Celestica announces first quarter financial results

    
    (All amounts in U.S. dollars.
    Per share information based on diluted
    shares outstanding unless noted otherwise).

                         First Quarter 2010 Summary
                         --------------------------

    -   Revenue of $1.52 billion, compared to $1.47 billion for the same
        period last year
    -   GAAP net earnings of $25.9 million, or $0.11 per share, compared to
        GAAP net earnings of $19.2 million, or $0.08 per share, last year
    -   Non-GAAP adjusted net earnings of $0.19 per share, compared to $0.15
        per share for the same period last year
    -   Non-GAAP return on invested capital of 23.3%, compared to 18.8%
        last year
    -   Non-GAAP adjusted operating margin of 3.4%, compared to 3.2%
        last year
    -   Non-GAAP adjusted gross margin of 7.2%, compared to 7.8% last year
    -   Inventory turns of 8.1x, compared to 7.3x turns last year
    -   Cash flow from operations of $11.5 million, non-GAAP free cash flow
        of $9.2 million
    -   Second quarter of 2010 revenue guidance of $1.5 billion - $1.6
        billion, non-GAAP adjusted net earnings per share of $0.19 - $0.23.
    

TORONTO, April 22 /CNW/ - Celestica Inc. (NYSE, TSX: CLS), a global leader in the delivery of end-to-end product lifecycle solutions, today announced financial results for the first quarter ended March 31, 2010.

    
    First Quarter Results
    ---------------------
    

Revenue for the quarter was $1,518 million, compared to $1,469 million in the first quarter of 2009, reflecting primarily new wins from existing customers and an improving economic environment, partially offset by program declines. GAAP net earnings were $25.9 million, or $0.11 per share, compared to GAAP net earnings of $19.2 million, or $0.08 per share, for the same period last year.

Adjusted net earnings for the quarter were $43.1 million, or $0.19 per share, compared to adjusted net earnings of $33.6 million, or $0.15 per share, for the same period last year. The term adjusted net earnings is a non-GAAP measure defined as net earnings before other charges, amortization of intangible assets (excluding amortization of computer software), total stock-based compensation including option and restricted stock expense, and gains or losses related to the repurchase of shares and debt, net of tax and significant deferred tax write-offs or recoveries. Detailed GAAP financial statements and supplementary information related to adjusted net earnings and other non-GAAP measures appear at the end of this press release.

    
    First Quarter Results Compared to Guidance
    ------------------------------------------
    

The company's revenue and adjusted net earnings per share for the first quarter of 2010 were within the company's published guidance, announced on January 27, 2010, of revenue of $1.45 billion to $1.60 billion, and adjusted net earnings per share of $0.15 to $0.21.

"Celestica's first quarter results demonstrate our ability to deliver both strong and consistent returns and profitability," said Craig Muhlhauser, President & CEO.

"The year-over-year revenue growth in the first quarter reflects the gradually improving economy, but also highlights the success Celestica has had in winning new business. We believe Celestica is well positioned to continue to capitalize on a number of new opportunities that are emerging globally across a broad range of markets and customers."

    
    Second Quarter of 2010 Outlook
    ------------------------------
    

For the second quarter ending June 30, 2010, the company anticipates revenue to be in the range of $1.5 billion to $1.6 billion, and adjusted net earnings per share to be in the range of $0.19 to $0.23.

    
    First Quarter Webcast and Annual Shareholders Meeting Webcast
    -------------------------------------------------------------
    

Management will host its first quarter results conference call webcast today at 8:00 a.m. Eastern. The company's Annual Meeting of Shareholders will be held today at 10:00 a.m. at the TMX Broadcast Centre, The Exchange Tower, 130 King St. West, Toronto, Ontario. Both webcasts can be accessed at www.celestica.com.

    
    CEO Enters Automatic Securities Disposition Plan
    ------------------------------------------------
    

Celestica also announced today that Craig Muhlhauser, President & CEO, has entered into an automatic securities disposition plan for the sale of up to 1,496,147 Subordinate Voting Shares between May 10, 2010 and April 29, 2011. The shares represent approximately eight percent of Mr. Muhlhauser's total vested and unvested equity at target performance levels.

Sales will be conducted by an independent broker pursuant to pre-determined criteria on a monthly basis and effected in part through the exercise of stock options previously granted to Mr. Muhlhauser.

In accordance with applicable Canadian provincial and U.S. securities laws, including Rule 10b5-1 of the Securities and Exchange Commission, the plan allows for the disposition of Subordinate Voting Shares and the related exercise of options on a pre-determined, automatic basis regardless of whether trading restrictions are in place, including whether Mr. Muhlhauser subsequently receives material non-public information regarding Celestica. Mr. Muhlhauser is not permitted to revoke or rescind the plan and, subject to limited exceptions, is not permitted to modify or amend the plan. Dispositions pursuant to the plan will be reported in accordance with applicable securities laws.

    
    Supplementary Information
    -------------------------
    

In addition to disclosing detailed results in accordance with Canadian generally accepted accounting principles (GAAP), Celestica provides supplementary non-GAAP measures as a method to evaluate the company's operating performance. See table below.

Management uses adjusted net earnings (and other non-GAAP measures) as a measure of enterprise-wide performance. Management believes adjusted net earnings is a useful measure for management, as well as investors, to facilitate period-to-period operating comparisons at the company and with its major North American EMS competitors. Adjusted net earnings do not include the effects of other charges, most significantly the write-down of goodwill and long-lived assets, gains or losses on the repurchase of shares or debt and the related income tax effect of these adjustments, and any significant deferred tax write-offs or recoveries. The company also excludes the following recurring charges: restructuring costs, total stock-based compensation (including option and restricted stock expense), the amortization of intangible assets (except amortization of computer software), and the related income tax effect of these adjustments. The term adjusted net earnings does not have any standardized meaning prescribed by GAAP and is not necessarily comparable to similar measures presented by other companies. Adjusted net earnings is not a measure of performance under Canadian or U.S. GAAP and should not be considered in isolation or as a substitute for net earnings prepared in accordance with Canadian or U.S. GAAP. The company has provided a reconciliation of adjusted net earnings, which is a non-GAAP measure, to Canadian GAAP net earnings below.

