6K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2004

Commission File Number 1-14858

CGI Group Inc.
(Translation of Registrant’s Name Into English)

1130 Sherbrooke Street West
5th Floor
Montréal, Québec
Canada H3A 2M8
(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F    Form 40-F |X|

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes     No |X|

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-___.

Enclosure: Press Release dated November 9, 2004, including financial statements for the period ending September 30, 2004.

This Form 6-K shall be deemed incorporated by reference in the Registrant's Registration Statement on Form S-8, Reg. Nos. 333-13350, 333-66044, 333-74932 and 333-112021.



FOR IMMEDIATE RELEASE

CGI Achieves Solid Growth in Fiscal 2004
Revenue for the year up 20.8% and net earnings up 23.8%
Fourth quarter revenue and earnings growth strong

Montreal, November 9, 2004 – CGI Group Inc. (NYSE: GIB; TSX: GIB.A), a leading provider of end-to-end information technology and business processing services, today reported audited results for the year ended September 30, 2004. All figures are in Canadian dollars unless otherwise indicated.

Fiscal Year 2004 Highlights
o   Revenue of $3,243.6 million was 20.8% higher than in fiscal 2003.
o   Net earnings from continuing operations increased 20.7% to $210.8 million compared with fiscal 2003.
o   Net earnings increased 23.8% to $219.6 million, compared with the prior year.
o   Basic and diluted earnings per share from continuing operations amounted to $0.50 for fiscal 2004, compared with basic and diluted earnings per share from continuing operations of $0.44 reported for fiscal 2003.
o   Basic and diluted earnings per share were $0.52 in fiscal 2004, compared with basic and diluted earnings per share of $0.45 one year ago.
o   The foreign exchange rate had a negative impact of $60.1 million on revenue.
o   The net earnings margin from continuing operations was 6.5%, the same as one year ago, and the net earnings margin was 6.8%, up from 6.6% in 2003.
o   Cash provided by operating activities was $394.1 million excluding a one-time tax payment and costs related to acquisition transactions.
o   The backlog of signed contracts at September 30, 2004 was $13.0 billion with a weighted average remaining contract term of 7.2 years.
o   The current pipeline of bids for large outsourcing contracts being reviewed by potential clients increased to $7 billion, from $5 billion previously.
o   At year end, CGI was well within plan to achieve a 15-20% accretion rate on an annualized basis for the integration of AMS

Fourth Quarter Highlights
o   Revenue increased 39.9% year-over-year to $959.2 million and was up 10.6% sequentially.
o   Net earnings from continuing operations increased 22.1% to $58.5 million from a year ago and 12.6% from the third quarter.
o   Basic and diluted earnings per share from continuing operations were $0.13, compared with $0.12 a year ago and in the third quarter.
o   Cash provided by operating activities was $100.7 million excluding one-time items.
o   New contract wins, extensions and renewals totaled $707.5 million.
o   Organic growth was 3.4%, compared with the previous quarter.

In millions of CDN$ except margin and per share amounts 12 months ended
September 30
Q4-04 Q4-03 2004 2003

Revenue $959.2  $685.7  $3,243.6  $2,684.8 
Net earnings from continuing operations $58.5  $47.9  $210.8  $174.7 
Net earnings $58.5  $48.5  $219.6  $177.4 
Net earnings from continuing operations margin 6.1% 7.0% 6.5% 6.5%

Net earnings margin 6.1% 7.1% 6.8% 6.6%

Basic and diluted earnings per share from continuing operations $0.13  $0.12  $0.50  $0.44 

Basic and diluted earnings per share $0.13  $0.12  $0.52  $0.45 

Cash provided by operating activities -3.6*  101.2  $229.8  $227.9 

Order backlog --  --  $13,000  $12,300 
* The amount would have been $100.7 million in the fourth quarter and $394.1 million in fiscal 2004 if not for one time tax payments to the US tax authorities following the sale of AMS' Defense and Intelligence Group and the payment of integration costs related to acquisitions.

"We are pleased with the solid performance we delivered in fiscal 2004," said Serge Godin, Chairman and CEO. "Our continued double digit growth and good profit margins result from the disciplined execution of our business plan. During 2004, we made our largest US acquisition yet, doubling our footprint in the US and Europe; won large outsourcing contracts in each of our three main markets - Canada, the US and Europe; and further demonstrated our core competency in the integration of acquisitions and outsourcing contracts.

"The increase in our sales funnel, which we observed over the past few quarters, is now materializing into solid contracts, as evidenced by the 3.4% sequential organic growth we achieved. We see growing demand for our services in all our markets. We will continue to apply our four pillars of growth strategy with discipline, as this approach has proven that it delivers results," Mr. Godin added.

Fiscal 2004 results
Fiscal 2004 revenue increased 20.8% to $3,243.6 million, from $2,684.8 million in 2003. The currency exchange rate, mainly between the Canadian and US dollars, had a negative impact of $60.1 million or 2.2% on revenue. External growth was 21.0% compared with last year, reflecting the acquisition of AMS effective May 3, 2004. On a constant dollar basis, organic growth was 2.0%, resulting from new and expanded outsourcing contracts, and business solutions sales.

Earnings before interest, income taxes, entity subject to significant influence and discontinued operations ("EBIT") for the year were $335.4 million, up 12.9% from last year's EBIT of $297.1 million. The EBIT margin was 10.3%, down from 11.1% a year ago as a result of the lower profitability of AMS during the transition period.

