As filed with the Securities and Exchange Commission on March 21, 2005.



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

---

FORM 20-F

o    Registration statement pursuant to Section 12(b) or 12(g)
of the Securities Exchange Act of 1934
orý    Annual report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 2004
oro    Transition report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Commission file number: 1-14832

---

CELESTICA INC.(Exact name of registrant as specified in its charter)

Ontario, Canada

(Jurisdiction of incorporation or organization)

1150 Eglinton Avenue East
Toronto, Ontario, Canada M3C 1H7(Address of registrant's principal executive offices)

---

SECURITIES REGISTERED OR TO BE REGISTERED
PURSUANT TO SECTION 12(b) OF THE ACT:

|Subordinate Voting Shares (Title of Class)           |  | The Toronto Stock Exchange
The New York Stock Exchange (Name of each Exchange on which Registered)
|---------------------------------------------------- |  | --------------------------------------------------------------------------------------------------
|Liquid Yield Option Notes due 2020 (Title of Class) |  | The New York Stock Exchange (Name of each Exchange on which Registered)                           

---

SECURITIES REGISTERED OR TO BE REGISTERED
PURSUANT TO SECTION 12(g) OF THE ACT:N/A

---

SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION
PURSUANT TO SECTION 15(d) OF THE ACT:N/A

---

Indicate
the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

|185,913,462 Subordinate Voting Shares |  | 0 Preference Shares
|------------------------------------- |  | -------------------
|39,065,950 Multiple Voting Shares     |  |                    

---

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  ý    No  o

Indicate by check mark which financial statement item the registrant has elected to follow.
Item 17  o    Item 18  ý

---





TABLE OF CONTENTS

|       |                                                               | Page
|------ | ------------------------------------------------------------- | ----
|PART I |                                                               | 1   
|       | Item 1. Identity of Directors, Senior Management and Advisers |     
|       | Item 2. Offer Statistics and Expected Timetable               |     
|       | Item 3. Key Information                                       |     
|       |                                                               |     
|       |                                                               |     
|       |                                                               |     
|       |                                                               |     
|       | Item 4. Information on the Company                            |     
|       |                                                               |     
|       |                                                               |     
|       |                                                               |     
|       |                                                               |     
|       | Item 5. Operating and Financial Review and Prospects          |     
|       |                                                               |     
|       |                                                               |     
|       |                                                               |     
|       |                                                               |     
|       | Item 6. Directors, Senior Management and Employees            |     
|       |                                                               |     
|       |                                                               |     
|       |                                                               |     
|       |                                                               |     
|       |                                                               |     
|       | Item 7. Major Shareholders and Related Party Transactions     |     
|       |                                                               |     
|       |                                                               |     
|       |                                                               |     
|       | Item 8. Financial Information                                 |     
|       |                                                               |     
|       |                                                               |     
|       | Item 9. The Offer and Listing                                 |     
|       |                                                               |     
|       |                                                               |     
|       |                                                               |     
|       |                                                               |     
|       |                                                               |     
|       |                                                               |     
|       |                                                               |     

i

---



|         | Item 10. Additional Information                                                       |    | 74                                              
|-------- | ------------------------------------------------------------------------------------- | -- | ------------------------------------------------
|         |                                                                                       |    | A.      Share Capital                           
|         |                                                                                       |    | B.      Memorandum and Articles of Incorporation
|         |                                                                                       |    | C.      Material Contracts                      
|         |                                                                                       |    | D.     Exchange Controls                        
|         |                                                                                       |    | E.      Taxation                                
|         |                                                                                       |    | F.       Dividends and Paying Agents            
|         |                                                                                       |    | G.     Statement by Experts                     
|         |                                                                                       |    | H.     Documents on Display                     
|         |                                                                                       |    | I.       Subsidiary Information                 
|         | Item 11. Quantitative and Qualitative Disclosures about Market Risk                   |    | 82                                              
|         | Item 12. Description of Securities Other than Equity Securities                       |    | 84                                              
|PART II  |                                                                                       | 84
|         | Item 13. Defaults, Dividend Arrearages and Delinquencies                              |    | 84                                              
|         | Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds |    | 84                                              
|         | Item 15. Controls and Procedures                                                      |    | 84                                              
|         | Item 16. [Reserved]                                                                   |    | 84                                              
|         | Item 16A. Audit Committee Financial Expert                                            |    | 84                                              
|         | Item 16B. Code of Ethics                                                              |    | 84                                              
|         | Item 16C. Principal Accountant Fees and Service                                       |    | 84                                              
|         | Item 16D. Exemptions from the Listing Standards for Audit Committees                  |    | 85                                              
|         | Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers      |    | 85                                              
|PART III |                                                                                       | 85
|         | Item 17. Financial Statements                                                         |    | 85                                              
|         | Item 18. Financial Statements                                                         |    | 85                                              
|         | Item 19. Exhibits                                                                     |    | 86                                              

ii

---



PART I

In this Annual Report, "Celestica," the "Company," "we," "us" and "our" refer to Celestica Inc. and its
subsidiaries.

In this Annual Report, all dollar amounts are expressed in United States dollars, except where we state otherwise. All references to "U.S.$" or "$" are to
U.S. dollars and all references to "C$" are to Canadian dollars. Unless we indicate otherwise, any reference in this Annual Report to a conversion between U.S.$ and C$ is a conversion at the
average of the exchange rates in effect for the year ended December 31, 2004. During that period, based on the relevant noon buying rates in New York City for cable transfers in Canadian
dollars, as certified for customs purposes by the Federal Reserve Bank of New York, the average daily exchange rate was U.S.$1.00 = C$1.3017.

Unless we indicate otherwise, all information in this Annual Report is stated as of February 21, 2005, the date as of which we prepared information for our
annual report to shareholders and management information circular and proxy statement.

Forward-Looking Statements

Item 4, "Information on the Company," "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Item 5
and other sections of this Annual Report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the U.S. Securities
Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the U.S. Exchange Act, including (without limitation) statements concerning possible or assumed future results
of operations of Celestica preceded by, followed by or that include the words "believes," "expects," "anticipates," "estimates," "intends," "plans," or similar expressions. 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.

Forward-looking
statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. You should understand that the following important factors, in
addition to those discussed in Item 3, "Key Information  Risk Factors," and elsewhere in this Annual Report, could affect our future results and could
cause those results to differ materially from those expressed in such forward-looking statements: variability of operating results among periods; inability to retain or grow our business due to
execution problems resulting from significant headcount reductions, plant closures and product transfer associated with major restructuring activities; 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 during uncertain economic conditions; our
dependence on a limited number of customers; our dependence on industries affected by rapid technological change; the challenge of responding to lower-than-expected customer
demand; our ability to successfully manage our international operations; component constraints; and our ability to manage our restructuring and the shift of production to lower-cost
geographies.

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. You should read this Annual Report and the documents, if any, that we incorporate by reference with the understanding that the actual future results may be materially different from what we
expect. We may not update these forward-looking statements, even if our situation changes in the future. All forward-looking statements attributable to us are expressly qualified by these cautionary
statements.

Item 1.    Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2.    Offer Statistics and Expected Timetable

Not applicable.

Item 3.    Key Information

A.    Selected Financial Data

You should read the following selected financial data together with Item 5, "Operating and Financial Review and Prospects," the Consolidated Financial
Statements in Item 18, and the other information in this

---



Annual
Report. The selected financial data is derived from the consolidated financial statements for the years we present.

The
Consolidated Financial Statements have been prepared in accordance with Canadian GAAP. These principles conform in all material respects with U.S. GAAP except as described in
note 20 to the Consolidated Financial Statements in Item 18. For all the years presented, the selected financial data is prepared in accordance with Canadian GAAP unless
otherwise indicated.

|                                                                 |  | Year ended December 31 |        
|---------------------------------------------------------------- |  | ---------------------- | -------
|
|
|Consolidated Statements of Earnings (Loss) Data (Canadian GAAP): |  |                        |        
|Revenue                                                          |  | $                      | 9,752.1
|Cost of sales                                                    |  |                        | 9,064.2
|                                                                 |  |                        |        
|Gross profit                                                     |  |                        | 687.9  
|Selling, general and administrative expenses(2)                  |  |                        | 326.1  
|Amortization of goodwill and intangible assets(3)                |  |                        | 88.9   
|Integration costs related to acquisitions(4)                     |  |                        | 16.1   
|Other charges(5)                                                 |  |                        |       
|Accretion of convertible debt                                    |  |                        | 10.3   
|Interest expense (income), net(6)                                |  |                        | (19.0  
|                                                                 |  |                        |        
|Earnings (loss) before income taxes                              |  |                        | 265.5  
|Income tax expense (recovery)(7)                                 |  |                        | 64.7   
|                                                                 |  |                        |        
|Net earnings (loss)                                              |  | $                      | 200.8  
|                                                                 |  |                        |        
|Other Financial Data:                                            |  |                        |        
|Basic earnings (loss) per share                                  |  | $                      | 1.01   
|Diluted earnings (loss) per share(8)                             |  | $                      | 0.98   
|Capital expenditures                                             |  | $                      | 282.8  
|Consolidated Statements of Earnings (Loss) Data (U.S. GAAP)(9):  |  |                        |        
|Net earnings (loss)                                              |  | $                      | 197.4  

|                                                    |  | As at December 31
|--------------------------------------------------- |  | -----------------
|
|
|Consolidated Balance Sheet Data (Canadian GAAP):    |  |                  
|Cash and short-term investments                     |  | $                
|Working capital(10)                                 |  | $                
|Capital assets                                      |  | $                
|Total assets                                        |  | $                
|Total long-term debt, including current portion(11) |  | $                
|Shareholders' equity                                |  | $                
|                                                    |  |                  

2

---



|Consolidated Balance Sheet Data (U.S. GAAP)(9): |  |   |         |  |   |         |  |   |         |  |   |         |  |   |        
|----------------------------------------------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | -------
|Total assets                                    |  | $ | 5,939.3 |  | $ | 6,643.3 |  | $ | 5,805.6 |  | $ | 5,182.2 |  | $ | 4,988.7
|Total long-term debt, including current portion |  | $ | 1,005.1 |  | $ | 1,046.8 |  | $ | 831.7   |  | $ | 626.4   |  | $ | 846.1  
|Shareholders' equity                            |  | $ | 2,605.4 |  | $ | 3,841.1 |  | $ | 3,344.4 |  | $ | 2,844.4 |  | $ | 2,257.6

---

As at December 312000

2001

2002

2003

2004(in millions)(a) Reclassified from equity to debt

$
243.1

$
269.4

$
262.1

$
210.5

$
124.1(b) Reclassified deferred financing costs from equity to other assets

$
5.2

$
4.9

$
4.1

$
2.8

$
1.3(c) Reduced deferred income tax assets and equity

$
1.9

$
1.9

$
1.9

$
1.9

$
1.9


Year ended December 312000

2001

2002

2003

2004(d) Recorded accretion charges and amortization of deferred financing costs, net of tax

$
5.8

$
15.6

$
17.8

$
16.1

$
12.0(e) Reclassified gain on repurchases of LYONs and related tax from equity to other charges and tax expense, net of tax







$
(8.3
)
$
(16.1
)
$
(22.0
)


3

---







Year ended December 312000

2001(in millions, except per share amounts)Net loss:As reported

$
200.8

$
(55.9
)Add back: goodwill amortization


39.1


39.2Net loss before goodwill amortization

$
239.9

$
(16.7
)Basic loss per share:As reported

$
1.01

$
(0.26
)Before goodwill amortization

$
1.20

$
(0.08
)Diluted loss per share:As reported

$
0.98

$
(0.26
)Before goodwill amortization

$
1.16

$
(0.08
)




4

---







Year ended December 312000

2001

2002

2003

2004(in millions)Basic

199.8

213.9

229.8

216.5

222.1Diluted

211.8

213.9

229.8

216.5

222.1


Exchange Rate Information

The rate of exchange as of February 17, 2005 for the conversion of Canadian dollars into United States dollars was U.S.$0.813 and for the conversion
of United States dollars into Canadian dollars was C$1.230. The following table sets forth the exchange rates for the conversion of U.S.$1.00 into Canadian dollars for the following periods.
The rates of exchange set forth herein are shown as, or are derived from, the reciprocals of the noon buying rates in New York City for cable transfers payable in Canadian dollars, as certified
for customs

5

---



purposes
by the Federal Reserve Bank of New York. The source of this data is the Federal Reserve Bank of New York's website (http://www.ny.frb.org).

|           |  | 2000   |  | 2001   |  | 2002   |  | 2003   |  | 2004  
|---------- |  | ------ |  | ------ |  | ------ |  | ------ |  | ------
|Average(1) |  | 1.4855 |  | 1.5487 |  | 1.5704 |  | 1.3916 |  | 1.2984

|     |  | February
2005 |  | January
2005 |  | December
2004 |  | November
2004 |  | October
2004 |  | September
2004
|---- |  | ------------- |  | ------------ |  | ------------- |  | ------------- |  | ------------ |  | --------------
|High |  | 1.2562        |  | 1.2422       |  | 1.2401        |  | 1.2263        |  | 1.2726       |  | 1.3071        
|Low  |  | 1.2294        |  | 1.1982       |  | 1.1856        |  | 1.1775        |  | 1.2194       |  | 1.2648        

---

B.    Capitalization and Indebtedness

Not applicable.

C.    Reasons for Offer and Use of Proceeds

Not applicable.

D.    Risk Factors

Our shareholders and prospective investors should carefully consider each of the following risks and all of the other information set
forth in this Annual Report.



We generated net earnings in 1999 and 2000. We recorded net losses of $55.9 million in 2001, $455.4 million in 2002, $266.7 million in 2003
and $854.1 million in 2004. In 2001, we incurred $22.8 million of integration costs related to acquisitions, $237.0 million of restructuring charges, and a $36.1 million
write-down of certain assets, primarily goodwill, intangible assets and certain long-term equity investments, with these charges totaling $295.9 million
($245.2 million after income taxes). In 2002, we incurred $21.1 million of integration costs related to acquisitions, $385.4 million of restructuring charges, a
$285.4 million write-down of certain assets, primarily goodwill and intangible assets, and $9.6 million in deferred financing costs and debt redemption fees, with these
charges totaling $701.5 million ($582.2 million after income taxes). In 2003, we incurred $94.9 million of restructuring
charges, and an $82.8 million write-down of intangible assets and capital assets, with these charges totaling $177.7 million ($166.8 million after income taxes). In
2004, we incurred $153.7 million of restructuring charges, a $387.3 million write-down of goodwill, capital and intangible assets, and a $116.8 million
write-down of doubtful accounts receivable for a specific customer, with these charges totaling $657.8 million (there was no tax benefit recorded on these charges in 2004).

In
January 2005, we announced additional pre-tax restructuring charges of between $225.0 million and $275.0 million, to be recorded over the next
15 months. We have undertaken numerous initiatives to restructure and reduce our capacity in response to the challenging technology end-markets, with the intention of improving
utilization and realizing cost savings in the future. These initiatives have included reducing and consolidating the number and location of our production facilities, largely to align our capacity and
infrastructure with anticipated customer demand, and to rationalize our operations worldwide. We will continue to evaluate our operations, and may propose future restructuring actions as a result of
changes in the marketplace, including the exit from less profitable operations or services no longer demanded by our customers. Any failure to successfully execute these initiatives, including any
delay in effecting these initiatives, can have a material adverse impact on our results. Furthermore, we may not be profitable in future periods.

6

---





With the significant and severe weakness in technology end markets over the past few years and the highly competitive nature of their businesses, our customers
require significant cost reductions in order to maintain sales and improve their financial performance. This environment has resulted in an accelerated movement of our production from
higher-cost regions such as North America and Western Europe to lower-cost regions such as Asia, Latin America and Central Europe. This accelerated move could impact current
and future results by such factors as increasing the risks associated with transferring production to new regions where skills or experience may be more limited than in higher-cost
regions, higher operating expenses during the transition, additional restructuring costs associated with the decrease in production levels in higher-cost geographies and the risks of
operating in new foreign jurisdictions. Product transfers could also result in our inability to retain our existing business or grow future revenue due to potential execution problems resulting from
significant headcount reductions, plant closures and product transfer associated with major restructuring activities.



We are in a highly competitive industry. We compete on a global basis to provide EMS services to original equipment manufacturers (OEMs) in the communications,
high-end computing, personal computing, storage, aerospace and defense, automotive, industrial and consumer end markets. Our competitors include major domestic and foreign companies such
as Flextronics International Ltd., Hon Hai Precision Industry Co., Ltd., Sanmina-SCI Corporation, Solectron Corporation and Jabil Circuit, Inc., as well as
smaller EMS companies that often have a regional product, service or industry specific focus. In addition, in recent years, original design manufacturers (ODMs), which are companies that provide
design and manufacturing services to OEMs, have been increasing their share of outsourced manufacturing services provided to OEMs in several markets, such as notebook and desktop computers,
personal computer motherboards, and consumer electronic products, such as cell phones. While we have not, to date, encountered significant competition from ODMs, such competition may increase if our
business in these markets grows, or if ODMs expand further into or beyond these markets. We also face indirect competition from the manufacturing operations of our current and prospective
customers, which could choose to manufacture products internally rather than to outsource to EMS providers.

Some
of our competitors have more geographically diversified international operations, a greater production presence in lower-cost geographies, as well as greater
manufacturing, financial, procurement, research and development and marketing resources than we have. Accordingly, our current or potential competitors may develop or acquire services comparable or
superior to those we develop, combine or merge to form larger competitors, or adapt quicker than we will to new technologies, evolving industry trends and changing customer requirements. Competition
has caused and may continue to cause excessive pricing pressures, reduced profits or loss of market share, any of which could materially and adversely affect us. In addition, the EMS industry has been
experiencing an increase in excess manufacturing capacity as well as increased competition from Asian competitors. This has and will continue to exert additional pressures on pricing for components
and services, thereby increasing the competitive pressures in the EMS industry. We may not be able to compete successfully against our current and future competitors, and the competitive pressures we
face may materially adversely affect us.



As a result of the unfavorable general economic conditions over the past four years and the reduced demand for technology capital goods, our sales have been
negatively affected. Our financial performance depends on our customers' viability, financial stability, and the end-market demand for our customers' products. Most of our customers, in
turn, depend substantially on the growth of the computing and communications industries. The computing and communications industries are characterized by rapidly changing technologies and shortening
product lifecycles. These industries have experienced severe revenue erosion, pricing and margin pressures, and excess inventories over this period. More recently, many of the customers of our
communication

7

---



customers
have merged or been acquired. These mergers and acquisitions could result in a decrease in demand from our customers in the telecommunications industry.



Our two largest customers in 2004 were Cisco Systems, Inc. and IBM, each of which represented more than 10% of our total 2004 revenue and which in the
aggregate represented 26% of our total 2004 revenue. Our top ten customers represented 65% of our total 2004 revenue. Our four largest customers in 2003 were Cisco Systems, IBM, Lucent Technologies,
and Sun Microsystems Inc., each of which represented more than 10% of our total 2003 revenue and in the aggregate represented 44% of our total 2003 revenue. Our top ten customers in 2003
represented 73% of our total 2003 revenue. We expect to continue to depend upon a relatively small number of customers for a significant percentage of our revenue.

Mergers
among our customers or our customers' customers could both increase concentration and/or reduce total demand as the combined entities rationalize their business. In addition,
some of our customers have, over the past several years, significantly reduced or delayed the volume of manufacturing services ordered from us. We cannot assure you that present or future large
customers will not terminate their manufacturing arrangements with us or significantly change, reduce, or delay the amount of manufacturing services ordered from us, any of which would adversely
affect our operating results.

Other
than in connection with asset acquisitions, otherwise known as "OEM divestitures," we generally do not enter into long-term supply commitments with our customers.
Instead, we bid on a project basis and typically have supply contracts or purchase orders in place for the project. We are dependent on customers to fulfill the terms associated with these orders
and/or contracts. Significant reductions in, or the loss of, sales to any of our large customers would have a material adverse effect on us. OEM divestitures
often entail long-term supply agreements between ourselves and the OEM customer, and we are similarly dependent on customers to fulfill their obligations under these contracts.



Our customers compete in markets that are characterized by rapidly changing technology, evolving industry standards and continuous improvements in products and
services. These conditions frequently result in short product lifecycles. Our success will depend largely on the success achieved by our customers in developing and marketing their products. If
technologies or standards supported by our customers' products become obsolete or fail to gain widespread commercial acceptance, our business could be materially adversely affected.



Our customers are increasingly dependent on EMS providers for new product introductions and rapid response times to changes in volume requirements. Most of our
customers typically do not commit to firm production schedules for more than 30 to 90 days in advance and we often experience reduced lead-times in customers' orders.
Accordingly, we cannot always forecast the level of customer orders with certainty. This can make it difficult to order appropriate levels of materials and to schedule production and maximize
utilization of our manufacturing capacity. In addition, customers may cancel their orders, change production quantities, or delay production for a number of reasons. The uncertain economic condition
of our customers' end markets, intense competition with respect to some of our customers' products and general order volume volatility has resulted, and may continue to result, in some of our
customers delaying or canceling the delivery of some of the products we manufacture for them, and placing purchase orders for lower volumes of products than previously anticipated. Cancellations,
reductions or delays by a significant customer, by a group of customers, or by a single customer whose production is material to an individual facility would seriously harm results of that operation
in that period. Such order changes could also cause a delay in the repayment to us for inventory expenditures we incurred in preparation for the customer orders or, in certain circumstances, require
us to return the inventory to our suppliers, re-sell the inventory to another customer or continue to hold the inventory. Order cancellations and delays could also lower our asset
utilization, resulting in higher levels of unproductive assets and lower

8

---



margins.
In some cases, dramatic changes in circumstances for a customer could also negatively impact the collectability of receivables or carrying value of our inventory for that customer. On other
occasions, customers have required rapid and sudden increases in production, which has placed an excessive burden on our manufacturing capacity. Rapid changes in product ramps, weakening financial
condition or the deterioration of any single customer's financial condition could prevent us from collecting receivables or realizing inventory on hand. Any of these factors or a combination of these
factors could have a material adverse effect on our results of operations.



During 2004, more than half of our revenue was produced from locations outside of North America. In addition, we purchased material from international suppliers
for much of our business, including our North American business. We believe that our future growth depends largely on our ability to increase our business in international markets and, as we describe
above, to shift much of our production to lower-cost geographies. We will continue to expand our operations both inside and outside of North America.

This
expansion will require significant management attention and financial resources. International operations are subject to inherent risks, which may adversely affect us, including:



We
have either purchased or built manufacturing facilities in numerous Asian countries, including Thailand, Malaysia, China, Singapore and the Philippines, and could be subject to the
political, economic and legal risks associated with doing business in these countries. Each of these regions has a long history of promoting foreign investment but has experienced economic and
political turmoil and fluctuations in the value of its currencies in the recent past. There is a potential risk that economic and political turmoil may result in the reversal of current policies
encouraging foreign investment and trade, restrictions on the transfer of funds overseas, employee turnover, labor unrest or other domestic problems that could adversely affect us.



A significant portion of our costs is for electronics components. All of the products we manufacture require one or more components that we order from suppliers
of these particular components. In many cases, there may be only one supplier of a particular component. Supply shortages for a particular component can delay production and thus delay the revenue of
all products using that component or can cause price increases in the products and services we provide. In the past, we have secured sufficient allocations of constrained components

9

---



so
that revenue was not materially impacted. In addition, at various times there have been industry-wide shortages of electronic components. Such shortages, or future fluctuations in
materials costs, may have a material adverse effect on our business or cause our results of operations to fluctuate from period to period.



We have operations in multiple regions around the world. As a result, we are subject to different regulatory requirements governing how quickly we are able to
reduce manufacturing capacity and terminate related employees. These requirements are particularly stringent in Europe. Restrictions on our ability to close under-performing facilities will result in
higher expenses associated with carrying excess capacity and infrastructure during our restructuring activities. The speed of our restructuring can also be impeded by delays from our customers in
terms of how fast they want to move their products to another facility. Since the restructuring of our plants will require some of our customers to move their production out of our facilities and into
one or more locations of ours, the customer could use this opportunity to instead shift its production to a competitor's facility.



We generally provide payment terms ranging from 30 to 60 days. As a result, we generate significant accounts receivable from sales to our customers,
historically representing 22% to 39% of current assets. Accounts receivable from sales to customers at December 31, 2004 were $1,023.3 million (December 31,
2003  $771.5 million; and December 31, 2002  $785.9 million). At December 31, 2004, two
customers represented 25% of our total accounts receivable (December 31, 2003  one customer represented 18% of total accounts receivable; and
December 31, 2002  one customer represented 28% of total accounts receivable). If any of our customers has insufficient liquidity, we may
encounter significant delays or defaults in payments owed to us by customers, and may extend our payment terms, which may have a significant adverse effect on our financial condition and results of
operations. We regularly review our accounts receivable valuations and make adjustments when necessary. In the fourth quarter of 2004, one of our customers experienced a significant deterioration in
its financial condition; as a result, we recorded additional charges of $116.8 million to reflect the estimated recoverable amounts on the assumption that the customer is unable to
recapitalize. Our allowance for doubtful accounts at December 31, 2004 was $140.1 million (December 31, 2003  $50.3 million; and
December 31, 2002  $62.4 million), which represented 12.0% of the gross accounts receivable balance (December 31,
2003  6.1%; and December 31, 2002  7.4%). Historically, the credit-related accounts receivable adjustments have not
been significant to our results of operations. For the year ended December 31, 2004, we wrote off accounts receivable of $2.5 million (December 31,
2003  $14.2 million; and December 31, 2002  $30.0 million) against the allowance for doubtful
accounts in the normal course of business.



A significant portion of our growth in prior years was generated through acquisitions. These transactions involve acquisitions of entire companies and
acquisitions of selected assets from OEMs. These assets typically consist primarily of equipment, inventory and, in certain cases, facilities or facility leases. OEM asset divestiture
transactions also typically involve our entering into new supply agreements with the relevant OEMs. This may cause difficulties related to our acquisitions, including:



10

---





Any
of these factors could prevent us from realizing the anticipated benefits of the acquisition, including operational synergies and economies of scale. Our failure to realize the
anticipated benefits of acquisitions could adversely affect our business and operating results.



We are continually investing in training, business process and information technology tools to eliminate waste, increase quality and reduce defects in the
manufacturing process. This investment is becoming more critical in our industry, as our customers require our global organization to produce cost savings through the elimination of waste. Failure to
deliver these cost savings or eliminate waste could affect our relationships with our customers, which would adversely affect our volumes and our operating results. The deployment of Lean and Six
Sigma manufacturing initiatives are part of the roadmap we are using to improve our own operating margins and failure to achieve anticipated benefits could impact our margin improvement.



In certain of our contracts, we provide a warranty against defects in our designs or deficiencies with respect to our manufacturing processes. A successful
product liability claim in excess of our insurance coverage, or any material claim for which insurance coverage is denied or limited and for which indemnification is not available, could have a
material adverse effect on our business, results of operations and financial condition.



We conduct business operations in a number of countries, including countries where:



We
develop our tax position based upon the anticipated nature and structure of our business and the tax laws, administrative practices and judicial decisions now in effect in the
countries in which we have assets or conduct business, all of which are subject to change or differing interpretations, possibly with retroactive effect. We are subject to audit by local tax
authorities of historical information which could result in additional tax expense in future periods relating to prior results. Any such increase in our income tax expense and related interest and
penalties could have a significant impact on our future earnings and future cash flows.

Certain
of our subsidiaries provide products and services to, and may from time to time undertake certain significant transactions with, other subsidiaries in different jurisdictions.
Several of these jurisdictions have tax laws with detailed transfer pricing rules which require that all transactions with non-resident related parties be priced using arm's length pricing
principles, and that contemporaneous documentation must exist to support such pricing.

International
taxation authorities could challenge the validity of our arm's length related party transfer pricing policies. International transfer pricing is a subjective area of
taxation and generally involves a significant degree of judgment. If any of these taxation authorities are successful in challenging our transfer pricing policies, our income tax expense may be
adversely affected and we could also be subjected to interest and penalty charges.



The principal currency in which we conduct our operations is U.S. dollars. However, some of our subsidiaries transact business in foreign currencies, such
as Canadian dollars, Thai baht, Euros, Mexican pesos, Czech koruna, Singapore dollars, Japanese yen, Malaysian ringgits, Chinese renminbi, Brazilian real, Philippine Peso, Romanian Lei and British
pound sterling. We often enter into hedging transactions to minimize our exposure to foreign currency and interest rate risks. Our current hedging activity is designed to reduce the variability of our
foreign currency costs and consists of contracts to purchase or sell these foreign currencies at

11

---



future
dates. In general, these contracts extend for periods ranging from 12 to 15 months. Our hedging transactions may not successfully minimize foreign currency risk, which could have
a material adverse effect on our results of operations.



We rely on a variety of common carriers for materials and product transportation and for routing these through various world ports. A work stoppage, strike or
shutdown of any important supplier's facility, or at any major port or airport, could result in manufacturing and shipping delays or expediting charges, which could have a material adverse effect on
our results of operations. Natural disasters, such as tsunamis, earthquakes, and fires in the regions where our facilities or our suppliers' facilities are located could impact our ability to deliver
products to our customers. Such events could disrupt supply to us, and from us to our customers, and adversely affect our operations.



The recruitment of personnel in the EMS industry is highly competitive. We believe that our future success will depend, in part, on our ability to continue to
attract and retain highly skilled executive, technical and management personnel. We generally do not have employment or non-competition agreements with our employees. To date we have been
successful in recruiting and retaining executive, managerial and technical personnel. However, the loss of services of certain of these employees could have a material adverse effect on our
operations.



We continue to evaluate the advantages and feasibility of new manufacturing processes. Our future success will depend in part upon our ability to develop and to
market manufacturing services which meet changing customer needs, to maintain technological leadership and to successfully anticipate or respond to technological changes in production, manufacturing
and supply chain processes in cost-effective and timely ways. Our manufacturing and supply chain processes, test development efforts and design capabilities may not be successful.



We believe that certain of our proprietary intellectual property rights and information give us a competitive advantage. Accordingly, we have taken, and intend to
continue to take, appropriate steps to protect this proprietary information. These steps include signing non-disclosure agreements with customers, suppliers, employees, and other parties
and implementing rigid security measures. Our protection measures may not be sufficient to prevent the misappropriation or unauthorized disclosure of our property or information.

There
is also a risk that infringement claims may be brought against us, our customers, or our suppliers in the future. If someone does successfully assert an infringement claim, we may
be required to spend significant time and money to develop a manufacturing process that does not infringe upon the rights of such other person or to obtain licenses for the technology, process or
information from the owner. We may not be successful in such development or any such licenses may not be available on commercially acceptable terms, if at all. In addition, any litigation could be
lengthy and costly and could adversely affect us even if we are successful in such litigation.



Future growth in our revenue includes a dependence on new outsourcing opportunities in which we assume additional manufacturing and supply chain management
responsibilities from OEMs. To the extent that these opportunities are not available, because OEMs decide to perform these functions internally, or we are not successful in winning new
contracts over our competitors, our future growth will be limited. Political pressure or negative sentiment by our customers' customers to reduce production outside of the United States, in
lower-cost

12

---



geographies,
could also adversely affect the rate of outsourcing or adversely affect the rate of outsourcing to EMS providers, such as Celestica, who have shifted substantial capacity to these
lower-cost geographies.



Increased international political instability, evidenced by the threat or occurrence of terrorist attacks, enhanced national security measures, conflicts in the
Middle East and Asia, strained international relations arising from these conflicts and the related decline in consumer confidence and continued economic weakness, may hinder our ability to do
business and may adversely affect our stock price. Any escalation in these events or similar future events may disrupt our operations or those of our customers and suppliers and may affect the
availability of materials needed to manufacture our products or the means to transport those materials to manufacturing facilities and finished products to customers. These events have had and may
continue to have an adverse impact on the U.S. and world economy in general and customer confidence and spending in particular, which in turn adversely affects our revenue and results of operations.
The impact of these events on the volatility of the U.S. and world financial markets could increase the volatility of our stock price and may limit the capital resources available to us and our
customers and suppliers.



We are subject to extensive environmental laws and regulations in numerous jurisdictions. Our environmental approach and practices have been designed to ensure
compliance with these laws and regulations in a manner consistent with local practice. Future developments and increasingly stringent regulations could require us to incur additional expenditures
relating to environmental matters at our facilities. Achieving and maintaining compliance with present, changing and future environmental laws could restrict our ability to modify or expand our
facilities or to continue production. This compliance could also require us to acquire costly equipment or to incur other significant expenses.

Certain
environmental laws impose liability for the costs of removal or remediation of hazardous or toxic substances on an owner, occupier or operator of real estate, even if such person
or company was not aware of or responsible for the presence of such substances. In addition, in some countries in which we have operations, any person or company who arranges for the disposal or
treatment of hazardous or toxic substances at a disposal or treatment facility may be liable for the costs of removal or remediation of such substances at such facility, whether or not the person or
company owns or operates the facility.

Some
of our operating sites have a history of industrial use. Soil and groundwater contamination have occurred at some of our facilities. From time to time we investigate, remediate, and
monitor soil and groundwater contamination at certain of our operating sites. In certain instances where soil or groundwater contamination existed prior to our ownership or occupation of a site,
landlords or former owners have contractually retained responsibility and liability for the contamination and its remediation. However, failure of such former owners or landlords to perform, as a
result of financial inability or otherwise, could result in our company being required to remediate such contamination.

We
generally obtained environmental assessments, or reviewed recent assessments initiated by others, for most of the manufacturing facilities that we own or lease at the time we either
acquired or leased such facilities. Our assessments may not reveal all environmental liabilities and current assessments were not available for all facilities. Consequently, there may be material
environmental liabilities of which we are not aware. In addition, ongoing clean up and containment operations may not be adequate for purposes of future laws. The conditions of our properties could be
affected in the future by the condition of the land or operations in the vicinity of the properties, such as the presence of underground storage tanks. These developments and others, such as
increasingly stringent environmental laws, increasingly strict enforcement of environmental laws by governmental authorities, or claims for damage to property or injury to persons resulting from the
environmental, health or safety impact of our operations may cause us to incur significant costs and liabilities that could have a material adverse effect on us.

13

---





Our outstanding credit agreement and the indenture related to our 77/8% Senior Subordinated Notes due 2011 contain financial and operating
covenants that limit our management's discretion with respect to certain business matters. Among other things, these covenants restrict our ability and our subsidiaries' ability to incur additional
debt, create liens or other encumbrances, change the nature of our business, sell or otherwise dispose of assets, and merge or consolidate with other entities. At February 21, 2005, we were in
compliance with these covenants. At February 21, 2005, we were limited to approximately $570 million of additional borrowings under our principal revolving credit facility based on
minimum financial ratios.



The primary objective of our investment activities is to preserve principal and to maximize yields without significantly increasing risk and while ensuring
investment tenors do not prohibit access to cash. To achieve this objective, we maintain our portfolio of cash equivalents in a variety of securities, including government and corporate obligations,
certificates of deposit and money market funds. As of December 31, 2004, substantially all of our portfolio was scheduled to mature in less than three months. A hypothetical 10% change in
interest rates would not have a material effect on the fair value of our investment portfolios.

As
of December 31, 2004, we had no cash equivalents that were subject to interest rate risk (defined as risk of loss of investment fair value due to interest rate movements). The
fair value of our cash equivalents approximated the carrying value as of December 31, 2004.

