Exhibit 99.1
Investor Relations: | |
John Lawlor | |
613-738-3503 | |
john.lawlor@cognos.com | |
Media Contacts: | |
Sean Reid | |
Cognos, 613-738-1440 | |
Sean.reid@cognos.com | |
Kristen Orfanos | |
LP&P, 781-782-5852 | |
Kristen_Orfanos@lpp.com |
Cognos®Reports Fourth Quarter and Full Year Results
Cognos delivers $117.9 million of license revenue
Ottawa, ON & Burlington, MA, March 30, 2006 – Cognos Incorporated (Nasdaq: COGN; TSX: CSN – all figures in U.S. dollars and in accordance with U.S. GAAP), the world leader in business intelligence (BI) and corporate performance management (CPM) solutions, today announced financial results for its fourth quarter and full fiscal year 2006, ended February 28, 2006.
Revenue for the fourth quarter was $253.1 million, compared with $256.3 million for the same period of last fiscal year. License revenue was $117.9 million, compared with $129.9 million in the fourth quarter of last fiscal year. Net income in the quarter was $44.0 million or $0.48 per diluted share, compared with $54.3 million or $0.58 per diluted share for the same period last fiscal year.
Revenue for the full fiscal year 2006 was $877.5 million, compared with $825.5 million for the previous fiscal year. Net income for fiscal year 2006 was $124.8 million, or $1.35 per diluted share, compared with the prior year’s net income of $136.6 million, or $1.47 per diluted share.
“These results represent solid performance,” said Rob Ashe, Cognos president and chief executive officer. “Overall license revenue of $117.9 million, inclusive of Cognos 8 license revenue of $55.5 million, 18 seven-figure contracts, and several major competitive wins all underscore the strength of our performance this quarter. Cognos 8 is setting the agenda for the BI market and establishing itself as the platform of choice for BI standardization.”
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“The Cognos team executed well this quarter,” Mr. Ashe continued. “Our market leading solutions for BI and Performance Management position us strongly in this dynamic market. The recent release of Cognos 8 MR1, the launch of our ground-breaking Search solution – Cognos Go!, and our new Strategic Global Alliance with IBM set Cognos on course to take full advantage of the tremendous market opportunity in front of us.”
Highlights:
• | Fourth quarter license revenue of $117.9 million, up 56 percent from the third quarter |
• | Cognos 8 license revenue of $55.5 million in the fourth quarter |
• | 18 contracts greater than $1 million, compared to 18 for the same period last year |
• | 242 contracts greater than $200,000, up 16 percent over the fourth quarter last year |
• | Cognos announces Global Strategic Alliance with IBM |
• | Major Cognos 8 wins at Allianz Life Insurance Company of North America, BC Hydro, BUPA, Georgia Department of Education, Nestle Suisse S.A., Public Works and Government Services Canada, San Diego City Schools, and State of Ohio Department of Administrative Services |
Cognos’ balance sheet remains strong. Operating cash flow was $92.7 million. As a result, the company exited the quarter with $551.0 million in cash, cash equivalents, and short-term investments.
Business Outlook
Management offers the following outlook for the first quarter of fiscal year 2007, ending May 31, 2006, inclusive of an after-tax share based compensation expense of $0.05:
• | Revenue is expected to be in the range of $210 million to $218 million; |
• | Diluted earnings per share are expected to be in the range of $0.15 to $0.19. |
Management offers the following outlook for the full fiscal year 2007, ending February 28, 2007, inclusive of an after-tax share based compensation expense of $0.23:
• | Revenue is expected to be in the range of $940 million to $960 million; |
• | Diluted earnings per share are expected to be in the range of $1.20 to $1.27. |
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The company’s outlook for the first quarter and full year of fiscal year 2007 assumes no significant changes in the economy, a business intelligence and corporate performance management market growth rate of approximately 7 percent, a tax rate of 25% for the year, a Canadian dollar of 86 cents U.S. and a Euro of $1.20 U.S. for the year. In addition, as outlined in a separate Current Report on Form 8-K filed today with the Securities and Exchange Commission (also available athttp://www.cognos.com/company/investor/events/fy06q4/sbc_8k.html), Cognos adopted Statement of Financial Accounting Standard No.123 (revised),Share-based Payment, (“SFAS 123R”) on March 1, 2006, electing to follow the modified retrospective application method of transition. SFAS 123R requires all companies to measure compensation costs for all share-based payments (including stock options) at fair value and recognize such costs in the statement of income. The adoption of SFAS 123R will impact Cognos’ operating income, net income, and earnings per share.
