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<SEC-DOCUMENT>0001047469-03-014116.txt : 20030422
<SEC-HEADER>0001047469-03-014116.hdr.sgml : 20030422
<ACCEPTANCE-DATETIME>20030422143113
ACCESSION NUMBER:		0001047469-03-014116
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20030331
FILED AS OF DATE:		20030422

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CELESTICA INC
		CENTRAL INDEX KEY:			0001030894
		STANDARD INDUSTRIAL CLASSIFICATION:	PRINTED CIRCUIT BOARDS [3672]
		IRS NUMBER:				980185558
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-14832
		FILM NUMBER:		03658172

	BUSINESS ADDRESS:	
		STREET 1:		12 CONCORD PL
		STREET 2:		7TH FL
		CITY:			ONTARIO CANADA
		STATE:			A6
		ZIP:			M3C 1V7
		BUSINESS PHONE:		416442211
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>a2108992z6-k.txt
<DESCRIPTION>FORM 6-K
<TEXT>
<PAGE>

                                    FORM 6-K
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                        REPORT OF FOREIGN PRIVATE ISSUER
                      PURSUANT TO RULE 13a-16 OR 15d-16 OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                           For the month of April 2003

                                   001-14832
                            (COMMISSION FILE NUMBER)

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

                                 CELESTICA INC.
                 (TRANSLATION OF REGISTRANT'S NAME INTO ENGLISH)

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

                            1150 EGLINTON AVENUE EAST
                                TORONTO, ONTARIO
                                 CANADA, M3C 1H7
                                 (416) 448-5800
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

     Indicate  by check mark  whether the  registrant  files or will file annual
reports under cover of Form 20-F or Form 40-F.

              Form 20-F   X                     Form 40-F ______

     Indicate by check mark whether the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1): ______

     Indicate by check mark whether the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7): ______

     Indicate by check mark whether by furnishing the  information  contained in
this Form, is the  registrant  also thereby  furnishing  the  information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

              Yes _____                             No   X

     If  "Yes"  is  marked,  indicate  below  the file  number  assigned  to the
registrant in connection with Rule 12g3-2(b): 82-_________

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


<PAGE>

                                 CELESTICA INC.
                                    FORM 6-K
                               MONTH OF APRIL 2003


Filed with this Form 6-K is the following:


- -    Management's  Discussion and Analysis of Financial Conditions and Results
of  Operations  for the three months ended March 31, 2003,  the text of which is
attached hereto as Exhibit 99.1 and is incorporated herein by reference.



Exhibits

99.1  - Management's Discussion and Analysis





<PAGE>


SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.





                                            CELESTICA INC.



Date:    April 21, 2003                  BY: /s/ Elizabeth L. DelBianco
                                            ------------------------------------
                                             Elizabeth L. DelBianco
                                             Vice President & General Counsel





<PAGE>



                                  EXHIBIT INDEX

                   99.1 - Management's Discussion and Analysis


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>a2108992zex-99_1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
<PAGE>

                                                                    EXHIBIT 99.1

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                               FIRST QUARTER 2003


     THE  FOLLOWING  DISCUSSION  OF  THE  FINANCIAL  CONDITION  AND  RESULTS  OF
OPERATIONS  OF THE COMPANY  SHOULD BE READ IN  CONJUNCTION  WITH THE 2002 ANNUAL
CONSOLIDATED  FINANCIAL  STATEMENTS AND THE MARCH 31, 2003 INTERIM  CONSOLIDATED
FINANCIAL STATEMENTS. ALL DOLLAR AMOUNTS ARE EXPRESSED IN U.S. DOLLARS.

