Celestica announces third quarter financial results

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

                         Third Quarter 2009 Summary
                         --------------------------

    -   Revenue of $1,556 million, compared to $2,031 million for the same
        period last year

    -   GAAP loss of $0.6 million or $0.00 per share, compared to GAAP net
        earnings of $32.1 million or $0.14 per share last year

    -   Adjusted net earnings of $0.17 per share, compared to $0.24 per share
        for the same period last year

    -   Return on invested capital, including intangibles, of 21.9%, compared
        to 13.9% last year

    -   Operating margin of 3.4%, compared to 3.2% last year

    -   Adjusted gross margin of 7.0%, compared to 7.4% last year

    -   Cash flow from operations of $146 million, free cash flow of
        $139 million

    -   Fourth quarter revenue guidance of $1.55 billion - $1.70 billion,
        adjusted net earnings per share of $0.14 - $0.20
    

TORONTO, Oct. 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 third quarter ended September 30, 2009.

Revenue for the quarter was $1,556 million, compared to $2,031 million in the third quarter of 2008. GAAP net loss was $0.6 million, or $0.00 per share, compared to GAAP net earnings of $32.1 million, or $0.14 per share, for the same period last year. The year-over-year change reflects the impact of weaker end-market demand, as well as higher restructuring costs in 2009 associated with the company's previously announced restructuring program.

Adjusted net earnings for the quarter were $39.5 million, or $0.17 per share, compared to adjusted net earnings of $54.3 million, or $0.24 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), option expense, 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 appears at the end of this press release.

The company's revenue and adjusted net earnings for the third quarter of 2009 met the high end of the company's published guidance, announced on July 23, 2009, of revenue of $1.425 billion to $1.575 billion and adjusted net earnings per share of $0.11 to $0.17.

For the nine months ended September 30, 2009, revenue was $4,428 million, compared to $5,743 million for the same period in 2008. GAAP net earnings were $23.9 million, or $0.10 per share, compared to $101.7 million, or $0.44 per share, for the same period last year. Adjusted net earnings for the nine months ended September 30, 2009 were $93.8 million, or $0.41 per share, compared to $128.6 million, or $0.56 per share, for the same period in 2008.

"Celestica continues to deliver improved operating performance and financial results despite a very challenging and volatile business environment," said Craig Muhlhauser, President & CEO. "One of the company's goals during this downturn was to continue to deliver on our commitments to our customers and increase our return on invested capital even at the low point of an economic cycle. We are very pleased with the performance we have achieved thus far."

Debt Redemption

---------------

In September 2009, the company announced its intention to redeem all of its outstanding 7.875% Senior Subordinated Notes due 2011 (Notes), with an aggregate principal amount of $339.4 million. In accordance with the terms of the Notes, the company will redeem the Notes at a price of 101.969% of the principal amount, plus accrued and unpaid interest to the redemption date. The company will complete the redemption in the fourth quarter of 2009 and expects to record a gain of approximately $10 million on redemption.

The company plans to fund the redemption using existing cash resources. After giving effect to the completion of the Notes redemption as of September 30, 2009, the company's cash balance would have been $906 million, and our Senior Subordinated Notes due 2013 remains at $223 million. The company also estimates a reduction to its 2010 net interest expense of approximately $14 million.

Fourth Quarter Outlook

----------------------

For the fourth quarter ending December 31, 2009, the company anticipates revenue to be in the range of $1.55 billion to $1.70 billion, and adjusted net earnings per share to range from $0.14 to $0.20.

Third Quarter Webcast

---------------------

Management will host its quarterly results conference call today at 4:30 p.m. Eastern. The webcast can be accessed at www.celestica.com.

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 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. 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, option 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 Harbour 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 anticipated expenses, the expected gains from our recently announced intention to redeem our 7.875% Senior Subordinated Notes due 2011, 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 challenges of effectively managing our operations during uncertain economic conditions, including significant changes in demand from our customers as a result of the impact of the global economic downturn and capital markets weakness; the risk of potential non-performance by counterparties, including but not limited to financial institutions, customers and suppliers; the effects of price competition and other business and competitive factors generally affecting the EMS industry, including changes in the trend for outsourcing; our dependence on a limited number of customers; variability of operating results among periods; the challenge of managing our financial exposures to foreign currency fluctuations; the challenge of responding to changes in customer demand; our inability to retain or grow our business due to execution problems resulting from significant headcount reductions, plant closures and product transfers associated with restructuring activities; our dependence on industries affected by rapid technological change; our ability to successfully manage our international operations; and the delays in the delivery and/or general availability of various components and materials used in our manufacturing process. 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 Securities and Exchange Commission and our Annual Information Form filed with the Canadian Securities Commissions. 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 third quarter ended September 30, 2009 and revenue and adjusted net earnings guidance for the fourth quarter ending December 31, 2009. 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 information (in millions of U.S. dollars, except per share amounts):

    

                                       2008                          2009
    Three months  ----------------------------- -----------------------------
     ended                   Adjust-                       Adjust-
     September 30   GAAP      ments   Adjusted    GAAP      ments   Adjusted
                  --------- --------- --------- --------- --------- ---------
    Revenue       $2,030.8  $      -  $2,030.8  $1,556.2  $      -  $1,556.2
    Cost of
     sales(1)      1,880.8      (0.5)  1,880.3   1,448.4      (0.5)  1,447.9
                  --------- --------- --------- --------- --------- ---------
    Gross profit     150.0       0.5     150.5     107.8       0.5     108.3
    SG&A(1)(2)        83.0      (0.6)     82.4      54.0      (0.8)     53.2
    Amortization
     of intangible
     assets(2)         6.3      (3.4)      2.9       4.7      (1.9)      2.8
    Other charges     16.4     (16.4)        -      43.5     (43.5)        -
                  --------- --------- --------- --------- --------- ---------
    Operating
     earnings -
     EBIAT(3)         44.3      20.9      65.2       5.6      46.7      52.3
    Interest
     expense, net      9.8         -       9.8       8.4         -       8.4
                  --------- --------- --------- --------- --------- ---------
    Net earnings
     (loss)
     before tax       34.5      20.9      55.4      (2.8)     46.7      43.9
    Income tax
     expense
     (recovery)        2.4      (1.3)      1.1      (2.2)      6.6       4.4
                  --------- --------- --------- --------- --------- ---------
    Net earnings
     (loss)       $   32.1  $   22.2  $   54.3  $   (0.6) $   40.1  $   39.5
                  --------- --------- --------- --------- --------- ---------
                  --------- --------- --------- --------- --------- ---------
    W.A. no. of
     shares (in
     millions) -
     diluted         230.3               230.3     229.5               231.7
    Earnings per
     share -
     diluted      $   0.14            $   0.24  $   0.00            $   0.17