In
June 2004, we issued Senior Subordinated Notes (Notes) with an aggregate principal amount of $500 million due 2011 and a fixed interest rate of 7.875%. We also entered into
agreements which hedge the fair value of the Notes by swapping the fixed rate of interest for a variable rate based on LIBOR plus a margin, thereby subjecting us to interest rate risk due to
fluctuation in the LIBOR rate. The average interest rate on the Notes for the year was 4.92% after reflecting the interest rate swap. A one-percentage point increase in the LIBOR rate would increase
our interest expense by $5.0 million annually.



Future sales of our subordinate voting shares in the public market, or the issuance of subordinate voting shares upon the exercise of stock options or otherwise,
could adversely affect the market price of the subordinate voting shares.

At
February 21, 2005, we had 195,304,563 subordinate voting shares and 29,851,630 multiple voting shares outstanding. All of the subordinate voting shares are freely
transferable without restriction or further registration under the U.S. Securities Act, except for shares held by our affiliates (as defined in the U.S. Securities Act) and shares
we issued in connection with our acquisition of MSL to persons who were affiliates of MSL. Shares held by our affiliates include all of the multiple voting shares and 2,925,643 subordinate
voting shares held by Onex Corporation. An affiliate may not sell shares in the United States unless the sale is registered under the U.S. Securities Act or an exemption from
registration is available. Rule 144 adopted under the U.S. Securities Act permits our affiliates to sell our shares in the United States subject to volume limitations and
requirements relating to manner of sale, notice of sale and availability of current public information with respect to us. Similar resale provisions apply to the subordinate voting shares issued to
MSL affiliates in connection with our acquisition of MSL.

In
addition, as of February 21, 2005, there were approximately 32,600,000 subordinate voting shares reserved for issuance under our employee share purchase and option plans
and for director compensation, including outstanding options to purchase approximately 24,300,000 subordinate voting shares. Moreover, we may, pursuant to our articles of incorporation, issue
an unlimited number of additional subordinate voting shares without further shareholder approval (subject to any required stock exchange approvals). As a result, a substantial number of our
subordinate voting shares will be eligible for sale in the public market at various times in the future. The issuances and/or sale of such shares would dilute the holdings of our shareholders and
could adversely affect the market price of the subordinate voting shares.

14

---







Onex owns, directly or indirectly, all of the outstanding multiple voting shares and 1.5% of the outstanding subordinate voting shares. The number of shares owned
by Onex, together with those shares Onex has the right to vote, represent 79.3% of the voting interest in us and less than 1% of the voting interest in our outstanding subordinate voting shares.
Accordingly, Onex exercises a controlling influence over our business and affairs and has the power to determine all matters submitted to a vote of our shareholders where our shares vote together as a
single class. Onex has the power to elect our directors and to approve significant corporate transactions such as certain amendments to our articles of incorporation, the sale of all or substantially
all of our assets and plans of arrangement in certain circumstances. Onex's voting power could have the effect of deterring or preventing a change in control of our company that might otherwise be
beneficial to our other shareholders. Under our revolving credit facilities, it is an event of default entitling our lenders to demand repayment if Onex ceases to control Celestica unless the shares
of Celestica become widely held ("widely held" meaning that no one person owns more than 20% of the votes). Under the indenture governing our LYONs, we are required to offer to repurchase all of the
LYONs if any person, other than Onex, becomes the beneficial owner of more than 50% of the voting interest in Celestica. Gerald W. Schwartz, the Chairman, President and Chief Executive Officer of Onex
and one of our directors, owns shares with a majority of the voting rights of the shares of Onex. Mr. Schwartz, therefore, effectively controls our affairs. The interests of Onex and
Mr. Schwartz may differ from the interests of the remaining holders of subordinate voting shares. For additional information about our principal shareholders, please turn to
Item 7(A), "Major Shareholders." Onex has, from time to time, issued debentures exchangeable and redeemable under certain circumstances for our subordinate voting shares, entered
into forward equity agreements with respect to subordinate voting shares, sold shares (after exchanging multiple voting shares for subordinate voting shares), or redeemed these debentures through the
delivery of subordinate voting shares and could do so in the future. These sales could impact our share price, have consequences as described above on our outstanding debt, and change our ownership
structure.



We are incorporated under the laws of the Province of Ontario, Canada. Substantially all of our directors, controlling persons and officers are residents of
Canada. Also, a substantial portion of our assets and the assets of these persons are located outside of the United States. As a result, it may be difficult to effect service within the
United States upon those directors, controlling persons and officers who are not residents
of the United States or to realize in the United States upon a judgment of courts of the United States predicated upon the civil liability provisions of the U.S. federal
securities laws.

Item 4. Information on the Company

A.    History and Development of the Company

We were incorporated in Ontario, Canada under the name Celestica International Holdings Inc. on September 27, 1996. Since that date, we have amended
our articles of incorporation on various occasions, principally to modify our corporate name and our share capital. Our legal name and commercial name is Celestica Inc. We are a corporation
domiciled in the Province of Ontario, Canada and operate under the Ontario Business Corporations Act. Our principal executive offices are located at 1150 Eglinton Avenue East, Toronto, Ontario,
Canada M3C 1H7 and our telephone number is (416) 448-5800. Our web-site is http://www.celestica.com. Information on our
web-site is not incorporated by reference in this Annual Report.

As
an important IBM manufacturing unit, we provided manufacturing services to IBM for more than 75 years. In 1993, we began providing EMS services to non-IBM
customers. In October 1996, we were purchased from IBM by an investor group, led by Onex, which included our management.

We
are a world leader in the delivery of innovative electronics manufacturing services. We operate a highly sophisticated global manufacturing network with operations in Asia, Europe and
the Americas, providing a broad range of integrated services and solutions to leading OEMs. Celestica's expertise in quality, technology and supply chain management, and leadership in the
global deployment of Lean principles, enables us to provide competitive advantage to our customers by improving time-to-market, scalability and manufacturing efficiency.

15

---



Our Acquisitions

In 2002, we acquired:



In
2003, we did not complete any acquisitions.

In
2004, we acquired:



The
aggregate purchase price for the 2002 and 2004 acquisitions was approximately $441 million.

In
connection with these acquisitions, we also entered into supply agreements.

Certain
information concerning capital expenditures, including acquisitions and financing activities, is set forth in notes 3, 7, 8, 9 and 18 to the Consolidated
Financial Statements in Item 18, and Item 5, "Operating and Financial Review and Prospects  Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Certain
information concerning our divestiture activities, including our restructurings, is set forth in note 11 to the Consolidated Financial Statements in Item 18,
in Item 4, "Information on the Company  Description of Property," and Item 5, "Operating and Financial Review and
Prospects  Management's Discussion and Analysis of Financial Condition and Results of Operations."

B.    Business Overview

Our goal is to be the "partner of choice" in EMS. We believe we are well positioned to achieve this goal given our position as one of the major EMS providers
worldwide and our widely recognized skills in EMS capabilities. Our focus is to (i) steadily improve our operating margins and increase operating efficiency by driving costs lower and providing
supply chain solutions that capture value for us and our customers, (ii) leverage our position in the areas of technology, quality and supply chain management, (iii) develop and enhance
profitable relationships with leading OEMs, (iv) broaden the range of the services we provide to OEMs in areas that can reduce their manufacturing, supply chain and product development
costs, (v) continue to diversify our end markets, serving a wide variety of OEMs, and (vi) selectively pursue acquisitions that enhance the company's EMS and supply chain capabilities.
We believe that success in these areas will allow us to achieve significantly improved financial performance and enhance shareholder value.

We
have operations in the Americas, Europe and Asia. We provide a wide variety of products and services to our customers, including the manufacture, assembly and test of complex printed
circuit assemblies (PCAs), and the full system assembly of final products. In addition, we provide a broad range of EMS services from product design to system assembly, fulfillment and after-market
service and support.

We
have historically targeted industry-leading OEMs primarily in the computing and communications sectors. In addition to this, we are increasing our diversification across other
markets, such as aerospace and defense, industrial, consumer and automotive, to reduce the risk of reliance on computing and communication sectors. We supply products and services to over
200 OEMs. In the aggregate, our top ten customers represented 65% of revenue in 2004. The products we manufacture can be found in a wide array of end products, including cell phones and
pagers, electronic metering devices, hubs and switches, LAN and WAN networking cards, laser printers, mainframe computers, mass storage devices, medical products, modems, multimedia peripherals, PBX
switches, personal computers, PDAs, photonic devices, printers and related supplies, routers, scalable processors, servers, switching products, video broadcasting equipment, wireless base stations,
wireless loop systems and workstations.

Our
principal competitive advantages include our advanced capabilities in the areas of technology and quality, our flexible and lower-cost manufacturing network, our
broadening service offerings, and our effective

16

---



supply
chain management. We are an industry leader in a wide range of advanced manufacturing technologies, using established and emerging process technologies. We believe our test capabilities are
among the best in the industry and enable us to produce highly reliable products, including products that are critical to the functioning of our customers' products and systems. Our size, geographic
reach and leading expertise in supply chain management allow us to purchase materials effectively and to deliver products to customers faster, thereby reducing overall product costs and reducing the
time to market.

We
believe that our highly skilled workforce gives us a distinct competitive advantage. Through innovative compensation and an employee stock ownership plan, we have developed an
entrepreneurial, participative and team-based culture.

Electronics Manufacturing Services Industry



The EMS industry is comprised of companies that provide a broad range of electronics manufacturing services to OEMs. As the capabilities of EMS companies
evolved from manufacturing components or partial assemblies to providing complex manufacturing services, an increasing number of OEMs adopted and became increasingly reliant upon manufacturing
outsourcing strategies. Today, the leading EMS companies have global footprints with worldwide supply chain management and offer end-to-end services for the product lifecycle,
including front-end design and product development, advanced manufacturing, final system assembly and test, direct order fulfillment, and after-market service and support. By outsourcing
their manufacturing and related services, OEMs are able to focus on their core competencies, including product development, sales, marketing and customer service, while leveraging the
manufacturing and supply chain expertise of EMS providers.

We
believe increased outsourcing adoption by OEMs will continue because it allows OEMs to:

Reduce Operating Costs and Invested Capital.OEMs are under significant pressure to reduce manufacturing costs and
capital expenditures as electronic products have become more technically advanced and the manufacturing process has become increasingly automated, which requires greater levels of investment in
capital equipment. EMS companies enable OEMs to gain access to advanced manufacturing facilities, supply chain management and engineering capabilities, additional capacity, greater flexibility
for both product ramp-up and changeover, and the economies of scale which EMS companies provide. As a result, OEMs can reduce their overall operating costs, working capital and
capital investment requirements.

Focus Resources on Core Competencies.The electronics industry is experiencing greater levels of competition and rapid
technological change. In this environment, many OEMs are seeking to focus on their core competencies of product development, sales, marketing and customer service, and to outsource design,
manufacturing and related requirements to their EMS partners.

Speed Time-to-Market.Electronics products are experiencing increasingly shorter product lifecycles,
requiring OEMs to continually reduce the time required to bring products to market. OEMs can significantly improve product development cycles and enhance
time-to-market by benefiting from the expertise and infrastructure of EMS providers. This includes capabilities relating to design services, quick-turn prototype
development and rapid ramp-up of new products to high-volume production, with the critical support of worldwide supply chain management.

Utilize EMS Companies' Procurement, Inventory Management and Logistics Expertise.OEMs that manufacture internally are
faced with greater complexities in planning, procurement and inventory management due to frequent design changes, short product lifecycles and product demand fluctuations. OEMs can address
these complexities by outsourcing to EMS providers that (i) possess sophisticated supply chain management capabilities and (ii) can leverage significant component procurement advantages
to lower product costs.

Access Leading Engineering Capabilities and Technologies.Electronics products and electronics manufacturing technology have
become increasingly sophisticated and complex. As a result, OEMs increasingly rely on EMS companies to provide design, engineering support, manufacturing and technological expertise. EMS
companies' design and engineering services can assist OEMs in the development of new product concepts,

17

---



as
well as with improvements in performance, cost and time required to bring products to market. In addition, OEMs gain access to high quality manufacturing expertise and capabilities in the
areas of advanced process, interconnect and test technologies.

Improve Access to Global Markets.OEMs are generally increasing their international activities in an effort to expand
sales through access to foreign markets. EMS companies with worldwide capabilities are able to offer such OEMs global manufacturing solutions, to meet local content requirements, distribute
products efficiently around the world and lower costs.

Access to Broadening Service Offerings.EMS providers are continually expanding their service offerings to include related
services  such as design, after-market services, and fulfillment  that historically have been performed by OEMs, thereby
giving the customer the opportunity to outsource more of its cost of the goods sold.

Celestica's Focus

Our goal is to be the "partner of choice" in the EMS industry. To achieve this goal, we work closely with OEM customers to proactively identify and fulfill each
of their requirements and exceed their expectations in areas such as service offerings, reliability and serviceability, quality and delivery. By succeeding in the following areas, we believe we will
maximize customer satisfaction, achieve superior financial performance and enhance shareholder value:

Steadily Improve Operating Margins and Increase Operating Efficiency.Operating margins and working capital performance
showed significant improvement in 2004. Though we are still not operating at our target level, we will continue to focus on: (i) completing our restructuring programs, (ii) leveraging
corporate procurement capabilities to lower materials costs, (iii) increasing utilization of facilities to take advantage of significant operating leverage, (iv) deploying corporate cost
reduction and productivity enhancement initiatives on a global basis, (v) applying best practices throughout our operations worldwide, (vi) moving production to
lower-cost regions, and (vii) compensating our employees based, in part, on the achievement of return on invested capital (ROIC) and customer satisfaction targets. In order to drive
greater efficiency, we are also committed to the deployment of Lean manufacturing and Six Sigma initiatives, designed to improve manufacturing processes by reducing waste and redundancy within our
manufacturing facilities. We will continue our intensive focus on maximizing asset turnover, which we believe will, combined with the margin enhancement measures described above, increase our ROIC.

Leverage Expertise in Technology, Quality and Supply Chain Management.We are committed to meeting our customers' needs in
the areas of technology, quality and supply chain management. Our modern plants across the world and leading technological capabilities enable us to produce complex and highly sophisticated products
to meet the rigorous demands of our OEM customers. Our commitment to quality in all aspects of our business allows us to deliver consistently reliable products to our OEM customers. The systems and
processes associated with our expertise in supply chain management enable us to rapidly ramp-up operations to meet customer needs, flexibly shift capacity in response to product demand
fluctuations and effectively distribute products directly to end customers. We often work closely with many suppliers to influence component design for the benefit of OEM customers. Through the
successes that we have had in these areas, we have been recognized through numerous customer and industry achievement awards.

Develop and Enhance Profitable, Key Relationships with Leading OEMs.We seek to build and sustain profitable, key
relationships with industry leaders in sectors that can benefit from the delivery of our innovative electronics manufacturing services. In addition, we are focused on identifying and developing new
customer relationships. To this end, we pursue opportunities which exploit our competitive advantages in the areas of technology, quality and supply chain management. We conduct ourselves as an
extension of our customers' organizations, which enables us to respond to their needs with speed, agility and a commitment to deliver results. This approach has allowed us to establish and maintain
strong manufacturing relationships with a wide range of leading OEMs such as Cisco Systems, IBM, Lucent Technologies and Sun Microsystems. Going forward, we believe our existing OEM customer
base will be a strong source of growth for us as we seek to strengthen these relationships through the delivery of additional services.

18

---



Expand Range of Service Offerings.We continually look to expand the breadth and depth of the services we provide to
OEMs in areas that can reduce their design, manufacturing, supply chain and product costs. Although we traditionally offered our services in connection with the production of
higher-end and more complex products, we have significantly broadened our offering of services to facilitate the manufacture of a broader spectrum of products and to support the full
product lines of leading OEMs. In the past few years, we have acquired additional capabilities in prototyping and PCA design, embedded system design, full system assembly, logistics,
fulfillment and after-market services. We are now providing a suite of green services that help our customers comply with emerging environmental legislation, including the European Union's RoHS
(Restriction of Hazardous Substances) and WEEE (Waste from Electrical and Electronic Equipment). RoHS mandates the removal of a number of hazardous substances, including the lead commonly found in
electronic products, by July 1, 2006, and WEEE mandates the treatment, recovery and recycling of waste from electrical and electronics equipment. We will expand our capabilities and service
offerings on a global basis based on potential returns to the company and in response to the changing needs of our customers.

Continue to Diversify End Markets and Customer Base.We have a diversified customer base whose products serve the
communications, server, storage, workstation and personal computer and other industries. In 2004, revenue by end-market users was as follows: enterprise
communications  27%; telecommunications  22%; servers  18%;
storage  11%; other  19%; and workstations and personal computers  3%. We target
industry-leading OEMs, historically focusing on the computing and communications sectors. We have recently expanded our diversification across other markets, such as aerospace and defense, automotive,
consumer, and industrial, to reduce the risk of reliance on certain sectors. Our acquisition of MSL expanded our customer base to include aerospace, automotive, retail systems and peripherals.

Selectively Pursue Strategic Acquisitions.We have completed numerous acquisitions and will continue to selectively seek
acquisition opportunities in order to (i) further develop strategic relationships with leading OEMs, (ii) expand our capacity and capability, (iii) diversify into new market
sectors, (iv) broaden our service offerings, and (v) optimize our global positioning. We have developed and deployed a comprehensive integration approach to support our acquisitions.
This includes establishing a common culture at all locations with broad-based workforce participation, providing a single marketing "face" to customers worldwide, deploying common information
technology platforms, leveraging global procurement and transferring best practices among operations worldwide.

Celestica's Business



We are positioned as a value-added provider within the EMS industry with a full spectrum of products and services to capitalize on our extensive technological
know-how and intellectual capital. We believe that our ability to deliver this wide spectrum of services to our OEM customers provides us with a competitive advantage over EMS providers
focused in few service areas. We offer a full range of manufacturing services, including those discussed below.

Supply Chain Management.We utilize our integrated enterprise resource planning and supply chain management system to enable
us to optimize materials management from supplier to end customer. Effective management of the supply chain is critical to the success of OEMs, as it directly impacts the time required to deliver
product to market and the capital requirements associated with carrying inventory.

Design.Our design team works with OEM product developers in the early stages of product development. The design team uses
advanced design tools to enable new product ideas to progress from electrical and ASIC design, to simulation and physical layout, to design for manufacture. Electronic linkages between the
customer and our design and manufacturing groups help to ensure that new designs are released rapidly, smoothly and cohesively into production.

Green Services.We are now providing a suite of green services that help our customers to comply with emerging environmental
legislation, including the European Union's RoHS (Restriction of Hazardous Substances) and WEEE (Waste from Electrical and Electronic Equipment). RoHS mandates the removal of a

19

---



number
of hazardous substances, including the lead commonly found in electronic products, by July 1, 2006, and WEEE mandates the treatment, recovery and recycling of waste from electrical and
electronics equipment.

Prototyping.Prototyping is a critical stage in the development of new products which is enhanced by linkages between OEM and
EMS engineers. Our prototyping and new product introduction centers are strategically located, enabling us to provide a quick response to customer demands, facilitating greater collaboration between
our engineers and those customers, and providing a seamless entry into our larger manufacturing facilities.

Product Assembly and Test.We use sophisticated technology in the assembly and testing of our products, and have continually
made significant investments in developing new assembly and test process techniques and improving product quality, reducing cost and improving delivery time to customers. We work independently and
with customers and suppliers to develop leading assembly and test technologies.

Full System Assembly.We provide full system assembly services to OEMs. These services require sophisticated logistics
capabilities to rapidly procure components, assemble products, perform complex testing and distribute products to customers around the world. Our full system assembly services involve combining a wide
range of sub-assemblies (including PCA) and employing advanced test techniques for various sub-assemblies and final end products. Increasingly, OEMs require custom
build-to-order system solutions with very short lead times. We are focused on exploiting this trend through our advanced supply chain management capabilities.

Product Assurance.We provide product assurance to our OEM customers. Our product assurance team performs product life
testing and full circuit characterization to ensure that designs meet or exceed required specifications. We are accredited as a National Testing Laboratory capable of testing to international
standards (e.g., Canadian Standards Association and Underwriters Laboratories). We believe that this service allows our customers to attain product
certification significantly faster than is customary in the EMS industry.

Failure Analysis.Our extensive failure analysis capabilities concentrate on identifying the root cause of product failures
and determining corrective action. Root causes of failures typically relate to inherent component defects or design robustness deficiencies. Products are subjected to various environmental extremes,
including
temperature, humidity, vibration, voltage and rate of use, and field conditions are simulated in failure analysis laboratories which also employ advanced electron microscopes, spectrometers and other
advanced equipment. We are proficient in discovering failures before products are shipped and, more importantly, our highly qualified engineers are very proactive in working in partnership with
suppliers and customers to develop and implement resolutions.

Logistics.We are able to leverage our expertise, relationships and global scale in manufacturing, supply chain management
and fulfillment to provide a fully integrated logistics solution to meet every need. Our logistics offering includes warehouse and distribution, freight management, logistics consulting services,
product and materials visibility and reverse logistics.

Packaging and Global Fulfillment.We design and test the packaging of products for bulk shipment or single end customer use.
We have a sophisticated integrated system for managing complex international order fulfillment that allows us to ship worldwide and, in many cases, directly to the OEM's customers.

After-Market Services.We offer a wide range of after-market support services. This support can be individualized to meet
each customer's requirements and includes field failure analysis, product upgrades, repair and engineering change management.



One of our strengths has been our ability to consistently deliver high-quality services and products. We have an extensive quality management system
that focuses on continual process improvement and achieving high levels of customer satisfaction. We employ a variety of advanced statistical engineering techniques and other tools to assist in
improving product and service quality. All of our principal facilities are ISO certified to

20

---



ISO 9001
or ISO 9002 standards. Most of our principal facilities are also certified to ISO 14001 (environmental) standards.

In
addition to these standards, we are committed to the deployment of Lean manufacturing and Six Sigma principles throughout our manufacturing network. The implementation of Lean
production systems helps improve efficiency of the manufacturing process in areas such as inventory on hand, set up times and floor space, and the number of people required for production. Success in
these areas helps our customers to lower their costs and contributes to better profitability for us.

We
believe that our success is directly linked to high levels of customer satisfaction. As a result, a portion of the compensation of employees is based on the results of extensive
customer satisfaction surveys conducted on our behalf by an independent consultant.



In 2004, approximately 42% of our revenue was produced in North America. Facilities in Asia and Europe generated approximately 39% and 19%, respectively, of our
revenue in 2004. A listing of our principal locations is included in Item 4, "Information on the Company  Description of Property." We are focused on
expanding our resources and capability in lower-cost geographies. We believe that locating in lower-cost geographic regions such as Central Europe and Asia complements our
service offerings by providing lower-cost manufacturing solutions to our OEM customers for certain price-sensitive applications.

Certain
information concerning geographic segments is set forth in note 18 to the Consolidated Financial Statements in Item 18.



We have adopted a focused marketing approach targeted at creating profitable, key relationships with leading OEMs in our end markets. Our global sales and
marketing organizations leverage an integrated set of processes designed to provide consistency to the customer worldwide. Our coordination of efforts with key global customers has been enhanced by
the creation of customer-focused units  each headed by a group general manager to oversee the entire relationship with such customers. Our global network is
comprised of direct sales representatives, operational and project managers, account executives and supply chain management, as well as senior executives. Our sales resources are directed at multiple
management and staff levels within target accounts. Sales offices are located in proximity to key customers and markets.



We have targeted industry-leading customers primarily in the computing and communications sectors. We supply products and services to over 200 OEMs,
including such industry leaders as Avaya Inc., Cisco Systems, EMC Corporation, Hewlett-Packard Corporation, IBM, Lucent Technologies, Motorola Inc., NEC, and Sun Microsystems.

During
2004, our two largest customers, Cisco Systems and IBM, each represented in excess of 10% of total revenue and in the aggregate represented 26% of total revenue. During 2003, our
four largest customers, Cisco Systems, IBM, Lucent Technologies and Sun Microsystems, each represented in excess of 10% of total revenue and in the aggregate represented 44% of total revenue. Our top
ten customers represented approximately 65% of our total revenue in 2004, compared with 73% in 2003.

We
derive most of our revenue from OEM customers. The contractual agreements with our key customers generally provide a framework for our overall relationship with the customers. We have
contractual arrangements with the majority of our customers that require the customer to purchase unused inventory that we have purchased to fulfill that customer's forecasted manufacturing demand.

We
generally enter into supply arrangements in connection with our acquisition of facilities from OEMs. These arrangements generally govern the conduct of business between the
parties relating to, among other things, the manufacture of products which were previously produced at that facility by the seller itself. Such arrangements, which in certain instances contain limited
overhead contribution provisions or limited

21

---



revenue
or product volume guarantees, range from one to five years. There can be no assurance that these arrangements will be renewed. As a result of the weaker economic environment over the past
several years, our results under these supply agreements have been affected adversely by order cancellations and rescheduling as our customers' base business volumes have decreased.



We use advanced technology in the design, assembly and test of the products we manufacture. We believe that our processes and skills are among the most
sophisticated in the industry, which provides us with advantages over many of our smaller and less sophisticated competitors.

Our
customer-focused factories are highly flexible and are reconfigured continually to meet customer-specific product requirements. We have extensive capabilities across a broad range of
specialized assembly processes and we work with a wide range of substrate types, based on the wide range of products we build for our customers from thin, flexible printed circuit boards to highly
complex, dense multi-layer boards.

Our
assembly capabilities are complemented by advanced test capabilities. Technologies include high speed functional testing, burn-in, vibration, radio frequency,
in-circuit and in-situ dynamic thermal cycling stress testing. We believe that our inspection technology, which includes X-ray laminography, three-dimensional laser
paste volumetric inspection and scanning electron microscopy, is among the most sophisticated in the EMS industry. Furthermore, we employ internally-developed automated robotic technology to perform
in-process repair.

Our
ongoing research and development activities include the development of processes and test technologies, as well as some focused product development. We are proactive in developing
manufacturing techniques that take advantage of the latest component and product designs and packaging. We often work with industry groups to advance the state of technology in the industry.



We have strong relationships with a broad range of suppliers. We use electronic data interchange with our key suppliers and ensure speed of supply through the use
of automated receiving and full-service distribution capabilities. During 2004, we procured and managed approximately $7 billion in materials and related services. We view the size
and scale of our procurement activities as an important competitive advantage, as it enhances our ability to obtain better pricing, influence component packaging and design and obtain a supply of
components in constrained markets.

We
utilize two fully integrated enterprise systems which provide comprehensive information on our logistics, financial and engineering support functions. One system is used in Asia,
Europe and several locations in the Americas and the other system is common throughout the rest of our operations. These systems provide management with the data required to manage the logistical
complexities of the business. These systems are augmented by and integrated with other applications, such as shop floor controls, component database management and design tools.

In
order to minimize risk associated with inventory, we primarily order materials and components only to the extent necessary to satisfy existing customer orders. We have implemented
specific inventory management strategies with certain suppliers, such as "supplier managed inventory" (pulling inventory at the production line on an as-needed basis) and
"real-time component pricing" (the ability to obtain the advantage of the most recent price change in component pricing) designed to minimize the risk to us of cost fluctuations.
Our incentives in Lean manufacturing and Six Sigma also focus on eliminating excess inventory throughout our supply chain. In providing electronics manufacturing services to our customers, we are
largely protected from the risk of fluctuations in inventory costs, as these costs are generally passed through to customers.

All
of the products we manufacture or assemble require one or more components. In many cases, there may be only one supplier of a particular component. Some of these components could be
rationed in response to supply shortages. We attempt to ensure continuity in the supply of these components. In cases where unanticipated customer demand or supply shortages occur, we attempt to
arrange for alternative sources of supply, where available, or to defer planned production in response to the anticipated unavailability of the

22

---



critical
components. In some cases, supply shortages will substantially curtail production of all full system assemblies using a particular component. In addition, at various times there have been
industry-wide shortages of electronic components. There can be no assurance that such shortages, or future fluctuations in materials cost, will not have a material adverse effect on our
results of operations, business, prospects and financial condition.



We hold licenses to various technologies which we acquired in connection with acquisitions from Fujitsu-ICL, Hewlett-Packard, IBM, NEC and other
companies. We believe that we have secured access to all required technology that is material to the current conduct of our business.

We
regard our manufacturing processes and certain designs as proprietary trade secrets and confidential information. We rely largely upon a combination of trade secret laws,
non-disclosure agreements with our customers and suppliers and our internal security systems, confidentiality procedures and employee confidentiality agreements to maintain the trade
secrecy of our designs and manufacturing processes. Although we take steps to protect our trade secrets, there can be no assurance that misappropriation will not occur.

We
currently have a limited number of patents and patent applications pending. However, we believe that the rapid pace of technological change makes patent protection less significant
than such factors as the knowledge and experience of management and personnel and our ability to develop, enhance and market manufacturing services.

We
license some technology from third parties which we use in providing manufacturing services to our customers. We believe that such licenses are generally available on commercial terms
from a number of licensors. Generally, the agreements governing such technology grant to us non-exclusive, worldwide licenses with respect to the subject technology and terminate upon a
material breach by us of the terms of the licensing agreement.



We compete on a global basis to provide electronics manufacturing services to OEMs in our end markets. Our competitors include a large number of domestic
and foreign companies, such as Flextronics International, Hon Hai Precision Industry, Sanmina-SCI, Solectron and Jabil Circuit, as well as smaller EMS companies that often have a regional,
product, service or industry specific focus. In addition, in recent years, ODMs, companies that provide design and manufacturing services to OEMs, have been increasing their share of outsourced
manufacturing services provided to OEMs in several markets, such as notebook and desktop computers, personal computer motherboards, and consumer electronic products, such as cell phones. While
we have not to date encountered significant competition from ODMs, such competition may increase if our business in these markets grows or if ODMs expand further into or beyond these markets.

We
could also face competition from current and prospective customers which evaluate our capabilities against the merits of manufacturing products internally. We compete with different
companies depending on the type of service or geographic area. Some of our competitors may have greater manufacturing, financial, research and development, and marketing resources than we do. We
believe that the primary basis of competition in our targeted markets is based on our track record in manufacturing technology, quality, responsiveness, the provision of value-added services and
price. To remain competitive, we believe we must continue to provide technologically advanced manufacturing services, maintain quality levels, offer flexible delivery schedules, deliver finished
products on a reliable basis and compete favorably on the basis of price.



As of December 31, 2004, we employed over 46,000 permanent and temporary (contract) employees worldwide. Given the variable nature of our project
flow and the quick response time required by our customers, it is critical that we are able to quickly ramp our production up or down to maximize efficiency. To achieve this, our approach has been to
employ a skilled temporary labor force, as required.

23

---



Culturally,
we are team-oriented, values-driven, empowerment-based, dynamic and results-oriented, with an overriding sensitivity to customer service and quality at all
levels. This culture is a critical factor for us, as we need to be able to fully utilize the intellectual capital of our employees to be successful. We believe that our employee relations are good.
Some of our employees in the United Kingdom, France, Italy, Mexico, the United States, Japan, Brazil and Spain are represented by unions.



We are subject to extensive environmental, health and safety laws and regulations, including measures relating to the release, use, storage, treatment,
transportation, discharge, disposal and remediation of contaminants, hazardous substances and wastes, as well as practices and procedures applicable to the construction and operation of our plants. We
believe that we are in compliance in all material respects with current environmental laws. However, there can be no assurance that we will not experience difficulties with our efforts to maintain
material compliance at our facilities, or to comply with either currently applicable environmental laws or environmental laws as they change in the future, or that our continued compliance efforts
(or failure to comply with applicable requirements) will not have a material adverse effect on our results of operations, business, prospects and financial condition. Our need to comply with
present and changing future environmental laws could restrict our ability to modify or expand our facilities or continue production and could require us to acquire costly equipment or to incur other
significant expense.

Some
of our operating sites have a history of industrial use. As is typical for such businesses, soil and groundwater contamination has occurred. From time to time we investigate,
remediate and monitor soil and groundwater contamination at certain of our operating sites.

Except
for the facilities we acquired in the Omni and MSL transactions, Phase I or similar environmental assessments (which involve general inspections without soil
sampling or ground water analysis) were obtained for most of the manufacturing facilities we lease or own in connection with our acquisition or lease of such facilities. Where contamination is
suspected, Phase II intrusive environmental assessments (including soil and/or groundwater testing) are usually performed. We expect to conduct such environmental assessments in respect to
future property acquisitions where consistent with local practice. These environmental assessments have not revealed any environmental liability that we believe, based on current information, will
have a material adverse effect on our results of operations, business, prospects or financial condition, nor are we aware that we have any such material environmental liability, in part because of the
contractual retention of liability for some contamination and its remediation by landlords and former owners at some sites. It is possible that our assessments do not reveal all environmental
liabilities or that there are material environmental liabilities of which we are not presently aware or that future changes in law or enforcement standards will cause us to incur significant costs or
liabilities in the future.

We
are now providing a suite of green services to help our customers comply with emerging environmental legislation, including the European Union's RoHS (Restriction of Hazardous
Substances) and WEEE (Waste from Electrical and Electronic Equipment). RoHS mandates the removal of a number of hazardous substances, including the lead commonly found in electronic products, by
July 1, 2006, and WEEE mandates the treatment, recovery and recycling of waste from electrical and electronics equipment.



Although we obtain firm purchase orders from our customers, OEM customers typically do not make firm orders for delivery of products more than 30 to
90 days in advance. We do not believe that the backlog of expected product sales covered by firm purchase orders is a meaningful measure of future sales, since orders may be rescheduled or
canceled.



With a significant exposure to computing and communications infrastructure products, we have historically seen a level of seasonality in our quarterly revenue
patterns. This seasonality generally has resulted in lower volumes in our first quarter, gradually increasing throughout the year, culminating in higher revenue in the fourth quarter. Seasonality is
also reflected in the mix and complexity of the products manufactured. As a result

24

---



of
this mix, our efforts to diversify our revenue base, and limited visibility in technology end markets, it is difficult to predict the extent and impact of seasonality on our business.

C.    Organizational Structure

We conduct our business through subsidiaries operating on a worldwide basis. The following companies are considered significant subsidiaries and each of them is
wholly-owned:

Celestica
(US Holdings) Inc., a Delaware corporation.

Celestica
Corporation, a Delaware corporation.

Celestica
(USA) Inc., a Delaware corporation.

Celestica
Singapore Pte Ltd., a Singapore corporation.

Celestica
Cayman Holdings 1 Limited, a Cayman Islands corporation.

IMS
International Manufacturing Services Limited, a Cayman Islands corporation.

Celestica
Holdings Pte Ltd., a Singapore corporation.

