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Celestica announces fourth quarter and fiscal year 2012 financial results



  Celestica announces fourth quarter and fiscal year 2012 financial results

PR Newswire

TORONTO, Jan. 22, 2013

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

TORONTO, Jan. 22, 2013 /PRNewswire/ - Celestica Inc. (NYSE, TSX: CLS), a
global leader in the delivery of end-to-end product lifecycle solutions, today
announced financial results for the fourth quarter and fiscal year ended
December 31, 2012.

                        Fourth Quarter 2012 Highlights

  * Revenue:  $1.50 billion, within the range of our guidance of $1.425 to
    $1.525 billion (announced October 23, 2012)
  * IFRS EPS:  $0.04 per share, compared to $0.32 per share for the fourth
    quarter of 2011
  * Adjusted EPS (non-IFRS):  $0.25 per share, above our guidance of $0.15 to
    $0.21 per share (announced October 23, 2012) and includes a $0.06 per
    share net income tax recovery
  * Free cash flow (non-IFRS):  $90.2 million, compared to $89.0 million for
    the fourth quarter of 2011
  * Diversified end markets: 23% of total revenue, increased from 18% of total
    revenue for the fourth quarter of 2011

                         Fiscal Year 2012 Highlights

  * Revenue:  $6.51 billion, down 10% from 2011
  * IFRS EPS:  $0.56 per share, compared to $0.89 per share for 2011
  * Adjusted EPS (non-IFRS):  $0.98 per share, compared to $1.11 per share for
    2011
  * Free cash flow (non-IFRS):  $211.4 million, up 47% from prior year
  * Diversified end markets: 20% of total revenue, increased from 14% of total
    revenue for 2011
  * Repurchased and cancelled 22.4 million subordinate voting shares under a
    substantial issuer bid for $175 million
  * Repurchased and cancelled 13.3 million subordinate voting shares under a
    Normal Course Issuer Bid for $113.8 million
  * Recorded $44.0 million of restructuring charges and $17.7 million of asset
    impairment charges
  * Acquired D&H Manufacturing Company for $71 million in September 2012

"Celestica  delivered  revenue  and  operating  profit  consistent  with   our 
guidance, and generated strong free cash  flow in the fourth quarter,  despite 
continued softness in  end market  demand." said  Craig Muhlhauser,  Celestica 
President and Chief Executive Officer. "We overcame a challenging  environment 
in 2012 and posted solid financial results, while continuing to invest in  the 
business and returning  over $280  million to our  shareholders through  share 
repurchases during the year.

"We are entering  2013 with  a solid foundation  to execute  our strategy  and 
capitalize on  the opportunities  before  us.  We  remain focused  on  driving 
profitable growth  and  creating superior  value  for our  customers  and  our 
shareholders."

Fourth Quarter and Fiscal Year  2012 Summary

                                                                   Three months ended           Fiscal year ended
                                                                       December 31                 December 31
                                                                   2011          2012          2011          2012
Revenue (in millions) ........................................  $ 1,753.4     $ 1,496.2     $ 7,213.0     $ 6,507.2  
                                                                                                                     
IFRS net earnings (in millions) ^(i) ......................     $    69.2     $     7.2     $   195.1     $   117.7  
IFRS                                                            $    0.32     $    0.04     $    0.89     $    0.56  
EPS^(i) .......................................................
                                                                                                                     
Adjusted net earnings (non-IFRS) (in millions)^(ii)             $    71.1     $    50.3     $   241.9     $   205.8  
Adjusted EPS (non-IFRS)^(i)(ii) ............................    $    0.33     $    0.25     $    1.11     $    0.98  
Non-IFRS return on invested capital (ROIC)^(ii) ...                  27.5 %        18.4 %        27.5 %        21.5 %
Non-IFRS operating margin^(ii) ............................           3.8 %         3.1 %         3.6 %         3.3 %

i.     International Financial Reporting Standards (IFRS) net earnings for the
fourth quarter of  2012 included an  aggregate charge of  $0.13 (pre-tax)  per 
share  for  stock-based  compensation,   amortization  of  intangible   assets 
(excluding computer software)  and restructuring charges.  This is within  the 
range we provided on October 23, 2012 of a charge between $0.08 and $0.14  per 
share. IFRS net earnings for the fourth quarter of 2012 also included a  $0.09 
(pre-tax) per share impairment charge, primarily against goodwill. Included in
the fourth quarter of 2012 adjusted EPS  (non-IFRS) of $0.25 was a net  income 
tax benefit of  $0.06 per share  arising from a  corporate tax  reorganization 
involving certain  of  our  European  subsidiaries  and  changes  to  our  tax 
provisions related to certain tax uncertainties.

ii.     Non-IFRS measures do not have  any standardized meaning prescribed  by 
IFRS and are not necessarily comparable to similar measures presented by other
companies using IFRS or other generally accepted accounting principles (GAAP).
See Schedule 1 for  non-IFRS definitions and a  reconciliation of non-IFRS  to 
IFRS measures.

End Markets by Quarter as a Percentage of Total Revenue

                                                        2011                                                   2012
                                   Q1         Q2         Q3         Q4         FY         Q1         Q2         Q3         Q4         FY
Communications ^(i) .....           36 %       34 %       34 %       33 %       35 %       33 %       32 %       37 %       37 %       35 %
Consumer ...................        26 %       25 %       25 %       26 %       25 %       23 %       21 %       15 %        9 %       18 %
Diversified                         11 %       13 %       16 %       18 %       14 %       19 %       19 %       21 %       23 %       20 %
^(ii) ..............
Servers .......................     15 %       17 %       14 %       13 %       15 %       15 %       16 %       14 %       17 %       15 %
Storage .......................     12 %       11 %       11 %       10 %       11 %       10 %       12 %       13 %       14 %       12 %
Revenue (in billions) ...       $ 1.80     $ 1.83     $ 1.83     $ 1.75     $ 7.21     $ 1.69     $ 1.74     $ 1.58     $ 1.50     $ 6.51  

i.     We combined enterprise communications and telecommunications for
reporting purposes effective the first quarter of 2012. Prior period
percentages were also combined.

ii.     Our diversified end market is comprised of industrial, aerospace and
defense, healthcare, green technology, semiconductor equipment and other.

Wind Down of Manufacturing Services for  Research In Motion Limited (RIM)  and 
Restructuring Update
In June 2012, we announced that we would wind down our manufacturing  services 
for RIM.  We  completed our  manufacturing services  for RIM  and the  related 
transition activities by the end of 2012. Revenue from RIM was minimal in  the 
fourth quarter of 2012  and it represented  12% of our  total revenue in  full 
year 2012 (full year 2011 — 19%).

Due to the historical significance  of RIM to our  operations and in order  to 
improve our margin performance, we announced that we would take  restructuring 
actions throughout our global network to reduce our overall cost structure. In
July 2012, we estimated total restructuring charges of between $40 million and
$50 million.  Our  current estimate  of  the total  restructuring  charges  to 
complete our planned actions, which we expect  to complete by the end of  June 
2013, is between $55 million and  $65 million, taking into account  additional 
actions in response to the  continued challenging demand environment. Of  this 
amount, we recorded  $16.7 million  in the fourth  quarter of  2012 and  $44.0 
million in 2012.

Substantial Issuer Bid (SIB)
During the fourth quarter  of 2012, we launched  and successfully completed  a 
SIB to  repurchase for  cancellation $175  million of  our subordinate  voting 
shares. We repurchased for cancellation approximately 22.4 million subordinate
voting shares at a price of $7.80 per share, representing approximately 12% of
the subordinate voting shares  issued and outstanding  prior to completion  of 
the SIB. We funded the share repurchases  using a combination of cash on  hand 
and cash from our revolving credit facility.

First Quarter 2013 Outlook
For the first quarter ending March 31, 2013, we anticipate revenue to be in
the range of $1.325 to $1.425 billion, and adjusted net earnings per share to
be in the range of $0.11 to $0.17.  We expect a negative $0.07 to $0.13 per
share (pre-tax) aggregate impact on an IFRS basis for the following items:
stock-based compensation, amortization of intangible assets (excluding
computer software) and restructuring charges.

Fourth Quarter Webcast
Management will host its fourth quarter results conference call today at  4:30 
p.m. Eastern Standard Time. The webcast can be accessed at www.celestica.com.

Supplementary Information
In addition to disclosing detailed results in accordance with IFRS,  Celestica 
provides  supplementary  non-IFRS  measures  to  consider  in  evaluating  the 
company's operating performance. See Schedule 1. Management uses adjusted  net 
earnings and other non-IFRS measures  to assess operating performance and  the 
effective  use  and  allocation  of  resources;  to  provide  more  meaningful 
period-to-period comparisons  of  operating  results;  to  enhance  investors' 
understanding of the core  operating results of  Celestica's business; and  to 
set management incentive targets.

