CGI Reports Continued Sequential Growth in Fiscal 2001 Second Quarter.Business Editors MONTREAL--(BUSINESS WIRE)--April 24, 2001 CGI Group CGI Group Inc. (TSX: GIB.A, NYSE: GIB) is a Canadian-based information technology (IT) management and business process services (BPS) company. Founded in 1976 as Conseillers en Gestion et Informatique Inc. (NYSE NYSE See: New York Stock Exchange :GIB See NIST binary. )(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :GIB.A) today reported unaudited results for the second quarter and six months ended March 31, 2001. All figures are in Canadian dollars Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents 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 One after the other in some consecutive order such as by name or number. 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 (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become 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 serge 1 n. A twilled cloth of worsted or worsted and wool, often used for suits. [Middle English sarge, from Old French, from Vulgar Latin *s Godin Godin is a French surname, one that is especially common in French Canada. People with the surname Godin
adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen , 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 (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. contracts, and this segment of the IT services industry is generally counter-cyclical in an economic slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. . 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 Desjardins (French, of the gardens) is a common last name in French-speaking Canada and is the name of:
UCAR Unmanned Combat Armed Rotorcraft UCAR Utility Cost Analysis Report International, one large outsourcing contract with Interac For the Japanese company, see . Interac Association is a Canadian organization linking enterprises that have proprietary networks so that they may communicate with each other for the purpose of exchanging electronic financial transactions. Association and, in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , contracts with Sun Life Financial, Allianz Allianz SE[1], (ISIN: DE0008404005; IPA pronunciation: [alli-anz], and formerly AG) is a large financial service provider headquartered in Munich, Germany. and Nordic
insurance company If Skadeforsakring.""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 CGI in full Common Gateway Interface. Specification by which a Web server passes data between itself and an application program. Typically, a Web user will make a request of the Web server, which in turn passes the request to a CGI application program. to provide high quality end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. 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 di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ), 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 debt-to-equity ratio The relationship between long-term funds provided by creditors and funds provided by owners. A firm's debt-to-equity ratio is calculated by dividing long-term debt by owners' equity. Both items are shown on the balance sheet. . 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 Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. CGI's backlog currently totals $7 billion. This figure excludes the $1 billion partnership with Desjardins, announced in October October: see month. 2000, and which should be finalized See finalization. in May 2001. IMRglobal merger agreement CGI will file its final proxy See proxy server. (networking) proxy - A process that accepts requests for some service and passes them on to the real server. A proxy may run on dedicated hardware or may be purely software. 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 Hart-Scott-Rodino Antitrust Improvements Act of 1976 (Public Law 94-435, known commonly as the HSR Act) is a set of amendments to the antitrust laws of the United States, principally the Clayton Antitrust Act. The HSR Act was signed into law by President Gerald R. . 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 The privilege of a stockholder to maintain a proportionate share of the ownership of a corporation by purchasing a proportionate share of any new stock issues. In most jurisdictions, an existing stockholder has the right to buy additional shares of a new issue to preserve 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 See Chief Financial Officer. Andre An·dré , John 1751-1780. British army officer hanged as a spy in the American Revolution for conspiring with Benedict Arnold. Imbeau) and possibly BCE BCE abbr. 1. Bachelor of Chemical Engineering 2. Bachelor of Civil Engineering BCE Abbreviation for before the Common Era. Inc. will exercise their preemptive rights to maintain their Class B multiple voting Noun 1. multiple voting - the act of voting in more than one place by the same person at the same election (illegal in U.S.) balloting, vote, voting, ballot - a choice that is made by counting the number of people in favor of each alternative; "there were only 17 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 In Business, the trading day is the time span that a particular stock exchange is open. For example, the New York Stock Exchange is, as of 2006, open from 09:30AM to 4:00PM. Trading days never take place on weekends. 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 according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. this 21 day average. This is in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . 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 Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. . Key transactions announced since January January: see month. 