Net earnings from continuing operations totaled $210.8 million, up 20.7% from last year's comparable net earnings of $174.7 million. Basic and diluted earnings per share from continuing operations were $0.50, compared with $0.44 in the previous year. Including gains from the sale of certain assets, net earnings for the year were $219.6 million, amounting to basic and diluted earnings per share of $0.52. The tax rate, which was 35.0% compared with 39.4% a year ago, resulted from a more balanced distribution of our earnings across our major geographic markets and a reduction in the Canadian federal and provincial statutory tax rate. The tax rate is expected to be 35% in 2005, including the expensing of stock options to begin in the first quarter of 2005.



In fiscal 2004, CGI made one large acquisition, American Management Systems (AMS), as well as two niche acquisitions, Apex Consulting Group Inc. ("Apex") on October 28, 2003 and GDS & Associates Systems Ltd, on January 14, 2004. CGI booked $3.0 billion in contract wins, renewals and extensions. During the year, CGI and its affiliated companies integrated more than 5,000 new members and now employ 25,000 people around the world.

Fourth Quarter Results (See also: Q4 MD&A filed with Sedar & Edgar and available at www.cgi.com)
Revenue for the fourth quarter ended September 30, 2004 increased 39.9% to $959.2 million, from $685.7 million in the same quarter last year, and was up 10.6% sequentially over third quarter revenue of $867.1 million. The increase reflects the acquisition of AMS and new business. External growth was 36.2% compared with last year, and 8.8% compared with the third quarter. Organic growth was 5.8% compared with a year ago, and 3.4% sequentially. Compared with the fourth quarter of last year, the currency exchange rate, mainly between the Canadian and US dollars, had a negative impact of approximately $14.7 million on revenue in the quarter.

In the fourth quarter, revenue from long-term outsourcing contracts represented 52% of the Company's total revenue, including 12% from business processing services, while project oriented SI&C work represented 48%. Geographically, revenue from clients in Canada represented 55% of total revenue; the US represented 36%, and all other regions, 9%. Revenue from clients in the financial services sector represented 35% of revenue; government and healthcare represented 28%; telecommunications and utilities, 23%; retail and distribution, 9%; and manufacturing, 5%.

EBIT was $89.5 million in the fourth quarter, up 10.6% over last year's fourth quarter EBIT of $80.9 million, and up 5.9% over third quarter EBIT of $84.5 million. The EBIT margin was 9.3%, compared with 11.8% in last year's fourth quarter and 9.7% in the third quarter. The reduction in the EBIT margin in the fourth quarter reflects the lower margin of AMS during the integration period and lower business solutions sales.

Net earnings from continuing operations in the fourth quarter increased 22.1% to $58.5 million, compared with net earnings from continuing operations of $47.9 million in the same period of 2003, and increased 12.6% from comparable net earnings of $51.9 million in the third quarter. The net earnings margin from continuing operations was 6.1% in the fourth quarter, below the 7.0% margin of last year but above the 6.0% margin in the third quarter. The net margin increased sequentially despite a $3.6 million impact due to seasonal factors, largely reflecting the cost synergies derived to date from the integration of AMS.

Net earnings also reflect a reduction in the tax rate, mainly resulting from a more balanced distribution of our earnings across our major geographic markets and a year-over-year reduction in the Canadian federal and provincial statutory tax rates.

Basic and diluted earnings per share from continuing operations were $0.13 in the fourth quarter, compared with basic and diluted earnings per share from continuing operations of $0.12 in last year's fourth quarter and in the fiscal 2004 third quarter.

Cash provided by operating activities amounted to negative $3.6 million, but would have totaled $100.7 million had it not been for one time tax payments made to the US tax authorities following the sale of AMS' Defense and Intelligence Group, as part of the AMS transaction, and the payment of integration costs related to the AMS acquisition. In the same quarter last year, cash provided by operating activities was $106.3 million.



CGI maintains a strong balance sheet. At September 30, 2004, cash and cash equivalents were $200.6 million and the total credit facility available amounted to $313.2 million.

During the fourth quarter, CGI signed $707.5 million of new contract wins, extensions and renewals. The backlog, adjusted to include the net increase in signed contracts, was $13.0 billion at September 30, 2004.

Fourth Quarter Operating Highlights
During and subsequent to the fourth quarter, CGI made a number of contract announcements, including:
o   In Canada, confirmed, on September 15, the signing of a $108-million, seven-year information technology outsourcing contract with ForestersTM, a financial services organization. As part of this contract, CGI will manage the data center, help desk, desktop, network, voice and data services serving over 1,600 employees in 60 offices North America-wide.
o   Announced the signing of a six-year, $125 million contract with Manulife Financial to create a new information technology development centre in Halifax. The centre of expertise will provide systems development, maintenance and integration services to Manulife and other CGI clients worldwide.
o   On October 4, or after the end of the quarter, CGI announced the signing of a five-year contract renewal with Co-operators General, part of The Co-operators group of financial services companies. This contract is valued at $85 million.
o   In the US, on September 29, announced the award, by the Tampa Housing Authority, of a business process services contract to serve the U.S. Department of Housing and Urban Development (HUD) in the State of Florida. The estimated value of the award to CGI is US$30 million over five years.

Guidance
Based on current market conditions and the opportunities we see in our markets, we provide the following guidance for fiscal 2005. We expect to achieve growth in revenue of 20% to 28% and growth in net earnings of 25% to 35%, after giving retroactive effect to the expensing of stock options. This will represent revenue between $3.90 billion and $4.15 billion and earnings per share between $0.52 and $0.56, after the expensing of stock options. Beginning in the first quarter of fiscal 2005, in accordance with Canadian generally accepted accounting principles (GAAP), CGI will begin expensing stock options. For comparison purposes with US peers, and since they are not yet required to expense stock options under US GAAP, CGI discloses the expected effect of stock options expensing on its earnings per share, which is expected to be $0.05 in fiscal 2005.

