EX-99.2

Exhibit 99.2

Interim Condensed Consolidated Financial Statements of

CGI INC.

For the three months ended December 31, 2022 and 2021

(unaudited)

Interim Consolidated Statements of Earnings

For the three months ended December 31

(in thousands of Canadian dollars, except per share data) (unaudited)

Notes

2022

2021

Revenue

3,450,272

3,092,396

Operating expenses

Costs of services, selling and administrative

2,899,608

2,570,607

Acquisition-related and integration costs

19,424

2,617

Net finance costs

18,141

25,578

Foreign exchange (gain) loss

(3,449

)

327

2,933,724

2,599,129

Earnings before income taxes

516,548

493,267

Income tax expense

134,169

125,819

Net earnings

382,379

367,448

Earnings per share

Basic earnings per share

1.62

1.51

Diluted earnings per share

1.60

1.49

See Notes to the Interim Condensed Consolidated Financial Statements.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			1

Interim Consolidated Statements of Comprehensive Income

For the three months ended December 31

(in thousands of Canadian dollars) (unaudited)


	2022			2021
		$			$
Net earnings		382,379			367,448

Items that will be reclassified subsequently to net earnings (net of income taxes):

Net unrealized gains (losses) on translating financial statements of foreign operations		346,881			(94,040	)

Net (losses) gains on cross-currency swaps and on translating long-term debt designated as hedges of net investments in foreign operations		(63,414	)		9,849

Deferred gains (costs) of hedging on cross-currency swaps		5,690			(828	)

Net unrealized (losses) gains on cash flow hedges		(15,614	)		7,233

Net unrealized gains (losses) on financial assets at fair value through other comprehensive income		436			(1,048	)

Items that will not be reclassified subsequently to net earnings (net of income taxes):

Net remeasurement losses on defined benefit plans		(10,309	)		(12,585	)
Other comprehensive income (loss)		263,670			(91,419	)
Comprehensive income		646,049			276,029

See Notes to the Interim Condensed Consolidated Financial Statements.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			2

Interim Consolidated Balance Sheets

(in thousands of Canadian dollars) (unaudited)

Notes

As at

December 31, 2022

As at

September 30, 2022

Assets

Current assets

Cash and cash equivalents

8c and 10

1,324,835

966,458

Accounts receivable

1,559,859

1,363,545

Work in progress

1,067,482

1,191,844

Current financial assets

71,406

33,858

Prepaid expenses and other current assets

182,793

189,366

Income taxes

4,411

5,137

Total current assets before funds held for clients

4,210,786

3,750,208

Funds held for clients

651,916

598,839

Total current assets

4,862,702

4,349,047

Property, plant and equipment

382,998

369,608

Right-of-use assets

527,840

535,121

Contract costs

270,689

261,612

Intangible assets

634,630

615,959

Other long-term assets

140,762

139,666

Long-term financial assets

201,253

337,156

Deferred tax assets

109,635

85,795

Goodwill

8,785,434

8,481,456

15,915,943

15,175,420

Liabilities

Current liabilities

Accounts payable and accrued liabilities

1,047,673

1,016,407

Accrued compensation and employee-related liabilities

1,074,925

1,130,726

Current portion of long-term debt

755,047

93,447

Current portion of lease liabilities

158,536

157,944

Provisions

30,964

33,103

Deferred revenue

547,069

453,579

Income taxes

234,831

153,984

Current derivative financial instruments

6,016

5,710

Total current liabilities before clients’ funds obligations

3,855,061

3,044,900

Clients’ funds obligations

656,922

604,431

Total current liabilities

4,511,983

3,649,331

Long-term debt

2,418,769

3,173,587

Long-term lease liabilities

544,019

551,257

Long-term provisions

17,894

17,482

Other long-term liabilities

226,683

192,108

Long-term derivative financial instruments

8,819

6,480

Deferred tax liabilities

136,807

157,406

Retirement benefits obligations

165,388

155,045

8,030,362

7,902,696

Equity

Retained earnings

5,805,630

5,425,005

Accumulated other comprehensive income

303,416

39,746

Capital stock

1,469,195

1,493,169

Contributed surplus

307,340

314,804

7,885,581

7,272,724

15,915,943

15,175,420

See Notes to the Interim Condensed Consolidated Financial Statements.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			3

