Exhibit 99.2
Condensed Consolidated Financial Statements of
CGI GROUP INC.
For the three months ended December 31, 2012 and 2011
(unaudited)
Condensed Consolidated Statements of Earnings
For the three months ended December 31
(in thousands of Canadian dollars, except share data) (unaudited)
2012 | 2011 | |||||||
$ | $ | |||||||
Revenue | 2,532,929 | 1,032,139 | ||||||
|
|
|
| |||||
Operating expenses | ||||||||
Costs of services, selling and administrative | 2,320,922 | 893,298 | ||||||
Acquisition-related and integration costs | 153,419 | — | ||||||
Finance costs | 27,197 | 5,286 | ||||||
Finance income | (1,661 | ) | (457 | ) | ||||
Other income | — | (5,646 | ) | |||||
Foreign exchange loss (gain) | 2,516 | (1,105 | ) | |||||
Share of profit on joint venture | — | (3,996 | ) | |||||
|
|
|
| |||||
2,502,393 | 887,380 | |||||||
|
|
|
| |||||
Earnings before income taxes | 30,536 | 144,759 | ||||||
Income tax expense | 8,091 | 38,216 | ||||||
|
|
|
| |||||
Net earnings | 22,445 | 106,543 | ||||||
|
|
|
| |||||
Earnings per share (Note 5C)) | ||||||||
Basic earnings per share | 0.07 | 0.41 | ||||||
Diluted earnings per share | 0.07 | 0.40 | ||||||
|
|
|
|
CGI Group Inc. – Condensed Consolidated Financial Statements for the three months ended December 31, 2012 and 2011 | 1 |
Condensed Consolidated Statements of Comprehensive Income
For the three months ended December 31
(in thousands of Canadian dollars) (unaudited)
2012 | 2011 | |||||||
$ | $ | |||||||
Net earnings | 22,445 | 106,543 | ||||||
|
|
|
| |||||
Net unrealized gains (losses) on translating financial statements of foreign operations (net of income taxes) | 112,156 | (46,045 | ) | |||||
Net unrealized (losses) gains on derivative financial instruments and on translating long-term debt designated as hedges of net investments in foreign operations (net of income taxes) | (52,213 | ) | 15,814 | |||||
Net unrealized losses on cash flow hedges (net of income taxes) | (267 | ) | (9,919 | ) | ||||
Net unrealized actuarial losses (net of income taxes) | (10,535 | ) | — | |||||
Net unrealized losses on investments available for sale (net of income taxes) | (122 | ) | (513 | ) | ||||
|
|
|
| |||||
Other comprehensive income (loss) | 49,019 | (40,663 | ) | |||||
|
|
|
| |||||
Comprehensive income | 71,464 | 65,880 | ||||||
|
|
|
|
CGI Group Inc. – Condensed Consolidated Financial Statements for the three months ended December 31, 2012 and 2011 | 2 |
Condensed Consolidated Balance Sheets
(in thousands of Canadian dollars) (unaudited)
As at December 31, 2012 | As at September 30, 2012 | |||||||
$ | $ | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents (Note 3) | 147,024 | 113,103 | ||||||
Short-term investments | 14,554 | 14,459 | ||||||
Accounts receivable | 1,589,031 | 1,446,149 | ||||||
Work in progress | 615,536 | 744,482 | ||||||
Prepaid expenses and other current assets | 279,725 | 244,805 | ||||||
Income taxes | 6,686 | 24,650 | ||||||
|
|
|
| |||||
Total current assets before funds held for clients | 2,652,556 | 2,587,648 | ||||||
Funds held for clients | 303,723 | 202,407 | ||||||
|
|
|
| |||||
Total current assets | 2,956,279 | 2,790,055 | ||||||
Property, plant and equipment | 489,945 | 500,995 | ||||||
Contract costs | 161,619 | 167,742 | ||||||
Intangible assets | 836,682 | 858,892 | ||||||
Other long-term assets | 96,373 | 96,351 | ||||||
Deferred tax assets | 243,332 | 219,590 | ||||||
Goodwill | 5,933,441 | 5,819,817 | ||||||
|
|
|
| |||||
10,717,671 | 10,453,442 | |||||||
|
|
|