Mr. Godin added, "We are confident about CGI's outlook, as we see excellent growth opportunities within our markets. With the integration of AMS essentially behind us, we are able to leverage our increased critical mass and expanded client relationships in the US and Europe into new business. We also continue to see robust potential in our metro markets in Canada. We have increased our pipeline of bids for large outsourcing contracts to $7 billion, and will continue to closely monitor all operations to ensure that they are consistent with targeted profitability levels, so that we remain one of the industry's top performing companies."

Quarterly Conference Call
A conference call for the investment community will be held today, November 9, at 9:00 am (Eastern Time). Participants may access the call by dialing (800) 387-6216 or through the Internet at www.cgi.com. Supporting slides for the call will also be available at www.cgi.com. For those



unable to participate on the live call, a webcast and copy of the slides will be archived at www.cgi.com.

About CGI
Founded in 1976, CGI is among the largest independent information technology and business process services firms in North America. CGI and its affiliated companies employ approximately 25,000 professionals. CGI provides end-to-end IT and business process services to clients worldwide from offices in Canada, the United States, Europe, Asia Pacific as well as from centers of excellence in India and Canada. CGI's annualized revenue run rate is currently CDN$3.8 billion (US$2.9 billion) and at September 30, 2004, CGI's order backlog was CDN$13.0 billion (US$10.3 billion). CGI's shares are listed on the TSX (GIB.A) and the NYSE (GIB) and are included in the S&P/TSX Composite Index as well as the S&P/TSX Capped Information Technology and MidCap Indices. Website: www.cgi.com.

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 that term in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. 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, foreign exchange and other risks identified in the Management's Discussion and Analysis (MD&A) in CGI Group Inc.'s Annual Report or Form 40-F filed with the SEC, the Company's Annual Information Form filed with the Canadian securities authorities, as well as assumptions regarding the foregoing. The words "believe", "estimate", "expect", "intend", "anticipate", "foresee", "plan", and similar expressions and variations thereof, identify certain of such forward-looking statements, which speak only as of the date on which they are made. In particular, statements relating to future growth are forward-looking statements. CGI disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.

-30-

For more information:

CGI
Investor Relations
Jane Watson, Vice-President, Investor Relations
(416) 945-3616 or (514) 841-3238
Ronald White, Director, Investor Relations
(514) 841-3230

Media Relations
Eileen Murphy, Director, Media Relations
(514) 841-3430



Consolidated Financial Statements of
CGI Group Inc.
For the three and twelve months ended September 30, 2004













1


Consolidated Financial Statements of CGI Group Inc.
For the three and twelve months ended September 30, 2004

Consolidated Statements of Earnings
(in thousands of Canadian dollars, except share amounts) (unaudited)

Three months ended September 30 Twelve months ended September 30

  2004  2003  2004  2003 

Revenue
959,212 

685,716 

3,243,612 

2,684,816 

Operating expenses
     Costs of services, selling and administrative 807,312  564,109  2,717,040  2,244,511 
     Research 7,315  6,093  26,710  22,036 
     Amortization (Note 6) 55,059  34,593  164,451  121,133 

  869,686  604,795  2,908,201  2,387,680 

Earnings before the following items: 89,526  80,921  335,411  297,136 

Interest
     Long-term debt 7,378  4,186  20,675  12,578 
     Other (2,578) (1,221) (8,728) (3,094)

  4,800  2,965  11,947  9,484 

Earnings before income taxes, entity subject to significant influence
     and discontinued operations 84,726  77,956  323,464  287,652 
Income taxes 26,265  30,356  113,142  113,269 

Earnings before entity subject to significant influence and discontinued operations 58,461  47,600  210,322  174,383 
Entity subject to significant influence 12  295  488  295 

Net earnings from continuing operations 58,473  47,895  210,810  174,678 
Net earnings from discontinued operations (Note 7) --  574  8,790  2,688 

Net earnings 58,473  48,469  219,600  177,366 

Weighted-average number of outstanding Class A subordinate and Class B shares 444,459,163  401,924,255  419,510,503  395,191,927 

Basic and diluted earnings per share from continuing operations 0.13  0.12  0.50  0.44 

Basic and diluted earnings per share from discontinued operations --  --  0.02  0.01 

Basic and diluted earnings per share (Note 4) 0.13  0.12  0.52  0.45 

Consolidated Statements of Retained Earnings
(in thousands of Canadian dollars) (unaudited)

Three months ended September 30 Twelve months ended September 30

  2004  2003  2004  2003 

Retained earnings, beginning of period
710,948 

506,841 

555,310 

377,944 
Net earnings 58,473  48,469  219,600  177,366 
Share issue costs, net of income taxes (Note 4) --  --  (5,489) -- 

Retained earnings, end of period 769,421  555,310  769,421  555,310 

2


Consolidated Financial Statements of CGI Group Inc.
For the three and twelve months ended September 30, 2004

Consolidated Balance Sheets
(in thousands of Canadian dollars)

As at September 30, 2004 
(unaudited)
Restated
As at September 30, 2003
 

Assets    
Current assets    
     Cash and cash equivalents 200,623  83,509 
     Accounts receivable 545,056  439,535 
     Work in progress 222,278  122,737 
     Prepaid expenses and other current assets 94,617  78,183 
     Future income taxes 80,814  35,767 
     Assets of businesses held for sale --  41,014 

