- Cognos 8 BI delivers $43.5 million in license revenue - OTTAWA,
Ontario and BURLINGTON, Mass., July 21 /PRNewswire/ -- Cognos
Incorporated (Nasdaq: COGN; TSX: CSN - all figures in U.S.
dollars), the world leader in business intelligence (BI) and
performance management solutions, today announced financial results
for its first quarter of fiscal year 2007, ended May 31, 2006.
Revenue for the first quarter was $217.0 million, compared with
$200.1 million for the same period last fiscal year. License
revenue was $73.7 million, compared with $71.1 million in the first
quarter of last fiscal year. Net income on a U.S. GAAP basis in the
quarter was $14.5 million or $0.16 per diluted share, compared with
$20.4 million or $0.22 per diluted share for the same period last
fiscal year. Net income on a non-GAAP basis (excluding amortization
of acquisition-related intangible assets and stock-based
compensation expense) for the quarter was $19.8 million or $0.22
per diluted share, compared with $25.0 million or $0.27 per diluted
share for the same period last fiscal year. First quarter non-GAAP
results differ from results measured under U.S. GAAP as they
exclude $1.1 million and $4.1 million of amortization of
acquisition-related intangible assets and stock-based compensation
expense, net of taxes, respectively. A reconciliation of U.S. GAAP
to non-GAAP results is included at the end of this press release.
First Quarter Highlights: * Cognos 8 license revenue of $43.5
million in the first quarter * 13 contracts greater than $1
million, compared to 6 for the same period last year * Enterprise
software veteran Les Rechan appointed COO * Announces new Cognos
Go! search service and strategic partnerships with enterprise
search software leaders Autonomy, Fast, Google and IBM * Strong
balance sheet performance - First quarter operating cash flow of
$72.6 million; Days sales outstanding (DSOs) for accounts
receivable were 58 days; $610.2 million in cash, cash equivalents,
and short-term investments as of the end of the quarter "I am
pleased with our first quarter results," said Cognos president and
chief executive officer Rob Ashe. "Cognos 8 delivered another
strong quarter. It has now achieved more than $100 million in
cumulative revenue in just over two quarters of general
availability." "We are pleased to have the recent SEC staff review
completed, eliminating the associated uncertainty for our customers
and shareholders," continued Mr. Ashe. "I am confident in our
business prospects and strategy moving forward." Business Outlook
The company's outlook for the second quarter and full fiscal year
2007 assumes no significant changes in the economy, a business
intelligence and performance management market growth rate of
approximately 7 percent, a U.S. GAAP tax rate of 24% and a Canadian
dollar of $0.88 U.S. and a Euro of $1.27 U.S. for the year. This
outlook includes incremental costs associated with the company's
efforts to complete the SEC review of $0.02 in both the second
quarter and full fiscal year. Management offers the following
outlook for the second quarter of fiscal year 2007 ending August
31, 2006: * Revenue is expected to be in the range of $220 million
to $228 million * U.S. GAAP diluted earnings per share are expected
to be in the range of $0.16 to $0.20 * Non-GAAP diluted earnings
per share are expected to be in the range of $0.22 to $0.26
Expected non-GAAP diluted earnings per share for the quarter ending
August 31, 2006 exclude approximately $1.1 million of amortization
of acquisition-related intangible assets and approximately $4.9
million of stock-based compensation expense, which is an increase
of approximately $0.06 per share, after the effect of taxes.