1282087
Ontario Inc., an Ontario corporation.

D.    Description of Property

The following table summarizes our principal facilities as of February 21, 2005. Our facilities are used to manufacture printed circuit boards, assemble
and configure final systems and for other related manufacturing and customer support activities.

|Facility                     |  | Manufacturing Square Footage |  | Owned/Leased
|---------------------------- |  | ---------------------------- |  | ------------
|
|Toronto, Ontario             |  | 888                          |  | Owned       
|Denver, Colorado             |  | 169                          |  | Leased      
|Little Rock, Arkansas        |  | 424                          |  | Owned       
|Fort Collins, Colorado       |  | 200                          |  | Owned       
|Salem, New Hampshire         |  | 278                          |  | Leased      
|San Jose, California         |  | 131                          |  | Leased      
|Mt. Pleasant, Iowa(1)        |  | 69                           |  | Leased      
|Charlotte, North Carolina(2) |  | 305                          |  | Leased      
|Raleigh, North Carolina(1)   |  | 70                           |  | Leased      
|Arden Hills, Minnesota       |  | 154                          |  | Leased      
|Austin, Texas                |  | 51                           |  | Leased      
|Dallas, Texas                |  | 86                           |  | Leased      
|Telford, England             |  | 132                          |  | Leased      
|Galway, Ireland              |  | 133                          |  | Leased      
|Vimercate, Italy             |  | 550                          |  | Owned       
|Saumur, France               |  | 142                          |  | Owned       
|Guerande, France             |  | 130                          |  | Owned       
|Rajecko, Czech Republic      |  | 170                          |  | Owned       
|Kladno, Czech Republic       |  | 166                          |  | Owned       
|Barcelona, Spain             |  | 58                           |  | Leased      
|Valencia, Spain(2)           |  | 518                          |  | Owned/Leased
|Monterrey, Mexico(2)         |  | 527                          |  | Leased      
|Reynosa, Mexico(2)           |  | 550                          |  | Leased      
|Queretaro, Mexico            |  | 77                           |  | Leased      
|Aquadilla, Puerto Rico       |  | 94                           |  | Leased      
|Jaguariuna, Brazil           |  | 134                          |  | Leased      
|Shanghai, China(2)           |  | 235                          |  | Owned/Leased
|                             |  |                              |  |             

25

---



|Dongguan, China(2)       |  | 286 |  | Leased      
|------------------------ |  | --- |  | ------------
|Suzhou, China(2)         |  | 516 |  | Owned/Leased
|Xiamen, China            |  | 89  |  | Leased      
|Shatin, Hong Kong        |  | 53  |  | Leased      
|Johor Bahru, Malaysia(2) |  | 405 |  | Owned/Leased
|Kulim, Malaysia          |  | 324 |  | Owned       
|Singapore(2)             |  | 354 |  | Leased      
|Miyagi, Japan            |  | 273 |  | Owned       
|Tokyo, Japan(2)          |  | 44  |  | Leased      
|Laem Chabang, Thailand   |  | 722 |  | Leased      
|Rayong, Thailand         |  | 38  |  | Leased      
|Cebu, Philippines        |  | 125 |  | Leased      

---

Our principal executive office is located at 1150 Eglinton Avenue East, Toronto, Ontario M3C 1H7. All of our principal facilities
are ISO certified to ISO 9001 or ISO 9002 standards. Most of our principal facilities are also certified to the ISO 14001 (environmental) standards.

Our
land and facility leases expire between 2005 and 2040. We currently expect to be able to extend the terms of expiring leases or to find replacement facilities on reasonable terms.

As
part of our restructuring plans, we have consolidated facilities and changed our strategic focus as to the number and geography of our sites. We have rationalized our global
manufacturing network to increase the percentage of our facilities in lower-cost geographies. See Item 5, "Operating and Financial Review and
Prospects  Management's Discussion and Analysis of Financial Condition and Results of Operations  Operating Results" for
additional information concerning our restructurings.

Item 5. Operating and Financial Review and Prospects

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of the financial condition and results of operations of Celestica should be read in conjunction with the
Consolidated Financial Statements in Item 18. All dollar amounts are expressed in U.S. dollars. The information in this document is provided as of February 21,
2005.

Certain statements contained in the following Management's Discussion and Analysis of Financial Condition and Results of Operations, including, without
limitation, statements concerning the words "believes," "expects," "anticipates," "estimates," "intends," "plans," or words of similar import, constitute forward-looking statements. Forward-looking
statements are not guarantees of future performance and involve risks, uncertainties and assumptions 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: variability of operating results among periods; inability to retain or grow our business due to execution
problems resulting from significant headcount reductions, plant closures and product transfer associated with major restructuring activities; the effects of price competition and other business and
competitive factors generally affecting the EMS industry; the challenges of effectively managing our operations during uncertain economic conditions; our dependence on a limited number of customers;
our dependence on industries affected by rapid technological change; the challenge of responding to lower-than-expected customer demand; our ability to successfully manage our
international operations; component constraints; and our ability to manage our restructuring and the shift of production to lower-cost geographies. These and other risks and uncertainties
are discussed in our various filings with the Canadian Securities Commissions and the U.S. Securities and Exchange Commission, including this Annual Report and subsequent reports on
Form 6-K filed with the U.S. Securities and Exchange Commission. See Item 3, "Key Information  Risk
Factors."

26

---



We also file an Annual Information Form with the Canadian Securities Commissions which is available electronically at www.sedar.com.

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 of
which we hereafter become aware. You should read this Annual Report with the understanding that the actual future results may be materially different from what we expect. We may not update these
forward-looking statements, even if our situation changes in the future. All forward-looking statements attributable to us are expressly qualified by these cautionary
statements.



Celestica is a world leader in the delivery of innovative electronics manufacturing services (EMS) targeting leading industry original equipment manufacturers
(OEMs), historically in the computing and telecommunications industries and increasingly in other manufacturing end markets, such as aerospace and defense, automotive, consumer electronics and
industrial. Celestica operates a highly sophisticated global
manufacturing network with operations in the Americas, Asia and Europe. Celestica's expertise in quality, technology and supply chain management enables it to provide competitive advantages to
customers by improving cost, time-to-market, scalability and flexibility.

Celestica
provides a broad range of electronics manufacturing services, including design, new product introduction, engineering services, supply chain management, printed circuit
assembly, system assembly, direct order fulfillment, logistics and after-market services and support.



The EMS industry is comprised of companies that provide a broad range of manufacturing services to OEMs. As the capabilities of EMS companies evolved from
manufacturing components to providing complex manufacturing services, OEMs have become increasingly reliant on these services. The EMS industry experienced rapid change and growth over the past
decade as an increasing number of OEMs outsourced more of their manufacturing requirements.

During
the period from 2001 - 2003, the EMS industry experienced demand weakness, particularly in the computing and communications end markets, as spending on
higher complexity and infrastructure products was reduced or cut. The Company's concentration of business with customers in these higher complexity products had an adverse effect on the Company's
revenue and margins for 2002 and 2003. The downturn also created excess capacity in the EMS industry resulting in industry restructuring and continued pricing pressures as EMS providers competed for a
reduced amount of business. Declining end markets and volumes led to lower-utilization rates which also adversely impacted margins for those years. Celestica's revenue for 2003 was
$6.7 billion, down 19% from $8.3 billion in 2002 and down 33% from $10.0 billion in 2001.

Technology
end-markets began to show signs of recovery in the later part of 2003 and into 2004. Revenue for 2004 grew to $8.8 billion from $6.7 billion in 2003,
aided by a modestly better economic environment, the acquisition of MSL and by adding new customers in diversified markets. Revenue growth was stronger in the first half of 2004 and slowed in the
second half of the year.



In response to the downturn in the EMS industry, the Company initiated restructuring plans to rebalance its global manufacturing network and reduce capacity. The
EMS industry changed during the technology downturn with OEM customers requiring their EMS providers to shift more production to lower-cost regions in order for them to compete in their
own highly competitive marketplaces.

In
2001, the Company announced its first restructuring plan. As the downturn continued, and excess capacity in higher-cost geographies remained, the Company announced
additional restructuring plans through to 2004 and now into 2006. The restructuring plans are focused on consolidating facilities, thereby improving capacity utilization while increasing production in
lower-cost geographies and accelerating margin expansion.

27

---



For
the fourth quarter of 2004, the Company's capacity utilization returned to just over 60%. At the completion of the restructuring initiatives, the Company expects the EMS production capacity
utilization to reach the 70% range. The Company expects to have an improved balance of high capability and lower-cost capacity in its global manufacturing network when all of the planned
restructuring actions are completed. As a result of the Company's past and current restructuring efforts, approximately 76% of its employees as of December 31, 2004 were in
lower-cost geographies, up from approximately 63% at the end of 2002.

Despite
the modest growth environment, the Company's focus for 2004 was to improve the operating margins of its EMS business, continue to grow in diversified market sectors, and to
further expand its integrated services and solutions offerings. To accomplish this, Celestica deployed the following:



The
Company's operating margin showed improvements in each quarter of 2004 and believes this momentum will continue in 2005. The Company is forecasting a moderate growth environment with
continued improvements in operating efficiency and additional cost savings from its new restructuring plans announced in January 2005.



Revenue for 2004 increased 31% to $8.8 billion from $6.7 billion in 2003. Revenue increased in all regions, as a result of new business wins from
existing and new customers and acquisition revenue. The Company also increased the revenue from its non-top 10 customers compared to prior years, demonstrating increased customer
diversification. Consistent with its diversification strategy, the Company completed the acquisition of Manufacturers' Services Limited (MSL) in March 2004, a mid-tier EMS provider
with a broad customer base in diversified markets.

The
following table sets forth, for the periods indicated, certain key operating results and other financial information (in millions, except per share amounts):

|                                             |  | Year ended December 31 |        
|-------------------------------------------- |  | ---------------------- | -------
|
|Revenue                                      |  | $                      | 8,271.6
|Gross profit                                 |  |                        | 555.1  
|Selling, general and administrative expenses |  |                        | 298.5  
|Net loss                                     |  |                        | (455.4 
|Basic loss per share                         |  |                        | (1.98  
|Diluted loss per share                       |  |                        | (1.98  

|                                                                                         |  | December 31
|---------------------------------------------------------------------------------------- |  | -----------
|
|Total assets                                                                             |  | $          
|Total long-term financial liabilities, including principal component of convertible debt |  |            

28

---



Gross
margin improved to 4.6% of revenue in 2004 from 3.9% in 2003. Included in Cost of sales is a $16.6 million charge to write-down inventory relating to the
Company's restructuring and exit from its reference design activities and a $44.6 million charge related to inventory for a specific customer. Excluding the inventory charges above, the gross
margin for the year would have been 5.3%. The gross margin increase was due principally to increased volumes, reduced pricing pressures, improved operating efficiency and benefits from the Company's
restructuring. The benefits from restructuring amounted to approximately $136 million in 2004 of which approximately 80% was realized as lower cost of sales. These improvements were partially
offset by the costs of ramping new customer programs, costs to support the reference design activities, and higher costs in certain geographies due to the weakened U.S. dollar. Lean
manufacturing and Six Sigma are processes focused on the continual refinement of all parts of the manufacturing cycle. Through the disciplined use of Lean principles and tool sets, the Company is able
to reduce the resources required (i.e., floor space, equipment, inventory and manufacturing lines) to build a product, which in turn, lowers the total
manufacturing cost for the Company and its customers.

Selling,
general and administrative (SG&A) expenses (including research and development costs) declined from 4.1% of revenue in 2003 to 3.8% in 2004. The reduction in SG&A expense as a
percentage of revenue, is a result of increased volumes, and benefits from restructuring activities, divestitures and other cost-reduction initiatives.

In
the third quarter of 2004, the Company decided to refocus its design resources to more directly support the product development initiatives of its largest customers. As a result, the
Company decided to restructure and exit its server reference design business and related channel activities. The Company's profitability is expected to improve when the Company completes its exit from
these businesses.

In
preparing its business plans for 2005 and beyond, the Company identified in the fourth quarter that volumes in the Americas and Europe were going to be lower than previously expected.
This adversely impacted the assessment of the carrying value of goodwill, long-lived assets and deferred income tax assets. The Company recorded impairment and Other charges amounting to
$912.6 million, primarily in the fourth quarter of 2004, which resulted in the significant net loss for the year. The charges primarily included goodwill impairment of $288.0 million,
long-lived asset impairment of $99.3 million, $161.4 million related to uncollectible receivables and an inventory write-down (through Cost of sales) for one
customer, and $248.2 million to establish a valuation allowance against deferred income tax assets.

The
Company also recorded $153.7 million in restructuring charges in 2004. The weaker plans for the Americas and Europe for 2005 and beyond, have resulted in additional
restructuring announcements. See "Subsequent events and recent developments". Total assets for 2004 have decreased from the prior year due to the above impairments offset, in part, by assets arising
from acquisitions.



In addition to the key financial, revenue and earnings related metrics above, management regularly reviews the following quarterly working capital metrics:

|                            |  | 4Q03 |   | 1Q04 |   | 2Q04 |   | 3Q04 |   | 4Q04 |  
|--------------------------- |  | ---- | - | ---- | - | ---- | - | ---- | - | ---- | -
|Days in accounts receivable |  | 34   |   | 39   |   | 39   |   | 41   |   | 38   |  
|Days in inventory           |  | 47   |   | 54   |   | 52   |   | 52   |   | 46   |  
|Days in accounts payable    |  | (71  | ) | (77  | ) | (70  | ) | (70  | ) | (67  | )
|                            |  |      |   |      |   |      |   |      |   |      |  
|Cash cycle days             |  | 10   |   | 16   |   | 21   |   | 23   |   | 17   |  

Days
in accounts receivable is calculated as the average accounts receivable for the quarter divided by the average daily revenue. Days in inventory is calculated as the average
inventory for the quarter divided by the average daily cost of sales. Days in accounts payable is calculated as the average accounts payable for the quarter divided by average daily cost of sales.
Accounts payable is defined as current liabilities less interest bearing payables and convertible debt. Cash cycle days is calculated as the sum of days in accounts receivable and days in inventory,
less the days in accounts payable. Cash cycle days for the fourth quarter of 2004 improved sequentially primarily due to improvements in inventory turns.

29

---





Celestica continued to maintain a strong balance sheet in 2004 and finished the year with a cash balance of $969 million. In June 2004, the Company
issued Senior Subordinated Notes (Notes) with a principal amount of $500.0 million, and a fixed interest rate of 7.875%. The Company also entered into agreements to swap the fixed rate of
interest for a variable rate on these Notes based on LIBOR plus a margin. $299.7 million of the proceeds was used to repurchase LYONs.



A significant portion of Celestica's growth in prior years was generated by strengthening its customer relationships, building a global manufacturing network, and
increasing the breadth of its service offerings through asset and business acquisitions. The Company focused on investing strategically in acquisitions that better positioned it for future outsourcing
opportunities. The Company's pace of acquisitions has slowed from prior years but future acquisitions may be undertaken if aligned with Company strategic initiatives.

On
March 12, 2004, the Company completed the acquisition of MSL, a full-service global electronics manufacturing and supply chain services company, headquartered in
the United States. This acquisition provided Celestica with an expanded customer base and service offering. This acquisition also supported Celestica's strategy of adding new customers in more
diversified end markets including industrial, aerospace and defense, automotive, retail systems, communications and network storage, and peripherals. The purchase price for MSL of
$321.2 million was financed with the issuance of 14.1 million subordinate voting shares, the issuance of options to purchase 2.1 million subordinate voting shares, the issuance of
warrants to purchase 1.1 million subordinate voting shares, and $51.6 million in cash.

In
April 2004, the Company acquired certain net assets located in the Philippines from NEC Corporation for cash of $8.1 million.

In
September 2004, the Company sold certain assets relating to its power operations for a cash selling price of $52.8 million. The Company reported a gain on sale of
$12.0 million. $2.0 million of the proceeds is held in escrow and will be released on completion of certain closing procedures. The Company has signed a multi-year agreement
to supply manufacturing services to the purchaser. Future revenue and earnings are not expected to change significantly given the Company's continuing involvement as a manufacturer for the purchaser.

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 company acquisitions. Celestica identifies possible acquisitions that would enhance its global manufacturing network, expand its service offerings,
increase its penetration in various 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
will continue to evaluate its operations and could propose exiting additional businesses or service offerings in order to better align with the Company's strategic objectives.



To further improve capacity utilization and accelerate margin improvements, the Company announced in January 2005 additional plans to restructure its
operations and expects to incur restructuring charges in the range of $225 million to $275 million during the next 15 months. The restructuring will include some plant closures
and a 10-15% reduction in the company's global workforce (approximately 5,500 employees). The restructuring plans will target primarily its higher-cost geographies where
end-market demand has not recovered to the levels management requires to achieve sustainable profitability.

Critical Accounting Policies and Estimates

Celestica prepares its financial statements in accordance with Canadian GAAP with a reconciliation to United States GAAP, as disclosed in note 20
to the Consolidated Financial Statements in Item 18.

30

---



The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
related disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant accounting
policies and methods used in preparation of the financial statements are described in note 2 to the Consolidated Financial Statements in Item 18. The Company evaluates its
estimates and assumptions on a regular basis, based on historical experience and other relevant factors. Actual results could differ materially from these estimates and assumptions. The following
critical accounting policies are impacted by judgments, assumptions and estimates used in preparation of the Consolidated Financial Statements in Item 18.



Celestica derives most of its revenue from the sale of electronics equipment that has been built to customer specifications. Celestica recognizes revenue from
product sales upon shipment, since title has passed, persuasive evidence of an arrangement exists, performance has occurred, receivables are reasonably assured of collection, customer specified test
criteria have been met, and the earnings process is complete. Celestica has contractual arrangements with the majority of its customers that require the customer to purchase unused inventory that
Celestica has purchased to fulfill that customer's forecasted manufacturing demand. Celestica accounts for raw material returns as reductions in inventory and does not recognize revenue on these
transactions.

Celestica
provides warehousing services in connection with manufacturing services to certain customers. The Company assesses the contracts to determine whether the manufacturing and
warehousing services can be accounted for as separate units of accounting. If the services do not constitute separate units of accounting, or the manufacturing services do not meet all of the revenue
recognition requirements, the Company defers recognizing revenue until the products have been shipped to the customer.



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, the current business environment, customer and industry concentrations, and historical experience. If any of the
Company's customers have insufficient liquidity, the Company may encounter significant delays or defaults in payments owed by its customers. This may result in the Company extending payment terms
which may have a significant adverse effect on the Company's financial condition and results of operations. A change to these factors could impact the estimated allowance and the provision for bad
debts recorded in selling, general and administrative expenses. In the fourth quarter of 2004, one of its customers experienced a significant deterioration in its financial condition. As a result, the
Company recorded additional charges of $116.8 million to Other charges to reflect the estimated recoverable amounts, on the assumption that the customer is unable to re-capitalize.



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. In the third quarter of 2004, the Company recorded a
$16.6 million charge to write-down inventory relating to the Company's restructuring and exit from the reference design business. In the fourth quarter of 2004, the Company recorded
additional charges to Cost of sales to reduce the net realizable value of inventory of one of its customers, who had experienced a significant deterioration in its financial condition.

31

---





Celestica has recorded a liability for warranty costs. As part of the normal sale of a product, the Company provides its customers with product warranties that
extend for periods generally ranging from one to three years from the date of sale. The liability for the expected cost of warranty-related claims is established when products are sold. In estimating
the warranty liability, historical material replacement costs and the associated labor to correct the product defect are considered. Revisions to these estimates are made when actual experience
differs materially from historical experience. Known product defects are specifically accrued for as the Company becomes aware of such defects. Changes to the estimates could impact the liability and
have a resulting impact on margins.



Celestica has recorded an income tax expense or recovery based on the net income earned or net loss incurred in each tax jurisdiction and the tax rate applicable
to that income or loss. In the ordinary course of business, there are many transactions and calculations where the ultimate tax outcome is uncertain. The final tax outcome of these matters may be
different than the estimates originally made by management in determining its income tax provisions. A change to these estimates could impact the income tax provision and net loss.

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, tax planning
strategies, changes in tax laws and other factors. A change to these factors could impact the estimated valuation allowance and income tax expense.

In
the fourth quarter of 2004, the Company recorded a charge to income tax expense of $248.2 million to establish additional valuation allowance for most of the remaining deferred
income tax assets in the United States and Europe. In the course of finalizing its 2005 business plan in the fourth quarter, the Company identified significant developments which it considered
in determining an allowance such as the future demands and level of sustainable profitability in these jurisdictions.



Celestica performs its annual goodwill impairment test in the fourth quarter of each year (to correspond with its planning cycle), and more frequently if
events or changes in circumstances indicate that an impairment loss may have been incurred. 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. In the course of finalizing its
2005 business plan in the fourth quarter, the Company made certain determinations with respect to expected growth in each operating region, its restructuring plans and the continued transfer of major
programs from higher-cost geographies to lower-cost geographies. In the fourth quarter of 2004, the Company recorded goodwill impairment in the Americas and Europe reporting
units, reflective of lower than previously expected business volumes. Celestica also recorded an impairment loss in 2002. Future goodwill impairment tests may result in further impairment charges.



Celestica performs its annual impairment tests on long-lived assets in the fourth quarter of each year (to correspond with its planning cycle),
and more frequently if events or changes in circumstances indicate that an impairment loss may have been incurred. Celestica estimates the useful lives of capital and intangible assets based on the
nature of the asset, historical experience and the terms of any related supply contracts. The valuation of long-lived assets is based on the amount of future net cash flows that 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 long-lived assets resulting in a change to depreciation or amortization expense and impairment

32

---



charges.
In the course of finalizing its 2005 business plan in the fourth quarter, the Company made certain determinations with respect to expected growth, its restructuring plans and the continued
transfer of major programs from higher-cost geographies to lower-cost geographies, which primarily impacted the assets in Americas and Europe. In the fourth quarter of 2004,
the Company recorded long-lived asset impairments, primarily in the Americas and Europe. Celestica also recorded long-lived impairment losses for 2002 and 2003. Future
impairment tests may result in further impairment charges.



Celestica has recorded restructuring charges relating to workforce reductions, facility consolidations and costs associated with exiting businesses. The
restructuring charges include employee severance and benefit costs, costs related to leased facilities that have been abandoned or subleased, owned facilities which are no longer used and are
available-for-sale, cost of leased equipment that have been abandoned, impairment of owned equipment available-for-sale, 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. For owned facilities and equipment, the impairment loss recognized is based on the fair value less costs to sell, with fair value estimated based on existing market prices for similar
assets. For leased facilities that have been abandoned or subleased, the estimated lease cost represents future lease payments subsequent to abandonment less estimated sublease income. To estimate
future sublease income, the Company worked with independent brokers to determine the estimated tenant rents the Company could be expected to realize. The estimated amount 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.

Costs
associated with restructuring activities initiated on or after January 1, 2003 are recorded in accordance with CICA Emerging Issues Committee Abstracts EIC-134,
"Accounting for Severance and
Termination Benefits," and EIC-135, "Accounting for Costs Associated with Exit and Disposal Activities."



Celestica has pension and non-pension post-employment benefit costs and liabilities, which are determined from actuarial valuations.
Actuarial valuations require management to make certain judgments and estimates relating to expected plan investment performance, salary escalation, compensation levels at the time of retirement,
retirement ages, and expected health care costs. The Company evaluates these assumptions on a regular basis taking into consideration current market conditions and historical data. A change in these
factors could impact future pension expense.

A.    Operating Results

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,
mix of manufacturing value-added and other factors, including price competition, manufacturing effectiveness and efficiency, the degree of automation used in the assembly process, the ability to
manage labor, 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 labor, the costs of transferring and ramping up programs, and other factors.

Weak
end-market conditions began to emerge in early to mid-2001 and continued through 2003 for most of the Company's communications and computing industry
customers. This resulted in customers rescheduling or canceling orders which negatively impacted Celestica's results of operations. The Company began to see signs of end-market improvement
towards the end of 2003, which continued into 2004. New customers and programs, improved end-markets, better demand from the Company's core customers, and the contributions from the
Company's acquisitions have resulted in higher revenue and improved operating performance in 2004 compared

33

---



to
2003. The Company expects to continue to improve operating results, as it focuses on optimizing profitability in programs (including the proactive discontinuance of non-profitable
activities), driving efficiencies from Lean manufacturing and Six Sigma methods, implementing and deriving benefits from restructuring activities and overall better cost management.

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

|                                             |  | Year ended December 31 |  
|-------------------------------------------- |  | ---------------------- | -
|
|Revenue                                      |  | 100.0                  | %
|Cost of sales                                |  | 93.3                   |  
|                                             |  |                        |  
|Gross profit                                 |  | 6.7                    |  
|Selling, general and administrative expenses |  | 3.6                    |  
|Amortization of intangible assets            |  | 1.2                    |  
|Integration costs related to acquisitions    |  | 0.3                    |  
|Other charges                                |  | 8.0                    |  
|Accretion of convertible debt                |  | 0.3                    |  
|Interest expense (income), net               |  |                       |  
|                                             |  |                        |  
|Loss before income taxes                     |  | (6.7                   | )
|Income taxes recovery (expense)              |  | 1.2                    |  
|                                             |  |                        |  
|Net loss                                     |  | (5.5)                  | %
|                                             |  |                        |  



Effective January 1, 2003, the Company prospectively adopted the revised CICA Handbook Section 3870, "Stock-based Compensation," which requires the
fair-value method of accounting to be applied to all stock-based compensation for employees and non-employees resulting in compensation charges. The impact to net loss was
$7.6 million for the year ended December 31, 2004 (2003  $0.3 million). See note 2(q) to the Consolidated Financial
Statements in Item 18.

Effective
January 1, 2004, the Company retroactively adopted the CICA Handbook Section 3110, "Asset Retirement Obligations," which requires the recognition of liabilities
for asset retirement obligations and the associated retirement costs, and has retroactively restated its results of operations for 2003 and prior periods. The impact to cost of sales and net loss was
$0.9 million for the year ended December 31, 2003 (2002  $0.7 million). See note 2(r)(i) to the Consolidated Financial
Statements in Item 18.

Effective
December 31, 2004, the Company early adopted the amendment to CICA Handbook Section 3860, "Financial
Instruments  Presentation and Disclosure," which requires a portion of the LYONs to be presented as liabilities and not as equity. The Company has retroactively
restated the first three quarters of 2004 and prior periods. The impact to net loss for the year ended December 31, 2004 was a gain of $10.0 million
(2003  $0; 2002  loss of $9.5 million). See note 2(r)(ii) to the Consolidated Financial
Statements in Item 18.



Celestica manages its operations on a geographic basis. The three reporting segments are the Americas, Europe and Asia. The following table shows revenue by
reporting segment:

|              |  | Year ended December 31 |     
|------------- |  | ---------------------- | ----
|
|
|Americas      |  | $                      | 4.6 
|Europe        |  |                        | 1.8 
|Asia          |  |                        | 2.1 
|Inter-segment |  |                        | (0.2
|              |  |                        |     
|Total         |  | $                      | 8.3 
|              |  |                        |     

34

---



Revenue increased 31% to $8.8 billion in 2004 from $6.7 billion in 2003. Revenue from the Americas, Europe and Asian operations has increased by 22%, 30% and 44%,
respectively from 2003. All regions have benefited from improved demand from some of the Company's top customers, new business wins and revenue from acquired operations. Although the revenue grew in
the Americas compared to the prior year, their growth was negatively impacted by the program transfers to lower-cost geographies. Asia benefited from its expanded manufacturing
capabilities, transfer of programs from higher-cost geographies and from the NEC acquisition. Organic growth drove a 17% increase in revenue. The MSL and NEC acquisitions increased revenue
by a further 14%. In the fourth quarter of 2004, Asia became the largest segment at 41% of total fourth quarter revenue.

Revenue
decreased 19% to $6.7 billion in 2003 from $8.3 billion in 2002 primarily due to reductions in volume as a result of the prolonged weakened end-market
conditions and reduced prices on components and services caused by continued excess capacity in the EMS industry. The reductions in volume accounted for approximately 75% of the revenue decrease and
the rest was a result of reduced pricing driven primarily by lower component costs. Revenue from the Americas and European operations decreased 33% and 22%, respectively, from 2002. These operations
were significantly impacted by customer order reductions due to the downturn in end-market demand for their products as well as severe pricing pressures. The Company responded by reducing
manufacturing capacity in these geographies by downsizing and/or closing facilities. In addition, the customers' continued demands for significantly lower product manufacturing costs has resulted in
the transfer of programs from higher-cost geographies to lower-cost geographies, which further reduced the revenue in these higher-cost geographies. Revenue from
Asian operations increased 17% from 2002 and has benefited from new business wins, the transfer of production from other geographies and the flow-through of acquisitions. Offsetting this
is the impact of continued softness in end markets and pricing pressures. Of the net increase in Asian revenue, approximately half resulted from the transfer of programs and from the
flow-through of the acquisition in Japan which closed on March 31, 2002.

The
following table shows industry market segmentation as a percentage of revenue for the indicated periods:

Year ended December 312002

2003

2004Enterprise communications

45%

25%

27%Telecommunications
{


23%

22%Servers

26%

22%

18%Storage

22%

13%

11%Other
{


10%

19%Workstations and PCs

7%

7%

3%


The
2002 comparatives have not been adjusted to reflect the new end-market segmentation categories.

The
Company has been focused on diversifying its customer base by adding new customers in areas other than communications and computing markets, such as aerospace and defense,
automotive, industrial and consumer. Revenue in these other markets as a percentage of total revenue in 2004 increased to 19% from 10% compared to 2003. Approximately one quarter of this
year-over-year growth resulted from new business wins and the remainder resulted from the MSL acquisition.

35

---



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

Year ended December 312002

2003

2004IBM

ü

ü

üCisco Systems



ü

üSun Microsystems

ü

üLucent Technologies

ü

ü


As
a result of diversifying its markets, the Company's customer mix has improved. The following table shows customer percentage of total revenue for the indicated periods:

Year ended December 312002

2003

2004Top 10 customers

85%

73%

65%Non-top 10 customers

15%

27%

35%


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 decrease in absolute terms or 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 15 (concentration of risk) and 17 to the Consolidated Financial Statements in Item 18.

The
Company believes its growth depends on increasing sales to existing customers for their current and future product generations, the expansion and addition of related manufacturing
and support services, and on successfully attracting new customers. Customer contracts can be cancelled and volume levels can be changed or delayed. The timely replacement of delayed, cancelled or
reduced orders with new business cannot be assured. In addition, the Company has no assurance that any of its current customers will continue to utilize its services, which could have a material
adverse effect on the Company's results of operations.



The following table is a breakdown of gross profit and gross margin as a percentage of revenue for the indicated periods:

Year ended December 312002

2003

2004Gross profit (in millions)

$
555.1

$
260.1

$
407.9Gross margin


6.7%


3.9%


4.6%


Gross
margin improved to 4.6% of revenue in 2004 from 3.9% in 2003. Included in Cost of sales is a $16.6 million charge to write-down inventory relating to the
Company's restructuring of its reference design activities and a $44.6 million charge related to inventory for a specific customer. See notes 11(i) and (k) to the
Consolidated Financial Statements in Item 18. Excluding the inventory charges above, the gross margin for the year would have been 5.3%. The gross margin increase was due principally to
increased base business volumes, reduced pricing pressures, improved operating efficiency and benefits from the Company's restructurings. The benefits from restructuring amounted to approximately
$136 million in 2004 of which approximately 80% was realized as lower cost of sales. These gains were partially offset by the costs of ramping new customer programs, costs to support the
reference design activities, and higher costs in certain geographies due to the weakened U.S. dollar. The Americas operations have shown margin improvements from a year ago as a result of the
factors described above and the exiting of the reference design activities. The European operations have

36

---



improved
significantly from the prior year, benefiting from improved utilization, restructuring benefits and cost reductions. The Asian operations have benefited from higher production volumes.

Gross
margin decreased to 3.9% in 2003 from 6.7% in 2002. Gross margin decreased disproportionately due to the significant reduction in business volumes and corresponding low asset
utilization rates, industry pricing pressures, a change in the mix of products manufactured (from higher complexity, higher value-add products to lower complexity, lower
value-add products), costs of ramping new customer programs, costs of transferring programs to other geographies and costs to support the new reference design activities. Lower volumes
contributed to approximately a 65% decrease in gross profit from 2002. Pricing, mix and the cost of new investments, reduced gross profit by approximately a further 20%. This decrease was offset in
part by the benefits from the restructuring programs and various other cost reduction initiatives. The benefits from restructuring amounted to approximately $250 million in 2003, of which
approximately 75% was realized in lower cost of sales.

In
2003, the higher-cost operations in the Americas and Europe were significantly impacted by reductions in higher-complexity and higher value-add products
resulting from the weak demand from Celestica's computing and telecommunications customers. As a result of these conditions, volumes declined and pricing pressures increased, which drove the majority
of the gross margin declines in 2003. European operations continued to be the most adversely affected by lower utilization levels and higher fixed costs. As a result, the Company initiated
restructuring actions for Europe in 2003. Americas operations were also affected by significant volume reductions, the cost of transferring programs and investments in new product and service
offerings, specifically in reference design activities. Asian operations were affected by program ramping costs and overall pricing pressures offset, in part, by higher production volumes.

Although
asset utilization rates have improved this past year due to higher volumes and reduction of capacity, certain operations continue to be affected by lower utilization levels and
higher fixed costs. The Company announced additional restructuring actions, primarily in the Americas and Europe, for 2005 and into the first half of 2006 to address these conditions.

The
nature of the Company's business is such that gross margin will fluctuate based on product volume and mix, production efficiencies, utilization of manufacturing capacity,
manufacturing costs, start-up and ramp-up activities, new product introductions, cost structures at
individual sites, and other factors, including pricing due to the overall highly competitive nature of the EMS industry. In addition, the availability of raw materials, which are subject to lead time
and other constraints, could affect the Company's revenue growth.



Selling, general and administrative expenses increased 21% to $331.6 million (3.8% of revenue) in 2004 from $273.8 million (4.1% of revenue) in
2003. The increase in SG&A expenses, on an absolute basis, reflects the costs to support higher volumes and new business, higher costs in certain geographies due to the weakened U.S. dollar,
and the inclusion of SG&A expenses for its acquired operations offset, in part, by the benefits from the Company's restructuring programs, and an $8.4 million reduction in research and
development costs due to the exit from the reference design activities. The benefits from restructuring amounted to approximately $136 million in 2004 of which approximately 20% impacted SG&A.

SG&A
expenses decreased 8% to $273.8 million (4.1% of revenue) in 2003 from $298.5 million (3.6% of revenue) in 2002. SG&A as a percentage of revenue increased as a result
of a significant reduction in revenue, higher spending in sales and marketing to support diversified markets, as well as the benefits from the restructuring activities which lagged behind the revenue
decline. The decrease in SG&A on an absolute basis, reflected the benefits from the restructuring programs, offset by higher costs, largely to support new products, including the new reference design
activities, and new markets.



Amortization of intangible assets decreased 29% to $34.6 million in 2004 from $48.5 million in 2003. In the fourth quarter of 2003, the Company
recorded an impairment charge to write-down its intangible assets. As a result of the write-down in 2003, the amortization expense decreased in 2004. This decrease in expense
was

37

---



partially
offset by amortization of intangible assets arising from the MSL acquisition of $6.4 million. In the fourth quarter of 2004, the Company recorded an impairment charge to
write-down its intangible assets, which will further reduce amortization expense in 2005.

Amortization
of intangible assets decreased 49% to $48.5 million in 2003 from $95.9 million 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 in 2002, the amortization expense decreased in 2003. The decrease in expense was partially offset by
amortization of intangible assets arising from the 2002 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 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 $3.1 million in 2004, zero in 2003 and $21.1 million in 2002. Integration costs vary from period to period due to the timing of acquisitions and
related integration activities.



|                                                    |                     | Year ended December 31 |      
|--------------------------------------------------- | ------------------- | ---------------------- | -----
|
|
|2001 restructuring                                  |                     | $                      | 237.0
|2002 restructuring                                  |                     |                        |     
|2003 restructuring                                  |                     |                        |     
|2004 restructuring                                  |                     |                        |     
|                                                    |                     |                        |      
|                                                    | Total restructuring |                        |      
|Goodwill impairment                                 |                     |                        |     
|Long-lived asset impairment                         |                     |                        | 36.1 
|Gain on sale of surplus land and building           |                     |                        |     
|Gain on sale of assets (see "Divestitures" section) |                     |                        |     
|Deferred financing costs and debt redemption fees   |                     |                        |     
|Other                                               |                     |                        |     
|Gain on repurchase of convertible debt              |                     |                        |     
|                                                    |                     |                        |      
|                                                    |                     | $                      | 273.1
|                                                    |                     |                        |      

Further
details of the other charges are included in note 11 to the Consolidated Financial Statements in Item 18.

