<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>a2056266zex-99_1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
<PAGE>

                                                                    Exhibit 99.1

[LOGO]

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                               SECOND QUARTER 2001

         THE  FOLLOWING  DISCUSSION  OF THE  FINANCIAL  CONDITION AND RESULTS OF
OPERATIONS OF THE COMPANY  SHOULD BE READ IN CONJUNCTION  WITH THE  CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000.

         CERTAIN STATEMENTS CONTAINED IN THE FOLLOWING  MANAGEMENT'S  DISCUSSION
AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND RESULTS OF  OPERATIONS,  INCLUDING,
WITHOUT  LIMITATION,  STATEMENTS  CONTAINING  THE WORDS  BELIEVES,  ANTICIPATES,
ESTIMATES,  EXPECTS,  AND WORDS OF SIMILAR  IMPORT,  CONSTITUTE  FORWARD-LOOKING
STATEMENTS.  FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE
AND INVOLVE RISKS AND  UNCERTAINTIES  WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS. AMONG THE
KEY FACTORS THAT COULD CAUSE SUCH  DIFFERENCES  ARE: THE LEVEL OF OVERALL GROWTH
IN THE ELECTRONICS  MANUFACTURING  SERVICES (EMS) INDUSTRY;  LOWER-THAN-EXPECTED
CUSTOMER DEMAND;  COMPONENT CONSTRAINTS;  VARIABILITY OF OPERATING RESULTS AMONG
PERIODS; DEPENDENCE ON THE COMPUTER AND COMMUNICATIONS INDUSTRIES; DEPENDENCE ON
A  LIMITED   NUMBER  OF  CUSTOMERS;   AND  THE  ABILITY  TO  MANAGE   EXPANSION,
CONSOLIDATION  AND THE  INTEGRATION  OF  ACQUIRED  BUSINESSES.  THESE  AND OTHER
FACTORS  ARE  DISCUSSED  IN THE  COMPANY'S  FILINGS  WITH  SEDAR  AND  THE  U.S.
SECURITIES AND EXCHANGE COMMISSION.

GENERAL

         Celestica is a leading provider of electronics  manufacturing  services
to OEMs worldwide and is the  third-largest  EMS provider in the world with 2000
revenue of $9.8  billion.  Celestica  provides a wide  variety of  products  and
services to its customers, including the high-volume manufacture of complex PCAs
and the full system  assembly of final products.  In addition,  the Company is a
leading-edge provider of design,  repair and engineering services,  supply chain
management and power products.  Celestica operates  facilities in North America,
Europe, Asia and Latin America.

         Celestica   prepares  its  financial   statements  in  accordance  with
accounting   principles   which  are   generally   accepted  in  Canada  with  a
reconciliation to accounting principles generally accepted in the United States,
as disclosed in Note 24 to the fiscal 2000 Consolidated Financial Statements.

ACQUISITIONS

         A significant  portion of Celestica's  growth has been generated by the
strengthening of its customer  relationships and increases in the breadth of its
service offering through facility and business acquisitions.

2000 ACQUISITIONS:

         In February and May, 2000, the Company acquired certain assets from the
Enterprise  Systems  Group and  Microelectronics  Division of IBM in  Rochester,
Minnesota and  Vimercate and Santa  Palomba,  Italy,  respectively,  for a total
purchase price of $470.0 million. The purchase price,  including capital assets,
working  capital and  intangible  assets,  was financed  with cash on hand.  The
Company signed two three-year  strategic supply agreements with IBM to provide a
complete  range of electronics  manufacturing  services,  with estimated  annual
revenue of  approximately  $1.5  billion.  The  Rochester,  Minnesota  operation
provides  printed  circuit  board  assembly  and test  services.  The  Vimercate
operation provides printed circuit board assembly services and the Santa Palomba
operation  provides  system  assembly  services.  Approximately  1,800 employees
joined Celestica.