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 www.celestica.com. The company's securities filings can also be
accessed at www.sedar.com and 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 or operational results including
our quarterly earnings and revenue guidance; the impact of acquisitions and
program wins or losses on our financial results and working capital
requirements; anticipated expenses, restructuring charges, capital
expenditures or benefits; our expected tax outcomes; our cash flows, financial
targets and priorities; changes in our mix of revenue by end markets; our
ability to diversify and grow our customer base and develop new capabilities;
and the effect of the global economic environment on customer demand. 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", "continues", 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 applicable
Canadian provincial and territorial securities legislation. Forward-looking
statements are not guarantees of future performance. Readers should understand
that the following important factors, among others, could affect our future
results and could cause those results to differ materially from those
expressed in such forward-looking statements: our dependence on a limited
number of customers and on our customers' ability to compete and succeed in
their marketplace for the products we manufacture; the effects of price
competition and other business and competitive factors generally affecting the
electronics manufacturing services (EMS) industry; the challenges of
effectively managing our operations and our working capital performance during
uncertain economic conditions, including responding to significant changes in
demand and changes in the outsourcing strategies of our customers, including
the insourcing of programs by them; the challenges of diversifying our
customer base, including the extent and timing of replacement business for
lost programs or customer disengagements; the challenges of managing changing
commodity costs as well as labor costs and conditions; disruptions to our
operations, or those of our customers, component suppliers, or our logistics
partners, resulting from local events including natural disasters, political
instability, local labor conditions and social unrest, criminal activity and
other risks present in the jurisdictions in which we operate; our inability to
retain or expand our business due to execution problems relating to the
ramping of new programs; the delays in the delivery and/or general
availability of various components and materials used in our manufacturing
process; the challenge of managing our financial exposure to foreign currency
volatility; our dependence on industries affected by rapid technological
change; variability of operating results among periods; our ability to
successfully manage our international operations; increasing income taxes and
our ability to successfully defend tax audits or meet the conditions of tax
incentives; the challenges of completing our restructuring activities or
integrating our acquisitions; 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 Celestica, are discussed herein and in our 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.

Our revenue, earnings and other financial guidance, as contained in this press
release, 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 and can fluctuate significantly  in 
terms of volume and mix of products or services; the timing and execution  of, 
and investments  associated with,  ramping new  business; the  success in  the 
marketplace  of  our   customers'  products;  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; the timing and execution  of our restructuring actions; and  our 
ability to diversify  our customer  base and develop  new capabilities.  These 
assumptions and estimates 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 our  guidance 
is effective on  the date given,  and will  only be updated  through a  public 
announcement. 

                                                                    Schedule 1

Supplementary Non-IFRS Measures
Our non-IFRS measures include  gross profit, gross margin  (gross profit as  a 
percentage of revenue), selling,  general and administrative expenses  (SG&A), 
SG&A as a percentage of revenue, operating earnings (EBIAT), operating  margin 
(EBIAT as  a  percentage of  revenue),  adjusted net  earnings,  adjusted  net 
earnings per share, ROIC, free cash flow, cash cycle days and inventory turns.
In calculating  these non-IFRS  financial  measures, management  excludes  the 
following items,  as applicable:   stock-based compensation,  amortization  of 
intangible assets  (excluding  computer  software),  restructuring  and  other 
charges, net  of recoveries  (most significantly  restructuring charges),  the 
write-down of goodwill, intangible assets  and property, plant and  equipment, 
and gains or losses related  to the repurchase of shares  or debt, net of  tax 
adjustments and significant deferred tax write-offs or recoveries.

These non-IFRS measures  do not  have any standardized  meaning prescribed  by 
IFRS and are not necessarily comparable to similar measures presented by other
companies using IFRS, or our North American competitors who report under  U.S. 
GAAP and use  non-U.S. GAAP  measures to describe  similar operating  metrics. 
Non-IFRS measures are not measures of performance under IFRS and should not be
considered in isolation or as a substitute for any standardized measure  under 
IFRS.  The  most  significant  limitation  to  management's  use  of  non-IFRS 
financial measures is that the charges  or credits excluded from the  non-IFRS 
measures are nonetheless charges or credits that are recognized under IFRS and
that have an economic impact on the company.  Management compensates for these
limitations primarily by issuing  IFRS results to show  a complete picture  of 
the company's  performance, and  reconciling non-IFRS  results back  to  IFRS, 
unless there are no comparable IFRS measures.

The economic  substance of  these exclusions  and management's  rationale  for 
excluding these from non-IFRS financial measures is provided below:

Stock-based compensation, which represents the  estimated fair value of  stock 
options, restricted  share  units  and  performance  share  units  granted  to 
employees, is  excluded  because  grant  activities  vary  significantly  from 
quarter-to-quarter in both  quantity and fair  value.  In addition,  excluding 
this expense allows us to better compare core operating results with those  of 
our competitors who also generally exclude stock-based compensation from their
core operating results, who may have different granting patterns and types  of 
equity awards, and who may use different option valuation assumptions than  we 
do, including those competitors who use  U.S. GAAP and non-U.S. GAAP  measures 
to present similar metrics.

Amortization charges    (excluding  computer  software)  consist  of  non-cash 
charges against  intangible  assets  that  are  impacted  by  the  timing  and 
magnitude of acquired  businesses.  Amortization of  intangibles varies  among 
competitors, and  we believe  that excluding  these charges  permits a  better 
comparison of core operating  results with those of  our competitors who  also 
generally exclude amortization charges.

Restructuring and other charges, net of recoveries, include costs relating  to 
employee severance, lease terminations, facility closings and  consolidations, 
write-downs of owned property and equipment  which are no longer used and  are 
available for  sale,  reductions  in  infrastructure  and  acquisition-related 
transaction  costs.  We  exclude  restructuring  and  other  charges,  net  of 
recoveries, because they are not directly related to ongoing operating results
and do  not reflect  expected future  operating expenses  after completion  of 
these activities.  We believe  this exclusion permits  a better comparison  of 
our core operating results  with those of our  competitors who also  generally 
exclude these charges in assessing operating performance.

Impairment charges,  which  consist  of  non-cash  charges  against  goodwill, 
intangible assets and property, plant and equipment, result primarily when the
carrying value of these assets exceeds their fair value.  Our competitors  may 
record impairment  charges  at different  times  and excluding  these  charges 
permits a better comparison  of our core operating  results with those of  our 
competitors who also  generally exclude these  charges in assessing  operating 
performance.

Gains or losses related to  the repurchase of shares  or debt are excluded  as 
these gains  or losses  do  not impact  core  operating performance  and  vary 
significantly among our competitors who  also generally exclude these  charges 
or recoveries in assessing operating performance.

Significant deferred  tax  write-offs  or recoveries  are  excluded  as  these 
write-offs or recoveries  do not  impact core operating  performance and  vary 
significantly among our competitors who  also generally exclude these  charges 
or recoveries in assessing operating performance.

The following table sets forth, for the periods indicated, a reconciliation of
IFRS to non-IFRS measures (in millions, except per share amounts):

                                                                                 Three months ended                              Year ended
                                                                                     December 31                                 December 31
                                                                             2011                  2012                  2011                  2012
                                                                                  % of                  % of                  % of                  % of
                                                                                  revenue               revenue               revenue               revenue
Revenue .........................................................     $ 1,753.4             $ 1,496.2             $ 7,213.0             $ 6,507.2          
                                                                                                                                                           
IFRS gross profit ...........................................         $   122.1      7.0%   $    99.8      6.7%   $   491.4      6.8%   $   438.4      6.7%
  Stock-based compensation ............................                     3.8                   2.9                  15.5                  13.4          
Non-IFRS gross profit ...................................             $   125.9      7.2%   $   102.7      6.9%   $   506.9      7.0%   $   451.8      6.9%
                                                                                                                                                           
IFRS SG&A .......................................................     $    58.5      3.3%   $    54.7      3.7%   $   253.4      3.5%   $   237.0      3.6%
  Stock-based compensation ..............................                  (5.9 )                (4.9 )               (28.7 )               (22.2 )        
Non-IFRS SG&A ...............................................         $    52.6      3.0%   $    49.8      3.3%   $   224.7      3.1%   $   214.8      3.3%
                                                                                                                                                           
IFRS earnings before income taxes .............                       $    54.2             $     2.2             $   198.8             $   111.9          
  Finance costs ...................................................         1.1                   1.0                   5.4                   3.5          
  Stock-based compensation ..............................                   9.7                   7.8                  44.2                  35.6          
  Amortization of intangible assets (excluding                              0.8                   1.5                   6.2                   4.1          
  computer software) .........................................
  Restructuring and other charges, net of                                   1.0                  34.5                   6.5                  59.5          
  recoveries ........................................................
Non-IFRS operating earnings (EBIAT) (1) ....                          $    66.8      3.8%   $    47.0      3.1%   $   261.1      3.6%   $   214.6      3.3%
                                                                                                                                                           