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 Alberta (ălbûr`tə), province (2001 pop. 2,974,807), 255,285 sq mi (661,188 sq km), including 6,485 sq mi (16,796 sq km) of water surface, W Canada. Health and Wellness valued at $25 million; - signed 10-year outsourcing contract with Interac Association. - February February: see month. : - 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 GIOS Generalized Infinite Order Sudden , CGI's Web-enabled insurance solution, in more than 20 countries; - signed $22 million contract with Nordic If Skadeforsakring 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 conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with financial statements for the second quarter of fiscal 2001 and 2000, with the MD&A and notes to the financial statements Notes to the financial statements A detailed set of notes immediately following the financial statements in an annual report that explain and expand on the information in 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 December: see month. 31, 1999 was a particularly strong quarter, reflecting spending by clients to ensure their IT systems were Y2K compliant Capable of correctly processing any data that deals with a date beyond the year 1999. See Y2K problem. , and also reflecting a large international contract completed later in the year. The geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. revenue mix in the first half of fiscal 2001 was 81% from Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , 14% from the US and 5% from International. Operating Expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. 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 ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $10 million, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc provincial Provincial has several meanings and may refer to:
Eligible for refunding under the terms of a bond indenture. tax credits for Quebec Quebec, city, Canada Quebec, Fr. Québec, city (1991 pop. 167,517), provincial capital, S Que., Canada, at the confluence of the St. Lawrence and St. Charles rivers. employees' salaries, resulting from CGI's participation in the government's program to establish E-Commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. 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 Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" Inc. For further details, see note 3 of the Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge . 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 Chartered Bank A financial institution whose primary roles are to accept and safeguard monetary deposits from individuals and organizations, and to lend money out. The details vary from country to country, but usually a chartered bank in operation has obtained government permission 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 Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. 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 Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. decreased by $29.2 million as a result of reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. of debt. Business acquisitions were paid for mostly through the issuance of shares. Investing activities include fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → 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 CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) Handbook
This article is about reference works. For the subnotebook computer, see .
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 FASB Statement A standard set by the Financial Accounting Standards Board regarding a financial accounting and reporting method. Essentially, FASB statements determine the acceptable accounting practices that Certified Public Accountants use in reporting 128 and IAS See iPlanet Application Server. 1. (computer) IAS - The first modern computer. It had main registers, processing circuits, information paths within the central processing unit, and used Von Neumann's fetch-execute cycle. 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 Attributed vicariously. In the legal sense, the term imputed is used to describe an action, fact, or quality, the knowledge of which is charged to an individual based upon the actions of another for whom the individual is responsible rather than on the individual's earnings approach for determining the dilutive effect Dilutive effect Result of a transaction that decreases earnings per common share (EPS). of options issued. Reconciliation of the numerator numerator the upper part of a fraction. numerator relationship see additive genetic relationship. numerator Epidemiology The upper part of a fraction and denominator denominator the bottom line of a fraction; the base population on which population rates such as birth and death rates are calculated. denominator of both basic and diluted per share data is disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). . Quarterly Conference Call Notification A conference call for the investment community will be held on Tuesday Tuesday: see week. , April 24, 2001 at 1:00 p.m. (Eastern Daylight For other uses, see Daylight (disambiguation). Daylight or the light of day is the combination of all direct and indirect sunlight outdoors during the daytime (and perhaps twilight). Time). A live audio webcast of the conference call, with accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. slides, will be available at CGI's website, www.cgi.ca. About CGI Founded in 1976, CGI is the fifth largest independent information technology services firm in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , based on its headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. of 10,000 professionals. CGI's order backlog totals approximately US$4.6 billion (CDN (Content Delivery Network) A system of distributed content on a large intranet or the public Internet in which copies of content are replicated and cached throughout the network. $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 United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , 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 Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing Stock Exchange's TSE 300 index The TSE 300 index was a stock market index that tracked the prices of 300 highly influential stocks which were traded on the Toronto Stock Exchange. Since May 1, 2002, it has been replaced by the S&P/TSX Composite Index. as well as the S&P/TSE Canadian Information Technology index. Web site: www.cgi.ca. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial (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.
CGI GROUP INC.
