CGI Group Inc. (NYSE: GIB; TSE: GIB.A) today reported unaudited results for the second quarter and six months ended March 31, 2001. All figures are in Canadian dollars unless indicated otherwise.
Highlights - Q2 Fiscal 2001
- Sequential growth of 38% for earnings before amortization of goodwill (cash net earnings) and 12% for revenue, compared with Q1 2001
- Sequential organic revenue growth of 3% over Q1 2001
- Year-over-year decline of 20% for cash net earnings and 2% for revenue
- Entered into definitive agreement to acquire IMRglobal Corp.("IMRglobal"), pending regulatory and shareholder approvals expected by summer 2001
- In the second quarter, earnings before interest, taxes, depreciation and amortization ("EBITDA" ) increased sequentially by 29% over the first quarter of fiscal 2001, but decreased by 6.7% compared with the same period one year ago
- Acquired Star Data Systems Inc. ("Star Data") effective January 2001
- Announced 6 outsourcing, systems integration and consulting contracts worth more than $400 million over a period of up to 10 years
First Half Fiscal 2001
- Sequential growth of 108% for cash net earnings and 9% for revenue
- Year-over-year decline of 30% for cash net earnings and 10% for revenue
- In the first half of fiscal 2001, EBITDA increased by 78.6% over the second half of fiscal 2000, but represented a decrease of 18.8% over the first half of fiscal 2000
"We continue to see business strengthening in our overall markets, based on recent contracts and the increase in the number and value of proposals outstanding," said Serge Godin, chairman, president and CEO. "Reflecting this activity, CGI's quarterly revenue stream has been steadily increasing sequentially, from $320.1 million in the fourth quarter of fiscal 2000, to $334.2 million in the first quarter of 2001, and now $374.0 million in the second quarter. The majority of our business is comprised of outsourcing contracts, and this segment of the IT services industry is generally counter-cyclical in an economic slowdown. We are pleased to report strong bidding activity across our full spectrum of services, including outsourcing, consulting and systems integration, in all our markets."
"We achieved organic growth on a sequential basis in the latest quarter, and significant contracts not yet reflected fully in our results will contribute to future organic growth," added Mr. Godin. "Contracts include, among others, the $1 billion 10-year partnership agreement with Desjardins expected to be signed in May 2001, a US$75 million 10-year outsourcing contract with US-based UCAR International, one large outsourcing contract with Interac Association and, in Europe, contracts with Sun Life Financial, Allianz and Nordic insurance company If Skadeförsäkring."
"Once the acquisition of IMRglobal is completed, we will have the critical mass to become a significant player in the large IT outsourcing market in the US. We believe that our combined strengths will enable CGI to provide high quality end-to-end IT services in a cost competitive way."
"Based on contracts announced to date, and provided new contracts close as expected, we expect revenue of $1.5 billion to $1.6 billion this fiscal year, and a continuing improvement in earnings margins as the year progresses. This forecast excludes the acquisition of IMRglobal which pends regulatory and shareholder approvals and is expected to be completed by summer 2001."
Second quarter of fiscal 2001
Over the past quarters, CGI's revenue stream has been steadily increasing sequentially, from $320.1 million in the fourth quarter of fiscal 2000, to $334.2 million in the first quarter of fiscal 2001, and $374.0 million in the second quarter. The second quarter revenue figure represents an 11.9% increase from the first quarter of fiscal 2001. Of this increase, 3.0% was organic and 8.9% was from acquisitions. Revenue was 1.7% below a year ago, when the company reported revenue of $380.5 million.
The EBITDA totaled $54.0 million, 29.0% higher than the previous quarter but 6.7% below a year ago. Earnings before amortization of goodwill (cash net earnings) were $22.2 million ($0.08 per share diluted), which is 37.5% above the $16.1 million ($0.06 per share diluted) reported in the first quarter of fiscal 2001 but 20.1% below the $27.8 million ($0.10 per share diluted) reported in the second quarter a year ago. The cash net earnings margin improved to 5.9% from 4.8% in the previous quarter but is below the 7.3% achieved in the second fiscal quarter last year.
The balance sheet remained strong, with healthy working capital and a low debt-to-equity ratio.
First six months of fiscal 2001
For the first six months of fiscal 2001, CGI reported revenue of $708.2 million, which represents an 8.8% increase from the second half of fiscal 2000 but a 9.8% decline from the $785.2 million reported in the first half of fiscal 2000. EBITDA was $95.9 million, 78.6% above the final two quarters of fiscal 2000, but 18.8% below the first six months a year ago.