    ROIC(4)                              13.9%                         21.9%
    Free cash
     flow(5)                          $   57.4                      $  139.1



                               2008                          2009
    Nine months   ----------------------------- -----------------------------
     ended                   Adjust-                       Adjust-
     September 30   GAAP      ments   Adjusted    GAAP      ments   Adjusted
                  --------- --------- --------- --------- --------- ---------
    Revenue       $5,742.8  $      -  $5,742.8  $4,427.8  $      -  $4,427.8
    Cost of
     sales(1)      5,352.3      (2.3)  5,350.0   4,107.1      (1.8)  4,105.3
                  --------- --------- --------- --------- --------- ---------
    Gross profit     390.5       2.3     392.8     320.7       1.8     322.5
    SG&A(1)(2)       215.1      (2.7)    212.4     183.3      (2.8)    180.5
    Amortization
     of intangible
     assets(2)        20.5     (11.8)      8.7      15.3      (6.9)      8.4
    Other charges     23.3     (23.3)        -      76.7     (76.7)        -
                  --------- --------- --------- --------- --------- ---------
    Operating
     earnings -
     EBIAT(3)        131.6      40.1     171.7      45.4      88.2     133.6
    Interest
     expense, net     28.8         -      28.8      29.3         -      29.3
                  --------- --------- --------- --------- --------- ---------
    Net earnings
     before tax      102.8      40.1     142.9      16.1      88.2     104.3
    Income tax
     expense
     (recovery)        1.1      13.2      14.3      (7.8)     18.3      10.5
                  --------- --------- --------- --------- --------- ---------
    Net earnings  $  101.7  $   26.9  $  128.6  $   23.9  $   69.9  $   93.8
                  --------- --------- --------- --------- --------- ---------
                  --------- --------- --------- --------- --------- ---------
    W.A. no. of
     shares (in
     millions) -
     diluted         230.0               230.0     230.5               230.5
    Earnings per
     share -
     diluted      $   0.44            $   0.56  $   0.10            $   0.41

    ROIC(4)                              12.1%                         18.1%
    Free cash
     flow(5)                         $   144.4                      $  196.2

    (1) Non-cash option expense included in cost of sales and SG&A is added
        back for adjusted net earnings.

    (2) Certain 2008 GAAP numbers have been restated to reflect the change in
        accounting for computer software effective January 1, 2009 as
        required under Canadian GAAP. For the third quarter of 2008,
        $2.9 million in amortization of computer software has been
        reclassified from SG&A expenses to amortization of intangible assets
        (first nine months of 2008 - $8.7 million). Amortization of computer
        software is not added back for EBIAT and adjusted net earnings. There
        is no impact to our current or previously reported EBIAT, adjusted
        net earnings or net earnings.

    (3) Management uses EBIAT 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, 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, option 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. The term EBIAT
        does not have any standardized meaning prescribed by Canadian or U.S.
        GAAP and is therefore unlikely to be comparable to similar measures
        presented by other companies. EBIAT 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.

    (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 metric used by the company includes operating
        margin, working capital management and asset utilization. ROIC is
        calculated by dividing EBIAT by average net invested capital. Net
        invested capital consists of total assets less cash, accounts
        payable, accrued liabilities and income taxes payable. The term ROIC
        does not have any standardized meaning prescribed by Canadian or U.S.
        GAAP and is therefore unlikely to be comparable to similar measures
        presented by other companies. ROIC is not a measure of performance
        under Canadian or U.S. GAAP and should not be considered in isolation
        or as a substitute for any standardized measure.

    (5) Management uses free cash flow as a measure to assess 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). The term free cash flow does not
        have any standardized meaning prescribed by Canadian or U.S. GAAP and
        is therefore unlikely to be comparable to similar measures presented
        by other companies. Free cash flow is not a measure of performance
        under Canadian or U.S. GAAP and should not be considered in isolation
        or as a substitute for any standardized measure.



    GUIDANCE SUMMARY

                       3Q 09 Guidance      3Q 09 Actual     4Q 09 Guidance(6)
                      -----------------  -----------------  -----------------
    Revenue           $1.425B - $1.575B       $1.556B        $1.55B - $1.70B
    Adjusted net EPS    $0.11 - $0.17          $0.17          $0.14 - $0.20


    (6) Guidance for the fourth quarter 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)