| |||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | 1,296,441 | 1,156,737 | ||||||
Accrued compensation | 490,577 | 539,779 | ||||||
Deferred revenue | 469,401 | 443,596 | ||||||
Income taxes | 164,556 | 177,030 | ||||||
Provisions (Note 4) | 243,843 | 160,625 | ||||||
Current portion of long-term debt | 55,855 | 52,347 | ||||||
|
|
|
| |||||
Total current liabilities before clients’ funds obligations | 2,720,673 | 2,530,114 | ||||||
Clients’ funds obligations | 299,572 | 197,986 | ||||||
|
|
|
| |||||
Total current liabilities | 3,020,245 | 2,728,100 | ||||||
Deferred tax liabilities | 177,763 | 171,130 | ||||||
Long-term provisions (Note 4) | 217,757 | 216,507 | ||||||
Long-term debt | 3,085,441 | 3,196,061 | ||||||
Retirement benefits obligations | 133,107 | 118,078 | ||||||
Other long-term liabilities | 589,146 | 601,232 | ||||||
|
|
|
| |||||
7,223,459 | 7,031,108 | |||||||
|
|
|
| |||||
Equity | ||||||||
Retained earnings | 1,135,593 | 1,113,225 | ||||||
Accumulated other comprehensive income (loss) (Note 6) | 48,744 | (275 | ) | |||||
Capital stock (Note 5A)) | 2,203,111 | 2,201,694 | ||||||
Contributed surplus | 106,764 | 107,690 | ||||||
|
|
|
| |||||
3,494,212 | 3,422,334 | |||||||
|
|
|
| |||||
10,717,671 | 10,453,442 | |||||||
|
|
|
|
CGI Group Inc. – Condensed Consolidated Financial Statements for the three months ended December 31, 2012 and 2011 | 3 |
Condensed Consolidated Statements of Changes in Equity
For the three months ended December 31
(in thousands of Canadian dollars) (unaudited)
Retained earnings | Accumulated other comprehensive (loss) income | Capital stock | Contributed surplus | Total equity | ||||||||||||||||
$ | $ | $ | $ | $ | ||||||||||||||||
Balance as at September 30, 2012 | 1,113,225 | (275 | ) | 2,201,694 | 107,690 | 3,422,334 | ||||||||||||||
Net earnings for the period | 22,445 | — | — | — | 22,445 | |||||||||||||||
Other comprehensive income for the period | — | 49,019 | — | — | 49,019 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
1,135,670 | 48,744 | 2,201,694 | 107,690 | 3,493,798 | ||||||||||||||||
Share-based payment costs | — | — | — | 6,960 | 6,960 | |||||||||||||||
Income tax impact associated with stock options | — | — | — | (5,811 | ) | (5,811 | ) | |||||||||||||
Exercise of stock options (Note 5A) | — | — | 9,115 | (2,075 | ) | 7,040 | ||||||||||||||
Repurchase of Class A subordinate shares (Note 5A) | (77 | ) | — | (35 | ) | — | (112 | ) | ||||||||||||
Purchase of Class A subordinate shares held in trust (Note 5A) | — | — | (7,663 | ) | — | (7,663 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balance as at December 31, 2012 | 1,135,593 | 48,744 | 2,203,111 | 106,764 | 3,494,212 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Retained earnings | Accumulated other comprehensive (loss) income | Capital stock | Contributed surplus | Total equity | ||||||||||||||||
$ | $ | $ | $ | $ | ||||||||||||||||
Balance as at September 30, 2011 | 1,057,599 | 14,572 | 1,178,559 | 98,501 | 2,349,231 | |||||||||||||||
Net earnings for the period | 106,543 | — | — | — | 106,543 | |||||||||||||||
Other comprehensive loss for the period | — | (40,663 | ) | — | — | (40,663 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
1,164,142 | (26,091 | ) | 1,178,559 | 98,501 | 2,415,111 | |||||||||||||||
Share-based payment costs | — | — | — | 2,492 | 2,492 | |||||||||||||||
Income tax impact associated with stock options | — | — | — | (431 | ) | (431 | ) | |||||||||||||
Exercise of stock options | — | — | 16,536 | (3,941 | ) | 12,595 | ||||||||||||||