Cash net earnings were $38.3 million ($0.14 per share diluted), which is 108.3% above the final two quarters of fiscal 2000 but 30.5% below the $55.1 million ($0.20 per share diluted) reported the same period a year ago.
CGI backlog
CGI's backlog currently totals $7 billion. This figure excludes the $1 billion partnership with Desjardins, announced in October 2000, and which should be finalized in May 2001.
IMRglobal merger agreement
CGI will file its final proxy statement/prospectus with the US Securities & Exchange Commission (SEC) for the merger agreement with IMRglobal following a review by the SEC. The transaction was cleared under the US Hart-Scott-Rodino Antitrust Improvements Act. The Company expects completion of the transaction by summer 2001.
The preliminary proxy statement/prospectus is filed with the SEC and available on its website: www.secinfo.com. Further information on the exercise price of previously announced preemptive rights by majority shareholders is provided in this document. The issue price at which CGI's majority individual shareholders (Mr. Godin and executive vice president and CFO André Imbeau) and possibly BCE Inc. will exercise their preemptive rights to maintain their Class B multiple voting interests at current levels, will be based on the average closing price of CGI's Class A subordinate shares in the 21 day period encompassing the 10 trading days prior to and 10 trading days following the transaction closing date. The transaction resulting from the merger agreement between CGI and IMRglobal will also be priced according to this 21 day average. This is in accordance with Canadian generally accepted accounting principles. BCE Inc. has decided not to exercise its preemptive rights to acquire additional Class A subordinate shares and has indicated to CGI that it will decide prior to closing of the merger whether or not it will exercise its preemptive rights for Class B multiple voting shares. If BCE decides to exercise its preemptive rights for Class B multiple voting shares, 3.6 million additional shares would be issued. This additional subscription would have no significant impact on the dilution.
Key transactions announced since January 2001
January
- Completed acquisition of Star Data for shares valued at $102.8 million
- Signed seven-year outsourcing contract worth $119 million with Sun Life Financial in the UK
- Won five-year outsourcing contract with Alberta Health and Wellness valued at $25 million
- Signed 10-year outsourcing contract with Interac Association
February
- Announced definitive merger agreement to acquire IMRglobal
- Under the terms of the agreement, IMRglobal shareholders will receive 1.5974 Class A subordinate shares of CGI for each share of IMRglobal common stock
- Signed multi-million pound Sterling contract with leading insurance company Allianz to implement GIOS, CGI's Web-enabled insurance solution, in more than 20 countries
- Signed $22 million contract with Nordic If Skadeförsäkring to implement GIOS across its 86 offices.
April
- Announced strategic partnership with UCAR International, including a 10-year US$75 million outsourcing contract for global IT services
Management's Discussion & Analysis ("MD&A") of Results from Operations and Financial Position
For the second quarters ended March 31, 2001 and 2000
The following MD&A should be read in conjunction with financial statements for the second quarter of fiscal 2001 and 2000, with the MD&A and notes to the financial statements in the fiscal 2000 annual report, and with the notes to the financial statements for the six months ended March 31, 2001. All amounts are in Canadian dollars unless otherwise indicated.
Revenue
During the second quarter of fiscal 2001, revenue increased from the first quarter on a sequential basis, and the year-over-year decline was more moderate than in the first quarter. Revenue of $374.0 million was 11.9% higher than in the first quarter of fiscal 2001, but 1.7% below the second quarter a year ago. On a sequential basis, organic growth amounted to 3.0% while external growth, reflecting close to three months of Star Data, amounted to 8.9%.
For the first six months of fiscal 2001, revenue of $708.2 million was 9.8% below the six month period ended March 31, 2000. The first quarter ended December 31, 1999 was a particularly strong quarter, reflecting spending by clients to ensure their IT systems were Y2K compliant, and also reflecting a large international contract completed later in the year. The geographic revenue mix in the first half of fiscal 2001 was 81% from Canada, 14% from the US and 5% from International.
Operating Expenses
The costs of services, selling and administrative expenses for the quarter were 0.9% below a year ago. Total operating expenses, which also include research and development, represented 85.6% of revenue compared with 84.8% of revenue in the same quarter a year ago. First half fiscal 2001 expenses were reduced by approximately $10 million, relating to provincial refundable tax credits for Quebec employees' salaries, resulting from CGI's participation in the government's program to establish E-Commerce Place. Tax credits amount to a total of $10,000 a year per eligible employee.