To
date, the Company has recorded charges in connection with four separate restructuring plans in response to the challenging economic climate and the continuing strategy to move
production from higher-cost to lower-cost geographies. These actions, which included reducing workforce, consolidating and repositioning the number and location of production
facilities, were largely intended to align the Company's capacity and infrastructure to anticipated customer requirements for more capacity in lower-cost regions, as well as to rationalize
its manufacturing network to lower demand levels.

The
Company has recorded a combined total of $871.0 million for its four restructuring plans. These restructuring plans were primarily focused on the Americas and Europe, as those
regions were impacted the most by the downturn. As of December 31, 2004, approximately 22,300 employees have been released from the business in connection with restructurings.
Approximately 1,100 additional employee positions remain to be eliminated relating to the restructuring announcements made up to December 31, 2004. Approximately 70% of the employee
terminations have been in the Americas, 25% in Europe and 5% in Asia. As of December 31,

38

---



2004,
38 facilities have been or will be closed or downsized primarily in the Americas and Europe. All cash outlays are expected to be funded from cash on hand.

In
January 2005, the Company announced additional restructuring plans to further improve capacity utilization and accelerate margin improvement, targeting its
higher-cost geographies. See "Subsequent events and recent developments."

The
Company expects to continue to benefit from the restructuring measures taken in 2004 and prior years through reduced depreciation, lease and labor costs in cost of sales and SG&A
expenses. The year-over-year incremental benefits were approximately $136 million in 2004, of which approximately 80% was realized in lower cost of sales and the balance
in lower SG&A expenses. The Company has completed the major components of the 2001 and 2002 restructuring plans, except for certain long-term lease and other contractual obligations
expected to be paid out over the remaining lease terms through 2015. The Company expects to complete the 2003 restructuring actions in Europe by the end of the third quarter of 2005, except for
certain regulatory payments expected to be paid out through 2007. The Company expects to complete its 2004 restructuring actions by early 2005.

The
Company will continue to evaluate its operations and could propose future restructuring actions as a result of changes in the marketplace and/or its exit from less profitable
operations or services no longer demanded by its customers. Also see "Subsequent events and recent developments."

At
the time of acquisition, the Company decided to consolidate some of the acquired MSL facilities. The cost of this restructuring totals $36.1 million and was recorded as part of
the purchase price. The plan includes reducing workforce primarily in the Americas and Europe. See note 3(i) to the Consolidated Financial Statements in Item 18.

In
the absence of any triggering events, the Company conducts its annual review of goodwill and long-lived assets in the fourth quarter of each year to correspond to its
planning cycle. As part of its business plans for 2005 and beyond, which were finalized in the fourth quarter of 2004, the Company reduced future volume expectations in the Americas and Europe
resulting in the need to develop new restructuring plans and increase the transfer of major customer programs from higher-cost to lower-cost geographies. As a result, the
forecasted revenue and net cash flows were reduced for many sites. The Company recorded non-cash impairment charges primarily in the Americas and Europe, against goodwill of
$288.0 million and against long-lived assets of $99.3 million in 2004. The Company also recorded impairment charges in 2002 and 2003.

The
Company may continue to experience goodwill and long-lived asset impairment charges in the future as a result of changes in the EMS industry, customer demand and other
market conditions, which may have a material adverse effect on the Company's financial condition.

In
the normal course of operations, the Company adjusts its allowance for doubtful accounts for specific customer risks and credit factors. In the fourth quarter of 2004, one of the
Company's customers experienced a significant deterioration in its financial condition. Although the customer is attempting to recapitalize, there are no assurances that it would be successful. As a
result, the Company determined that additional provisions were required and recorded charges of $116.8 million in Other charges and $44.6 million in Cost of sales to reflect the
estimated recoverable amounts for receivables and inventory. Management assessed a variety of outcomes to determine its best estimate of the recoverable amounts. If the financial conditions affecting
that customer or management's estimates of the customer's cash flows change in future reporting periods, there could be further impairment or a recovery of amounts previously written down.



The Company has repurchased LYONs during the past three years and recognized gains and losses which have been apportioned between the principal and option
components. The Company has recognized a gain on the principal component which is recorded in Other charges. See notes 2(r)(ii) and 8 to the Consolidated Financial Statements in
Item 18.

39

---





Accretion charges in 2004 were $17.6 million compared to $23.4 million in 2003 and $28.7 million in 2002. The decrease in accretion charges
reflects the repurchase of LYONs during the past few years.



Net interest expense in 2004 was $19.7 million compared to net interest income of $4.0 million in 2003. During 2004, the Company earned less
interest income due to lower average invested cash balances compared to 2003. In addition, the Company's expense for 2004 includes interest charges on the Senior Subordinated Notes due 2011, that were
issued in June of 2004. The average interest rate on the Notes was 4.92% for the year, after reflecting the effects of the associated variable interest rate swap agreements.

Interest
income in 2003 decreased to $9.4 million compared to $17.2 million in 2002, primarily a result of lower cash balances being invested at lower interest rates.
Interest income was offset by interest expense on the Senior Subordinated Notes due 2006 and debt facilities. Interest expense decreased to $5.4 million in 2003 from $16.1 million in
2002, due to the redemption of the 2006 Senior Subordinated Notes in August 2002.



Income tax expense in 2004 was $252.2 million on a net loss before tax of $601.9 million, compared to $33.5 million in 2003 on a net loss
before tax of $233.2 million. The effective tax rate for 2004 was a negative 42% compared to an effective tax rate of negative 14% for 2003.

The
Company's effective tax rate is impacted by the mix and volume of business in lower tax jurisdictions within Europe and Asia, tax holidays and tax incentives that have been
negotiated with the respective tax authorities (which expire between 2006 and 2012), restructuring charges, operating losses, the time period in which losses may be used under tax laws, and the
impairment of deferred income tax assets. The tax holidays are subject to conditions with which the Company expects to continue to comply.

In
certain jurisdictions, the Company currently has significant net operating losses and other deductible temporary differences, which will reduce taxable income in these jurisdictions
in future periods. The Company has determined that a valuation allowance of $545.7 million is required in respect of its deferred income tax assets as at December 31, 2004
(2003  $185.3 million).

Included
in the 2004 valuation allowance of $545.7 million is a charge of $248.2 million relating to a valuation allowance for most of the remaining deferred income tax
assets in the United States and Europe. In previous reporting periods, the Company provided valuation allowances for future tax benefits resulting from net operating loss carryforwards and for
certain other deductible temporary differences where it believed its ability to realize in the future was in doubt. The Company had believed it was more likely than not that the remaining net deferred
income tax assets would be realized principally based upon forecasted taxable income, generally within the net operating loss carryforward period. During the fourth quarter of 2004, in the course of
finalizing its 2005 business plan, the Company identified significant developments, discussed in Other charges above, which it considered in determining its valuation allowance. Reduced future
expected profits and the cost of restructuring actions and planned program transfers negatively impacted previous estimates of taxable income, particularly in the United States and Europe. The
Company determined the more likely than not criteria was no longer met and accordingly increased the valuation allowance. The Company expects to record a full valuation allowance on future deferred
income tax assets arising in these jurisdictions until a sustainable level of taxable income is reached.

Also
included in the 2004 valuation allowance is $51.1 million attributable to the acquisition of MSL. Decreases in the MSL valuation allowance in future years will be recorded as
adjustments to intangible assets.

The
Company believes it will generate sufficient future taxable income to realize the benefit of the net deferred income tax asset balance of $1.5 million as at
December 31, 2004.

40

---



B.    Liquidity and Capital Resources



The following table shows key liquidity metrics for the indicated periods:

As at December 312002

2003

2004(in millions)Cash and cash equivalents

$
1,851.0

$
1,028.8

$
968.8


Year ended December 312002

2003

2004(in millions)Cash provided by (used in) operations

$
982.8

$
(158.5
)
$
(139.2
)Cash used for investing activities


(191.5
)

(169.5
)

(79.9
)Cash provided by (used in) financing activities


(283.1
)

(494.2
)

159.1


In
2004, operating activities utilized $139.2 million in cash compared to utilizing $158.5 million in cash in 2003. Cash from operations was primarily used to support
accounts receivable and accounts payable balances. Accounts receivable balances were higher due to increased revenue levels and a year end decrease in balances sold under the accounts receivable
facility. See "Capital resources."



Investing activities in 2004 included capital expenditures of $142.2 million, primarily to expand manufacturing capabilities in lower-cost
geographies such as Mexico, Malaysia, Romania, Thailand and the Czech Republic, and net cash of $39.6 million paid for the NEC and MSL acquisitions offset, in part, by proceeds from the sale of
the power business and the sale of vacant facilities, primarily in Europe.



In June 2004, the Company received gross proceeds of $500.0 million from the Senior Subordinated Notes offering and incurred $12.0 million,
pre-tax, in underwriters' fees and expenses. Financing activities also included a $38.1 million repayment of loans assumed in connection with the MSL acquisition.

In
June 2004, LYONs with a principal amount at maturity of $540.3 million were repurchased at an average price of $554.77 per LYON, for total cash of $299.7 million.
See further details in notes 2(r)(ii) and 8 to the Consolidated Financial Statements in Item 18.

The
Company currently has approval to spend up to an additional $200.3 million to repurchase LYONs, at management's discretion. The Company may from time to time repurchase LYONs
in the open market or through privately negotiated transactions. The amount and timing of future purchases cannot be determined at this time. Through December 31, 2004, the Company has
repurchased LYONs with a total principal amount at maturity of $1,199.1 million, for total cash of $623.5 million.

Celestica
completed its second Normal Course Issuer Bid (NCIB) in July 2004. The Company repurchased a total of 22.6 million subordinate voting shares pursuant to its two
NCIBs during the period from August 2002
to July 2004. There were no repurchases in 2004. Under these programs, shares were purchased at the market price at the time of purchase.

Since
the Company began its share and debt repurchase activities in the third quarter of 2002, a total of $1,067.8 million has been spent to repurchase senior subordinated notes,
subordinate voting shares and LYONs.

41

---





As at December 31, 2004, the Company has contractual obligations that require future payments as follows:

|                 |  | Total |       | 2005 |   | 2006 |  | 2007 |      | 2008 |   | 2009 |  | Thereafter
|---------------- |  | ----- | ----- | ---- | - | ---- |  | ---- | ---- | ---- | - | ---- |  | ----------
|
|Long-term debt   |  | $     | 503.4 |      | $ | 2.6  |  | $    | 0.8  |      | $ |     |  | $         
|Operating leases |  |       | 213.0 |      |   | 60.9 |  |      | 42.4 |      |   | 25.9 |  |           

As
at December 31, 2004, the Company had outstanding LYONs with a principal amount at maturity of $614.4 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, for a total of $352.0 million. The Company may elect to settle its
repurchase obligation in cash or shares, or any combination thereof. See note 8 to the Consolidated Financial Statements in Item 18.

As
at December 31, 2004, the Company has commitments that expire as follows:

|                                                                         |  | Total |       | 2005 |   | 2006  |  | 2007 |      | 2008 |   | 2009 |  | Thereafter
|------------------------------------------------------------------------ |  | ----- | ----- | ---- | - | ----- |  | ---- | ---- | ---- | - | ---- |  | ----------
|
|Foreign currency contracts                                               |  | $     | 509.3 |      | $ | 486.3 |  | $    | 21.9 |      | $ | 1.1  |  | $         
|Letters of credit, letters of guarantee and surety and performance bonds |  |       | 63.7  |      |   | 58.2  |  |      | 0.3  |      |   | 2.7  |  |           
|Capital expenditures                                                     |  |       | 19.8  |      |   | 19.8  |  |      |     |      |   |     |  |           

Cash
outlays for the Company's contractual obligations and commitments identified above are expected to be funded by cash on hand. Celestica also has outstanding purchase orders with
certain suppliers for the purchase of inventory. These purchase orders are generally short-term in nature. Orders for standard items can typically be canceled with little or no financial
penalty. Celestica's policy regarding non-standard or customized orders dictates that such items are only ordered specifically for customers who have contractually assumed liability for
the inventory. In addition, a substantial portion of the standard items covered by the Company's purchase orders were procured for specific customers based on their purchase orders or a forecast under
which the customer has contractually assumed liability for such material. Accordingly, the amount of liability from purchase obligations under these purchase orders is not significant or meaningful.

The
Company's defined benefit pension funding policy is to contribute amounts sufficient to meet minimum local statutory funding requirements that are based on actuarial calculations.
The Company may make additional discretionary contributions based on actuarial assessments. In 2004, the Company made contributions to the plans of $37.6 million, of which $18.2 million
was for defined contribution plans, and $19.4 million was for defined benefit plans. $31.4 million of the $37.6 million was for regular contributions and $6.2 million was
discretionary. The Company may, from time to time, make additional voluntary contributions to the pension plans. The estimated additional voluntary contributions for 2005 are between
$4.0 million and $6.0 million. In 2004, the Company also made contributions to the non-pension post-employment benefit plans of $13.4 million to fund
benefit payments. The estimated contributions to these plans for 2005 is $6.1 million.

At
December 31, 2004, Celestica had committed $19.8 million in capital expenditures, principally for machinery and equipment and facilities in Asia. The Company expects
capital spending for 2005 to be in the range of 1.5% to 2.5% of revenue, which will be funded from cash on hand. In addition, Celestica regularly reviews acquisition opportunities and, as a result,
may require additional debt or equity financing to fund these transactions.

The
Company has provided routine indemnifications whose terms range in duration and often are not explicitly defined. These may include indemnifications against adverse effects due to
changes in tax laws and patent infringements by third parties. The maximum amounts from these indemnifications cannot be reasonably estimated. In some cases, the Company has recourse against other
parties to mitigate its risk of loss from these indemnifications. Historically, the Company has not made significant payments relating to these indemnifications.

42

---





In June 2004, the Company amended its 364-day credit facility from $250.0 million to $600.0 million and extended the maturity
from October 2004 to June 2007. The facility includes a $25.0 million swing-line facility that provides for short-term borrowings up to a maximum of seven
days. The credit facility permits the Company and certain designated subsidiaries to borrow funds for general corporate purposes (including acquisitions). Borrowings under the facility bear interest
at LIBOR plus a margin except that borrowings under the swing-line facility bear interest at a base rate plus a margin. There are no borrowings outstanding under this facility. Commitment
fees for 2004 were $5.9 million. Concurrently with this amendment, the Company elected to terminate its $500.0 million four-year revolving term credit facility.

The
facility has restrictive covenants relating to debt incurrence and sale of assets and also contains financial covenants that require the Company to maintain certain financial ratios.
A change of control is an event of default. Based on the required minimum financial ratios, at December 31, 2004, the Company was limited to approximately $570 million of available debt
incurrence. The available debt incurrence under the facility has been reduced by outstanding letters of credit totaling $61.1 million. The Company was in compliance with all covenants at
December 31, 2004.

Celestica
and certain subsidiaries have additional uncommitted bank overdraft facilities which total $61.6 million that are available for operating requirements at
December 31, 2004. There are no borrowings outstanding under these facilities.

In
June 2004, the Company issued Senior Subordinated Notes (Notes) with an aggregate principal amount of $500.0 million due 2011 and a fixed interest rate of 7.875%. The
Company received gross proceeds of $500.0 million and incurred $12.0 million, pre-tax, in underwriters' commissions and expenses which have been deferred and are being
amortized over the term of the debt. A portion of the proceeds was used to repurchase LYONs. The Notes are unsecured and are subordinated in right of payment to all senior debt of the Company. The
Notes may be redeemed on July 1, 2008 or later at various premiums above face value.

In
connection with the Notes offering, Celestica has entered into interest rate swap agreements which hedge the fair value of the Notes by swapping the fixed rate of interest for a
variable rate based on LIBOR plus a margin. The notional amount of the agreements is $500.0 million. The agreements are effective as of June 2004 and mature July 2011. The average
interest rate on the Notes for the year was 4.92%, after reflecting the interest rate swap. As a result of entering into the interest rate swap agreements, the Company is exposed to interest rate
risks due to fluctuations in the LIBOR rate. A one-percentage point increase in the LIBOR rate would increase interest expense by $5.0 million annually.

Celestica
believes that cash flow from operating activities, together with cash on hand and borrowings available under the Company's amended credit facility (which are undrawn), will be
sufficient to fund currently anticipated working capital, planned restructuring and capital spending, and debt service requirements for the next 12 months. Historically, the Company has funded
its operations from the proceeds of public offerings of equity and debt securities, cash and cash equivalents generated from operations, bank debt, sales of accounts receivable and capital equipment
lease financings. The Company anticipates that it will continue to enter into debt and equity financings, sales of accounts receivable and lease transactions to fund any acquisitions and anticipated
growth. The issuance of additional equity or convertible debt securities could dilute the current shareholders. Further, the Company may issue debt securities that have rights and privileges senior to
equity holders, and the terms of this debt could impose restrictions on its operations. Such financings and other transactions may not be available on terms acceptable to the Company or at all.

The
Company's short term investment objectives are to preserve principal and to maximize yields without significantly increasing risk and while ensuring investment tenors do not prohibit
access to cash. To achieve this objective, the Company maintains a portfolio of cash equivalents in a variety of securities, including government and corporate obligations, certificates of deposit and
money market funds.

In
March 2004, Standard and Poor's Rating Service revised Celestica's credit rating to BB and in May 2004, Moody's Investor's Services, Inc. revised Celestica's
senior implied rating to Ba2. In October 2004, Standard and Poor's revised Celestica's credit rating to BB- and revised the outlook to stable. In February 2005, Moody's

43

---



revised
their rating to Ba3 with a stable outlook. A reduction in Celestica's credit ratings could impact Celestica's future cost of borrowing.

In
September 2004, the Company renewed its agreement to sell up to $400.0 million in accounts receivable under a revolving facility with a maturity of
September 2006. As of December 31, 2004, the Company
generated liquidity of $300.8 million from the facility. The purchaser of the accounts receivable is a division of a Schedule 1, "A" rated Canadian bank, with a Standard and
Poor's rating of A and Stable outlook, and had assets under management of over $50.0 billion as of the date of its last annual filing. The terms of the agreement allow for a reduction of the
program size to $300 million and a shortening of the maturity to September 2005, if Celestica's corporate credit rating falls below BB as determined by Standard and Poor's or
Ba2 as determined by Moody's. The terms of the agreement provide that the purchaser may elect not to purchase receivables if Celestica's corporate credit rating falls below BB- as
determined by Standard and Poor's. In October 2004, the program size was reduced to $300 million as a result of the downgrade from Standard and Poor's.



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 other currencies. The
majority of the Company's cash balances are held in U.S. dollars. 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 activities and does not enter into speculative trades. Gains or losses on foreign currency contracts that are designated,
effective and qualify as cash flow hedges of forecasted transactions are recognized in earnings in the same period and on the same financial statement caption as the underlying hedged transaction. At
December 31, 2004, Celestica had forward foreign exchange contracts covering various currencies in an aggregate notional amount of $509.3 million. The majority of contracts expire by
March 2006, with the exception of one contract which extends to June 2007. The fair value of these contracts at December 31, 2004 was an unrealized gain of $31.1 million.
Celestica's current hedging activity is designed to reduce the variability of its foreign currency costs in the regions the Company has manufacturing operations and generally involves entering into
contracts to trade U.S. dollars for various currencies at future dates. In general, these contracts extend for periods of up to 16 months. Celestica may from time to time, enter into
additional hedging transactions to minimize its exposure to foreign currency. There can be no assurance that such hedging transactions will be successful.

In
connection with the issuance of its $500.0 million Senior Subordinated Notes in June 2004, the Company entered into interest rate swap agreements to hedge the fair value
of the Notes, by swapping the fixed rate of interest for a variable interest rate. The notional amount of the agreements is $500.0 million. The agreements are effective as of June 2004
and mature July 2011. The fair value of the interest rate swap agreements at December 31, 2004 was an unrealized gain of $19.8 million.



As of December 31, 2004, the Company had 185.9 million outstanding subordinate voting shares and 39.1 million outstanding multiple voting
shares.



The Company and its parent company, Onex Corporation (Onex), are parties to a management services agreement dated July 1, 2003 whereby Onex has agreed to
provide certain strategic planning, financial and support services to Celestica as Celestica may reasonably request from time to time having regard to Onex's experience, expertise and personnel.
Celestica has agreed to pay Onex certain fees under the agreement, including a base fee and a performance incentive fee, if any. The base fee is equal to approximately $0.5 million per year,
increasing after two years to $1.0 million per year. The incentive fee portion is tied to Celestica's performance. In the event of a change in control of Celestica, Onex is entitled to receive
an amount equal to the difference between $10.0 million and the aggregate amount of base fees and incentive fees paid to Onex during the term of the agreement.

44

---



In
2004, the Company expensed management-related fees of $0.7 million charged by its parent company.



|                                                       |           | 2003 |         | 2004  |  
|------------------------------------------------------ | --------- | ---- | ------- | ----- | -
|
|
|Revenue                                                |           | $    | 1,587.4 |       | $
|Cost of sales                                          |           | $    | 1,511.9 |       | $
|Gross profit %                                         |           |      | 4.8%    |       |  
|Net earnings (loss)                                    |           | $    | 4.6     |       | $
|Weighted average # of shares outstanding (in millions) |           |      |         |       |  
|                                                       |  basic   |      |         | 227.0 |  
|                                                       |  diluted |      |         | 230.2 |  
|Earnings (loss) per share                              |           |      |         |       |  
|                                                       |  basic   |      | $       | 0.02  |  
|                                                       |  diluted |      | $       | 0.02  |  



Effective January 1, 2003, the Company began to record compensation expense for employee stock option grants. Compensation expense includes
$0.3 million in the fourth quarter of 2003 and $1.6 million, $2.1 million, $2.1 million and $1.8 million, respectively, for the first, second, third and fourth
quarters of 2004. Prior to January 1, 2003, stock options were accounted for using the settlement method and no compensation expense was recognized.

Effective
January 1, 2004, the Company retroactively adopted the CICA Handbook Section 3110, which requires the recognition of liabilities for asset retirement obligations
and the associated retirement costs, and has retroactively restated its results of operations for all prior periods. The quarterly impact to cost of sales and net earnings (loss) was
$0.2 million for the first, second and third quarters of 2003 and was $0.3 million for the fourth quarter of 2003. See note 2(r)(i) to the Consolidated Financial
Statements in Item 18.

Effective
December 31, 2004, the Company early adopted the amendment to CICA Handbook Section 3860 which requires a portion of the LYONs to be presented as liabilities and
not as equity. The Company has retroactively restated its results of operations for all prior periods. The quarterly expense (net gain) impact to net earnings (loss) was $(1.4) million, $(0.5)
million, $(0.9) million and $2.8 million, for the first, second, third and fourth quarters of 2003, and $3.7 million, $(17.6) million, $2.1 million and $1.8 million for the
first, second, third and fourth quarters of 2004. See note 2(r)(ii) to the Consolidated Financial Statements in Item 18.

The
quarterly data reflects the following:



Revenue for the fourth quarter of 2004 increased 22% to $2.3 billion from $1.9 billion for the same period in 2003. Revenue increased in all
regions, as a result of new business wins from existing and new customers and acquisition revenue. Gross profit improved to 4.0% of revenue for the fourth quarter of 2004 from 3.8% for the same period
in 2003, primarily due to increased volumes, pricing and improved operating efficiency due to the Lean and Six Sigma manufacturing initiatives and benefits from restructuring, which more than offset
the higher

45

---



costs
of ramping new customers and services, and the inventory charge related to the credit provision increases associated with one customer.

Absent
any triggering factors during the year, the Company conducts its annual review of goodwill and long-lived assets in the fourth quarter of each year to correspond with
its planning cycle. In finalizing its business plan for 2005 and beyond, the Company identified in the fourth quarter that volumes in the Americas and Europe were going to be lower than previously
expected. This adversely impacted the Company's assessment of the carrying value of goodwill, long-lived assets and deferred income tax assets. The Company recorded impairment and Other
charges amounting to $835.4 million in the fourth quarter of 2004, which resulted in the significant net loss for the quarter. The charges primarily included goodwill impairment of
$288.0 million, long-lived asset impairment of $99.3 million, $161.4 million related to uncollectible receivables and an inventory write-down (which is
included in Cost of sales) for a specific customer, and $248.2 million to establish a valuation allowance against deferred income tax assets. The Company also recorded $44.8 million in
restructuring charges in the fourth quarter of 2004. In the fourth quarter of 2003, the Company recorded impairment and Other charges of $105.2 million, primarily long-lived asset
impairment of $82.8 million and $24.2 million in restructuring charges.

Recent Accounting Developments



Effective January 1, 2004, the Company adopted the CICA Accounting Guideline AcG-13. See note 2(s) to the Consolidated
Financial Statements in Item 18.



In December 2003, FASB issued FIN 46R. The CICA also issued Accounting Guideline AcG-15 which is similar to FIN 46R to be
effective 2005. See notes 2(s) and 20(l) to the Consolidated Financial Statements in Item 18.



Effective December 31, 2004, the Company adopted the CICA revised Handbook Section 3860, "Financial
Instruments  Presentation and Disclosure." See note 2(r) to the Consolidated Financial Statements in Item 18.



Effective January 1, 2004, the Company adopted CICA Abstracts EIC-141, "Revenue Recognition," and EIC-142, "Revenue Arrangements
with Multiple Deliverables." See note 2(s) to the Consolidated Financial Statements in Item 18.



Effective January 1, 2004, the Company adopted the CICA Handbook Section 1100. See note 2(s) to the Consolidated Financial
Statements in Item 18.



In January 2005, the CICA amended EIC-144, "Accounting by a customer (including a reseller) for certain consideration received from a vendor."
See note 2(s) to the Consolidated Financial Statements in Item 18.



In January 2005, the CICA issued Section 3855, "Financial Instruments  Recognition and Measurement,"
Section 1530, "Comprehensive Income," and Section 3865, "Hedges." See note 2(s) to the Consolidated Financial Statements in Item 18.

46

---





C.    Research and Development, Patents and Licenses, Etc.

Certain information concerning research and development and intellectual property is set forth in Item 4, "Information of the
Company  Business Overview  Celestica's Business  Technology and Research and
Development."

D.    Trend Information

After three years of significant revenue declines, revenue partially recovered in 2004, particularly in the first half of the year, and slowed in the second half
of the year. The current economic environment reflects moderate end market growth, but end markets continue to have limited visibility.

While
pricing in the industry stabilized in 2004, significant deterioration beyond current expectations could slow or stall our operating margin progress. Though operating margins have
improved in the industry in the past year as revenues increased and companies realize benefits from restructuring activities, the industry remains highly competitive from both North American and
Asian-based competitors.

The
EMS industry continues to see a significant number of outsourcing opportunities and we are well positioned to participate further in the trend towards increased outsourcing by
OEMs. OEMs are interested in outsourcing more of their cost of goods sold, and in particular are asking their EMS providers to be able to provide more services in areas such as design,
fulfillment, logistics, and after-market services.

The
EMS industry continues to restructure and reduce under-utilized capacity particularly in the higher-cost geographies of the Americas and Western Europe. Concurrently, the
industry is increasing capacity in lower-cost geographies such as Asia, Eastern Europe and Mexico as customers require the lowest cost solutions to compete in their highly competitive end
markets.

Item 6. Directors, Senior Management and Employees

A.    Directors and Senior Management

Each director of Celestica is elected by the shareholders to serve until the next annual meeting or until a successor is elected or appointed. Executive officers
of Celestica are appointed annually and serve at the discretion of the board of directors. The following table sets forth certain information regarding the directors and executive officers of
Celestica.

|Name                   |  | Age |  | Position with Celestica                                           
|---------------------- |  | --- |  | ------------------------------------------------------------------
|Robert L. Crandall     |  | 69  |  | Chairman of the Board and Director                                
|William A. Etherington |  | 63  |  | Director                                                          
|Richard S. Love        |  | 67  |  | Director                                                          
|Anthony R. Melman      |  | 57  |  | Director                                                          
|Gerald W. Schwartz     |  | 63  |  | Director                                                          
|Charles W. Szuluk      |  | 62  |  | Director                                                          
|Don Tapscott           |  | 57  |  | Director                                                          
|Stephen W. Delaney     |  | 45  |  | Chief Executive Officer                                           
|J. Marvin MaGee        |  | 52  |  | President                                                         
|Anthony P. Puppi       |  | 47  |  | Chief Financial Officer                                           
|Peter J. Bar           |  | 47  |  | Senior Vice President and Corporate Controller                    
|John Boucher           |  | 45  |  | Chief Supply Chain and Procurement Officer                        
|Arthur P. Cimento      |  | 47  |  | Senior Vice President, Corporate Strategies                       
|Lisa J. Colnett        |  | 47  |  | Senior Vice President, Human Resources                            
|Elizabeth L. DelBianco |  | 45  |  | Senior Vice President, Chief Legal Officer and Corporate Secretary
|Michael Homer          |  | 45  |  | President, Americas                                               
|Iain S. Kennedy        |  | 43  |  | Chief Information Officer                                         
|Paul Nicoletti         |  | 37  |  | Senior Vice President and Corporate Treasurer                     
|                       |  |     |  |                                                                   

47

---



|Neo Kia Quek      |  | 57 |  | President, Asia                             
|----------------- |  | -- |  | --------------------------------------------
|Rahul Suri        |  | 39 |  | Senior Vice President, Corporate Development
|Ronald F. Wichter |  | 55 |  | Senior Vice President, Global Services      

The
following is a brief biography of each of Celestica's directors and senior officers:

Robert L. Crandallhas been a director of Celestica since July 1998 and was appointed Chairman of the Board of Directors of
Celestica in January 2004. He is the retired Chairman of the Board and Chief Executive Officer of AMR Corporation/American Airlines Inc. Mr. Crandall currently serves on the
boards of Anixter International Inc., the Halliburton Company, i2 Technologies Inc., each of which is a public
corporation, and Air Cell, Inc. He is also involved with a number of private companies and is also a member of the Federal Aviation Administration Management Advisory Committee.
Mr. Crandall holds a Bachelor of Science degree from the University of Rhode Island and a Master of Business Administration degree from the Wharton School of the University of Pennsylvania.

William A. Etheringtonis a director and the Non-Executive Chairman of the Board of the Canadian Imperial Bank of Commerce, a
public corporation. He also serves on the boards of Celestica (since October 2001), Dofasco Inc., MDS Inc., which are public corporations, and The Relizon Company
(a private equities firm), and is a member of the President's Council, the University of Western Ontario. Mr. Etherington is the former Senior Vice President and Group Executive, Sales
and Distribution, IBM Corporation, and Chairman, President and Chief Executive Officer of IBM World Trade Corporation. After joining IBM Canada in 1964, he ran successively larger portions of the
company's business in Canada, Latin America, Europe and from the corporate office in Armonk, New York, retiring from IBM with over 37 years of service. Mr. Etherington holds a
Bachelor of Science degree in Electrical Engineering and a Doctor of Laws (Hon.) from the University of Western Ontario.

Richard S. Loveis a former Vice President of Hewlett-Packard and a former General Manager of the Computer Order Fulfillment and
Manufacturing Group for Hewlett-Packard's Computer Systems Organization. Mr. Love has been a director of Celestica since July 1998. From 1962 until 1997, he held positions of increasing
responsibility with Hewlett-Packard, becoming Vice President in 1992. He is a former director of HMT Technology Corporation (electronics manufacturing) and the Information Technology Industry Council.
Mr. Love holds a Bachelor of Science degree in Business Administration and Technology from Oregon State University and a Master of Business Administration degree from Fairleigh Dickinson
University.

Anthony R. Melmanis a Managing Director of Onex, a public corporation. Dr. Melman has been a director of Celestica since 1996.
Dr. Melman joined Onex in 1984. He serves on the boards of various Onex subsidiaries. From 1977 to 1984, Dr. Melman was Senior Vice President of Canadian Imperial Bank of Commerce, in
charge of worldwide merchant banking, project financing, acquisitions and other specialized financing activities. Prior to emigrating to Canada in 1977, he had extensive merchant banking experience in
South Africa and the U.K. Dr. Melman is also a director of The Baycrest Centre Foundation, The Baycrest Centre for Geriatric Care, the University of Toronto Asset Management Corporation,
and a member of the Board of Governors of Mount Sinai Hospital. He is also Chair of Fundraising for the Pediatric Oncology Group of Ontario (POGO). Dr. Melman holds a Bachelor of Science degree
in Chemical Engineering from the University of The Witwatersrand, a Master of Business Administration (gold medalist) from the University of Cape Town and a Ph.D. in Finance from the University of The
Witwatersrand.

Gerald W. Schwartzis the Chairman of the Board, President and Chief Executive Officer of Onex and has been a director of Celestica since
July 1998. Prior to founding Onex in 1983, Mr. Schwartz was a co-founder (in 1977) of what is now CanWest Global Communications Corp. He is a director of Onex, The
Bank of Nova Scotia, and Indigo Books & Music Inc., which are public corporations, and Phoenix Entertainment Corp. Mr. Schwartz is also Vice Chairman and member of the Executive
Committee of Mount Sinai Hospital, Chairman of the Canadian Friends of Simon Wiesenthal Center and is a director, governor or trustee of a number of other organizations, including Junior Achievement
of Toronto, Canadian Council of Christians and Jews and The Simon Wiesenthal Center. He holds a Bachelor of Commerce degree and a Bachelor of Laws degree from the University of Manitoba, a Master of
Business Administration degree from the Harvard

48

---



University
Graduate School of Business Administration, and a Doctor of Laws (Hon.) from St. Francis Xavier University.

Charles W. Szuluk, formerly an officer of Ford Motor Company, was President of Visteon Automotive Systems, and a former Group Vice
President. Mr. Szuluk has been a director of Celestica since 2003. From 1988 until 1999, he held positions of increasing responsibility with Ford, including General Manager, Electronics
Division, and Vice President, Process Leadership and Information Systems. He retired from Ford in 1999. Prior to joining Ford, he spent 24 years with IBM in a variety of management and
executive management positions. Mr. Szuluk holds a Bachelor of Science degree in Chemical Engineering from the University of Massachusetts and attended Union College of New York in
Advanced Graduate Studies.

Don Tapscottis an internationally respected authority, consultant and speaker on business strategy and organizational transformation. He
is the author of several widely read books on the application of technology in business. Mr. Tapscott is Chief Executive Officer of New Paradigm Learning Corporation, a business strategy
and education company he founded in 1992, and an adjunct Professor of Management at the University of Toronto's Joseph L. Rotman School of Management. He is also a founding member of the Business and
Economic Roundtable on Addiction and Mental Health, and a fellow of the World Economic Forum. Mr. Tapscott has been a director of Celestica since September 1998. He holds a Bachelor of
Science degree in Psychology and Statistics, and a Master of Education degree, specializing in Research Methodology, as well as a Doctor of Laws (Hon.) from the University of Alberta.

Stephen W. Delaneyhas been Celestica's Chief Executive Officer since January 2004. Mr. Delaney is responsible for charting
Celestica's course and overall company strategy. Prior to this position, he was the President, Americas Operations, where he was responsible for Celestica's operations in the region. Before joining
Celestica in 2001, Mr. Delaney was the Vice President and General Manager of Interior and Exterior Systems Business at Visteon Automotive Services, where he was responsible for a division with
25 plants and 25,000 employees spanning North and South America, Europe, and Asia. Prior to joining Visteon in 1997 as Vice President of Supply, Mr. Delaney held executive and
senior management roles in the operations of AlliedSignal's Electronic Systems business, Ford's Electronics Division, and IBM's Telecommunications division. Mr. Delaney holds a Masters degree
in Business Administration from Duke University in North Carolina and a Bachelor of Science degree in Industrial Engineering from Iowa State University.

