Business intelligence (BI) company Cognos has announced a settlement in the pending patent litigation by Business Objects. The settlement agreement dismisses a lawsuit filed by Business Objects on 5 May 2000 alleging that Cognos Impromptu software infringes its United States Patent number 5 555 403.
Under the terms of this agreement, Business Objects releases Cognos for any alleged infringement of this patent. In addition, both Cognos and Business Objects have agreed to a five-year moratorium on patent litigation between the companies.
To obtain this settlement, Cognos has agreed to pay Business Objects a sum of $24 million consisting of a $10 million up-front payment and quarterly payments of $1.75 million over the next two years. The agreement specifically reaffirms that Cognos makes no admission regarding the validity, enforceability or infringement of any patent.
"We stand firm in our position that the Business Objects patent is invalid and unenforceable against Cognos," said Ron Zambonini, Cognos chief executive officer.
"However, despite our strong views, we felt that the opportunity to settle was best for our business during a time of great business momentum and opportunity for Cognos. By resolving this matter now, we avoid the distraction of continued litigation and eliminate the risk of an uncertain jury verdict and any subsequent appeals. The after tax present value cash impact of this settlement is less than $17 million. We are very pleased to have this issue behind us and now look forward to devoting all of our time and efforts towards continuing to deliver the world`s leading business intelligence solutions to our customers."
As this settlement was concluded prior to the issuance of Cognos` fiscal 2002 financial statements, it is required by generally accepted accounting principles to record the impact of this settlement in fiscal 2002. Accordingly, Cognos will include a special charge of $23.2 million reflecting the present value of the agreed upon settlement payments as a year-end adjustment to its previously announced fiscal 2002 financials. As a result, previously announced earnings before tax of $51.4 million have been adjusted to $28.2 million, earnings after tax of $36.2 million have been adjusted to $19.4 million and fully diluted earnings per share of $0.40 have been adjusted to $0.21.
The charges associated with this settlement will not have any material impact on Cognos financial results for the current fiscal year ending 28 February 2003. Cognos reiterates the guidance for the first quarter and full fiscal year 2003 as discussed during its investor call conducted on 10 April 2002.
Cognos had a conference call to discuss the details of the settlement on 28 May 2002. The Webcast may be accessed at http://www.cognos.com/company/investor/events/052802.html.
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Cognos is the world`s largest and most successful vendor of enterprise business intelligence solutions that leverage Internet technology to make information easily accessible to everyone in your enterprise. Founded in 1969, Cognos does business in more than 120 countries and employs some 2 600 people worldwide. With more than 2 million BI licences in over 16 000 organisations worldwide, Cognos solutions are licensed for use by a wide range of customers, including Global 3000 corporations.
Our business intelligence solutions and services are sold directly and are also available from more than 3 000 worldwide partners and resellers and supported by an experienced field force of more than 1 400 customer-facing personnel. For more information, visit http://www.cognos.com/.
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