Exhibit 99.1 COGNOS INCORPORATED Management's Discussion and Analysis of Financial Condition and Results of Operations -- Canadian Supplement (in United States dollars, unless otherwise indicated, and in accordance with Canadian 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 our annual report on form 10-K as filed with the United States Securities and Exchange Commission (10-K). The Canadian Supplement should also be read in conjunction with the audited Consolidated Financial Statements and Notes prepared in accordance with U.S. GAAP (included in our 10-K), and the audited Consolidated Financial Statements and Notes prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP") included in the Corporation's Annual Information Form for the fiscal year ended February 28, 2002. 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 of the MD&A in our 10-K. 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 Cognos Incorporated financial condition and results of operations. RESULTS OF OPERATIONS Year ended ----------------------- 2002 2001 2000 ------- ------- ------- Income before taxes -- U.S. GAAP....................... $28,169 $91,318 $81,688 Income before taxes -- Canadian GAAP................... $25,337 $93,911 $81,215 Income tax provision -- U.S. GAAP...................... $ 8,761 $27,058 $22,873 Income tax provision -- Canadian GAAP.................. $10,738 $31,175 $26,673 Net Income per share diluted -- U.S. GAAP.............. $ 0.21 $ 0.70 $ 0.67 Net Income per share diluted -- Canadian GAAP.......... $ 0.16 $ 0.68 $ 0.62 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 net income before taxes by $7.6 million, $4.1 million and $6.7 million in fiscal 2002, 2001 and 2000, respectively, compared to U.S. GAAP. 123 Investment tax credits Canadian GAAP requires that investment tax credits be deducted from operating expense. Under U.S. GAAP, these amounts are to be deducted from the income tax provision. The impact of this difference was to increase net income before taxes and the income tax provision by $4.8 million, $6.7 million and $6.2 million in fiscal 2002, 2001 and 2000, respectively, compared to U.S. GAAP. Deferred income taxes related to acquired in-process technology The above noted difference related to 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 income tax provision by $2.9 million, $2.6 million and $2.4 million in fiscal 2002, 2001 and 2000, respectively, compared to U.S. GAAP. 124