     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.  THESE RISKS AND
UNCERTAINTIES  INCLUDE,  BUT ARE NOT LIMITED TO: THE  CHALLENGES OF  EFFECTIVELY
MANAGING OUR OPERATIONS DURING UNCERTAIN ECONOMIC  CONDITIONS;  THE CHALLENGE OF
RESPONDING  TO  LOWER-THAN-EXPECTED   CUSTOMER  DEMAND;  THE  EFFECTS  OF  PRICE
COMPETITION AND OTHER BUSINESS AND COMPETITIVE  FACTORS GENERALLY  AFFECTING THE
EMS INDUSTRY;  OUR DEPENDENCE ON THE INFORMATION  TECHNOLOGY AND  COMMUNICATIONS
INDUSTRIES;  OUR  DEPENDENCE ON A LIMITED  NUMBER OF CUSTOMERS AND ON INDUSTRIES
AFFECTED BY RAPID TECHNOLOGICAL CHANGE;  COMPONENT  CONSTRAINTS;  VARIABILITY OF
OPERATING RESULTS AMONG PERIODS; AND THE ABILITY TO MANAGE OUR RESTRUCTURING AND
THE SHIFT OF  PRODUCTION  TO LOWER COST  GEOGRAPHIES.  THESE AND OTHER RISKS AND
UNCERTAINTIES  AND FACTORS  ARE  DISCUSSED  IN THE  COMPANY'S  FILINGS  WITH THE
CANADIAN SECURITIES COMMISSIONS AND THE U.S. SECURITIES AND EXCHANGE COMMISSION,
INCLUDING THE COMPANY'S  ANNUAL  REPORT ON FORM 20-F AND  SUBSEQUENT  REPORTS ON
FORM 6-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

     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.

OVERVIEW

     Celestica is a world leader in providing electronics manufacturing services
to OEMs in the information technology and communications  industries.  Celestica
provides a wide variety of products and services to its customers, including the
high-volume manufacture of complex printed circuit board assemblies 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 the Americas, Europe and Asia.

     Over the past two years, the information  technology and communications end
markets have experienced continuing weakness. Revenue for 2002 was $8.3 billion,
down 17% from $10.0 billion for 2001.  The reduced demand for OEM's products and
services  contributed  to the decrease in the Company's  revenue and margins for
2002 and for the first quarter of 2003.

     Historically,  acquisitions have contributed significantly to the Company's
growth,  with 2001 being the most active year for acquisitions,  in terms of the
number  of  acquisitions  closed  and the  total  purchase  price.  Growth  from
acquisitions in 2002 and 2003, to date however, was minimal. Celestica continues
to evaluate  acquisition  opportunities  and anticipates that  acquisitions will
continue to contribute to its future growth.

     In 2001, the Company announced its first  restructuring plan in response to
the weakened end  markets.  The  continued  downturn  into 2002  resulted in the
Company announcing its second  restructuring  plan. In January 2003, the Company
announced a further  restructuring plan, which it expects to complete by the end
of  2003.  The  restructurings  are  focused  on  consolidating  facilities  and
increasing capacity in lower cost geographies.  The Company expects that it will
have  a  better-balanced   manufacturing  footprint  when  all  of  the  planned
restructuring actions are completed.

     In the fourth quarter of 2002,  Celestica  recorded  impairment  losses, in
connection with its annual  impairment tests of goodwill and long-lived  assets.
Future impairment tests may result in additional impairment charges.



<PAGE>
                                       2

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Celestica  prepares its financial  statements in accordance  with generally
accepted accounting  principles (GAAP) in Canada with a reconciliation to United
States GAAP, as disclosed in note 22 to the 2002 Annual  Consolidated  Financial
Statements.

     The  preparation of financial  statements in conformity  with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities  and disclosures of contingent  assets and liabilities at
the date of the financial  statements,  and the reported  amounts of revenue and
expenses  during the  reporting  period.  Significant  accounting  policies  and
methods used in preparation of the financial  statements are described in note 2
to the 2002 Annual Consolidated Financial Statements.  The Company evaluates its
estimates and assumptions on a regular basis, based on historical experience and
other relevant factors.  Significant estimates are used in determining,  but not
limited to, the allowance for doubtful accounts, inventory valuation, income tax
valuation allowances, the fair value of reporting units for purposes of goodwill
impairment  tests,  the useful lives and  valuation of  intangible  assets,  and
restructuring  charges.  Actual  results  could  differ  materially  from  those
estimates and assumptions.

REVENUE RECOGNITION:

     Celestica  derives most of its revenue from OEM customers.  The contractual
agreements with its key customers  generally provide a framework for its overall
relationship  with the  customer.  Celestica  recognizes  product  revenue  upon
shipment to the customer as  performance  has occurred,  all customer  specified
acceptance  criteria  have been  tested  and met,  and the  earnings  process is
considered complete.  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
its 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.