J. Marvin MaGeehas been President of Celestica since February 2001. In his current role, he is responsible for
Celestica's worldwide business development, including Regional Sales, Global Customer Accounts,
Diversified Markets and Marketing and Sales. Mr. MaGee served as President and Chief Operating Officer of Celestica from February 2001 until April 2004. He held the
position of Executive Vice President, Worldwide Operations from October 1999 to February 2001. Mr. MaGee joined the company in January 1997 as Senior Vice
President, Canadian Operations. Before joining Celestica, he spent 18 years with IBM Canada where he held a number of executive positions in manufacturing and development, with assignments in
Canada and the United States. Mr. MaGee holds a Bachelor of Science degree in Mechanical Engineering from the University of New Brunswick and a Master of Business
Administration degree from McMaster University.

Anthony P. Puppihas been the Chief Financial Officer of Celestica since its establishment and was a Director of Celestica from
October 1996 to April 2002. He was appointed Executive Vice President in October 1999, and served as General Manager, Global Services from January 2001 until
April 2004 overseeing Celestica's after-market services, design, power systems and plastics businesses. From 1980 to 1992, he held numerous senior financial management positions with IBM
Canada. Mr. Puppi holds a Bachelor of Business Administration degree in Finance and a Master of Business Administration degree from York University.

Peter J. Barhas been Corporate Controller of Celestica since February 1999 and was appointed Senior Vice President in
April 2004. Mr. Bar is responsible for all corporate external reporting, financial planning and budgeting and business controls-related matters. He joined Celestica in March 1998,
as Vice President, Finance  Power Systems. Prior to joining Celestica, Mr. Bar was the Controller for the Personal Systems Group of IBM Canada. During his
14-year career in the information technology industry, he has served in several senior management positions for both IBM Canada and IBM's headquarters in Armonk, New York.
Mr. Bar holds a Bachelor of Commerce degree from the University of Toronto and a Chartered Accountant designation.

49

---



John Boucherjoined Celestica in March 2004. He currently holds the position of Chief Supply Chain and Procurement Officer. Prior
to this he was President, Americas, and was responsible for all manufacturing operations in Canada, the U.S., Mexico and Brazil. Prior to joining Celestica, he was Group Vice President, Electronics
Manufacturing Services Operations, of MSL since 2003. Prior to that, Mr. Boucher was Corporate Vice President, Global Supply Chain Management since 1999. Before joining MSL in 1995 as part of
the company's founding team, Mr. Boucher managed the start up of after-market operations at Circuit Test Inc. Prior to that, he spent over 17 years with Digital Equipment
Corporation, where he held a number of senior management positions. Mr. Boucher's educational background includes: the Executive Program in International Management, Babson College, Wellesley,
Massachusetts; the Professional Enrichment program, Boston University; and Fitchburg State College, Business Management program.

Arthur P. Cimentojoined Celestica in September 1999 as Senior Vice President, Corporate Strategies. Prior to joining Celestica, he
was at McKinsey & Co., a leading international management consulting firm, with a client portfolio focused on electronics operations. Mr. Cimento joined McKinsey in 1988, was
elected a Principal in 1993, and held leadership positions in McKinsey's Operations and Electronics practices. Before joining McKinsey, Mr. Cimento held management positions in several
engineering services firms. He is a director of the San Francisco Chamber of Commerce. Mr. Cimento holds both a Bachelor of Science and a Master of Science degree in Mechanical Engineering from
the Massachusetts Institute of Technology.

Lisa J. Colnetthas been a Senior Vice President since October 1996. In her current role as Senior Vice President, Human Resources,
she is responsible for Celestica's global human resources programs and practices. Previously, Ms. Colnett served as Senior Vice President, Chief Information Officer and Worldwide Process
Management, and was responsible for key functions including information technology and manufacturing. Prior to that, Ms. Colnett headed the Memory Division of Celestica. Ms. Colnett
joined IBM Canada in 1981, and, over the course of her career, has had experience in materials logistics, cost engineering, site logistics, manufacturing management and human resources.
Ms. Colnett holds a Bachelor of Business Administration degree from the University of Western Ontario.

Elizabeth L. DelBiancojoined Celestica in February 1998. As the Senior Vice President, Chief Legal Officer and Corporate
Secretary, she is responsible for the legal affairs of Celestica on a global basis, including all aspects of regulatory compliance and corporate governance. Ms. DelBianco came to Celestica
following a 13-year career as a senior corporate legal advisor in the telecommunications industry. She is currently a member of the Continuous Disclosure Advisory Committee to the Ontario
Securities Commission. Ms. DelBianco holds a Bachelor of Arts degree from the University of Toronto, a Bachelor of Laws degree from Queen's University and a Master of Business Administration
degree from the University of Western Ontario. She is admitted to practice in Ontario and New York.

Michael Homerhas been President, Americas, since November 2004, and is responsible for all manufacturing operations in Canada, the
U.S., Mexico and Brazil. Prior to his current position, Mr. Homer was Senior Vice President, Canadian EMS operations since 2003. Before joining Celestica in 2003, Mr. Homer held the
roles of President, Honeywell Canada and Vice President, Airbus Programs, for Honeywell's Aerospace Airframes Systems Division. Prior to that, he was General Manager of Honeywell's Toronto Aerospace
business and director of operations. Before joining Honeywell in 1997, Mr. Homer had an 11-year career in the automotive industry, where he held several senior engineering,
production and manufacturing positions with Ford Electronics Manufacturing Corporation. Mr. Homer holds a Bachelor of Engineering degree from McGill University, and accreditation from the
University of Tennessee in the area of Productivity through Quality and Lean Enterprise Systems.

Iain S. Kennedyhas been Senior Vice President of Celestica since 1996. In his current role of Chief Information Officer, he is
responsible for leading Celestica's Information Technology organization. Prior to this, he was the Senior Vice President of Supply Chain Management and Information Technology. From October 2000
until November 2002, he was responsible for the integration of new acquisitions as well as South American Operations. Previously, he led Celestica's Mergers and Acquisitions team from 1996
through September 2000. Mr. Kennedy joined IBM Canada in 1984, and, over the course of his career, has held a number of senior management positions in key areas of the business,
including supply chain management, manufacturing operations, business development and information technology as Chief Information Officer from

50

---



1996
to 1998. Mr. Kennedy holds a Bachelor of Science degree in Computer Science from the University of Western Ontario and a Master of Business Administration (Ivey Scholar) degree from the
Richard Ivey School of Business, University of Western Ontario.

Paul Nicolettihas been Corporate Treasurer since September 2002 and has been a Senior Vice President since April 2004. He
is responsible for all corporate finance, tax, and treasury-related matters. Previously, he was Vice President, Global Financial Operations since February 2001. Prior to that, from
August 1999, he was Vice President, Finance and was responsible for all financial aspects of Celestica's Canadian and Mexican EMS operations. Mr. Nicoletti joined IBM in 1989 and, over
the course of his career, has held a number of senior financial roles in business development, planning, accounting, pricing and financial strategies. He was responsible for leading all financial
strategies and due diligence relating to the divestiture of Celestica from IBM. Mr. Nicoletti holds a Bachelor of Arts degree from the University of Western Ontario and a Master of Business
Administration degree from York University.

Neo Kia Quekhas been the President, Asia, of Celestica since September 2002. He is responsible for Celestica's operations in
China, Hong Kong, Indonesia, Japan, Malaysia, Singapore and Thailand. Prior to that, Mr. Quek was Senior Vice President, Asia Operations from February 2000. Before joining Celestica in
1999, he was the Senior Vice President of Asia Operations for International Manufacturing Services. Mr. Quek has over 25 years of direct high-tech experience and, over the
course of his career, has held positions at Intel Corporation, Seagate Technology, National Semi-Conductor Corporation, General Electric, SCI Systems and Siemens AG in operations, repair
services, process engineering, quality assurance and power. Mr. Quek holds a Bachelor degree in Management Studies from the Management Institute of Singapore.

Rahul Surihas been Senior Vice President of Celestica since July 2000. In his current role as Senior Vice President, Corporate
Development, he is responsible for Celestica's corporate development strategy. Mr. Suri has over 17 years of mergers and acquisitions and related experience. Prior to joining Celestica,
he worked in a range of related positions, including as Managing Director in the Mergers and Acquisitions Group at BMO Nesbitt Burns Investment Banking, and Partner at Davies Ward & Beck
(now Davies Ward Phillips & Vineberg). In 1992, he served as an advisor to the Chairman and the Executive Director of the Ontario Securities Commission. Mr. Suri has a Master of
Arts degree in Law from Cambridge University, England and is qualified as a barrister and solicitor in the Province of Ontario.

Ronald F. Wichterhas been Senior Vice President, Global Services of Celestica since August 2004. In his current role, he is
responsible for enhancing the company's Global Services portfolio by anticipating and delivering integrated services and solutions that meet the dynamic and changing business needs of Celestica's
customers. Prior to joining Celestica, Mr. Wichter was the Chief Executive Officer of International Harbour, LLC, a technology and manufacturing consulting and international sourcing
company, and prior to that he was Senior Vice President, Global Manufacturing Solutions, at Rockwell Automation. With over 25 years of industry experience, Mr. Wichter has held
numerous management and executive roles at Rockwell Automation and Compaq Computer. Mr. Wichter holds a Master of Science degree in Industrial Administration from Union College in
New York and a Bachelor of Science degree in Mathematics from Rensselaer Polytechnic Institute.

There
are no family relationships among any of the foregoing persons, and there are no arrangements or understandings with any person pursuant to which any of our directors or members of
senior management were selected.

B.    Compensation

Aggregate Compensation of Directors and Officers

Directors who are not officers or employees of Celestica or Onex receive compensation for their services as directors. Under the directors' compensation plan,
directors receive an annual retainer fee of $45,000. The Chairmen of the Audit and Compensation Committees are entitled to an additional annual retainer of $10,000. The non-executive
Chairman, who also serves as the Chairman of the Executive and Corporate Governance Committees, receives an additional annual retainer of $30,000. Directors receive a fee of $2,500 for each day of
meetings of the Board of Directors and Committee meetings attended. Directors who travel outside of their

51

---



home
state or province to attend a meeting are entitled to a travel fee of $2,500. Directors receive half of their fees (or may elect, on an annual basis, to receive all of their fees) in
Deferred Share Units, or DSUs. Each DSU represents the right to receive one subordinate voting share when the director ceases to be a director. The number of DSUs paid in lieu of cash is calculated,
in the case of meeting fees, by dividing the cash fee that would otherwise be payable by the closing price of subordinate voting shares on the NYSE on the date of the meeting and, in the case of
annual retainer fees, by dividing the cash amount that would otherwise be payable quarterly by the closing price of subordinate voting shares on the NYSE on the last day of the quarter.

The
Board of Directors discontinued the granting of options for directors in December 2004. Instead, directors now receive annual grants of DSUs. Each director receives
3,350 DSUs annually, except for the Chairman, who receives 6,700 DSUs annually. New directors will receive an initial grant of 10,000 DSUs when they join the Board.

In
April 2004, the Board of Directors established a guideline for minimum shareholdings for independent directors. The guideline currently requires that directors hold securities
of Celestica of a value proportionate to their annual retainer and the years they have served on our Board. Directors on the Board for less than one year are not required, but are encouraged, to hold
securities of Celestica (which are supported by the initial grant of 10,000 DSUs which new directors receive upon their joining the Board), as described below. Directors on the Board between
one and two years must hold securities of Celestica of the same value as their annual retainer, while directors with Board experience of between two and five years must hold securities of Celestica
with a value of at least three times their annual retainer. Directors who have served on the Board for five years or more are required to hold securities of Celestica with a value of at least five
times their annual retainer. Although directors will not be deemed to have breached the guideline by reason of a decrease in the market value of our securities, the directors will be required to
purchase additional securities within a reasonable period of time to comply with the guideline. The start date for determining compliance with the requirements for the existing directors was
April 22, 2004, the date on which the guideline was adopted by the Board. The start date for determining compliance for new directors will be the date on which they join the Board.

Grants
of subordinate voting shares under the directors' compensation plan may not exceed an aggregate of 500,000 subordinate voting shares.

The
aggregate cash equivalent of compensation we paid in 2004 to our directors in their capacity as directors was $495,000. Of this amount, the directors received DSUs with a cash
equivalent of $401,250. In 2004, eligible directors were issued, in aggregate, options to acquire 30,000 subordinate voting shares, pursuant to the Celestica Long-Term Incentive
Plan, at an exercise price of $18.25.

The
aggregate compensation paid by us in 2004 to our senior officers as a group was $7,233,000.

52

---



As
at December 31, 2004, executive officers and directors as a group held options to purchase a total of the following numbers of subordinate voting shares at the purchase price
per share indicated below:

Number of Subordinate Voting
Shares

Purchase Price Per
Share210,000

$0.925261,071

$5.00227,500

$8.7533,700

$7.50167,880

C$18.9021,600

C$20.62570,000

$22.97242,000

C$57.84560,000

$39.03100,000

C$60.00132,000

C$86.5024,000

$56.187525,000

C$73.50100,000

$50.00295,400

C$66.0690,000

$41.895,000

$40.0620,000

C$34.5040,000

$23.4120,000

C$72.6040,000

$48.6920,000

C$66.7840,000

$44.2320,000

$35.9550,000

$13.10100,000

$18.66267,000

C$29.113,000

C$23.295,000

$32.408,000

C$15.3545,000

$10.62272,600

$14.8640,000

$17.10350,000

$17.15255,000

C$18.0030,000

$18.25650,000

C$22.7520,000

C$22.8920,000

C$24.92


These
options expire at various dates from June 13, 2006 through December 9, 2014. See
" Compensation  Long-Term Incentives" below. See note 9 to the Consolidated Financial Statements in
Item 18 for further information about options.

Remuneration of Named Executive Officers

The following table sets forth the compensation of the Chief Executive Officer (and his predecessor, who retired in 2004), the Chief Financial Officer, and
the President of Celestica and the three other most highly

53

---



compensated
senior officers of Celestica during the year ended December 31, 2004 (collectively, the "Named Executive Officers") for services rendered in all capacities during our two most
recently completed financial years.

Summary Compensation Table

|                                                                                        |  |           |  |                 |  |                 |  | Long-term Compensation Awards |        |                   |       
|--------------------------------------------------------------------------------------- |  | --------- |  | --------------- |  | --------------- |  | ----------------------------- | ------ | ----------------- | ------
|
|
|
|
|Stephen W. Delaney(5)(6)
    Chief Executive Officer                                    |  | 2004
2003 |  | 550,000
360,000 |  | 
             |  | 200,000
200,000               | (7)(7) | 5,659,000
173,400 | (8)(9)
|Anthony P. Puppi(10)
    Chief Financial Officer                                        |  | 2004
2003 |  | 604,978
455,065 |  | 
             |  | 88,000
160,000                | (7)(7) | 4,511,808
       | (11)  
|J. Marvin MaGee(10)
    President                                                       |  | 2004
2003 |  | 604,978
562,139 |  | 
             |  | 88,000
160,000                | (7)(7) | 4,511,808
       | (11)  
|Neo Kia Quek(12)
    President, Asia Operations                                         |  | 2004
2003 |  | 390,000
305,927 |  | 607,430
64,000  |  | 28,000
90,000                 | (7)    | 1,111,776
       | (13)  
|Nate Kawaye
    Senior Vice President
Group GM,
Enterprise Accounts                     |  | 2004
2003 |  | 300,000
275,000 |  | 592,410
137,500 |  | 28,000
60,000                 | (7)    | 915,376
         | (14)  
|Rahul Suri(10)
    Senior Vice President,
Corporate Development                         |  | 2004
2003 |  | 374,510
321,222 |  | 413,743
64,244  |  | 9,000
80,000                  | (7)    | 297,200
         | (15)  
|Eugene V. Polistuk(10)(16)
    Former Chairman of the Board and
Chief Executive Officer |  | 2004
2003 |  | 134,440
749,518 |  | 
             |  | 
                           |        | 
               |       

---

54

---





The following table sets forth options to purchase subordinate voting shares granted by us to the Named Executive Officers during the year ended
December 31, 2004.

|Name               |  | Subordinate Voting Shares Under Options Granted |     | % of Total Options Granted to Employees in 2004 |  | Exercise Price |  | Market Value of Subordinate Voting Shares on the Date of Grant |  | Expiration Date 
|------------------ |  | ----------------------------------------------- | --- | ----------------------------------------------- |  | -------------- |  | -------------------------------------------------------------- |  | ----------------
|
|Stephen W. Delaney |  | 200,000                                         | (1) | 12.10%                                          |  | U.S.$14.86     |  | U.S.$14.86                                                     |  | December 9, 2014
|J. Marvin MaGee    |  | 88,000                                          | (1) | 5.30%                                           |  | C$18.00        |  | C$18.00                                                        |  | December 9, 2014
|Anthony P. Puppi   |  | 88,000                                          | (1) | 5.30%                                           |  | C$18.00        |  | C$18.00                                                        |  | December 9, 2014
|Nate Kawaye        |  | 28,000                                          |     | 1.70%                                           |  | U.S.$14.86     |  | U.S.$14.86                                                     |  | December 9, 2014
|Neo Kia Quek       |  | 28,000                                          |     | 1.70%                                           |  | U.S.$14.86     |  | U.S.$14.86                                                     |  | December 9, 2014
|Rahul Suri         |  | 9,000                                           |     | 0.55%                                           |  | C$18.00        |  | C$18.00                                                        |  | December 9, 2014
|Eugene V. Polistuk |  |                                                |     |                                                |  |               |  |                                                               |  |                

---



The following table sets forth certain information with respect to options to purchase subordinate voting shares that were exercised by Named Executive Officers
during the year ended December 31, 2004 and subordinate voting shares under option to the Named Executive Officers at December 31, 2004.

|                   |  |         |  |           |  | Unexercised Options at December 31, 2004 |  | Value of Unexercised in-the-Money Options at December 31, 2004(1)
|------------------ |  | ------- |  | --------- |  | ---------------------------------------- |  | -----------------------------------------------------------------
|
|
|
|Stephen W. Delaney |  |        |  |          |  | 142,500                                  |  | 472,500                                                          
|Anthony P. Puppi   |  |        |  |          |  | 287,946                                  |  | 292,750                                                          
|J. Marvin MaGee    |  |        |  |          |  | 412,382                                  |  | 336,750                                                          
|Neo Kia Quek       |  |        |  |          |  | 391,500                                  |  | 153,000                                                          
|Nate Kawaye        |  |        |  |          |  | 159,749                                  |  | 104,250                                                          
|Rahul Suri         |  |        |  |          |  | 147,000                                  |  | 109,000                                                          
|Eugene V. Polistuk |  | 275,833 |  | 3,150,013 |  | 557,500                                  |  | 112,500                                                          

---

55

---



Compensation Philosophy and Objectives

Celestica's executive compensation policies and practices are designed to: (i) align the interests of the executive officers with the interest of our
shareholders; (ii) link executive compensation to the performance of Celestica relative to that of our competitors and the contribution of individual to such performance;
(iii) compensate executive officers at a level and in a manner that ensures Celestica is capable of attracting, motivating and retaining individuals with exceptional executive skills and
abilities; and (iv) ensure direct accountability for the overall results of Celestica.

Our
Compensation Committee benchmarks all elements of executive compensation against executive compensation of a comparator group of companies in the technology sector with revenue
similar to Celestica and including four of our direct competitors in the EMS industry, which we refer to as the EMS competitors. The Compensation Committee reviews and approves the EMS competitors
each year.

For
executive positions where no direct match exists or where there is insufficient data within the EMS competitors group, benchmarking is done using executive salary survey data for
organizations similar in size to Celestica pursuant to a process approved by the Compensation Committee.

Target
compensation is benchmarked at the market median (50th percentile) for both executive and non-executive levels.

Executive
officer compensation is comprised of base salary, annual incentive plans, long-term incentive plans and benefits as described below. Members of the Board of
Directors who are independent directors approve all elements of the Chief Executive Officer's compensation.

The
equity mix will vary by employee level, and targets a higher percentage of performance elements at the senior levels where there is a stronger influence on results. At the executive
levels, a high portion of the pay mix includes "at risk" components which are comprised of cash and long-term equity-based incentive plans. The target pay mix is based on competitive
benchmarks. The portion of compensation which is "at risk" is set at approximately 80% for the Chief Executive Officer, Chief Financial Officer and the President and 70% for Senior Vice Presidents.
The following table sets forth the percentage breakdown of the "at risk" compensation to executive officers in 2004:

Percentage of Equity-Based Compensation Granted in 2004

|                                                               |  | Performance Share Units |  | Restricted Share Units |  | Performance Contingent Stock Options |  | Stock Options
|-------------------------------------------------------------- |  | ----------------------- |  | ---------------------- |  | ------------------------------------ |  | -------------
|Chief Executive Officer,
Chief Financial Officer and President |  | 40%                     |  | 20%                    |  | 40%                                  |  | N/A          
|Senior Vice Presidents and Vice Presidents                     |  | 30%                     |  | 40%                    |  | N/A                                  |  | 30%          

Base Salary

Base salaries are established taking into account individual performance and experience, level of responsibility and competitive pay practices. Celestica
references the median level of base salaries at the EMS competitors.

Base
salaries are reviewed annually and adjusted as appropriate. Although base salaries are not directly linked to specific corporate performance, Celestica considers the level of
corporate performance achieved in the prior year as well as the expected level of performance in making any adjustments to them.

Annual Incentive Plans

Bonuses paid pursuant to the annual incentive plans are based on achievements related to profitability, inventory days, customer satisfaction, and performance
metrics related to earnings per share and return on capital.

56

---



Celestica
Executive Team Incentive Plan

Executives
of Celestica participate in the Celestica Executive Team Incentive Plan. Payments under this plan are tied to achievement relative to pre-determined targets for
financial and customer results at a corporate or business unit level, individual performance and Celestica's performance relative to our direct competitors on key financial metrics. Corporate and
business unit targets are approved by the Board on the recommendation of the Compensation Committee and are based on profitability, inventory days and customer satisfaction measures. In 2004, certain
executives had a customized performance objective as a component of their business unit targets, which related to special initiatives for their business units. The Chief Executive Officer assesses
each executive's individual performance in accordance with business results, teamwork and the executive's key accomplishments. This assessment is factored into the executive's earned reward. The Board
of Directors evaluates the Chief Executive Officer. The Compensation Committee evaluates Celestica's performance relative to that of the EMS competitors based on defined performance metrics relating
to adjusted earnings per share and return on capital. This relative performance is one factor in determining the amount available to be paid out under the plan.

Celestica
Team Incentive Plan

Any
executives not participating in the Executive Team Incentive Plan and most non-executive employees participate in the Celestica Team Incentive Plan. Awards under this
plan are based on corporate or business unit financial and customer results, as well as individual performance.

Long-Term Incentives

Celestica's long-term equity-based incentive plans for senior executives consist of performance share units (PSUs), restricted share units (RSUs),
stock options, and performance contingent stock options. Under these plans, the Board of Directors of Celestica may, in its discretion, grant awards from time to time to directors, permanent employees
and consultants ("eligible participants") of Celestica, our subsidiaries and other companies or partnerships in which Celestica has a significant investment ("affiliated entities"). The objectives of
the long-term equity based incentive plans are: to align employee interests with those of shareholders and incentivize appropriate behaviours over the longer term; to reward employees for
their contribution to Celestica's success; and to allow Celestica to attract and retain the qualified and experienced employees who are critical to our success.

The
interests of any eligible participant under the long-term equity incentive plans or in any award under those plans are not transferable, subject to limited exceptions.

The
long-term equity incentive plans, or the terms of any award granted thereunder, may be amended by the Board of Directors, subject to obtaining any required regulatory
approvals and participant and shareholder approval if required.

For
all awards under equity-based incentive plans for the Chief Executive Officer, Chief Financial Officer, President and Senior Vice Presidents, the Compensation Committee makes
recommendations for final approval by our Board of Directors.

The
total number of equity grants in a given year is established after taking into account the number of equity grants in that year relative to the total number of shares outstanding
(burn rate) as well as the total number of equity grants outstanding relative to the total number of shares outstanding (overhang). Celestica is taking measures to lower the overhang and burn rate and
considerably reduced the number of equity grants in 2004 as compared to previous years.

Celestica
Long-Term Incentive Plan

Under
the Celestica Long-Term Incentive Plan ("LTIP"), the board of directors of Celestica may in its discretion grant from time to time stock options, performance shares,
performance share units and stock appreciation rights (SARs) to eligible participants of Celestica and affiliated entities.

Under
the LTIP, up to 29,000,000 subordinate voting shares may be issued from treasury. The number of subordinate voting shares which may be issued from treasury under the LTIP to
directors is limited to 2,000,000.

57

---



In
addition, Celestica may satisfy obligations under the LTIP by acquiring subordinate voting shares in the market. The LTIP limits the number of subordinate voting shares which may be reserved for
issuance to insiders or any one participant pursuant to options or rights granted pursuant to the LTIP, together with subordinate voting shares reserved for issuance under any other employee-related
plan of Celestica or options for services granted by Celestica, to 10% and 5%, respectively, of the aggregate issued and outstanding subordinate voting shares and multiple voting shares of Celestica.

Options
issued under the LTIP may be exercised during a period determined under the LTIP, which may not exceed ten years. The LTIP also provides that, unless otherwise determined by the
board of directors, options will terminate within specified time periods following the termination of employment of an eligible participant with Celestica or our affiliated entities. The exercise of
options may be subject to vesting conditions, including specific time schedules for vesting and performance-based conditions such as share price and financial results. The grant to, or exercise of
options by, an eligible participant may also be subject to certain share ownership requirements.

Under
the LTIP, eligible participants may be granted SARs, a right to receive a cash amount equal to the difference between the market price of the subordinate voting shares at the time
of the grant and the market price of such shares at the time of exercise of the SAR. Such amounts may also be payable by the issuance of subordinate voting shares. The exercise of SARs may also be
subject to conditions similar to those which may be imposed on the exercise of stock options.

Under
the LTIP, eligible participants may be allocated performance units in the form of PSUs or RSUs, which represent the right to receive an equivalent number of subordinate voting
shares at a specified release date. The issuance of such shares may be subject to vesting requirements similar to those described above with respect to the exercisability of options and SARs,
including such time or performance-based conditions as may be determined by the board of directors in its discretion. The number of subordinate voting shares which may be issued from the treasury of
Celestica under the performance unit program is limited to 2,000,000 and the number of subordinate voting shares which may be issued pursuant to the performance unit program to any one person
shall not exceed 1% of the aggregate issued and outstanding subordinate voting shares and multiple voting shares of Celestica.

The
interests of any participant under the LTIP or in any option, rights or performance unit are not transferable, subject to limited exceptions.

The
LTIP, or the terms of any option, SAR or performance unit granted thereunder, can be amended by the board of directors, subject to obtaining any required regulatory approvals and
participant and shareholder approval where so required.

The
issuance of RSUs and PSUs may be subject to vesting requirements, including any time-based conditions established by the Board of Directors in its discretion. The vesting
of PSUs also require the achievement of specified performance based-conditions as determined by the Compensation Committee and approved by the Board of Directors.



The use of PSUs allows us to link rewards for executives more closely with individual and corporate performance:



58

---





PSUs
are granted annually under the LTIP and the CSUP based on the recommendation of the management of each business unit and subject to the approval of the Chief Executive Officer. The
number of PSUs granted to any individual is determined with consideration to grants at the median level for the EMS competitors and individual performance. The final value of any award is based on
subordinate voting share price at time of release. PSUs vest in full at the end of three years, with no interim vesting.

The
number of PSUs granted in December 2004 to executives totalled 792,966 PSUs. The number of PSUs that vest will range from 0 to 792,966 depending on our relative
performance ranking.



RSUs are granted annually under the LTIP and the CSUP based on the recommendation of the management of each business unit and subject to the approval of the Chief
Executive Officer. The number of RSUs granted to any individual is determined with consideration to individual performance and grants at the median level for the EMS competitors. RSUs represent the
right to receive an equivalent number of subordinate voting shares, or, at Celestica's election, an equivalent value in cash, and vest in full at the end of three years, with no interim vesting.
Throughout the year, Celestica may grant RSUs for new hire or retention purposes.

The
number of RSUs granted in December 2004 to executives totalled 436,148 RSUs.



Stock options currently are granted annually to eligible employees, under the LTIP, based on the recommendation of the management of each business unit and
subject to the approval of the Chief Executive Officer. During the year, Celestica may grant stock options to newly hired employees or to existing employees for retention purposes with the approval of
the Chief Executive Officer.

The
number of stock options granted in December 2004 to executive officers totalled 421,450.



Performance contingent stock options (PCOs), provide the opportunity for significant gains for superior corporate performance and reduced gain for marginal
performance. The option exercise price is equal to the market price of subordinate voting shares at the close of business on the day prior to the grant date (except where a longer period is required
by local law). The PCOs vest annually over the first three years and have a ten year term. The portion of the option grant award that vests each year (and the number of options that may be
exercised) is contingent on our rank relative to that of the EMS competitors.

The
number of PCOs granted is determined with consideration to individual performance and grants at the median level for the EMS competitors. PCOs are granted to the Chief Executive
Officer, Chief Financial Officer and President. High performance means options vest at above the median level and results in above average reward levels. Conversely, low performance will result in no
reward.

The
number of PCOs granted in December 2004 to executives, including the Chief Executive Officer, was 376,000. The number of PCOs that vest will range from 0 to 376,000 depending
on our relative performance ranking.

Celestica
Share Unit Plan

Under
Celestica's Share Unit Plan (CSUP), the Board of Directors of Celestica may, in its discretion, grant from time to time RSUs and PSUs to eligible participants of Celestica and its
affiliated entities.

There
is no limit on the number of subordinate voting shares that may be issued under the terms of the CSUP. Celestica cannot fulfill its obligations under the CSUP through the issuance
of subordinate voting shares from treasury, and therefore will deliver previously issued and outstanding subordinate voting shares it acquires in the market for this purpose or cash.

59

---



ESPO
Plans

We
have issued subordinate voting shares and have granted options to acquire subordinate voting shares for the benefit of certain of our employees and executives pursuant to the ESPO
Plans which were in effect prior to our initial public offering. No further options or subordinate voting shares (other than pursuant to outstanding options) may be issued under these ESPO Plans.

Pursuant
to the ESPO Plans, employees and executives of Celestica were offered the opportunity to purchase subordinate voting shares and, in connection with such purchase, receive
options to acquire an additional number of subordinate voting shares based on the number of subordinate voting shares acquired by them under the ESPO Plans (on average, approximately
1.435 options for each subordinate voting share acquired under the ESPO Plans). In each case, the exercise price for the options is equal to the price per share paid for the corresponding
subordinate voting shares acquired under the ESPO Plans.

Upon
the completion of Celestica's initial public offering, certain options became exercisable. The balance of the options issued under the ESPO Plans vested over a period of five years
beginning December 31, 1998. All
options granted under the ESPO Plans were fully vested as of December 31, 2003. All subordinate voting shares acquired by employees under the ESPO Plans are held either by the employee or by
Towers Perrin Share Plan Services in trust for Celestica Employee Nominee Corporation as agent for and on behalf of such employees.

Employee
Share Ownership Plan

The
purpose of the Celestica Employee Share Ownership Plan ("CESOP") is to enable eligible employees, including executive officers, of Celestica to acquire subordinate voting shares, so
as to encourage continued employee interest in the operation, growth and development of Celestica. Under the CESOP, an eligible participant may elect to contribute an amount, representing no more than
10% of his or her salary. Celestica will contribute 25% of the amount of employee contributions, up to a maximum of 1% of the employee's salary for the relevant payroll period. Contributions are used
to purchase subordinate voting shares on the open market.

Executive
Share Ownership Guideline

Celestica
has recently established share ownership guidelines for the Chief Executive Officer, Chief Financial Officer and President. The guidelines require the Chief Executive Officer
to hold Celestica securities with a value equal to three times his or her base salary and the Chief Financial Officer and President to hold Celestica securities with a value equal to two times his or
her base salary. Each executive will have five years to meet the share ownership guidelines. Although the Chief Executive Officer, Chief Financial Officer and President will not be deemed to have
breached the guideline by reason of a decrease in the market value of our securities, they will be required to purchase additional securities within a reasonable period of time to comply with the
guideline.

Benefits

Health, dental, pension, life insurance and long-term disability programs are available for all employees with no additional benefits for executives.
Celestica references the median level of benefits at similarly sized companies in the EMS industry.

Pension Plans

Messrs. Delaney, Puppi, MaGee and Suri each participate in Celestica's non-contributory pension plan (the "Canadian
Pension Plan"). The Canadian Pension Plan has a defined benefit and a defined contribution portion and provides for a maximum of 30 years' service and retirement eligibility at the earlier of
30 years' service or age 55. They also participate in an unregistered supplementary pension plan (the "Supplementary Plan") that provides benefits equal to the difference between the
benefits determined in
accordance with the formula set out in the Canadian Pension Plan and Canada Customs and Revenue Agency maximum pension benefits.

Messrs. Delaney,
MaGee and Suri participate only in the defined contribution portion of the Canadian Pension Plan. The defined contribution portion of the Canadian
Pension Plan allows employees to choose how Celestica contributions are invested on their behalf within a range of investment options provided by third party fund managers. Celestica's contributions
to this plan on behalf of an employee range from 3% of earnings to a maximum of 6.75% of earnings based on the number of years of service. Retirement benefits depend upon the

60

---



performance
of the investment options chosen. Celestica currently contributes 3% of earnings annually on behalf of Messrs. Delaney and Suri and 6.75% of earnings annually on behalf of
Mr. MaGee.

Mr. Puppi
participates only in the defined benefit portion of the Canadian Pension Plan. The benefit provided under this plan is equal to the benefit entitlement accrued under the
relevant IBM plan prior to October 22, 1996, the date Celestica was divested from IBM, plus the benefits earned under the Canadian Pension Plan since that date. The terms of the Canadian
Pension Plan, which were accepted by certain employees when they transferred to Celestica, mirrored those of the IBM pension plan in place at the time of divestiture. The Plan is of a modified career
average design with benefits based on a three-year earnings average to December 31 of a designated base year (the "Base Year"). In 2004, the Base Year was updated to
December 31, 2003 and may be updated from time to time until December 31, 2009. The formula for calculating benefits for the period after October 22, 1996 is the greater of
earnings (salary and bonus) or 0.9% of earnings up to the yearly maximum pensionable earnings ("YMPE") level, plus 1.45% of earnings above the YMPE. The defined benefit portion of the Canadian Pension
Plan also provides for supplementary early retirement benefits from the date of early retirement to age 65.

The
following table sets forth the estimated aggregate annual benefits payable under the defined benefit portion of the Canadian Pension Plan and the Supplementary Plan based on average
earnings and years of service.

Canadian Pension Plan Table(1)(2)

Years of ServiceEarnings Average20

25

30+(3)$400,000

$
104,000

$
130,000

$
156,000$600,000

$
156,000

$
194,000

$
234,000$800,000

$
207,000

$
288,000

$
311,000$1,000,000

$
260,000

$
343,000

$
389,000$1,200,000

$
311,000

$
389,000

$
467,000$1,400,000

$
363,000

$
454,000

$
545,000$1,600,000

$
415,000

$
519,000

$
588,000$1,800,000

$
467,000

$
584,000

$
621,000


---

Mr. Puppi currently has accrued 24.7 years of credited service, which entitles him to a total annual pension under the Canadian
Pension Plan and the Supplemental Plan of C$204,000 payable on June 1, 2010. If Mr. Puppi completes 30 years of credited service, then, based on his current best average earnings,
he would be entitled to a total annual benefit of C$412,000.