                                                    December 31  September 30
                                                        2008         2009
                                                    ------------ ------------
    Assets                                                       (unaudited)
    Current assets:
      Cash and cash equivalents (note 6)...........  $  1,201.0   $  1,261.4
      Accounts receivable (note 10(c)).............     1,074.0        854.0
      Inventories (note 2).........................       787.4        697.5
      Prepaid and other assets (note 7(i)).........        87.1         55.3
      Income taxes recoverable.....................        14.1         20.5
      Deferred income taxes........................         8.2          5.7
                                                    ------------ ------------
                                                        3,171.8      2,894.4
    Property, plant and equipment (note 1(i))......       433.5        410.0
    Intangible assets (note 1(i))..................        54.1         40.7
    Other long-term assets (note 7(ii))............       126.8        124.7
                                                    ------------ ------------
                                                     $  3,786.2   $  3,469.8
                                                    ------------ ------------
                                                    ------------ ------------
    Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable.............................  $  1,090.6   $  1,001.6
      Accrued liabilities (notes 4 and 7(i)).......       463.1        302.4
      Income taxes payable.........................        13.5         11.9
      Deferred income taxes........................         0.2          0.6
      Current portion of long-term debt (note 3)...         1.0        357.4
                                                    ------------ ------------
                                                        1,568.4      1,673.9
    Long-term debt (note 3)........................       732.1        223.7
    Accrued pension and post-employment benefits...        63.2         71.9
    Deferred income taxes..........................        47.2         33.7
    Other long-term liabilities....................         9.8          9.4
                                                    ------------ ------------
                                                        2,420.7      2,012.6
    Shareholders' equity (note 8):
      Capital stock................................     3,588.5      3,590.5
      Contributed surplus..........................       204.4        225.5
      Deficit......................................    (2,436.8)    (2,412.9)
      Accumulated other comprehensive income.......         9.4         54.1
                                                    ------------ ------------
                                                        1,365.5      1,457.2
                                                    ------------ ------------
                                                     $  3,786.2   $  3,469.8
                                                    ------------ ------------
                                                    ------------ ------------

                    Guarantees and contingencies (note 9)

     See accompanying notes to unaudited consolidated financial statements.
    These unaudited interim consolidated financial statements should be read
     in conjunction with the 2008 annual consolidated financial statements.



                               CELESTICA INC.

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

                                 Three months ended      Nine months ended
                                    September 30            September 30
                                  2008        2009        2008        2009
                              ----------- ----------- ----------- -----------
                              (unaudited) (unaudited) (unaudited) (unaudited)

    Revenue..................  $ 2,030.8   $ 1,556.2   $ 5,742.8   $ 4,427.8
    Cost of sales............    1,880.8     1,448.4     5,352.3     4,107.1
                              ----------- ----------- ----------- -----------
    Gross profit.............      150.0       107.8       390.5       320.7
    Selling, general and
     administrative expenses
     (note 1(i)).............       83.0        54.0       215.1       183.3
    Amortization of
     intangible assets
     (note 1(i)).............        6.3         4.7        20.5        15.3
    Other charges (note 4)...       16.4        43.5        23.3        76.7
    Interest on long-term
     debt....................       14.1         8.4        42.3        29.6
    Interest income, net of
     interest expense........       (4.3)          -       (13.5)       (0.3)
                              ----------- ----------- ----------- -----------
    Earnings (loss) before
     income taxes............       34.5        (2.8)      102.8        16.1
    Income tax expense
     (recovery):
      Current................        6.4         1.7         5.1         7.8
      Deferred...............       (4.0)       (3.9)       (4.0)      (15.6)
                              ----------- ----------- ----------- -----------
                                     2.4        (2.2)        1.1        (7.8)
                              ----------- ----------- ----------- -----------
    Net earnings (loss)
     for the period..........  $    32.1   $    (0.6)  $   101.7   $    23.9
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    Basic earnings
     per share...............  $    0.14   $    0.00   $    0.44   $    0.10

    Diluted earnings
     per share...............  $    0.14   $    0.00   $    0.44   $    0.10

    Shares used in computing
     per share amounts:
      Basic (in millions)....      229.4       229.5       229.2       229.5
      Diluted (in millions)..      230.3       229.5       230.0       230.5

     See accompanying notes to unaudited consolidated financial statements.
    These unaudited interim consolidated financial statements should be read
     in conjunction with the 2008 annual consolidated financial statements.



                               CELESTICA INC.

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

                                 Three months ended      Nine months ended
                                    September 30            September 30
                                  2008        2009        2008        2009
                              ----------- ----------- ----------- -----------
                              (unaudited) (unaudited) (unaudited) (unaudited)
    Net earnings (loss)
     for the period..........  $    32.1   $    (0.6)  $   101.7   $    23.9
    Other comprehensive
     income, net of tax:
      Foreign currency
       translation gain
       (loss)................       (3.3)        5.5         2.8         0.4
      Reclass foreign
       currency translation
       to other charges......          -         1.8           -         1.8
      Net gain (loss) on
       derivatives designated
       as cash flow hedges...      (11.4)        4.5        (9.0)        6.1
      Reclass net loss
       (gain) on derivatives
       designated as cash
       flow hedges to
       operations............       (2.5)        2.0       (21.5)       36.4
                              ----------- ----------- ----------- -----------
    Comprehensive income.....  $    14.9   $    13.2   $    74.0   $    68.6
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

     See accompanying notes to unaudited consolidated financial statements.
    These unaudited interim consolidated financial statements should be read
     in conjunction with the 2008 annual consolidated financial statements.



                               CELESTICA INC.

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

                                 Three months ended      Nine months ended
                                    September 30            September 30
                                  2008        2009        2008        2009
                              ----------- ----------- ----------- -----------
                              (unaudited) (unaudited) (unaudited) (unaudited)