IFRS net earnings ..........................................          $    69.2      3.9%   $     7.2      0.5%   $   195.1      2.7%   $   117.7      1.8%
  Stock-based compensation .............................                    9.7                   7.8                  44.2                  35.6          
  Amortization of intangible assets (excluding                              0.8                   1.5                   6.2                   4.1          
  computer software) ..........................................
  Restructuring and other charges, net of                                   1.0                  34.5                   6.5                  59.5          
  recoveries ........................................................
  Adjustments for taxes (2) .................................              (9.6 )                (0.7 )               (10.1 )               (11.1 )        
Non-IFRS adjusted net earnings ..................                     $    71.1      4.1%   $    50.3      3.4%   $   241.9      3.4%   $   205.8      3.2%
                                                                                                                                                           
Diluted EPS .....................................................                                                                                          
  Weighted average # of shares (in millions) .....                        218.7                 203.4                 218.3                 210.5          
  IFRS earnings per share .................................           $    0.32             $    0.04             $    0.89             $    0.56          
  Non-IFRS adjusted net earnings per share .....                      $    0.33             $    0.25             $    1.11             $    0.98          
  # of shares outstanding (in millions) ................                  216.5                 182.8                 216.5                 182.8          
                                                                                                                                                           
IFRS cash provided by operations ..............                       $    96.8             $   104.6             $   196.3             $   312.4          
  Purchase of property, plant and equipment,                               (6.8 )               (13.4 )               (45.2 )               (97.0 )        
  net of sales proceeds ......................................
  Finance costs paid ..........................................            (1.0 )                (1.0 )                (7.0 )                (4.0 )        
Non-IFRS free cash flow (3) ..........................                $    89.0             $    90.2             $   144.1             $   211.4          
                                                                                                                                                           
ROIC % (4) ........................................................         27.5%                18.4 %                 27.5%                 21.5%        

 1. EBIAT is defined as earnings before interest, amortization of intangible
    assets (excluding computer software) and income taxes.  EBIAT also
    excludes stock-based compensation, restructuring and other charges, net of
    recoveries, gains or losses related to the repurchase of shares or debt,
    and impairment charges.
 2. The adjustments for taxes, as applicable, represent the tax effects on the
    non-IFRS adjustments and significant deferred tax write-offs or recoveries
    that do not impact our core operating performance.
 3. Management uses free cash flow as a measure, in addition to cash flow from
    operations, to assess operational cash flow performance. We believe free
    cash flow provides another level of transparency to our liquidity as it
    represents cash generated from or used in operating activities after the
    purchase of property, plant and equipment (net of proceeds from sale of
    certain surplus equipment and property) and finance costs paid.
 4. Management uses ROIC as a measure to assess the effectiveness of the
    invested capital we use to build products or provide services to our
    customers. Our ROIC measure 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 and other current liabilities
    and provisions, and income taxes payable. We use a two-point average to
    calculate average net invested capital for the quarter and a five-point
    average to calculate average net invested capital for the year. There is
    no comparable measure under IFRS.

The following table sets forth, for the periods indicated, our calculation  of 
ROIC % (in millions, except ROIC %):

                                                                                               Three months                  Year ended
                                                                                             ended December 31              December 31
                                                                                            2011          2012           2011          2012
Non-IFRS operating earnings (EBIAT) ..................                                   $    66.8     $    47.0      $   261.1     $   214.6  
Multiplier ...............................................................                       4             4              1             1  
Annualized EBIAT .................................................                       $   267.2     $   188.0      $   261.1     $   214.6  
                                                                                                                                               
Average net invested capital for the period ...........                                  $   972.1     $ 1,021.1      $   950.7     $   997.1  
                                                                                                                                               
ROIC % ..................................................................                     27.5 %        18.4 %         27.5 %        21.5 %
                                                                                                                                               
                                                                           December 31    March 31         June 30   September 30   December 31
                                                                              2011          2012              2012       2012          2012
Net invested capital consists of:                                                                                                              
Total assets ............................................................  $ 2,969.6     $ 2,955.4     $ 2,951.2      $ 2,885.5     $ 2,658.8  
Less: cash ..............................................................      658.9         646.7         630.6          598.2         550.5  
Less: accounts payable, accrued and other current                                                                                              
liabilities, provisions and income taxes payable ......                      1,346.6       1,317.8       1,332.1        1,209.6       1,143.9
Net invested capital by quarter ...............................            $   964.1     $   990.9     $   988.5      $ 1,077.7     $   964.4  
                                                                                                                                               
                                                                           December 31    March 31       June 30     September 30   December 31
                                                                              2010          2011          2011           2011          2011
Net invested capital consists of:                                                                                                              
Total assets ............................................................  $ 3,013.9     $ 2,997.3     $ 3,020.6      $ 2,914.8     $ 2,969.6  
Less: cash ..............................................................      632.8         584.0         552.6          586.1         658.9  
Less: accounts payable, accrued and other current                                                                                              
liabilities, provisions and income taxes payable ......                      1,552.6       1,483.1       1,417.3        1,348.6       1,346.6
Net invested capital by quarter ................................           $   828.5     $   930.2     $ 1,050.7      $   980.1     $   964.1  

GUIDANCE SUMMARY

                                        Q4 12         Q4 12              Q1 13
                                      Guidance        Actual     Guidance ^(1)
Revenue (in billions).............      $1.425 to        $1.50       $1.325 to
                                           $1.525                       $1.425
Adjusted EPS (diluted) (2) ...           $0.15 to        $0.25        $0.11 to
                                            $0.21                        $0.17
                                                                  

(1)  We expect a negative$0.07 to $0.13 per share (diluted) pre-tax aggregate
impact on an IFRS basis for the following recurring items: stock-based
compensation, amortization of intangible assets (excluding computer software)
and restructuring charges.

(2)  Included in the fourth quarter of 2012 adjusted EPS (non-IFRS) of $0.25
was a net income tax benefit of $0.06 per share arising from a corporate tax
reorganization involving certain of our European subsidiaries and changes to
our tax provisions related to certain tax uncertainties.

 

                               CELESTICA INC.  

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

                                                                            December 31   December 31
                                                                               2011          2012
Assets                                                                                               
Current assets:                                                                                      
  Cash and cash equivalents (note 12) ...................                   $   658.9     $   550.5  
    Accounts receivable (note 5) ..............................                 810.8         700.5  
    Inventories (note 6) ............................................           880.7         745.7  
    Income taxes receivable .....................................                 9.1          13.8  
    Assets classified as held-for-sale .......................                   32.1          30.8  
    Other current assets ..........................................              71.0          69.4  
Total current assets ..............................................           2,462.6       2,110.7  
                                                                                                     
Property, plant and equipment ...............................                   322.7         337.0  
Goodwill ................................................................        48.0          60.3  
Intangible assets ....................................................           35.5          53.0  
Deferred income taxes ...........................................                41.4          36.6  
Other non-current assets ......................................                  59.4          61.2  
Total assets ..........................................................     $ 2,969.6     $ 2,658.8  
                                                                                                     
Liabilities and Equity                                                                               
Current liabilities:                                                                                 
  Borrowings under credit facilities (note 7) .............                 $       —     $    55.0  
  Accounts payable ...............................................            1,002.6         831.6  
  Accrued and other current liabilities .....................                   268.7         243.7  
  Income taxes payable ..........................................                39.0          37.8  
  Current portion of provisions ...............................                  36.3          30.8  
Total current liabilities ...........................................         1,346.6       1,198.9  
                                                                                                     
Retirement benefit obligations (note 9) ..................                      120.5         116.2  
Provisions and other non-current liabilities ............                        11.1          13.5  
Deferred income taxes ..........................................                 27.6          13.5  
Total liabilities .......................................................     1,505.8       1,342.1  
                                                                                                     
Equity:                                                                                              
  Capital stock (note 8) ..........................................           3,348.0       2,774.7  
  Treasury stock (note 8) .......................................              (37.9)        (18.3)  
  Contributed surplus .............................................             369.5         653.2  
  Deficit ................................................................. (2,203.5)     (2,097.0)  
  Accumulated other comprehensive income (loss)                                (12.3)           4.1  
Total equity ...........................................................      1,463.8       1,316.7  
Total liabilities and equity .......................................        $ 2,969.6     $ 2,658.8  

                           Contingencies (note 13)

    The accompanying notes are an integral part of these unaudited interim
                 condensed consolidated financial statements.

                               CELESTICA INC.  