Depreciation and Amortization
The year-over-year increase in depreciation and amortization expense reflects new acquisitions and assets acquired with an outsourcing contract in the UK.
Income Taxes
The effective income tax rate (before income tax related to goodwill amortization) was 43.6% in the second quarter of fiscal 2001 and 44.1% in the first six months, compared with 40.1% and 40.9% respectively in the same periods of fiscal 2000. The increase is mostly due to the non-recognition of tax benefits resulting from U.S. losses.
Earnings before Amortization of Goodwill
In the second quarter of fiscal 2001, earnings before amortization of goodwill (also referred to as cash net earnings) were $22.2 million ($0.08 per share diluted), which is ahead of the previous quarter by 37.5%, but 20.1% below the second quarter of fiscal 2000. The Company considers cash net earnings to be the most accurate measurement of its profitability, as goodwill amortization has no impact on cash resources.
Amortization of Goodwill, Net of Income Taxes
The goodwill amortization, which is higher than in previous periods, stems mostly from the acquisition of Star Data, C.U. Processing Inc. and AGTI Consulting Services Inc. For further details, see note 3 of the Consolidated Financial Statements.
Net Earnings
Net earnings in the second quarter of fiscal 2001 were 45.9% higher on a sequential basis, and 35.1% lower on a year-over-year basis, due to the changes in revenue, operating expenses, and other expenses outlined above. Star Data, acquired at the beginning of January 2001, was accretive to earnings.
Liquidity and Financial Resources
CGI maintains a strong balance sheet and cash position which, together with bank lines, are sufficient to support the Company's growth strategy. The Company has a $250 million credit facility with four Canadian chartered banks available for acquisitions and general working capital purposes. As at March 31, 2001, the total credit facility available amounted to $218 million.
Operating cash flows in the second quarter and in the first six months of fiscal 2001 were higher than in the first quarter of fiscal 2001 and second half of fiscal 2000, respectively. However, they were lower than in the second quarter and first six months of fiscal 2000. The variations reflect primarily the variations in net earnings and in amortization of goodwill.
Operating cash flow in the second quarter amounted to $35.0 million, compared with $38.9 million in the second quarter a year ago. The variation in operating cash flow reflects mostly the variation in net earnings. Cash provided by operating activities amounted to $16.1 million, compared with $51.8 million in the second quarter of fiscal 2000. The year over year decrease reflects completion of a major systems integration contract in the second quarter of fiscal 2000, combined with growth in business in the second quarter of fiscal 2001.
Long-term debt decreased by $29.2 million as a result of reimbursement of debt. Business acquisitions were paid for mostly through the issuance of shares. Investing activities include fixed assets and contract costs acquired in the normal course of business, net of $7.3 million of cash balance at acquisition of business, completed with the issuance of shares.
The cash position at the end of the quarter amounted to $28.2 million, compared with $37.4 million in the second quarter of fiscal 2000.
Accounting changes
Effective the first quarter of fiscal 2001, the Company adopted recommendations of the CICA Handbook sections 1751, regarding interim financial statements, and 3500, regarding earnings per share.
Section 1751 establishes standards for interim financial statements. In accordance with this section, CGI has provided disclosure on new or changed accounting policies or methods (i.e. the adoption of section 3500); included disclosure required in annual financial statements concerning business combinations (mostly C.U. Processing Inc., Star Data and AGTI Consulting Services Inc.), and provided a comparative balance sheet as at the end of the immediately preceding fiscal year instead of the same period of the previous year.
Section 3500 brings Canadian requirements in line with U.S. and international standards FASB Statement 128 and IAS 33. Presentation and disclosure requirements are aligned with those of FASB Statement 128. Under the revised standard, the treasury stock method is used instead of the current imputed earnings approach for determining the dilutive effect of options issued. Reconciliation of the numerator and denominator of both basic and diluted per share data is disclosed.
Quarterly Conference Call Notification
A conference call for the investment community will be held on Tuesday, April 24, 2001 at 1:00 p.m. (Eastern Daylight Time). A live audio webcast of the conference call, with accompanying slides, will be available at CGI's website, www.cgi.ca.