  1,143,388  800,745 
Fixed assets 142,761  144,941 
Contract costs 278,240  256,320 
Definite-life intangibles and other long-term assets (Note 3) 625,121  392,069 
Future income taxes 102,720  22,764 
Goodwill 1,827,604  1,385,518 

Total assets before funds held for clients 4,119,834  3,002,357 
Funds held for clients (Note 2) 196,622  134,326 

  4,316,456  3,136,683 

Liabilities
Current liabilities
     Accounts payable and accrued liabilities 433,415  289,556 
     Accrued compensation 118,541  110,398 
     Deferred revenue 123,213  70,300 
     Income taxes 31,369  19,165 
     Future income taxes 68,603  47,003 
     Current portion of long-term debt 14,529  20,555 
     Liabilities of businesses held for sale --  16,316 

  789,670  573,293 
Future income taxes 287,433  140,571 
Long-term debt 475,291  247,431 
Accrued integration charges and other long-term liabilities 104,771  60,852 

Total liabilities before clients' funds obligations 1,657,165  1,022,147 
Clients' funds obligations (Note 2) 196,622  134,326 

  1,853,787  1,156,473 

Shareholders' equity
     Capital stock (Note 4) 1,820,230  1,480,631 
     Contributed surplus (Note 4) 6,693  5,870 
     Warrants and stock options (Note 4) 24,984  27,901 
     Retained earnings 769,421  555,310 
     Foreign currency translation adjustment (158,659) (89,502)

  2,462,669  1,980,210 

  4,316,456  3,136,683 

5


Consolidated Financial Statements of CGI Group Inc.
For the three and twelve months ended September 30, 2004

Consolidated Statements of Cash Flows
(in thousands of Canadian dollars) (unaudited)

Three months ended September 30 Restated
Twelve months ended September 30

  2004  2003  2004  2003 

Operating activities        
     Net earnings from continuing operations 58,473  47,895  210,810  174,678 
     Adjustments for:
        Amortization expense (Note 6) 63,506  41,377  194,185  148,922 
        Deferred credits (1,547) (3,966) (16,439) (30,174)
        Future income taxes 34,545  25,373  52,963  47,962 
        Foreign exchange (gain) loss (1,170) 1,475  (789) 1,914 
        Entity subject to significant influence (12) (295) (488) (295)
     Net change in non-cash working capital items (157,418) (10,685) (210,423) (115,068)

Cash (used for) provided by continuing operating activities (3,623) 101,174  229,819  227,939 


Investing activities
     Business acquisitions (net of cash acquired) (Note 5) (7,783) (3,972) (589,678) (233,512)
     Proceeds from sales of assets and businesses (net of cash
         disposed) (Note 5 and 7)
23,743  --  87,503  -- 
     Purchase of fixed assets (13,712) (11,757) (54,616) (60,833)
     Contract costs (7,120) (5,968) (76,260) (29,211)
     Increase in definite-life intangibles and other long-term assets (21,906) (62,934) (83,085) (144,510)
     Decrease in definite-life intangibles and other long-term assets 3,107  10,321  17,595  10,321 

Cash used for continuing investing activities (23,671) (74,310) (698,541) (457,745)


Financing activities
     Net variation in credit facility 4,511  (88,591) 21,534  219,000 
     (Decrease) increase in other long-term debt (6,045) 13,450  231,123  (19,812)
     Issuance of shares (net of share issue costs) 431  526  330,996  6,451 

Cash (used for) provided by continuing financing activities (1,103) (74,615) 583,653  205,639 

Effect of rate changes on cash and cash equivalents from continuing operations (1,576) 1,900  186  917 

Net (decrease) increase in cash and cash equivalents from continuing operations (29,973) (45,851) 115,117  (23,250)
Net cash and cash equivalents provided by discontinued operations --  3,118  1,997  2,538 
Cash and cash equivalents, beginning of period 230,596  126,242  83,509  104,221 

Cash and cash equivalents, end of period 200,623  83,509  200,623  83,509 


Interest paid 7,778  3,105  21,477  9,293 
Income taxes paid 87,574  9,124  143,405  66,526 
Issuance of Class A subordinate shares for business acquisitions (Note 5) --  --  1,020  140,546 


4


Notes to the Consolidated Financial Statements
For the three and twelve months ended September 30, 2004
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)

Note 1 — Summary of significant accounting policies

Interim Consolidated Financial Statements

The interim consolidated financial statements for the three and twelve months ended September 30, 2004 and 2003 are unaudited and include all adjustments that management of CGI Group Inc. (the “Company”) considers necessary for a fair presentation of the financial position, results of operations and cash flows.

The disclosure provided for these interim periods do not conform in all respects to the requirements of generally accepted accounting principles for the annual consolidated financial statements; therefore, the interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements of the Company for the year ended September 30, 2003. These interim consolidated financial statements have been prepared using the same accounting policies and methods of their application as the annual consolidated financial statements for the year ended September 30, 2003, except for the accounting changes referred to below.

Certain comparative figures have been reclassified in order to conform to the current period presentation.

Recent accounting changes

The Canadian Institute of Chartered Accountants (“CICA”) issued Accounting Guideline 13, Hedging Relationships, which deals with the identification, documentation, designation and effectiveness of hedges and also the discontinuance of hedge accounting, but does not specify hedge accounting methods. This guidance is applicable to hedging relationships in effect in fiscal years beginning on or after July 1, 2003. The adoption of this new guideline had no impact on the Company’s Consolidated Financial Statements disclosure.