Repurchase of Class A subordinate shares | (46,621 | ) | — | (16,796 | ) | — | (63,417 | ) | ||||||||||||
Purchase of Class A subordinate shares held in trust | — | — | (14,252 | ) | — | (14,252 | ) | |||||||||||||
Sale of Class A subordinate shares held in trust | — | — | 1,118 | 53 | 1,171 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balance as at December 31, 2011 | 1,117,521 | (26,091 | ) | 1,165,165 | 96,674 | 2,353,269 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
CGI Group Inc. – Condensed Consolidated Financial Statements for the three months ended December 31, 2012 and 2011 | 4 |
Condensed Consolidated Statements of Cash Flows
For the three months ended December 31
(tabular amounts only are in thousands of Canadian dollars) (unaudited)
2012 | 2011 | |||||||
$ | $ | |||||||
Operating activities | ||||||||
Net earnings | 22,445 | 106,543 | ||||||
Adjustments for: | ||||||||
Amortization and depreciation | 114,008 | 50,348 | ||||||
Deferred income taxes | (17,682 | ) | 6,520 | |||||
Foreign exchange loss | 707 | 203 | ||||||
Share-based payment costs | 6,960 | 2,492 | ||||||
Gain on sale of investment in joint venture | — | (2,981 | ) | |||||
Share of profit on joint venture | — | (3,996 | ) | |||||
Dividend received from joint venture | — | 7,350 | ||||||
Net change in non-cash working capital items | 98,092 | (17,765 | ) | |||||
|
|
|
| |||||
Cash provided by operating activities | 224,530 | 148,714 | ||||||
|
|
|
| |||||
Investing activities | ||||||||
Net change in short-term investments | (109 | ) | 2,683 | |||||
Proceeds from sale of business | — | 458 | ||||||
Purchase of property, plant and equipment | (39,857 | ) | (11,998 | ) | ||||
Additions to contract costs | (9,167 | ) | (7,960 | ) | ||||
Additions to intangible assets | (9,907 | ) | (9,013 | ) | ||||
Additions to other long-term assets | (1,322 | ) | (245 | ) | ||||
Net change in long-term investments | 683 | — | ||||||
|
|
|
| |||||
Cash used in investing activities | (59,679 | ) | (26,075 | ) | ||||
|
|
|
| |||||
Financing activities | ||||||||
Net change in credit facilities | (118,214 | ) | (541,415 | ) | ||||
Increase of long-term debt | — | 490,382 | ||||||
Repayment of long-term debt | (11,898 | ) | (8,961 | ) | ||||
Purchase of Class A subordinate shares held in trust (Note 5A)) | (7,663 | ) | (14,252 | ) | ||||
Sale of Class A subordinate shares held in a trust | — | 1,171 | ||||||
Repurchase of Class A subordinate shares (Note 5A)) | (112 | ) | (63,417 | ) | ||||
Issuance of Class A subordinate shares | 6,594 | 12,763 | ||||||
|
|
|
| |||||
Cash used in financing activities | (131,293 | ) | (123,729 | ) | ||||
|
|
|
| |||||
Effect of foreign exchange rate changes on cash and cash equivalents | 363 | (2,224 | ) | |||||
|
|
|
| |||||
Net increase (decrease) in cash and cash equivalents | 33,921 | (3,314 | ) | |||||
Cash and cash equivalents, beginning of period | 113,103 | 60,673 | ||||||
|
|
|
| |||||
Cash and cash equivalents, end of period (Note 3) | 147,024 | 57,359 | ||||||
|
|
|
| |||||
The following amounts are classified within operating activities: | ||||||||
Interest paid | 23,683 | 3,395 | ||||||
Interest received | 740 | 518 | ||||||
Income taxes paid | 21,757 | 23,819 | ||||||
|
|
|
|
NON-CASH TRANSACTIONS
Significant non-cash transactions consisted of property, plant and equipment and intangible asset additions for a total amount of $7,569,000 for the three months ended December 31, 2012 ($20,372,000 for the three months ended December 31, 2011).