ALLOWANCE FOR DOUBTFUL ACCOUNTS:

     Celestica  records an allowance for doubtful  accounts  related to accounts
receivable  that are  considered  to be impaired.  The allowance is based on the
Company's  knowledge of the financial  condition of its customers,  the aging of
the   receivables,   current   business   environment,   customer  and  industry
concentrations,  and  historical  experience.  A change to these  factors  could
impact the  estimated  allowance  and the  provision  for bad debts  recorded in
selling, general and administrative expenses.

INVENTORY VALUATION:

     Celestica values its inventory on a first-in,  first-out basis at the lower
of cost and replacement cost for production  parts, and at the lower of cost and
net  realizable  value  for  work in  progress  and  finished  goods.  Celestica
regularly  adjusts its inventory  valuation based on shrinkage and  management's
estimates of net realizable  value,  taking into  consideration  factors such as
inventory  aging,  future  demand  for  the  inventory,  and the  nature  of the
contractual  agreements  with customers and suppliers,  including the ability to
return  inventory  to them.  A change  to these  assumptions  could  impact  the
valuation of inventory and have a resulting impact on margins.

INCOME TAX VALUATION ALLOWANCE:

     Celestica records a valuation  allowance against deferred income tax assets
when management  believes it is more likely than not that some portion or all of
the  deferred  income  tax assets  will not be  realized.  Management  considers
factors  such as the  reversal of  deferred  income tax  liabilities,  projected
future  taxable  income,  the character of the income tax asset and tax planning
strategies.  A change to these  factors  could  impact the  estimated  valuation
allowance and income tax expense.

GOODWILL:

     Celestica  performs  its  annual  goodwill  impairment  tests in the fourth
quarter of each year, and more frequently if events or changes in  circumstances
indicate that an impairment loss may have been incurred.

<PAGE>
                                       3

Impairment  is tested at the  reporting  unit level by comparing  the  reporting
unit's carrying amount to its fair value. The fair values of the reporting units
are  estimated  using a combination  of a market  approach and  discounted  cash
flows.  The  process of  determining  fair  values is  subjective  and  requires
management  to exercise  judgment in making  assumptions  about future  results,
including  revenue and cash flow  projections at the reporting  unit level,  and
discount rates.  Celestica  recorded an impairment loss in the fourth quarter of
2002. Future goodwill impairment tests may result in further impairment charges.

INTANGIBLE ASSETS:

     Celestica  performs its annual impairment tests on long-lived assets in the
fourth  quarter  of each  year,  and more  frequently  if events or  changes  in
circumstances indicate that an impairment loss may have been incurred. Celestica
estimates  the  useful  lives of  intangible  assets  based on the nature of the
asset, historical experience and the terms of any related supply contracts.  The
valuation of  intangible  assets is based on the amount of future net cash flows
these  assets are  estimated to generate.  Revenue and expense  projections  are
based on  management's  estimates,  including  estimates  of current  and future
industry conditions.  A significant change to these assumptions could impact the
estimated  useful lives or valuation of intangible  assets resulting in a change
to amortization expense and impairment charges.

RESTRUCTURING CHARGES:

     Celestica  recorded  restructuring  charges in 2001 and 2002,  relating  to
facility  consolidations  and workforce  reductions.  These charges are recorded
based  on  detailed  plans   approved  and  committed  to  by  management.   The
restructuring  charges  include  employee  severance  and benefit  costs,  costs
related  to  leased  facilities  that  will be  abandoned  or  subleased,  owned
facilities  which are no longer used and will be held for  disposition,  cost of
leased equipment that will be abandoned, impairment of owned equipment that will
be held for disposition,  and impairment of related intangible assets, primarily
intellectual  property.  The recognition of these charges requires management to
make certain  judgments  and estimates  regarding the nature,  timing and amount
associated  with these  plans.  The  estimates of future  liability  may change,
requiring  additional  restructuring  charges or a reduction of the  liabilities
already recorded. At the end of each reporting period, the Company evaluates the
appropriateness of the remaining accrued balances.

RECENT ACQUISITIONS

     A significant portion of Celestica's growth in prior years was generated by
strengthening  its  customer  relationships  and  increasing  the breadth of its
service offerings through asset and business  acquisitions.  The Company focused
on investing  strategically in acquisitions  that better  positioned the Company
for  future  outsourcing   opportunities.   Celestica's  most  active  year  for
acquisitions  was 2001. The historical pace of Celestica's  acquisitions did not
continue in 2002 or in 2003, to date, and may not continue in the future.