Cognos management will host a Webcast and conference call to present results for the fourth quarter of fiscal year 2006 and business outlook at 5:15 p.m. Eastern Time, today, March 30, 2006.
The conference call may be accessed at 416-640-1907. The Webcast and archive may be accessed athttp://www.cognos.com/company/investor/events/fy06q4. A replay of the conference call may be accessed at 416-640-1917 until Thursday, April 13, 2006 at 11:59 p.m. Eastern Time. The passcode for the replay is 21174106#.
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 for both the first quarter of fiscal year 2007 and the full fiscal year 2007; the impact of Cognos products and solutions, including Cognos 8 and Cognos Go!, on the market and Cognos’ position in the market; the impact of Cognos’ Strategic Global Alliance with IBM; the assumptions made in connection with the business outlook 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: 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
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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; and the existence of regulatory barriers to integration; 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 corporate performance management, delivers software and services that help companies drive, monitor and understand corporate performance.
Cognos delivers the next level of competitive advantage — Corporate Performance Management (CPM) — achieved through the strategic application of BI on an enterprise scale. Our integrated CPM solution helps customers drive performance through planning; monitor performance through scorecarding; and understand performance through business intelligence.
Cognos serves more than 23,000 customers in over 135 countries. Cognos enterprise business intelligence solutions and services are also available from more than 3,000 worldwide partners and resellers. For more information, visit the Cognos Web site athttp://www.cognos.com.
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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.
Note to Editors: Copies of previous Cognos press releases and Corporate and product information are available on the Cognos Web site atwww.cognos.com, and at PR Newswire’s site atwww.prnewswire.com.
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SUPPLEMENTARY INFORMATION (unaudited):
FY2005 | FY 2006 | |||||
Q4 | Q1 | Q2 | Q3 | Q4 | ||
Total License Revenue ($000s) | 129,946 | 71,146 | 78,649 | 75,510 | 117,942 | |
Year-Over-Year License Revenue Growth | 39% | 8% | 4% | (18)% | (9)% | |
Geographic Distribution: | ||||||
Total Revenue ($000s) | ||||||
Americas | 141,189 | 115,516 | 122,593 | 122,171 | 147,560 | |
Europe | 94,145 | 66,461 | 67,596 | 72,972 | 87,474 | |
Asia/Pacific | 20,992 | 18,098 | 21,853 | 17,111 | 18,095 | |
% of Total | ||||||
Americas | 55% | 58% | 58% | 58 % | 58 % | |
Europe | 37% | 33% | 32% | 34 % | 35 % | |
Asia/Pacific | 8% | 9% | 10% | 8 % | 7 % | |
Year-Over-Year Revenue Growth – Total | ||||||
Americas | 23% | 10% | 11% | 1 % | 5 % | |
Europe | 26% | 21% | 17% | 5 % | (7)% | |
Asia/Pacific | 63% | 31% | 28% | (12)% | (14)% | |
Pro Forma Year-Over-Year Revenue Growth – In Local Currency | ||||||
Americas | 22% | 9% | 10% | 0 % | 3 % | |
Europe | 19% | 17% | 17% | 14 % | 4 % | |
Asia/Pacific | 61% | 26% | 22% | (10)% | (9)% | |
Orders (License, Support, Services) | ||||||
