increase (decrease) in salaries, commissions, and related items


(5,106
)


819Increase (decrease) in income taxes payable


(2,778
)


(16,131
)Decrease in deferred revenue


(3,780
)


(7,460
)30,428



8,708Cash provided by (used in) investing activitiesMaturity of short-term investments


113,186



118,336Purchase of short-term investments


(47,626
)


(60,606
)Additions to fixed assets


(4,269
)


(6,813
)61,291



50,917Cash provided by (used in) financing activitiesIssue of common shares


3,765



3,569Repurchase of shares


(9,992
)


Increase in (repayment of) long-term debt and long-term liabilities


(16
)


96(6,243
)


3,665Effect of exchange rate changes on cash


2,653



(808
)Net increase in cash and cash equivalents


88,129



62,482Cash and cash equivalents, beginning of period


192,901



115,293Cash and cash equivalents, end of period


281,030



177,775Short-term investments, end of period


57,229



61,652Cash, cash equivalents, and short-term investments, end of period

$
338,259


$
239,427





(See accompanying notes)




29




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COGNOS INCORPORATED





CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(All amounts in U.S. dollars, unless otherwise stated)


(In accordance with CDN GAAP)





1.    Basis of Presentation





The accompanying unaudited consolidated financial statements have been prepared by the Corporation in United States (U.S.) dollars and in accordance with Canadian generally accepted accounting
principles (GAAP) with respect to the preparation of interim financial information. Accordingly, they 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, 2002.





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.





2.    Accounting Changes





Business Combinations and Intangible Assets





Effective
March 1, 2002 the Corporation adopted the Canadian Institute of Chartered Accountants Handbook Sections 1581, Business Combinations, and 3062, Goodwill and Other Intangible Assets (Sections 1581 and 3062), effective for
fiscal years beginning after December 15, 2001. Under the new rules, goodwill (and intangible assets deemed to have indefinite lives) will no longer be amortized but will be subject to annual impairment tests in accordance with the pronouncements.
Other intangible assets will continue to be amortized over their useful lives.





Application of the
non-amortization provisions of the pronouncements resulted in an increase in net income of $1,135,000 ($0.01 per share) for the quarter ended May 31, 2002 and is expected to result in an increase in net income of $4,000,000 ($0.04 per diluted share)
for fiscal 2003. The Corporation performed the required impairment tests of goodwill and indefinite-lived intangible assets as of March 1, 2002. The effect of these tests was not material on the earnings and financial position of the Corporation.





Stock-Based Payments





Effective January 1, 2002 the Corporation adopted, the CICA issued Handbook Section 3870 Stock-Based Compensation and Other Stock-Based Payments (Section 3870).
Section 3870 establishes standards for the recognition, measurement, and disclosure of stock-based




30




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COGNOS INCORPORATED





CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(All amounts in U.S. dollars, unless otherwise stated)


(In accordance with CDN GAAP)





compensation and other stock-based payments made in exchange for goods and services. It applies to transactions, including non-reciprocal
transactions, in which an enterprise grants shares of common stock, stock options, or other equity instruments or incurs liabilities based on the price of common stock or other equity instruments. Section 3870 outlines a fair value based method of
accounting for certain stock-based transactions. As permitted by Section 3870, the Corporation did not adopt the fair value based method of accounting for all employee stock-based transactions, and was not affected by the requirements to account for
the fair value of certain other stock-based transactions. During the period ended May 31, 2002 there was no impact on the Corporations financial position, results of operations, or cash flows.





3.    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, 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.





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





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.





4.    Goodwill





The balance of goodwill as at the date of implementation of Sections 1581 and 3062, March 1, 2002 (see Note 2), was $15,230,000. During the quarter ended May 31, 2002 there were additions to goodwill of $40,000 related to additional
consideration paid to the former shareholders of Teijin Cognos Incorporated (TCI). This additional consideration was based on the net revenue of TCI during the quarter.




31




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COGNOS INCORPORATED





CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(All amounts in U.S. dollars, unless otherwise stated)


(In accordance with CDN GAAP)





During the quarter ended May 31, 2001 the Corporation recorded amortization expense of $1,089,000 related to the amortization
of goodwill. If the non-amortization provision of Sections 1581 and 3062 had been in effect beginning March 1, 2001 net loss for the quarter ended May 31, 2001 would have been $11,232,000 and basic net loss per share and diluted net loss per share
for the same period would have been $0.13.