    Cash provided by (used in):
    Operations:
    Net earnings (loss)
     for the period..........  $    32.1   $    (0.6)  $   101.7   $    23.9
    Items not affecting cash:
      Depreciation and
       amortization..........       27.2        24.4        81.5        74.5
      Deferred income taxes..       (4.0)       (3.9)       (4.0)      (15.6)
      Non-cash stock-based
       compensation..........        3.7         6.7        16.5        21.4
      Restructuring charges
       (note 4)..............        0.2         2.8         0.5         4.1
      Other charges
       (note 4)..............          -         1.5           -         8.0
    Other....................        4.9         1.0         8.0        (8.2)
    Changes in non-cash
     working capital items:
      Accounts receivable....     (146.8)      (46.1)      (98.9)      219.0
      Inventories............      (31.3)      (64.3)      (51.4)       88.8
      Prepaid and
       other assets..........        9.8        13.6        25.0        36.0
      Income taxes
       recoverable...........       (1.5)       (1.8)      (14.6)       (6.4)
      Accounts payable and
       accrued liabilities...      191.2       211.9       132.8      (195.4)
      Income taxes payable...        2.3         1.2         6.3        (1.6)
                              ----------- ----------- ----------- -----------
      Non-cash working
       capital changes.......       23.7       114.5        (0.8)      140.4
                              ----------- ----------- ----------- -----------
    Cash provided by
     operations..............       87.8       146.4       203.4       248.5
                              ----------- ----------- ----------- -----------
    Investing:
      Purchase of property,
       plant and equipment...      (30.8)       (9.9)      (63.2)      (56.3)
      Proceeds from sale
       of assets.............        0.4         5.1         4.2         6.5
      Other..................       (0.1)          -        (0.1)        0.5
                              ----------- ----------- ----------- -----------
    Cash used in investing
     activities..............      (30.5)       (4.8)      (59.1)      (49.3)
                              ----------- ----------- ----------- -----------
    Financing:
      Repurchase of Senior
       Subordinated Notes
       (Notes) (note 3(d))...          -           -           -      (149.7)
      Proceeds from
       termination of
       swap agreements
       (note 3(d))...........          -           -           -        14.7
      Financing costs........          -           -           -        (2.3)
      Repayment of capital
       lease obligations.....          -        (0.1)       (0.2)       (1.0)
      Issuance of share
       capital...............        0.2         1.8         2.1         2.0
      Other..................       (2.3)       (1.2)       (4.7)       (2.5)
                              ----------- ----------- ----------- -----------
    Cash provided by (used in)
     financing activities....       (2.1)        0.5        (2.8)     (138.8)
                              ----------- ----------- ----------- -----------

    Increase in cash.........       55.2       142.1       141.5        60.4
    Cash and cash equivalents,
     beginning of period.....    1,203.0     1,119.3     1,116.7     1,201.0
                              ----------- ----------- ----------- -----------
    Cash and cash equivalents,
     end of period...........  $ 1,258.2   $ 1,261.4   $ 1,258.2   $ 1,261.4
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

                 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 2008 annual consolidated financial statements.



                               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 2008 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
    September 30, 2009 and the results of operations, comprehensive income,
    and cash flows for the three months and nine months ended
    September 30, 2008 and 2009.

    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
    accounts receivable, 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 financial instruments and
    pension costs. Actual results could differ materially from those
    estimates and assumptions, especially in light of the economic
    environment and uncertainties.

    These unaudited interim consolidated financial statements are based upon
    accounting principles consistent with those used and described in the
    2008 annual consolidated financial statements, except for the following:

    Changes in accounting policies:

    (i) Goodwill and intangible assets:

    On January 1, 2009, we adopted CICA Handbook Section 3064, "Goodwill and
    intangible assets." This revised standard establishes guidance for the
    recognition, measurement and disclosure of goodwill and intangible
    assets, including internally generated intangible assets. As required by
    this standard, we have retroactively reclassified computer software
    assets on our consolidated balance sheet from property, plant and
    equipment to intangible assets. We have also reclassified computer
    software amortization on our consolidated statement of operations from
    depreciation expense, included in selling, general and administrative
    expenses, to amortization of intangible assets. There is no impact on
    previously reported net earnings or loss.

    Intangible assets:
                                                    December 31  September 30
                                                        2008         2009
                                                    ------------ ------------
    Intellectual property..........................  $      0.6   $        -
    Other intangible assets........................        19.5         12.6
    Computer software assets.......................        34.0         28.1
                                                    ------------ ------------
                                                     $     54.1   $     40.7
                                                    ------------ ------------
                                                    ------------ ------------

    Amortization expense is as follows:

                                 Three months ended      Nine months ended
                                    September 30            September 30
                                  2008        2009        2008        2009
                              ----------- ----------- ----------- -----------
    Amortization of
     intellectual property...  $     0.3   $       -   $     0.9   $     0.2
    Amortization of other
     intangible assets.......        3.1         1.9        10.9         6.7
    Amortization of computer
     software assets.........        2.9         2.8         8.7         8.4
                              ----------- ----------- ----------- -----------
                               $     6.3   $     4.7   $    20.5   $    15.3
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    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. We have started an IFRS conversion project to evaluate the
    impact of implementing the new standards. Our transition plan is
    currently on track with our implementation schedule. Although we have
    identified key accounting differences that may potentially affect our
    financial statements or operations, we cannot at this time determine the
    impact 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 considerations and
    contingencies will also be recorded at fair value at the acquisition
    date. The standard also states that acquisition-related costs will be
    expensed as incurred and that restructuring charges will be expensed in
    the periods after the acquisition date. 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. Earlier adoption is permitted. We will consider the impact of
    adopting this standard on our consolidated financial statements if we
    have a business combination.

    (c) Consolidated financial statements:

    In January 2009, the CICA issued Handbook Section 1601, "Consolidated
    financial statements," which replaces the existing standards. This
    section establishes the standards for preparing consolidated financial
    statements and is effective for 2011. Earlier adoption is permitted. We
    will consider the impact of adopting this standard on our consolidated
    financial statements if we have a business combination.

    (d) Financial instruments - disclosures:

    In June 2009, the CICA issued amendments to Handbook Section 3862,
    "Financial instruments - disclosures," which requires enhanced
    disclosures on liquidity risk of financial instruments and new
    disclosures on fair value measurements of financial instruments. These
    requirements correspond to the IFRS on financial instruments disclosures.
    This amendment is effective for our 2009 annual consolidated financial
    statements. We are currently evaluating the impact of adopting this
    amendment on our consolidated financial statements.

    2.  Inventories:

    For the first nine months of 2009, we recorded a net inventory provision
    through cost of sales of $1.3 to write down the value of our inventory to
    net realizable value.

