Gino I got this report on the Merrill Linch web site. You may have this report free if you register and download in PDF format. It is a very interesting report find the ***** on this page and you will see that they suggest 0.16$ and .018$ EPS for Q3 and Q4 witch are, in my view, undervalued if you look at the historical figures, and also the NET MARGIN should finish at 6.5% and 7% for Q3 and Q4. For myself I predict .21$ for Q3 and .31$ for Q4 witch would make .82$ for 1999. On that base, CGI shares should be at around 53$ by the end of 1999. Remember that those projections does not take into consideration the rumor that you are talking about.
Au revoir
Jean-Robert
CGI Group – 29 April 1999
4
CGI Group – Income Statement Summary
Year End September 30 FY '97 Dec. '97 Mar. '98 Jun. '98 Sep. '98 FY '98 Dec. '98 Mar. '99 Jun. '99 Sep. '99 FY '99E FY '00E
Canadian GAAP, C$000 Total Q1A Q2A Q3A Q4A Total Q1 Q2 Q3F Q4F Total Total
Total Revenue 231,916 115,796 142,881 157,757 324,529 740,963 334,348 338,790 365,000 410,000 1,448,138 1,790,000
Direct Costs, Selling & Admin. 203,677 99,058 121,965 132,688 279,905 633,616 283,688 283,809 306,600 345,220 1,219,317 1,503,145
Res. & Dev. 3,115 1,154 1,422 1,624 1,780 5,980 2,072 2,296 2,555 2,870 9,793 11,958
EBITDA 25,124 15,584 19,494 23,445 42,844 101,367 48,588 52,685 55,845 61,910 219,028 274,898
Depr. & Amort., Fix. Assets 3,583 3,160 3,130 3,556 7,005 16,851 6,918 6,741 7,150 7,200 28,009 29,225
Amort., LT Out. Contr. 3,985 1,871 3,441 2,974 3,035 11,321 4,078 3,993 4,200 4,250 16,521 17,325
Amort., Dev. Costs 591 319 319 649 818 2,105 469 468 500 500 1,937 2,000
Amort., Goodwill 1,517 1,419 1,672 1,672 3,671 8,434 3,760 3,883 4,450 5,500 17,593 22,200
Total Op. Expenses 216,468 106,981 131,949 143,163 296,214 678,307 300,985 301,190 325,455 365,540 1,293,170 1,585,853
Operating Income - EBIT 15,448 8,815 10,932 14,594 28,315 62,656 33,363 37,600 39,545 44,460 154,968 204,148
Interest on LT Debt 647 174 190 202 250 816 179 291 200 200 870 800
Other Interest Exp. (Gains) 908 66 41 0 (1,987) (1,880) (1,502) (1,977) (1,500) (1,500) (6,479) (6,800)
EBT 13,893 8,575 10,701 14,392 30,052 63,720 34,686 39,286 40,845 45,760 160,577 210,148
Income Tax Exp. (Recovery) 5,685 3,786 4,700 6,735 13,968 29,189 16,468 18,051 18,797 21,017 74,333 98,420
Adjustment (Sign. Influence) (310) 0 0 0 44 44 19 18 0 0 37 0
Minority Interest (133) 161 92 0 0 253 0 0 0 0 0 0
Net Income 7,765 4,950 6,093 7,657 16,128 34,828 18,237 21,253 22,048 24,743 86,281 111,727
*****EPS (Weighted Avg.) $0.10 $0.05 $0.05 $0.07 $0.13 $0.29 $0.14 $0.16 $0.16 $0.18 $0.64 $0.83
Cash Flow / Sh. (Est.) $0.25 $0.14 $0.15 $0.17 $0.24 $0.70 $0.19 $0.27 $0.29 $0.31 $1.06 $1.36
Weighted avg. sh. out. (000) 79.800 106.950 114.192 114.884 128.510 117.307 133.436 134.035 134.200 134.300 134.000 134.500
Common Size and Margins
EBITDA Margin 10.8% 13.5% 13.6% 14.9% 13.2% 13.7% 14.5% 15.6% 15.3% 15.1% 15.1% 15.4%
EBIT Margin 6.7% 7.6% 7.7% 9.3% 8.7% 8.5% 10.0% 11.1% 10.8% 10.8% 10.7% 11.4%
EBT Margin 6.0% 7.4% 7.5% 9.1% 9.3% 8.6% 10.4% 11.6% 11.2% 11.2% 11.1% 11.7%
Tax Rate 40.9% 44.2% 43.9% 46.8% 46.5% 45.8% 47.5% 45.9% 46.0% 45.9% 46.3% 46.8%
*****Net Margin 3.3% 4.3% 4.3% 4.9% 5.0% 4.7% 5.5% 6.3% 6.0% 6.0% 6.0% 6.2%
Growth Rates
Total Revenue Growth 90.1% 174.9% 206.8% 122.8% 348.1% 219.5% 188.7% 137.1% 131.4% 26.3% 95.4% 23.6%
EBITDA Growth 192.1% 337.8% 312.8% 186.2% 395.4% 303.5% 211.8% 170.3% 138.2% 44.5% 116.1% 25.5%
Total Operating Expenses 87.0% 168.6% 205.1% 117.0% 339.4% 213.4% 181.3% 128.3% 127.3% 23.4% 90.6% 22.6%
Operating Income 147.6% 285.8% 230.1% 201.1% 465.8% 305.6% 278.5% 243.9% 171.0% 57.0% 147.3% 31.7%
Net Income 185.7% 379.2% 316.8% 218.1% 463.3% 348.5% 268.4% 248.8% 187.9% 53.4% 147.7% 29.5%
Weighted Average EPS 149.4% 234.1% 174.0% 116.3% 265.7% 196.4% 195.3% 197.2% 146.5% 46.8% 120.6% 29.0%
Cash Flow 8.7% 238.5% 184.7% 91.4% 166.9% 178.2% 40.7% 82.1% 65.2% 31.7% 52.6% 27.8%
Other
Net Cash ($mln) 12.7 9.9 16.1 20.3 121.4 121 118 107
Cash Per Share $0.16 $0.09 $0.14 $0.18 $0.94 $1.03 $0.88 $0.80
A/R ($mln) 78.9 93.8 107.7 125.2 184.6 185 196 217
DSO (based on last q sales) 99.5 73.9 68.8 72.4 51.9 51.9 53.6 58.4
Backlog ($mln) 1,100 1,500 1,500 1,500 6,500 6,500 6,700 7,000
Calendar Earnings per share $0.13 $0.38 $0.70 $0.85
Calendar Revenues 305,594 959,515 1,538,790 1,825,000
Calendar EBITDA 37,148 134,371 235,040 280,678
Calendar Year Ending 1997 1998 1999 2000
Source: CGI. Estimates from Merrill Lynch.
Opinion Key [X-a-b-c]: Investment Risk Rating(X): A - Low, B - Average, C - Above Average, D - High. Appreciation Potential Rating (a: Int. Term - 0-12 mo.; b: Long Term - >1 yr.): 1 - Buy, 2 - Accumulate, 3 - Neutral, 4 -Reduce,
5 - Sell, 6 - No Rating. Income Rating(c): 7 - Same/Higher, 8 - Same/Lower, 9 - No Cash Dividend.
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