         In  June  2000,   Celestica   acquired  NDB   Industrial   Ltda.,   NEC
Corporation's  wholly-owned  manufacturing  subsidiary  in Brazil.  The  Company
signed a five-year  supply agreement to manufacture NEC  communications  network
equipment for the Brazilian market, with estimated revenue of approximately $1.2
billion over the five-year  term of the agreement.  Approximately  680 employees
joined  Celestica.  This  acquisition  enhanced the Company's  presence in South
America and put  Celestica  in a leadership  position  with  communications  and
Internet  infrastructure  customers.  In August 2000, the Company  acquired Bull
Electronics Inc., the North American contract manufacturing  operation of Groupe
Bull of France. The operations, which are located in Lowell, Massachusetts, have
enhanced the  Company's  service  offerings in the New England area. In November
2000,  Celestica  acquired NEC  Technologies  (UK) Ltd.,  in Telford,  UK, which
enhanced the Company's wireless communications capacity in


<PAGE>


Europe.  The  aggregate  price for these three  acquisitions  in 2000 was $169.8
million. In 2000, Celestica established a greenfield operation in Singapore.

2001 ACQUISITIONS:

         In January 2001,  Celestica acquired Excel Electronics,  Inc. through a
merger with Celestica (US) Inc. which enhanced the Company's  prototype  service
offering  in the  Southern  region  of the  United  States.  In  February  2001,
Celestica  acquired  certain  manufacturing  assets in Dublin,  Ireland  and Mt.
Pleasant,  Iowa from  Motorola  Inc.  The  Company  signed a  three-year  supply
agreement  with  estimated  revenue of more than $1 billion over the  three-year
term of the agreement.  Approximately  1,150 employees  joined  Celestica.  This
acquisition  expanded the  Company's  business  relationship  with  Motorola,  a
leading telecom wireless  customer.  In March 2001,  Celestica  acquired certain
assets relating to a repair business from N.K. Techno Co. Ltd which expanded the
Company's presence in Japan.  Celestica also established a greenfield  operation
in Shanghai.

         In May 2001, Celestica acquired certain assets in Little Rock, Arkansas
and  Denver,  Colorado  from Avaya Inc.  and also  entered  into  agreements  to
purchase  additional  assets in the United States and France, to be completed in
phases during the third quarter of 2001.  Upon completion of the acquisition the
total purchase price will be approximately $200 million and approximately  1,400
employees are expected to join Celestica.  The Company signed a five-year supply
agreement with estimated  revenue of  approximately  $4 billion over the term of
the agreement.  In June 2001,  Celestica  acquired Sagem CR s.r.o.  in the Czech
Republic,  from Sagem SA of France  which  enhanced  the  Company's  presence in
Central Europe. The aggregate price for acquisitions completed in the first half
of 2001 was $150.1 million, of which $148.1 million was financed with cash.

         In May 2001, the Company entered into an agreement to acquire Primetech
Electronics  Inc.  (Primetech).  This  acquisition  will provide  Celestica with
additional  high  complexity   manufacturing   capability  while  expanding  the
Company's global customer base. Primetech is an EMS provider with two facilities
in Canada and  approximately  700 employees.  The  shareholders of Primetech are
entitled to receive 0.22  subordinate  voting shares of Celestica for each share
of  Primetech.  The share  exchange  ratio  will be subject  to  adjustments  on
closing. The total purchase price is estimated to be approximately C$265 million
(US$175 million). This acquisition is subject to Primetech shareholder and court
approvals and is expected to close in the third quarter of 2001.

         In June 2001,  the Company  entered  into an  agreement to acquire Omni
Industries Limited (Omni). Omni is an EMS provider,  headquartered in Singapore,
with a presence in Asia, with locations in Singapore, Malaysia, China, Indonesia
and Thailand.  The company is also  represented in the United States and Mexico,
and has  approximately  9,000  employees.  Omni provides  printed  circuit board
assembly and system  assembly  services,  as well as other related  supply chain
services  including  plastic  injection  molding,  IC equipment,  substrates and
distribution.  Omni manufactures  products for industry leading OEM's in the PC,
storage and communications  sectors. This acquisition will significantly enhance
Celestica's  EMS  presence in Asia.  The  shareholders  of Omni are  entitled to
receive 0.045 subordinate  voting shares of Celestica for each share of Omni or,
at the holder's election, cash consideration of S$4.25, subject to the aggregate
cash limit of S$860 million  (approximately US$475 million).  The total purchase
price is  estimated to be  approximately  US$890  million.  The  acquisition  is
subject to Omni  shareholder and court approvals and is expected to close in the
fourth quarter of 2001.