5.    Intangible Assets





As at May 31, 2002

As at February 28, 2002Cost


Accumulated Amortization

Cost


Accumulated Amortization

Amortization Rate($000s)

($000s)Developed Technology

$
13,681


$
9,449

$
13,681


$
8,720

20%In-process technology


38,400



31,642


38,400



29,817

20%Deferred Consideration


8,945



8,434


8,945



8,286

Consideration Period61,026



49,525


61,026



46,823(49,525
)





(46,823
)Net book value

$
11,501





$
14,203





Amortization of intangible assets was $2,702,000 and $3,271,000 in
the quarters ended May 31, 2002 and May 31, 2001, respectively. The estimated amortization expense related to intangible assets is as follows ($000s):





2003 (Q2 to Q4)

$
5,4692004


4,4422005


1,0072006


583





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.




32




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COGNOS INCORPORATED





CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(All amounts in U.S. dollars, unless otherwise stated)


(In accordance with CDN GAAP)





7.    Net Income (loss) per Share





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





Three months ended May
31,2002

2001Basic Net Income (Loss) per ShareNet income (loss)

$
8,754

$
(12,321
)Weighted average number of shares outstanding


88,000


88,023Basic net income (loss) per share


$0.10


$(0.14
)Diluted Net Income (Loss) per ShareNet income (loss)

$
8,754

$
(12,321
)Weighted average number of shares outstanding


88,000


88,023Dilutive effect of stock options


3,531


NilAdjusted weighted average number of shares outstanding


91,531


88,023Diluted net income (loss) per share


$0.10


$(0.14
)





For the quarter ended May 31, 2001, the effect of converting stock
options was antidilutive as a result of net losses.





8.    Comprehensive Income





For the quarter ended May 31, 2002, the Corporation had other comprehensive income of $3,864,000 compared to other comprehensive expense
of $870,000 for the quarter ended May 31, 2000. These amounts relate to foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency, net of unrealized net derivative gains (losses) which
corresponds to the cumulative translation adjustment for Canadian GAAP purposes.





Comprehensive income (loss)
includes net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) 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.




33




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COGNOS INCORPORATED





CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(All amounts in U.S. dollars, unless otherwise stated)


(In accordance with CDN GAAP)





9.    Accounting for Stock Option Plans





As permitted by Section 3870, the Corporation did not adopt the fair value based method of accounting for all employee stock-based compensation. 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. Accordingly, no compensation cost has been recognized in the financial statements for the Corporations stock option and stock purchase
plans.





Section 3870 requires disclosure of pro forma net income and earnings per share as if the Corporation had
elected to adopt the fair value based accounting method. 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 by $6,256,000 and $6,241,000, in the quarters ended May 31, 2002 and 2001, respectively. Basic net income per share and diluted net income per share would have been reduced by $0.07 in each the quarters ended May 31, 2002 and
2001, respectively.





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 for the quarters ended May 31, 2002 and 2001, respectively: risk-free interest rates of 3.7% and 4.4%, expected life of the options of 3.0 years and 2.9 years, expected volatility of 68%
and 69%, and for both quarters, a dividend yield of zero.





10.    Segmented Information





The Corporation has one reportable segmentcomputer software products.





11.    Special Charges





In the quarter ended May 31, 2001 the Corporation recorded a pre-tax special charge to earnings of $12,798,000 in connection with a restructuring plan to align the Corporations cost structure and operations to the
prevailing economic environment. These special charges primarily related to involuntary employee separations for approximately 300 employees, as well as asset write-downs, and accruals for net costs of abandoning leases and related write-down of
leasehold improvements. The accrual was included on the balance sheet as accrued charges and salaries, commissions, and related items. During the fourth quarter of fiscal 2002 $2,589,000 of the accrual was reversed into income as a result of
revisions to prior cost assumptions.





The employee separations impacted all functional groups and geographic
regions of the Corporation. All employee separations under the restructuring plan were completed within fiscal 2002 and substantially all cash payments have been paid.




34




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COGNOS INCORPORATED





CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(All amounts in U.S. dollars, unless otherwise stated)


(In accordance with CDN GAAP)





The following table displays the status of the restructuring reserve at May 31, 2002: (000s)





Employee Separations


Other Restructuring Costs


TotalRestructuring charges Q1 fiscal 2002

$
9,660


$
3,138


$
12,798Cash payments


(7,203
)


(1,040
)


(8,243
)Asset write-downs






(1,557
)


(1,557
)Adjustments to accrual


(2,306
)


(283
)


(2,589
)Balance as at February 28, 2002


151



258



409Cash Payments


(119
)


(16
)


(135
)Asset write-downs










Balance as at May 31, 2002

$
32


$
242


$
274





12.    Subsequent Events





On June 20, 2002, subsequent to the quarter end, the Corporation filed a registration statement with the United States Securities and
Exchange Commission and a Canadian prospectus with Canadian securities regulators for a secondary offering of 4,500,000 common shares. All of the common shares in the offering are being sold by certain entities affiliated with Michael U. Potter. The
Corporation will not receive any proceeds from the sale of the shares. In addition, the underwriters have an option to purchase up to an additional 675,000 common shares in the offering from the selling shareholders.




35