(updated May 14, 2001)
| Consolidated financial statements of CGI GROUP INC. For the six months ended March 31, 2001 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CGI GROUP INC. Consolidated statements of retained earnings (in thousands of Canadian dollars) (unaudited) |
||||
|
|
||||
| Â | Three months ended March 31, | Six months ended March 31, | ||
| Â | 2001 | 2000 | 2001 | 2000 |
|
|
||||
| Â | $ | $ | $ | $ |
| Retained earnings at beginning of period, as previously reported | 193,578 | 150,449 | 183,156 | 139,080 |
| Adjustment for change in accounting policy | - | - | - | (11,590) |
|
|
||||
| Retained earnings at beginning of period, as restated | 193,578 | 150,449 | 183,156 | 127,490 |
| Net earnings | 15,206 | 23,412 | 25,628 | 46,371 |
|
|
||||
| Retained earnings at end of period | 208,784 | 173,861 | 208,784 | 173,861 |
|
|
||||
| CGI GROUP INC. Consolidated balance sheets (in thousands of Canadian dollars) (unaudited) |
||
|
|
||
| Â | As at March 31, 2001 | As at September 30, 2000 |
|
|
||
| Â | $ | $ |
| Assets Current assets |
 |  |
| Cash and cash equivalents | 28,190 | 49,341 |
| Accounts receivable | 232,396 | 211,188 |
| Income taxes | 21,299 | 10,483 |
| Work in progress | 48,702 | 49,117 |
| Prepaid expenses and other current assets | 32,997 | 19,442 |
| Future income taxes | 6,951 | 7,052 |
|
|
||
| Â | 370,535 | 346,623 |
| Investment in an entity subject to significant influence | - | 1,261 |
| Fixed assets | 80,693 | 58,900 |
| Contract costs | 100,360 | 93,716 |
| Future income taxes | 34,569 | 24,470 |
| Goodwill | 521,094 | 395,903 |
|
|
||
| Â | 1,107,251 | 920,873 |
|
|
||
| Liabilities Current liabilities |
 |  |
| Accounts payable and accrued liabilities | 168,027 | 142,754 |
| Deferred revenue | 59,019 | 25,512 |
| Future income taxes | 5,436 | 7,963 |
| Current portion of long-term debt | 6,799 | 5,770 |
|
|
||
| Â | 239,281 | 181,999 |
| Future income taxes | 13,903 | 23,929 |
| Long-term debt | 38,080 | 37,644 |
|
|
||
| Â | 291,264 | 243,572 |
| Shareholders' equity | Â | Â |
| Capital stock (Note 2) | 600,145 | 491,807 |
| Contributed surplus | 211 | 211 |
| Retained earnings | 208,784 | 183,156 |
| Foreign currency translation adjustment | 6,847 | 2,127 |
|
|
||
| Â | 815,987 | 677,301 |
|
|
||
| Â | 1,107,251 | 920,873 |
|
|
||
| CGI GROUP INC. Consolidated balance sheets (in thousands of Canadian dollars) (unaudited) |
||
|
|
||
| Â | As at March 31, 2001 | As at September 30, 2000 |
|
|
||
| Â | $ | $ |
| Assets Current assets |
 |  |
| Cash and cash equivalents | 28,190 | 49,341 |
| Accounts receivable | 232,396 | 211,188 |
| Income taxes | 21,299 | 10,483 |
| Work in progress | 48,702 | 49,117 |
| Prepaid expenses and other current assets | 32,997 | 19,442 |
| Future income taxes | 6,951 | 7,052 |
|
|
||
| Â | 370,535 | 346,623 |
| Investment in an entity subject to significant influence | - | 1,261 |
| Fixed assets | 80,693 | 58,900 |
| Contract costs | 100,360 | 93,716 |
| Future income taxes | 34,569 | 24,470 |
| Goodwill | 521,094 | 395,903 |
|
|
||
| Â | 1,107,251 | 920,873 |
|
|
||
| Liabilities Current liabilities |
 |  |
| Accounts payable and accrued liabilities | 168,027 | 142,754 |
| Deferred revenue | 59,019 | 25,512 |
| Future income taxes | 5,436 | 7,963 |
| Current portion of long-term debt | 6,799 | 5,770 |
|
|
||
| Â | 239,281 | 181,999 |
| Future income taxes | 13,903 | 23,929 |
| Long-term debt | 38,080 | 37,644 |
|
|
||
| Â | 291,264 | 243,572 |
| Shareholders' equity | Â | Â |
| Capital stock (Note 2) | 600,145 | 491,807 |
| Contributed surplus | 211 | 211 |
| Retained earnings | 208,784 | 183,156 |
| Foreign currency translation adjustment | 6,847 | 2,127 |
|
|
||
| Â | 815,987 | 677,301 |
|
|
||
| Â | 1,107,251 | 920,873 |
|
|
||
| Â | ||||
|
|
||||
| Â | Three months ended March 31, | Six months ended March 31, | ||
| Â | 2001 | 2000 | 2001 | 2000 |
|
|
||||
| Â | $ | $ | $ | $ |
| Operating activities | Â | Â | Â | Â |