     As a result of the  continued  downturn in the  economy,  some of the sites
acquired  in prior  years  have been  impacted  by the  Company's  restructuring
actions.  Supply agreements entered into in connection with certain acquisitions
were also affected by order  cancellations  and  reschedulings  as base-business
volumes have decreased. See discussion below in "Results of Operations."

2002 ASSET ACQUISITIONS:

     In March 2002,  the Company  acquired  certain assets located in Miyagi and
Yamanashi,  Japan from NEC Corporation and signed a five-year supply  agreement.
In August 2002, the Company acquired  certain assets from Corvis  Corporation in
the United  States and  signed a  multi-year  supply  agreement.  The  aggregate
purchase  price for these  acquisitions  in 2002 of $111.0  million was financed
with cash and allocated to the net assets acquired, based on their relative fair
values at the date of acquisition.

     Celestica may at any time be 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,

<PAGE>
                                       4

what the  terms or timing  of any  agreement  would  be.  Celestica  expects  to
continue  any  current   discussions  and  actively  pursue  other   acquisition
opportunities.


RESULTS OF OPERATIONS

     Celestica's  annual and  quarterly  operating  results  vary from period to
period as a result of the level and timing of customer  orders,  fluctuations in
materials  and other  costs  and the  relative  mix of  value-add  products  and
services.  The level and timing of customers' orders will vary due to customers'
attempts to balance their inventory,  changes in their manufacturing strategies,
variation  in  demand  for  their  products  and  general  economic  conditions.
Celestica's annual and quarterly operating results are also affected by capacity
utilization,  geographic  manufacturing  mix and other factors,  including price
competition,   manufacturing   effectiveness  and  efficiency,   the  degree  of
automation used in the assembly process, the ability to manage labour, inventory
and capital assets  effectively,  the timing of  expenditures in anticipation of
forecasted  sales levels,  the timing of  acquisitions  and related  integration
costs, customer product delivery requirements, shortages of components or labour
and  other  factors.  Weak  end-market  conditions  began to  emerge in early to
mid-2001 and have  continued to weaken for the  communications  and  information
technology  industries.  This  resulted in customers  rescheduling  or canceling
orders which negatively impacted Celestica's results of operations.

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

<TABLE>
<CAPTION>

                                                   THREE MONTHS ENDED
                                                        MARCH 31
                                                    2002       2003
                                                    -----      -----
<S>                                                 <C>        <C>
Revenue.....................................        100.0%     100.0%
Cost of sales...............................         92.9       95.2
                                                    -----      -----
Gross profit................................          7.1        4.8
Selling, general and administrative expenses          3.4        3.8
Research and development costs..............          0.2        0.3
Amortization of intangible assets...........          1.0        0.8
Integration costs related to acquisitions...          0.2        --
Other charges...............................          --        (0.1)
                                                    -----      -----
Operating income............................          2.3        --
Interest expense (income), net..............          0.1       (0.2)
                                                    -----      -----
Earnings before income taxes................          2.2        0.2
Income taxes................................          0.4        --
                                                    -----      -----
Net earnings................................          1.8%       0.2%
                                                    =====      =====
</TABLE>

REVENUE

     Revenue decreased 26%, to $1,587.4 million for the three months ended March
31, 2003 from $2,151.5  million for the same period in 2002,  primarily due to a
reduction in volumes as a result of the prolonged weakened end-market conditions
and  seasonality.  Excess  capacity  in the  EMS  industry  continued  to  exert
pressures on pricing for components and services,  thereby reducing revenue. The
visibility of end-market conditions remains limited.

     Celestica manages its operations on a geographic basis. The three reporting
segments are the Americas, Europe and Asia. Revenue from the Americas operations
was $769.3  million for the three months ended March 31, 2003, a decrease of 43%
from the same  period in 2002.  Revenue  from  European  operations  was  $336.4
million for the three  months  ended March 31,  2003, a decrease of 28% from the
same period in 2002. The Americas and European  operations have been hardest hit
by customer cancellations and order delays because of the downturn in end-market
demand for their products.  In addition,  the customers'  continued  demands for
significantly  lower  product  manufacturing  costs,  have reduced  revenue even
further in these higher cost  geographies.  The Company has and will continue to
reduce its  manufacturing  capacity in these  geographies  by downsizing  and/or
closing  facilities.  These actions include the transfer of programs from higher
cost  geographies to lower cost  geographies.  Revenue from Asian operations was
$525.6  million for the three months  ended March 31,  2003,  an increase of 31%
from the same period in 2002.  The increase in revenue from Asian  operations is
primarily due to the  flow-through  of the  acquisition  in Japan,  which closed
March 31, 2002.  Asian  operations  also benefited from the production  that the
Company transferred from other geographies. Volumes for the Asian operations are
expected to increase in 2003, as the Company  transfers  additional  programs to
that region. As the EMS industry increases its production  capabilities in lower
cost  geographies such as Asia,  competition  will likely increase  resulting in
additional pricing