Interim Consolidated Statements of Changes in Equity

For the three months ended December 31

(in thousands of Canadian dollars) (unaudited)


	Notes	Retained earnings			Accumulated other comprehensive income			Capital stock			Contributed surplus			Total equity
			$			$			$			$			$

Balance as at September 30, 2022			5,425,005			39,746			1,493,169			314,804			7,272,724

Net earnings			382,379			—			—			—			382,379

Other comprehensive income			—			263,670			—			—			263,670

Comprehensive income			382,379			263,670			—			—			646,049

Share-based payment costs			—			—			—			16,259			16,259

Income tax impact associated with stock options			—			—			—			5,841			5,841

Exercise of stock options	5a		—			—			37,416			(6,310	)		31,106

Exercise of performance share units	5a		(3,030	)		—			12,962			(23,254	)		(13,322	)

Unrealized commitment to purchase Class A subordinate voting shares			1,276			—			103			—			1,379

Purchase of Class A subordinate voting shares held in trusts	5a		—			—			(74,455	)		—			(74,455	)
Balance as at December 31, 2022			5,805,630			303,416			1,469,195			307,340			7,885,581

	Notes	Retained earnings			Accumulated other comprehensive income			Capital stock			Contributed surplus			Total equity
			$			$			$			$			$

Balance as at September 30, 2021			4,732,229			331,580			1,632,705			289,718			6,986,232

Net earnings			367,448			—			—			—			367,448

Other comprehensive loss			—			(91,419	)		—			—			(91,419	)

Comprehensive income (loss)			367,448			(91,419	)		—			—			276,029

Share-based payment costs			—			—			—			15,041			15,041

Income tax impact associated with stock options			—			—			—			1,579			1,579

Exercise of stock options	5a		—			—			13,450			(2,279	)		11,171

Exercise of performance share units	5a		—			—			14,285			(14,285	)		—

Purchase for cancellation of Class A subordinate voting shares	5a		(232,254	)		—			(18,259	)		—			(250,513	)

Purchase of Class A subordinate voting shares held in trusts	5a		—			—			(70,303	)		—			(70,303	)

Balance as at December 31, 2021			4,867,423			240,161			1,571,878			289,774			6,969,236

See Notes to the Interim Condensed Consolidated Financial Statements.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			4

Interim Consolidated Statements of Cash Flows

For the three months ended December 31

(in thousands of Canadian dollars) (unaudited)


	Notes		2022			2021
				$			$
Operating activities

Net earnings				382,379			367,448

Adjustments for:

Amortization, depreciation and impairment				124,260			118,255

Deferred income tax recovery				(22,204	)		(7,271	)

Foreign exchange gain				(1,481	)		(1,440	)

Share-based payment costs				16,259			15,041

Gain on leases termination				(2,362	)		—

Net change in non-cash working capital items		8a		108,423			(7,708	)

Cash provided by operating activities				605,274			484,325

Investing activities

Net change in short-term investments				(96	)		—

Business acquisitions (considering bank overdraft assumed and cash acquired)				(3,998	)		(121,672	)

Loan receivable				(21,469	)		—

Purchase of property, plant and equipment				(41,271	)		(42,593	)

Additions to contract costs				(20,692	)		(16,222	)

Additions to intangible assets				(31,345	)		(25,493	)

Purchase of long-term investments				(87,025	)		(6,331	)

Proceeds from sale of long-term investments				14,924			6,506

Cash used in investing activities				(190,972	)		(205,805	)

Financing activities

Increase of long-term debt				948			—

Repayment of long-term debt				(2,878	)		(326,788	)

Payment of lease liabilities				(35,618	)		(36,570	)

Repayment of debt assumed from business acquisitions				(56,994	)		(84,558	)

Withholding taxes remitted on the net settlement of performance share units		5a		(13,322	)		—

Purchase of Class A subordinate voting shares held in trusts		5a		(74,455	)		(70,303	)