    
    About Celestica
    ---------------
    

Celestica is dedicated to delivering end-to-end product lifecycle solutions to drive our customers' success. Through our simplified global operations network and information technology platform, we are solid partners who deliver informed, flexible solutions that enable our customers to succeed in the markets they serve. Committed to providing a truly differentiated customer experience, our agile and adaptive employees share a proud history of demonstrated expertise and creativity that provides our customers with the ability to overcome any challenge.

For further information on Celestica, visit its website at http://www.celestica.com. The company's security filings can also be accessed at http://www.sedar.com and http://www.sec.gov.

    
    Safe Harbor and Fair Disclosure Statement
    -----------------------------------------
    

This news release contains forward-looking statements related to our future growth, trends in our industry, our financial and/or operational results including those relating to the redemption of our Senior Subordinated Notes and the expected benefits of such redemption, and our financial or operational performance. Such forward-looking statements are predictive in nature and may be based on current expectations, forecasts or assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially from the forward-looking statements themselves. Such forward-looking statements may, without limitation, be preceded by, followed by, or include words such as "believes", "expects", "anticipates", "estimates", "intends", "plans", or similar expressions, or may employ such future or conditional verbs as "may", "will", "should" or "would", or may otherwise be indicated as forward-looking statements by grammatical construction, phrasing or context. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995, and in any applicable Canadian securities legislation. Forward-looking statements are not guarantees of future performance. You should understand that the following important factors could affect our future results and could cause those results to differ materially from those expressed in such forward-looking statements: the effects of price competition and other business and competitive factors generally affecting the electronics manufacturing services (EMS) industry, including changes in the trend for outsourcing; our dependence on a limited number of customers and end markets; variability of operating results among periods; the challenges of effectively managing our operations, including responding to significant changes in demand from our customers; our inability to retain or expand our business due to execution problems resulting from significant headcount reductions, plant closures and product transfer activities; the delays in the delivery and/or general availability of various components and materials used in our manufacturing process; our dependence on industries affected by rapid technological change; our ability to successfully manage our international operations; the challenge of managing our financial exposures to foreign currency fluctuations; and the risk of potential non-performance by counterparties, including but not limited to financial institutions, customers and suppliers. These and other risks and uncertainties, as well as other information related to the company, are discussed in the Company's various public filings at www.sedar.com and www.sec.gov, including our Annual Report on Form 20-F and subsequent reports on Form 6-K filed with the U.S. Securities and Exchange Commission and our Annual Information Form filed with the Canadian securities regulators. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. Except as required by applicable law, we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

As of its date, this press release contains any material information associated with the Company's financial results for the first quarter ended March 31, 2010 and revenue and adjusted net earnings guidance for the second quarter ending June 30, 2010. Revenue and earnings guidance is reviewed by the Company's Board of Directors. Our revenue and earnings guidance is based on various assumptions which management believes are reasonable under the current circumstances, but may prove to be inaccurate, and many of which involve factors that are beyond the control of the Company. The material assumptions may include the following: forecasts from our customers, which range from 30 to 90 days; timing and investments associated with ramping new business; general economic and market conditions; currency exchange rates; pricing and competition; anticipated customer demand; supplier performance and pricing; commodity, labor, energy and transportation costs; operational and financial matters; technological developments; and the timing and execution of our restructuring plan. These assumptions are based on management's current views with respect to current plans and events, and are and will be subject to the risks and uncertainties referred to above. It is Celestica's policy that revenue and earnings guidance is effective on the date given, and will only be updated through a public announcement.

The following table sets forth, for the periods indicated, a reconciliation of Canadian GAAP net earnings to adjusted net earnings and other non-GAAP measures (in millions of U.S. dollars, except per share amounts). Non-GAAP measures do not have any standardized meaning prescribed by Canadian or U.S. GAAP and are not necessarily comparable to similar measures presented by other companies. Non-GAAP measures are not measures of performance under Canadian or U.S. GAAP and should not be considered in isolation or as a substitute for any standardized measure under Canadian or U.S. GAAP.

Beginning in the fourth quarter of 2009, the company revised its definition of the following non-GAAP measures - adjusted net earnings, return on invested capital, adjusted operating margin (EBIAT), adjusted cost of sales, adjusted gross profit, adjusted gross margin and adjusted selling, general and administrative expenses (SG&A) - to exclude (in addition to the items excluded under the previous definition) total stock-based compensation expense (consisting of option and restricted stock expense). These non-GAAP measures, including comparables for prior periods, reflect the revised definition, unless otherwise specified.

    
                              2009                          2010
    Three months  -----------------------------------------------------------
     ended                   Adjust-                       Adjust-
     March 31       GAAP      ments   Adjusted    GAAP      ments   Adjusted
                  --------- --------- --------- --------- --------- ---------
    Revenue       $1,469.4  $      -  $1,469.4  $1,518.1  $      -  $1,518.1
    Cost of
     sales(l)(2)   1,358.2      (3.0)  1,355.2   1,412.4      (4.0)  1,408.4
                  --------- --------- --------- --------- --------- ---------
    Gross
     profit(1)(2)    111.2       3.0     114.2     105.7       4.0     109.7
    SG&A(1)(2)        67.4      (3.4)     64.0      60.5      (5.0)     55.5
    Amortization
     of
     intangible
     assets            5.8      (3.1)      2.7       3.7      (1.3)      2.4
    Other charges     12.5     (12.5)        -      14.5     (14.5)        -
                  --------- --------- --------- --------- --------- ---------

    Operating
     earnings -
     EBIAT(3)         25.5      22.0      47.5      27.0      24.8      51.8
    Interest
     expense, net     10.2         -      10.2       3.9         -       3.9
                  --------- --------- --------- --------- --------- ---------
    Net earnings
     before tax       15.3      22.0      37.3      23.1      24.8      47.9
    Income tax
     expense
     (recovery)       (3.9)      7.6       3.7      (2.8)      7.6       4.8
                  --------- --------- --------- --------- --------- ---------
    Net earnings  $   19.2  $   14.4  $   33.6  $   25.9  $   17.2  $   43.1
                  --------- --------- --------- --------- --------- ---------
                  --------- --------- --------- --------- --------- ---------
    No. of
     shares (in
     millions)
     - diluted       229.4               229.4     232.8               232.8
    Earnings
     per share
     - diluted    $   0.08            $   0.15  $   0.11            $   0.19
    ROIC(4)                              18.8%                         23.3%
    Free cash
     flow(5)                          $   16.1                      $    9.2

    (1) Excludes total stock-based compensation, comprised of option and
        restricted stock expense.