<PAGE>
                                       5

pressures for components and services. This pricing pressure,  combined with the
cost of transferring numerous products to Asia, has impacted the Company's Asian
results in the first quarter.

     Sequentially,  revenue has decreased  17% from the fourth  quarter of 2002,
due to seasonality and continued difficult end markets.

     The  following  represents  the  end-market  industries  as a percentage of
revenue for the three months ended March 31, 2003:

<TABLE>
          <S>                                         <C>
          Enterprise communications............       24%
          Telecommunications...................       23%
          Servers..............................       22%
          Storage..............................       14%
          Other................................        9%
          Workstations and PCs.................        8%
</TABLE>

     In 2003, the Company separated its  Communications  segment into Enterprise
communications and Telecommunications.  In addition, Storage and Other were also
separated.  The 2002  comparatives  have not been  adjusted  to reflect  the new
segments.  The  comparatives  for the three  months  ended March 31, 2002 are as
follows:  Communications  - 46%;  Servers - 28%;  Storage  and other - 19%;  and
Workstations and PCs - 7%.

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

<TABLE>
<CAPTION>

                                        THREE MONTHS
                                            ENDED
                                           MARCH 31
                                        -------------
                                        2002     2003
                                        ----     ----
          <S>                           <C>      <C>
          Sun Microsystems........       X        X
          IBM.....................       X        X
          Lucent Technologies ....       X        X
          Hewlett-Packard.........       X
</TABLE>

     Celestica's  top ten  customers  represented  in the aggregate 78% of total
revenue for the three months ended March 31, 2003,  compared to 88% for the same
period  in 2002.  There has been a steady  decline  in  revenue  from the top 10
customers  over the past year, as they have been hardest hit by the  broad-based
reductions in corporate  spending for information  technology and communications
infrastructure  products.  At the same time,  the  Company  has been  focused on
diversifying  its customer  base by adding new customers in areas outside of the
traditional  communications  and  information  technology  end markets,  such as
military and aerospace, automotive, industrial, consumer and medical.

     The Company is dependent  upon  continued  revenue from its top  customers.
There can be no assurance  that revenue from these or any other  customers  will
not increase or decrease as a percentage of total 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. See notes
17  (concentration  of risk) and 19 to the 2002  Annual  Consolidated  Financial
Statements.

GROSS PROFIT

     Gross profit was $75.7 million for the three months ended March 31, 2003, a
decrease of 50% from the same period in 2002. Gross margin decreased to 4.8% for
the three months ended March 31, 2003 from 7.1% for the same period in 2002. The
decrease in margins was due to the significant reduction in business volumes and
corresponding low utilization rates, industry pricing pressures, and a change in
the mix of  products  manufactured.  This  decrease  was  offset  in part by the
benefits from the Company's restructuring programs. The European operations were
the  most  adversely  affected  as  they  were  operating  at  lower  levels  of
utilization and higher fixed costs. The volume  reductions and pricing pressures
tended to impact  the higher  value-add  products,  disproportionately,  further
reducing the European margins. The European operations are proceeding with their
restructuring plans, including the transfer of programs, which will be completed
throughout  the  remainder of the year,  with benefits in the latter part of the
year.  The  Americas   operations  have  been  affected  by  significant  volume
reductions,  a  change  in the  mix of  products  manufactured,  and by  pricing
pressures from some of their larger  customers.  Although Asian profits improved
on an absolute basis, margins have decreased mainly due to pricing.