Purchase and cancellation of Class A subordinate voting shares		5a		(10,291	)		(266,915	)

Issuance of Class A subordinate voting shares		5a		31,106			11,159

Net change in client funds obligations				52,379			46,058

Cash used in financing activities				(109,125	)		(727,917	)

Effect of foreign exchange rate changes on cash, cash equivalents and cash included in funds held for clients				33,486			(19,057	)

Net increase (decrease) in cash, cash equivalents and cash included in funds held for clients				338,663			(468,454	)

Cash, cash equivalents and cash included in funds held for clients, beginning of year				1,471,184			2,155,731

Cash, cash equivalents and cash included in funds held for clients, end of year				1,809,847			1,687,277

Cash composition:

Cash and cash equivalents				1,324,835			1,184,641

Cash included in funds held for clients				485,012			502,636

See Notes to the Interim Condensed Consolidated Financial Statements.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			5

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2022 and 2021

(tabular amounts only are in thousands of Canadian dollars, except per share data) (unaudited)

1.	Description of business

CGI Inc. (the Company), directly or through its subsidiaries, provides managed information technology (IT) and business process services, business and strategic IT consulting and systems integration services, as well as the sale of software solutions to help clients effectively realize their strategies and create added value. 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 Class A subordinate voting 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 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, 2022 which were consistently applied to all periods presented, except for the new accounting standard amendments adopted on October 1, 2022, as described below in Note 3, Accounting policies.

These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended September 30, 2022.

The Company’s interim condensed consolidated financial statements for the three months ended December 31, 2022 and 2021 were authorized for issue by the Board of Directors on January 31, 2023.

3.	Accounting policies

ADOPTION OF ACCOUNTING STANDARD

The following standard amendments have been adopted by the Company on October 1, 2022:

Onerous contracts – Cost of Fulfilling a Contract - Amendments to IAS 37

In May, 2020, the IASB amended IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The standard amendments clarify that for assessing whether a contract is onerous, the cost of fulfilling the contract includes both the incremental cost of fulfilling that contract and an allocation of other costs that relates directly to fulfilling the contract.

The implementation of these standard amendments resulted in no significant impact on the Company’s interim condensed consolidated financial statements.

FUTURE ACCOUNTING STANDARD CHANGES

The following standard amendments have been issued and will be effective on October 1, 2023 for the Company, with earlier application permitted. The Company is currently evaluating the impact of these standard amendments on its consolidated financial statements.

Classification of Liabilities as Current or Non-current – Amendments to IAS 1

In January, 2020, the IASB amended IAS 1 Presentation of Financial Statements. The standard amendments clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period and which only impacts the presentation of liabilities in the balance sheet. The classification is unaffected by expectations about whether the Company will exercise its right to defer settlement of a liability.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			6

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2022 and 2021

(tabular amounts only are in thousands of Canadian dollars, except per share data) (unaudited)

3.	Accounting policies (continued)

FUTURE ACCOUNTING STANDARD CHANGES (CONTINUED)

Disclosure of Accounting Policy Information – Amendments to IAS 1 and IFRS Practice Statement 2

In February, 2021, the IASB amended IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements to require the Company to disclose its material accounting policy information rather than its significant accounting policies.

Definition of Accounting Estimates – Amendments to IAS 8

In February, 2021, the IASB amended IAS 8 Accounting Policies, Changes in Accounting estimates and Errors to introduce a definition of accounting estimates and to help entities distinguish changes in accounting policies from changes in accounting estimates. This distinction is important because changes in accounting policies must be applied retrospectively while changes in accounting estimates are accounted for prospectively.

Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12

In May, 2021, the IASB amended IAS 12 Income Taxes, to narrow the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences.

The following standard amendments have been issued and will be effective as of October 1, 2024 for the Company, with earlier application permitted. The Company is currently evaluating the impact of these standard amendments on its consolidated financial statements.