    3.  Long-term debt:

                                                   December 31  September 30
                                                        2008         2009
                                                    ------------ ------------
    Secured, revolving credit facility
     due 2009(a)...................................  $        -   $        -
    Senior Subordinated Notes due 2011
     (2011 Notes)(b)(c)(d)(e)......................       489.4        339.4
    Senior Subordinated Notes due 2013
     (2013 Notes)(b)...............................       223.1        223.1
    Embedded prepayment option at
     fair value(d)(f)..............................       (19.2)        (0.7)
    Basis adjustments on debt obligation(f)........         4.9          3.8
    Unamortized debt issue costs...................        (7.0)        (4.3)
    Fair value adjustment of 2011 Notes
     attributable to interest rate risks(d)(e)(f)..        40.9         19.8
                                                    ------------ ------------
                                                          732.1        581.1
    Capital lease obligations......................         1.0            -
                                                    ------------ ------------
                                                          733.1        581.1
    Less current portion(e)........................         1.0        357.4
                                                    ------------ ------------
                                                     $    732.1   $    223.7
                                                    ------------ ------------
                                                    ------------ ------------

    (a) In April 2009, we renewed our revolving credit facility and reduced
        the size from $300.0 to $200.0, on generally similar terms and
        conditions, with a maturity of April 2011. Under the terms of the
        renewed facility, borrowings bear a higher interest rate than under
        the previous terms and 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 September 30, 2009.
        Commitment fees for the first nine months of 2009 were $1.5. We were
        in compliance with all covenants at September 30, 2009. Based on the
        required financial ratios at September 30, 2009, we have full access
        to this facility.

        We also have uncommitted bank overdraft facilities available for
        operating requirements which total $65.0 at September 30, 2009. There
        were no borrowings outstanding under these facilities at
        September 30, 2009.

    (b) Our 2011 Notes bear a fixed interest rate of 7.875%. Our 2013 Notes
        bear a fixed interest rate of 7.625%. We are entitled to redeem our
        Notes at various premiums above face value. See note 3(e).

        The Notes are unsecured and subordinated in right of payment to all
        our senior debt. The Notes have restrictive covenants that limit our
        ability to pay dividends, repurchase our own stock or repay debt that
        is subordinated to these Notes. These covenants also place
        limitations on the sale of assets and our ability to incur additional
        debt. We were in compliance with all covenants at September 30, 2009.

    (c) In connection with the 2011 Notes, we entered into agreements to swap
        the fixed interest rate with a variable interest rate based on LIBOR
        plus a margin. In February 2009, we terminated our interest rate swap
        agreements. See note 3(d). Interest costs on the 2011 Notes were
        based on a fixed rate of 7.875% for the third quarter of 2009 and the
        average interest rate was 7.0% for the first nine months of 2009
        (5.8% and 6.4%, respectively, for the third quarter and first nine
        months of 2008).

    (d) In March 2009, we paid $149.7, excluding accrued interest, to
        repurchase 2011 Notes with a principal amount at maturity of $150.0.
        During the first quarter of 2009, we recognized a gain of $9.1 on the
        repurchase of the 2011 Notes which we recorded in other charges. See
        note 4. The gain on the repurchase was measured based on the carrying
        value of the repurchased portion of the 2011 Notes on the date of
        repurchase. We also terminated our interest rate swap agreements in
        the amount of $500.0 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 and will
        amortize the historical fair value adjustment on the 2011 Notes as a
        reduction to interest expense on long-term debt, over the remaining
        term of the 2011 Notes, using the effective interest rate method. As
        a result of discontinuing fair value hedge accounting in the first
        quarter of 2009, we recorded a write-down 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, which we recorded
        in other charges. See note 4.

    (e) In September 2009, we announced our intent to redeem all of the
        outstanding 2011 Notes, with an aggregate principal amount of $339.4.
        In accordance with the terms of the 2011 Notes, we will redeem the
        2011 Notes at a price of 101.969% of the principal amount, plus
        accrued and unpaid interest to the redemption date. We plan to
        complete the redemption in the fourth quarter of 2009. As a result,
        we reclassified our 2011 Notes from long-term debt on our
        consolidated balance sheet to current debt. At September 30, 2009, we
        carried our 2011 Notes at an amortized cost of $357.4. This carrying
        amount was comprised primarily of the principal component of $339.4
        and the unamortized fair value adjustment attributable to interest
        rate risk of $19.8, net of unamortized debt issue costs. We expect to
        record a gain of approximately $10 on the redemption of the 2011
        Notes in other charges during the fourth quarter of 2009.

    (f) The prepayment options in the Notes qualify as embedded derivatives
        which must be bifurcated for reporting under the financial
        instruments standards. As of September 30, 2009, the fair value of
        the embedded derivative asset for the 2013 Notes is $0.7 and is
        recorded against long-term debt. The decrease in the fair value of
        the embedded derivative asset from December 31, 2008 primarily
        reflects the write-down related to the hedge de-designation and debt
        repurchase described in note 3(d). In addition, in connection with
        our intent to redeem the remaining 2011 Notes as noted in note 3(e),
        we recorded a write-down of $1.1 in the carrying value of the
        embedded prepayment option on the 2011 Notes. This write-down is
        recorded in other charges. See note 4. As a result of bifurcating the
        prepayment option from these Notes, a basis adjustment was added to
        the cost of the long-term debt. This basis adjustment is amortized
        over the term of the debt using the effective interest rate method.
        The amortization of the basis adjustment is recorded as a reduction
        of interest expense on long-term debt.

        As of September 30, 2009, the unamortized fair value adjustment to
        the 2011 Notes attributable to the movement in the benchmark interest
        rates is $19.8. The decrease in this fair value adjustment from
        December 31, 2008 primarily reflects the debt repurchase and hedge
        de-designation described in note 3(d). After the hedge
        de-designation, this fair value adjustment is being amortized to
        interest expense on long-term debt over the remaining term of the
        2011 Notes. As noted in note 3(e), in connection with the planned
        redemption of the 2011 Notes in the fourth quarter of 2009, the
        related basis adjustment, the unamortized debt issue costs and the
        unamortized fair value adjustment will be eliminated in determining
        the gain on redemption.