    (2) Management uses adjusted cost of sales, adjusted gross profit,
        adjusted gross margin and adjusted SG&A as measures to assess
        operating performance. Management believes that each of these is an
        appropriate measure for management, as well as investors, to compare
        operating performance from period-to-period. Adjusted cost of sales
        is calculated by excluding total stock-based compensation from GAAP
        cost of sales. Adjusted gross profit is calculated by excluding total
        stock-based compensation from GAAP gross profit. Adjusted gross
        margin is calculated by dividing adjusted gross profit by revenue.
        Adjusted SG&A is calculated by excluding total stock-based
        compensation from GAAP SG&A. Adjusted SG&A percentage is calculated
        by dividing adjusted SG&A by revenue.

    (3) Management uses EBIAT (adjusted operating margin) as a measure to
        assess operating performance. Excluded from EBIAT are the effects of
        other charges, most significantly the write-down of goodwill and
        long-lived assets, gains or losses on the repurchase of shares or
        debt, and the related income tax effect of these adjustments, and any
        significant deferred tax write-offs or recoveries. We also exclude
        the following recurring charges: restructuring costs, total stock-
        based compensation (including option and restricted stock expense),
        amortization of intangible assets (except amortization of computer
        software), interest expense or income, and the related income tax
        effect of these adjustments. Management believes EBIAT, which
        isolates operating activities before interest and taxes, is an
        appropriate measure for management, as well as investors, to compare
        the company's operating performance from period-to-period. There is
        no comparable measure under Canadian or U.S. GAAP. EBIAT should not
        be considered as a substitute for net earnings prepared in accordance
        with Canadian or U.S. GAAP.

    (4) Management uses ROIC as a measure to assess the effectiveness of the
        invested capital it uses to build products or provide services to its
        customers. The ROIC measure used by the company includes operating
        margin, working capital management and asset utilization.  ROIC is
        calculated by dividing EBIAT (defined in (3) above) by average net
        invested capital.  Net invested capital consists of total assets less
        cash, accounts payable, accrued liabilities and income taxes payable.
        We use a two-point average to calculate average net invested capital
        for the quarter. Management believes ROIC is an appropriate measure
        for management, as well as investors, to compare operating
        performance from period-to-period. There is no comparable measure
        under Canadian or U.S. GAAP.

    (5) Management uses free cash flow as a measure to assess operational
        cash flow performance.  Free cash flow is calculated as cash
        generated from operations less capital expenditures (net of proceeds
        from the sale of surplus property and equipment). Management
        believes free cash flow is an appropriate measure for management, as
        well as investors, to compare cash flow performance from period-to-
        period. There is no comparable measure under Canadian or U.S. GAAP.

        GUIDANCE SUMMARY

                       Q1 10 Guidance    Q1 10 Actual      2Q 10 Guidance(6)
                      ----------------   -------------    ------------------
        Revenue       $1.45B - $1.60B        $1.52B          $1.5B - $1.6B
        Adjusted
         net EPS       $0.15 - $0.21         $0.19           $0.19 - $0.23

    (6) Guidance for the second quarter of 2010 is provided only on an
        adjusted net earnings basis. This is due to the difficulty in
        forecasting the various items impacting GAAP net earnings, such as
        the amount and timing of our restructuring activities.



                               CELESTICA INC.

                         CONSOLIDATED BALANCE SHEETS
                        (in millions of U.S. dollars)
                                 (unaudited)

                                                    December 31     March 31
                                                           2009         2010
                                                    ------------ ------------
    Assets
    Current assets:
      Cash and cash equivalents (note 6)...........  $    937.7   $    712.2
      Accounts receivable..........................       828.1        799.7
      Inventories..................................       676.1        724.3
      Prepaid and other assets.....................        74.5         72.5
      Income taxes recoverable.....................        21.2         21.4
      Deferred income taxes........................         5.2          5.7
                                                    ------------ ------------
                                                        2,542.8      2,335.8
    Property, plant and equipment.................        393.8        380.3
    Goodwill from business combinations (note 2)..            -          3.0
    Intangible assets.............................         32.3         33.5
    Other long-term assets........................        137.2        139.0
                                                    ------------ ------------
                                                     $  3,106.1   $  2,891.6
                                                    ------------ ------------
                                                    ------------ ------------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable.............................  $    927.1   $    978.3
      Accrued liabilities (note 4).................       331.9        250.8
      Income taxes payable.........................        38.0         40.5
      Current portion of long-term debt (note 3)...       222.8            -
                                                    ------------ ------------
                                                        1,519.8      1,269.6
    Accrued pension and post-employment benefits...        75.4         78.5
    Deferred income taxes..........................        28.0         24.3
    Other long-term liabilities....................         7.1          7.0
                                                    ------------ ------------
                                                        1,630.3      1,379.4
    Shareholders' equity:
      Capital stock................................     3,591.2      3,596.3
      Contributed surplus..........................       210.6        214.2
      Deficit......................................    (2,381.8)    (2,355.9)
      Accumulated other comprehensive income.......        55.8         57.6
                                                    ------------ ------------
                                                        1,475.8      1,512.2
                                                    ------------ ------------
                                                     $  3,106.1   $  2,891.6
                                                    ------------ ------------
                                                    ------------ ------------

                           Contingencies (note 9).

     See accompanying notes to unaudited consolidated financial statements.
       These unaudited interim consolidated financial statements should
           be read in conjunction with the 2009 annual consolidated
                            financial statements.