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

                                                                                        Three months ended              Year ended
                                                                                            December 31                 December 31
                                                                                        2011          2012          2011          2012
Revenue .........................................................................    $ 1,753.4     $ 1,496.2     $ 7,213.0     $ 6,507.2  
Cost of sales (note 6) .....................................................           1,631.3       1,396.4       6,721.6       6,068.8  
Gross profit ....................................................................        122.1          99.8         491.4         438.4  
Selling, general and administrative expenses (SG&A) .......                               58.5          54.7         253.4         237.0  
Research and development ..............................................                    4.7           3.7          13.8          15.2  
Amortization of intangible assets ......................................                   2.6           3.7          13.5          11.3  
Other charges (note 10) ...................................................                1.0          34.5           6.5          59.5  
Earnings from operations ..................................................               55.3           3.2         204.2         115.4  
Finance costs .................................................................            1.1           1.0           5.4           3.5  
Earnings before income taxes ...........................................                  54.2           2.2         198.8         111.9  
Income tax expense (recovery) (note 11):                                                                                                  
  Current .........................................................................      (5.6)          12.1          10.3          15.5  
  Deferred .......................................................................       (9.4)        (17.1)         (6.6)        (21.3)  
                                                                                        (15.0)         (5.0)           3.7         (5.8)  
Net earnings for the period ...............................................          $    69.2     $     7.2     $   195.1     $   117.7  
                                                                                                                                          
Basic earnings per share ..................................................          $    0.32     $    0.04     $    0.90     $    0.56  
                                                                                                                                          
Diluted earnings per share ................................................          $    0.32     $    0.04     $    0.89     $    0.56  
                                                                                                                                          
Shares used in computing per share amounts (in millions):                                                                                 
  Basic ............................................................................     216.6         201.5         216.3         208.6  
  Diluted ..........................................................................     218.7         203.4         218.3         210.5  

    The accompanying notes are an integral part of these unaudited interim
                 condensed consolidated financial statements.

                               CELESTICA INC.  

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

                                                    Three months ended         Year ended
                                                       December 31             December 31
                                                     2011       2012        2011        2012
Net earnings for the                               $ 69.2     $   7.2     $ 195.1     $ 117.7  
period ...........................................
Other comprehensive income (loss), net of tax:                                                 
        Actuarial gains (losses) on pension plans     5.2      (11.2)         5.2      (11.2)  
        (note 9) .......
        Currency translation differences for        (3.7)         0.1       (1.7)       (0.1)  
        foreign operations... 
        Change from derivatives designated as         1.0         0.3      (22.9)        16.5  
        hedges ...........
Total comprehensive income (loss) for the          $ 71.7     $ (3.6)     $ 175.7     $ 122.9  
period ..........

    The accompanying notes are an integral part of these unaudited interim
                 condensed consolidated financial statements.

                               CELESTICA INC. 

            CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                        (in millions of U.S. dollars)
                                (unaudited)  

                                                                                                                           Accumulated
                                                                                                                              other
                                                                                                                          comprehensive
                                                           Capital stock      Treasury      Contributed                   income (loss)
                                                             (note 8)      stock (note 8)     surplus        Deficit           (a)        Total equity
Balance -- January 1,                                       $  3,329.4       $  (15.9)       $  360.9     $ (2,403.8)      $    12.3       $ 1,282.9  
2011 ............................................
Capital transactions (note 8):                                                                                                                        
  Issuance of capital                                             18.6               —          (6.7)               —              —            11.9  
  stock ..............................................
  Purchase of treasury                                               —          (49.4)              —               —              —          (49.4)  
  stock ...........................................
  Stock-based compensation and                                       —            27.4           15.3               —              —            42.7  
  other ...........................
Total comprehensive income:                                                                                                                           
  Net earnings for                                                   —               —              —           195.1              —           195.1  
  2011 ...................................................
  Other comprehensive income (loss), net of tax:                                                                                                      
  Actuarial gains on pension plans (note                             —               —              —             5.2              —             5.2  
  9) .....................
  Currency translation differences for foreign operations            —               —              —               —          (1.7)           (1.7)  
  Change from derivatives designated as                              —               —              —               —         (22.9)          (22.9)  
  hedges ............
Balance -- December 31,                                     $  3,348.0       $  (37.9)       $  369.5     $ (2,203.5)      $  (12.3)       $ 1,463.8  
2011 ......................................
                                                                                                                                                      
Capital transactions (note 8):                                                                                                                        
  Issuance of capital                                             18.3               —         (10.8)               —              —             7.5  
  stock .............................................
  Repurchase of capital stock for                              (591.6)               —          302.0               —              —         (289.6)  
  cancellation .................
  Purchase of treasury                                               —          (21.7)              —               —              —          (21.7)  
  stock ..........................................
  Stock-based compensation and                                       —            41.3          (4.1)               —              —            37.2  
  other ..........................
  Reclassification of cash-settled stock-based
  compensation to accrued
  liabilities ...............................                        —               —          (3.4)               —              —           (3.4)  
Total comprehensive income:                                                                                                                           
  Net earnings for                                                   —               —              —           117.7              —           117.7  
  2012 ..................................................
  Other comprehensive income (loss), net of tax:                                                                                                      
  Actuarial losses on pension plans (note                                                                      (11.2)                         (11.2)  
  9) ...................
  Currency translation differences for foreign operations            —               —              —               —          (0.1)           (0.1)  
  Change from derivatives designated as                              —               —              —               —           16.5            16.5  
  hedges ............
Balance -- December 31,                                     $  2,774.7       $  (18.3)       $  653.2     $ (2,097.0)      $     4.1       $ 1,316.7  
2012 ......................................
                                                                                                                                              

      (a)  Accumulated other comprehensive income (loss) is net of tax. 

    The accompanying notes are an integral part of these unaudited interim
                 condensed consolidated financial statements.

                               CELESTICA INC. 

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

                                                                                                            Three months ended          Year ended
                                                                                                                December 31             December 31
                                                                                                             2011        2012        2011        2012
Cash provided by (used in):                                                                                                                             
Operating activities:                                                                                                                                   
Net earnings for the period .....................................................................          $  69.2     $   7.2     $ 195.1     $ 117.7  
Adjustments for items not affecting cash:                                                                                                               
  Depreciation and amortization ..............................................................                18.9        20.9        77.2        81.7  
  Equity-settled stock-based compensation ............................................                         9.7         7.6        41.2        35.4  
  Other charges (recoveries) ..................................................................              (6.7)        18.9      (12.1)        30.8  
  Finance costs .....................................................................................          1.1         1.0         5.4         3.5  
  Income tax expense (recovery) ............................................................                (15.0)       (5.0)         3.7       (5.8)  
Other ....................................................................................................  (24.5)       (5.7)      (31.3)      (11.2)  
Changes in non-cash working capital items:                                                                                                              
  Accounts receivable .............................................................................         (32.7)        77.0       147.0       116.7  
  Inventories ............................................................................................    59.1        61.0         2.0       147.3  
  Other current assets ............................................................................          (5.7)         1.0         3.9         6.7  
  Accounts payable, accrued and other current liabilities and provisions                                      19.4      (73.3)     (216.9)     (193.1)  
Non-cash working capital changes ..........................................................                   40.1        65.7      (64.0)        77.6  
Net income taxes received (paid) ............................................................                  4.0       (6.0)      (18.9)      (17.3)  
Net cash provided by operating activities ................................................                    96.8       104.6       196.3       312.4  
                                                                                                                                                        
Investing activities:                                                                                                                                   
Acquisitions, net of cash acquired (note 3) .............................................                        —         0.4      (80.5)      (71.0)  
Purchase of computer software and property, plant and equipment ........                                    (14.8)      (17.3)      (62.3)     (105.9)  
Proceeds from sale of assets .................................................................                 8.0         3.9        17.1         8.9  
Net cash used in investing activities .......................................................                (6.8)      (13.0)     (125.7)     (168.0)  
                                                                                                                                                        
Financing activities:                                                                                                                                   
Borrowings under credit facilities (note 7) ...............................................                      —        55.0           —        55.0  
Issuance of capital stock (note 8) ...........................................................                 0.4         0.4        11.9         7.5  
Repurchase of capital stock for cancellation (note 8) ..............................                             —     (175.8)           —     (289.6)  
Purchase of treasury stock (note 8) ........................................................                (16.6)      (17.9)      (49.4)      (21.7)  
Finance costs paid .................................................................................         (1.0)       (1.0)       (7.0)       (4.0)  
Net cash used in financing activities ........................................................              (17.2)     (139.3)      (44.5)     (252.8)  
                                                                                                                                                        
Net increase (decrease) in cash and cash equivalents ...........................                              72.8      (47.7)        26.1     (108.4)  
Cash and cash equivalents, beginning of period ....................................                          586.1       598.2       632.8       658.9  
Cash and cash equivalents, end of period ..............................................                    $ 658.9     $ 550.5     $ 658.9     $ 550.5  

    The accompanying notes are an integral part of these unaudited interim
                 condensed consolidated financial statements.

                               CELESTICA INC. 

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

1. REPORTING ENTITY 

Celestica Inc.  (Celestica)  is  incorporated in  Canada  with  its  corporate 
headquarters located  at  844 Don  Mills  Road, Toronto,  Ontario,  M3C  1V7.  
Celestica is a publicly listed company on the Toronto Stock Exchange (TSX) and
the New York Stock Exchange (NYSE).

Celestica delivers innovative supply chain solutions globally to customers  in 
the   communications    (comprised    of   enterprise    communications    and 
telecommunications), consumer, computing (comprised  of servers and  storage), 
and diversified (comprised of  industrial, aerospace and defense,  healthcare, 
green technology, semiconductor equipment and other) end markets. Our  product 
lifecycle solutions  include  a  full  range  of  services  to  our  customers 
including design, supply chain management, manufacturing, engineering, complex
mechanical  and  systems   integration,  order   fulfillment,  logistics   and 
after-market services.