        We applied fair value hedge accounting to our interest rate swaps and
        our hedged debt obligation (2011 Notes) until February 2009. We also
        mark-to-market the bifurcated embedded prepayment options in our debt
        instruments until the options are extinguished. The changes in the
        fair values each period are recorded in interest expense on long-term
        debt, except for the write-down of the embedded prepayment option due
        to hedge de-designation or planned debt redemption which we recorded
        in other charges. The mark-to-market adjustment fluctuates each
        period as it is dependent on market conditions, including future
        interest rates, implied volatility and credit spreads. The impact on
        our results of operations is as follows:

                                  Three months ended      Nine months ended
                                    September 30            September 30
                                  2008        2009        2008        2009
                              ----------- ----------- ----------- -----------
    Increase (decrease) in
     interest expense on
     long-term debt..........  $     0.9   $    (3.7)  $     0.2   $    (7.0)


    4.  Other charges:

                                  Three months ended      Nine months ended
                                    September 30            September 30
                                  2008        2009        2008        2009
                              ----------- ----------- ----------- -----------
    Restructuring(a).........  $    16.8   $    42.0   $    23.7   $    69.6
    Release of cumulative
     translation
     adjustment(b)...........          -         1.8           -         1.8
    Gain on repurchase
     of Notes
     (notes 3(d)(e)(f))......          -           -           -        (9.1)
    Write-down of embedded
     prepayment option
     (notes 3(d)(f)).........          -         1.1           -        16.7
    Other(c).................       (0.4)       (1.4)       (0.4)       (2.3)
                              ----------- ----------- ----------- -----------
                               $    16.4   $    43.5   $    23.3   $    76.7
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------

    (a)   Restructuring:

    In January 2008, we estimated that a restructuring charge of between
    $50 and $75 would be recorded throughout 2008 and 2009. In light of the
    continued uncertain economic environment, we determined that further
    restructuring actions were required to improve our overall utilization
    and reduce overhead costs, and 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. During 2008 and through the third quarter of 2009, we
    recorded a total of $104.9 in restructuring charges. Of that amount,
    $42.0 was recorded in the third quarter of 2009. 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 are manufacturing
    and plant employees in the Americas and Europe. 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 2009 activity are as follows:

                           Lease and
                              other
                  Employee   contrac-  Facility
                   termin-    tual       exit     Total      2009
                    ation    oblig-     costs    accrued   non-cash    2009
                    costs    ations   and other liability   charge    charge
                  --------- --------- --------- --------- --------- ---------
    December 31,
     2008......... $  18.7   $  26.7   $   0.2   $  45.6   $     -   $     -
    Cash
     payments.....   (14.6)     (2.2)     (0.1)    (16.9)        -         -
    Charges/
     adjustments..    10.4      (4.5)      0.2       6.1       0.6       6.7
                  --------- --------- --------- --------- --------- ---------
    March 31,
     2009.........    14.5      20.0       0.3      34.8       0.6       6.7
    Cash
     payments.....   (14.9)     (2.6)     (0.3)    (17.8)        -         -
    Charges/
     adjustments..    16.2       3.7       0.3      20.2       0.7      20.9
                  --------- --------- --------- --------- --------- ---------
    June 30,
     2009.........    15.8      21.1       0.3      37.2       1.3      27.6
    Cash
     payments.....   (16.7)     (3.6)     (0.9)    (21.2)        -         -
    Charges/
     adjustments..    33.8       4.2       1.2      39.2       2.8      42.0
                  --------- --------- --------- --------- --------- ---------
    September 30,
     2009......... $  32.9   $  21.7   $   0.6   $  55.2   $   4.1   $  69.6
                  --------- --------- --------- --------- --------- ---------
                  --------- --------- --------- --------- --------- ---------

    As of September 30, 2009, we have approximately $28 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) Release of cumulative translation adjustment:

    We recorded a net loss of $1.8 for the release of the cumulative foreign
    currency translation adjustment related to a liquidated foreign
    subsidiary.

    (c) Other:

    We recognized recoveries on the sale of certain assets that were
    previously written down through other charges.

    5.  Segment information:

    The accounting standards establish the criteria for the disclosure of
    certain information in the interim and annual financial statements
    regarding operating segments, products and services and major customers.
    Operating segments are defined as components of an enterprise for which
    separate financial information is available that is regularly evaluated
    by the chief operating decision maker in deciding how to allocate
    resources and in assessing performance. Our operating segment is
    comprised of our electronics manufacturing services business. Our chief
    operating decision maker is our Chief Executive Officer.

    (i) 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 business from new,
        existing and disengaging customers; the level of program wins or
        losses; the phasing in or out of programs; and changes in customer
        demand.

                                 Three months ended      Nine months ended
                                    September 30            September 30
                                  2008        2009        2008        2009
                              ----------- ----------- ----------- -----------
         Consumer............        25%         32%         22%         28%
         Enterprise
          communications.....        25%         20%         26%         21%
         Servers.............        15%         13%         17%         13%
         Storage.............        10%         13%         10%         11%
         Telecommunications..        14%         12%         15%         17%
         Industrial, aerospace
          and defense, and
          healthcare.........        11%         10%         10%         10%

    (ii) For the third quarter and first nine months of 2009, one customer
         represented more than 10% of total revenue (third quarter and first
         nine months of 2008 - no customer represented more than 10% of total
         revenue).


    6.  Supplemental cash flow information:

                                 Three months ended      Nine months ended
                                    September 30            September 30
    Paid during the period:       2008        2009        2008        2009
                              ----------- ----------- ----------- -----------
    Interest(a)..............  $    30.2   $    22.6   $    64.1   $    54.5
    Taxes(b).................  $     6.2   $     2.2   $    14.1   $    17.0

    (a) This includes interest paid on the Notes. Interest on these Notes is
        payable in January and July of each year until maturity. See
        notes 3(b) and (c).