At
the time of his retirement, Mr. Polistuk had accrued the maximum 30 years of credited service. Therefore, the total annual benefit payable to Mr. Polistuk under
the Canadian Pension Plan and the Supplemental Plan is C$778,450.

During
the year ended December 31, 2004, Celestica accrued an aggregate of $1,009,995 to provide pension benefits for Messrs. Delaney, Puppi, MaGee, Suri and
Polistuk pursuant to the Canadian Pension Plan. No other amounts were set aside or accrued by Celestica during the year ended December 31, 2004 for the purpose of providing pension, retirement
or similar benefits for Messrs. Puppi, MaGee, Suri and Polistuk and for Mr. Delaney, with the exception in Mr. Delaney's case, of amounts set aside or accrued by
Celestica under the U.S. Plan as described below.

During
the year ended December 31, 2004, Mr. Delaney participated in both the U.S. Plan and the Canadian Pension Plan as a result of his assuming the Chief Executive
Officer role in Canada during the year. Mr. Kawaye participated in the U.S. Plan. The U.S. Plan qualifies as a deferred salary arrangement under section 401 of the
U.S. Internal Revenue Code of 1986, as amended. Under the U.S. Plan, participating

61

---



employees
may defer a portion of their pre-tax earnings not to exceed 20% of their total compensation. Celestica may make contributions for the benefit of eligible employees.

During
the year ended December 31, 2004, Celestica contributed $24,600 to the U.S. Plan for the benefit of Mr. Delaney and Mr. Kawaye. Except as described
above, no other amounts were set aside or accrued by Celestica during the year ended December 31, 2004 for the purpose of providing pension, retirement or similar benefits for
Messrs. Delaney and Kawaye.

Mr. Quek
participates in the Singapore Plan. The Singapore Plan is a deferred salary arrangement under the Central Provident Fund Act of Singapore. Under the Singapore Plan,
participating employees may defer a
portion of their pre-tax earnings not to exceed 20% of their total compensation, but up to a specified limit. Celestica may make contributions for the benefit of eligible employees.
Celestica contributed $3,327 for Mr. Quek during the year ended December 31, 2004.

Mr. Polistuk
retired from Celestica on February 27, 2004. During the year ended December 31, 2004, Celestica accrued an aggregate of $741,261 for the purpose of
providing pension, retirement or similar benefits for him.

Employment Agreements

As of December 31, 2004, each of the Named Executive Officers had employment agreements with Celestica. Mr. Polistuk's employment agreement, except
for certain non-competition, confidentiality and non-solicitation provisions, was not in effect as of December 31, 2004 because his employment terminated during the
year.



Mr. Puppi entered into an employment agreement with Celestica as of October 22, 1996 and Messrs. Delaney, MaGee and Suri
entered into employment agreements with Celestica as of July 22, 2004. Each agreement provides that the executive is entitled to certain severance benefits if, within three years of a change of
control of Celestica, he is terminated without cause or resigns for reasons specified in the contract. The amount of severance payment for each executive is equal to three times his annual base salary
and annual target bonus for the last year of employment pro-rated to the date of termination. In addition, the contracts provide for a cash settlement to cover benefits that would
otherwise be payable during the severance period and the continuation of pension contributions or, in Mr. Puppi's case, a credit for years of service up to June 1, 2010 under Celestica's
Canadian Pension Plan. Mr. Delaney is entitled to payment to make him whole for any United States excise tax payable by him if his severance benefits constitute parachute payments within
the meaning of the U.S. Internal Revenue Code.

In
the absence of a change of control of Celestica, upon termination without cause or resignation for the reasons specified in the contract, each executive is entitled, in lieu of two
years' notice (or three years in Mr. Delaney's case), to payments and benefits substantially similar to those provided following termination after a change in control, except that there
is no accelerated vesting of options and rights and, in the case of Messrs. MaGee, Puppi and Suri, Celestica's obligations regarding lump sum payments, the continuation of benefit
plans and contributions to or continuation of pension and retirement plans is for the two-year period following termination.



Celestica entered into an employment agreements with Messrs. Quek and Kawaye at the time Celestica acquired International Manufacturing Services, or IMS,
in 1998.

The
contracts provides that upon termination of the executive without cause, or upon resignation of the executive for reasons specified in the contract, the executive is entitled to
receive a monthly salary for a period of 36 months following the date of termination and a bonus amount based on average bonus received over the previous three years, except that payments shall
be reduced by an amount equal to a portion of any replacement earnings during that period. Each executive also is entitled to receive a cash settlement to cover benefits that would otherwise be
payable during the two-year period following termination.

62

---





Indemnification Agreements

Celestica and certain of our subsidiaries have entered into indemnification agreements with certain of the directors and officers of Celestica and our
subsidiaries. These agreements generally provide that Celestica or the subsidiary of Celestica which is a party to the agreement, as applicable, will indemnify the director or officer in question
(including his or her heirs and legal representatives) against all costs, charges and expenses incurred by him or her in respect of any civil, criminal or administrative action or proceeding to which
he or she is made a party by reason of being or having been a director or officer of such corporation or a subsidiary thereof, provided that (a) he or she has acted honestly and in good faith
with a view to the best interests of the corporation, and (b) in the case of a criminal or administrative proceeding that is enforced by a monetary penalty, he or she had reasonable grounds for
believing that his or her conduct was lawful.

C.    Board Practices

Members of the Board of Directors are elected until the next annual meeting or until their successors are elected or appointed.

Except
for the right to receive deferred compensation (see Item 6(B), "Compensation"), no director is entitled to benefits from Celestica when they cease to serve as
a director.

Board Committees

The Board of Directors has established four standing committees, each with a specific mandate, the Executive Committee, Audit Committee, Compensation Committee
and Nominating and Corporate Governance Committee. The Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are each composed of independent directors.



The members of the Executive Committee are Mr. Crandall and Dr. Melman. The purpose of the Executive Committee is to provide a degree of flexibility
and ability to respond to time-sensitive matters where it is impractical to call a meeting of the full Board of Directors. The Committee reviews such matters and makes such recommendations
thereon to the Board of Directors as it considers appropriate, including matters designated by the Board of Directors as requiring Committee review. Members of the Committee also meet approximately
once a month on an informal basis to review and stay informed about current business issues. The Board of Directors is briefed on these issues at their regularly scheduled meetings or, if the matter
is material, between regularly scheduled meetings. No decision of the Committee shall be effective until it is approved or ratified by the Board of Directors.



The Audit Committee consists of Mr. Crandall, Mr. Etherington and Mr. Tapscott, all of whom are independent directors. The Audit Committee
has a well-defined mandate which, among other things, sets out its relationship with, and expectations of, the external auditors, including the establishment of the independence of the
external auditors and approval of any non-audit mandates of the external auditor; the engagement, evaluation, remuneration and termination of the external auditor; its relationship with,
and expectations of, the internal auditor function and its oversight of internal control; and the disclosure of financial and related information. The Audit Committee has direct communication channels
with the internal and external auditors to discuss and review specific issues and has the authority to retain such independent advisors as it may consider appropriate. The Audit Committee annually
reviews and approves the mandate and plan of the internal audit department. The Audit Committee's duties include the responsibility for reviewing financial statements with management and the auditors,
monitoring the integrity of Celestica's management information systems and internal control procedures, and reviewing the adequacy of Celestica's processes for identifying and managing risk.

63

---





The Compensation Committee consists of Mr. Crandall, Mr. Etherington, Mr. Szuluk, and Mr. Tapscott, all of whom are independent
directors. Dr. Melman was a member of this committee during 2004, but ceased to be a member as of January 2005. Although Dr. Melman would not be an independent director under the
rules of the New York Stock Exchange (the "NYSE Rules") because he is an officer of Onex, Dr. Melman's membership on the Compensation Committee was consistent with the provision
in the NYSE Rules permitting an officer of a parent company to sit on the compensation committee of a company that it
controls. It is the responsibility of the Compensation Committee to define and communicate compensation policy and principles that reflect and support our strategic direction, business goals and
desired culture. The mandate of the Compensation Committee includes the following: review and recommend to the Board of Directors Celestica's overall reward/compensation policy, including an executive
compensation policy that is consistent with competitive practice and supports organizational objectives and shareholder interests; review annually, and submit to the Board of Directors for approval,
the elements of our annual and long-term incentive compensation plans and equity-based plans, including plan design, performance targets, administration and total funds/shares reserved for
payment; review and recommend to the Board of Directors the compensation of the Chief Executive Officer based on the Board of Directors' assessment of the annual performance of the Chief Executive
Officer; review and recommend to the Board of Directors the compensation of our most senior executives; review our succession plans for key executive positions; and review and approve material changes
to our organizational structure and human resource policies.



The Nominating and Corporate Governance Committee consists of Mr. Crandall, Mr. Etherington, Mr. Love, and Mr. Tapscott, all of whom
are independent directors. Dr. Melman was a member of the committee during 2004, but ceased to be a member as of January 2005. Although Dr. Melman would not be an independent
director under the NYSE Rules because he is an officer of Onex, Dr. Melman's membership on the Nominating and Corporate Governance Committee was consistent with the provision in the NYSE Rules
permitting an officer of a parent company to sit on the nominating and corporate governance committee of a company that it controls. The Nominating and Corporate Governance Committee recommends to the
Board the criteria for selecting candidates for nomination to the Board and the individuals to be nominated for election by the shareholders. The Committee's mandate includes making recommendations to
the Board relating to the Company's approach to corporate governance, developing the Company's corporate governance guidelines, assessing the performance of the Chief Executive Officer relative to
corporate goals and objectives established by the Committee, and assessing the effectiveness of the Board of Directors and its committees.

D.    Employees

Celestica has over 46,000 permanent and temporary (contract) employees worldwide as at December 31, 2004. The following table sets forth information
concerning our employees by geographic location:

Number of EmployeesDateAmericas

Europe

AsiaDecember 31, 2002

14,500

6,000

19,500December 31, 2003

13,000

5,500

21,500December 31, 2004

14,000

6,500

25,500


During
the year ended December 31, 2004, approximately 11,000 temporary (contract) employees were engaged by Celestica worldwide. During the year ended December 31,
2004, approximately 3,800 employees were terminated as a result of restructuring actions announced during the year. See note 11 to the Consolidated Financial Statements in
Item 18 for further information on the restructurings.

The
number of employees in the Americas and Europe at December 31, 2004 includes the employees who joined us as a result of our MSL acquisition in March 2004, which was
offset in part by headcount reductions in 2003 and 2004 due to the downsizing or closure of some of our facilities and the transfer of production from

64

---



higher-cost
to lower-cost geographies. The number of employees in Asia has increased from December 31, 2002 to December 31, 2004 due to the increase in business
in Asia, the transfer of production from other geographies and from our acquisition in the Philippines in April 2004.

Certain
information concerning employees is set forth in Item 4, "Information on the Company  Business
Overview  Human Resources."

E.    Share Ownership

The following table sets forth certain information concerning the direct and beneficial ownership of shares of Celestica at February 21, 2005 by each
director who holds shares and each of the Named Executive Officers and all directors and executive officers of Celestica as a group. Unless otherwise noted, the address of each of the shareholders
named below is Celestica's principal executive office. In this table, multiple voting shares are referred to as "MVS", subordinate voting shares are referred to as "SVS", and Celestica's Liquid Yield
Option Notes due 2020 are referred to as "LYONs."

|Name of Beneficial Owner(1)                                                       |  | Voting Shares        |  | Percentage of Class |  | Percentage of all Equity Shares |  | Percentage of Voting Power
|--------------------------------------------------------------------------------- |  | -------------------- |  | ------------------- |  | ------------------------------- |  | --------------------------
|Robert L. Crandall(2)                                                             |  | 135,000              |  | SVS                 |  | *                               |  | *                         
|                                                                                  |  | 15,130               |  | LYONs(3)            |  | *                               |  | *                         
|William E. Etherington(4)                                                         |  | 31,250               |  | SVS                 |  | *                               |  | *                         
|Richard S. Love(5)                                                                |  | 117,500              |  | SVS                 |  | *                               |  | *                         
|Anthony R. Melman(6)(7)                                                           |  | 450,000              |  | SVS                 |  | *                               |  | *                         
|Gerald W. Schwartz(6)(8)                                                          |  | 29,851,630           |  | MVS                 |  | 100.0%                          |  | 13.3%                     
|                                                                                  |  | 3,114,387            |  | SVS                 |  | 1.6%                            |  | 1.4%                      
|Charles W. Szuluk(9)                                                              |  | 10,000               |  | SVS                 |  | *                               |  | *                         
|Don Tapscott(10)                                                                  |  | 105,500              |  | SVS                 |  | *                               |  | *                         
|Stephen W. Delaney                                                                |  | 200,127              |  | SVS                 |  | *                               |  | *                         
|J. Marvin MaGee                                                                   |  | 461,965              |  | SVS                 |  | *                               |  | *                         
|Anthony P. Puppi                                                                  |  | 434,226              |  | SVS                 |  | *                               |  | *                         
|Neo Kia Quek                                                                      |  | 459,000              |  | SVS                 |  | *                               |  | *                         
|All directors and executive officers as a group (22 persons, including above)(11) |  | 29,851,630
7,037,798 |  | MVS
SVS             |  | 100.0%
3.6%                     |  | 13.3%
3.1%                
|Total percentage of all equity shares and total percentage of voting power        |  |                      |  |                     |  |                                 |  | 16.4%                     

---

65

---





MVS and SVS have different voting rights. See Item 10, "Additional Information  Memorandum and
Articles of Incorporation."

At
February 21, 2005, approximately 5,200 persons held options to acquire an aggregate of approximately 24,300,000 subordinate voting shares. Most of these options
were issued pursuant to the ESPO Plan and Long-Term Incentive Plan. See Item 6(B), "Compensation." The following table sets forth information with respect to options outstanding as
at February 21, 2005.

Outstanding Options

|Beneficial Holders                       |  | Number of Subordinate Voting Shares Under Option |  | Exercise Price   |  | Year of Issuance     |  | Date of Expiry                       
|---------------------------------------- |  | ------------------------------------------------ |  | ---------------- |  | -------------------- |  | -------------------------------------
|Executive Officers
(14 persons in total) |  | 210,000                                          |  | $0.925           |  | June 13, 1996        |  | June 13, 2006                        
|                                         |  | 261,071                                          |  | $5.00            |  | During 1997          |  | April 8, 2007                        
|                                         |  | 118,200                                          |  | $7.50 - $8.75    |  | During 1997 and 1998 |  | October 22, 2007 to July 3, 2008     
|                                         |  | 259,480                                          |  | C$18.90 - $22.97 |  | During 1999          |  | January 1, 2009 to September 20, 2009
|                                         |  | 302,000                                          |  | $39.03/C$57.845  |  | December 7, 1999     |  | December 7, 2009                     
|                                         |  | 105,000                                          |  | $40.06 - C$60.00 |  | During 2000          |  | February 1, 2010 to May 26, 2010     
|                                         |  | 156,000                                          |  | $56.1875/C$86.50 |  | December 5, 2000     |  | December 5, 2010                     
|                                         |  | 25,000                                           |  | C$73.50          |  | March 1, 2001        |  | March 1, 2011                        
|                                         |  | 100,000                                          |  | $50.00           |  | April 20, 2001       |  | April 20, 2011                       
|                                         |  | 385,400                                          |  | $41.89/C$66.06   |  | December 4, 2001     |  | December 4, 2011                     
|                                         |  | 420,000                                          |  | $13.10 - C$29.11 |  | During 2002          |  | October 1, 2012 to December 18, 2012 
|                                         |  | 8,000                                            |  | C$15.35          |  | April 18, 2003       |  | April 18, 2013                       
|                                         |  | 1,000,000                                        |  | $17.15/C$22.75   |  | January 31, 2004     |  | January 31, 2014                     
|                                         |  | 140,000                                          |  | $15.67 - C$22.89 |  | During 2004          |  | February 6, 2014 to August 9, 2014   
|                                         |  | 535,100                                          |  | $15.86 - C$18.00 |  | December 9, 2004     |  | December 9, 2014                     
|                                         |  |                                                  |  |                  |  |                      |  |                                      

66

---



|Directors who are not Executive Officers                                                                 |  | 143,000   |  | $8.75              |  | During 1998                          |  | July 7, 2008                        
|-------------------------------------------------------------------------------------------------------- |  | --------- |  | ------------------ |  | ------------------------------------ |  | ------------------------------------
|                                                                                                         |  | 60,000    |  | $23.41/C$34.50     |  | July 7, 1999                         |  | July 7, 2009                        
|                                                                                                         |  | 60,000    |  | $48.69/C$72.60     |  | July 7, 2000                         |  | July 7, 2010                        
|                                                                                                         |  | 60,000    |  | $44.23/C$66.78     |  | July 7, 2001                         |  | July 7, 2011                        
|                                                                                                         |  | 20,000    |  | $35.95             |  | October 22, 2001                     |  | October 22, 2011                    
|                                                                                                         |  | 5,000     |  | $32.40             |  | April 21, 2002                       |  | April 21, 2012                      
|                                                                                                         |  | 45,000    |  | $10.62             |  | April 18, 2003                       |  | April 18, 2013                      
|                                                                                                         |  | 30,000    |  | $18.25             |  | May 10, 2004                         |  | May 10, 2014                        
|All other Celestica Employees (other than IMS, Primetech and MSL) (approximately 4,500 persons in total) |  | 1,749,854 |  | $5.00              |  | During 1997                          |  | April 8, 2007                       
|                                                                                                         |  | 549,803   |  | $7.50 - C$14.05    |  | During 1998                          |  | April 29, 2008 to November 9, 2008  
|                                                                                                         |  | 693,850   |  | $13.69 - C$21.45   |  | January 1, 1999 to March 17, 1999    |  | January 1, 2009 to March 17, 2009   
|                                                                                                         |  | 1,750,629 |  | $39.03/C$57.845    |  | December 7, 1999                     |  | December 7, 2009                    
|                                                                                                         |  | 278,400   |  | $13.65 - C$53.75   |  | During 1999                          |  | January 1, 2009 to December 31, 2009
|                                                                                                         |  | 635,900   |  | $40.06 - C$123.65  |  | During 2000                          |  | January 1, 2010 to December 31, 2010
|                                                                                                         |  | 1,712,560 |  | $56.1875/C$86.50   |  | December 5, 2000                     |  | December 5, 2010                    
|                                                                                                         |  | 418,400   |  | $49.00 - C$108.45  |  | During 2001                          |  | January 1, 2011 to December 31, 2011
|                                                                                                         |  | 4,099,298 |  | $41.89/C$66.06     |  | December 4, 2001                     |  | December 4, 2011                    
|                                                                                                         |  | 318,553   |  | $13.10 - C$70.81   |  | During 2002                          |  | January 1, 2012 to December 31, 2012
|                                                                                                         |  | 2,287,752 |  | $18.66/C$29.11     |  | December 3, 2002                     |  | December 3, 2012                    
|                                                                                                         |  | 113,620   |  | $10.19 - C$22.54   |  | During 2003                          |  | January 1, 2013 to December 31, 2013
|                                                                                                         |  | 279,285   |  | $17.11 - C$26.47   |  | During 2004                          |  | January 1, 2014 to December 31, 2014
|                                                                                                         |  | 2,298,447 |  | $17.15/C$22.75     |  | January 31, 2004                     |  | January 31, 2014                    
|                                                                                                         |  | 558,726   |  | $14.86/C$18.00     |  | December 9, 2004                     |  | December 9, 2014                    
|                                                                                                         |  | 139,268   |  | $13.49 - C$17.51   |  | January 1, 2005 to February 21, 2005 |  | January 1, 2015 to February 21, 2015
|IMS Employees(1)                                                                                         |  | 372,145   |  | $0.925 - $13.31    |  | December 30, 1998                    |  | June 13, 2006 to December 18, 2008  
|Primetech Employees(2)                                                                                   |  | 11,110    |  | C$45.45 - C$111.36 |  | During 1999 - 2001                   |  | February 15, 2005 to March 16, 2006 
|                                                                                                         |  |           |  |                    |  |                                      |  |                                     

67

---



|MSL Employees(3) |  | 110,627 |  | $10.67 - $53.33 |  | June 5, 1995 to December 6, 1999 |  | June 5, 2005 to December 6, 2009     
|---------------- |  | ------- |  | --------------- |  | -------------------------------- |  | -------------------------------------
|                 |  | 777,907 |  | $8.37 - $78.00  |  | During 2000 and 2001             |  | January 1, 2010 to December 28, 2011 
|                 |  | 739,915 |  | $8.37 - $15.60  |  | During 2002 and 2003             |  | January 31, 2012 to September 8, 2013

---

Item 7. Major Shareholders and Related Party Transactions

A.    Major Shareholders

The following table sets forth certain information concerning the direct and beneficial ownership of the shares of Celestica at February 21, 2005 by each
person known to Celestica to own beneficially, directly or indirectly, 5% or more of the subordinate voting shares or the multiple voting shares. In this table, multiple voting shares are referred to
as "MVS" and subordinate voting shares are referred to as"SVS." MVS and SVS have different voting rights. See Item 10, "Additional Information  Memorandum
and Articles of Incorporation."

|Name of Beneficial Owner(1)                                                |  | Type of Ownership   |  | Number of Shares |  | Percentage of Class |  | Percentage of all Equity Shares |  | Percentage of Voting Power
|-------------------------------------------------------------------------- |  | ------------------- |  | ---------------- |  | ------------------- |  | ------------------------------- |  | --------------------------
|Onex Corporation(2)(3)                                                     |  | Direct and Indirect |  | 29,851,630       |  | MVS                 |  | 100.0%                          |  | 13.3%                     
|                                                                           |  |                     |  | 2,925,643        |  | SVS                 |  | 1.5%                            |  | 1.3%                      
|Gerald W. Schwartz(2)(4)                                                   |  | Direct and Indirect |  | 29,851,630       |  | MVS                 |  | 100.0%                          |  | 13.3%                     
|                                                                           |  |                     |  | 3,114,387        |  | SVS                 |  | 1.6%                            |  | 1.4%                      
|FMR Corp.(5)(6)                                                            |  | Indirect            |  | 17,864,861       |  | SVS                 |  | 9.1%                            |  | 7.9%                      
|Phillips, Hager & North Investment Management Ltd.(7)(8)                   |  | Indirect            |  | 13,852,676       |  | SVS                 |  | 7.1%                            |  | 6.2%                      
|Total percentage of all equity shares and total percentage of voting power |  |                     |  |                  |  |                     |  |                                 |  | 28.7%                     

---

68

---





Onex's and FMR Corp.'s ownership percentages have not changed significantly over the past three years and Phillips, Hager & North
Investment Management Ltd. only recently became a beneficial owner of 5% or more of our subordinate voting shares.

Holders

On February 21, 2005, there were approximately 2,012 holders of record of subordinate voting shares, of which approximately 512 holders,
holding approximately 52% of the outstanding subordinate voting shares, were resident in the United States and approximately 463 holders, holding approximately 47% of the outstanding
subordinate voting shares, were resident in Canada.

On
February 21, 2005, there was one holder of record of the Liquid Yield Option Notes due 2020; the holder of record was in the United States.

69

---



B.    Related Party Transactions

Interest of Management in Certain Transactions

Celestica and Onex are parties to an Amended and Restated Management Services Agreement dated July 1, 2003 under which Onex has agreed to provide certain
strategic planning, financial and support services to Celestica of such nature as Celestica may reasonably request from time to time having regard to Onex' experience, expertise and personnel or the
personnel of its subsidiaries, as the case may be. Celestica has agreed to pay Onex certain fees under the agreement including a base fee and a performance incentive fee, if any. The base fee is equal
to approximately $500,000 per year, increasing after two years to $1,000,000 per year. The incentive fee payable in any year is tied to company performance. The agreement also provides that if
Celestica uses Onex management personnel to provide investment banking or financial advice in connection with any acquisition, Onex will be entitled to receive fees consistent in the determination of
the Board of Directors of Celestica with fees typically paid for financial advice in such circumstances to investment bankers or other expert advisors at arm's-length to Celestica. The agreement
terminates on December 31, 2008, subject to automatic termination 30 days after the first day upon which Onex ceases to hold at least one multiple voting share. In the event of a change
of control of Celestica, Onex is entitled to receive an amount equal to the difference between $10,000,000 and the aggregate amount of base fees and incentive fees paid to Onex during the term of the
agreement, and no further base or incentive fees are payable thereafter. During 2004, Celestica paid to Onex management-related fees of $682,800. The payment obligations under the agreement are not
considered to be material to either Celestica or Onex.

Indebtedness of Directors and Senior Officers

As at February 25, 2005, no officers of Celestica were indebted to Celestica in connection with the purchase of subordinate voting shares. The amount
outstanding during 2004 represented a guarantee of indebtedness by Celestica and included indebtedness for interest accrued on such guaranteed indebtedness. The security for each of the guaranteed
amounts was the purchased subordinate voting shares. The last such arrangement was entered into in July 2000 and no further such arrangements are permitted. The following table sets forth
details of such guarantees by Celestica of indebtedness of the directors and officers of Celestica.

Indebtedness of Senior Officers under Securities Purchase Programs

|Name and Principal Position                                                         |  | Involvement of Company |  | Largest Amount Outstanding During 2004(1)
($) |           | Amount Outstanding As At February 25, 2005
($) |   | Financially Assisted Securities Purchases During 2004
(#) |   | Security for Indebtedness |     | Amount Forgiven During 2004
($)
|----------------------------------------------------------------------------------- |  | ---------------------- |  | --------------------------------------------- | --------- | ---------------------------------------------- | - | --------------------------------------------------------- | - | ------------------------- | --- | -------------------------------
|J. Marvin MaGee
    President
Toronto, Ontario                                      |  | Guarantor              |  | $                                             | 190,464   |                                                | 0 |                                                           | 0 |                           | SVS |                                
|Daniel P. Shea
    Senior Vice President and Group General Manager
Toronto, Ontario |  | Guarantor              |  | $                                             | 344,421   |                                                | 0 |                                                           | 0 |                           | SVS |                                
|Rahul Suri
    Senior Vice President,
Corporate Development
Toronto, Ontario        |  | Guarantor(2)           |  | $                                             | 1,431,166 |                                                | 0 |                                                           | 0 |                           | SVS |                                

---

70

---



No securities were purchased by any director or officer during 2004 with the financial assistance of Celestica. Other than as described above, no
director, officer or employee was indebted to Celestica other than in connection with securities purchase programs during the year ended December 31, 2004.

C.    Interests of Experts and Counsel

Not applicable.

Item 8. Financial Information

A.    Consolidated Statements and Other Financial Information

See Item 18, "Financial Statements."

Litigation

We are party to litigation from time to time. We currently are not party to any legal proceedings which management expects will have a material adverse effect on
the results of operations, business, prospects or financial condition of Celestica.

Dividend Policy

We have not declared or paid any dividends to our shareholders. We will retain earnings for general corporate purposes to promote future growth; as such, the
board of directors does not anticipate paying any dividends for the foreseeable future. Celestica's board of directors will review this policy from time to time, having regard to our financial
condition, financing requirements and other relevant factors.

B.    Significant Changes

See note 22 to the Consolidated Financial Statements in Item 18 for information on significant changes.

Item 9. The Offer and Listing

A.    Offer and Listing Details

Market Information

The subordinate voting shares are listed on the New York Stock Exchange (the "NYSE") and the Toronto Stock Exchange (the "TSX"). In the
following tables, subordinate voting shares are referred to as "SVS."

The annual high and low market prices for the five most recent fiscal years

|                             |  | NYSE  
|---------------------------- |  | ------
|
|
|Year ended December 31, 2000 |  | $87.88
|Year ended December 31, 2001 |  | 76.40 
|Year ended December 31, 2002 |  | 47.08 
|Year ended December 31, 2003 |  | 20.29 
|Year ended December 31, 2004 |  | 21.15 

|                             |  | TSX     
|---------------------------- |  | --------
|
|
|Year ended December 31, 2000 |  | C$128.25
|Year ended December 31, 2001 |  | 114.00  
|Year ended December 31, 2002 |  | 75.05   
|Year ended December 31, 2003 |  | 27.98   
|Year ended December 31, 2004 |  | 27.84   

71

---



The high and low market prices for each full fiscal quarter for the two most recent fiscal years

|                             |                | NYSE
|---------------------------- | -------------- | ----
|
|
|Year ended December 31, 2003 |                |     
|                             | First quarter  |     
|                             | Second quarter |     
|                             | Third quarter  |     
|                             | Fourth quarter |     
|Year ended December 31, 2004 |                |     
|                             | First quarter  |     
|                             | Second quarter |     
|                             | Third quarter  |     
|                             | Fourth quarter |     

|                             |                | TSX
|---------------------------- | -------------- | ---
|
|
|Year ended December 31, 2003 |                |    
|                             | First quarter  |    
|                             | Second quarter |    
|                             | Third quarter  |    
|                             | Fourth quarter |    
|Year ended December 31, 2004 |                |    
|                             | First quarter  |    
|                             | Second quarter |    
|                             | Third quarter  |    
|                             | Fourth quarter |    

The high and low market prices for each month for the most recent six months

|               |  | NYSE  
|-------------- |  | ------
|
|
|September 2004 |  | $14.57
|October 2004   |  | 14.48 
|November 2004  |  | 15.65 
|December 2004  |  | 15.70 
|January 2005   |  | 13.98 
|February 2005  |  | 14.09 

|               |  | TSX    
|-------------- |  | -------
|
|
|September 2004 |  | C$18.80
|October 2004   |  | 17.69  
|November 2004  |  | 18.75  
|December 2004  |  | 18.85  
|January 2005   |  | 16.60  
|February 2005  |  | 17.75  

72

---





Celestica's Liquid Yield Option Notes due 2020, or LYONs, are listed on the NYSE. Liquid Yield Option Notes is a trademark of Merrill
Lynch & Co., Inc. The market price range of the LYONs as reported on BloombergTM for the periods indicated is set forth in the following tables.

The annual high and low market prices for the LYONs for the most recent fiscal years

|                                |  | High   |  | Low   
|------------------------------- |  | ------ |  | ------
|Year ended December 31, 2000(1) |  | $55.83 |  | $40.05
|Year ended December 31, 2001    |  | 53.74  |  | 34.56 
|Year ended December 31, 2002    |  | 46.00  |  | 33.00 
|Year ended December 31, 2003    |  | 52.50  |  | 42.00 
|Year ended December 31, 2004    |  | 55.00  |  | 52.00 

---

The annual high and low market prices for the LYONs for the most recent fiscal years

|                             |                | High |        | Low
|---------------------------- | -------------- | ---- | ------ | ---
|Year ended December 31, 2003 |                |      |        |    
|                             | First quarter  |      | $48.63 |    
|                             | Second quarter |      | 50.88  |    
|                             | Third quarter  |      | 52.50  |    
|                             | Fourth quarter |      | 52.50  |    
|Year ended December 31, 2004 |                |      |        |    
|                             | First quarter  |      | $54.00 |    
|                             | Second quarter |      | 55.00  |    
|                             | Third quarter  |      | 55.00  |    
|                             | Fourth quarter |      | 53.00  |    

The high and low market prices for the LYONs for each month for the most recent six months

|               |  | High    |  | Low   
|-------------- |  | ------- |  | ------
|September 2004 |  | No Data
|October 2004   |  | $53.00  |  | $53.00
|November 2004  |  | No Data
|December 2004  |  | No Data
|January 2005   |  | No Data
|February 2005  |  | $53.88  |  | $53.88

B.    Plan of Distribution

Not applicable.

C.    Markets

The subordinate voting shares are listed on the NYSE and the TSX.

Celestica's
LYONs are listed on the NYSE.

D.    Selling Shareholders

Not applicable.

E.    Dilution

Not applicable.

73

---



F.     Expense of the Issue

Not applicable.

Item 10.    Additional Information

Trustees, Transfer Agents and Registrars

JPMorgan Chase Bank, N.A., formerly Chase Manhattan Bank, is the trustee under (i) our Indenture, dated as of August 1, 2000, related to our Liquid
Yield Option Notes due 2020, (ii) our Indenture, dated as of June 16, 2004, related to our 77/8% Senior Subordinated Notes due 2011 (the Notes
Indenture), (iii) our First Supplemental Indenture, dated as of June 16, 2004, to the Notes Indenture, and (iv) our Second Supplemental Indenture, dated as of December 30,
2004, to the Notes Indenture. The trustee can be reached by mail at JPMorgan Chase Bank, N.A., Institutional Trust Services, 4 New York Plaza, 15th Floor, New York,
New York 10004 or by telephone at 1-212-623-6796.

ComputerShare
Trust Company of Canada is the trustee for the benefit of the holders of the subordinate voting shares pursuant to an agreement with Onex, and is the transfer agent for the
subordinate voting shares. You may contact the transfer agent by mail at ComputerShare Trust Company of Canada, 100 University Avenue, 9th Floor, Toronto, Ontario M5J 2Y1, or by
telephone within Canada and the United States at 1-800-564-6253 and at 514-982-7555 from all other countries.

Celestica
Employee Nominee Corporation acts as agent for and on behalf of certain executives and employees of Celestica pursuant to certain of Celestica's employee share purchase and
option plans. Celestica Employee Nominee Corporation can be reached by mail at Towers Perrin Share Plan Services Limited, Wyndham Court, Pritchard Street, Bristol,
United Kingdom BS2 8RH or by telephone at 011-44-117-984-4721.

Onex
holds subordinate voting shares in trust for Celestica Employee Nominee Corporation. Onex Corporation can be reached at 161 Bay Street, P.O. Box 700, Toronto,
Ontario, M5J 2S1.

Corporate Governance

We are subject to a variety of corporate governance guidelines and requirements enacted by the Toronto Stock Exchange, the Canadian Securities Administrators, the
New York Stock Exchange and by the U.S. Securities and Exchange Commission under its rules and those mandated by the United States Sarbanes-Oxley Act of 2002. Today, we meet and
often exceed not only corporate governance legal requirements in Canada and the United States, but also the best practices recommended by securities regulators. We are listed on the
New York Stock Exchange and, although we are not required to comply with all of the New York Stock Exchange corporate governance requirements to which we would be subject if we were a
U.S. corporation, we have aligned our governance practices with all of those requirements.

A.    Share Capital

Not applicable.

B.    Memorandum and Articles of Incorporation



The Business Corporations Act (Ontario), or the OBCA, requires Celestica to call an annual shareholders' meeting not later than 15 months after holding the
last preceding annual meeting and permits Celestica to call a special shareholders' meeting at any time. In addition, in accordance with the OBCA, the holders of not less than 5% of Celestica's shares
carrying the right to vote at a meeting sought to be held may requisition our directors to call a special shareholders' meeting for the purposes stated in the requisition. Celestica is required to
mail a notice of meeting and management information circular to registered shareholders not less than 21 days and not more than 50 days prior to the date of any annual or special
shareholders' meeting. These materials also are filed with Canadian securities regulatory authorities and the SEC. Our by-laws provide that a quorum of two shareholders in person or
represented by proxy holding or representing by proxy not less than 35% of Celestica's issued shares carrying the right to vote at the meeting is required to transact business at a

74

---



shareholders'
meeting. Shareholders, and their duly appointed proxies and corporate representatives, as well as our auditors, are entitled to be admitted to our annual and special shareholders'
meetings.