                               CELESTICA INC.

                    CONSOLIDATED STATEMENTS OF OPERATIONS
           (in millions of U.S. dollars, except per share amounts)
                                 (unaudited)

                                                          Three months ended
                                                               March 31
                                                           2009         2010
                                                    ------------ ------------

    Revenue........................................  $  1,469.4   $  1,518.1
    Cost of sales..................................     1,358.2      1,412.4
                                                    ------------ ------------
    Gross profit...................................       111.2        105.7
    Selling, general and administrative expenses...        67.4         60.5
    Amortization of intangible assets..............         5.8          3.7
    Other charges (note 4).........................        12.5         14.5
    Interest on long-term debt.....................        10.4          3.8
    Other interest expense (income)................        (0.2)         0.1
                                                    ------------ ------------
    Earnings before income taxes...................        15.3         23.1
    Income tax expense (recovery):
      Current......................................         2.7          3.1
      Deferred.....................................        (6.6)        (5.9)
                                                    ------------ ------------
                                                           (3.9)        (2.8)
                                                    ------------ ------------
    Net earnings for the period....................  $     19.2   $     25.9
                                                    ------------ ------------
                                                    ------------ ------------

    Basic earnings per share.......................  $     0.08   $     0.11

    Diluted earnings per share.....................  $     0.08   $     0.11

    Shares used in computing per share amounts:
      Basic (in millions)..........................       229.4        229.9
      Diluted (in millions)........................       229.4        232.8

    See accompanying notes to unaudited consolidated financial statements.
          These unaudited interim consolidated financial statements
             should be read in conjunction with the 2009 annual
                     consolidated financial statements.



                               CELESTICA INC.

               CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                        (in millions of U.S. dollars)
                                 (unaudited)

                                                          Three months ended
                                                               March 31
                                                           2009         2010
                                                    ------------ ------------

    Net earnings for the period....................  $     19.2   $     25.9
    Other comprehensive income, net of tax:
      Currency translation adjustment..............        (9.1)        (2.0)
      Change from derivatives designated as hedges.        10.5          3.8
                                                    ------------ ------------
    Comprehensive income...........................  $     20.6   $     27.7
                                                    ------------ ------------
                                                    ------------ ------------

    See accompanying notes to unaudited consolidated financial statements.
          These unaudited interim consolidated financial statements
             should be read in conjunction with the 2009 annual
                     consolidated financial statements.



                               CELESTICA INC.

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                        (in millions of U.S. dollars)
                                 (unaudited)

                                                          Three months ended
                                                               March 31
                                                           2009         2010
                                                    ------------ ------------

    Cash provided by (used in):
    Operations:
    Net earnings for the period....................  $     19.2   $     25.9
    Items not affecting cash:
      Depreciation and amortization................        25.8         22.5
      Deferred income taxes........................        (6.6)        (5.9)
      Stock-based compensation.....................         6.4          5.7
      Restructuring charges (note 4)...............         0.6         (0.2)
      Other charges................................         6.5          7.7
    Other..........................................        (7.9)        (0.6)
    Changes in non-cash working capital items:
      Accounts receivable..........................       342.6         28.9
      Inventories..................................        92.3        (47.7)
      Prepaid and other assets.....................        19.9          6.7
      Income taxes recoverable.....................        (3.0)        (0.2)
      Accounts payable and accrued liabilities.....      (446.9)       (33.8)
      Income taxes payable.........................        (1.3)         2.5
                                                    ------------ ------------
      Non-cash working capital changes.............         3.6        (43.6)
                                                    ------------ ------------
    Cash provided by operations....................        47.6         11.5
                                                    ------------ ------------

    Investing:
      Acquisition (note 2).........................           -         (5.0)
      Purchase of computer software and property,
       plant and equipment.........................       (32.4)        (7.6)
      Proceeds from sale of assets.................         0.9          5.3
      Other........................................         0.8         (0.3)
                                                    ------------ ------------
    Cash used in investing activities..............       (30.7)        (7.6)
                                                    ------------ ------------

    Financing:
      Repurchase of Senior Subordinated
       Notes (Notes) (note 3(c))...................      (149.7)      (231.6)
      Proceeds from termination of swap agreements
       (note 3(c)).................................        14.7            -
      Repayment of capital lease obligations.......        (0.6)           -
      Issuance of share capital....................           -          3.5
      Other........................................        (1.0)        (1.3)
                                                    ------------ ------------
    Cash used in financing activities..............      (136.6)      (229.4)
                                                    ------------ ------------

    Decrease in cash...............................      (119.7)      (225.5)
    Cash and cash equivalents, beginning of period.     1,201.0        937.7
                                                    ------------ ------------
    Cash and cash equivalents, end of period.......  $  1,081.3   $    712.2
                                                    ------------ ------------
                                                    ------------ ------------

                 Supplemental cash flow information (note 6).

    See accompanying notes to unaudited consolidated financial statements.
          These unaudited interim consolidated financial statements
             should be read in conjunction with the 2009 annual
                     consolidated financial statements.



                               CELESTICA INC.

               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                        (in millions of U.S. dollars)
                                 (unaudited)
                                                                     Accumu-
                                                                       lated
                                                                       other
                                                                    compreh-
                       Number of               Contri-                ensive
                        shares(1)   Capital      buted                income
                    (in millions)     stock    surplus    Deficit    (note 8)
                      ---------- ---------- ---------- ---------- -----------

    Balance -
     December 31,
     2008............      229.2  $ 3,588.5  $   204.4  $(2,436.8) $     9.4
    Stock-based
     compensation
     costs...........          -          -        6.4          -          -
    Other............          -          -        0.5          -          -
    Net earnings
     for the period..          -          -          -       19.2          -
    Currency
     translation
     adjustments.....          -          -          -          -       (9.1)
    Change from
     derivatives
     designated as
     hedges..........          -          -          -          -       10.5
                      ---------- ---------- ---------- ---------- -----------
    Balance -
     March 31,
     2009............      229.2  $ 3,588.5  $   211.3  $(2,417.6) $    10.8
                      ---------- ---------- ---------- ---------- -----------
                      ---------- ---------- ---------- ---------- -----------