Information about long-term debt with covenants – Amendments to IAS 1

In October, 2022, the IASB issued standard amendments to IAS 1 Presentation of Financial Statements that aim to improve the information companies provide about long-term debt with covenants. These standard amendments to IAS 1 specify that covenants to be complied with after the reporting date do not affect the classification of debt as current or non-current at the reporting date. Instead, these standard amendments require a company to disclose information about these covenants in the notes to the financial statements.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			7

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2022 and 2021

(tabular amounts only are in thousands of Canadian dollars, except per share data) (unaudited)

4.	Accumulated other comprehensive income


	As at December 31, 2022			As at September 30, 2022
		$			$

Items that will be reclassified subsequently to net earnings:

Net unrealized gains on translating financial statements of foreign operations, net of accumulated income tax expense of $44,524 ($45,419 as at September 30, 2022)		638,413			291,532

Net losses on cross-currency swaps and on translating long-term debt designated as hedges of net investments in foreign operations, net of accumulated income tax recovery of $53,622 ($43,936 as at September 30, 2022)		(335,104	)		(271,690	)

Deferred gains of hedging on cross-currency swaps, net of accumulated income tax expense of $4,868 ($4,664 as at September 30, 2022)		33,964			28,274

Net unrealized gains on cash flow hedges, net of accumulated income tax expense of $5,179 ($10,398 as at September 30, 2022)		14,660			30,274

Net unrealized losses on financial assets at fair value through other comprehensive income, net of accumulated income tax recovery of $1,248 ($1,367 as at September 30, 2022)		(3,636	)		(4,072	)

Items that will not be reclassified subsequently to net earnings:

Net remeasurement losses on defined benefit plans, net of accumulated income tax recovery of $15,753 ($12,095 as at September 30, 2022)		(44,881	)		(34,572	)

		303,416			39,746

For the three months ended December 31, 2022, $3,510,000 of the net unrealized gains on cash flow hedges, net of income tax expense of $1,197,000, previously recognized in other comprehensive income, were reclassified in the consolidated statements of earnings ($360,000 and $249,000, respectively, were reclassified for the three months ended December 31, 2021).

For the three months ended December 31, 2022, $3,196,000 of the deferred gains of hedging on cross-currency swaps, net of income tax expense of $488,000, were also reclassified in the consolidated statements of earnings ($2,647,000 and $955,000, respectively, were reclassified for the three months ended December 31, 2021).


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			8

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2022 and 2021

(tabular amounts only are in thousands of Canadian dollars, except per share data) (unaudited)

5.	Capital stock, share-based payments and earnings per share

a)	Capital stock


Class A subordinate voting shares							Class B multiple voting shares				Total

	Number			Carrying value			Number		Carrying value		Number			Carrying value
				$					$					$

As at September 30, 2022		211,302,549			1,456,275			26,445,706		36,894		237,748,255			1,493,169

Release of shares held in trusts¹		—			12,962			—		—		—			12,962

Purchased and held in trusts¹		—			(74,455	)		—		—		—			(74,455	)

Issued upon exercise of stock options²		698,709			37,416			—		—		698,709			37,416

Purchased and cancelled³		(100,100	)		103			—		—		(100,100	)		103
As at December 31, 2022		211,901,158			1,432,301			26,445,706		36,894		238,346,864			1,469,195

¹	During the three months ended December 31, 2022, 163,266 shares held in trust were released (212,611 during the three months ended December 31, 2021) with a recorded value of $12,962,000, ($14,285,000 during the three months ended December 31, 2021) that was removed from contributed surplus.

During the three months ended December 31, 2022, the Company settled the withholding tax obligations of the employees under the performance share unit (PSU) plans for a cash payment of $13,322,000 (nil during the three months ended December 31, 2021).

During the three months ended December 31, 2022, the trustees, in accordance with the terms of the PSU plans and Trust Agreements, purchased 640,052 Class A subordinate voting shares of the Company on the open market (643,629 during the three months ended December 31, 2021) for a cash consideration of $74,455,000 ($70,303,000 during the three months ended December 31, 2021).

As at December 31, 2022, 2,318,495 Class A subordinate voting shares were held in trusts under the PSU plans (1,862,969 as at December 31, 2021 and 1,841,709 as at September 30, 2022).