Consolidated statements of earnings
(in thousands of Canadian dollars, except per share amounts)
(unaudited)
---------------------------------------------------------------
Three months ended Six months ended
March 31, March 31,
2001 2000 2001 2000
---------------------------------------------------------------
$ $ $ $
Revenue 373,982 380,533 708,161 785,206
---------------------------------------------------------------
Operating expenses
Costs of
services,
selling and
administrative
expenses 316,949 319,973 606,770 661,783
Research and
development 3,029 2,650 5,519 5,410
---------------------------------------------------------------
319,978 322,623 612,289 667,193
---------------------------------------------------------------
Operating earnings
(EBITDA) before: 54,004 57,910 95,872 118,013
---------------------------------------------------------------
Depreciation and
amortization of
fixed assets 7,937 6,727 14,774 13,794
Amortization of
contract costs 6,347 5,155 11,814 11,496
---------------------------------------------------------------
14,284 11,882 26,588 25,290
---------------------------------------------------------------
Earnings before the
following items 39,720 46,028 69,284 92,723
---------------------------------------------------------------
Interest
Long-term debt (972) (944) (1,834) (1,879)
Other (117) - (155) (182)
Income 732 1,287 1,277 2,503
---------------------------------------------------------------
(357) 343 (712) 442
---------------------------------------------------------------
Earnings before
income taxes,
entity subject to
significant influence
and amortization
of goodwill 39,363 46,371 68,572 93,165
Income taxes 17,165 18,600 30,239 38,079
---------------------------------------------------------------
Earnings before
entity subject to
significant influence
and amortization
of goodwill 22,198 27,771 38,333 55,086
Entity subject to
significant influence - 15 7 51
---------------------------------------------------------------
Earnings before
amortization of
goodwill 22,198 27,786 38,340 55,137
Amortization of
goodwill, net
of income taxes 6,992 4,374 12,712 8,766
---------------------------------------------------------------
Net earnings 15,206 23,412 25,628 46,371
---------------------------------------------------------------
Weighted average
number of
outstanding
Class A
subordinate
shares and
Class B
shares 288,261,784 270,154,613 281,893,441 269,709,197
---------------------------------------------------------------
Basic and
diluted
earnings before
amortization of
goodwill per
share (Note 1) 0.08 0.10 0.14 0.20
---------------------------------------------------------------
Basic and diluted
earnings per
share (Note 1) 0.05 0.09 0.09 0.17
---------------------------------------------------------------
CGI GROUP INC.
Consolidated statements of retained earnings
(in thousands of Canadian dollars) (unaudited)
---------------------------------------------------------------
Three months ended Six months ended
March 31, March 31,
2001 2000 2001 2000
---------------------------------------------------------------
$ $ $ $
Retained earnings,
beginning of
period, as
previously
reported 193,578 150,449 183,156 139,080
Adjustment for
change in
accounting policy - - - (11,590)
---------------------------------------------------------------
Retained earnings,
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,
end of period 208,784 173,861 208,784 173,861
---------------------------------------------------------------
CGI GROUP INC.
Consolidated balance sheets
(in thousands of Canadian dollars) (unaudited)
---------------------------------------------------------------
As at March 31, As at September 30,
2001 2000
---------------------------------------------------------------
$ $
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
---------------------------------------------------------------
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
---------------------------------------------------------------
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
---------------------------------------------------------------
239,281 181,999
Future income taxes 13,903 23,929
Long-term debt 38,080 37,644
---------------------------------------------------------------
291,264 243,572
---------------------------------------------------------------
Shareholders' equity
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
---------------------------------------------------------------
815,987 677,301
---------------------------------------------------------------
1,107,251 920,873
---------------------------------------------------------------
CGI GROUP INC.