The CICA issued Handbook Section 3063, Impairment of Long-lived Assets, which is effective for fiscal years beginning on or after April 1, 2003. This section provides guidance on recognition, measurement and disclosure related to impairment of long-lived assets. It replaces the write-down provisions in Section 3061, Property, Plant and Equipment . The adoption of this section did not have a significant impact on the financial statements.

Future accounting changes

The CICA issued Handbook Section 3110, Asset Retirement Obligations. The new standard focuses on the recognition and measurement of liabilities for obligations associated with the retirement of property, plant and equipment when those obligations result from the acquisition, construction, development or normal operation of the assets. The standard is effective for fiscal years beginning on or after January 1, 2004. The adoption of this section will not have a significant impact on the financial statements.

The CICA re-issued Handbook Section 3870, Stock-based Compensation and other Stock-based Payments. The revised standard requires the adoption of a fair value based method for all stock-based awards effective for fiscal years beginning on or after January 1, 2004. The Company will adopt this new standard for its fiscal year beginning October 1, 2004.

Note 2 —Preparation of Consolidated Financial Statements

Accrued integration charges

During the twelve months ended September 30, 2004, the Company revised the calculation of the defined benefit pension plan covering Underwriters Adjustment Bureau Ltd. (“UAB”) employees which it acquired on January 1, 2003. The initial actuarial valuation made as of the acquisition date and as of September 30, 2003 understated the pension plan liability. The effect of the restatement is reflected on the September 30, 2003 balance sheet as follows: increase in accounts payable and accrued liabilities, in future income taxes assets and in goodwill of $4,500,000, $1,530,000 and $2,970,000 respectively.

In connection with recent business acquisitions, the Company recognized liabilities for costs incurred on business combinations accounted for using the purchase method. Such costs include mainly provisions related to leases for premises occupied by the acquired businesses, which the Company plans to vacate, as well as costs related to the planned termination of certain employees. Effective in 2004, the long-term portion of such liabilities is presented on the Balance Sheet under the caption “Accrued integration charges and other long-term liabilities”. The current portion remains under the caption “Accounts payable and accrued liabilities”.

Funds held for clients and clients’ funds obligations

In connection with the Company’s payroll and tax filing services, the Company collects funds for payment of payroll and taxes, temporarily holds such funds until payment is due; remits the funds to the clients’ employees and appropriate tax authorities; files federal and local tax returns; and handles related regulatory correspondence and amendments. Effective April 1, 2004, the Company presented separately the payroll funds held for clients and related obligations. The Company considers that such a presentation is more appropriate and better reflects the total assets on which returns are earned. Prior year’s amounts were restated to conform to the current year’s presentation.

5


Notes to the Consolidated Financial Statements
For the three and twelve months ended September 30, 2004
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)

Note 3 —Definite-life intangibles and other long-term assets


2004  2003 

  Cost  Accumulated 
amortization 
Net book 
value 
Cost  Accumulated 
amortization 
Net book 
value 

Internal software 72,515  25,549  46,966  72,800  19,642  53,158 
Business solutions 226,412  48,286  178,126  130,897  33,360  97,537 
Software licenses 142,578  61,878  80,700  116,887  55,378  61,509 
Customer relationships and other 346,107  60,763  285,344  181,551  31,971  149,580 

Definite-life intangibles 787,612  196,476  591,136  502,135  140,351  361,784 

Financing lease 13,121  25,413 
Investment in an entity subject to significant influence 16,415  4,872 
Other 4,449  -- 

Other long-term assets 33,985  30,285 

Total definite-life intangibles and other long-term assets 625,121  392,069 

Note 4 — Capital stock, stock options and warrants

Stock options — Under a stock option compensation 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. The exercise price is established by the Board of Directors and is equal to the closing Class A subordinate share price on the TSX preceding the date of the grant. Options generally vest one to three years from the date of grant and must be exercised within a ten-year period, except in the event of retirement, termination of employment or death.

The following outlines the impact and assumptions used had the Company determined compensation cost resulting from the Company’s stock option plan using the fair value based method of accounting for awards granted since October 1, 2001:

  Three months ended September 30 Twelve months ended September 30

    2004 2003 2004 2003

  Continuing
operations
Including
discontinued
operations
Continuing
operations
Including
discontinued
operations
Continuing
operations
Including
discontinued
operations
Continuing
operations
Including
discontinued
operations

Net earnings 58,473  58,473  47,895  48,469  210,810  219,600  174,678  177,366 
Fair value of stock-based
    compensation
(5,564) (5,564) (2,490) (2,490) (25,559) (25,559) (8,168) (8,168)

Pro forma net earnings 52,909  52,909  45,405  45,979  185,251  194,041  166,510  169,198 
Pro forma basic and diluted
    earnings per share
0.12 0.12 0.11 0.11 0.44  0.46  0.42  0.43 

Assumptions used in the Black-
    Scholes option pricing model:
  Dividend yield 0.0% 0.0% 0.0% 0.0%
  Expected volatility 46.1% 49.1% 47.4% 52.7%
  Risk-free interest rate 4.04% 3.76% 3.93% 4.21%
  Expected life (years) 5 5 5 5
  Weighted-average grant date
    fair value ($)
  4.04 3.74 3.68 3.16

6


Notes to the Consolidated Financial Statements
For the three and twelve months ended September 30, 2004
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)

Note 4 — Capital stock, stock options and warrants (continued)

The following table presents the number of all shares, stock options and warrants outstanding as at:

  September 30, 2004  September 30, 2003 

Class A subordinate shares 410,720,891  368,236,503 
Class B shares 33,772,168  33,772,168 

Total capital stock 444,493,059  402,008,671 
Number of stock options (Class A subordinate shares) - Accounted for 1,083,208  1,675,913 
Number of stock options (Class A subordinate shares) - Not accounted for 24,454,092  18,783,602 
Number of warrants (Class A subordinate shares) - Accounted for 5,118,210  5,118,210 
Number of warrants (Class A subordinate and Class B shares) - Not accounted for 4,562,058  4,562,058 

Number of shares reflecting the potential exercise of stock options and warrants 479,710,627  432,148,454 

The Class A subordinate and the Class B shares changed as follows:

Twelve months ended September 30, 2004 Twelve months ended September 30, 2003

Class A subordinate shares Class B shares Class A subordinate shares Class B shares

Number Carrying value Number Carrying value Number Carrying value Number Carrying value

$ $   $ $

Balance, beginning of period 368,236,503  1,435,763  33,772,168  44,868  339,900,257  1,278,416  40,799,774  54,205 
Issued as consideration for
    business acquisitions (Note 5)
136,112  1,020  --  --  19,963,399  140,546  --  -- 
Issued for cash (1) 41,340,625  330,725  --  --  --  --  --  -- 
Conversion (2) --  --  --  --  7,027,606  9,337  (7,027,606) (9,337)
Options exercised 1,007,651  7,854  --  --  1,345,241  7,464  --  -- 

Balance, end of period 410,720,891  1,775,362  33,772,168  44,868  368,236,503  1,435,763  33,772,168  44,868 

(1)   On May 3rd, 2004, the Company issued 41,340,625 Class A subordinate shares to the public and to BCE for cash proceeds of $330,725,000 before share issue costs of $5,489,000 (net of income tax recoveries of $2,466,000).

(2)   As part of the agreement of July 24, 2003 entered into between the majority shareholders and BCE, 7,027,606 Class B shares were converted into an equivalent number of Class A subordinate shares.

The following table presents information concerning stock options and warrants accounted for:

Twelve months ended September 30, 2004 Twelve months ended September 30, 2003

Stock options Warrants Stock options Warrants

  Number Carrying
value
Number Carrying
value
Number Carrying
value
Number Carrying
value

$ $   $ $

Balance, beginning of period 1,675,913  8,246  5,118,210  19,655  2,333,231  11,477  5,118,210  19,655 
Exercised (425,352) (2,094) --  --  (206,208) (1,013) --  -- 
Forfeited and expired (1) (167,353) (823) --  --  (451,110) (2,218) --  -- 

Balance, end of period 1,083,208  5,329  5,118,210  19,655  1,675,913  8,246  5,118,210  19,655 

(1)   During the twelve months ended September 30, 2004, the Company cancelled options for an amount of $823,000 ($2,218,000 for the twelve months ended September 30, 2003), which have been reclassified to contributed surplus.

The following table presents information concerning all outstanding stock options granted to certain employees and directors by the Company:

Number of options Twelve months ended September 30, 2004 Twelve months ended September 30, 2003

Outstanding, beginning of period 20,459,515  20,814,820 
Granted 7,577,166  4,600,502 
Exercised (1,007,651) (1,345,241)
Forfeited and expired (1,491,730) (3,610,566)

Outstanding, end of period 25,537,300  20,459,515 

7


Notes to the Consolidated Financial Statements
For the three and twelve months ended September 30, 2004
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)

Note 4 — Capital stock, stock options and warrants (continued)

Earnings per share
The following table sets forth the computation of basic and diluted earnings per share:

Three months ended September 30 Three months ended September 30

2004 2003

Net earnings
(numerator)
Number of shares
(denominator)
Earnings
per share
Net earnings
(numerator)
Number of shares
(denominator)
Earnings
per share

Net earnings 58,473  444,459,163  0.13 48,469  401,924,255  0.12

Dilutive options (1)   2,212,887      1,667,161 
Dilutive warrants (1)   1,777,099      1,265,150 

Net earnings after assumed conversions 58,473  448,449,149  0.13 48,469  404,856,566  0.12

 
Twelve months ended September 30 Twelve months ended September 30

2004 2003

Net earnings
(numerator)
Number of shares
(denominator)
Earnings
per share
Net earnings
(numerator)
Number of shares
(denominator)
Earnings
per share

Net earnings 219,600  419,510,503  0.52 177,366  395,191,927  0.45

Dilutive options (1)   1,994,835      1,508,995 
Dilutive warrants (1)   1,595,014      764,755 

Net earnings after assumed conversions 219,600  423,100,352  0.52 177,366  397,465,677  0.45

(1)   The calculation of the dilutive effects excludes all anti-dilutive options and warrants that would not be exercised because their exercise price is higher than the average market value of a Class A subordinate share of the Company for each of the periods shown in the table. The number of excluded options was 11,998,940 and 13,194,520 for the three months and twelve months ended September 30, 2004, respectively, and 14,201,690 and 14,388,314 for the three months and twelve months ended September 30, 2003, respectively. The number of excluded warrants was 2,113,041 for the three months and for the twelve months ended September 30, 2004 and 2003.

8


Notes to the Consolidated Financial Statements
For the three and twelve months ended September 30, 2004
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)

Note 5 —Investments in subsidiaries and joint ventures

For all business acquisitions, the Company began recording the results of operations of the acquired entities as of their respective effective acquisition dates.