CGI Group Inc. – Condensed Consolidated Financial Statements for the three months ended December 31, 2012 and 2011 | 5 |
Notes to the Condensed Consolidated Financial Statements
For the three months ended December 31, 2012 and 2011
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)
1. | Description of business |
CGI Group Inc. (the “Company”), directly or through its subsidiaries, manages information technology services (“IT services”) as well as business process services (“BPS”) to help clients effectively realize their strategies and create added value. The Company’s services include the management of IT and business processes (“outsourcing”), systems integration and consulting including the sale of software licenses. The Company was incorporated under Part IA of the Companies Act (Québec) predecessor to the Business Corporations Act (Québec) which came into force on February 14, 2011 and its shares are publicly traded. The executive and registered office of the Company is situated at 1350, René-Lévesque Blvd. West, Montréal, Québec, Canada, H3G 1T4.
2. | Basis of preparation |
These interim condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and International Accounting Standard (“IAS”) 34, “Interim Financial Reporting” as issued by the International Accounting Standards Board (“IASB”). In addition, the interim condensed consolidated financial statements have been prepared in accordance with the accounting policies set out in Note 3, “Summary of significant accounting policies” of the Company’s consolidated financial statements for the year ended September 30, 2012, which are based on IFRS and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations. The accounting policies were consistently applied to all periods presented.
These interim condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements of the Company for the year ended September 30, 2012.
The Company’s unaudited interim condensed consolidated financial statements for the three months ended December 31, 2012 and 2011 were authorized for issue by the Board of Directors on January 30, 2013.
3. | Cash and cash equivalents |
As at December 31, 2012 | As at September 30, 2012 | |||||||
$ | $ | |||||||
Cash | 130,149 | 86,060 | ||||||
Cash equivalents | 16,875 | 27,043 | ||||||
|
|
|
| |||||
Cash and cash equivalents | 147,024 | 113,103 | ||||||
|
|
|
|
CGI Group Inc. – Condensed Consolidated Financial Statements for the three months ended December 31, 2012 and 2011 | 6 |
Notes to the Condensed Consolidated Financial Statements
For the three months ended December 31, 2012 and 2011
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)
4. | Provisions |
The Company’s provisions consist of liabilities for leases of premises that the Company has vacated, litigation and claim provisions arising in the ordinary course of business, decommissioning liabilities for operating leases of office buildings where certain arrangements require premises to be returned to their original state at the end of the term and restructuring provisions.
During the three months ended December 31, 2012, an amount of approximately $136,000,000 for integration costs, partially offset by payments, was accounted for in provisions which is mainly due to the termination of employees to transform the operations of Logica plc (“Logica”) to the Company’s operating model.
5. | Capital stock, share-based payments and earnings per share |
A) CAPITAL STOCK
Class A subordinate shares | Class B shares | Total | ||||||||||||||||||||||
Number | Carrying value | Number | Carrying value | Number | Carrying value | |||||||||||||||||||
$ | $ | $ | ||||||||||||||||||||||
Balance as at September 30, 2012 | 273,771,106 | 2,154,807 | 33,608,159 | 46,887 | 307,379,265 | 2,201,694 | ||||||||||||||||||
Repurchased and cancelled1 | (5,000 | ) | (35 | ) | — | — | (5,000 | ) | (35 | ) | ||||||||||||||
Issued upon exercise of stock options2 | 585,743 | 9,115 | — | — | 585,743 | 9,115 | ||||||||||||||||||
Purchased and held in trust3 | — | (7,663 | ) | — | — | — | (7,663 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Balance as at December 31, 2012 | 274,351,849 | 2,156,224 | 33,608,159 | 46,887 | 307,960,008 | 2,203,111 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