Consolidated statements of cash flows
(in thousands of Canadian dollars) (unaudited)
---------------------------------------------------------------
Three months ended Six months ended
March 31, March 31,
2001 2000 2001 2000
---------------------------------------------------------------
$ $ $ $
Operating activities
Net earnings 15,206 23,412 25,628 46,371
Adjustments for:
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:
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)
---------------------------------------------------------------
(18,871) 12,872 (9,374) (71,090)
---------------------------------------------------------------
Cash provided by
operating activities 16,132 51,751 56,505 11,517
---------------------------------------------------------------
Financing activities
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
Business acquisitions
(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)
---------------------------------------------------------------
Effect of exchange rate
changes on cash and cash
equivalents 1,298 (48) 1,628 (467)
---------------------------------------------------------------
Net (decrease) increase
in cash position (23,263) 39,693 (21,151) (4,833)
---------------------------------------------------------------
Cash position at
beginning 51,453 (2,297) 49,341 42,229
---------------------------------------------------------------
Cash position at end 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 These interim
financial statements should be read in conjunction with the
consolidated financial statements of the Company and notes thereto for
the year ended September 30, 2000.
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.
Three months ended March 31,
2001
---------------------------------------------------------------
Net earnings Number of shares Per share
(numerator) (denominator) amount
---------------------------------------------------------------
$ $ $
Net earnings
available to
common
shareholders 15,206 288,261,784 0.05
Dilutive options - 765,726
---------------------------------------------------------------
Net earnings
available to
common
shareholders
and assumed
conversions 15,206 289,027,510 0.05
---------------------------------------------------------------
Three months ended March 31,
2001
---------------------------------------------------------------
Net earnings Number of shares Per share
(numerator) (denominator) amount
---------------------------------------------------------------
$ $ $
Net earnings
available to
common
shareholders 23,412 270,154,613 0.09
Dilutive options - 3,718,911
---------------------------------------------------------------
Net earnings
available to
common
shareholders
and assumed
conversions 23,412 273,873,524 0.09
---------------------------------------------------------------
Six months ended March 31,
2001
---------------------------------------------------------------
Net earnings Number of shares Per share
(numerator) (denominator) amount
---------------------------------------------------------------
$ $ $
Net earnings
available to
common
shareholders 25,628 281,893,441 0.09
Dilutive options - 845,704
---------------------------------------------------------------
Net earnings
available to
common
shareholders
and assumed
conversions 25,628 282,739,145 0.09
---------------------------------------------------------------
Six months ended March 31,
2000
---------------------------------------------------------------
Net earnings Number of shares Per share
(numerator) (denominator) amount
---------------------------------------------------------------
$ $ $
Net earnings
available to
common
shareholders 46,371 269,709,197 0.17
Dilutive options - 3,393,168
Net earnings
available to
common
shareholders
and assumed
conversions 46,371 273,102,365 0.17
---------------------------------------------------------------
Note 2 - Capital Stock
Capital Stock
Class A subordinate shares carrying one vote per share,
participating equally with Class B shares with respect to the payment
of dividends and convertible into Class B shares under certain
conditions in the event of certain takeover bids on Class B shares.
Class B shares, carrying ten votes per share, participating
equally with Class A subordinate shares with respect to the payment of
dividends and convertible at any time at the option of the holder into
Class A subordinate shares.
Options
Under a stock option plan for certain employees and directors of
the Company and its subsidiaries, the Board of Directors may grant, at
its discretion, options to purchase company stock to certain employees
and directors of the Company and of its subsidiaries. The exercise
price is established by the Board of Directors but may not be lower
than the average closing price for Class A subordinate shares over the
five business days preceeding the date of grant. Each option must be
exercised within a ten-year period, except in the event of retirement,
termination of employment or death.