Management offers the following outlook for the full fiscal year
2007 ending February 28, 2007: * Revenue is expected to be in the
range of $950 million to $970 million * U.S. GAAP diluted earnings
per share are expected to be in the range of $1.15 to $1.22 *
Non-GAAP diluted earnings per share are expected to be in the range
of $1.43 to $1.50 Expected non-GAAP diluted earnings per share for
fiscal year 2007 ending February 28, 2007, exclude approximately
$4.5 million of amortization of acquisition-related intangible
assets and approximately $21.0 million of stock-based compensation
expense, which is an increase of approximately $0.28 per share,
after the effect of taxes. Cognos management will host a Webcast
and conference call to present results for the first quarter of
fiscal year 2007 and business outlook at 8:15 a.m. Eastern Time,
today, July 21, 2006. The conference call may be accessed at
800-366-8058 for North America and 416-640-1907 outside North
America. The Webcast and archive may be accessed at
http://www.cognos.com/company/investor/events/fy07q1. A replay of
the conference call may be accessed at 416-640-1917 until Friday,
August 4, 2006 at 11:59 p.m. Eastern Time. The passcode for the
replay is 21197580#. Safe Harbor for Forward-Looking Statements
Certain statements made in this press release that are not based on
historical information (including those in the section entitled
"Business Outlook") are forward-looking statements which are made
pursuant to the safe harbor provisions of Section 21E of the
Securities Exchange Act of 1934 and Section 138.4(9) of the Ontario
Securities Act. Such forward-looking statements relate to, among
other things, the company's expectations with respect to revenue
and earnings per share (on both a GAAP and non-GAAP basis) for the
second quarter of fiscal year 2007 and the full fiscal year 2007;
the assumptions set out in the "Business Outlook" including those
relating to the economy, the growth rate for the business
intelligence and performance management markets, U.S. GAAP tax
rate, the exchange rate for the Canadian dollar and Euro in U.S.
currency, the impact of amortization of acquisition-related
intangible assets and stock-based compensation on earnings per
share; the impact of incremental costs associated with the
company's efforts to complete the SEC review in both the second
quarter and full fiscal year; and other matters. Certain
assumptions were applied in making the forward-looking statements,
such as the business outlook, and material assumptions are set out
above in the section entitled "Business Outlook". These
forward-looking statements are neither promises nor guarantees, but
involve risks, factors and uncertainties that may cause actual
results to differ materially from those in the forward-looking
statements. Factors that may cause such differences include, but
are not limited to: the impact on Cognos' business of the delay in
filing its annual and quarterly reports; Cognos' transition to
Cognos 8 and customer acceptance and implementation of Cognos 8; a
continuing increase in the number of larger customer transactions
and the related lengthening of sales cycles and challenges in
executing on these sales opportunities; the company's ability to
identify, hire, train, motivate, and retain highly qualified
management/other key personnel (including sales personnel) and its
ability to manage changes and transitions in management/other key
personnel; the incursion of enterprise resource planning and other
major software companies into the BI market; continued BI and
software market consolidation and other competitive changes in the
BI and software market; currency fluctuations; the impact of the
implementation of SFAS No. 123R; the company's ability to develop,
introduce and implement new products as well as enhancements or
improvements for existing products that respond to customer/product
requirements and rapid technological change; the impact of global
economic conditions on the company's business; the company's
ability to maintain or accurately forecast revenue or to anticipate
and accurately forecast a decline in revenue from any of its
products or services; the company's ability to compete in an
intensely competitive market; new product introductions and
enhancements by competitors; the company's ability to select and
implement appropriate business models, plans and strategies and to
execute on them; fluctuations in the company's quarterly and annual
operating results; fluctuations in the company's tax exposure; the
impact of natural disasters on the overall economic condition of
North America; unauthorized use or misappropriation of the
company's intellectual property; claims by third parties that the
company's software infringes their intellectual property; the risks
inherent in international operations, such as the impact of the
laws, regulations, rules and pronouncements of foreign
jurisdictions and their interpretation by foreign courts,
tribunals, regulatory and similar bodies; the company's ability to
identify, pursue, and complete acquisitions with desired business
results; the existence of regulatory barriers to integration; the
impact of the implementation of changes in the application of
accounting pronouncements and interpretations; as well as the risk
factors discussed in the company's most recent Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q, filed with the United
States Securities and Exchange Commission ("SEC") and the Canadian
Securities Administrators ("CSA"), as well as other periodic
reports filed with the SEC and the CSA. Readers should not place
undue reliance on any such forward-looking statements, which speak
only as of the date they are made. The company disclaims any
obligation to publicly update or revise any such statement to
reflect any change in its expectations or in events, conditions, or
circumstances on which any such statements may be based, or that
may affect the likelihood that actual results will differ from
those contained in the forward-looking statements. About Cognos:
Cognos, the world leader in business intelligence and performance
management solutions, provides world-class enterprise planning and
BI software and services to help companies plan, understand and
manage financial and operational performance. Cognos brings
together technology, analytical applications, best practices, and a
broad network of partners to give customers a complete performance
system. The Cognos performance system is an open and adaptive
solution that leverages an organization's ERP, packaged
applications, and database investments. It gives customers the
ability to answer the questions -- How are we doing? Why are we on
or off track? What should we do about it? -- and enables them to
understand and monitor current performance while planning future
business strategies. Cognos serves more than 23,000 customers in
more than 135 countries, and its top 100 enterprise customers
consistently outperform market indexes. Cognos performance
management solutions and services are also available from more than
3,000 worldwide partners and resellers. For more information, visit
the Cognos Web site at http://www.cognos.com/. Use of non-GAAP
Financial Measures: Cognos management utilizes certain non-GAAP
measures to evaluate its performance, including the impact of
business acquisitions on Cognos' results of operations. In
addition, Cognos discloses non-GAAP measures of net income and
earnings per share to investors and securities analysts to enable
them to, among other things, more accurately compare our
performance against their financial models and similar companies in
its industry many of which present similar non-GAAP measures.