> $ 1M | 18 | 6 | 9 | 7 | 18 | |
> $200K | 208 | 104 | 124 | 115 | 242 | |
> $ 50K | 1,215 | 668 | 754 | 737 | 1,241 | |
Average Selling Price (License Orders Only) ($000s) | ||||||
> $ 50K | 207 | 175 | 172 | 157 | 192 | |
New vs Existing License Revenue – % of Total | ||||||
New | 37% | 32% | 31% | 29 % | 27 % | |
Existing | 63% | 68% | 69% | 71 % | 73 % | |
Channel – License Revenue – % of Total | ||||||
Direct | 77% | 68% | 74% | 72 % | 77 % | |
Third Party | 23% | 32% | 26% | 28 % | 23 % | |
Other Statistics | ||||||
Cash, cash equivalents, and short-term investments ($000s) | 522,900 | 496,036 | 501,252 | 483,259 | 551,002 | |
Days sales outstanding | 67 | 63 | 60 | 66 | 77 | |
Total employees | 3,393 | 3,408 | 3,453 | 3,566 | 3,574 | |
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COGNOS INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(US$000s except share amounts, U.S. GAAP)
Three Months Ended February 28, | Years Ended February 28, | |||
2006 | 2005 | 2006 | 2005 | |
(Unaudited) | ||||
Revenue | ||||
Product license | $117,942 | $129,946 | $343,247 | $362,958 |
Product support | 96,988 | 88,477 | 371,985 | 320,451 |
Services | 38,199 | 37,903 | 162,268 | 142,122 |
Total revenue | 253,129 | 256,326 | 877,500 | 825,531 |
Cost of revenue | ||||
Cost of product license | 1,934 | 1,280 | 6,297 | 3,025 |
Cost of product support | 9,665 | 10,048 | 36,405 | 32,805 |
Cost of services | 31,548 | 31,796 | 129,020 | 113,302 |
Total cost of revenue | 43,147 | 43,124 | 171,722 | 149,132 |
Gross margin | 209,982 | 213,202 | 705,778 | 676,399 |
Operating expenses | ||||
Selling, general, and administrative | 130,495 | 122,811 | 447,080 | 406,204 |
Research and development | 30,114 | 29,244 | 114,740 | 105,938 |
Amortization of acquisition-related intangible assets | 1,697 | 1,637 | 6,655 | 5,602 |
Total operating expenses | 162,306 | 153,692 | 568,475 | 517,744 |
Operating income | 47,676 | 59,510 | 137,303 | 158,655 |
Interest and other income, net | 7,544 | 1,578 | 17,163 | 6,571 |
Income before taxes | 55,220 | 61,088 | 154,466 | 165,226 |
Income tax provision | 11,230 | 6,753 | 29,664 | 28,622 |
Net income | $ 43,990 | $ 54,335 | $124,802 | $136,604 |
Net income per share | ||||
Basic | $0.49 | $0.60 | $1.38 | $1.51 |
Diluted | $0.48 | $0.58 | $1.35 | $1.47 |
Weighted average number of shares (000s) | ||||
Basic | 90,015 | 90,982 | 90,564 | 90,517 |
Diluted | 91,421 | 94,187 | 92,605 | 93,238 |
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COGNOS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(US$000s, U.S. GAAP)
February 28, 2006 | February 28, 2005 | |
Assets | ||
Current assets | ||
Cash and cash equivalents | $ 398,634 | $ 378,348 |
Short-term investments | 152,368 | 144,552 |
Accounts receivable | 216,850 | 189,602 |
Prepaid expenses and other current assets | 31,978 | 24,373 |
Deferred tax assets | 6,783 | 3,856 |
806,613 | 740,731 | |
Fixed assets, net | 75,821 | 73,566 |
Intangible assets, net | 22,125 | 27,234 |
Other assets | 6,096 | 6,378 |
Goodwill | 225,709 | 221,490 |
$1,136,364 | $1,069,399 | |
Liabilities | ||
Current liabilities | ||
Accounts payable | $ 33,975 | $ 30,705 |
Accrued charges | 30,799 | 31,047 |
Salaries, commissions, and related items | 73,229 | 91,010 |
Income taxes payable | 4,648 | 21,148 |
Deferred revenue | 246,562 | 222,585 |
389,213 | 396,495 | |
Deferred income taxes | 28,171 | 17,083 |