During the twelve months ended September 30, 2004, the Company made the following major acquisition:

  American Management Systems, Incorporated (“AMS”) — On May 3, 2004, the Company acquired all outstanding shares of AMS, a business services and information technology consulting firm to the government, healthcare, financial services, and communications industries.

The acquisitions were accounted for using the purchase method. The purchase price allocation shown below is preliminary and based on Company’s best estimates. The final purchase price allocations are expected to be completed as soon as Company’s management has gathered all the significant information believed to be available and considered necessary in order to finalize this allocation.

  AMS  Other  Total 
 

Non-cash working capital items (200,439) (936) (201,375)
Fixed assets 13,475  459  13,934 
Definite-life intangibles and other long-term assets 280,540  3,452  283,992 
Future income taxes 13,659  12  13,671 
Goodwill (1) 549,519  6,940  556,459 
Long-term debt --  (70) (70)
Accrued integration charges and other long-term liabilities (72,760) --  (72,760)

  583,994  9,857  593,851 
Cash position at acquisition 616,237  224  616,461 

Net assets acquired 1,200,231  10,081  1,210,312 

Consideration
Cash 1,179,156  8,449  1,187,605 
Acquisition costs 21,075  612  21,687 
Issuance of 136,112 Class A subordinate shares (2) --  1,020  1,020 

  1,200,231  10,081  1,210,312 

(1)   The near totality of the goodwill is included in the Information Technology (“IT”) services segment and $35,749,000 is deductible for tax purposes.

(2)   The value of the shares issued as consideration for the business acquisition was determined using the average closing share price on the TSX over a reasonable period before and after the date the terms of the business combination were agreed to and announced.

During the three-month period ended September 30, 2004, the Company revised the amount of the purchase price of AMS and its other acquisitions, resulting in a net decrease of non-cash working capital items, contract costs, definite-life intangibles and other long-term assets and cash position at acquisition of $20,149,000, $2,074,000, $55,421,000 and $1,170,000 respectively, and a net increase of fixed assets, future income tax assets, accrued integration charges and other long-term liabilities and cash consideration of $6,300,000, $57,098,000, $13,461,000 and $6,661,000, respectively, whereas goodwill increased by $35,538,000.

During the twelve-month period ended September 30, 2004, the Company modified the purchase price allocations and made adjustments relating to certain businesses purchased within the last twelve months, resulting in a net decrease of goodwill of $11,326,000 and a net increase of non-cash working capital items, future income tax and cash of $8,058,000, $115,000 and $3,153,000, respectively .

During the twelve-month period ended September 30, 2004, the Company sold the assets related to the information services of the banking and investment group, one of the divisions presented in the discontinued operations, for cash consideraton of $47,000,000, which resulted in a gain on sale of $11,217,000 after tax and a goodwill reduction of $20,355,000.

During the twelve-month period ended September 30, 2004, the Company sold three other divisions which were classified as discontinued operations for a total consideration of $40,350,000, which was comprised of $17,560,000 of cash, a balance of sale of $6,000,000, an interest-bearing note of $2,750,000, an assumption of liabilities of $540,000 and $13,500,000 of shares of Nexxlink Technologies Inc. These transactions resulted in a loss of approximately $1,400,000.

Also, during the twelve-month period ended September 30, 2004, the Company sold its interest in a joint venture and non significant assets for cash consideration of $4,260,000, net of $4,235,000 of cash disposed. These transactions resulted in a nominal gain.

In connection with the acquisition of AMS and Cognicase, completed during the third quarter of 2004 and the second quarter of 2003, respectively, the Company adopted certain plans to restructure and integrate the acquired businesses. Consequently, the Company established provisions related to leases for premises occupied by the acquired businesses, which the Company plans to vacate, as well as costs related to the planned termination of certain employees of the acquired businesses performing functions already available through its existing structure.

9


Notes to the Consolidated Financial Statements
For the three and twelve months ended September 30, 2004
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)

Note 5 —Investments in subsidiaries and joint ventures (continued)

The components of the integration charges included in the allocation of purchase price changed as follows during the twelve months ended September 30, 2004:


  Consolidation and 
closure of facilities 
Severance  Total 
 

Balance, beginning of period 41,029  9,580  50,609 
Adjustments to initial provision 678  (5,963) (5,285)
New integration charges 43,102  96,360  139,462 
Foreign currency translation adjustment (3,028) (6,817) (9,845)
Paid during the twelve-month period (12,804) (72,910) (85,714)

Balance, end of period 68,977  20,250  89,227 

Note 6 — Amortization expense

Three months ended September 30  Three months ended September 30 

2004  2003  2004  2003 

 
Amortization of fixed assets 12,695  13,049  48,214  43,940 
Amortization of contract costs related to transition costs 4,660  2,031  9,633  4,219 
Amortization of definite-life intangibles and other long-term assets 33,670  19,513  102,570  72,974 
Impairment of contract costs 4,034  --  4,034  -- 

  55,059  34,593  164,451  121,133 
Amortization of contract costs related to incentives (presented
   as a reduction of revenue)
8,447  6,784  29,734  27,789 

  63,506  41,377  194,185  148,922 

Note 7 — Discontinued operations and assets held for sale

The Company formally adopted a plan to divest from certain activities acquired from previous acquisitions which were not related to its core business. During the twelve months ended September 30, 2004, four divisions, two buildings and land were classified as assets held for sale.

One of the divisions’ activities consist mainly of sales of integrated management system software package suites (Enterprise Resource Planning or ERP) and related services targeted to municipalities, healthcare bodies as well as manufacturing and distribution companies. The second division’s activities consist mainly of providing installation and technical services for mid-range and micro computer systems and automated teller machines. The third division’s activities consist mainly of supplying high-quality PC-based power engineering software applications and the last division’s activities consist mainly of providing information services to banking and investment groups.