The carrying value of Class A subordinate voting shares includes $6,310,000 which corresponds to a reduction in contributed surplus representing the value of accumulated compensation costs associated with the stock options exercised during the three months ended December 31, 2022 ($2,279,000 during the three months ended December 31 2021).

On January 31, 2023, the Company’s Board of Directors authorized, subject to regulatory approval from the Toronto Stock Exchange (TSX), the renewal of the Normal Course Issuer Bid (NCIB) for the purchase for cancellation of up to 18,769,394 Class A subordinate voting shares on the open market through the TSX, the New York Stock Exchange (NYSE) and/or alternative trading systems or otherwise pursuant to exemption orders issued by securities regulators. The Class A subordinate voting shares are available for purchase for cancellation commencing on February 6, 2023 until no later than February 5, 2024, or on such earlier date when the Company has either acquired the maximum number of Class A subordinate voting shares allowable under the NCIB or elects to terminate the bid.

During the three months ended December 31, 2022, the Company paid for and cancelled 100,100 Class A subordinate voting shares under the current NCIB, with a carrying value of $778,000 and for a total consideration of $10,291,000, which were purchased, or committed to be purchased, but not cancelled as at September 30, 2022. During the three months ended December 31, 2021, the Company purchased 2,310,766 Class A subordinate voting shares under the previous NCIB for a cash consideration of $250,513,000 and the excess of the purchase price over the carrying value in the amount of $232,254,000 was charged to retained earnings.

b)	Share-based payments

i)	Performance share units (PSUs)

During the three months ended December 31, 2022, 897,037 PSUs were granted, 280,910 were exercised and 109,851 were forfeited. The PSUs granted in the period had a grant date fair value of $112.43 per unit.

ii)

Stock options

During the three months ended December 31, 2022, 698,709 stock options were exercised (Note 5a) and 6,841 were forfeited.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			9

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2022 and 2021

(tabular amounts only are in thousands of Canadian dollars, except per share data) (unaudited)

5.	Capital stock, share-based payments and earnings per share (continued)

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:


	2022						2021
	Net earnings		Weighted average number of shares outstanding¹		Earnings per share		Net earnings		Weighted average number of shares outstanding¹		Earnings per share

		$				$		$				$

Basic		382,379		236,126,560		1.62		367,448		242,953,751		1.51

Net effect of dilutive stock options and PSUs²				3,310,204						3,857,311

Diluted		382,379		239,436,764		1.60		367,448		246,811,062		1.49

During the three months ended December 31, 2022, 100,100 Class A subordinate voting shares paid for and cancelled, and 2,318,495 Class A subordinate voting shares held in trusts, were excluded from the calculation of the weighted average number of shares outstanding as of the date of the transaction (2,460,766 and 1,864,539, respectively during the three months ended December 31, 2021).

²	The calculation of the diluted earnings per share excluded 13,260 stock options, for the three months ended December 31, 2022 (324,089, during the three months ended December 31 2021), as they were anti-dilutive.

6. Net finance costs



	Three months ended December 31

	2022			2021

		$			$

Interest on long-term debt		14,005			16,867

Interest on lease liabilities		7,161			7,257

Net interest costs on net defined benefit obligations or assets		1,091			799

Other finance costs		1,049			1,254

Finance costs		23,306			26,177

Finance income		(5,165	)		(599	)

		18,141			25,578


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			10

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2022 and 2021

(tabular amounts only are in thousands of Canadian dollars, except per share data) (unaudited)

7.	Investments in subsidiaries

a)	Acquisitions and disposals

There were no significant acquisitions or disposals for the three months ended December 31, 2022.

b)	Acquisition-related and integration costs

During the three months ended December 31, 2022, the Company expensed $19,424,000, for acquisition-related and integration costs. This amount includes acquisition-related costs of nil and integration costs of $19,424,000. The integration costs mainly include terminations of employment of $7,289,000, accounted for in restructuring provisions, as well as fees associated to the mandatory repayment of long-term debt of $3,825,000 assumed in a business acquisition, costs of vacating lease premises of $1,337,000 and other integration costs of $6,973,000.