| Net earnings | 15,206 | 23,412 | 25,628 | 46,371 |
| Adjustments for: | Â | Â | Â | Â |
| Depreciation and amortization of fixed assets | 7,937 | 6,727 | 14,774 | 13,794 |
| Loss on disposal of fixed assets | - | 17 | - | 131 |
| Amortization of contract costs | 6,347 | 5,155 | 11,814 | 11,496 |
| Amortization of goodwill | 7,358 | 4,708 | 13,444 | 9,433 |
| Future income taxes | (2,814) | (959) | (1,872) | 1,532 |
| Foreign exchange loss (gain) | 969 | (166) | 2,098 | (99) |
| Entity subject to significant influence | - | (15) | (7) | (51) |
|
|
||||
| Operating cash flow | 35,003 | 38,879 | 65,879 | 82,607 |
|
|
||||
| Changes in non-cash operating working capital items: | Â | Â | Â | Â |
| Accounts receivable | (7,660) | 47,910 | 1,696 | (2,188) |
| Work in progress | (21,612) | 4,212 | (4,861) | (11,584) |
| Prepaid expenses and other current assets | (8,634) | (9,982) | (12,014) | (14,812) |
| Accounts payable and accrued liabilities | (7,320) | (17,897) | (11,261) | (37,254) |
| Income taxes | 509 | 520 | (10,797) | 2,111 |
| Deferred revenue | 25,846 | (11,891) | 27,863 | (7,363) |
|
|
||||
| Â | (18,871) | 12,872 | (9,374) | (71,090) |
|
|
||||
| Cash provided by operating activities | 16,132 | 51,751 | 56,505 | 11,517 |
|
|
||||
| Financing activities | Â | Â | Â | Â |
| Addition of long-term debt | - | - | 20,000 | - |
| Reduction of long-term debt | (30,521) | (1,291) | (31,694) | (3,385) |
| Issuance of shares | 311 | 3,134 | 485 | 10,148 |
|
|
||||
| Cash (used for) provided by financing activities | (30,210) | 1,843 | (11,209) | 6,763 |
|
|
||||
| Investing activities | Â | Â | Â | Â |
| Business acquisitions (net of cash) (Note 3) | 7,348 | - | (47,123) | (2,892) |
| Entity subject to significant influence | - | (514) | - | (514) |
| Purchase of fixed assets | (7,590) | (5,017) | (10,577) | (9,091) |
| Proceeds from sale of fixed assets | - | 144 | - | 297 |
| Contract costs | (10,241) | (8,466) | (10,375) | (10,446) |
|
|
||||
| Cash used for investing activities | (10,483) | (13,853) | (68,075) | (22,646) |
|
|
||||
| Foreign exchange gain (loss) on cash held in foreign currencies | 1,298 | (48) | 1,628 | (467) |
|
|
||||
| Net (decrease) increase in cash and cash equivalents | (23,263) | 39,693 | (21,151) | (4,833) |
| Cash and cash equivalents at beginning of period | 51,453 | (2,297) | 49,341 | 42,229 |
|
|
||||
| Cash and cash equivalents at end of period | 28,190 | 37,396 | 28,190 | 37,396 |
|
|
||||
| Interest paid | 1,849 | 944 | 2,749 | 2,061 |
| Income taxes paid | 12,022 | 23,929 | 30,618 | 38,847 |
|
|
||||
| CGI GROUP INC. Notes to the consolidated financial statements (tabular amounts only are in thousands of Canadian dollars)(unaudited) Note 1 - Summary of significant accounting policies On October 1, 2000, the Company adopted the new recommendations of the Canadian Institute of Chartered Accountants Handbook section 3500 - Earnings per share. Under the revised section 3500, the treasury stock method is used instead of the current imputed earnings approach for determining the dilutive effect of options issued. In addition, the section requires that a reconciliation of the numerator and denominator be disclosed. |
|
|
||||||
| Â | Three months ended March 31, | |||||
|
|
||||||
| Â | 2001 | 2000 | ||||
|
|
||||||
| Â | Net earnings (numerator) |
Number of shares (denominator) |
Per share amount |
Net earnings (numerator) |
Number of shares (denominator) |
Per share amount |
|
|
||||||
| Â | $ | Â | $ | $ | Â | $ |
| Net earnings available to common shareholders | 15,206 | 288,261,784 | 0.05 | 23,412 | 270,154,613 | 0.09 |
| Dilutive options | - | 765,726 | Â | - | 3,718,911 | Â |
|
|
||||||
| Net earnings available to common shareholders and assumed conversions | 15,206 | 289,027,510 | 0.05 | 23,412 | 273,873,524 | 0.09 |
|
|
||||||
|
|
||||||
| Â | Six months ended March 31, | |||||
|
|
||||||
| Â | 2001 | 2000 | ||||
|
|
||||||
| Â | Net earnings (numerator) |
Number of shares (denominator) |