The following table presents information concerning capital stock
issued and paid and all stock options as of March 31, 2001:
Number of shares issued and paid Number
---------------------------------------------------------------
Class A subordinate shares 255,219,941
Class B shares 34,846,526
---------------------------------------------------------------
Total Capital stock 290,066,467
---------------------------------------------------------------
Number of stock options
(convertible into Class A subordinate shares) 8,340,425
---------------------------------------------------------------
Number of shares reflecting the potential
exercise of stock options 298,406,892
---------------------------------------------------------------
As of March 31, 2001, and September 30, 2000, (after giving
retroactive effect of the subdivision of the Company's shares that
occured 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:
March 31, 2001
---------------------------------------------------------------
Class A subordinate shares Class B shares
---------------------------------------------------------------
Number Amount Number Amount
---------------------------------------------------------------
$ $
Balance at the
beginning of
period 240,755,667 490,645 34,846,526 1,162
Issued for cash - - - -
Issued as
consideration
for business
acquisitions 14,299,441 107,853 - -
Options exercised 164,833 485 - -
---------------------------------------------------------------
Balance at the end
of period 255,219,941 598,983 34,846,526 1,162
---------------------------------------------------------------
September 30, 2000
---------------------------------------------------------------
Class A subordinate shares Class B shares
---------------------------------------------------------------
Number Amount Number Amount
---------------------------------------------------------------
$ $
Balance at the
beginning of
period 233,887,974 423,616 34,773,652 148
Issued for cash 287,914 4,003 - -
Issued as
consideration
for business
acquisitions 5,626,369 57,112 - -
Options exercised 953,410 5,914 72,874 1,014
---------------------------------------------------------------
Balance at the end
of period 240,755,667 490,645 34,846,526 1,162
---------------------------------------------------------------
The following table presents information concerning all stock
options granted to certain employees and directors by the Company as
of March 31, 2001, and September 30, 2000:
March 31, 2001 September 30, 2000
---------------------------------------------------------------
Number of options
Outstanding at the beginning
of period 6,413,181 4,996,414
Granted 2,565,800 2,565,594
Exercised, forfeited and
expired (638,556) (1,148,827)
---------------------------------------------------------------
Outstanding at the end
of period 8,340,425 6,413,181
---------------------------------------------------------------
Note 3 - Business acquisition
During the six months ended March 31, 2001, the Company acquired
all the outstanding shares of C.U. Processing Inc. and RSI Realtime
Inc. on October 4, 2000, and on December 12, 2000, respectively, and
acquired 49% of all the outstanding shares of AGTI Consulting Services
Inc. ("AGTI") on November 27, 2000. Also, the Company acquired all the
outstanding shares of Groupe-conseil CDL Inc. on January, 4, 2001, and
announced, on January 9, 2001, that its offer to purchase all of the
outstanding Star Data Systems Inc. ("Star Data") common shares on the
basis of 0.737 Class A subordinate shares of the Company for each Star
Data common share, has been successful with all the conditions of its
offer having been satisfied. Furthermore, on January 12, 2001, the
Company increased its interest in Conseillers en informatique
d'affaires from 35% to 49%. The Company now accounts for its 49%
interest using the proportionate consolidation method. A contingent
payment of $1,640,000 for AGTI was made in the three months ended
March 31, 2001 based on the accomplishment of specified financial
goals as of December 31, 2000. The contingent payment resulted in a
corresponding increase of the purchase price and the resulting
goodwill.
These acquisitions were accounted for using the purchase method,
as follows:
C.U.
Star Data AAGTI 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)
---------------------------------------------------------------
90,061 17,276 36,699 12,208 156,244
Cash position at
acquisition 12,759 7,639 1,837 635 22,870
---------------------------------------------------------------
102,820 24,915 38,536 12,843 179,114
---------------------------------------------------------------
Consideration
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
---------------------------------------------------------------
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 of and for the Canada US International
three months
ended March 31, 2001
---------------------------------------------------------------
$ $ $
Revenue 313,865 49,682 16,262
Operating expenses 247,279 53,267 15,263
Operating earnings
(EBITDA) before: 66,586 (3,585) 999
---------------------------------------------------------------
Depreciation and
amortization 12,752 753 497
---------------------------------------------------------------
Earnings before interest,
income taxes,
entity subject to
significant influence
and amortization of
goodwill 53,834 (4,338) 502
---------------------------------------------------------------
Total assets 797,867 198,360 63,615
---------------------------------------------------------------
As of and for the
three months
ended March 31, 2001
---------------------------------------------------------------