1 | On February 1, 2012, the Company’s Board of Directors authorized the renewal of a Normal Course Issuer Bid (“NCIB”) for the purchase of up to 22,064,163 Class A subordinate shares for cancellation on the open market through the Toronto Stock Exchange. The Class A subordinate shares were available for purchase commencing February 9, 2012, until no later than February 8, 2013, or on such earlier date when the Company completes its purchases or elects to terminate the bid. During the three months ended December 31, 2012, the Company repurchased 5,000 Class A subordinate shares for cash consideration of $112,000. The excess of the purchase price over the carrying value, in the amount of $77,000 was charged to retained earnings. |
2 | The carrying value of Class A subordinate shares includes $2,075,000 which corresponds to a reduction in contributed surplus representing the value of accumulated compensation costs associated with the stock options exercised during the period. |
3 | The trustee, in accordance with the terms of the PSU plan and a Trust Agreement, purchased 336,849 Class A subordinate shares of the Company on the open market for $7,663,000 during the three months ended December 31, 2012. As at December 31, 2012, 1,200,715 Class A subordinate shares were held in trust under the PSU plan (Note 5B)). |
CGI Group Inc. – Condensed Consolidated Financial Statements for the three months ended December 31, 2012 and 2011 | 7 |
Notes to the Condensed Consolidated Financial Statements
For the three months ended December 31, 2012 and 2011
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)
5. | Capital stock, share-based payments and earnings per share (continued) |
B) SHARE-BASED PAYMENTS
i) Stock options
Under the Company’s stock option plan, the Board of Directors may grant, at its discretion, stock options to purchase Class A subordinate shares to certain employees, officers, directors and consultants of the Company and its subsidiaries. The exercise price is established by the Board of Directors and is equal to the closing price of the Class A subordinate shares on the TSX on the day preceding the date of the grant. Stock options generally vest over four years from the date of grant conditionally upon achievement of objectives and must be exercised within a ten-year period, except in the event of retirement, termination of employment or death.
The following table presents information concerning all outstanding stock options granted by the Company:
Number of stock options | ||||
Outstanding as at September 30, 2012 | 18,617,230 | |||
Granted | 4,814,947 | |||
Exercised | (585,743 | ) | ||
Forfeited | (1,536,756 | ) | ||
|
| |||
Outstanding, as at December 31, 2012 | 21,309,678 | |||
|
|
The fair value of stock options granted in the period and the assumptions used in the calculation of their fair value on the date of grant using the Black-Scholes option pricing model were as follows:
For the three months ended December 31 | ||||||||
2012 | 2011 | |||||||
Weighted average assumptions | ||||||||
Grant date fair value ($) | 4.94 | 5.23 | ||||||
Dividend yield (%) | 0.00 | 0.00 | ||||||
Expected volatility (%)1 | 23.79 | 27.15 | ||||||
Risk-free interest rate (%) | 1.25 | 1.38 | ||||||
Expected life (years) | 4.00 | 5.00 | ||||||
Exercise price ($) | 23.65 | 19.71 | ||||||
Share price ($) | 23.65 | 19.71 |
1 | Expected volatility was determined using statistical formulas and based on the weekly historical average of closing daily share prices over the period of the expected life of stock option. |
CGI Group Inc. – Condensed Consolidated Financial Statements for the three months ended December 31, 2012 and 2011 | 8 |
Notes to the Condensed Consolidated Financial Statements
For the three months ended December 31, 2012 and 2011
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)
5. | Capital stock, share-based payments and earnings per share (continued) |
B) SHARE-BASED PAYMENTS (CONTINUED)
ii) Performance share units
Under the PSU plan, the Board of Directors may grant PSUs to senior executives and other key employees (“participants”) which entitle them to receive one Class A subordinate share for each PSU. The vesting performance conditions are determined by the Board of Directors at the time of each grant. PSUs expire on December 31 of the third calendar year following the end of the fiscal year during which the PSU award is made, except in the event of retirement, termination of employment or death. Granted PSUs vest annually over a period of four years from the date of grant conditionally upon achievement of objectives.
Class A subordinate shares purchased in connection with the PSU plan are held in trust for the benefit of the participants. The trust, considered as a special purpose entity, is consolidated in the Company’s consolidated financial statements with the cost of the purchased shares recorded as a reduction of capital stock (Note 5A)).