Celestica's articles of incorporation do not place any restrictions on Celestica's objects and purposes.



The OBCA requires that every director who is a party to a material contract or transaction or a proposed material contract or transaction with a company, or who
is a director or officer of, or has a material interest in, any person who is a party to a material contract or transaction or a proposed material contract or transaction with the company, shall
disclose in writing to the company or request to have entered in the minutes of the meetings of directors the nature and extent of his or her interest, and shall refrain from voting in respect of the
material contract or transaction or proposed material contract or transaction unless the contract or transaction is:



However,
a director who is prohibited by the OBCA from voting on a material contract or proposed material contract may be counted in determining whether a quorum is present for the
purpose of the resolution, if the director disclosed his or her interest in accordance with the OBCA and the contract or transaction was reasonable and fair to the corporation at the time it was
approved.

Celestica's
by-laws provide that the directors shall from time to time determine by resolution the remuneration to be paid to the directors, which shall be in addition to the
salary paid to any officer or employee of Celestica who is also a director. The directors may also by resolution award special remuneration to any director in undertaking any special services on
Celestica's behalf other than the normal work ordinarily required of a director of Celestica. The by-laws provide that confirmation of any such resolution by Celestica's shareholders is
not required.

The
by-laws provide that the directors may:



The
directors may, by resolution, amend or repeal any by-laws that regulate the business or affairs of Celestica. The OBCA requires the directors to submit any such amendment
or repeal to Celestica's shareholders at the next meeting of shareholders, and the shareholders may confirm, reject or amend the amendment or repeal.

75

---





The by-laws provide that every director shall be an individual 18 or more years of age, and that no one who is of unsound mind and has been so
found by a court in Canada or elsewhere or who has the status of a bankrupt shall be a director. There is no provision of the articles of incorporation or by-laws imposing a requirement
for retirement or non-retirement of directors under an age limit requirement. The OBCA requires that a majority of the directors of Celestica be resident Canadians.

The
OBCA provides that unless the articles of a corporation otherwise provide, a director of a corporation is not required to hold shares issued by the corporation. There is no provision
in the articles of incorporation imposing a requirement that a director hold any shares issued by Celestica. In April 2004, Celestica's Board of Directors established a guideline for minimum
shareholdings for independent directors. The guideline currently requires that directors hold securities of Celestica of a value proportionate to their annual retainer and the years they have served
on our Board. See Item 6, "Directors, Senior Management and Employees  Compensation."



The rights and preferences attaching to our subordinate voting shares and multiple voting shares are described in the section entitled "Description of Capital
Stock" of our registration statement on Form F-3 (Reg. No. 333-69278), filed with the SEC on September 12, 2001. The rights and preferences attaching to
our LYONs are described in the section entitled "Description of LYONs" of our Rule 424(b) prospectus, filed with the SEC on July 26, 2000, as part of our registration statement on
Form F-3 (Reg. No. 333-12338), filed with the SEC on July 24, 2000. The rights and preferences attaching to our 77/8% Senior Subordinated
Notes due 2011 are described in the section entitled "Description of Notes" of our Rule 424(b) prospectus, filed with the SEC on June 14, 2004. Those sections are hereby
incorporated by reference into this Annual Report.

Additional
information concerning the rights and limitations of shareholders found in Celestica's articles of incorporation is hereby incorporated by reference to our registration
statement on Form F-4 (Reg. No. 333-9636).

C.    Material Contracts

The following table summarizes each material contract, other than contracts entered into in the ordinary course of business, to which Celestica or any member of
Celestica's group is a party, for the two years immediately preceding the publication of this Annual Report:

|Date             |  | Parties                                                                 |  | Type                         |  | Terms and Conditions                                                                        |  | Approximate Consideration
|---------------- |  | ----------------------------------------------------------------------- |  | ---------------------------- |  | ------------------------------------------------------------------------------------------- |  | -------------------------
|October 14, 2003 |  | Celestica, MSL Acquisition Sub Inc. and Manufacturers' Services Limited |  | Agreement and Plan of Merger |  | Manufacturers' Services Limited merged with and into a wholly-owned subsidiary of Celestica |  | $320 million(1)          

---

See Item 5, " Operating and Financial Review and Prospects  Liquidity and
Capital Resources  Indebtedness."

D.    Exchange Controls

Canada has no system of exchange controls. There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to
non-resident investors. There are no laws of Canada or

76

---



exchange
restrictions affecting the remittance of dividends, interest, royalties or similar payments to non-resident holders of Celestica's securities, except as described under
Item 10(E), " Taxation," below.

E.    Taxation

Material Canadian Federal Income Tax Considerations

The following is a summary of the material Canadian federal income tax considerations generally applicable to a person (a "U.S. Holder") who
acquires subordinate voting shares and who, for purposes of the Income Tax Act (Canada) (the "Canadian Tax Act") and the Canada-United States Income Tax Convention (1980)
(the "Tax Treaty"), at all relevant times is resident in the United States and is neither resident nor deemed to be resident in Canada, deals at arm's length and is not affiliated with
Celestica, holds such subordinate voting shares as capital property, and does not use or hold, and is not deemed to use or hold, the subordinate voting shares in carrying on business in Canada.
Special rules, which are not discussed in this summary, may apply to a U.S. Holder that is a financial institution (as defined in the Canadian Tax Act), or is an insurer to whom
the subordinate voting shares are designated insurance property (as defined in the Canadian Tax Act).

This
summary is based on the current provisions of the Tax Treaty, the Canadian Tax Act and the regulations thereunder, all specific proposals to amend the Canadian Tax Act
or the regulations publicly announced by the Minister of Finance (Canada) prior to February 21, 2005, and Celestica's understanding of the current published administrative practices of the
Canada Revenue Agency.

This
summary is not exhaustive of all possible Canadian federal income tax considerations and, except as mentioned above, does not take into account or anticipate any changes in law,
whether by legislative, administrative or judicial decision or action, nor does it take into account the tax legislation or considerations of any province or territory of Canada or any jurisdiction
other than Canada, which may differ significantly from the considerations described in this summary.

This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular holder, and no
representation with respect to the Canadian federal income tax consequences to any particular holder is made. Consequently, U.S. Holders of subordinate voting shares should consult their own
tax advisors with respect to the income tax consequences to them having regard to their particular circumstances.

All
amounts relevant in computing a U.S. Holder's liability under the Canadian Tax Act are to be computed in Canadian dollars.



By virtue of the Canadian Tax Act and the Tax Treaty, dividends (including stock dividends) on subordinate voting shares paid or credited or deemed to be
paid or credited to a U.S. Holder who is the beneficial owner of such dividends will be subject to Canadian non-resident withholding tax at the rate of 15% of the gross amount of
such dividends. Under the Tax Treaty, the rate of withholding tax on dividends is reduced to 5% if that U.S. Holder is a company that beneficially owns at least 10% of the voting stock of
Celestica. Moreover, under the Tax Treaty, dividends paid to certain religious, scientific, literary, educational or charitable organizations and certain pension organizations that are resident in,
and generally exempt from tax in, the U.S., generally are exempt from Canadian non-resident withholding tax. Provided that certain administrative procedures are observed by such an
organization, Celestica would not be required to withhold such tax from dividends paid or credited to such organization.



A U.S. Holder will not be subject to tax under the Canadian Tax Act in respect of any capital gain realized on the disposition or deemed disposition
of subordinate voting shares unless the subordinate voting shares constitute or are deemed to constitute "taxable Canadian property" (as defined in the Canadian Tax Act) (other than
treaty-protected property, as defined in the Canadian Tax Act) at the time of such disposition. Shares of a corporation resident in Canada that are listed on a prescribed stock exchange for
purposes of the Canadian Tax Act will be "taxable Canadian property" under the Canadian Tax Act if, at any time during the five-year

77

---



period
immediately preceding the disposition or deemed disposition of the share, the U.S. Holder, persons with whom the U.S. Holder did not deal at arm's length, or the
U.S. Holder together with such persons owned 25% or more of the issued shares of any class or series of shares of the corporation that issued the shares. Provided they are listed on a
prescribed stock exchange for purposes of the Canadian Tax Act (which includes the TSX and NYSE), subordinate voting shares acquired by a U.S. Holder generally will not be taxable
Canadian property to a U.S. Holder unless the foregoing 25% ownership threshold applies to the U.S. Holder with respect to Celestica or the subordinate voting shares are otherwise deemed
by the Canadian Tax Act to be taxable Canadian property. Even if the subordinate voting shares are taxable Canadian property to a U.S. Holder, they generally will be treaty-protected
property if the value of such shares at the time of disposition is not derived principally from real property situated in Canada. Consequently, any gain realized by the U.S. Holder upon the
disposition of the subordinate voting shares generally will be exempt from tax under the Canadian Tax Act.

Material United States Federal Income Tax Considerations

The following discussion describes the material United States federal income tax consequences to United States Holders (as defined below) of
subordinate voting shares. A United States Holder is a citizen or resident of the United States, a corporation (or other entity taxable as a corporation), partnership or limited
liability company created or organized in or under the laws of the United States or of any political subdivision thereof, an estate, the income of which is includible in gross income for
U.S. federal income tax purposes regardless of its source, or a trust, if either (i) a court within the United States is able to exercise primary supervision over the
administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) the trust has made an election under applicable
U.S. Treasury regulations to be treated as a United States person. If a partnership (or limited liability company that is treated as a partnership) holds subordinate voting
shares, the tax treatment of a partner generally will depend upon the status of the partner and upon the activities of the partnership. If you are a partner of a partnership holding subordinate voting
shares, we suggest that you consult with your tax advisor. This summary is for general information purposes only. It does not purport to be a comprehensive description of all of the tax considerations
that may be relevant to your decision to purchase, hold or dispose of subordinate voting shares. This summary considers only United States Holders who will own subordinate voting shares as
capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"). In this context, the term "capital assets" means, in
general, assets held for investment by a taxpayer. Material aspects of U.S. federal income tax relevant to non-United States Holders are also discussed below.

This
discussion is based on current provisions of the Internal Revenue Code, current and proposed Treasury regulations promulgated thereunder and administrative and judicial decisions as
of February 21, 2005, all of which are subject to change, possibly on a retroactive basis. This discussion does not address all aspects of U.S. federal income taxation that may be
relevant to any particular United States Holder based on the United States Holder's individual circumstances. In particular, this discussion does not address the potential application of
the alternative minimum tax or U.S. federal income tax consequences to United States Holders who are subject to special treatment, including taxpayers who are broker-dealers or insurance
companies, taxpayers who have elected mark-to-market accounting, individual retirement and other tax-deferred accounts, tax-exempt organizations,
financial institutions or "financial services entities," taxpayers who hold subordinate voting shares as part of a "straddle," "hedge" or "conversion transaction" with other investments, taxpayers
owning directly, indirectly or by attribution at least 10% of the voting power of our share capital, and taxpayers whose functional currency (as defined in Section 985 of the Internal
Revenue Code) is not the U.S. dollar.

This
discussion does not address any aspect of U.S. federal gift or estate tax or state, local or non-U.S. tax laws. Additionally, the discussion does not
consider the tax treatment of persons who hold subordinate voting shares through a limited liability company or through a partnership or other pass-through entity (such as an S
corporation). For U.S. federal income tax purposes, income earned through a foreign or domestic partnership or similar entity is generally attributed to its owners. You are advised to consult
your own tax advisor with respect to the specific tax consequences to you of purchasing, holding or disposing of the subordinate voting shares.

78

---





In the event that Celestica pays a dividend, and subject to the discussion of the passive foreign investment company (PFIC) rules below, a United States
Holder will be required to include in gross income as ordinary income the amount of any distribution paid on subordinate voting shares, including any Canadian taxes withheld from the amount paid, on
the date the distribution is received, to the extent that the distribution is paid out of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. In
addition, distributions of the Company's current or accumulated earnings and profits will be foreign source passive income for U.S. foreign tax credit purposes and will not qualify for the
dividends-received deduction available to corporations. Distributions in excess of such earnings and profits will be applied against and will reduce the United States Holder's tax basis in the
subordinate voting shares and, to the extent in excess of such basis, will be treated as capital gain.

Distributions
of current or accumulated earnings and profits paid in Canadian dollars to a United States Holder will be includible in the income of the United States Holder
in a dollar amount calculated by reference to the exchange rate on the date the distribution is received. A United States Holder who receives a distribution of Canadian dollars and converts the
Canadian dollars into U.S. dollars subsequent to receipt will have foreign exchange gain or loss based on any appreciation or depreciation in the value of the Canadian dollar against the
U.S. dollar. Such gain or loss will generally be ordinary income and loss and will generally be U.S. source gain or loss for U.S. foreign tax credit purposes. United States
Holders should consult their own tax advisors regarding the treatment of a foreign currency gain or loss.

United States
Holders will generally have the option of claiming the amount of any Canadian income taxes withheld either as a deduction from gross income or as a
dollar-for-dollar credit against their U.S. federal income tax liability, subject to specified conditions and limitations. Individuals who do not claim itemized
deductions, but instead utilize the standard deduction, may not claim a deduction for the amount of the Canadian income taxes withheld, but these individuals generally may still claim a credit against
their U.S. federal income tax liability. The amount of foreign income taxes that may be claimed as a credit in any year is subject to complex limitations and restrictions, which must be
determined on an individual basis by each shareholder. The total amount of allowable foreign tax credits in any year cannot exceed the pre-credit U.S. tax liability for the year
attributable to foreign source taxable income and further limitations may apply under the alternative minimum tax. A United States Holder will be denied a foreign tax credit with respect to
Canadian income tax withheld from dividends received on subordinate voting shares to the extent that he or she has not held the subordinate voting shares for at least 16 days of the
30-day period beginning on the date which is 15 days before the ex-dividend date or to the extent that he or she is under an obligation to make related payments with
respect to substantially similar or related property. Instead, a deduction may be allowed. Any days during which a United States Holder has substantially diminished his or her risk of loss on
his or her subordinate voting shares are not counted toward meeting the 16-day holding period.

Individuals
who receive "qualified dividend income" (excluding dividends from a PFIC) in taxable years beginning after December 31, 2002 and before January 1, 2009
generally will be taxed at a maximum U.S. federal rate of 15% (rather than the higher tax rates generally applicable to items of ordinary income) provided certain holding period requirements
are met. Based upon current Internal Revenue Service pronouncements, Celestica believes that dividends paid by it with respect to its subordinate voting shares should constitute "qualified dividend
income" for United States federal income tax purposes and that holders
who are individuals (as well as certain trusts and estates) should be entitled to the reduced rates of tax, as applicable. Holders are urged to consult their own tax advisors regarding the
impact of the "qualified dividend income" provisions of the Internal Revenue Code on their particular situations, including related restrictions and special rules.



Subject to the discussion of the PFIC rules below, upon the sale, exchange or other disposition of subordinate voting shares, a United States Holder will
recognize capital gain or loss in an amount equal to the difference between his or her adjusted tax basis in his or her shares and the amount realized on the disposition. A United States
Holder's adjusted tax basis in the subordinate voting shares will generally be the initial cost, but

79

---



may
be adjusted for various reasons including the receipt by such United States Holder of a distribution that was not made up wholly of earning and profits as described above under the heading
"Taxation of Dividends Paid on Subordinate Voting Shares." A United States Holder that uses the cash method of accounting calculates the dollar value of the proceeds received on the sale date
as of the date that the sale settles, while a United States Holder who uses the accrual method of accounting is required to calculate the value of the proceeds of the sale as of the "trade
date," unless he or she has elected to use the settlement date to determine his or her proceeds of sale. Capital gain from the sale, exchange or other disposition of shares held more than one year is
long-term capital gain and is eligible for a maximum 15% rate of taxation for non-corporate taxpayers. Special rules (and generally lower maximum rates) apply to
non-corporate taxpayers in lower tax brackets. Further preferential tax treatment may be available for non-corporate taxpayers who dispose of subordinate voting shares held for
over five years. Gain or loss recognized by a United States Holder on a sale, exchange or other disposition of subordinate voting shares generally will be treated as U.S. source income
or loss for U.S. foreign tax credit purposes. The deductibility of a capital loss recognized on the sale, exchange or other disposition of subordinate voting shares is subject to limitations. A
United States Holder who receives foreign currency upon disposition of subordinate voting shares and converts the foreign currency into U.S. dollars subsequent to receipt will have
foreign exchange gain or loss based on any appreciation or depreciation in the value of the foreign currency against the U.S. dollar. United States Holders should consult their own tax
advisors regarding the treatment of a foreign currency gain or loss.



A non-U.S. corporation will be a passive foreign investment company, or PFIC, if, in general, either (i) 75% or more of its gross income
in a taxable year, including the pro rata share of the gross income of any U.S. or foreign company in which it is considered to own 25% or more of the shares by value, is passive income or
(ii) 50% or more of its assets in a taxable year, averaged over the year and ordinarily determined based on fair market value and including the pro rata share of the assets of any
company in which it is considered to own 25% or more of the shares by value, are held for the production of, or
produce, passive income. Passive income includes amounts derived by reason of the temporary investment of funds raised in a public offering. If we were a PFIC and a United States Holder did not
make an election to treat the company as a "qualified electing fund" and did not make a mark-to-market election, each as described below, then:



The
special PFIC rules will not apply to a United States Holder if the United States Holder makes an election to treat the company as a "qualified electing fund" in the
first taxable year in which he or she owns subordinate voting shares and if we comply with reporting requirements. Instead, a shareholder of a qualified electing fund is required for each taxable year
to include in income a pro rata share of the ordinary earnings of the qualified electing fund as ordinary income and a pro rata share of the net capital gain of the qualified electing
fund as long-term capital gain, subject to a separate election to defer payment of taxes, which deferral is subject to an interest charge. We have agreed to supply United States
Holders with the information needed to

80

---



report
income and gain pursuant to this election in the event that we are classified as a PFIC. The election is made on a shareholder-by-shareholder basis and may be revoked
only with the consent of the Internal Revenue Service, or IRS. A shareholder makes the election by attaching a completed IRS Form 8621, including the PFIC annual information statement, to a
timely filed U.S. federal income tax return. Even if an election is not made, a shareholder in a PFIC who is a United States Holder must file a completed IRS Form 8621
every year.

A
United States Holder who owns PFIC shares that are publicly traded could elect to mark the shares to market annually, recognizing as ordinary income or loss each year an amount
equal to the difference as of the close of the taxable year between the fair market value of the PFIC shares and the United States Holder's adjusted tax basis in the PFIC shares. If the
mark-to-market election were made, then the rules set forth above would not apply for periods covered by the election. The subordinate voting shares would be treated as
publicly traded for purposes of the mark-to-market election and, therefore, such election would be made if Celestica were classified as a PFIC. A
mark-to-market election is, however, subject to complex and specific rules and requirements, and United States Holders are strongly urged to consult their tax advisors
concerning this election if we are classified as a PFIC.

We
believe that we will not be a PFIC for 2005. Based on our current business plan, we do not expect to become a PFIC in the foreseeable future. These conclusions rest, at least in part,
on factual issues, including a determination as to value of assets and projections as to our revenue. We cannot assure you that our actual revenues, including our revenues for the remainder of 2005,
will be as projected or that a determination as to non-PFIC status would not be challenged by the Internal Revenue Service. Moreover, the tests for determining PFIC status are applied
annually, and it is difficult to make accurate predictions of future income and assets, which are relevant to the determination as to whether we will be a PFIC in the future. A United States
Holder who holds subordinate voting shares during a period in which we are a PFIC will be subject to the PFIC rules, even if we cease to be a PFIC, unless he or she has made a qualifying electing fund
election. If we were determined to be a PFIC with respect to a year in which we had not thought that we would be so treated, the information needed to enable United States Holders to make a
qualifying electing fund election would not have been provided. United States Holders are strongly urged to consult their tax advisors about the PFIC rules, including the consequences to them
of making a mark-to-market or qualifying electing fund elections with respect to subordinate voting shares in the event that we are treated as a PFIC.



Except as described in "Information Reporting and Back-up Withholding" below, a non-United States Holder of subordinate voting
shares will not be subject to U.S. federal income or withholding tax on the payment of dividends on, and the proceeds from the disposition of, subordinate voting shares unless:





United States Holders generally are subject to information reporting requirements and back-up withholding at a current rate of 28% with respect
to dividends paid in the United States and on proceeds paid from the disposition of shares, unless the United States Holder (i) is a corporation or comes within certain other
exempt categories and demonstrates this fact when so required, or (ii) provides a correct taxpayer identification number, certifies that it is not subject to backup withholdings, and otherwise
complies with applicable requirements of the backup withholding rules.

81

---



Non-United States
Holders generally are not subject to information reporting or back-up withholding with respect to dividends paid on or upon the
disposition of shares, provided in some instances that the non-United States Holder provides a taxpayer identification number, certifies to his foreign status or otherwise
establishes an exemption.

The
amount of any back-up withholding will be allowed as a credit against U.S. federal income tax liability and may entitle the Holder to a refund, provided that
required information is furnished to the Internal Revenue Service.

F.     Dividends and Paying Agents

Not applicable.

G.    Statement by Experts

Not applicable.

H.    Documents on Display

Any statement in this Annual Report about any of our contracts or other documents is not necessarily complete. If the contract or document is filed as an exhibit
to this Annual Report or is incorporated by reference, the contract or document is deemed to modify our description. You must review the exhibits themselves for a complete description of the contract
or document.

You
may review a copy of our filings with the SEC, including exhibits and schedules filed with this Annual Report, at the SEC's public reference facilities in Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You may also obtain copies of such materials from the Public Reference Section of the SEC, Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. You may call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. The SEC maintains a web-site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that file
electronically with the SEC. We began to file electronically with the SEC in November 2000.

You
may read and copy any reports, statements or other information that we file with the SEC at the addresses indicated above and you may also access some of them electronically at the
web-site set forth above. These SEC filings are also available to the public from commercial document retrieval services.

We
also file reports, statements and other information with the Canadian Securities Administrators, or the CSA, and these can be accessed electronically at the CSA's System for
Electronic Document Analysis and Retrieval web-site (http://www.sedar.com).

I.     Subsidiary Information

Not applicable.

Item 11.    Quantitative and Qualitative Disclosures about Market Risk

Exchange Rate Risk

Celestica has entered into foreign currency contracts to hedge foreign currency risk. These financial instruments include, to varying degrees, elements of market
risk in excess of amounts recognized in the balance sheets. The table below provides information about Celestica's foreign currency contracts. The table presents the notional amounts and weighted
average exchange rates by expected (contractual) maturity dates. These notional

82

---



amounts
generally are used to calculate the contractual payments to be exchanged under the contracts. At December 31, 2004, these contracts had a fair value unrealized gain of
U.S.$31.1 million.

|                                     |                               | Expected Maturity Date |      
|------------------------------------ | ----------------------------- | ---------------------- | -----
|
|Forward Exchange Agreements          |                               |                        |      
|Receive C$/Pay U.S.$                 |                               |                        |      
|                                     | Contract amount (in millions) |                        | $    
|                                     | Average exchange rate         |                        | $    
|Receive Euro/Pay U.S.$               |                               |                        |      
|                                     | Contract amount (in millions) |                        | $    
|                                     | Average exchange rate         |                        | $    
|Receive U.S.$/Pay Euro               |                               |                        |      
|                                     | Contract amount (in millions) |                        | $    
|                                     | Average exchange rate         |                        | $    
|Receive Mexican Pesos/Pay U.S.$      |                               |                        |      
|                                     | Contract amount (in millions) |                        | $    
|                                     | Average exchange rate         |                        | $    
|Receive £/Pay U.S.$                  |                               |                        |      
|                                     | Contract amount (in millions) |                        | $    
|                                     | Average exchange rate         |                        | $    
|Receive Singapore $/Pay U.S.$        |                               |                        |      
|                                     | Contract amount (in millions) |                        | $    
|                                     | Average exchange rate         |                        | $    
|Receive Czech Koruna/Pay U.S.$       |                               |                        |      
|                                     | Contract amount (in millions) |                        | $    
|                                     | Average exchange rate         |                        | $    
|Receive Thai Baht/Pay U.S.$          |                               |                        |      
|                                     | Contract amount (in millions) |                        | $    
|                                     | Average exchange rate         |                        | $    
|Receive Malaysian ringgits/Pay U.S.$ |                               |                        |      
|                                     | Contract amount (in millions) |                        | $    
|                                     | Average exchange rate         |                        | $    
|Receive Japanese yen/Pay U.S.$       |                               |                        |      
|                                     | Contract amount (in millions) |                        | $    
|                                     | Average exchange rate         |                        | $    
|                                     |                               |                        |      
|Total                                |                               | $                      | 486.3
|                                     |                               |                        |      

Interest Rate Risk

Celestica's existing debt is comprised of capital lease commitments amounting to $3.4 million. These capital lease commitments are not sensitive to changes
in interest rates.

In
June 2004, we issued Senior Subordinated Notes (Notes) with an aggregate principal amount of $500.0 million due 2011, with a fixed interest rate of 7.875%. In connection
with the Notes offering, Celestica has entered into interest rate swap agreements which hedge the fair value of the Notes by swapping the fixed rate of interest for a variable rate based on LIBOR plus
a margin. The notional amount of the agreements is $500.0 million. The agreements are effective as of June 2004 and mature July 2011. The average interest rate on the Notes for
the year was 4.92%, after reflecting the interest rate swap. As a result of entering into the interest rate swap agreements, we are exposed to interest rate risks due to fluctuations in the LIBOR
rate. A one-percentage point increase in the LIBOR rate would increase interest expense by $5.0 million annually.

Convertible debt (LYONs)

As of December 31, 2004, we have convertible instruments, with an outstanding principal amount at maturity of $614.4 million, payable
August 1, 2020. We were not exposed to interest rate risk on this debt because (i) the issue price represents a fixed yield to maturity, (ii) the principal payable at maturity is
fixed and (iii) the conversion ratio into subordinate voting shares of Celestica is fixed.

83

---





Item 12. Description of Securities Other than Equity Securities

Not applicable.

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

None.

Item 15. Controls and Procedures

Based on their evaluation of Celestica's disclosure controls and procedures as of the end of the period covered by this Annual Report, the Chief Executive Officer
and Chief Financial Officer have concluded that such controls and procedures are effective.

There
were no changes in Celestica's internal controls over financial reporting identified in connection with their evaluation that occurred during the period covered by this annual
report that have materially affected, or are reasonably likely to materially affect, Celestica's control over financial reporting.

Item 16. [Reserved]

Item 16A. Audit Committee Financial Expert

The Board of Directors has considered the extensive financial experience of Mr. Crandall and Mr. Etherington, including their respective experiences
serving as the Chief Financial Officer of a large U.S. and/or Canadian organization, and has determined that each of them is an audit committee financial expert within the meaning of the
U.S. Sarbanes-Oxley Act of 2002.

The
Board of Directors also determined that Messrs. Crandall and Etherington are independent directors, as that term is defined in the NYSE listing standards.

Item 16B. Code of Ethics

The Board of Directors has adopted a Finance Code of Professional Conduct for Celestica's Chief Executive Officer, our senior finance officers, and all personnel
in the finance organization to deter wrongdoing and promote honest and ethical conduct in the practice of financial management; full, fair, accurate, timely and understandable disclosure; and
compliance with all applicable laws and regulations. These professionals are expected to abide by this code as well as Celestica's Business Conduct Governance policy and all of our other applicable
business policies, standards and guidelines.

The
Finance Code of Professional Conduct and the Business Conduct Governance policy can be accessed electronically at http://www.celestica.com.

Item 16C. Principal Accountant Fees and Service

The auditor is engaged to provide services pursuant to pre-approval policies and procedures established by the Audit Committee of Celestica's board of directors.
The Audit Committee approves the external auditor's
Audit Plan, the scope of the external auditor's quarterly reviews and all related fees. The Audit Committee approves any non-audit services provided by the auditor and considers whether
these services are compatible with the external auditor's independence.

Celestica's
auditors are KPMG LLP. KPMG did not provide any financial information systems design or implementation services to Celestica during 2003 or 2004. The Audit Committee
has determined that the provision of the non-audit services by KPMG does not compromise KPMG's independence. Celestica also used

84

---



other
public accounting firms for consulting and other services for fees totaling $4.7 million in 2004 and $4.0 million in 2003.

Audit Fees

KPMG billed Celestica $2.1 million in 2004 and $1.7 million in 2003 for audit services.

Audit-Related Fees

KPMG billed Celestica $1.0 million in 2004 and $0.4 million in 2003 for audit-related services, primarily in connection with financial due diligence
services for acquisitions and other non-statutory audits.

Tax Fees

KPMG billed Celestica $1.6 million in 2004 and $2.0 million in 2003 for tax compliance, tax advice, tax planning services and tax due diligence
services.

All Other Fees

KPMG billed Celestica $0.2 million in 2004 and $0.6 million in 2003 for actuarial and other services provided in connection with Celestica's pension
plans. In accordance with the new independence requirements in 2004, Celestica no longer engages KPMG for these services.

Item 16D. Exemptions from the Listing Standards for Audit Committees

None.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

|         
|---------
|
|         
|June 2004
|         

PART III

Item 17. Financial Statements

Not applicable.

Item 18. Financial Statements

The following financial statements have been filed as part of this Annual Report:

|                                                                                                     |  | Page
|---------------------------------------------------------------------------------------------------- |  | ----
|Report of Independent Registered Public Accounting Firm                                              |  | F-1 
|Auditors' Report                                                                                     |  | F-2 
|Consolidated Balance Sheets as at December 31, 2003 and 2004                                         |  | F-3 
|Consolidated Statements of Loss for the years ended December 31, 2002, 2003 and 2004                 |  | F-4 
|Consolidated Statements of Shareholders' Equity for the years ended December 31, 2002, 2003 and 2004 |  | F-5 
|Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2003 and 2004           |  | F-6 
|Notes to the Consolidated Financial Statements                                                       |  | F-7 

85

---





Item 19. Exhibits

The following exhibits have been filed as part of this Annual Report:

|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Incorporated by Reference |  |          
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- |  | ---------
|
|1.   |  | Articles of Incorporation and Bylaws as currently in effect:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                           |  |          
|1.1  |  | Certificate and Articles of Incorporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | F-1                       |  | 333-8700 
|1.2  |  | Certificate and Articles of Amendment effective October 22, 1996                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | F-1                       |  | 333-8700 
|1.3  |  | Certificate and Articles of Amendment effective January 24, 1997                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | F-1                       |  | 333-8700 
|1.4  |  | Certificate and Articles of Amendment effective October 8, 1997                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | F-1                       |  | 333-8700 
|1.5  |  | Certificate and Articles of Amendment effective April 29, 1998                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | F-1/A                     |  | 333-8700 
|1.6  |  | Articles of Amendment effective
June 26, 1998                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | F-1                       |  | 333-10030
|1.7  |  | Restated Articles of Incorporation effective June 26, 1998                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | F-1                       |  | 333-10030
|1.8  |  | Restated Articles of Incorporation effective November 20, 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | 20-F                      |  | 001-14832
|1.9  |  | Restated Article of Incorporation effective May 13, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | 20-F                      |  | 001-14832
|1.10 |  | Bylaw No. 1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 20-F                      |  | 001-14832
|1.11 |  | Bylaw No. 2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | F-1                       |  | 333-8700 
|1.12 |  | Bylaw No. 3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 20-F                      |  | 001-14832
|1.13 |  | Bylaw No. 4                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 20-F                      |  | 001-14832
|1.14 |  | Bylaw No. A                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 20-F                      |  | 001-14832
|2.   |  | Instruments defining rights of holders of equity or debt securities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                           |  |          
|2.1  |  | See Certificate and Articles of Incorporation and amendments thereto identified above                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                           |  |          
|2.2  |  | Form of Subordinate Voting Share Certificate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | F-1/A                     |  | 333-8700 
|2.3  |  | Indenture, dated as of August 1, 2000, between Celestica Inc. and The Chase Manhattan Bank, as Trustee (including a form of the Outstanding Notes)                                                                                                                                                                                                                                                                                                                                                                                                                    |  | 6-K                       |  | 001-14832
|2.4  |  | Third Amended and Restated Revolving Term Credit Agreement, June 4, 2004, between: Celestica Inc., the Subsidiaries of Celestica Inc. specified therein as Designated Subsidiaries, CIBC World Markets, as
Joint Lead Arranger, RBC Capital Markets, as Joint Lead Arranger and Co-Syndication Agent, Canadian Imperial Bank of Commerce, a Canadian Chartered Bank, as Administrative Agent, The Bank Of Nova Scotia, as Documentation Agent, Banc of America
Securities LLC, as Co-Syndication Agent and the financial institutions named in Schedule A, as lenders |  | 6-K                       |  | 001-14832

86

---



|2.5 |  | Indenture, dated as of June 16, 2004, between Celestica Inc. and JPMorgan Chase Bank, N.A., as trustee                                                                                                                                                                                                                      |  | 6-K  |  | 0001-14832 |  | June 17, 2004     |  | 4.11 |  |  
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | ---------- |  | ----------------- |  | ---- |  | -
|2.6 |  | First Supplemental Indenture, dated as of June 16, 2004, between Celestica Inc. and JPMorgan Chase Bank, N.A., as trustee, to the Indenture, dated as of June 16, 2004, between Celestica Inc. and
JPMorgan Chase Bank, N.A., as trustee                                                                                    |  | 6-K  |  | 0001-14832 |  | June 17, 2004     |  | 4.21 |  |  
|2.7 |  | Second Supplemental Indenture, dated as of December 30, 2004, between Celestica Inc. and JPMorgan Chase Bank, N.A., as trustee, to the First Supplemental Indenture, dated as of June 16, 2004, between
Celestica Inc. and the trustee, to the Indenture, dated as of June 16, 2004, between Celestica Inc. and the trustee |  |      |  |            |  |                   |  |      |  | X
|4.  |  | Certain Contracts:                                                                                                                                                                                                                                                                                                          |  |      |  |            |  |                   |  |      |  |  
|4.1 |  | Amended and Restated Management Services Agreement, dated as of July 1, 2003, among Celestica Inc., Celestica North America Inc. and Onex Corporation                                                                                                                                                                       |  | F-4  |  | 333-110362 |  | November 10, 2003 |  | 10.1 |  |  
|4.2 |  | Stock Purchase Agreement, dated January 8, 2002, between NEC Corporation, NEC Miyagi, Ltd., NEC Yamanashi, Ltd., 1325091 Ontario Inc., and Celestica Inc*                                                                                                                                                                   |  | 20-F |  | 001-14832  |  | April 21, 2003    |  | 3.8  |  |  
|4.3 |  | Agreement and Plan of Merger, dated as of October 14, 2003, by and among Celestica Inc., MSL Acquisition Sub Inc. and Manufacturers' Services Limited                                                                                                                                                                       |  | F-4  |  | 333-110362 |  | November 10, 2003 |  | 2.1  |  |  
|4.4 |  | Executive Employment Agreement, dated as of July 22, 2004, between Celestica Inc., Celestica International Inc., Celestica Corporation and Stephen W. Delaney                                                                                                                                                               |  |      |  |            |  |                   |  |      |  | X
|4.5 |  | Amending Agreement to Executive Employment Agreement, dated as of February 9, 2005, between Celestica Inc., Celestica International Inc., Celestica Corporation and Stephen W. Delaney                                                                                                                                      |  |      |  |            |  |                   |  |      |  | X
|4.6 |  | Executive Employment Agreement, dated as of July 22, 2004, between Celestica Inc., Celestica International Inc. and J. Marvin MaGee                                                                                                                                                                                         |  |      |  |            |  |                   |  |      |  | X
|4.7 |  | Amending Agreement to Executive Employment Agreement, dated as of February 9, 2005, between Celestica Inc., Celestica International Inc. and J. Marvin MaGee                                                                                                                                                                |  |      |  |            |  |                   |  |      |  | X
|4.8 |  | Executive Employment Agreement, dated as of July 22, 2004, between Celestica Inc., Celestica International Inc. and Anthony P. Puppi                                                                                                                                                                                        |  |      |  |            |  |                   |  |      |  | X
|4.9 |  | Executive Employment Agreement, dated as of July 22, 2004, between Celestica Inc., Celestica International Inc. and Peter J. Bar                                                                                                                                                                                            |  |      |  |            |  |                   |  |      |  | X
|    |  |                                                                                                                                                                                                                                                                                                                             |  |      |  |            |  |                   |  |      |  |  

87

---



|4.10 |  | Executive Employment Agreement, dated as of October 22, 1996, between Celestica, Inc. and Lisa J. Colnett                                  |  |       |  |          |  |                 |  |       |  | X
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------ |  | ----- |  | -------- |  | --------------- |  | ----- |  | -
|4.11 |  | Executive Employment Agreement, dated as of July 22, 2004, between Celestica Inc., Celestica International Inc. and Elizabeth L. DelBianco |  |       |  |          |  |                 |  |       |  | X
|4.12 |  | Employment Agreement, dated as of November 2, 1998, between Celestica Asia Inc. and Nate Kawaye                                            |  |       |  |          |  |                 |  |       |  | X
|4.13 |  | Executive Employment Agreement, dated as of July 22, 2004, between Celestica Inc., Celestica International Inc. and Paul Nicoletti         |  |       |  |          |  |                 |  |       |  | X
|4.14 |  | Employment Agreement, dated as of November 2, 1998, between Celestica Asia Inc. and Neo Kia Quek                                           |  |       |  |          |  |                 |  |       |  | X
|4.15 |  | Executive Employment Agreement, dated as of July 22, 2004, between Celestica Inc., Celestica International Inc. and Rahul Suri             |  |       |  |          |  |                 |  |       |  | X
|4.16 |  | Canadian Share Unit Plan                                                                                                                   |  |       |  |          |  |                 |  |       |  | X
|4.17 |  | D2D Employee Share Purchase and Option Plan (1997)                                                                                         |  | F-1/A |  | 333-8700 |  | June 1, 1998    |  | 10.20 |  |  
|4.18 |  | Celestica 1997 U.K. Approved Share Option Scheme                                                                                           |  | F-1   |  | 333-8700 |  | April 29, 1998  |  | 10.19 |  |  
|4.19 |  | 1998 U.S. Executive Share Purchase and Option Plan                                                                                         |  | S-8   |  | 333-9500 |  | October 8, 1998 |  | 4.6   |  |  
|8.1  |  | Subsidiaries of Registrant                                                                                                                 |  |       |  |          |  |                 |  |       |  | X
|12.1 |  | Chief Executive Officer Certification                                                                                                      |  |       |  |          |  |                 |  |       |  | X
|12.2 |  | Chief Financial Officer Certification                                                                                                      |  |       |  |          |  |                 |  |       |  | X
|13.1 |  | Certification required by Rule 13a-14(b)**                                                                                                 |  |       |  |          |  |                 |  |       |  | X

---

88

---



SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign
this annual report on its behalf.

| |  | CELESTICA INC.
| |  | --------------
| |  | By:           

Date: March 21, 2005

89

---





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors of
Celestica Inc.