During the three months ended December 31, 2021, the Company expensed $2,617,000, for acquisition-related and integration costs. This amount included acquisition-related costs of $140,000 and integration costs of $2,477,000. The acquisition-related costs consisted mainly of professional fees incurred for the acquisitions. The integration costs included terminations of employment of $998,000, accounted for in restructuring provisions, and other integration costs of $1,479,000.

8.	Supplementary cash flow information

a) Net change in non-cash working capital items is as follows for the three months ended December 31:


	2022		2021

		$		$

Accounts receivable		(151,462)		(120,513)

Work in progress		161,589		89,834

Prepaid expenses and other assets		8,472		10,309

Long-term financial assets		(2,012)		(6,050)

Accounts payable and accrued liabilities		10,135		60,682

Accrued compensation and employee-related liabilities		(98,146)		(78,229)

Deferred revenue		94,481		31,610

Income taxes		82,800		56,970

Provisions		(4,519)		(19,311)

Long-term liabilities		9,413		(31,858)

Derivative financial instruments		(159)		(292)

Retirement benefits obligations		(2,169)		(860)

		108,423		(7,708)

b) Net interest paid and income taxes paid are classified within operating activities and are as follows for the three months ended December 31:


	2022		2021

		$		$

Net interest paid		7,153		15,633

Income taxes paid		68,481		43,693

c) Cash and cash equivalents consisted of unrestricted cash as at December 31, 2022 and September 30, 2022.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			11

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2022 and 2021

(tabular amounts only are in thousands of Canadian dollars, except per share data) (unaudited)

9.	Segmented information

Since April 1, 2022, the Company is managed through the following nine operating segments, namely: Western and Southern Europe (primarily France, Spain and Portugal); United States (U.S.) Commercial and State Government; Canada; U.S. Federal; Scandinavia and Central Europe (Germany, Sweden and Norway); United Kingdom (U.K.) and Australia; Finland, Poland and Baltics; Northwest and Central-East Europe (primarily Netherlands, Denmark and Czech Republic); and Asia Pacific Global Delivery Centers of Excellence (mainly India and Philippines) (Asia Pacific).

The operating segments reflect the management structure and the way that the chief operating decision-maker, who is the President and Chief Executive Officer of the Company, evaluates the business. The following tables present information on the Company’s operations based on its management structure. The Company has restated the segmented information for the comparative period to conform to the new segmented information structure.

For the three months ended December 31, 2022

Western
and
Southern
Europe

U.S.
Commercial
and State
Government

Canada

U.S.
Federal

Scandinavia
and Central
Europe

U.K. and
Australia

Finland,
Poland
and
Baltics

Northwest
and
Central-
East
Europe

Asia
Pacific

Eliminations

Total

Segment revenue

628,128

566,013

506,373

464,029

398,203

329,947

203,258

178,101

221,423

(45,203

)

3,450,272

Segment earnings before acquisition-related and integration costs, net finance costs and income tax expense¹

77,404

82,282

119,002

73,145

31,107

45,100

29,218

25,866

70,989

—

554,113

Acquisition-related and integration costs (Note 7b)

(19,424

)

Net finance costs

(18,141

)

Earnings before income taxes

516,548

Total amortization and depreciation of $124,053,000 included in the Western and Southern Europe, U.S. Commercial and State Government, Canada, U.S. Federal, Scandinavia and Central Europe, U.K. and Australia, Finland, Poland and Baltics, Northwest and Central-East Europe and Asia Pacific segments is $20,561,000, $19,353,000, $13,815,000, $15,956,000, $21,542,000, $9,077,000, $8,973,000, $7,540,000 and $7,236,000, respectively, for the three months ended December 31, 2022.