The following table presents information concerning the number of outstanding PSUs granted by the Company:
Outstanding as at September 30, 2012 | 863,866 | |||
Granted1 | 336,849 | |||
|
| |||
Outstanding as at December 31, 2012 | 1,200,715 | |||
|
|
1 | The PSUs granted in the period had a grant date fair value of $23.65 per unit. |
C) EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share for the three months ended December 31:
2012 | 2011 | |||||||||||||||||||||||
Net earnings | Weighted average number of shares outstanding1 | Earnings per share | Net earnings | Weighted average number of shares outstanding1 | Earnings per share | |||||||||||||||||||
$ | $ | $ | $ | |||||||||||||||||||||
Basic | 22,445 | 306,637,866 | 0.07 | 106,543 | 259,293,329 | 0.41 | ||||||||||||||||||
Net effect of dilutive stock options and PSUs2 | 8,423,613 | 9,620,176 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
22,445 | 315,061,479 | 0.07 | 106,543 | 268,913,505 | 0.40 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
1 | The 5,000 Class A subordinate shares repurchased and 1,200,715 Class A subordinate shares held in trust during the three months ended December 31, 2012 (3,360,800 and 863,866, respectively, during the three months ended December 31, 2011), were excluded from the calculation of weighted average number of shares outstanding as of the date of transaction. |
2 | The calculation of the diluted earnings per share excluded 4,809,947 stock options for the three months ended December 31, 2012 (2,510,560 for the three months ended December 31, 2011), as they were anti-dilutive. |
CGI Group Inc. – Condensed Consolidated Financial Statements for the three months ended December 31, 2012 and 2011 | 9 |
Notes to the Condensed Consolidated Financial Statements
For the three months ended December 31, 2012 and 2011
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)
6. | Accumulated other comprehensive income (loss) |
As at December 31, 2012 | As at September 30, 2012 | |||||||
$ | $ | |||||||
Net unrealized gains (losses) on translating financial statements of foreign operations (net of accumulated income tax expense of $8,508 as at December 31, 2012 and $330 as at September 30, 2012) | 104,236 | (7,920 | ) | |||||
Net unrealized (losses) gains on derivative financial instruments and on translating long-term debt designated as hedges of net investments in foreign operations (net of accumulated income tax recovery of $7,288 as at December 31, 2012 and net of accumulated income tax expense of $959 as at September 30, 2012) | (46,142 | ) | 6,071 | |||||
Net unrealized losses on cash flow hedges (net of accumulated income tax recovery of $3,363 as at December 31, 2012 and net of income tax recovery of $3,302 as at September 30, 2012) | (6,610 | ) | (6,343 | ) | ||||
Net unrealized actuarial gains (net of income tax recovery of $1,675 as at December 31, 2012 and net of income tax expense of $1,961 as at September 30, 2012) | (5,957 | ) | 4,578 | |||||
Net unrealized gains on investments available for sale (net of accumulated income tax expense of $1,232 as at December 31, 2012 and $1,276 as at September 30, 2012) | 3,217 | 3,339 | ||||||
|
|
|
| |||||
48,744 | (275 | ) | ||||||
|
|
|
|
For the three months ended December 31, 2012, $436,000 of the net unrealized gains previously recognized in other comprehensive income (loss) (net of income taxes recovery of $24,000) were reclassified to net earnings for derivatives designated as cash flow hedges.
CGI Group Inc. – Condensed Consolidated Financial Statements for the three months ended December 31, 2012 and 2011 | 10 |
Notes to the Condensed Consolidated Financial Statements
For the three months ended December 31, 2012 and 2011
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)
7. | Investments in subsidiaries |
a) Preliminary purchase price allocation
The preliminary purchase price allocation shown below relates to the acquisition of Logica on August 20, 2012. No modifications were made to the preliminary purchase price allocation and goodwill has not yet been allocated to the cash-generating units. The final purchase price allocation is expected to be completed as soon as management has gathered all of the significant information available and considered necessary in order to finalize this allocation.