2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES 

Statement of compliance: 

These unaudited interim condensed consolidated financial statements have  been 
prepared in  accordance  with  International  Accounting  Standard  (IAS)  34, 
Interim  Financial  Reporting  as  issued  by  the  International   Accounting 
Standards Board (IASB) and accounting  policies we adopted in accordance  with 
International Financial Reporting  Standards (IFRS).  These unaudited  interim 
condensed consolidated financial statements reflect all adjustments that  are, 
in the  opinion  of management,  necessary  to present  fairly  our  financial 
position as at December 31, 2012 and the results of operations,  comprehensive 
income and cash  flows for the  three months and  the year ended  December 31, 
2012. 

The  unaudited  interim  condensed  consolidated  financial  statements   were 
authorized for issuance by our board of directors on January 22, 2013. 

Functional and presentation currency: 

These  unaudited  interim  condensed  consolidated  financial  statements  are 
presented in  U.S.  dollars,  which  is  also  our  functional  currency.  All 
financial information is  presented in  millions of U.S.  dollars (except  per 
share amounts).

Use of estimates and judgments: 

The preparation  of  financial statements  in  conformity with  IFRS  requires 
management to  make  judgments,  estimates and  assumptions  that  affect  the 
application of  accounting policies  and the  reported amounts  of assets  and 
liabilities, revenue and  expenses and the  related disclosures of  contingent 
assets and  liabilities. Actual  results could  differ materially  from  these 
estimates and assumptions. We review our estimates and underlying  assumptions 
on an ongoing  basis.  Revisions  are recognized in  the period  in which  the 
estimates are revised and may impact future periods as well. 

Key  sources  of  estimation  uncertainty   and  judgment:  We  have   applied 
significant estimates and assumptions in the following areas which we  believe 
could have  a  significant  impact  on  our  reported  results  and  financial 
position: our valuations of inventory, assets held for sale and income taxes; 
the amount of  restructuring charges  or recoveries;  the  measurement of  the 
recoverable amount  of our  cash  generating units  (CGU); our  valuations  of 
financial  assets  and  liabilities,  retirement  benefit  costs,  stock-based 
compensation, provisions and contingencies; and the allocation of our purchase
price and other valuations we use in our business acquisitions. The  near-term 
economic environment could also impact certain estimates necessary to  prepare 
our consolidated financial  statements, in particular  the recoverable  amount 
used in our impairment testing of our non-financial assets, the rate of return
on our  pension assets  and the  discount  rates applied  to our  pension  and 
retirement liabilities.

We have applied significant judgment to the following areas: the determination
of our CGUs and whether events or changes in circumstances during the year are
indicators that a review for impairment should be conducted; and the timing of
restructuring plans.

These unaudited interim condensed consolidated financial statements are  based 
upon  accounting  policies  and  estimates  consistent  with  those  used  and 
described in note 2 of our 2011 annual consolidated financial statements.

3. ACQUISITIONS 

In September 2012, we completed  the acquisition of D&H Manufacturing  Company 
(D&H), a leading manufacturer of precision machined components and  assemblies 
based  in  California,  U.S.A.  D&H  provides  manufacturing  and  engineering 
services, coupled  with dedicated  capacity and  equipment for  prototype  and 
quick-turn support,  to  some of  the  world's leading  semiconductor  capital 
equipment manufacturers.  The final  purchase  price was  $71.0, net  of  cash 
acquired, which we financed from cash  on hand. Details of the final  purchase 
price allocation are as follows:

          Current assets, net of cash acquired .....                  $ 21.6  
          Property, plant and equipment ..............                  15.1  
          Customer intangible assets ...................                24.0  
          Goodwill ................................................     26.4  
          Current liabilities ....................................     (4.2)  
          Deferred income taxes ...........................           (11.9)  
                                                                      $ 71.0  
                                                                              

Through this  acquisition,  we  have  further  enhanced  our  entry  into  the 
semiconductor  capital  equipment  market.    We  added  precision   machining 
capabilities to  our  service  offerings and  have  acquired  engineering  and 
technical  depth  that  we  can  leverage  with  our  existing   semiconductor 
customers, as well as expand to other customers in our diversified markets. We
do not expect any of the goodwill will be tax deductible. We expensed $0.9  in 
acquisition-related transaction costs during  the year through other  charges. 
This acquisition did not have a significant impact on our consolidated results
of operations for 2012.

In June 2011, we acquired  the semiconductor equipment contract  manufacturing 
operations of Brooks  Automation, Inc.  These operations,  located in  Oregon, 
U.S.A.  and  Wuxi,  China,  specialize  in  manufacturing  complex  mechanical 
equipment and providing systems  integration services to  some of the  world's 
largest semiconductor equipment  manufacturers. The final  purchase price  was 
$80.5, net of cash acquired. The purchase  was financed from cash on hand  and 
$45.0 from our revolving credit facility which we repaid in the third  quarter 
of 2011. On the acquisition date, we  recorded $33.8 in goodwill and $12.5  in 
intangible assets. We expensed  $0.6 in acquisition-related transaction  costs 
during 2011 through other charges. 

In August 2010, we completed the  acquisition of Austrian-based Allied  Panels 
Entwicklungs-und Produktions GmbH (Allied  Panels), a medical engineering  and 
manufacturing service provider. The purchase  price was subject to  adjustment 
for contingent consideration if specific pre-determined financial targets were
achieved through  2012. At  December 31,  2011, we  had  a provision  of  $3.2 
related to this contingent consideration. During 2012, we determined that this
provision was no longer  necessary and released  this provision through  other 
charges (note 10(d)).

Pro forma disclosure: Revenue and earnings for each period would not have been
materially different had the acquisitions  occurred at the beginning of  their 
respective years.

4. SEGMENT AND CUSTOMER REPORTING 

End markets:  

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 mix  and 
complexity of the products or services we provide, the extent, timing and rate
of new program wins, follow-on business or losses from customers, the  phasing 
in or  out of  programs, the  success  in the  marketplace of  our  customers' 
products, and  changes  in  customer  demand.  We  expect  that  the  pace  of 
technological change, the frequency  of customers transferring business  among 
EMS competitors and the level of outsourcing by customers (including decisions
on insourcing), and  the constantly  changing dynamics of  the global  economy 
will also continue to impact our business from period-to-period. 

Starting  with  the  first  quarter  of  2012,  we  combined  our   enterprise 
communications and telecommunications end markets into one communications  end 
market for reporting purposes. We also combined prior period percentages. 

                             Three months ended        Year ended
                                December 31            December 31
                               2011       2012      2011         2012
Communications .....           33 %       37 %      35 %         35 %  
Consumer ...............       26 %        9 %      25 %         18 %  
Diversified ..............     18 %       23 %      14 %         20 %  
Servers ..................     13 %       17 %      15 %         15 %  
Storage ..................     10 %       14 %      11 %         12 %
                                                   

Customers:  

For the  fourth  quarter  and  full  year 2012,  we  had  two  customers  that 
individually represented more than  10% of total  revenue (fourth quarter  and 
full year 2011 — two customers).  We completed our manufacturing services  for 
Research In Motion Limited (RIM) and the related transition activities by  the 
end of 2012. Our revenue  from RIM was minimal in  the fourth quarter of  2012 
(third quarter of 2012 — 10%; fourth quarter of 2011 — 20%). For the full year
2012, RIM accounted for 12% of total revenue (full year 2011 — 19%).

5. ACCOUNTS RECEIVABLE 

In November  2012, we  entered  into an  agreement to  sell  up to  $375.0  in 
accounts receivable on an uncommitted basis (subject to pre-determined  limits 
by customer) to two  third-party banks. Both banks  had a Standard and  Poor's 
long-term rating of A or above  and a short-term rating of A-1at  December 31, 
2012. This agreement has  no fixed termination date  and can be terminated  at 
any time by  us or  the banks.   At December 31, 2012,  we had  sold $50.0  of 
accounts receivable under  this facility  (December 31, 2011 —  $60.0 under  a 
prior  facility).  The   accounts  receivable  sold   are  removed  from   our 
consolidated balance  sheet  and  reflected  as  cash  provided  by  operating 
activities in our consolidated statement of  cash flows. Upon sale, we  assign 
the rights to the  accounts receivable to the  banks.  We continue to  collect 
cash from our customers and remit the cash to the banks when collected. We pay
interest and fees which  we record through finance  costs in our  consolidated 
statement of operations.

6. INVENTORIES 

We record our inventory  provisions and valuation  recoveries through cost  of 
sales. We record inventory provisions to  reflect changes in the value of  our 
inventory to  net  realizable value,  and  valuation recoveries  primarily  to 
reflect realized  gains on  the disposition  of inventory  previously  written 
down. We recorded net inventory provisions of $1.1 and $5.3, respectively, for
the fourth quarter and full year 2012. We recorded net inventory recoveries of
$0.1 for the fourth quarter of 2011  and net inventory provisions of $4.5  for 
full year 2011.  We regularly  review our  estimates and  assumptions used  to 
value our inventory through analysis  of historical performance. During  2012, 
our net inventory provisions of $5.3  were comprised of new net provisions  of 
$10.9 for  aged inventory,  offset in  part by  a $5.6  credit reflecting  the 
improved recovery of certain inventory.