Per share amount |
Net earnings (numerator) |
Number of shares (denominator) |
Per share amount |
|
|
||||||
| Â | $ | Â | $ | $ | Â | $ |
| Net earnings available to common shareholders | 25,628 | 281,893,441 | 0.09 | 46,371 | 269,709,197 | 0.17 |
| Dilutive options | - | 845,704 | Â | - | 3,393,168 | Â |
|
|
||||||
| Net earnings available to common shareholders and assumed conversions | 25,628 | 282,739,145 | 0.09 | 46,371 | 273,102,365 | 0.17 |
|
|
||||||
| CGI GROUP INC. Notes to the consolidated financial statements (tabular amounts only are in thousands of Canadian dollars)(unaudited) Note 2 - Capital Stock |
|
| Number of shares issued and paid | Number |
|
|
|
| Class A subordinate shares | 255,224,941 |
| Class B shares | 34,846,526 |
|
|
|
| Total capital stock | 290,071,467 |
|
|
|
| Number of stock options (convertible into Class A subordinate shares) | 8,941,297 |
|
|
|
| Number of shares reflecting the potential exercise of stock options | 299,012,764 |
|
|
|
| Â | |||||||||||||||
| Â | |||||||||||||||
| Â | |||||||||||||||
| As at March 31, 2001, and September 30, 2000, (after giving retroactive effect of the subdivision of the Company's shares that occurred on August 12, 1997, December 15, 1997, May 21, 1998 and January 7, 2000), the Class A subordinate shares and the Class B shares changed as follow : | |||||||||||||||
| Â | March 31, 2001 | September 30, 2000 | |||||||||||||
| Â | |||||||||||||||
| Â | Class A subordinate shares | Class B shares | Class A subordinate shares | Class B shares | |||||||||||
| Â | |||||||||||||||
| Â | Number | Â | Amount | Â | Number | Â | Amount | Â | Number | Â | Amount | Â | Number | Â | Amount |
| Â | |||||||||||||||
| Â | Â | Â | $ | Â | Â | Â | $ | Â | Â | Â | $ | Â | Â | Â | $ |
| Â | |||||||||||||||
| Balance at the beginning of year | 240,755,667 | Â | 490,645 | Â | 34,846,526 | Â | 1,162 | Â | 233,887,974 | Â | 423,616 | Â | 34,773,652 | Â | 148 |
| Issued for cash | - | Â | - | Â | - | Â | - | Â | 287,914 | Â | 4,003 | Â | - | Â | - |
| Issued as consideration for business acquisitions | 14,299,441 | Â | 107,853 | Â | - | Â | - | Â | 5,626,369 | Â | 57,112 | Â | - | Â | - |
| Options exercised | 164,833 | Â | 485 | Â | - | Â | - | Â | 953,410 | Â | 5,914 | Â | 72,874 | Â | 1,014 |
| Â | |||||||||||||||
| Balance at end of period | 255,219,941 | Â | 598,983 | Â | 34,846,526 | Â | 1,162 | Â | 240,755,667 | Â | 490,645 | Â | 34,846,526 | Â | 1,162 |
| Â | |||||||||||||||
| The following table presents information concerning all stock options granted to certain employees and directors by the Company as at March 31, 2001, and September 30, 2000: | ||
| Â | March 31, 2001 | September 30, 2000 |
| Number of options | Â | Â |
| Outstanding at beginning of year | 6,413,181 | 4,996,414 |
| Granted | 2,565,800 | 2,565,594 |
| Exercised, forfeited and expired | (638,556) | (1,148,827) |
|
|
||
| Outstanding at end of period | 8,340,425 | 6,413,181 |
|
|
||
| CGI GROUP INC. Notes to the consolidated financial statements (tabular amounts only are in thousands of Canadian dollars)(unaudited) Note 3 - Business acquisition These acquisitions were accounted for using the purchase method, as follows: |
| Â | Star Data | AGTI | C.U. Processing | Other | Total |
|
|
|||||
| Non-cash working capital items | (15,791) | 2,216 | (9,811) | 2,543 | (20,843) |
| Fixed assets | 21,211 | 448 | 3,296 | 485 | 25,440 |
| Contract costs | 7,613 | - | 447 | - | 8,060 |
| Future income taxes | 16,013 | 10 | 4,228 | 428 | 20,679 |
| Goodwill | 71,814 | 14,602 | 39,351 | 10,214 | 135,981 |
| Assumption of long-term debt | (10,799) | - | (812) | (1,462) | (13,073) |
|
|
|||||
| Â | 90,061 | 17,276 | 36,699 | 12,208 | 156,244 |
| Cash position at acquisition | 12,759 | 7,639 | 1,837 | 635 | 22,870 |
|
|
|||||
| Â | 102,820 | 24,915 | 38,536 | 12,843 | 179,114 |
|
|
|||||
| Consideration | Â | Â | Â | Â | Â |
| Cash | - | 24,915 | 38,536 | 6,542 | 69,993 |