During the twelve-month period ended September 30, 2004, the Company disposed of these divisions classified as discontinued operations. For further information see Note 5. Also, on July 1, 2004, the Company sold the above-mentioned assets classified as discontinued operations for $18,683,000, resulting in a nominal loss.

The following table presents summarized financial information related to discontinued operations:

Three months ended September 30  Three months ended September 30 

2004  2003  2004  2003 

 
Revenue 24,323  37,291  84,345 

Earnings before the under-noted: 2,473  19,349  8,743 
Amortization expense 1,585  1,848  4,555 

Earnings before income taxes 888  17,501  4,188 
Income taxes 314  8,711  1,500 

Net earnings from discontinued operations 574  8,790  2,688 

Discontinued operations are included in the IT services segment.

10


Notes to the Consolidated Financial Statements
For the three and twelve months ended September 30, 2004
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)

Note 8 — Segmented information

The Company has two lines of business (“LOB”) as follows: IT services and Business Process Services (“BPS”).

The focus of these lines of business is as follows:

  The IT services LOB provides a full-range of IT services, including systems integration, consulting and outsourcing, to clients worldwide. The professionals and facilities located in India and Canada also serve the United States and foreign-based clients as an integral part of their off-shore and near-shore delivery model.

  The BPS LOB provides a full spectrum of business process outsourcing services to its client base. Its services include end-to-end business processing for insurance companies, human resource and pay services, services to banking, investment and financial cooperative clients, document management services, as well as finance and administration business process services.

The following presents information on the Company’s operations based on its management structure:

As at and for the three months ended September 30, 2004 IT services  BPS  Corporate  Total 

Revenue 832,682  126,530  --  959,212 
Operating expenses before amortization expense 695,272  100,235  19,120  814,627 
Amortization expense 48,946  4,112  2,001  55,059 

Earnings before interest, income taxes, entity subject to significant
   influence and discontinued operations
88,464  22,183  (21,121) 89,526 

Total assets 3,304,859  687,680  323,917  4,316,456 

 
As at and for the three months ended September 30, 2003

Revenue 555,126  130,590  --  685,716 
Operating expenses before amortization expense 443,421  107,688  19,093  570,202 
Amortization expense 28,604  5,180  809  34,593 

Earnings before interest, income taxes, entity subject to significant
   influence and discontinued operations
83,101  17,722  (19,902) 80,921 

Total assets (Restated) 2,263,013  665,564  208,106  3,136,683 

 
As at and for the twelve months ended September 30, 2004 IT services BPS  Corporate  Total 

Revenue 2,733,371  510,241  --  3,243,612 
Operating expenses before amortization expense 2,252,320  419,619  71,811  2,743,750 
Amortization expense 140,447  16,514  7,490  164,451 

Earnings before interest, income taxes, entity subject to significant
   influence and discontinued operations
340,604  74,108  (79,301) 335,411 

Total assets 3,304,859  687,680  323,917  4,316,456 

 
As at and for the twelve months ended September 30, 2003

Revenue 2,182,568  502,248  --  2,684,816 
Operating expenses before amortization expense 1,787,168  415,088  64,291  2,266,547 
Amortization expense 101,580  15,802  3,751  121,133 

Earnings before interest, income taxes, entity subject to significant
influence and discontinued operations 293,820  71,358  (68,042) 297,136 

Total assets (Restated) 2,263,013  665,564  208,106  3,136,683 

The accounting policies of each segment are the same as those described in the summary of significant accounting policies. See Note 2 of the annual Consolidated Financial Statements of the Company for the year ended September 30, 2003.

The figures are presented net of intersegment sales and transfers, which are priced as if the sales or transfers were to third parties.

11


Notes to the Consolidated Financial Statements
For the three and twelve months ended September 30, 2004
(tabular amounts only are in thousands of Canadian dollars, except share data) (unaudited)

Note 9 — Guarantees

In the normal course of business, the Company enters into agreements that may provide for indemnification and guarantees to counterparties in transactions such as consulting and outsourcing services, business divestitures, lease agreements and financial obligations. These indemnification undertakings and guarantees may require us to compensate counterparties for costs and losses incurred as a result of various events, including breaches of representations and warranties, intellectual property right infringement, claims that may arise while providing services or as a result of litigation that may be suffered by counterparties. The nature of most indemnification and guarantees undertakings prevent the Company from making a reasonable estimate of the maximum potential amount the Company could be required to pay counterparties, as the agreements do not specify a maximum amount and the amounts are dependent upon the outcome of future contingent events the nature and likelihood of which cannot be determined at this time. The Company does not expect that any sum it may have to pay in connection with these indemnification and guarantees will have a materially adverse effect on its consolidated financial statements.

Furthermore, the Company has, in the past, guaranteed certain financial liabilities which relate to debt obligations of its senior management team who purchased the Company’s shares as part of their total compensation plan. This program has since been modified and no new guarantees have been issued. The maximum potential amount of future payments, which the Company could be required to make under these guarantees, is $5,825,000 as of September 30, 2004 ($6,028,000 as of September 30, 2003).

12


SIGNATURES

       Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


  CGI GROUP INC.
    (Registrant)



Date:    November 9, 2004
By /s/ Paule Doré
       Name:   Paule Doré
       Title:     Executive Vice-President
                     and Chief Corporate Officer
                     and Secretary