Logica | ||||
$ | ||||
Assets | ||||
Current assets | 1,374,838 | |||
Property, plant and equipment | 250,808 | |||
Contract costs | 71,697 | |||
Intangible assets | 603,683 | |||
Other long-term assets | 87,789 | |||
Deferred tax assets | 197,210 | |||
Goodwill | 3,276,172 | |||
|
| |||
5,862,197 | ||||
|
| |||
Liabilities | ||||
Current liabilities | (1,546,273 | ) | ||
Debt | (808,775 | ) | ||
Deferred tax liabilities | (43,616 | ) | ||
Long-term provisions | (182,880 | ) | ||
Retirement benefits obligations | (113,526 | ) | ||
Other long-term liabilities | (426,864 | ) | ||
|
| |||
(3,121,934 | ) | |||
|
| |||
Bank overdraft assumed, net | (57,883 | ) | ||
|
| |||
Net assets acquired | 2,682,380 | |||
|
| |||
Cash consideration | 2,676,912 | |||
Consideration payable | 5,468 | |||
|
|
CGI Group Inc. – Condensed Consolidated Financial Statements for the three months ended December 31, 2012 and 2011 | 11 |
Notes to the Condensed Consolidated Financial Statements
For the three months ended December 31, 2012 and 2011
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)
8. | Segmented information |
In the prior year, management regularly reviewed the Company’s operating results through five operating segments, namely: U.S., Canada, GIS, Europe & Asia Pacific and Logica. Effective October 1, 2012, as a result of changes to the management reporting structure, the Company is now managed through seven operating segments, namely: United States of America (“U.S.”); Nordics, Southern Europe and South America (“NSESA”); Canada; France (including Luxembourg and Morocco); United Kingdom (“U.K.”); Central and Eastern Europe (including Netherlands, Germany and Belgium) (“CEE”); and Asia Pacific (including Australia, India, Philippines and the Middle East) which are based on its geographic delivery model.
The following presents information on the Company’s operations based on its current management structure effective October 1, 2012. The Company has retrospectively revised the segmented information for the comparative periods to conform to the new segmented information structure.
For the three months ended December 31, 2012 | U.S. | NSESA | Canada | France | U.K. | CEE | Asia Pacific | Total | ||||||||||||||||||||||||
Segment revenue | 577,328 | 533,651 | 427,704 | 321,440 | 292,909 | 262,696 | 117,201 | 2,532,929 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Earnings before acquisition-related and integration costs, finance costs, finance income and income tax expense1 | 60,404 | 17,245 | 83,626 | 13,218 | 9,135 | 15,082 | 10,781 | 209,491 | ||||||||||||||||||||||||
Acquisition-related and integration costs | (153,419 | ) | ||||||||||||||||||||||||||||||
Finance costs | (27,197 | ) | ||||||||||||||||||||||||||||||
Finance income | 1,661 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Earnings before income taxes | 30,536 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 | Amortization and depreciation included in the U.S., NSESA, Canada, France, U.K., CEE and Asia Pacific operating segments is $23,022,000, $24,115,000, $25,733,000, $10,313,000, $18,005,000, $6,092,000 and $6,430,000 respectively, for the three months ended December 31, 2012. |
CGI Group Inc. – Condensed Consolidated Financial Statements for the three months ended December 31, 2012 and 2011 | 12 |
Notes to the Condensed Consolidated Financial Statements
For the three months ended December 31, 2012 and 2011
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)
8. | Segmented information (continued) |
For the three months ended December 31, 2011 | U.S. | NSESA | Canada | France | U.K. | CEE | Asia Pacific | Total | ||||||||||||||||||||||||
Segment revenue | 497,259 | 9,882 | 444,983 | 8,007 | 15,923 | 22,729 | 33,356 | 1,032,139 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Earnings before finance costs, finance income, other income, share of profit on joint venture and income tax expense1 | 46,875 | 428 | 83,584 | 11 | 926 | 1,975 | 6,147 | 139,946 | ||||||||||||||||||||||||
Finance costs | (5,286 | ) | ||||||||||||||||||||||||||||||
Finance income | 457 | |||||||||||||||||||||||||||||||
Other income | 5,646 | |||||||||||||||||||||||||||||||
Share of profit on joint venture | 3,996 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Earnings before income taxes | 144,759 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 | Amortization and depreciation included in the U.S., NSESA, Canada, France, U.K., CEE and Asia Pacific operating segments is $22,963,000, $108,000, $24,358,000, $55,000, $993,000, $222,000 and $1,214,000 respectively, for the three months ended December 31, 2011. |
The accounting policies of each operating segment are the same as those described in the summary of significant accounting policies (Note 3) of the Company’s consolidated financial statements for the year ended September 30, 2012. Intersegment revenue is priced as if the revenue was from third parties.
CGI Group Inc. – Condensed Consolidated Financial Statements for the three months ended December 31, 2012 and 2011 | 13 |