Non-GAAP measures should not be considered an alternative to
measurements required by US GAAP, such as net income and earnings
per share and should not be considered measures of our liquidity.
Non-GAAP measures may not be comparable to non-GAAP information
provided by other issuers in its industry or in other industries.
Cognos, the Cognos logo and Cognos 8 are trademarks or registered
trademarks of Cognos Incorporated in the United States and/or other
countries. All other names are trademarks or registered trademarks
of their respective companies. SUPPLEMENTARY INFORMATION
(unaudited): FY 2006 FY 2007 Q1 Q2 Q3 Q4 Q1 Total License Revenue
($000s) 71,146 78,649 75,510 117,942 73,735 Year-Over-Year License
Revenue Growth 8% 4% (18)% (9)% 4% Geographic Distribution: Total
Revenue ($000s) Americas 115,516 122,593 122,171 147,560 129,913
Europe 66,461 67,596 72,972 87,474 72,225 Asia/Pacific 18,098
21,853 17,111 18,095 14,902 % of Total Americas 58% 58% 58% 58% 60%
Europe 33% 32% 34% 35% 33% Asia/Pacific 9% 10% 8% 7% 7%
Year-Over-Year Revenue Growth -Total Americas 10% 11% 1% 5% 12%
Europe 21% 17% 5% (7)% 9% Asia/Pacific 31% 28% (12)% (14)% (18)%
Pro Forma Year-Over-Year Revenue Growth - In Local Currency
Americas 9% 10% 0% 3% 11% Europe 17% 17% 14% 4% 11% Asia/Pacific
26% 22% (10)% (9)% (15)% Orders (License, Support, Services) >
$1M 6 9 7 18 13 > $200K 104 124 115 242 118 > $ 50K 668 754
737 1,241 728 Average Selling Price (License Orders Only) ($000s)
> $ 50K 175 172 157 192 186 New vs Existing License Revenue - %
of Total New 32% 31% 29% 27% 29% Existing 68% 69% 71% 73% 71%
Channel - License Revenue - % of Total Direct 68% 74% 72% 77% 70%
Third Party 32% 26% 28% 23% 30% Other Statistics Cash, cash
equivalents, and short-term investments ($000s) 496,036 501,252
483,259 551,002 610,184 Days sales outstanding 63 60 66 77 58 Total
employees 3,408 3,453 3,566 3,574 3,622 COGNOS INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME (US$000s except share amounts,
U.S. GAAP) (Unaudited) Three months ended May 31, 2006 2005 Revenue
Product license $ 73,735 $ 71,146 Product support 100,181 88,505
Services 43,124 40,424 Total revenue 217,040 200,075 Cost of
revenue Cost of product license 1,757 1,222 Cost of product support
11,227 8,996 Cost of services 37,516 32,297 Total cost of revenue
50,500 42,515 Gross margin 166,540 157,560 Operating expenses
Selling, general, and administrative 117,592 105,715 Research and
development 33,279 29,765 Amortization of acquisition-related
intangible assets 1,701 1,637 Total operating expenses 152,572
137,117 Operating income 13,968 20,443 Interest and other income,
net 5,011 2,780 Income before taxes 18,979 23,223 Income tax
provision 4,441 2,851 Net income $ 14,538 $ 20,372 Net income per
share Basic $0.16 $0.22 Diluted $0.16 $0.22 Weighted average number
of shares (000s) Basic 89,893 91,078 Diluted 90,825 93,897 COGNOS
INCORPORATED CONSOLIDATED BALANCE SHEETS (US$000s, U.S. GAAP)
(Unaudited) May 31, February 28, 2006 2006 Assets Current assets
Cash and cash equivalents $ 337,178 $ 398,634 Short-term
investments 273,006 152,368 Accounts receivable 139,974 216,850
Income taxes receivable 5,670 1,363 Prepaid expenses and other
current assets 26,044 31,978 Deferred tax assets 11,748 12,936