7. CREDIT FACILITIES 

We have a $400.0 revolving credit  facility that matures in January 2015.   We 
are required  to comply  with certain  restrictive covenants  including  those 
relating to  debt incurrence,  the sale  of assets,  a change  of control  and 
certain financial  covenants related  to indebtedness,  interest coverage  and 
liquidity. We have  pledged certain  assets as security  for borrowings  under 
this facility. Borrowings under this facility bear interest at LIBOR or  Prime 
rate for the period of the draw plus  a margin. The terms of these draws  have 
historically been  less  than  90  days. In  December  2012,  we  completed  a 
substantial issuer  bid  (SIB) to  repurchase  for cancellation  $175  of  our 
subordinate voting  shares  which  we  funded  in  part  through  this  credit 
facility. See note  8. At  December 31, 2012, we  had drawn  $55.0 under  this 
facility (December 31, 2011  — no amounts  drawn), and we  were in  compliance 
with all covenants.  Commitment fees paid in the fourth quarter and full  year 
2012 were $0.5  and $2.0, respectively.  At December 31, 2012,  we had  issued 
$31.1 of letters of credit under this facility. 

We also have uncommitted bank overdraft facilities available for intraday  and 
overnight operating  requirements which  total  $70.0 at  December 31,  2012.  
There were no amounts drawn  under these overdraft facilities at  December 31, 
2012 (December 31, 2011— no amounts drawn).

The amounts we borrow and repay under these facilities can vary  significantly 
from  month-to-month  depending  upon  our  working  capital  and  other  cash 
requirements.

8. CAPITAL STOCK 

In the fourth quarter of 2012, we launched and successfully completed the  SIB 
pursuant to  which we  repurchased for  cancellation $175  of our  subordinate 
voting shares.  We repurchased  for  cancellation approximately  22.4  million 
subordinate voting  shares  at  a  price  of  $7.80  per  share,  representing 
approximately 12%  of our  subordinate voting  shares issued  and  outstanding 
prior to completion of the SIB.  We also recorded $0.8 in transaction  related 
costs. We funded the share repurchases using a combination of cash on hand and
cash from our revolving credit facility. See note 7.

On February 7, 2012, the TSX accepted our Normal Course Issuer Bid (NCIB) that
allows us to repurchase, at our  discretion, until the earlier of  February 8, 
2013 or  the  completion  of purchases  under  the  bid, up  to  16.2  million 
subordinate voting  shares  in the  open  market or  as  otherwise  permitted, 
subject to the normal terms and  limitations of such bids. The maximum  number 
of subordinate voting shares we  are permitted to repurchase for  cancellation 
under the NCIB is reduced by the number of subordinate voting shares purchased
for equity-based compensation plans (see below). During the fourth quarter  of 
2012, we did  not repurchase  any subordinate voting  shares for  cancellation 
under the  NCIB. As  of  December 31, 2012,  we  have paid  $113.8,  including 
transaction fees,  to repurchase  for  cancellation a  total of  13.3  million 
shares at a weighted average price of $8.52 per share under the NCIB since its
commencement in February 2012.

We have  granted  share  unit  awards  to  employees  under  our  equity-based 
compensation plans. We have the option to satisfy the delivery of shares  upon 
vesting of the awards by issuing new subordinate voting shares from  treasury, 
purchasing subordinate voting  shares in  the open  market, or  by cash.  From 
time-to-time, we pay cash for the purchase of subordinate voting shares in the
open market by a  trustee to satisfy  the delivery of  shares upon vesting  of 
awards. For accounting purposes,  we classify these  shares as treasury  stock 
until they are delivered pursuant to the plans. In the fourth quarter of 2012,
we entered into an Automatic Share Purchase Plan (ASPP) with a trustee for the
purchase of  2.2 million  subordinate  voting shares  in  the open  market  to 
satisfy the deliveries in  respect of share unit  awards vesting in the  first 
quarter of 2013.  This ASPP  allows the  trustee to  purchase our  subordinate 
voting shares  for  such  purposes  at any  time  through  January  31,  2013, 
including during any applicable trading  blackout periods. We have paid  $17.9 
to the trustee to fund  purchases under this ASPP.  During 2012, we also  paid 
$3.8 for the trustee's purchase of 0.4 million subordinate voting shares prior
to the ASPP for delivery under our equity-based compensation plans. During the
fourth quarter and full year 2011, we paid $16.6 and $49.4, respectively,  for 
the  trustee's  purchase  of  2.0  million  and  5.7  million,   respectively, 
subordinate voting  shares  in the  open  market. At  December 31,  2012,  the 
trustee held 0.8 million subordinate voting shares, with a value of $6.4,  and 
$11.9 in cash, representing the estimated amount of cash required to  complete 
the ASPP program (December 31, 2011 — held 4.5 million with a value of $37.9).

In 2010, we elected to cash-settle certain awards vesting in the first quarter
of 2011 due to limitations on the number of subordinate voting shares we could
purchase in the open market during the term of a prior share buy-back program.
We also elected to cash-settle certain  RSUs vesting in the fourth quarter  of 
2012 due to a prohibition on our purchase of subordinate voting shares in  the 
open market during the SIB.  We account for cash-settled awards as liabilities
and we remeasure these based on our  share price at each reporting date  until 
the settlement date, with a corresponding charge to compensation expense.  The 
mark-to-market adjustment on these cash-settled awards was $0.2 for 2012 (2011
— $2.7). When we  made the decision  in the fourth quarter  of 2012 to  settle 
these awards with cash, we reclassified  $3.4, representing the fair value  of 
these awards, from contributed surplus  to accrued liabilities. As  management 
currently intends to settle all other share unit awards with shares  purchased 
in the open market by a trustee, we have accounted for these share unit awards
as equity-settled awards. 

For the fourth quarter  and full year  2012, stock-based compensation  expense 
was $7.8 and $35.6, respectively (fourth quarter and full year 2011 — $9.7 and
$44.2, respectively).  The  amount  of our  stock-based  compensation  expense 
varies each  period, and  includes mark-to-market  adjustments for  awards  we 
settled in cash (see above) and  plan adjustments. The portion of our  expense 
that relates to performance-based  compensation generally varies depending  on 
the level of  achievement of  pre-determined performance  goals and  financial 
targets. We amended  the retirement  eligibility clauses  in our  equity-based 
compensation plans in 2011  which accelerated our  recognition of the  related 
compensation expense of $3.1 in 2012 (2011 — $4.8).

During 2012, we received cash proceeds of $7.5 (2011 — $11.9) relating to  the 
exercise of stock options.

9. PENSION AND NON-PENSION POST-EMPLOYMENT BENEFIT PLANS

We provide  pension  and non-pension  post-employment  benefit plans  for  our 
employees. Our obligations  are determined based  on actuarial valuations.  We 
recognize  actuarial  gains  or  losses  arising  from  defined  benefit   and 
post-retirement benefit plans through other comprehensive income and  directly 
in deficit. For 2012, we recognized $11.2 of net actuarial losses, net of  tax 
(2011 —  $5.2 of net actuarial gains,  net of tax). The measurement date  used 
for the accounting  valuation of our  pension and non-pension  post-employment 
benefit plans was December 31, 2012.

10. OTHER CHARGES (RECOVERIES)

                                      Three months ended       Year ended
                                         December 31           December 31
                                       2011       2012       2011       2012
Restructuring                         $ 7.7     $ 16.7     $ 14.5     $ 44.0  
(a) ..................
Asset impairment (b) ............         —       17.7          —       17.7  
Recovery of damages (c) ......        (5.2)          —      (5.2)          —  
Other                                 (1.5)        0.1      (2.8)      (2.2)  
(d) ..............................
                                      $ 1.0     $ 34.5     $  6.5     $ 59.5  
                                                                              

(a) Restructuring:  

Our restructuring charges are comprised of the following: 

                                        Three months ended       Year ended
                                           December 31           December 31
                                         2011       2012       2011       2012
Cash                                    $ 7.7     $ 15.5     $ 18.2     $ 27.8  
charges .............................
Non-cash charges (recoveries) .....         —        1.2      (3.7)       16.2  
                                        $ 7.7     $ 16.7     $ 14.5     $ 44.0  
                                                                                

Our restructuring  charges  in 2012  were  related to  the  wind down  of  our 
manufacturing services  for  RIM  and  other  actions  throughout  our  global 
network.  We  completed our  manufacturing  services for  RIM in  Romania  and 
Malaysia  at  the  end  of  June  2012  and  substantially  all  of  the   RIM 
manufacturing services in  Mexico by  the end of  September 2012.  Due to  the 
historical significance of RIM to our  operations and in order to improve  our 
overall margin  performance,  we  previously  announced  that  we  would  take 
restructuring actions throughout our global network to reduce our overall cost
structure. In July 2012, we  estimated total restructuring charges of  between 
$40.0 and $50.0 in  connection with these  restructuring actions. Our  current 
estimate of the total restructuring  charges to complete our planned  actions, 
which we expect  to complete by  the end  of June 2013,  is between $55.0  and 
$65.0, taking into  account additional  actions in response  to the  continued 
challenging demand  environment. Of  this  amount, we  recorded $16.7  in  the 
fourth quarter of 2012 and $44.0 in  2012.  In 2012, we recorded cash  charges 
of $27.8,  primarily  related  to  employee  termination  costs  for  our  RIM 
operations and other actions throughout our global network.  We also  recorded 
non-cash charges of $16.2 primarily to  write down to recoverable amounts  the 
RIM-related equipment  that  was no  longer  in  use in  Mexico,  Romania  and 
Malaysia. Also see the discussion on asset impairment in note 10(b).