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



    Cash and cash equivalents are                   December 31  September 30
     comprised of the following:                        2008         2009
                                                    ------------ ------------
    Cash(i)........................................  $    406.2   $    399.0
    Cash equivalents(i)............................       794.8        862.4
                                                    ------------ ------------
                                                     $  1,201.0   $  1,261.4
                                                    ------------ ------------
                                                    ------------ ------------

    (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 September 30, 2009 a
        Standard and Poor's rating of A-1 or above.

    7.  Derivative financial instruments:

    (i) We enter into foreign currency contracts to hedge foreign currency
        risks primarily relating to cash flows. At September 30, 2009, we had
        forward exchange contracts covering various currencies in an
        aggregate notional amount of $469.6. All derivative financial
        instruments are recorded at fair value on our consolidated balance
        sheet. The fair value of our foreign currency contracts at
        September 30, 2009 was a net unrealized gain of $6.2
        (December 31, 2008 - net unrealized loss of $38.9). This is comprised
        of $9.0 of derivative assets recorded in prepaid and other assets,
        and $2.8 of derivative liabilities recorded in accrued liabilities
        and other long-term 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 and losses
        of our foreign currency contracts during the first nine months of
        2009 is due primarily to the favourable movement in the exchange
        rates for the currencies that we hedge and the settlement of
        contracts with significant losses.

        At September 30, 2009, we had forward exchange contracts to trade
        U.S. dollars in exchange for the following currencies:

                                           Weighted
                                            average
                                Amount     exchange     Maximum
                                of U.S.   rate of U.S.   period   Fair value
    Currency                    dollars     dollars    in months  gain/(loss)
    ------------------------- ----------- ----------- ----------- -----------
    Canadian dollar..........  $   189.2   $    0.90          15   $     4.6
    British pound sterling...       84.3        1.62           4         1.5
    Mexican peso.............       60.6        0.07          12         0.3
    Thai baht................       38.4        0.03          12        (0.1)
    Malaysian ringgit........       35.9        0.28          12         0.2
    Singapore dollar.........       21.8        0.69          12         0.4
    Euro.....................       21.2        1.43           4        (0.3)
    Brazilian real...........        7.0        0.56           3        (0.3)
    Romanian lei.............        6.3        0.34           7        (0.1)
    Czech koruna.............        4.9        0.06           3           -
                              -----------                         -----------
    Total....................  $   469.6                           $     6.2
                              -----------                         -----------
                              -----------                         -----------

    (ii) In connection with the issuance of our 2011 Notes in June 2004, we
         entered into agreements to swap the fixed rate of interest for a
         variable interest rate. The notional amount of the agreements was
         $500.0. The fair value of the interest rate swap agreements at
         December 31, 2008 was an unrealized gain of $17.3, which we recorded
         in other long-term assets. In connection with the debt repurchase
         (see notes 3(c) and (d)), we terminated our swap agreements. We
         received $14.7 in February 2009 representing the fair value of the
         swap agreements, excluding accrued interest, prior to termination.
         Notes 3(d) and (f) summarize the impact of our mark-to-market
         adjustments and our fair value hedge accounting.

         Fair value hedge ineffectiveness arose when the change in the fair
         values of our swap agreements, our hedged debt obligation and its
         embedded derivatives, and the amortization of the related basis
         adjustments did not offset each other during a reporting period. The
         fair value hedge ineffectiveness loss of $1.4 for our 2011 Notes was
         recorded in interest expense on long-term debt for the first nine
         months of 2009 (loss of $0.5 for the first nine months of 2008).
         This fair value hedge ineffectiveness was driven primarily by the
         difference in the credit risk used to value our hedged debt
         obligation as compared to the credit risk used to value our interest
         rate swaps. As a result of discontinuing our fair value hedge on our
         2011 Notes in February 2009, no further fair value hedge
         ineffectiveness will occur in subsequent quarters with respect to
         the 2011 Notes.

    8.  Shareholders' equity:

                               Capital               Contributed
                                 stock      Warrants    surplus     Deficit
                              ----------- ----------- ----------- -----------
    Balance - December 31,
     2007....................  $ 3,585.2   $     3.1   $   190.3   $(1,716.3)
    Shares issued............        3.3           -           -           -
    Warrants cancelled.......          -        (3.1)        3.1           -
    Stock-based compensation
     costs...................          -           -        12.2           -
    Other....................          -           -         0.7           -
    Net earnings for first
     nine months of 2008.....          -           -           -       101.7
                              ----------- ----------- ----------- -----------
    Balance - September 30,
     2008....................  $ 3,588.5   $       -   $   206.3   $(1,614.6)
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------
    Balance - December 31,
     2008....................  $ 3,588.5   $       -   $   204.4   $(2,436.8)
    Shares issued............        2.0           -           -           -
    Stock-based compensation
     costs...................          -           -        19.6           -
    Other....................          -           -         1.5           -
    Net earnings for first
     nine months of 2009.....          -           -           -        23.9
                              ----------- ----------- ----------- -----------
    Balance - September 30,
     2009....................  $ 3,590.5   $       -   $   225.5   $(2,412.9)
                              ----------- ----------- ----------- -----------
                              ----------- ----------- ----------- -----------



                                                        Year     Nine months
                                                       ended        ended
    Accumulated other comprehensive income,         December 31  September 30
     net of tax:                                        2008         2009
                                                    ------------ ------------
    Opening balance of foreign currency
     translation account...........................  $     35.2   $     46.7
    Foreign currency translation gain..............        11.5          0.4
    Release of cumulative foreign currency
     translation to other charges (note 4(b))......           -          1.8
                                                    ------------ ------------
    Closing balance................................        46.7         48.9

    Opening balance of unrealized net gain (loss)
     on cash flow hedges...........................  $     20.7   $    (37.3)
    Net gain (loss) on cash flow hedges(1).........       (53.1)         6.1
    Net loss (gain) on cash flow hedges
     reclassified to operations(2).................        (4.9)        36.4
                                                    ------------ ------------
    Closing balance(3).............................       (37.3)         5.2
                                                    ------------ ------------
    Accumulated other comprehensive income.........  $      9.4   $     54.1
                                                    ------------ ------------
                                                    ------------ ------------

    (1) Net of income tax expense (benefit) of $0.1 and $(0.1) for the three
        and nine months ended September 30, 2009 ($0.8 income tax benefit for
        2008).
    (2) Net of income tax expense of $0.1 and $0.6 for the three and nine
        months ended September 30, 2009 ($0.2 income tax expense for 2008).
    (3) Net of income tax expense of $0.1 as of September 30, 2009 ($0.4
        income tax benefit as of December 31, 2008).