Revenue 290,956 53,073 53,003
Operating expenses 240,110 48,326 43,814
---------------------------------------------------------------
Operating earnings
(EBITDA) before: 50,846 4,747 9,189
Depreciation and
amortization 9,887 1,261 398
---------------------------------------------------------------
Earnings before interest,
income taxes,
entity subject to
significant influence
and amortization of
goodwill 40,959 3,486 8,791
---------------------------------------------------------------
Total assets 516,187 169,302 147,372
---------------------------------------------------------------
As of and for
the six months
ended March 31, 2001
---------------------------------------------------------------
Revenue 590,265 100,880 38,828
Operating expenses 473,384 104,246 39,328
Operating earnings
(EBITDA) before: 116,881 (3,366) (500)
Depreciation and
amortization 23,592 1,602 837
---------------------------------------------------------------
Earnings before interest,
income taxes,
entity subject to
significant influence
and amortization of
goodwill 93,289 (4,968) (1,337)
---------------------------------------------------------------
Total assets 797,867 198,360 63,615
---------------------------------------------------------------
As of and for
the six months
ended March 31, 2000
---------------------------------------------------------------
Revenue 603,176 105,990 119,211
Operating expenses 498,556 96,216 103,023
---------------------------------------------------------------
Operating earnings
(EBITDA) before: 104,620 9,774 16,188
Depreciation and
amortization 21,363 2,382 882
---------------------------------------------------------------
Earnings before interest,
income taxes,
entity subject to
significant influence
and amortization of
goodwill 83,257 7,392 15,306
---------------------------------------------------------------
Total assets 516,187 169,302 147,372
---------------------------------------------------------------
As of and for Corporate Intersegment Total
the three months expenses and elimination
ended March 31, 2001 programs
---------------------------------------------------------------
$ $ $
Revenue - (5,827) 373,982
Operating expenses 9,996 (5,827) 319,978
Operating earnings
(EBITDA) before: (9,996) - 54,004
Depreciation and amortization 282 - 14,284
---------------------------------------------------------------
Earnings before interest,
income taxes,
entity subject to
significant influence
and amortization of goodwill (10,278) - 39,720
---------------------------------------------------------------
Total assets 47,409 - 1,107,251
---------------------------------------------------------------
As of and for
the three months
ended March 31, 2000
Revenue - (16,499) 380,533
Operating expenses 6,872 (16,499) 322,623
---------------------------------------------------------------
Operating earnings
(EBITDA) before: (6,872) - 57,910
Depreciation and amortization 336 - 11,882
---------------------------------------------------------------
Earnings before interest,
income taxes,
entity subject to
significant influence
and amortization of goodwill (7,208) - 46,028
---------------------------------------------------------------
Total assets 60,462 - 893,323
---------------------------------------------------------------
As of and for
the six months
ended March 31, 2001
Revenue - (21,812) 708,161
Operating expenses 17,143 (21,812) 612,289
---------------------------------------------------------------
Operating earnings
(EBITDA) before: (17,143) - 95,872
Depreciation and amortization 557 - 26,588
---------------------------------------------------------------
Earnings before interest,
income taxes,
entity subject to
significant influence
and amortization of goodwill (17,700) - 69,284
---------------------------------------------------------------
Total assets 47,409 - 1,107,251
---------------------------------------------------------------
As of and for
the six months
ended March 31, 2000
Revenue - (43,171) 785,206
Operating expenses 12,569 (43,171) 667,193
---------------------------------------------------------------
Operating earnings
(EBITDA) before: (12,569) - 118,013
Depreciation and amortization 663 - 25,290
---------------------------------------------------------------
Earnings before interest,
income taxes,
entity subject to
significant influence
and amortization of goodwill (13,232) - 92,723
---------------------------------------------------------------
Total assets 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, the
Company will issue approximately 70.3 million Class A subordinate
shares and outstanding IMR stock options will become up to 9.9 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 professionnal fees and integrated costs related to the
acquisition of $74,000,000 will be included in the total purchase
consideration.
Certain holders of the Company Class B shares have commited to
exercise their preemptive rights in connection with the merger
pursuant to which 6.0 million Class B shares will be issued. BCE, a
shareholder of the Company, has decided not to exercice 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 its preemptive rights for Class B shares. If
BCE decided to exercise its preemptive rights on Class B shares,
approximately 3.6 million additional Class B shares of the Company
will be issued.
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 by resolution adopted by the 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 - Comparative figures
Certain comparative figures have been reclassified in order to
conform to the presentation adopted in 2001.
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