    Balance -
     December 31,
     2009............      229.5  $ 3,591.2  $   210.6  $(2,381.8) $    55.8
    Shares issued....        0.5        5.1          -          -          -
    Stock-based
     compensation
     costs...........          -          -        3.2          -          -
    Other............          -          -        0.4          -          -
    Net earnings
     for the period..          -          -          -       25.9          -
    Currency
     translation
     adjustments.....          -          -          -          -       (2.0)
    Change from
     derivatives
     designated as
     hedges..........          -          -          -          -        3.8
                      ---------- ---------- ---------- ---------- -----------
    Balance -
     March 31, 2010..      230.0  $ 3,596.3    $ 214.2  $(2,355.9) $    57.6
                      ---------- ---------- ---------- ---------- -----------
                      ---------- ---------- ---------- ---------- -----------
    (1) Includes subordinate voting shares and multiple voting shares.



                               CELESTICA INC.

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (in millions of U.S. dollars, except per share amounts)
                                 (unaudited)


    1.  Basis of presentation and significant accounting policies:

    We prepare our financial statements in accordance with generally accepted
    accounting principles (GAAP) in Canada.

    The disclosures contained in these unaudited interim consolidated
    financial statements do not include all requirements of Canadian GAAP for
    annual financial statements. These unaudited interim consolidated
    financial statements should be read in conjunction with the 2009 annual
    consolidated financial statements. These unaudited interim consolidated
    financial statements reflect all adjustments which are, in the opinion of
    management, necessary to present fairly our financial position as at
    March 31, 2010 and the results of operations, comprehensive income and
    cash flows for the three months ended March 31, 2009 and 2010.

    i)  Use of estimates:

    The preparation of financial statements in conformity with GAAP requires
    management to make estimates and assumptions that affect the reported
    amounts of assets and liabilities and related disclosures of contingent
    assets and liabilities at the date of the financial statements, and the
    reported amounts of revenue and expenses during the reporting period. We
    applied significant estimates and assumptions to our valuations against
    inventory and income taxes, to the amount and timing of restructuring
    charges or recoveries, to the fair values used in testing long-lived
    assets, and to valuing our pension costs. We evaluate our estimates and
    assumptions on a regular basis, taking into account historical experience
    and other relevant factors. Actual results could differ materially from
    those estimates and assumptions.

    These unaudited interim consolidated financial statements are based upon
    accounting principles consistent with those used and described in the
    2009 annual consolidated financial statements.

    ii) Recently issued accounting pronouncements:

    (a) International financial reporting standards (IFRS):

    In February 2008, the Canadian Accounting Standards Board announced the
    adoption of IFRS for publicly accountable enterprises. IFRS will replace
    Canadian GAAP effective January 1, 2011. IFRS is effective for our first
    quarter of 2011 and will require that we restate our 2010 comparative
    numbers under IFRS. Our IFRS transition plan is progressing according to
    our implementation schedule, which includes completing our formal staff
    training in the second quarter of 2010. We disclosed our preliminary IFRS
    accounting policy decisions in our 2009 annual management's discussion
    and analysis. Although we have identified key accounting policy
    differences, we have only begun the quantification process. We cannot at
    this time determine the full impact of IFRS on our consolidated financial
    statements.

    (b) Business combinations:

    In January 2009, the CICA issued Handbook Section 1582, "Business
    combinations," which replaces the existing standards. This section
    establishes the standards for the accounting of business combinations,
    and states that all assets and liabilities of an acquired business will
    be recorded at fair value. Obligations for contingent consideration and
    contingencies will also be recorded at fair value at the acquisition
    date. The standard also states that acquisition-related costs and
    restructuring charges will be expensed as incurred. This standard is
    equivalent to the IFRS on business combinations. This standard is applied
    prospectively to business combinations with acquisition dates on or after
    January 1, 2011. We do not expect the adoption of this standard to have a
    material impact on our consolidated financial statements unless we engage
    in a significant acquisition.

    (c) Multiple deliverable revenue arrangements:

    In December 2009, the CICA issued EIC 175, "Multiple deliverable revenue
    arrangements," which replaces the existing standards. This abstract
    provides additional guidance for arrangements involving multiple
    deliverables including how consideration should be measured and allocated
    to the separate units of an arrangement. This abstract is effective for
    2011. Earlier adoption is permitted. We are evaluating the impact of
    adopting this abstract on our consolidated financial statements.

    2.  Acquisition:

    In January 2010, we acquired the shares of Scotland-based Invec Solutions
    Limited (Invec) for a cash purchase price of $5.0. Invec provides
    warranty management, repair and parts management services to companies in
    the information technology and consumer electronics markets. The amount
    of goodwill and intangible assets, primarily computer software assets,
    arising from this acquisition was $3.0 and $3.8, respectively. We are in
    the process of finalizing the valuation of certain items. Accordingly,
    our fair value allocation is preliminary and is subject to refinement.

    3.  Long-term debt:

                                                    December 31    March 31
                                                        2009         2010
                                                    ------------ ------------

        Secured, revolving credit facility
         due 2011 (a) .............................  $        -   $        -
        Senior Subordinated Notes due 2013
         (2013 Notes) (b)(c) ......................       223.1            -
        Embedded prepayment option at fair
         value (c) ................................        (1.5)           -
        Basis adjustments on debt obligation (c) ..         3.1            -
        Unamortized debt issue costs (c) ..........        (1.9)           -
                                                    ------------ ------------
        Current portion of long-term debt .........  $    222.8   $        -
                                                    ------------ ------------
                                                    ------------ ------------

    (a) We have a revolving $200.0 credit facility with a maturity of
        April 2011. We are required to comply with certain restrictive
        covenants relating to debt incurrence, the sale of assets, a change
        of control and certain financial covenants related to indebtedness,
        interest coverage and liquidity. There were no borrowings outstanding
        under the facility at March 31, 2010. Commitment fees for the first
        quarter of 2010 were $0.6. We were in compliance with all covenants
        at March 31, 2010. Based on the required financial ratios at
        March 31, 2010, we have full access to this facility.