793,620 814,129 Fixed assets, net 79,315 75,821 Intangible assets,
net 20,507 22,125 Other assets 5,868 6,096 Deferred tax assets
6,440 6,928 Goodwill 225,709 225,709 $1,131,459 $1,150,808
Liabilities Current liabilities Accounts payable $ 27,807 $ 33,975
Accrued charges 33,429 30,799 Salaries, commissions, and related
items 60,611 73,229 Income taxes payable 2,928 6,009 Deferred
income taxes 5,868 4,118 Deferred revenue 233,468 246,562 364,111
394,692 Deferred income taxes 32,735 30,344 396,846 425,036
Stockholders' Equity Capital stock Common shares and additional
paid-in capital(May 31, 2006 - 89,711,171; February 28, 2006 -
89,826,706) 455,451 439,680 Treasury shares (May 31, 2006 - 46,989;
February 28, 2006 - 55,970) (1,237) (1,563) Retained earnings
274,703 283,168 Accumulated other comprehensive income 5,696 4,487
734,613 725,772 $1,131,459 $1,150,808 COGNOS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS (US$000s, U.S. GAAP)
(Unaudited) Three months ended May 31, 2006 2005 Cash flows from
operating activities Net income $ 14,538 $ 20,372 Non-cash items
Depreciation and amortization 7,240 7,165 Stock-based compensation
5,157 4,082 Deferred income taxes 5,181 (3,827) Loss on disposal of
fixed assets 139 87 32,255 27,879 Change in non-cash working
capital Decrease in accounts receivable 81,140 46,835 Increase in
income taxes receivable (4,307) (2,001) Decrease in prepaid
expenses and other current assets 6,891 1,423 Decrease in accounts
payable (7,027) (8,043) Increase (decrease) in accrued charges
1,600 (8,003) Decrease in salaries, commissions, and related items
(14,825) (36,133) Decrease in income taxes payable (3,355) (15,942)
Decrease in deferred revenue (19,732) (10,825) Net cash provided by
(used in) operating activities 72,640 (4,810) Cash flows from
investing activities Maturity of short-term investments 112,615
127,925 Purchase of short-term investments (232,636) (101,983)
Additions to fixed assets (6,371) (4,756) Additions to intangible
assets (326) (245) Decrease in other assets 269 245 Acquisition
costs, net of cash and cash equivalents - 131 Net cash provided by
(used in) investing activities (126,449) 21,317 Cash flows from
financing activities Issue of common shares 12,935 11,784
Repurchase of shares (24,998) (25,254) Net cash used in financing
activities (12,063) (13,470) Effect of exchange rate changes on
cash 4,416 (3,959) Net decrease in cash and cash equivalents
(61,456) (922) Cash and cash equivalents, beginning of period
398,634 378,348 Cash and cash equivalents, end of period 337,178
377,426 Short-term investments, end of period 273,006 118,610 Cash,
cash equivalents, and short-term investments, end of period
$610,184 $496,036 COGNOS INCORPORATED Reconciliation of US GAAP to
Non-GAAP (US$000s except share amounts) (Unaudited) For the three
months ended May 31, 2006 US GAAP Add back: Add back: Non-GAAP
Amortization Stock-based Results of intangible compensation assets
Revenue Product license $73,735 $ $ $73,735 Product support 100,181
100,181 Services 43,124 43,124 Total revenue 217,040 217,040 Cost
of revenue Cost of product license 1,757 1,757 Cost of product
support 11,227 (96) 11,131 Cost of services 37,516 (187) 37,329
Total cost of revenue 50,500 (283) 50,217 Gross margin 166,540 283
166,823 Operating expenses Selling, general, and administrative