<PAGE>
                                       6

     For the  foreseeable  future,  the  Company's  gross  margin is expected to
depend on product mix,  production  efficiencies,  utilization of  manufacturing
capacity,  geographic  manufacturing  mix, start-up and ramp up activities,  new
product introductions,  pricing within the electronics industry, cost structures
at individual sites, and other factors.  Over time,  margins at individual sites
and for the Company as a whole are expected to fluctuate. Also, the availability
of  labour  and 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 decreased 17%, to $59.7
million  (3.8% of revenue)  for the three months ended March 31, 2003 from $72.2
million  (3.4% of revenue) for the same period in 2002.  SG&A as a percentage of
revenue  increased as certain  elements of expenses were fixed over this period.
The decrease in SG&A,  on an absolute  basis,  reflects  the  benefits  from the
Company's restructuring programs and a reduction in spending.

RESEARCH AND DEVELOPMENT COSTS

     Research and  development  costs  remained  flat at $4.5  million  (0.3% of
revenue)  for the three  months  ended March 31, 2003  compared to $4.5  million
(0.2% of revenue) for the same period in 2002.

AMORTIZATION OF INTANGIBLE ASSETS

     Amortization of intangible  assets  decreased 44%, to $12.4 million for the
three  months  ended  March 31,  2003 from $22.0  million for the same period in
2002. In the fourth quarter of 2002, the Company  recorded an impairment  charge
to  write  down its  intangible  assets.  As a result  of the  write  down,  the
amortization expense has decreased.  The decrease in expense is partially offset
by amortization of intangible assets arising from the 2002 acquisitions.

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.

     No  integration  costs were  incurred  for the three months ended March 31,
2003  compared to $3.9  million for the same period in 2002.  Integration  costs
vary from  period to  period  due to the  timing  of  acquisitions  and  related
integration activities.

Other charges

<TABLE>
<CAPTION>
                                                       THREE MONTHS
                                                           ENDED
                                                         MARCH 31
                                                     ---------------
                                                     2002      2003
                                                     -----     -----
    <S>                                              <C>       <C>
                                                      (in millions)
    2001 and 2002 restructuring...................   $  --     $  --
    Gain on sale of surplus land..................      --      (1.6)
                                                     -----     -----
                                                     $  --     $(1.6)
                                                     =====     =====
</TABLE>

     Further  details of the other  charges are  included in note 13 to the 2002
Annual  Consolidated  Financial  Statements  and note 5 to the  March  31,  2003
Interim Consolidated Financial Statements.

     As of  December  31,  2002,  the  Company  had  recorded  charges  for  two
restructuring  plans in response to the economic climate.  These actions,  which
included  reducing  the  workforce,  consolidating  facilities  and changing the
number and location of production facilities, were largely intended to align the
Company's capacity and infrastructure to anticipated customer demand, as well as
to rationalize its footprint worldwide.  The 2001 restructuring plan resulted in
charges of $237.0 million.  The 2002  restructuring  plan resulted in charges of
$383.5 million.  Cash outlays are funded from cash on hand. In January 2003, the
Company announced another

<PAGE>
                                       7

restructuring  plan to further reduce its  manufacturing  capacity.  The Company
estimates the cost of this plan will be between $50.0 million to $70.0  million,
to be recorded by the end of 2003, of which 80% is expected to be cash costs.

     The Company has and expects to continue to benefit  from the  restructuring
measures taken in prior years through reduced  operating  costs. The Company has
completed  the major  components  of the 2001  restructuring  plan,  except  for
certain long-term lease and other contractual  obligations.  The Company expects
to  complete  the 2002  restructuring  actions  by the end of 2003,  except  for
certain long-term lease and other contractual obligations.

INTEREST INCOME, NET

     Interest income for the three months ended March 31, 2003 increased to $4.6
million, compared to $3.7 million for the same period in 2002. Although interest
is earned on higher cash balances,  the interest rates were lower than they were
a year ago.

     Interest expense decreased to $1.2 million for the three months ended March
31, 2003 compared to $5.4 million for the same period in 2002,  primarily due to
the redemption of the Senior Subordinated Notes in August 2002. Interest expense
is  expected  to decrease  for 2003 as a result of the  full-year  effect of the
redemption.

INCOME TAXES

     The income tax expense for the three  months  ended March 31, 2003 was $0.7
million  compared  to $8.1  million for the same  period in 2002,  both  periods
reflecting an effective tax rate of 17%.