| Issuance of 14,299,441 Class A subordinate shares | 102,820 | - | - | 5,033 | 107,853 |
| Value of investment in an entity subject to significant influence upon interest increased | - | - | - | 1,268 | 1,268 |
|
|
|||||
| Â | 102,820 | 24,915 | 38,536 | 12,843 | 179,114 |
|
|
|||||
| Note 4 - Segmented information The Company provides information technology services. The following presents information on the Company's operations based on its organizational structure. |
||||||
|
|
||||||
| As at and for the three months ended March 31, 2001 | Canada | US | International | Corporate expenses and programs | Intersegment elimination | Total |
|
|
||||||
| Â | $ | $ | $ | $ | $ | $ |
| Revenue | 313,865 | 49,682 | 16,262 | - | (5,827) | 373,982 |
| Operating expenses | 247,279 | 53,267 | 15,263 | 9,996 | (5,827) | 319,978 |
|
|
||||||
| Operating earnings before: | 66,586 | (3,585) | 999 | (9,996) | - | 54,004 |
| Depreciation and amortization | 12,752 | 753 | 497 | 282 | - | 14,284 |
|
|
||||||
| Earnings before interest, income taxes, entity subject to significant influence and amortization of goodwill | 53,834 | (4,338) | 502 | (10,278) | - | 39,720 |
|
|
||||||
| Total assets | 797,867 | 198,360 | 63,615 | 47,409 | - | 1,107,251 |
| CGI GROUP INC. Notes to the consolidated financial statements (tabular amounts only are in thousands of Canadian dollars)(unaudited) Note 4 - Segmented information |
||||||
|
|
||||||
| As at and for the three months ended March 31, 2000 | Canada | US | International | Corporate expenses and programs | Intersegment elimination | Total |
|
|
||||||
| Â | $ | $ | $ | $ | $ | $ |
| Revenue | 290,956 | 53,073 | 53,003 | - | (16,499) | 380,533 |
| Operating expenses | 240,110 | 48,326 | 43,814 | 6,872 | (16,499) | 322,623 |
|
|
||||||
| Operating earnings before: | 50,846 | 4,747 | 9,189 | (6,872) | - | 57,910 |
| Depreciation and amortization | 9,887 | 1,261 | 398 | 336 | - | 11,882 |
|
|
||||||
| Earnings before interest, income taxes, entity subject to significant influence and amortization of goodwill | 40,959 | 3,486 | 8,791 | (7,208) | - | 46,028 |
|
|
||||||
| Total assets | 516,187 | 169,302 | 147,372 | 60,462 | - | 893,323 |
|
|
||||||
| As at and for the six months ended March 31, 2001 | Â | Â | Â | Â | Â | Â |
|
|
||||||
| Revenue | 590,265 | 100,880 | 38,828 | - | (21,812) | 708,161 |
| Operating expenses | 473,384 | 104,246 | 39,328 | 17,143 | (21,812) | 612,289 |
|
|
||||||
| Operating earnings before: | 116,881 | (3,366) | (500) | (17,143) | - | 95,872 |
| Depreciation and amortization | 23,592 | 1,602 | 837 | 557 | - | 26,588 |
|
|
||||||
| Earnings before interest, income taxes, entity subject to significant influence and amortization of goodwill | 93,289 | (4,968) | (1,337) | (17,700) | - | 69,284 |
|
|
||||||
| Total assets | 797,867 | 198,360 | 63,615 | 47,409 | - | 1,107,251 |
|
|
||||||
| As at and for the six months ended March 31, 2000 | Â | Â | Â | Â | Â | Â |
|
|
||||||
| Revenue | 603,176 | 105,990 | 119,211 | - | (43,171) | 785,206 |
| Operating expenses | 498,556 | 96,216 | 103,023 | 12,569 | (43,171) | 667,193 |
|
|
||||||
| Operating earnings before: | 104,620 | 9,774 | 16,188 | (12,569) | - | 118,013 |
| Depreciation and amortization | 21,363 | 2,382 | 882 | 663 | - | 25,290 |
|
|
||||||
| Earnings before interest, income taxes, entity subject to significant influence and amortization of goodwill | 83,257 | 7,392 | 15,306 | (13,232) | - | 92,723 |
|
|
||||||
| Total assets | 516,187 | 169,302 | 147,372 | 60,462 | - | 893,323 |
|
|
||||||