The recognition  of our  restructuring  charges required  us to  make  certain 
judgments and estimates  regarding the nature,  timing and amounts  associated 
with the restructuring actions. Our major assumptions included the timing  and 
number of employees to  be terminated, the  measurement of termination  costs, 
and the  timing of  disposition  and estimated  fair  values used  for  assets 
available for sale. We developed a detailed plan and have recorded termination
costs for employees with  whom we have  communicated.  We engaged  independent 
brokers to determine the estimated fair  values less costs to sell for  assets 
we no  longer  used  and which  were  available  for sale.  We  recognized  an 
impairment loss for assets whose carrying amount exceeded the fair values less
costs to  sell as  determined by  the third-party  brokers. We  also  recorded 
adjustments to reflect actual proceeds on disposition of these assets.  At the
end  of  each  reporting  period,  we  evaluate  the  appropriateness  of  our 
restructuring charges and  balances.  Further adjustments  may be required  to 
reflect actual experience or changes in estimates.

Our restructuring charges  for 2011  were primarily  for employee  termination 
costs.  We  also  recorded  recoveries  resulting from  the  sale  of  vacated 
properties and surplus equipment against our restructuring charges.

At December  31,  2012,  our  restructuring  provision  was  $14.8,  comprised 
primarily of employee  termination costs  which we  expect to  pay during  the 
first half of 2013. 

(b) Asset impairment: 

We conduct our annual impairment assessment of goodwill, intangible assets and
property, plant and equipment in the fourth quarter of each year and  whenever 
events or changes  in circumstance  indicate that  the carrying  amount of  an 
asset or CGU may not be recoverable. We recognize an impairment loss when  the 
carrying amount of an asset  or CGU or group  of CGUs exceeds the  recoverable 
amount, which is  measured as  the greater of  its value-in-use  and its  fair 
value less costs to sell.

In the second  quarter of 2012,  we tested  the carrying amounts  of the  CGUs 
impacted by the  wind down of  our manufacturing services  for RIM in  Mexico, 
Romania and  Malaysia.  We  recorded  an impairment  loss on  the  RIM-related 
assets that  were  available  for sale  through  restructuring  charges  (note 
10(a)).  We then  compared the  remaining carrying  amounts of  these CGUs  to 
their recoverable  amounts and  determined there  was no  impairment to  these 
assets that had not been recorded to restructuring charges in 2012.

In the fourth quarter of 2012,  we performed our annual impairment  assessment 
of goodwill, intangible assets and property, plant and equipment. We  recorded 
non-cash  impairment  charges  totaling  $17.7,  comprised  of  $14.6  against 
goodwill,  $0.7 against intangible assets and $2.4 against property, plant and
equipment. The majority of our  goodwill impairment related to the  healthcare 
business we acquired in 2010. Our overall progress and the ability to ramp the
healthcare business  has been  slower  than we  originally anticipated.  As  a 
result, we recorded an impairment loss of $11.9 relating to healthcare.

We determined  the  recoverable amount  of  our  CGUs based  on  the  expected 
value-in-use. The process of  determining the recoverable amount  of a CGU  is 
subjective  and  requires  management  to  exercise  significant  judgment  in 
estimating future growth and discount rates, and projecting cash flows,  among 
other  factors.  The  assumptions  used  in  our  impairment  assessment  were 
determined based on past experiences  adjusted for expected changes in  future 
conditions. Our major  assumptions included  projections of  cash flows,  with 
primary emphasis on our 2013 plan. We also considered our strategic plan which
extends through 2015 and other updates. Both the 2013 plan and the  three-year 
strategic plan  were approved  by management  and presented  to our  board  of 
directors. We used cash  flow projections ranging  from 2 to  5 years for  the 
impaired CGUs, in line  with the remaining useful  lives of the CGUs'  primary 
assets.  We  generally   used  our   weighted-average  cost   of  capital   of 
approximately 13%, on a pre-tax basis,  to discount our cash flows. For  those 
CGUs that were subject to higher risk and volatilities, we used discount rates
that ranged from 20% to  28% to reflect the risk  inherent in the cash  flows. 
Where applicable, we worked with  independent brokers to obtain market  prices 
to estimate our real property values.

We performed a sensitivity analysis to  identify the impact of changes in  key 
assumptions, including  discount rates  and projected  growth rates.  Our  CGU 
arising  from  the  acquisition   of  the  semiconductor  equipment   contract 
manufacturing  operations  of  Brooks  Automation,  which  includes  $33.8  of 
goodwill, has been  impacted by  the downturn in  the semiconductor  industry. 
Nonetheless, this  CGU continues  to  win new  programs from  its  significant 
customers and has assumed  growth in 2013 and  beyond. Failure to realize  the 
assumed revenues at an appropriate profit margin could result in an impairment
in a future  period. We did  not identify  any other key  assumptions where  a 
reasonably possible change would result in material impairments to our CGUs.

In 2011,  we recorded  no impairment  against goodwill,  intangible assets  or 
property, plant  and  equipment  as the  recoverable  amounts  exceeded  their 
carrying amounts.

(c) Recovery of damages:

In 2009,  we  recorded a  provision  related to  a  recovery of  damages  upon 
settlement of a class action lawsuit. Based on management's assessment of  the 
potential outcomes,  we deemed  this  provision was  no longer  necessary  and 
released $5.2 during 2011 through other charges.

(d) Other:

Other includes  realized recoveries  on certain  assets that  were  previously 
written down through other charges and acquisition-related transaction  costs. 
During 2011 and 2012, we  released a portion of  our provision related to  the 
estimated fair  value  of  contingent  consideration  for  our  Allied  Panels 
acquisition and  recorded  the  recoveries  through  other  charges.  We  also 
recorded transaction costs related to our acquisitions. See note 3.

11. INCOME TAXES 

Our effective income  tax rate can  vary significantly quarter-to-quarter  for 
various reasons,  including  the mix  and  volume  of business  in  lower  tax 
jurisdictions within Europe and Asia,  in jurisdictions with tax holidays  and 
incentives, and in jurisdictions for which no deferred income tax assets  have 
been recognized because management  believed it was  not probable that  future 
taxable profit  would be  available against  which tax  losses and  deductible 
temporary differences could be  utilized.  Our effective  income tax rate  can 
also vary  due  to  the  impact of  restructuring  charges,  foreign  exchange 
fluctuations, operating losses, and certain tax exposures.

During the fourth quarter of  2011, we formally settled  tax audits of one  of 
our Malaysian subsidiaries related to the years 2001 through 2006 and 2009. As
a result, we released  $10.0 of provisions  previously recorded for  Malaysian 
tax uncertainties.  In  addition, we  recognized  a deferred  tax  recovery in 
Canada for an inter-company investment we wrote off relating to a restructured
subsidiary.

During the third quarter of 2012, we recorded an income tax recovery of  $10.6 
arising from changes to our  provisions related to certain tax  uncertainties. 
As a result of the D&H acquisition  in September 2012, we recognized $10.4  of 
previously unrecognized deferred tax assets in the United States.

During the fourth quarter of 2012, we commenced a corporate tax reorganization
involving certain of  our European  subsidiaries. As a  result, we  recognized 
$17.0 of  deferred tax  assets in  the fourth  quarter of  2012 as  it  became 
probable that  the temporary  differences associated  with our  investment  in 
these subsidiaries would reverse  in the foreseeable future. These  recoveries 
were partially  offset by  income  tax expense  arising  from changes  to  our 
provisions for certain tax uncertainties.

12. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT 

Our financial assets  are comprised  primarily of cash  and cash  equivalents, 
accounts receivable and derivatives used for hedging purposes.  Our  financial 
liabilities are comprised primarily of  accounts payable, certain accrued  and 
other liabilities  and  provisions,  and derivatives.   The  majority  of  our 
financial liabilities  is recorded  at amortized  cost except  for  derivative 
liabilities, which  are  measured  at  fair  value.   Our  term  deposits  are 
classified as held-to-maturity and our short-term investments in money  market 
funds are  recorded  at  fair  value,  with  changes  recognized  through  our 
consolidated statement of operations. 