     The  Company's  effective  tax rate is the  result of the mix and volume of
business  in lower tax  jurisdictions  within  Europe and Asia.  These lower tax
rates include tax holidays and tax incentives that Celestica has negotiated with
the respective tax  authorities  which expire between 2004 and 2012. The Company
expects the current tax rate of 17% to continue for the foreseeable future based
on the  anticipated  nature  and  conduct  of its  business  and the  tax  laws,
administrative  practices and judicial  decisions now in effect in the countries
in which the Company has assets or conducts  business,  all of which are subject
to change or differing interpretation, possibly with retroactive effects.

     The net  deferred  income tax asset as at March 31, 2003 of $280.1  million
($274.3  million as at December  31,  2002),  arises from  available  income tax
losses and future  income tax  deductions.  The  Company's  ability to use these
income tax  losses  and future  income  tax  deductions  is  dependent  upon the
operations  of the  Company in the tax  jurisdictions  in which  such  losses or
deductions  arose.  Management  records a valuation  allowance  against deferred
income tax assets when management  believes it is more likely than not that some
portion or all of the deferred income tax assets will not be realized.  Based on
the  reversal of  deferred  income tax  liabilities,  projected  future  taxable
income,  the  character  of the  income tax asset and tax  planning  strategies,
management  has  determined  that a  valuation  allowance  of $85.4  million  is
required  in respect  of its  deferred  income  tax assets as at March 31,  2003
($76.6  million as at  December  31,  2002).  In order to fully  utilize the net
deferred income tax assets of $280.1 million,  the Company will need to generate
future taxable income of  approximately  $757.0 million.  Based on the Company's
current  projection  of  taxable  income for the  periods in which the  deferred
income tax assets are  deductible,  it is more  likely than not that the Company
will realize the benefit of the net  deferred  income tax assets as at March 31,
2003.

LIQUIDITY AND CAPITAL RESOURCES

     For the three months ended March 31, 2003,  operating  activities  provided
Celestica with $85.4 million in cash. Cash was generated primarily from earnings
and the  collection  of accounts  receivable,  offset by a reduction in accounts
payable and accrued liabilities. The Company will continue to focus on improving
working capital management.

     Investing  activities  for the three months  ended March 31, 2003  included
capital expenditures of $18.1 million.

     The  Company  continued  to reduce the  leverage  on its  balance  sheet by
repurchasing  Liquid Yield  OptionTM  Notes (LYONs) in the open market.  For the
three months ended March 31, 2003,  LYONs with a principal amount at

<PAGE>
                                       8

maturity of $153.8 million,  were repurchased at an average price of $494.57 per
LYON, for a total of $76.1 million. A loss of $0.1 million, net of taxes of $1.7
million,  was  recorded.  See  further  details  in note 10 to the  2002  Annual
Consolidated  Financial  Statements  and note 3 to the  March 31,  2003  Interim
Consolidated Financial Statements.  The Company may, from time to time, purchase
additional  LYONs in the open  market.  In April  2003,  the board of  directors
authorized the Company to spend up to an additional $100.0 million to repurchase
LYONs, at management's discretion. This is in addition to the amounts previously
authorized,  of which $73.6 million  remains  available for future  purchases at
March 31, 2003. The amount and timing of future  purchases  cannot be determined
at this time.

     In July 2002,  Celestica  filed a Normal Course Issuer Bid to repurchase up
to 9.6 million  subordinate voting shares, for cancellation,  over a period from
August 1, 2002 to July 31,  2003.  The shares  will be  purchased  at the market
price at the time of purchase. The number of shares to be repurchased during any
30-day period may not exceed 2% of the outstanding  subordinate voting shares. A
copy of the Notice relating to the Normal Course Issuer Bid may be obtained from
Celestica,  without  charge,  by  contacting  the Company's  Investor  Relations
Department  at  clsir@celestica.com.  For the three months ended March 31, 2003,
the Company  repurchased  6.8 million  subordinate  voting  shares at a weighted
average price of $12.01 per share.  All of these  transactions  were funded with
cash on hand.  In April 2003,  the Company  announced  that it has  expanded the
number of shares to be purchased  under its current  Normal  Course  Issuer Bid,
from 5% of the outstanding subordinate voting shares to 10% of the public float.
Total authorized shares under this program is approximately  18.6 million shares
of which 8.8 million shares have been repurchased to date.