| Note 5 - Commitment On February 21, 2001, the Company signed a definitive merger agreement providing for the acquisition by the Company of all outstanding shares of common stock of IMRglobal Corp. ("IMR"), on the basis of 1.5974 Class A subordinate share of the Company for each share of IMR common stock. As a result of the proposed merger, based on number of outstanding shares of IMR common stock and IMR stock options outstanding at May 9, 2001, the Company will issue approximately 70.4 million Class A subordinate shares and outstanding IMR stock options will become up to 9.6 million options to acquire Class A subordinate shares. The total purchase price will be determined using the Class A subordinate share average closing price on the Toronto Stock Exchange for the twenty-one-day period starting ten days before and ending ten days after the merger date. Estimated professional fees and integrated costs related to the acquisition of $74,000,000 will be included in the total purchase consideration. Certain holders of the Class B shares have committed to exercise their preemptive rights in connection with the merger pursuant to which approximately 6.0 million Class B shares will be issued, up to a maximum aggregate amount of $60,000,000. BCE Inc., a shareholder, has determined not to exercise its preemptive rights to acquire additional Class A subordinate shares and has indicated that it will decide prior to closing of the merger whether or not it will exercise these preemptive rights to acquire additional Class B shares. However, in the event BCE Inc. decides to exercise its preemptive rights to acquire additional Class B shares, approximately 3.6 million additional Class B shares of the Company will be issued at the same price per share described above. |
| CGI GROUP INC. Notes to the consolidated financial statements (tabular amounts only are in thousands of Canadian dollars)(unaudited) Note 5 - Commitment Completion of the transaction is subject to customary conditions, including satisfaction of regulatory requirements. The merger is also subject to approval of IMR shareholders at a special meeting, to be held on June 22, 2001, by resolution adopted by a majority of shareholders. The transaction will be accounted for using the purchase method and the excess of the purchase price over the estimated fair value of net assets acquired will be accounted for as goodwill and will be amortized on a straight-line basis over 20 years. Note 6 - Subsequent event Note 7 - Comparative figures |
|
About CGI Founded in 1976, CGI is the fifth largest independent information technology services firm in North America, based on its headcount of 10,000 professionals. CGI's order backlog totals approximately US$4.6 billion (CDN$7.0 billion) and its revenue stands at US$1 billion (CDN$1.5 billion). CGI provides end-to-end IT services and business solutions to 2,500 clients in the United States, Canada and more than 20 countries around the world. CGI's shares are listed on the NYSE (GIB), as well as on the TSE (GIB.A). They are included in the Toronto Stock Exchange's TSE 300 index as well as the S&P/TSE Canadian Information Technology index. Web site: www.cgi.ca. Forward-Looking Statements All statements in this press release that do not directly and exclusively relate to historical facts constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements represent CGI Group Inc.'s intentions, plans, expectations, and beliefs, and are subject to risks, uncertainties, and other factors, of which many are beyond the control of the Company. These factors could cause actual results to differ materially from such forward-looking statements. These factors include and are not restricted to the timing and size of contracts, acquisitions and other corporate developments; the ability to attract and retain qualified employees; market competition in the rapidly-evolving information technology industry; general economic and business conditions; and other risks identified in Management's Discussion and Analysis (MD&A) in CGI Group Inc.'s annual report or Form 40F filed with the U.S. Securities & Exchange Commission and the Company's Annual Information Form filed with Canadian securities commissions. All of the risk factors included in these filed documents are included here by reference. CGI disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. - 30 - For more information: Investor inquiries Media inquiries |