    We expect that all the gains on cash flow hedges reported in accumulated
    other comprehensive income at September 30, 2009 will be reclassified to
    operations during the next 12 months.

    9.  Guarantees and contingencies:

    We have contingent liabilities in the form of letters of credit, letters
    of guarantee and surety bonds which we have provided to various third
    parties. These guarantees cover various payments, including customs and
    excise taxes, utility commitments and certain bank guarantees. At
    September 30, 2009, these contingent liabilities amounted to
    $49.0 (December 31, 2008 - $55.4).

    In addition to the above guarantees, we have also provided routine
    indemnifications, the terms of which range in duration and often are not
    explicitly defined. These may include indemnifications against adverse
    impacts due to changes in tax laws and patent infringements by third
    parties. We have also provided indemnifications in connection with the
    sale of certain businesses and real property. The maximum potential
    liability from these indemnifications cannot be reasonably estimated. In
    some cases, we have recourse against other parties to mitigate our risk
    of loss from these indemnifications. Historically, we have not made
    significant payments relating to these types of indemnifications.

    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.

    We expect to receive a recovery of damages related to certain purchases
    we made in prior periods as a result of the settlement of a class action
    lawsuit. The distribution of the settlement funds is subject to court
    approval and, as a result, we have not yet recorded a gain. We intend to
    record the recovery, net of estimated costs and expenses, in other
    charges when the settlement is approved. We expect to record a net
    recovery of between $21 and $27 during the fourth quarter of 2009.

    Income taxes:

    We are subject to tax audits by local tax authorities of historical
    information which could result in additional tax expense in future
    periods relating to prior results. In addition, tax authorities could
    challenge 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 and 2002 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.

    10. Financial instruments - financial risks:

    We have exposures to the following financial risks arising from financial
    instruments: market risk, credit risk and liquidity risk. Market risk is
    the risk that results in changes to market prices, such as foreign
    exchange rates and interest rates, that could affect our operations or
    the value of our financial instruments.

    (a) Currency risk: Due to the nature of our international operations, we
    are exposed to exchange rate fluctuations on our financial instruments
    denominated in various foreign currencies. We manage our currency risk
    through our hedging program using forecasts of future cash flows
    denominated in foreign currencies and our currency exposures. Our major
    currency exposures, as of September 30, 2009, 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 September 30, 2009.

                                            Canadian      Thai      Mexican
                                             dollar       baht        peso
                                          ----------- ----------- -----------
    Cash and cash equivalents............  $    50.5   $     0.3   $     1.1
    Accounts receivable..................        0.1           -           -
    Other financial assets...............        0.3         1.3         0.2
    Accounts payable and
     accrued liabilities.................      (33.7)      (12.0)      (11.4)
    Other financial liabilities..........          -        (0.3)          -
                                          ----------- ----------- -----------
    Net financial assets (liabilities)...  $    17.2   $   (10.7)  $   (10.1)
                                          ----------- ----------- -----------
                                          ----------- ----------- -----------

    At September 30, 2009, 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:

                                           Canadian       Thai     Mexican
                                             dollar       baht        peso
                                          ----------- ----------- -----------
                                                  Increase (decrease)
    1% Strengthening
      Net earnings.......................  $     0.2   $    (0.1)  $       -
      Other comprehensive income.........        1.9         0.4         0.2
    1% Weakening
      Net earnings.......................       (0.2)        0.1           -
      Other comprehensive income.........       (1.9)       (0.4)       (0.2)

    (b) Interest rate risk: We are exposed to interest rate risks as we have
    significant cash balances invested at floating rates. Borrowings under
    our revolving credit facility bear interest at LIBOR plus a margin. If we
    borrow under this facility, we will be exposed to interest rate risks due
    to fluctuations in the LIBOR rate.

    (c) Credit risk: Credit risk refers to the risk that a counterparty may
    default on its contractual obligations resulting in a financial loss to
    us. To mitigate the risk of financial loss from defaults under our
    foreign currency forward contracts, these counterparty financial
    institutions each had a Standard and Poor's rating of A or above at
    September 30, 2009. The financial institution with which we have an
    accounts receivable sales program had a Standard and Poor's rating of A+
    at September 30, 2009. At September 30, 2009, there were no outstanding
    accounts receivable that were sold under the program. See notes 14(c) and
    18 to the 2008 annual consolidated financial statements.

    We also provide credit to our customers in the normal course of business.
    The carrying amount of financial assets recorded in the financial
    statements, net of any allowances or reserves for losses, represents our
    estimate of maximum exposure to this credit risk. As of September 30,
    2009, less than 1% of our gross accounts receivable are over 90 days past
    due. Accounts receivable are net of an allowance for doubtful accounts of
    $10.8 at September 30, 2009 (December 31, 2008 - $13.7).

    (d) Liquidity risk: Liquidity risk is the risk that we may not have cash
    available to satisfy our financial obligations as they come due. The
    majority of our financial liabilities recorded in accounts payable and
    accrued liabilities are due within 90 days. The redemption of our 2011
    Notes is planned for the fourth quarter of 2009 and will be funded from
    existing cash resources. Our 2013 Notes are scheduled to mature in
    July 2013. Management believes that cash flow from operations, together
    with cash on hand, cash from the sale of accounts receivable, and
    borrowings available under our credit facility and bank overdraft
    facilities will be sufficient to support our financial obligations. See
    note 14(d) to the 2008 annual consolidated financial statements.

    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

Organization Profile

Celestica Inc.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890