         In July  2001,  the  Company  entered  into an  agreement  with  Lucent
Technologies  Inc. to acquire certain assets.  The purchase price is expected to
be  approximately  $550 million to $650 million and will be financed  with cash.
The Company also signed a five-year supply  agreement with estimated  revenue of
up to $10 billion over the term of the agreement. This acquisition is subject to
regulatory approvals and is expected to close in the third quarter of 2001.

         Consistent  with its past practices and as a normal course of business,
Celestica maybe engaged in ongoing  discussions with respect to several possible
acquisitions   of  widely  varying  sizes,   including   small  single  facility
acquisitions,   significant   multiple   facility   acquisitions  and  corporate
acquisitions.  Celestica has identified several possible acquisitions that would
enhance its global  operations,  increase its penetration in several  industries
and  establish  strategic  relationships  with new  customers.  There  can be no
assurance  that any of these  discussions  will result in a definitive  purchase
agreement  and, if they do, what the terms or timing of any agreement  would be.
Celestica expects to continue any current  discussions and actively pursue other
acquisition opportunities.


                                      -2-


<PAGE>


RESULTS OF OPERATIONS

         Celestica's  revenue  and  margins  can vary from period to period as a
result of the level of business volumes, seasonality of demand, component supply
availability,  and the timing of  acquisitions.  There is no certainty  that the
historical pace of Celestica's acquisitions will continue in the future.

         Celestica's  contracts  with  its key  customers  generally  provide  a
framework  for its overall  relationship  with the customer.  Actual  production
volumes are based on purchase orders for the delivery of products.  These orders
typically do not commit to firm production schedules for more than 30 to 90 days
in advance.  Celestica  minimizes  risk  relative to its  inventory  by ordering
materials  and  components  only to the extent  necessary  to  satisfy  existing
customer orders.  Celestica is largely protected from the risk of inventory cost
fluctuations as these costs are generally passed through to customers.

         Celestica's  annual  and  quarterly  operating  results  are  primarily
affected by the level and timing of customer  orders,  fluctuations in materials
costs, and relative mix of value add products and services. The level and timing
of a customer's  orders will vary due to the  customer's  attempt to balance its
inventory, changes in its manufacturing strategy and variation in demand for its
products.  Celestica's annual and quarterly  operating results are also affected
by  capacity  utilization  and  other  factors,   including  price  competition,
manufacturing effectiveness and efficiency, the degree of automation used in the
assembly   process,   the  ability  to  manage   inventory  and  capital  assets
effectively,  the timing of expenditures in anticipation of increased sales, the
timing of acquisitions and related integration costs,  customer product delivery
requirements and shortages of components or labour. Historically,  Celestica has
experienced  some seasonal  variation in revenue,  with revenue  typically being
highest in the fourth quarter and lowest in the first quarter.

         The table  below sets  forth  certain  operating  data  expressed  as a
percentage of revenue for the periods indicated:

<TABLE>
<CAPTION>

                                                THREE MONTHS ENDED     SIX MONTHS ENDED
                                                      JUNE 30,              JUNE 30,
                                                ------------------     ----------------
                                                  2000       2001       2000       2001
                                                --------   --------    --------  --------
<S>                                              <C>        <C>        <C>        <C>
Revenue ....................................     100.0%     100.0%     100.0%     100.0%
Cost of sales ..............................      93.0       92.8       93.1       92.8
                                                --------   --------    --------  --------
Gross profit ...............................       7.0        7.2        6.9        7.2
Selling, general and administrative expenses       3.5        3.2        3.5        3.3
Amortization of intangible assets ..........       0.9        1.1        0.9        1.1
Integration costs related to acquisitions ..       0.2        0.3        0.2        0.2
Other charges ..............................         -        2.0          -        1.0
                                                --------   --------    --------  --------
Operating income ...........................       2.4        0.6        2.3        1.6
Interest income, net .......................      (0.2)      (0.1)      (0.2)      (0.1)
                                                --------   --------    --------  --------
Earnings before income taxes ...............       2.6        0.7        2.5        1.7
Income taxes ...............................       0.6        0.1        0.7        0.4
                                                --------   --------    --------  --------
Net earnings ...............................       2.0%       0.6%       1.8%       1.3%
                                                --------   --------    --------  --------
                                                --------   --------    --------  --------
</TABLE>