							For the three months ended December 31, 2021
	Western and Southern Europe		U.S. Commercial and State Government		Canada		U.S. Federal		Scandinavia and Central Europe		U.K. and Australia		Finland, Poland and Baltics		Northwest and Central- East Europe		Asia Pacific		Eliminations			Total

		$		$		$		$		$		$		$		$		$		$			$

Segment revenue		503,478		483,434		465,515		416,575		404,932		298,462		192,276		182,099		183,965		(38,340	)		3,092,396

Segment earnings before acquisition-related and integration costs, net finance costs and income tax expense¹		78,437		71,683		119,270		58,859		33,910		47,166		24,976		28,102		59,059		—			521,462

Acquisition-related and integration costs (Note 7b)																							(2,617	)

Net finance costs																							(25,578	)

Earnings before income taxes																							493,267

Total amortization and depreciation of $118,047,000 included in the Western and Southern Europe, U.S. Commercial and State Government, Canada, U.S. Federal, Scandinavia and Central Europe, U.K. and Australia, Finland, Poland and Baltics, Northwest and Central-East Europe and Asia Pacific segments is $14,061,000, $17,273,000, $15,540,000, $13,852,000, $24,011,000, $9,661,000, $8,405,000, $8,564,000 and $6,680,000, respectively, for the three months ended December 31, 2021.

The accounting policies of each operating segment are the same as those described in Note 3, Summary of significant accounting policies, of the Company’s consolidated financial statements for the year ended September 30, 2022. Intersegment revenue is priced as if the revenue was from third parties.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			12

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2022 and 2021

(tabular amounts only are in thousands of Canadian dollars, except per share data) (unaudited)

9.	Segmented information (continued)

GEOGRAPHIC INFORMATION

The following table provides external revenue information based on the client’s location which is different from the revenue presented under operating segments, due to the intersegment revenue, for the three months ended December 31:


	2022		2021
		$		$
Western and Southern Europe

France		549,942		431,823
Spain		28,047		26,895
Portugal		27,179		26,084

Others		12,241		10,867
		617,409		495,669

U.S.¹		1,068,308		935,296

Canada		550,618		502,692

Scandinavia and Central Europe

Germany		207,687		198,371
Sweden		177,977		191,361

Norway		35,179		36,036
		420,843		425,768

U.K. and Australia

U.K.		369,944		327,306

Australia		21,396		16,154
		391,340		343,460

Finland, Poland and Baltics

Finland		201,810		191,735

Others		9,174		8,705
		210,984		200,440

Northwest and Central-East Europe

Netherlands		133,272		126,832
Denmark		24,755		31,103
Czech Republic		15,976		13,533

Others		15,874		16,610
		189,877		188,078

Asia Pacific

Others		893		993

		893		993

		3,450,272		3,092,396

¹	External revenue included in the U.S. Commercial and State Government and U.S. Federal operating segments was $602,072,000 and $466,236,000 respectively, for the three months ended December 31, 2022 ($515,714,000 and $419,582,000, respectively, for the three months ended December 31, 2021).


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			13

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2022 and 2021

(tabular amounts only are in thousands of Canadian dollars, except per share data) (unaudited)

9.	Segmented information (continued)

INFORMATION ABOUT SERVICES

The following table provides revenue information based on services provided by the Company for the three months ended December 31:


	2022		2021
		$		$

Managed IT and business process services		1,842,203		1,711,958

Business and strategic IT consulting and systems integration services		1,608,069		1,380,438

		3,450,272		3,092,396

MAJOR CLIENT INFORMATION

Contracts with the U.S. federal government and its various agencies, included within the U.S. Federal operating segment, accounted for $460,495,000 and 13.3% of revenues for the three months ended December 31, 2022 ($402,541,000 and 13.0% for the three months ended December 31, 2021).

10.

Financial instruments

FAIR VALUE

All financial instruments are initially measured at their fair value and are subsequently classified either at amortized cost, at fair value through earnings or at fair value through other comprehensive income.

The Company has made the following classifications:

Amortized cost

Trade accounts receivable, long-term receivables within long-term financial assets, accounts payable and accrued liabilities, accrued compensation and employee-related liabilities, long-term debt and clients’ funds obligations.

Fair value through earnings (FVTE)

Cash, cash equivalents, cash included in funds held for clients, derivative financial instruments and deferred compensation plan assets within long-term financial assets.

Fair value through other comprehensive income (FVOCI)

Short-term investments included in current financial assets, long-term bonds included in funds held for clients and long-term investments within long-term financial assets.