        We also have uncommitted bank overdraft facilities available for
        intraday operating requirements which total $65.0 at March 31, 2010.
        There were no borrowings outstanding under these facilities at
        March 31, 2010.

    (b) In June 2005, we issued the 2013 Notes with a principal amount of
        $250.0 and a fixed interest rate of 7.625%. We repurchased the
        remaining 2013 Notes in the first quarter of 2010. See note 3(c).

    (c) In March 2009, we paid $149.7, excluding accrued interest, to
        repurchase Senior Subordinated Notes due 2011 (2011 Notes) with a
        principal amount of $150.0. In November 2009, we paid $346.1,
        excluding accrued interest, to repurchase the remaining 2011 Notes
        with a principal amount of $339.4. We recognized a gain of $9.1 in
        the first quarter of 2009 and a gain of $10.4 in the fourth quarter
        of 2009 on these repurchases which we recorded in other charges. In
        March 2010, we paid $231.6, excluding accrued interest, to repurchase
        the remaining 2013 Notes and recognized a loss of $8.8 in other
        charges. The gain or loss on the repurchases was measured based on
        the carrying value of the repurchased portion of the Notes, which
        included the related basis adjustment, the unamortized debt issue
        costs and the carrying value of the embedded prepayment option, on
        the dates of repurchase.

        In the first quarter of 2009, we also terminated the interest rate
        swap agreements related to the 2011 Notes and received $14.7 in cash,
        excluding accrued interest, as settlement of these agreements. In
        connection with the termination of the swap agreements, we
        discontinued fair value hedge accounting on the 2011 Notes in the
        first quarter of 2009 and recorded a write-down, through other
        charges, of $15.6 in the carrying value of the embedded prepayment
        option on the 2011 Notes to reflect the change in fair value upon
        hedge de-designation. We amortized the historical fair value
        adjustment on the 2011 Notes until they were repaid, using the
        effective interest rate method. This amortization is recorded as a
        reduction of interest expense on long-term debt.

        We marked-to-market the bifurcated embedded prepayment options in our
        Notes until the options were extinguished. The change in the fair
        values each period were recorded in interest expense on long-term
        debt, except for the write-down of the embedded prepayment option due
        to hedge de-designation or debt repurchase which we recorded in other
        charges. The impact on our results of operations is as follows:

                                                       Three months ended
                                                             March 31
                                                        2009         2010
                                                    ------------ ------------
        Decrease in interest expense on long-term
         debt .....................................  $      1.8   $      0.1

    4.  Other charges:

                                                       Three months ended
                                                             March 31
                                                        2009         2010
                                                    ------------ ------------
        Restructuring (a) .........................  $      6.7   $      8.1
        Loss (gain) on repurchase of Notes
         (note 3(c)) ..............................        (9.1)         8.8
        Write-down of embedded prepayment option
         (note 3(c)) ..............................        15.6            -
        Other (b) .................................        (0.7)        (2.4)
                                                    ------------ ------------
                                                     $     12.5   $     14.5
                                                    ------------ ------------
                                                    ------------ ------------

    (a) Restructuring:

    In January 2008, we estimated that a restructuring charge of between $50
    and $75 would be recorded throughout 2008 and 2009. In July 2009, we
    announced additional restructuring charges of between $75 and $100.
    Combined, we expect to incur total restructuring charges of between $150
    and $175 associated with this program. Since the beginning of 2008, we
    have recorded total restructuring charges of $126.5. Of that amount, $8.1
    was recorded in the first quarter of 2010. We expect to complete these
    restructuring actions by the end of 2010. We recognize the restructuring
    charges as the detailed plans are finalized.

    Our restructuring actions include consolidating facilities and reducing
    our workforce. The majority of the employees terminated under this plan
    were manufacturing and plant employees in the Americas, Europe and the
    Philippines. For leased facilities that we no longer use, the lease costs
    included in the restructuring costs represent future lease payments less
    estimated sublease recoveries. Adjustments are made to lease and other
    contractual obligations to reflect incremental cancellation fees paid for
    terminating certain facility leases and to reflect changes in the
    accruals for other leases due to delays in the timing of sublease
    recoveries, changes in estimated sublease rates, or changes in use,
    relating principally to facilities in the Americas. We expect our long-
    term lease and other contractual obligations to be paid out over the
    remaining lease terms through 2015. Our restructuring liability is
    recorded in accrued liabilities.

    Details of the 2010 activity are as follows:

                                   Lease
                                     and
                                   other  Facility
                       Employee    cont-     exit    Total     2010
                         termi-  ractual    costs  accrued     non-    Total
                         nation   oblig-      and    liab-     cash     2010
                          costs   ations    other    ility   charge   charge
                        -------- -------- -------- -------- -------- --------

    December 31, 2009 .  $ 23.7   $ 20.8   $  0.5   $ 45.0   $    -   $    -
    Cash payments .....   (21.1)    (5.4)    (0.8)   (27.3)       -        -
    Charges/
     adjustments ......     5.9      1.5      0.9      8.3     (0.2)     8.1
                        -------- -------- -------- -------- -------- --------
    March 31, 2010 ....  $  8.5   $ 16.9   $  0.6   $ 26.0   $ (0.2)  $  8.1
                        -------- -------- -------- -------- -------- --------
                        -------- -------- -------- -------- -------- --------

    As of March 31, 2010, we have approximately $22.0 in assets that are
    held-for-sale, primarily land and buildings, as a result of the
    restructuring actions we have implemented. We have programs underway to
    sell these assets.

    (b) Other:

    We realized recoveries on certain assets that were previously written
    down through other charges.

    5.  Segment and customer information:

    (a) The following table indicates revenue by end market as a percentage
        of total revenue. Our revenue fluctuates from period-to-period
        depending on numerous factors, including but not limited to:
        seasonality of business; the level of program wins or losses with
        new, existing or disengaging customers; the phasing in or out of
        programs; and changes in customer demand.