ADJUSTED NET EARNINGS

         As a result of the significant number of acquisitions made by Celestica
over the past few years, management of Celestica uses adjusted net earnings as a
measure of  operating  performance  on an  enterprise-wide  basis.  Adjusted net
earnings exclude the effects of acquisition-related charges (most significantly,
amortization   of   intangible   assets  and   integration   costs   related  to
acquisitions),  other charges (most significantly restructuring) and the related
income tax effect of these  adjustments.  Adjusted net earnings is not a measure
of performance  under Canadian GAAP or U.S. GAAP.  Adjusted net earnings  should
not be considered in isolation or as a substitute  for net earnings  prepared in
accordance  with  Canadian  GAAP  or  U.S.  GAAP or as a  measure  of  operating
performance or  profitability.  The following  table  reconciles net earnings to
adjusted net earnings:

                                  -3-

<PAGE>

<TABLE>
<CAPTION>


                                               THREE MONTHS ENDED       SIX MONTHS ENDED
                                                      JUNE 30,               JUNE 30,
                                               --------------------    --------------------
                                                 2000        2001        2000        2001
                                               --------    --------    --------    --------
                                                   (IN MILLIONS)           (IN MILLIONS)
<S>                                            <C>         <C>         <C>         <C>
Net earnings ...............................   $  41.4     $  15.8     $  67.5     $  70.6
Amortization of intangible assets ..........      19.2        28.1        34.5        57.7
Integration costs related to acquisitions ..       4.9         7.8         5.6        10.1
Other charges ..............................         -        53.2           -        57.0
Income tax effect of above .................      (1.8)      (11.8)       (4.4)      (15.0)
                                               --------    --------    --------    --------
Adjusted net earnings ......................   $  63.7     $  93.1     $ 103.2     $ 180.4
                                               --------    --------    --------    --------
                                               --------    --------    --------    --------
As a percentage of revenue .................       3.0%        3.5%        2.8%        3.4%
                                               --------    --------    --------    --------
                                               --------    --------    --------    --------
</TABLE>


REVENUE

         Revenue  increased  27% to $2,660.7  million for the three months ended
June 30, 2001 from $2,091.9 million for the same period in 2000. Revenue for the
six months ended June 30, 2001  increased 45% to $5,353.3  million from $3,704.2
million for the same  period in 2000.  This  increase  in revenue was  primarily
through   acquisitions   and  was  driven   principally   by  customers  in  the
communications,  storage and server  industries.  Organic revenue increases were
smaller due to the overall softening of demand  experienced in 2001. The Company
defines  organic  revenue as revenue  excluding  the  business  from  operations
acquired in the  preceding  comparable  period.  Sequentially,  revenue was flat
compared to the three months ended March 31, 2001, due to the continued economic
slowdown.

         Revenue from the Americas  operations grew 14% to $1,712.8  million for
the three months ended June 30, 2001 from  $1,499.2  million for the same period
in 2000 and increased 27% to $3,408.4  million for the six months ended June 30,
2001 from  $2,680.0  million for the same period in 2000.  Revenue from European
operations  grew 60% to $839.0  million for the three months ended June 30, 2001
from $525.0  million for the same period in 2000 and increased  100% to $1,743.9
million for the six months ended June 30, 2001 from $872.9  million for the same
period in 2000. Revenue from Asian operations increased 3% to $196.9 million for
the three months ended June 30, 2001 from $191.4  million for the same period in
2000 and 19% to $411.9  million  for the six  months  ended  June 30,  2001 from
$345.9 million for the same period in 2000.  Inter-segment revenue for the three
and six  months  ended  June 30,  2001 was $88.0  million  and  $210.9  million,
respectively,  compared to $123.7 million and $194.6 million for the same period
in 2000.