CAPITAL RESOURCES

     At March 31, 2003, the Company had two credit facilities:  a $500.0 million
four-year  revolving term credit  facility and a $350.0  million  revolving term
credit  facility  which  expire  in 2005  and  2004,  respectively.  The  credit
facilities permit Celestica and certain designated  subsidiaries to borrow funds
directly for general  corporate  purposes  (including  acquisitions) at floating
rates.  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.  No borrowings  were  outstanding  under the revolving  credit
facilities at March 31, 2003.

     Celestica and certain  subsidiaries  have overdraft bank  facilities  which
total $47.1 million that are available for operating requirements.

     Celestica believes that cash flow from operating activities,  together with
cash on hand and  borrowings  available  under its  credit  facilities,  will be
sufficient  to fund  currently  anticipated  working  capital,  planned  capital
spending  and debt  service  requirements  for the next 12 months.  The  Company
expects capital spending for 2003 to be in the range of 1.0% to 2.0% of revenue.
At  March  31,  2003,   Celestica  had   committed   $25.6  million  in  capital
expenditures. In addition, Celestica regularly reviews acquisition opportunities
and, therefore, may require additional debt or equity financing.

     The Company  has an  arrangement  to sell up to $400.0  million in accounts
receivable  under a revolving  facility which is available until September 2004.
As of March 31, 2003, the Company generated cash from the sale of $313.6 million
in accounts receivable.  The terms of the arrangement provide that the purchaser
may elect not to purchase receivables if Celestica's credit rating falls below a
specified  threshold.  Celestica's  credit  rating is  significantly  above that
threshold.

     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 denominated in
various  currencies.  As a result,  Celestica  may  experience  transaction  and
translation gains or losses because of currency fluctuations. The Company has an
exchange  risk  management  policy in place to control its hedging  programs and
does not enter into speculative trades. At March 31, 2003, Celestica had forward
foreign exchange  contracts covering various currencies in an aggregate notional
amount of $596.2  million  with  expiry  dates up to June  2004,  except for one
contract for $10.6 million that expires in January 2006. The fair value of these
contracts  at  March  31,  2003,  was  an  unrealized  gain  of  $31.9  million.
Celestica's  current  hedging  activity is designed to reduce the variability of
its foreign  currency  costs and generally  involves  entering into contracts to
trade U.S. dollars for Canadian dollars, British pounds sterling,

<PAGE>
                                       9

Mexican pesos, euros, Thai baht,  Singapore dollars,  Brazilian reais,  Japanese
yen and Czech koruna 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.  See  note  2(n)  to the  2002  Annual
Consolidated Financial Statements.

     As at March 31, 2003, the Company has convertible  instruments,  the LYONs,
with an outstanding  principal  amount at maturity of $1,436.8  million  payable
August 1, 2020.  Holders of the instruments have the option to require Celestica
to repurchase  their LYONs on August 2, 2005, at a price of $572.82 per LYON, or
a total of $823.0  million.  The  Company  may elect to  settle  its  repurchase
obligation in cash or shares, or any combination thereof. See further details in
note 10 to the 2002 Annual Consolidated Financial Statements.

RECENT ACCOUNTING DEVELOPMENTS

IMPAIRMENT OF LONG-LIVED ASSETS:

     In  August  2001,  FASB  approved  SFAS  No.  143,  "Accounting  for  Asset
Retirement  Obligations"  and  in  October  2001,  FASB  issued  SFAS  No.  144,
"Accounting  for the  Impairment or Disposal of Long-Lived  Assets." In December
2002,  the CICA issued  standards  similar to SFAS No. 144.  See notes 22(k) and
2(r) to the 2002 Annual Consolidated Financial Statements.

COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES:

     In July 2002, FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal  Activities,"  effective  for exit or disposal  activities
that are initiated  after  December 31, 2002.  See note 22(k) to the 2002 Annual
Consolidated  Financial  Statements.  In March 2003,  the CICA issued  standards
similar to SFAS No. 146.

GUARANTEES:

     In  November  2002,  FASB  issued  FIN  45,  "Guarantor's   Accounting  and
Disclosure  Requirements."  In December  2002,  the CICA  approved  AcG-14 which
harmonizes  Canadian GAAP to the  disclosure  requirements  of FIN 45. See notes
22(k) and 2(r) to the 2002 Annual Consolidated Financial Statements.

CONSOLIDATION OF VARIABLE INTEREST ENTITIES:

     In January 2003, FASB issued FIN 46,  "Consolidation  of Variable  Interest
Entities." See note 22(k) to the 2002 Annual Consolidated Financial Statements.


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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