417,384 | 413,578 | |
Commitments and Contingencies | ||
Stockholders’ Equity | ||
Capital stock | ||
Common shares and additional paid-in capital (2006 – 89,826,706; 2005 – 91,070,967) | 279,943 | 252,561 |
Treasury shares (2006 – 55,970; 2005 – 46,375) | (1,563) | (1,199) |
Deferred stock-based compensation | (501) | (277) |
Retained earnings | 436,614 | 402,020 |
Accumulated other comprehensive income | 4,487 | 2,716 |
718,980 | 655,821 | |
$1,136,364 | $1,063,399 | |
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COGNOS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US$000s, U.S. GAAP)
Three Months Ended February 28, | Years Ended February 28, | |||
2006 | 2005 | 2006 | 2005 | |
(Unaudited) | ||||
Cash flows from operating activities | ||||
Net income | $ 43,990 | $ 54,335 | $124,802 | $136,604 |
Non-cash items | ||||
Depreciation and amortization | 7,653 | 5,724 | 29,362 | 26,384 |
Amortization of deferred stock-based compensation | 152 | 220 | 679 | 734 |
Amortization of other deferred compensation | -- | -- | -- | 7 |
Deferred income taxes | 5,891 | (5,336) | 5,971 | (4,364) |
Loss on disposal of fixed assets | 166 | 200 | 521 | 413 |
57,852 | 55,143 | 161,335 | 159,778 | |
Change in non-cash working capital | ||||
Increase in accounts receivable | (58,358) | (45,790) | (30,245) | (23,734) |
Increase in prepaid expenses and other current assets | (10,472) | (5,665) | (7,563) | (665) |
Increase (decrease) in accounts payable | 7,963 | (2,779) | 3,409 | (5,900) |
Increase (decrease) in accrued charges | 5,012 | 1,352 | (714) | (2,891) |
Increase (decrease) in salaries, commissions, and related items | 16,269 | 22,682 | (16,168) | 23,987 |
Increase (decrease) in income taxes payable | 3,067 | 7,446 | (15,722) | 15,032 |
Increase in deferred revenue | 71,362 | 65,251 | 30,606 | 32,860 |
Net cash provided by operating activities | 92,695 | 97,640 | 124,938 | 198,467 |
Cash flows from investing activities | ||||
Maturity of short-term investments | 117,948 | 10,145 | 450,727 | 330,716 |
Purchase of short-term investments | (44,187) | (29,268) | (458,543) | (311,689) |
Additions to fixed assets | (4,766) | (5,545) | (21,840) | (17,516) |
Additions to intangible assets | (468) | (206) | (1,125) | (977) |
Decrease (increase) in other assets | 311 | (6,378) | 426 | (6,378) |
Acquisition costs, net of cash and cash equivalents | -- | (2,181) | (4,546) | (51,887) |
Net cash provided by (used in) investing activities | 68,838 | (33,433) | (34,901) | (57,731) |
Cash flows from financing activities | ||||
Issue of common shares | 6,756 | 15,914 | 34,324 | 48,734 |
Purchase of treasury shares | (713) | -- | (890) | (335) |
Repurchase of shares | (24,144) | (14,915) | (97,527) | (42,735) |
Net cash provided by (used in) financing activities | (18,101) | 999 | (64,093) | 5,664 |
Effect of exchange rate changes on cash | (1,928) | (795) | (5,658) | 7,118 |
Net increase in cash and cash equivalents | 141,504 | 64,411 | 20,286 | 153,518 |
Cash and cash equivalents, beginning of period | 257,130 | 313,937 | 378,348 | 224,830 |
Cash and cash equivalents, end of period | 398,634 | 378,348 | 398,634 | 378,348 |
Short-term investments, end of period | 152,368 | 144,552 | 152,368 | 144,552 |
Cash, cash equivalents, and short-term investments, end of period | $551,002 | $522,900 | $551,002 | $522,900 |
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