         Revenue from customers in the communications industry for the three and
six  months  ended  June  30,  2001   increased  to  32%  and  33%  of  revenue,
respectively,  compared to 28% and 29% of revenue for the same  periods in 2000.
Revenue  from  customers  in the  server-related  business for the three and six
months ended June 30, 2001  increased  to 33% and 32% of revenue,  respectively,
compared  to 31% and 28% of revenue  for the same  periods in 2000,  mainly as a
result of the IBM acquisitions in February and May, 2000.

         The following customers  represented more than 10% of total revenue for
each of the indicated periods:

<TABLE>
<CAPTION>

                              THREE AND SIX
                              MONTHS ENDED
                                  JUNE 30,
                             ---------------
                              2000     2001
                             ------   ------
<S>                          <C>      <C>
Sun Microsystems.......          -        -
IBM....................          -        -
Hewlett-Packard........          -
</TABLE>


         Celestica's top five customers represented in the aggregate 63% and 65%
of total revenue for the three and six months ended June 30, 2001, respectively,
compared to 71% and 69% of total  revenue for the same  periods  last year.  The
Company is dependent upon continued  revenue from its top five customers.  There
can be no  guarantee  that revenue  from these or any other  customers  will not
increase or decrease as a percentage of consolidated revenue either individually
or as a group.  Any material  decrease in revenue from these or other  customers
could have a material adverse effect on the Company's results of operations.


                                      -4-

<PAGE>


GROSS PROFIT

         Gross profit increased 32% to $192.2 million for the three months ended
June 30, 2001 from $145.8  million  for the same  period in 2000.  Gross  margin
increased  to 7.2% for the three  months  ended June 30,  2001 from 7.0% for the
same  period  in  2000  as  a  result  of  supply  chain  initiatives,  improved
utilization  at  several  sites  and  continued  focus on  costs.  Gross  profit
increased  50% to $385.5  million  for the six months  ended June 30,  2001 from
$256.4 million for the same period in 2000.  Gross margin  increased to 7.2% for
the six months ended June 30, 2001 from 6.9% for the same period in 2000.  Gross
margin for the three and six months ended June 30, 2001 was consistent  with the
gross margin for the three months ended March 31, 2001.

         For the foreseeable  future,  the Company's gross margin is expected to
depend  primarily  on  product  mix,  production  efficiencies,  utilization  of
manufacturing  capacity,  start-up  activity,  new  product  introductions,  and
pricing within the electronics industry.  Over time, gross margins at individual
sites and for the  Company  as a whole are  expected  to  fluctuate.  Changes in
product mix,  additional  costs  associated with new product  introductions  and
price  erosion  within  the  electronics  industry  could  adversely  affect the
Company's  gross margin.  Also, the  availability  of raw  materials,  which are
subject to lead time and other  constraints,  could possibly limit the Company's
revenue growth.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling,  general and administrative  (SG&A) expenses increased 18% for
the three months  ended June 30, 2001 to $86.4  million  (3.2% of revenue)  from
$73.5  million  (3.5% of  revenue)  for the same period in 2000.  SG&A  expenses
increased 33% for the six months ended June 30, 2001 to $175.4  million (3.3% of
revenue) from $131.5  million (3.5% of revenue) for the same period in 2000. The
increase in expenses was primarily due to  operations  acquired  during 2000 and
2001.  SG&A  expenses  continue to increase year over year at a slower rate than
revenue.

         Research and development  (R&D) costs of $2.4 million (0.1% of revenue)
were  incurred for the three months ended June 30, 2001 compared to $4.9 million
(0.2% of  revenue)  for the same  period in 2000.  R&D costs for the six  months
ended June 30, 2001 were $8.9  million,  compared  to $9.2  million for the same
period of 2000.