117,592 (4,304) 113,288 Research and development 33,279 (491)
32,788 Amortization of acquisition-related intangible assets 1,701
(1,701) - Total operating expenses 152,572 (1,701) (4,795) 146,076
Operating income 13,968 1,701 5,078 20,747 Interest and other
income, net 5,011 5,011 Income before taxes 18,979 1,701 5,078
25,758 Income tax provision 4,441 624 931 5,996 Net income $14,538
$1,077 $4,147 $19,762 Net income per share Basic $0.16 $0.01 $0.05
$0.22 Diluted $0.16 $0.01 $0.05 $0.22 Cognos management utilizes
certain non-GAAP measures to evaluate its performance, including
the impact of business acquisitions on Cognos' results of
operations. In addition, Cognos discloses non-GAAP measures of net
income and earnings per share to investors and securities analysts
to enable them to, among other things, more accurately compare our
performance against their financial models and similar companies in
our industry many of which present similar non-GAAP measures.
Non-GAAP measures should not be considered an alternative to
measurements required by US GAAP, such as net income and earnings
per share and should not be considered measures of our liquidity.
Non-GAAP measures may not be comparable to non-GAAP information
provided by other issuers in its industry or in other industries.
COGNOS INCORPORATED Reconciliation of US GAAP to Non-GAAP (US$000s
except share amounts) (Unaudited) For the three months ended May
31, 2005 US GAAP Add back: Add back: Non-GAAP Amortization
Stock-based Results of intangible compensation assets Revenue
Product license $71,146 $ $ $71,146 Product support 88,505 88,505
Services 40,424 40,424 Total revenue 200,075 200,075 Cost of
revenue Cost of product license 1,222 1,222 Cost of product support
8,996 (114) 8,882 Cost of services 32,297 (207) 32,090 Total cost
of revenue 42,515 (321) 42,194 Gross margin 157,560 321 157,881
Operating expenses Selling, general, and administrative 105,715
(2,870) 102,845 Research and development 29,765 (891) 28,874
Amortization of acquisition-related intangible assets 1,637 (1,637)
- Total operating expenses 137,117 (1,637) (3,761) 131,719
Operating income 20,443 1,637 4,082 26,162 Interest and other
income, net 2,780 2,780 Income before taxes 23,223 1,637 4,082
28,942 Income tax provision 2,851 624 461 3,936 Net income $20,372
$ 1,013 $ 3,621 $25,006 Net income per share Basic $0.22 $0.01
$0.04 $0.27 Diluted $0.22 $0.01 $0.04 $0.27 COGNOS INCORPORATED
Reconciliation of US GAAP to Non-GAAP Diluted Earnings per Share
for Business Outlook (Unaudited) Three Months ending Twelve Months
ending August 31, 2006 February 28, 2007 Projected US GAAP Diluted
Earnings per Share $0.16 - $0.20 $1.15-$1.22 Plus: Amortization of
acquisition-related intangible assets 0.02 0.08 Stock-based
compensation expense 0.06 0.28 Less: Income tax effect of non-GAAP
adjustments (0.02) (0.08) Projected non-GAAP Diluted Earnings per
Share $0.22 - $0.26 $1.43 - $1.50 DATASOURCE: Cognos Incorporated
CONTACT: Investor Relations: John Lawlor of Cognos,
+1-613-738-3503, , or Media: Sean Reid of Cognos, +1-613-738-1440,
; or Kristen Orfanos of LP&P, +1-781-782-5852, , for Cognos Web
site: http://www.cognos.com/
http://www.cognos.com/company/investor/events/fy07q1
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