FAIR VALUE HIERARCHY

Fair value measurements recognized in the consolidated balance sheet are classified in accordance with the following levels:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included in Level 1, but that are observable for the asset or liability, either directly or indirectly; and

Level 3: inputs for the asset or liability that are not based on observable market data.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			14

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2022 and 2021

(tabular amounts only are in thousands of Canadian dollars, except per share data) (unaudited)

10.

Financial instruments (continued)

FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Valuation techniques used to value financial instruments are as follows:

The fair value of the U.S. unsecured notes (2014 U.S. Senior Notes), the 5 and 10 year Senior U.S. unsecured notes (2021 U.S. Senior Notes), the 7 year Senior unsecured notes (2021 CAD Senior Notes), the unsecured committed revolving credit facility, the unsecured committed term loan credit facility and the other long-term debt is estimated by discounting expected cash flows at rates currently offered to the Company for debts of the same remaining maturities and conditions;

The fair value of long-term bonds included in funds held for clients and in long-term investments is determined by discounting the future cash flows using observable inputs, such as interest rate yield curves or credit spreads, or according to similar transactions on an arm’s-length basis;

The fair value of foreign currency forward contracts is determined using forward exchange rates at the end of the reporting period;

The fair value of cross-currency swaps and interest rate swaps is determined based on market data (primarily yield curves, exchange rates and interest rates) to calculate the present value of all estimated cash flows;

The fair value of cash, cash equivalents, cash included in funds held for clients and short-term investments included in current financial assets is determined using observable quotes; and

The fair value of deferred compensation plan assets within long-term financial assets is based on observable price quotations and net assets values at the reporting date.

There were no changes in valuation techniques during the three months ended December 31, 2022.

The following table presents the financial liabilities included in the long-term debt measured at amortized cost categorized using the fair value hierarchy:

As at December 31, 2022

As at September 30, 2022

Level

Carrying amount

Fair value

Carrying amount

Fair value

2014 U.S. Senior Notes

Level 2

541,523

533,633

550,177

539,752

2021 U.S. Senior Notes

Level 2

1,340,777

1,157,310

1,361,974

1,127,739

2021 CAD Senior Notes

Level 2

596,074

507,983

595,900

503,227

Other long-term debt

Level 2

18,718

17,995

71,278

68,991

2,497,092

2,216,921

2,579,329

2,239,709

For the remaining financial assets and liabilities measured at amortized cost, the carrying values approximate the fair values of the financial instruments given their short term maturity.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			15

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2022 and 2021

(tabular amounts only are in thousands of Canadian dollars, except per share data) (unaudited)

10.

Financial instruments (continued)

FAIR VALUE MEASUREMENTS (CONTINUED)

The following table presents financial assets and liabilities measured at fair value categorized using the fair value hierarchy:

Level

As at December 31, 2022

As at September 30, 2022

Financial assets

FVTE

Cash and cash equivalents

Level 2

1,324,835

966,458

Cash included in funds held for clients

Level 2

485,012

504,726

Deferred compensation plan assets

Level 1

80,072

71,863

1,889,919

1,543,047

Derivative financial instruments designated as hedging instruments

Current derivative financial instruments included in current financial assets

Level 2

Cross-currency swaps

55,549

8,740

Foreign currency forward contracts

9,556

18,934

Long-term derivative financial instruments

Level 2

Cross-currency swaps

70,025

222,246

Foreign currency forward contracts

5,928

15,631

141,058

265,551

FVOCI

Short-term investments included in current financial assets

Level 2

6,301

6,184

Long-term bonds included in funds held for clients

Level 2

166,904

94,113

Long-term investments

Level 2

16,686

16,826

189,891

117,123

Financial liabilities

Derivative financial instruments designated as hedging instruments

Current derivative financial instruments

Level 2

Cross-currency swaps

1,619

—

Foreign currency forward contracts

4,397

5,710

Long-term derivative financial instruments

Level 2

Cross-currency swaps

2,288

1,685

Foreign currency forward contracts

6,531

4,795

14,835

12,190

There were no transfers between Level 1 and Level 2 during the three months ended December 31, 2022.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2022 and 2021			16