INTANGIBLE ASSETS AND AMORTIZATION

         Amortization  of intangible  assets  increased to $28.1 million for the
three months ended June 30, 2001 from $19.2 million for the same period in 2000.
Amortization of intangible  assets increased to $57.7 million for the six months
ended June 30, 2001 from $34.5 million for the same period in 2000. The increase
is  attributable  to the  intangible  assets  arising  from  the  2000  and 2001
acquisitions, with the largest portion relating to the IBM and NEC acquisitions.
The excess of the  purchase  price paid over the fair value of  tangible  assets
acquired in the acquisitions  completed in 2000 and 2001 totalled $346.1 million
and has been allocated to goodwill,  intellectual  property and other intangible
assets.

         At June 30, 2001, intangible assets represented 9% of Celestica's total
assets compared to 10% at December 2000.

INTEGRATION COSTS RELATED TO ACQUISITIONS

         Integration  costs related to  acquisitions  represent  one-time  costs
incurred  within  12  months  of the  acquisition  date,  such as the  costs  of
implementing   compatible  information  technology  systems  in  newly  acquired
operations,  establishing  new processes  related to marketing and  distribution
processes to  accommodate  new  customers  and  salaries of  personnel  directly
involved with  integration  activities.  All of the  integration  costs incurred
related  to  newly  acquired  facilities,  and  not  to the  Company's  existing
operations.

         Integration costs were $7.8 million and $10.1 million for the three and
six months ended June 30, 2001 compared to $4.9 million and $5.6 million for the
same periods in 2000. The integration costs incurred in 2001 primarily relate to
the IBM, Motorola and Avaya acquisitions.

         Integration  costs  vary from  period to  period  due to the  timing of
acquisitions  and related  integration  activities.  Celestica  expects to incur
additional integration costs in 2001 as it completes the integration of its 2000


                                      -5-


<PAGE>


and 2001 acquisitions.  Celestica will incur future additional integration costs
as the Company continues to make acquisitions as part of its growth strategy.

OTHER CHARGES

         Other  charges  are  non-recurring  items or items that are  unusual in
nature.  For the three and six months  ended June 30, 2001,  Celestica  incurred
$53.2 million and $57.0 million respectively in other charges.

         In the first  quarter of 2001,  the  Company  was  impacted by numerous
order reductions, rescheduling and cancellations. The Company believes that this
was consistent with the EMS industry,  in general. This resulted in a sequential
decline in revenue from the fourth quarter of 2000 to the first quarter of 2001,
and flat  revenue  from the first to the second  quarter.  The Company has taken
actions to resolve surpluses as a result of the current market slowdown.  In the
second quarter of 2001, these actions  included  facility  consolidations  and a
workforce  reduction.  Employee  terminations  were made  across all  geographic
regions with the majority being  manufacturing and plant employees.  The company
took a non-cash charge to write-down  certain  long-lived assets in Canada,  the
United  States,  Europe and Mexico.  These  write-downs  relate to machinery and
equipment, buildings and improvements, which have become impaired as a result of
the rationalization of facilities. A further description of the charges taken is
included in Note 5 to the interim consolidated financial statements for June 30,
2001 contained in the Company's quarterly filings.

         The  Company  expects to record an  additional  charge of  between  $30
million and $40 million in the third quarter as it continues to rationalize  the
cost  structure,  of which  approximately  one  half  could  represent  non-cash
charges.

         The Company expects to benefit from the  restructuring  measures of the
second and third  quarters,  through margin  improvement  and reduced  operating
costs,  in the  upcoming  quarters.  These  savings are  primarily  from reduced
employee-related  costs. The Company expects to complete the major components of
the  restructuring  plan by the first  quarter of 2002.  Cash outlays are funded
from cash on hand.

         Celestica did not incur any "other charges" in 2000.

INTEREST INCOME, NET

         Interest income, net of interest expense,  for the three and six months
ended June 30, 2001  amounted to $2.4  million and $5.9  million,  respectively,
compared to $6.3  million and $8.1  million  for the same  periods in 2000.  The
Company  continued to earn  interest  income on its cash balance which more than
offset the interest expense incurred on the Company's Senior Subordinated Notes.
The  decrease  in  interest  income in the  second  quarter is a result of lower
interest  rates and lower  average cash balances for the three months ended June
30, 2001 compared to the same period in 2000.