                                                       Three months ended
                                                             March 31
                                                        2009         2010
                                                    ------------ ------------

        Consumer ..................................         29%          29%
        Enterprise
         Communications ...........................         21%          21%
        Telecommunications ........................         18%          14%
        Storage ...................................          8%          14%
        Servers ...................................         13%          12%
        Industrial, Aerospace and Defense, and
         Healthcare ...............................         11%          10%

    (b) For the first quarter of 2010, one customer represented more than 10%
        of total revenue (first quarter of 2009 - two customers individually
        represented more than 10% of total revenue).

    6.  Supplemental cash flow information:

                                                       Three months ended
                                                             March 31
        Paid during the period:                         2009         2010
                                                    ------------ ------------

        Interest (a) ..............................  $     28.9   $     12.1
        Taxes (b) .................................  $      5.1   $      1.0

    (a) This includes interest paid on the Notes. Interest on the Notes was
        payable in January and July of each year until maturity or earlier
        repurchase or redemption. See note 3(c).

    (b) Cash taxes paid is net of any income taxes recovered.

                                                    December 31    March 31
                                                        2009         2010
                                                    ------------ ------------
        Cash and cash equivalents are comprised
         of the following:

        Cash (i) ..................................  $    259.8   $    260.3
        Cash equivalents (i) ......................       677.9        451.9
                                                    ------------ ------------
                                                     $    937.7   $    712.2
                                                    ------------ ------------
                                                    ------------ ------------

        (i)   Our current portfolio consists of certificates of deposit and
              certain money market funds that are secured exclusively by U.S.
              government securities. The majority of our cash and cash
              equivalents are held with financial institutions each of which
              had at March 31, 2010 a Standard and Poor's rating of A-2 or
              above.

    7.  Derivative financial instruments:

    We enter into foreign currency contracts to hedge foreign currency risks
    primarily relating to cash flows. At March 31, 2010, we had forward
    exchange contracts covering various currencies in an aggregate notional
    amount of $582.7. All derivative financial instruments are recorded at
    fair value on our consolidated balance sheet. The fair value of our
    foreign currency contracts at March 31, 2010 was a net unrealized gain of
    $16.8 (December 31, 2009 - net unrealized gain of $8.0). This is
    comprised of $17.8 of derivative assets recorded in prepaid and other
    assets and other long-term assets, and $1.0 of derivative liabilities
    recorded in accrued liabilities. The unrealized gains and losses are a
    result of fluctuations in foreign exchange rates between the time the
    currency forward contracts were entered into and the valuation date at
    period end. The change in the net unrealized gains of our foreign
    currency contracts during the first quarter of 2010 is due primarily to
    the favourable movement in the exchange rates for the currencies that we
    hedge.

    At March 31, 2010, we had forward exchange contracts to trade U.S.
    dollars in exchange for the following currencies:

                                             Weighted
                                              average
                                             exchange                  Fair
                                              rate of     Maximum     value
                                Amount of        U.S.   period in     gain/
    Currency                 U.S. dollars     dollars      months     (loss)
    ----------------------- -------------- ----------- ---------- -----------

    Canadian dollar .......     $   208.6   $    0.94        16    $     9.4
    British pound
     sterling .............          93.3        1.55         4          2.7
    Thai baht .............          76.6        0.03        12          1.3
    Mexican peso ..........          49.0        0.08        14          1.9
    Malaysian ringgit .....          48.6        0.29        12          1.4
    Euro ..................          37.4        1.35         5            -
    Romanian lei ..........          23.8        0.33        12         (0.2)
    Singapore dollar ......          20.1        0.71        12          0.2
    Czech koruna ..........          13.4        0.05         9         (0.1)
    Swiss franc ...........           9.9        0.96         4          0.2
    Brazilian real ........           2.0        0.55         3            -
                                ----------                         ----------
    Total .................     $   582.7                          $    16.8
                                ----------                         ----------
                                ----------                         ----------


    8.  Accumulated other comprehensive income, net of tax:

                                                                     Three
                                                                    months
                                                     Year Ended      ended
                                                    December 31    March 31
                                                        2009         2010
                                                    ------------ ------------

    Opening balance of foreign currency
     translation account ..........................  $     46.7   $     46.9
    Currency translation adjustment ...............        (1.6)        (2.0)
    Release of cumulative currency translation to
     other charges ................................         1.8            -
                                                    ------------ ------------
    Closing balance ...............................        46.9         44.9

    Opening balance of unrealized net gain (loss)
     on cash flow hedges ..........................  $    (37.3)  $      8.9
    Net gain on cash flow hedges (a) ..............        14.4          8.8
    Net loss (gain) on cash flow hedges
     reclassified to operations (b) ...............        31.8         (5.0)
                                                    ------------ ------------
    Closing balance (c) ...........................         8.9         12.7
                                                    ------------ ------------

    Accumulated other comprehensive income ........  $     55.8   $     57.6
                                                    ------------ ------------
                                                    ------------ ------------

    (a) Net of income tax expense of $0.3 for the three months ended
        March 31, 2010 ($0.1 income tax benefit for 2009).
    (b) Net of income tax benefit of $0.1 for the three months ended
        March 31, 2010 ($0.6 income tax expense for 2009).
    (c) Net of income tax expense of $0.3 as of March 31, 2010 ($0.1 income
        tax expense as of December 31, 2009).

    We expect that the majority of the gains on cash flow hedges reported in
    accumulated other comprehensive income at March 31, 2010 will be
    reclassified to operations during the next 12 months, primarily through
    cost of sales as the underlying expenses that are being hedged are
    included in cost of sales.

    9.  Contingencies:

    Litigation:

    In the normal course of our operations, we are subject to litigation and
    claims from time to time. We may also be subject to lawsuits,
    investigations and other claims, including environmental, labor, product,
    customer disputes and other matters. Management believes that adequate
    provisions have been recorded in the accounts where required. Although it
    is not always possible to estimate the extent of potential costs, if any,
    management believes that the ultimate resolution of such contingencies
    will not have a material adverse impact on our results of operations,
    financial position or liquidity.

