Exhibit 99.1

COGNOS INCORPORATEDMANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS-CANADIAN
SUPPLEMENT(in United States dollars, unless otherwise indicated, and in accordance
with CDN GAAP)

The following Managements
Discussion and Analysis of Financial Condition and Results of Operations-Canadian
Supplement (Canadian Supplement) should be read in conjunction with our
Managements Discussion and Analysis of Financial Condition and Results of Operations
(MD&A) included in Item 2 of this quarterly report. The Canadian
Supplement should also be read in conjunction with the unaudited Consolidated Financial
Statements and Notes prepared in accordance with U.S. generally accepted accounting
principles (GAAP) (included in Item 1), and the audited Consolidated Financial
Statements and Notes included in our Annual Information Form for the fiscal year ended
February 28, 2005.

The following contains
forward-looking statements and should be read in conjunction with the factors set forth in
the Certain Factors That May Affect Future Results section and the
Forward-looking Statements/Safe Harbor section of the MD&A in Item 2 of this quarterly
report. All dollar amounts in this Canadian Supplement are in thousands of United States
dollars unless otherwise stated. The Canadian Supplement has been prepared by management
to provide an analysis of the material differences between Canadian GAAP and U.S. GAAP on
our financial condition and results of operations.

CRITICAL ACCOUNTING ESTIMATES

In addition to the critical
accounting estimates listed in the MD&A, we also use the following for Canadian GAAP
purposes:

Accounting for Stock
Option, Stock Purchase, and Restricted Share Unit Plans

We apply CICA Handbook section 3870,
Stock-based Compensation and Other Stock-based payments, (CICA 3870) in
accounting for our stock option, stock purchase, and restricted share unit plans.
Compensation expense for options granted and shares issued under our stock option and
restricted share unit plans is recognized over their vesting period using the fair value
method of accounting for stock-based compensation. For purposes of computing the
stock-based compensation, the fair value of the options granted during the three month
period ended May 31, 2005 was estimated at the date of grant using a binomial lattice
option-pricing model. Prior to March 1, 2005, we used the Black-Scholes option-pricing
model to estimate the fair value of options at the grant date. Any consideration paid by
employees on the exercise of stock options is credited to capital stock. The discount from
market price offered to employees who purchase stock through our stock purchase plan is
also recognized as a compensation expense in the period when the shares are purchased.

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Exhibit 99.1

COGNOS INCORPORATEDMANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS-CANADIAN
SUPPLEMENT(in United States dollars, unless otherwise indicated, and in accordance
with CDN GAAP)

RESULTS OF OPERATIONS

|                                             | Three months endedMay 31,
|-------------------------------------------- | -------------------------
|                                             |                          
|                                             | 2005                     
|                                             |                          
|Income before taxes  U.S. GAAP              |                          
|Income before taxes  Canadian GAAP          |                          
|                                            
|Income tax provision  U.S. GAAP             |                          
|Income tax provision  Canadian GAAP         |                          
|                                            
|Net income per share diluted  U.S. GAAP     |                          
|Net income per share diluted  Canadian GAAP |                          

Acquired in-process technology
Canadian GAAP requires capitalization of the value assigned to acquired in-process
technology and amortization of this value over its estimated useful life. Under U.S. GAAP,
this value is written off immediately. The impact of this difference was to decrease
income before taxes by $0.3 million for both the three months ended May 31, 2005 and
May 31, 2004, compared to U.S. GAAP.

Stock-based compensation
Under U.S. GAAP, companies may choose
between the intrinsic value method and fair value method of accounting for stock-based
compensation. We have elected to account for stock-based compensation using the intrinsic
value method in accordance with APB 25 and to disclose the pro forma effect of recording
compensation expense under the fair value method. This disclosure can be found in Note 3
to the unaudited consolidated financial statements. For Canadian GAAP purposes, companies
are required to use the fair value method of accounting for stock-based compensation. The
impact of this difference for the three months ended May 31, 2005 and May 31, 2004 was to
decrease income before taxes by $3.9 million and $3.7 million respectively.

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Exhibit 99.1

COGNOS INCORPORATEDMANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS-CANADIAN
SUPPLEMENT(in United States dollars, unless otherwise indicated, and in accordance
with CDN GAAP)

Investment tax credits
Canadian GAAP requires that
investment tax credits be deducted from operating expense. Under U.S. GAAP, these amounts
are deducted from the income tax provision. The impact of this difference was to increase
income before taxes and the income tax provision by $5.5 million for the three months
ended May 31, 2005, and $3.0 million for the three months ended May 31, 2004,
with no resulting impact to net income, compared to U.S. GAAP.

Deferred income taxes
The capitalization of in-process
technology created an additional deferred income tax liability on the Canadian GAAP
balance sheet as the capitalization of the in-process technology created a temporary
difference. The amortization of this balance decreased the Canadian GAAP income tax
provision by $0.1 million for both the quarters ended May 31, 2005 and May
31, 2004, as compared to U.S. GAAP.

The expensing of stock-based
compensation creates a deferred tax asset on the Canadian GAAP financial statements as
this expense is deductible in certain jurisdictions when the options are exercised. Under
U.S. GAAP, the reduction in the tax liability is treated as part of the purchase price
component of the stock options and added to paid-in capital. The expensing of stock-based
compensation reduced the Canadian GAAP tax provision by $0.5 million and $0.4 million in
the three-month period ended May 31, 2005 and May 31, 2004, respectively, as compared to
U.S. GAAP.

Derivative financial
instrumentsIn addition to the above noted
differences affecting income before taxes, the income tax provision and net income,
derivative financial instruments are treated differently under Canadian GAAP and U.S.
GAAP. Under Canadian GAAP, derivative financial instruments that qualify for hedge
accounting treatment may be recognized on the balance sheet only to the extent that cash
has been paid and or received together with adjustments necessary to offset recognized
gains or losses arising on the hedged items. Under US GAAP, such derivative financial
instruments are recognized on the balance sheet at fair value with a corresponding charge
or credit recorded in OCI for any portion not recognized in income. At May 31, 2005 and
February 28, 2005, there was $0.6 million and $0.3 million included in OCI related to the
net unrealized loss on our cash flow hedges. For Canadian GAAP, this amount was removed
and applied against the accrued liability related to the hedge.

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