INCOME TAXES

          Income tax expense for the three  months  ended June 30, 2001 was $3.3
million,  reflecting  an  effective  tax rate of 17%,  compared to an income tax
expense of $13.1 million and an effective tax rate of 24% for the same period in
2000. The Company's effective tax rate decreased to 17% in the second quarter of
2001 as a result of the mix and volume of  business  in lower tax  jurisdictions
within Europe and Asia.  These lower tax rates  include  special tax holidays or
similar tax incentives  that  Celestica has  negotiated  with the respective tax
authorities, as well as new tax arrangements that became effective this quarter.

         Income tax  expense  for the six months  ended June 30,  2001 was $20.6
million,  reflecting  an  effective  tax rate of 23%,  compared to an income tax
expense of $25.4 million and an effective tax rate of 27% for the same period in
2000.

         Celestica  has  recognized a net deferred tax asset at June 30, 2001 of
$92.8 million  compared to $83.5  million at December 31, 2000.  This relates to
the  recognition  of net  operating  losses  and future  income  tax  deductions
available to reduce future  years'  income for income tax purposes.  Celestica's
current projections


                                      -6-


<PAGE>


demonstrate  that it will generate  sufficient  taxable  income in the future to
realize the  benefit of these  deferred  income tax assets in the  carry-forward
periods. These losses will expire over a 15-year period commencing in 2006.



LIQUIDITY AND CAPITAL RESOURCES

         For the three months ended June 30, 2001, operating activities provided
Celestica with $212.2 million in cash compared to the use of cash from operating
activities  of $166.1  million for the same period in 2000.  Cash was  generated
from  earnings,   a  reduction  in  inventory  and  the  collection  of  certain
recoverable  commodity taxes. For the six months ended June 30, 2001,  Celestica
used cash of $48.6 million from operating activities compared to the use of cash
of $140.4 million for the same period in 2000.

         Investing  activities  for the six months ended June 30, 2001  included
capital expenditures of $136.1 million and $148.1 million for acquisitions.  See
"2001 Acquisitions". Investing activities for the six months ended June 30, 2000
included  capital  expenditures  of $97.9 million and $596.7 million for the IBM
and NEC acquisitions, respectively.

          In late May 2001,  Celestica  issued 12.0 million  subordinate  voting
shares for gross  proceeds of $714.0  million  less  expenses  and  underwriting
commissions of $10.0 million  (pre-tax).  In March 2000,  Celestica  issued 16.6
million  subordinate  voting  shares for gross  proceeds of $757.4  million less
expenses and underwriting commissions of $26.8 million (pre-tax).


CAPITAL RESOURCES

         Celestica  has two $250 million  global,  unsecured,  revolving  credit
facilities,  each  provided by a syndicate  of  lenders.  The credit  facilities
permit  Celestica and certain  designated  subsidiaries to borrow funds directly
for general corporate purposes  (including  acquisitions) at floating rates. The
credit  facilities are available  until July 2003 and April 2004,  respectively.
Under the credit facilities: Celestica is required to maintain certain financial
ratios;  its ability and that of certain of its  subsidiaries  to grant security
interests,  dispose of assets,  change the nature of its  business or enter into
business  combinations,  is  restricted;  and a change in control is an event of
default. Both facilities were amended effective June 8, 2001. No borrowings were
outstanding  under the revolving credit  facilities at June 30, 2001 or December
31, 2000.

         In early August  2001,  Celestica  announced  the  completion  of a new
four-year  extendible,  unsecured,  revolving  credit facility for $500 million,
provided  by a syndicate  of lenders.  The  facility  is  available  for general
corporate purposes,  including  acquisitions.  The Company now has a total of $1
billion in revolving credit facilities.

         The only  other  financial  covenant  in  effect  is a debt  incurrence
covenant  contained in  Celestica's  Senior  Subordinated  Notes due 2006.  This
covenant is based on Celestica's  fixed charge coverage ratio, as defined in the
indenture governing the Senior Subordinated Notes.

         Celestica was in compliance with all debt covenants as at June 30, 2001
and December 31, 2000.