Cash and cash equivalents are comprised of the following: 

                                December 31   December 31
                                   2011          2012
Cash ........................    $  191.7      $  265.3  
Cash equivalents ......             467.2         285.2  
                                 $  658.9      $  550.5  
                                                         

Our current portfolio consists of bank deposits and certain money market funds
that hold primarily U.S. government securities.  The majority of our cash  and 
cash equivalents is  held with  financial institutions  each of  which had  at 
December 31, 2012 a Standard and Poor's short-term rating of A-1 or above. 

Currency risk: 

Due to the global nature  of our operations, we  are exposed to exchange  rate 
fluctuations on our financial  instruments denominated in various  currencies. 
The majority of our currency risk is driven by the operational costs  incurred 
in local currencies by our subsidiaries.  We manage our currency risk  through 
our hedging program  using forecasts of  future cash flows  and balance  sheet 
exposures denominated in foreign currencies. 

Our major  currency exposures  at  December 31, 2012  are summarized  in  U.S. 
dollar equivalents in the following table. We have included in this table only
those items that we classify as financial assets or liabilities and which were
denominated in  non-functional currencies.  In accordance  with the  financial 
instruments standard, we have excluded  items such as retirement benefits  and 
income taxes. The local  currency amounts have been  converted to U.S.  dollar 
equivalents using the spot rates at December 31, 2012. 

                                                       Chinese    Malaysian     Canadian     Mexican        Thai
                                                       renminbi    ringgit       dollar        peso         baht
Cash and cash                                          $ 33.9     $    2.9     $    2.6     $    3.0     $    2.3  
equivalents .................................
Accounts                                                 19.3            —         13.9            —            —  
receivable ...........................................
Other financial                                           1.6          0.6            —          0.6          0.4  
assets .........................................
Accounts payable and certain accrued and other
  liabilities and
provisions ....................................        (43.3)       (16.9)       (33.9)       (16.3)       (17.7)  
Net financial assets                                   $ 11.5     $ (13.4)     $ (17.4)     $ (12.7)     $ (15.0)  
(liabilities) ............................
                                                                                         

Foreign currency risk sensitivity analysis: 

At  December 31,  2012,  the  financial  impact  of  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  is 
summarized in the following  table.  The financial  instruments impacted by  a 
change in exchange rates include our  exposures to the above financial  assets 
or liabilities  denominated  in  non-functional  currencies  and  our  foreign 
exchange forward contracts. 

                                           Chinese    Malaysian   Canadian   Mexican    Thai
                                           renminbi    ringgit     dollar     peso      baht
                                                           Increase (decrease)
1% Strengthening                                                                              
  Net                                       $ 0.5     $ (0.1)      $ 2.1      $  —      $  —  
  earnings ...............................
  Other comprehensive income ......             —         0.8        0.5       0.2       1.0  
1% Weakening                                                                                  
  Net                                       (0.4)         0.1      (2.0)         —         —  
  earnings ...............................
  Other comprehensive income ......             —       (0.8)      (0.4)     (0.2)     (1.0)
                                                                              

At December 31, 2012, we had forward exchange contracts to trade  U.S. dollars 
in exchange for the following currencies: 

                                                     Weighted                
                                                     average
                                                     exchange      Maximum
                                     Amount of       rate of      period in   Fair value
Currency                            U.S. dollars   U.S. dollars    months     gain/(loss)
Canadian dollar ..........           $  288.2        $  1.01              9    $  (0.7)  
Thai baht ....................          118.3           0.03             15         2.1  
Malaysian ringgit ........               87.6           0.32             15         1.1  
Mexican peso .............               37.9           0.08             12         0.4  
British pound ..............             68.3           1.62              4         0.1  
Chinese renminbi .......                 34.1           0.16             12         0.1  
Euro ...........................         11.9           1.31              4         0.1  
Romanian leu .............               11.3           0.28             12         0.5  
Other ..........................         24.6                            12         0.5  
Total ...........................    $  682.2                                  $    4.2  
                                                                               

At December 31, 2012, the fair value  of these contracts was a net  unrealized 
gain of $4.2 (December 31, 2011 —  net unrealized loss of $13.9).  Changes  in 
the fair  value of  hedging derivatives  to  which we  apply cash  flow  hedge 
accounting, to  the  extent effective,  are  deferred in  other  comprehensive 
income until  the  expenses  or  items being  hedged  are  recognized  in  our 
consolidated statement  of operations.  Any  hedge ineffectiveness,  which  at 
December 31, 2012  was  not  significant, is  recognized  immediately  in  our 
consolidated statement of operations. At  December 31, 2012, we recorded  $6.2 
of  derivative  assets  in  other  current  assets  and  $2.0  of   derivative 
liabilities in accrued and other current liabilities. The unrealized gains and
losses are a result of fluctuations in foreign exchange rates between the date
the currency forward  contracts were entered  into and the  valuation date  at 
period end.

13. CONTINGENCIES 

Litigation  

In the  normal  course of  our  operations, we  may  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 matters 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 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  added  one  of  our  directors  and  Onex 
Corporation as defendants. On October 14, 2010, the District Court granted the
defendants' motions  to  dismiss the  consolidated  amended complaint  in  its 
entirety. The plaintiffs appealed  to the United States  Court of Appeals  for 
the Second Circuit the  dismissal of its claims  against us, our former  Chief 
Executive and Chief Financial Officers, but not as to the other defendants. In
a summary order  dated December 29,  2011, the Court  of Appeals reversed  the 
District Court's dismissal of the consolidated amended complaint and  remanded 
the case  to the  District  Court for  further  proceedings. The  parties  are 
currently engaged  in  the  discovery  process.  Parallel  class  proceedings, 
including a claim  issued in October  2011, remain against  us and our  former 
Chief Executive and Chief Financial Officers in the Ontario Superior Court  of 
Justice. On October 15,  2012, the Ontario Superior  Court of Justice  granted 
limited aspects of the defendants' motion  to strike, which ruling is  subject 
to appeal,  but the  court has  not  granted leave  nor certification  of  any 
actions. We believe  the allegations in  the 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  the 
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  various 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  should 
have been materially higher in 2001 and 2002 and materially lower in 2003  and 
2004 as a result of certain inter-company transactions.

Canadian tax authorities have taken the position that certain interest amounts
deducted by one of  our Canadian entities in  2002 through 2004 on  historical 
debt  instruments  should  be  re-characterized  as  capital  losses.  If  tax 
authorities are successful with their challenge, we estimate that the  maximum 
net  impact  for  additional  income  taxes  and  interest  expense  could  be 
approximately $30.5 million Canadian  dollars (approximately $30.6 at  current 
exchange rates).  We believe  that our  asserted position  is appropriate  and 
would be  sustained upon  full  examination by  the  tax authorities  and,  if 
necessary,  upon  consideration  by  the  judicial  courts.  Our  position  is 
supported by our Canadian legal tax advisers.

In connection  with a  tax audit  in  Brazil, tax  authorities had  taken  the 
position that income reported by our Brazilian subsidiary in 2004 should  have 
been materially higher as a  result of certain inter-company transactions.  In 
June 2011, we received a ruling from the Brazilian Lower Administrative  Court 
that was largely consistent with our original filing position.  As the  ruling 
generally favored the  taxpayer, the  Brazilian tax  authorities appealed  the 
matter to a higher  court. In June 2012,  the Brazilian Higher  Administrative 
Court unanimously upheld the Lower Administrative Court decision. Although  we 
believe it is unlikely to  occur due to the  recent unanimous decision by  the 
higher court,  the Brazilian  tax  authorities have  the  right to  present  a 
Special Appeal to change  the decision. We did  not previously accrue for  any 
potential adverse tax impact for the 2004 tax audit. Brazilian tax authorities
are not precluded from taking similar positions in future audits with  respect 
to these types of transactions.

We have and  expect to  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. While our  ability to do so  is not certain, we  believe 
that our interpretation  of applicable  Brazilian law will  be sustained  upon 
full examination  by the  Brazilian tax  authorities and,  if necessary,  upon 
consideration by the Brazilian judicial courts.  Our position is supported  by 
our Brazilian legal tax advisors.  A change to the benefit realizable on these
Brazilian  losses  could  increase  our   net  deferred  tax  liabilities   by 
approximately 48.8  million Brazilian  reais (approximately  $23.9 at  current 
exchange rates). 

The successful pursuit of the assertions made by any taxing authority  related 
to the above noted tax audits or others could result in our owing  significant 
amounts  of  tax,  interest  and  possibly  penalties.  We  believe  we   have 
substantial defenses to the asserted positions and have adequately accrued for
any probable potential adverse tax impact. However, there can be no  assurance 
as to the final resolution of  these claims and any resulting proceedings  and 
if these claims and  any ensuing proceedings are  determined adversely to  us, 
the amounts we may be required to pay could be material. 

SOURCE Celestica Inc.

Contact:

Celestica Communications
(416) 448-2200  media@celestica.com   

Celestica Investor Relations
(416) 448-2211 clsir@celestica.com
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