    In 2007, securities class action lawsuits were commenced against us and
    our former Chief Executive and Chief Financial Officers in the United
    States District Court of the Southern District of New York by certain
    individuals, on behalf of themselves and other unnamed purchasers of our
    stock, claiming that they were purchasers of our stock during the period
    January 27, 2005 through January 30, 2007. The plaintiffs allege
    violations of United States federal securities laws and seek unspecified
    damages. They allege that during the purported class period we made
    statements concerning our actual and anticipated future financial results
    that failed to disclose certain purportedly material adverse information
    with respect to demand and inventory in our Mexican operations and our
    information technology and communications divisions. In an amended
    complaint, the plaintiffs have added one of our directors and Onex
    Corporation as defendants. All defendants have filed motions to dismiss
    the amended complaint. These motions are pending. A parallel class
    proceeding has also been issued against us and our former Chief Executive
    and Chief Financial Officers in the Ontario Superior Court of Justice,
    but neither leave nor certification of the action has been granted by
    that court. We believe that the allegations in these claims are without
    merit and we intend to defend against them vigorously. However, there can
    be no assurance that the outcome of the litigation will be favorable to
    us or that it will not have a material adverse impact on our financial
    position or liquidity. In addition, we may incur substantial litigation
    expenses in defending these claims. We have liability insurance coverage
    that may cover some of our litigation expenses, potential judgments or
    settlement costs.

    Income taxes:

    We are subject to tax audits and reviews by local tax authorities of
    historical information which could result in additional tax expense in
    future periods relating to prior results. Reviews by tax authorities
    generally focus on, but are not limited to, the validity of our inter-
    company transactions, including financing and transfer pricing policies
    which generally involve subjective areas of taxation and a significant
    degree of judgment. If any of these tax authorities are successful with
    their challenges, our income tax expense may be adversely affected and we
    could also be subject to interest and penalty charges.

    In connection with ongoing tax audits in Canada, tax authorities have
    taken the position that income reported by one of our Canadian
    subsidiaries in 2001 through 2003 should have been materially higher as a
    result of certain inter-company transactions. The successful pursuit of
    that assertion could result in that subsidiary owing significant amounts
    of tax, interest and possibly penalties. We believe we have substantial
    defenses to the asserted position and have adequately accrued for any
    probable potential adverse tax impact. However, there can be no assurance
    as to the final resolution of this claim and any resulting proceedings,
    and if this claim and any ensuing proceedings are determined adversely to
    us, the amounts we may be required to pay could be material.

    In connection with a tax audit in Brazil, in the fourth quarter of 2009,
    tax authorities took the position that income reported by our Brazilian
    subsidiary in 2004 should have been materially higher as a result of
    certain inter-company transactions. We believe we have substantial
    defenses to the asserted position. However, there can be no assurance as
    to the final resolution of this matter and, if it is determined adversely
    to us, the amounts we may be required to pay for taxes, interest and
    penalties could be material.

    We have and will continue to recognize the future benefit of certain
    Brazilian tax losses on the basis that these tax losses can and will be
    fully utilized in the fiscal period ending on the date of dissolution of
    our Brazilian subsidiary. We regularly review Brazilian laws and assess
    the likelihood of the realization of the future benefit of the tax
    losses. A change to the benefit realizable on these Brazilian losses
    could result in a substantial increase to our net future tax liabilities.

    10. Financial instruments - financial risks:

    Currency risk: Due to the nature of our international operations, we are
    exposed to exchange rate fluctuations on our cash receipts, cash payments
    and balance sheet exposures denominated in various foreign currencies. We
    manage our currency risk through our hedging program using forecasts of
    future cash flows and our balance sheet exposures denominated in foreign
    currencies. Our major currency exposures, as of March 31, 2010, are
    summarized in U.S. dollar equivalents in the following table. For
    purposes of this table, we have excluded items such as pension, post-
    employment benefits and income taxes, in accordance with the financial
    instruments standards. The local currency amounts have been converted to
    U.S. dollar equivalents using the spot rates as of March 31, 2010.

                             Chinese  Canadian  Malaysian   Thai     Mexican
                             renminbi  dollar    ringgit    baht       peso
                            --------- --------- --------- --------- ---------
        Cash and cash
         equivalents ......  $  25.8   $  45.7   $   1.9   $   0.3   $   1.0
        Accounts
         receivable .......     26.9       0.4       0.2         -         -
        Other financial
         assets ...........      0.4         -       0.4       1.3       0.1
        Accounts payable
         and accrued
         liabilities ......    (23.6)    (27.5)    (13.0)    (12.3)    (16.3)
                            --------- --------- --------- --------- ---------
        Net financial
         assets
         (liabilities) ....  $  29.5   $  18.6   $ (10.5)  $ (10.7)  $ (15.2)
                            --------- --------- --------- --------- ---------
                            --------- --------- --------- --------- ---------

    At March 31, 2010, a one-percentage point strengthening or weakening of
    the following currencies against the U.S. dollar for our financial
    instruments denominated in non-functional currencies has the following
    impact:

                             Chinese  Canadian  Malaysian   Thai     Mexican
                             renminbi  dollar    ringgit    baht       peso
                            --------- --------- --------- --------- ---------
        1% Strengthening
          Net earnings ....  $   0.3   $   0.4   $  (0.2)  $     -   $     -
          Other
           comprehensive
           income .........        -       1.9       0.4       0.7       0.2
        1% Weakening
          Net earnings ....     (0.3)     (0.4)      0.2         -         -
          Other
           comprehensive
           income .........        -      (1.8)     (0.4)     (0.7)     (0.2)

    11. Comparative information:

    We have reclassified certain prior period information to conform to the
    current period's presentation.
    

%SEDAR: 00010284E

SOURCE Celestica Inc.

For further information: For further information: Laurie Flanagan, Celestica Global Communications, (416) 448-2200, media@celestica.com; Paul Carpino, Celestica Investor Relations, (416) 448-2211, clsir@celestica.com

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