         Celestica believes that cash flow from operating  activities,  together
with  cash on  hand  and  borrowings  available  under  its  global,  unsecured,
revolving credit  facilities,  will be sufficient to fund currently  anticipated
working capital,  planned capital spending and debt service requirements for the
next 12  months,  as well as  previously  announced  acquisitions.  The  Company
expects  capital  spending  for 2001 to be  approximately  $200  million to $250
million.  At June 30,  2001,  Celestica  had  committed  $37  million in capital
expenditures.    In   addition,    Celestica   regularly   reviews   acquisition
opportunities, and may therefore require additional debt or equity financing.

         Celestica prices the majority of its products in U.S. dollars,  and the
majority of its material costs are also denominated in U.S. dollars.  However, a
significant  portion of its non-material  costs (including  payroll,  facilities
costs and  costs of  locally  sourced  supplies  and  inventory)  are  primarily
denominated  in Canadian  dollars,  British pounds  sterling,  Euros and Mexican
pesos. As a result,  Celestica may experience  transaction and translation gains
or


                                      -7-


<PAGE>


losses because of currency fluctuations. At June 30, 2001, Celestica had forward
foreign exchange  contracts covering various currencies in an aggregate notional
amount of $1,426  million with expiry dates up to December  2002. The fair value
of these  contracts at June 30, 2001,  was an unrealized  loss of $13.5 million.
Celestica's  current  hedging  activity is designed to reduce the variability of
its foreign  currency  costs and involves  entering into  contracts to sell U.S.
dollars to purchase  Canadian dollars,  British pounds sterling,  Mexican pesos,
Singapore dollars and Euros at future dates. In general,  these contracts extend
for periods of less than 19 months. Celestica may, from time to time, enter into
additional hedging transactions to minimize its exposure to foreign currency and
interest rate risks.  There can be no assurance that such hedging  transactions,
if entered into, will be successful.

RECENT DEVELOPMENTS

         In July  2001,  Celestica  announced  that it  would  incur  additional
restructuring charges of $30 to $40 million in the third quarter as it continues
to rationalize its cost structure. See "Other charges".

         In July 2001,  Celestica  announced it has entered into agreements with
Lucent Technologies. See "2001 Acquisitions".

RECENT ACCOUNTING DEVELOPMENTS

         The  Financial  Accounting  Standards  Board (FASB) has issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" and SFAS No.
138 which amends SFAS No. 133.  SFAS No. 133  establishes  methods of accounting
for derivative  financial  instruments and hedging  activities  related to those
instruments as well as other hedging activities.  The standard requires that all
derivatives  be recorded on the balance  sheet at fair value.  The Company  will
implement  SFAS No. 133 for its year ended December 31, 2001 for purposes of the
U.S.  GAAP  reconciliation.  In accordance  with the new  standard,  the Company
accounts for its existing foreign currency contracts as cash flow hedges.

         In the first quarter of 2001,  Celestica adopted  retroactively the new
Canadian  Institute  of  Chartered  Accountants  (CICA)  Handbook  Section  3500
"Earnings per Share",  which  requires the use of the treasury  stock method for
calculating  diluted  earnings  per share.  This change  results in earnings per
share  calculations  which are consistent with United States generally  accepted
accounting principles.  Previously reported diluted earnings per share have been
restated to reflect this change.

         In July  2001,  the FASB  issued  SFAS No. 141 and SFAS No. 142 and the
CICA approved  Handbook Section 1581 "Business  Combinations"and  3062 "Goodwill
and Other Intangible  Assets".  The new standards mandate the purchase method of
accounting  for business  combinations  and require  that  goodwill no longer be
amortized but instead be tested for impairment at least annually.  Upon adoption
of the  standards  beginning  January  1, 2002,  the  Company  will  discontinue
amortization  for  goodwill  and test for  impairment  using the new  standards.
Effective  July 1,  2001 and for the  remainder  of the  fiscal  year,  goodwill
acquired in business  combinations  completed  after June 30, 2001,  will not be
amortized  and  impairment  testing  will be based on  existing  standards.  The
Company is currently  determining the impact of the new standards.  It is likely
that the elimination of the amortization on goodwill will have a material impact
on the Company's financial statements.


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