We
have audited the accompanying consolidated balance sheets of Celestica Inc. and subsidiaries (the "Company") as at December 31, 2003 and 2004 and the consolidated
statements of loss, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 2004. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as at December 31, 2003 and
2004 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2004 in conformity with Canadian generally accepted
accounting principles.

As
described in note 2(q) to the consolidated financial statements, the Company adopted the provisions of CICA Handbook
Section 3870  Stock-based Compensation and Other Stock-based Payments on January 1, 2003.

Canadian
generally accepted accounting principles vary in certain significant respects from accounting principles generally accepted in the United States of America. Information
relating to the nature and effect of such differences is presented in note 20 to the consolidated financial statements.

|                  |  |                      
|----------------- |  | ---------------------
|Toronto, Canada   |  | /s/ KPMG LLP         
|February 11, 2005 |  | Chartered Accountants

F-1

---



AUDITORS' REPORT

To
the Shareholders of Celestica Inc.

We
have audited the consolidated balance sheets of Celestica Inc. as at December 31, 2003 and 2004 and the consolidated statements of loss, shareholders' equity and cash
flows for each of the years in the three-year period ended December 31, 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In
our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2003 and 2004 and the
results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2004 in accordance with Canadian generally accepted accounting
principles.

|                  |  |                      
|----------------- |  | ---------------------
|Toronto, Canada   |  | GRAPHIC              
|February 11, 2005 |  | Chartered Accountants

F-2

---





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

|                                                                   |                                            | As at December 31
|------------------------------------------------------------------ | ------------------------------------------ | -----------------
|
|Assets                                                             |                                            |                  
|Current assets:                                                    |                                            |                  
|                                                                   | Cash and cash equivalents                  |                  
|                                                                   | Accounts receivable (note 2(e))            |                  
|                                                                   | Inventories (note 2(f))                    |                  
|                                                                   | Prepaid and other assets                   |                  
|                                                                   | Income taxes recoverable                   |                  
|                                                                   | Deferred income taxes (note 12)            |                  
|                                                                   |                                            |                  
|                                                                   |                                            |                  
|Capital assets (note 4)                                            |                                            |                  
|Goodwill from business combinations (note 5)                       |                                            |                  
|Intangible assets (note 5)                                         |                                            |                  
|Other assets (note 6)                                              |                                            |                  
|                                                                   |                                            |                  
|                                                                   |                                            | $                
|                                                                   |                                            |                  
|Liabilities and Shareholders' Equity                               |                                            |                  
|Current liabilities:                                               |                                            |                  
|                                                                   | Accounts payable                           |                  
|                                                                   | Accrued liabilities (notes 11 and 20(k))   |                  
|                                                                   | Income taxes payable                       |                  
|                                                                   | Deferred income taxes (note 12)            |                  
|                                                                   | Current portion of long-term debt (note 7) |                  
|                                                                   | Convertible debt (notes 2(r) and 8)        |                  
|                                                                   |                                            |                  
|                                                                   |                                            |                  
|Long-term debt (note 7)                                            |                                            |                  
|Convertible debt (notes 2(r) and 8)                                |                                            |                  
|Accrued pension and post-employment benefits (note 14)             |                                            |                  
|Deferred income taxes (note 12)                                    |                                            |                  
|Other long-term liabilities                                        |                                            |                  
|                                                                   |                                            |                  
|                                                                   |                                            |                  
|Shareholders' equity (note 2(r))                                   |                                            |                  
|                                                                   |                                            |                  
|                                                                   |                                            | $                
|                                                                   |                                            |                  
|Accounting policy changes (note 2(r))                              |                                            |                  
|Commitments, contingencies and guarantees (note 16)                |                                            |                  
|Canadian and United States accounting policy differences (note 20) |                                            |                  
|Subsequent event (note 22)                                         |                                            |                  

See accompanying notes to consolidated financial statements.

F-3

---



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

|                                                                      |          | Year ended December 31 |        
|--------------------------------------------------------------------- | -------- | ---------------------- | -------
|
|Revenue                                                               |          | $                      | 8,271.6
|Cost of sales (note 11)                                               |          |                        | 7,716.5
|                                                                      |          |                        |        
|Gross profit                                                          |          |                        | 555.1  
|Selling, general and administrative expenses                          |          |                        | 298.5  
|Amortization of intangible assets (note 5)                            |          |                        | 95.9   
|Integration costs related to acquisitions (note 3)                    |          |                        | 21.1   
|Other charges (note 11)                                               |          |                        | 665.7  
|Accretion of convertible debt (notes 2(r)(ii) and 8)                  |          |                        | 28.7   
|Interest on long-term debt                                            |          |                        | 16.1   
|Interest expense (income), net                                        |          |                        | (17.2  
|                                                                      |          |                        |        
|Loss before income taxes                                              |          |                        | (553.7 
|Income taxes expense (recovery) (note 12):                            |          |                        |        
|                                                                      | Current  |                        |        
|                                                                      | Deferred |                        |        
|                                                                      |          |                        |        
|                                                                      |          |                        | (98.3  
|                                                                      |          |                        |        
|Net loss                                                              |          | $                      | (455.4 
|                                                                      |          |                        |        
|Basic loss per share (notes 2(r)(i) and 10)                           |          | $                      | (1.98  
|Diluted loss per share (notes 2(r)(i) and 10)                         |          | $                      | (1.98  
|Weighted average number of shares outstanding (in millions) (note 10) |          |                        |        
|                                                                      | Basic    |                        |        
|                                                                      | Diluted  |                        |        
|Net loss in accordance with U.S. GAAP (note 20)                       |          | $                      | (494.9 
|Basic loss per share, in accordance with U.S. GAAP (note 20)          |          | $                      | (2.15  
|Diluted loss per share, in accordance with U.S. GAAP (note 20)        |          | $                      | (2.15  

See accompanying notes to consolidated financial statements.

F-4

---





CELESTICA INC.        CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY        (in millions of U.S. dollars)

|                                            |  | Convertible Debt (note 8) |        | Capital Stock (note 9) |   | Warrants (note 9) |   | Contributed Surplus |     | Retained Earnings (Deficit) |   | Foreign Currency Translation Adjustment |  | Total Shareholders' Equity |         
|------------------------------------------- |  | ------------------------- | ------ | ---------------------- | - | ----------------- | - | ------------------- | --- | --------------------------- | - | --------------------------------------- |  | -------------------------- | --------
|Balance  December 31, 2001                 |  | $                         | 886.8  |                        | $ | 3,699.0           |   | $                   |    |                             | $ |                                        |  | $                          | 162.1   
|Change in accounting policy (note 2(r)(ii)) |  |                           | (266.0 | )                      |   |                  |   |                     |    |                             |   |                                        |  |                            | (1.0    
|                                            |  |                           |        |                        |   |                   |   |                     |     |                             |   |                                         |  |                            |         
|Balance  January 1, 2002 as restated       |  |                           | 620.8  |                        |   | 3,699.0           |   |                     |    |                             |   |                                        |  |                            | 161.1   
|Repurchase of convertible debt (note 8)     |  |                           | (75.5  | )                      |   |                  |   |                     |    |                             |   |                                        |  |                            | (1.6    
|Shares issued, net                          |  |                           |       |                        |   | 8.5               |   |                     |    |                             |   |                                        |  |                            |        
|Repurchase of shares (note 9)               |  |                           |       |                        |   | (36.9             | ) |                     |    |                             |   | 5.8                                     |  |                            | (1.4    
|Foreign currency translation                |  |                           |       |                        |   |                  |   |                     |    |                             |   |                                        |  |                            |        
|Net loss for the year                       |  |                           |       |                        |   |                  |   |                     |    |                             |   |                                        |  |                            | (455.4  
|                                            |  |                           |        |                        |   |                   |   |                     |     |                             |   |                                         |  |                            |         
|Balance  December 31, 2002                 |  |                           | 545.3  |                        |   | 3,670.6           |   |                     |    |                             |   | 5.8                                     |  |                            | (297.3  
|Repurchase of convertible debt (note 8)     |  |                           | (150.1 | )                      |   |                  |   |                     |    |                             |   |                                        |  |                            | (18.9   
|Shares issued, net                          |  |                           |       |                        |   | 7.3               |   |                     |    |                             |   |                                        |  |                            |        
|Repurchase of shares (note 9)               |  |                           |       |                        |   | (380.1            | ) |                     |    |                             |   | 105.2                                   |  |                            |        
|Stock-based compensation (note 2(q))        |  |                           |       |                        |   |                  |   |                     |    |                             |   | 0.3                                     |  |                            |        
|Other                                       |  |                           |       |                        |   |                  |   |                     |    |                             |   | 4.4                                     |  |                            |        
|Foreign currency translation                |  |                           |       |                        |   |                  |   |                     |    |                             |   |                                        |  |                            |        
|Net loss for the year                       |  |                           |       |                        |   |                  |   |                     |    |                             |   |                                        |  |                            | (266.7  
|                                            |  |                           |        |                        |   |                   |   |                     |     |                             |   |                                         |  |                            |         
|Balance  December 31, 2003                 |  |                           | 395.2  |                        |   | 3,297.8           |   |                     |    |                             |   | 115.7                                   |  |                            | (582.9  
|Repurchase of convertible debt (note 8)     |  |                           | (185.0 | )                      |   |                  |   |                     |    |                             |   |                                        |  |                            | (36.6   
|Shares issued                               |  |                           |       |                        |   | 261.3             |   |                     |    |                             |   | 15.2                                    |  |                            |        
|Warrants issued (note 9)                    |  |                           |       |                        |   |                  |   |                     | 8.9 |                             |   |                                        |  |                            |        
|Stock-based compensation (note 2(q))        |  |                           |       |                        |   |                  |   |                     |    |                             |   | 7.6                                     |  |                            |        
|Other                                       |  |                           |       |                        |   |                  |   |                     |    |                             |   | 4.4                                     |  |                            |        
|Foreign currency translation                |  |                           |       |                        |   |                  |   |                     |    |                             |   |                                        |  |                            |        
|Net loss for the year                       |  |                           |       |                        |   |                  |   |                     |    |                             |   |                                        |  |                            | (854.1  
|                                            |  |                           |        |                        |   |                   |   |                     |     |                             |   |                                         |  |                            |         
|Balance  December 31, 2004                 |  | $                         | 210.2  |                        | $ | 3,559.1           |   | $                   | 8.9 |                             | $ | 142.9                                   |  | $                          | (1,473.6
|                                            |  |                           |        |                        |   |                   |   |                     |     |                             |   |                                         |  |                            |         

See accompanying notes to consolidated financial statements.

F-5

---



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

|                                                |                                                                                              | Year ended December 31 |        
|----------------------------------------------- | -------------------------------------------------------------------------------------------- | ---------------------- | -------
|
|Cash provided by (used in):                     |                                                                                              |                        |        
|Operations:                                     |                                                                                              |                        |        
|Net loss                                        |                                                                                              | $                      | (455.4 
|Items not affecting cash:                       |                                                                                              |                        |        
|                                                | Depreciation and amortization                                                                |                        |        
|                                                | Deferred income taxes                                                                        |                        |        
|                                                | Accretion of convertible debt                                                                |                        |        
|                                                | Non-cash charge for option issuances                                                         |                        |        
|                                                | Restructuring charges (note 11)                                                              |                        |        
|                                                | Other charges (note 11)                                                                      |                        |        
|                                                | Gain on settlement of principal component of convertible debt (note 8)                       |                        |        
|                                                | Inventory write-down related to one customer and the exiting of certain businesses (note 11) |                        |        
|Other                                           |                                                                                              |                        | (2.0   
|Changes in non-cash working capital items:      |                                                                                              |                        |        
|                                                | Accounts receivable                                                                          |                        |        
|                                                | Inventories                                                                                  |                        |        
|                                                | Prepaids and other assets                                                                    |                        |        
|                                                | Income taxes recoverable                                                                     |                        |        
|                                                | Accounts payable and accrued liabilities                                                     |                        |        
|                                                | Income taxes payable                                                                         |                        |        
|                                                |                                                                                              |                        |        
|                                                | Non-cash working capital changes                                                             |                        |        
|                                                |                                                                                              |                        |        
|Cash provided by (used in) operations           |                                                                                              |                        | 982.8  
|                                                |                                                                                              |                        |        
|Investing:                                      |                                                                                              |                        |        
|                                                | Acquisitions, net of cash acquired                                                           |                        |        
|                                                | Purchase of capital assets                                                                   |                        |        
|                                                | Proceeds on sale of capital assets                                                           |                        |        
|                                                | Other                                                                                        |                        |        
|                                                |                                                                                              |                        |        
|Cash used in investing activities               |                                                                                              |                        | (191.5 
|                                                |                                                                                              |                        |        
|Financing:                                      |                                                                                              |                        |        
|                                                | Bank indebtedness                                                                            |                        |        
|                                                | Increase in long-term debt (note 7)                                                          |                        |        
|                                                | Long-term debt issue costs, pre-tax                                                          |                        |        
|                                                | Repayment of long-term debt                                                                  |                        |        
|                                                | Debt redemption fees (note 11(h)) and deferred financing costs                               |                        |        
|                                                | Repurchase of convertible debt (note 8)                                                      |                        |        
|                                                | Issuance of share capital                                                                    |                        |        
|                                                | Repurchase of capital stock (note 9)                                                         |                        |        
|                                                | Other                                                                                        |                        |        
|                                                |                                                                                              |                        |        
|Cash provided by (used in) financing activities |                                                                                              |                        | (283.1 
|                                                |                                                                                              |                        |        
|Increase (decrease) in cash                     |                                                                                              |                        | 508.2  
|Cash, beginning of year                         |                                                                                              |                        | 1,342.8
|                                                |                                                                                              |                        |        
|Cash, end of year                               |                                                                                              | $                      | 1,851.0
|                                                |                                                                                              |                        |        
|Cash is comprised of cash and cash equivalents. |                                                                                              |                        |        
|Supplemental cash flow information (note 19).   |                                                                                              |                        |        

See accompanying notes to consolidated financial statements.

F-6

---



CELESTICA INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in millions of U.S. dollars, except for per share amounts)

1.     NATURE OF BUSINESS:



2.     SIGNIFICANT ACCOUNTING POLICIES:

(a)   Principles of consolidation and basis of presentation:



(b)   Use of estimates:



(c)   Revenue:



(d)   Cash and cash equivalents:



(e)   Allowance for doubtful accounts:



F-7

---





(f)    Inventories:



|                 |  | 2003 |         | 2004
|---------------- |  | ---- | ------- | ----
|Raw materials    |  | $    | 736.6   |     
|Work in progress |  |      | 119.2   |     
|Finished goods   |  |      | 174.8   |     
|                 |  |      |         |     
|                 |  | $    | 1,030.6 |     
|                 |  |      |         |     

(g)   Capital assets:



|Buildings                        |  | 25 years                       
|-------------------------------- |  | -------------------------------
|Buildings/leasehold improvements |  | Up to 25 years or term of lease
|Office equipment                 |  | 5 years                        
|Machinery and equipment          |  | 3 to 5 years                   
|Software                         |  | 1 to 10 years                  

(h)   Goodwill from business combinations:



(i)    Intangible assets:



(j)    Impairment or disposal of long-lived assets:



F-8

---





(k)   Pension and non-pension post-employment benefits:



(l)    Deferred financing costs:



(m)  Income taxes:



(n)   Foreign currency translation and hedging:



F-9

---







(o)   Research and development:



(p)   Restructuring charges:



(q)   Stock-based compensation and other stock-based payments:



F-10

---





|                                                                       |  | Year ended December 31 |      
|---------------------------------------------------------------------- |  | ---------------------- | -----
|
|Risk-free rate                                                         |  |                        | 5.1  
|Dividend yield                                                         |  |                        | 0.0  
|Volatility factor of the expected market price of the Company's shares |  |                        | 70   
|Expected option life (in years)                                        |  |                        | 5.0  
|Weighted-average grant date fair values of options issued              |  | $                      | 12.02



Year ended December 312002

2003

2004Net loss as reported

$
(455.4
)
$
(266.7
)
$
(854.1
)Deduct: Stock-based compensation costs using fair-value method


(2.2
)

(9.6
)

(7.9
)Pro forma net loss

$
(457.6
)
$
(276.3
)
$
(862.0
)Loss per share:Basic  as reported

$
(1.98
)
$
(1.23
)
$
(3.85
)Basic  pro forma

$
(1.99
)
$
(1.28
)
$
(3.88
)Diluted  as reported

$
(1.98
)
$
(1.23
)
$
(3.85
)Diluted  pro forma

$
(1.99
)
$
(1.28
)
$
(3.88
)




(r)   Changes in accounting policies:





F-11

---





2002

2003

2004January 1

$
2.6

$
3.7

$
4.0New obligations, net of adjustments


0.8





0.2Assumed on acquisition of MSL








1.3Accretion charges recorded in cost of sales


0.3


0.3


0.4December 31

$
3.7

$
4.0

$
5.9




(s)   Recently issued accounting pronouncements:



F-12

---















3.     ACQUISITIONS AND DIVESTITURES:

(i)    Business combination:



F-13

---





|Current assets                       |  | $ | 277.1  |  
|------------------------------------ |  | - | ------ | -
|Capital assets                       |  |   | 59.1   |  
|Other long-term assets               |  |   | 6.6    |  
|Goodwill                             |  |   | 224.4  |  
|Customer intangibles                 |  |   | 35.0   |  
|Other liabilities assumed            |  |   | (213.0 | )
|Deferred taxes                       |  |   | (27.0  | )
|Long-term debt assumed               |  |   | (41.0  | )
|                                     |  |   |       
|Net assets acquired                  |  | $ | 321.2  |  
|                                     |  |   |       
|Financed by:                         |  |   |        |  
|Cash                                 |  | $ | 51.6   |  
|Issuance of shares                   |  |   | 245.5  |  
|Issuance of options                  |  |   | 15.2   |  
|Issuance of warrants (see note 9(d)) |  |   | 8.9    |  
|                                     |  |   |       
|                                     |  | $ | 321.2  |  
|                                     |  |   |       



|                       |  | Employee termination costs |       | Lease and other contractual obligations |   | Facility exit costs and other |   | Total accrued liability |     
|---------------------- |  | -------------------------- | ----- | --------------------------------------- | - | ----------------------------- | - | ----------------------- | ----
|Accrued on acquisition |  | $                          | 28.0  |                                         | $ | 6.9                           |   | $                       | 1.2 
|Cash payments          |  |                            | (14.7 | )                                       |   | (0.6                          | ) |                         | (0.2
|                       |  |                            |       |                                         |   |                               |   |                         |     
|December 31, 2004      |  | $                          | 13.3  |                                         | $ | 6.3                           |   | $                       | 1.0 
|                       |  |                            |       |                                         |   |                               |   |                         |     



(ii)   Asset acquisition:



(iii)  Divestiture:



F-14

---





4.     CAPITAL ASSETS:

2003Cost

Accumulated Amortization

Net Book ValueLand

$
68.3

$


$
68.3Buildings


226.8


35.1


191.7Buildings/leasehold improvements


90.6


53.4


37.2Office equipment


96.2


58.7


37.5Machinery and equipment


583.7


343.8


239.9Software


221.7


114.9


106.8$
1,287.3

$
605.9

$
681.4


2004Cost

Accumulated Amortization

Net Book ValueLand

$
54.2

$


$
54.2Buildings


225.7


50.3


175.4Buildings/leasehold improvements


100.4


59.8


40.6Office equipment


105.2


73.9


31.3Machinery and equipment


626.2


428.6


197.6Software


229.9


159.7


70.2$
1,341.6

$
772.3

$
569.3




F-15

---





5.     GOODWILL FROM BUSINESS COMBINATIONS AND INTANGIBLE ASSETS:



Americas

Europe

Asia

TotalBalance December 31, 2002 and 2003 (a)

$
115.7

$


$
832.3

$
948.0Acquisitions (b)


111.6


72.2


40.6


224.4Divestitures (c)


(11.5
)







(11.5
)Impairment (d)


(215.8
)

(72.2
)




(288.0
)Balance December 31, 2004

$


$


$
872.9

$
872.9






2003Cost

Accumulated Amortization

Net Book ValueIntellectual property

$
129.3

$
99.3

$
30.0Other intangible assets


165.6


57.7


107.9$
294.9

$
157.0

$
137.9


2004Cost

Accumulated Amortization

Net Book ValueIntellectual property

$
129.3

$
115.5

$
13.8Other intangible assets


200.6


109.9


90.7$
329.9

$
225.4

$
104.5


F-16

---





Intellectual Property

Other Intangible Assets

TotalBalance December 31, 2002

$
75.6

$
136.3

$
211.9Amortization


(27.4
)

(21.1
)

(48.5
)Post-closing adjustment





(0.2
)

(0.2
)Impairment (i)


(18.2
)

(7.1
)

(25.3
)Balance December 31, 2003


30.0


107.9


137.9Amortization


(10.8
)

(23.8
)

(34.6
)Acquisitions (ii)





35.0


35.0Impairment (i)


(5.4
)

(28.4
)

(33.8
)Balance December 31, 2004

$
13.8

$
90.7

$
104.5






Year ended December 312002

2003

2004Amortization of intellectual property

$
72.0

$
27.4

$
10.8Amortization of other intangible assets


23.9


21.1


23.8$
95.9

$
48.5

$
34.6




2005

$
27.42006


24.92007


18.52008


16.02009


8.4Thereafter


9.3


F-17

---



6.     OTHER ASSETS:

2003

2004Deferred income taxes (note 12)

$
260.9

$
23.7Deferred pension (note 14)


55.0


57.7Commodity taxes recoverable


14.6


15.6Deferred financing fees


5.9


14.6Other


3.6


8.2$
340.0

$
119.8




7.     LONG-TERM DEBT:

2003

2004Unsecured, revolving credit facility due 2007 (a)

$


$
Senior Subordinated Notes due 2011 (b)





500.0Capital lease obligations


3.4


3.43.4


503.4Less current portion


2.7


2.6$
0.7

$
500.8






2005

$
2.62006


0.82007


2008


2009


Thereafter


500.0


F-18

---



8.     CONVERTIBLE DEBT:



9.     CAPITAL STOCK:

(a)Authorized:



(b)Issued and outstanding:

Number of Shares (in millions)

Subordinate Voting Shares

Multiple Voting Shares

Total Subordinate and Multiple Voting Shares Outstanding

Warrants

Shares to be issuedBalance December 31, 2002

189.5

39.1

228.6



0.5Repurchase of shares (i)

(20.6
)


(20.6
)


Other share issuances (ii)

0.9



0.9



Balance December 31, 2003

169.8

39.1

208.9



0.5Acquisitions (iii)

14.1



14.1

1.1

Other share issuances (iv)

2.0



2.0



Balance December 31, 2004

185.9

39.1

225.0

1.1

0.5


F-19

---





Amount

Subordinate Voting Shares

Multiple Voting Shares

Shares to be issued

Total Subordinate and Multiple Voting Shares Outstanding

WarrantsBalance December 31, 2002

$
3,525.9

$
138.8

$
5.9

$
3,670.6

$
Repurchase of shares (i)


(380.1
)







(380.1
)

Other share issuances (ii)


7.3








7.3


Balance December 31, 2003


3,153.1


138.8


5.9


3,297.8


Acquisitions (iii)


245.5








245.5


8.9Other share issuances (iv)


15.8








15.8


Balance December 31, 2004

$
3,414.4

$
138.8

$
5.9

$
3,559.1

$
8.9






(c)Stock option plans:







F-20

---





Number of Options (in millions)

Shares

Weighted Average Exercise PriceOutstanding at December 31, 2001

23.9

$
31.67Granted

3.9

$
19.93Exercised

(0.9
)
$
7.42Cancelled

(0.8
)
$
41.49Outstanding at December 31, 2002

26.1

$
30.51Granted

0.4

$
13.85Exercised

(0.9
)
$
5.59Cancelled

(2.8
)
$
35.42Outstanding at December 31, 2003

22.8

$
30.88Issued on acquisition of MSL and granted in the year

7.7

$
16.96Exercised

(2.0
)
$
7.30Cancelled

(2.8
)
$
30.71Outstanding at December 31, 2004

25.7

$
27.92Shares reserved for issuance upon exercise of stock options or awards (in millions)

32.9




Plan

Range of Exercise Prices

Outstanding Options

Weighted Average Exercise Price

Exercisable Options

Weighted Average Exercise Price

Weighted Average Remaining Life(in millions)



(in millions)



(years)ESPO

$  5.00 - $  7.50

2.5

$
5.32

2.5

$
5.32

3.5LTIP

$  8.75 - $13.10

0.6

$
9.54

0.5

$
9.30

3.8$13.25 - $19.90

8.6

$
17.02

3.7

$
17.15

7.5$20.06 - $25.75

0.5

$
23.21

0.5

$
23.25

4.3$30.23 - $44.23

7.8

$
40.51

7.8

$
40.53

5.0$45.63 - $63.44

3.2

$
54.78

3.2

$
54.78

4.7$69.25 - $84.00

0.2

$
73.91

0.2

$
73.91

5.2MSL

$  8.37 - $13.33

0.7

$
12.50

0.7

$
12.50

6.8$13.47 - $17.67

0.5

$
14.35

0.5

$
14.35

7.3$18.67 - $21.83

0.3

$
20.71

0.3

$
20.71

6.1$27.83 - $78.00

0.2

$
40.07

0.2

$
40.07

5.0Other

$  0.93 - $13.31

0.6

$
5.39

0.6

$
5.39

1.825.7




20.7






F-21

---





(d)Warrants:



10.   LOSS PER SHARE AND WEIGHTED AVERAGE SHARES OUTSTANDING:



Year ended December 312002

2003

2004Numerator:Net loss attributable to common shareholders

$
(455.4
)
$
(266.7
)
$
(854.1
)Denominator (in millions):Weighted average shares  basic


229.8


216.5


222.1Effect of dilutive securities:(1)Employee stock options and warrants








Convertible debt








Weighted average shares  diluted


229.8


216.5


222.1Loss per share:Basic

$
(1.98
)
$
(1.23
)
$
(3.85
)Diluted

$
(1.98
)
$
(1.23
)
$
(3.85
)




11.   OTHER CHARGES:

Year ended December 312002

2003

20042001 restructuring (a)

$
1.9

$
7.9

$
1.62002 restructuring (b)


383.5


15.7


3.02003 restructuring (c)





71.3


2.02004 restructuring (d)








147.1Total restructuring


385.4


94.9


153.7Goodwill impairment (e)


203.7





288.0Long-lived asset impairment (f)


81.7


82.8


99.3Gain on sale of assets (g)








(12.0
)Deferred financing costs and debt redemption fees (h)


9.6


1.3


1.6Other (i)








116.8Gain on repurchase of convertible debt (j)


(12.1
)

(23.8
)

(32.9
)Gain on sale of surplus land and building


(2.6
)

(3.6
)

(11.3
)Other charges


665.7


151.6


603.2Inventory write-down related to one customer and the exiting of certain businesses, recorded in cost of sales (i) and (k) (i) and (k)








61.2Total

$
665.7

$
151.6

$
664.4


F-22

---







Employee termination costs

Lease and other contractual obligations

Facility exit costs and other

Total accrued liability

Non-cash charge

Total chargeJanuary 1, 2001

$


$


$


$


$


$
Provision


90.7


35.3


12.4


138.4


98.6


237.0Cash payments


(51.2
)

(1.6
)

(2.9
)

(55.7
)




December 31, 2001


39.5


33.7


9.5


82.7


98.6


237.0Cash payments


(35.4
)

(13.0
)

(6.8
)

(55.2
)




Adjustments


(4.1
)

11.4


(2.7
)

4.6


(2.7
)

1.9December 31, 2002





32.1





32.1


95.9


238.9Cash payments





(14.1
)




(14.1
)




Adjustments





7.9





7.9





7.9December 31, 2003





25.9





25.9


95.9


246.8Cash payments





(5.9
)




(5.9
)




Adjustments





1.6





1.6





1.6December 31, 2004

$


$
21.6

$


$
21.6

$
95.9

$
248.4






F-23

---





Employee termination costs

Lease and other contractual obligations

Facility exit costs and other

Total accrued liability

Non-cash charge

Total chargeJanuary 1, 2002

$


$


$


$


$


$
Provision


128.8


51.7


8.5


189.0


194.5


383.5Cash payments


(41.7
)

(1.7
)

(0.7
)

(44.1
)




December 31, 2002


87.1


50.0


7.8


144.9


194.5


383.5Cash payments


(83.4
)

(30.0
)

(7.8
)

(121.2
)




Adjustments


7.4


16.2


2.9


26.5


(10.8
)

15.7December 31, 2003


11.1


36.2


2.9


50.2


183.7


399.2Cash payments


(11.8
)

(21.6
)

(3.2
)

(36.6
)




Adjustments


0.7


0.6


0.3


1.6


1.4


3.0December 31, 2004

$


$
15.2

$


$
15.2

$
185.1

$
402.2






Employee termination costs

Lease and other contractual obligations

Facility exit costs and other

Total accrued liability

Non-cash charge

Total chargeJanuary 1, 2003

$


$


$


$


$


$
Provision


61.4


0.3


1.1


62.8


8.5


71.3Cash payments


(28.6
)

(0.3
)

(1.1
)

(30.0
)




December 31, 2003


32.8








32.8


8.5


71.3Cash payments


(19.0
)







(19.0
)




Adjustments


2.0








2.0





2.0December 31, 2004

$
15.8

$


$


$
15.8

$
8.5

$
73.3




F-24

---





Employee termination costs

Lease and other contractual obligations

Facility exit costs and other

Total accrued liability

Non-cash charge

Total chargeJanuary 1, 2004

$


$


$


$


$


$
Provision


98.6


8.7


5.9


113.2


33.9


147.1Cash payments


(79.8
)

(4.5
)

(0.9
)

(85.2
)




December 31, 2004

$
18.8

$
4.2

$
5.0

$
28.0

$
33.9

$
147.1








F-25

---









12.   INCOME TAXES:

Year ended December 312002

2003

2004Loss before income tax:Canadian operations

$
(206.7
)
$
(49.8
)
$
(165.3
)Foreign operations


(347.0
)

(183.4
)

(436.6
)$
(553.7
)
$
(233.2
)
$
(601.9
)Current income tax expense (recovery):Canadian operations

$
(0.8
)
$
4.5

$
10.9Foreign operations


21.2


9.2


6.7$
20.4

$
13.7

$
17.6Deferred income tax expense (recovery):Canadian operations

$
(26.1
)
$
(18.1
)
$
(13.7
)Foreign operations


(92.6
)

37.9


248.3$
(118.7
)
$
19.8

$
234.6


F-26

---





Year ended December 312002

2003

2004Combined Canadian federal and provincial income tax rate


38.6%


36.6%


36.1%Income tax recovery based on loss before income taxes at statutory rate

$
(213.7
)
$
(85.4
)
$
(217.3
)Increase (decrease) resulting from:Manufacturing and processing deduction


5.8


1.6


1.4Foreign (income) losses taxed at lower rates


(19.2
)

(6.7
)

34.6Amortization and write-down of non-deductible goodwill and intangible assets


44.2


1.0


102.9Other non-deductible items


8.0


14.3


3.1Change in valuation allowance


76.6


108.7


327.5Income tax expense (recovery)

$
(98.3
)
$
33.5

$
252.2




2003

2004Deferred income tax assets:Income tax effect of operating losses carried forward

$
256.9

$
377.6Accounting provisions not currently deductible


54.8


94.4Capital, intangible and other assets


69.8


70.5Share issue and debt issue costs


5.0


8.4Restructuring accruals


39.1


27.5425.6


578.4Valuation allowance


(185.3
)

(545.7
)Total deferred income tax assets


240.3


32.7Deferred income tax liabilities:Deferred pension asset


(16.5
)

(12.9
)Other


(1.3
)

(18.3
)Total deferred income tax liabilities


(17.8
)

(31.2
)Deferred income tax asset, net

$
222.5

$
1.5




F-27

---





Year of Expiry

Amount2005

$
0.32006


0.92007


95.02008


90.42009


6.12010


122.22011-2024


649.0Indefinite


345.7$
1,309.6


13.   RELATED PARTY TRANSACTIONS:



14.   PENSION AND NON-PENSION POST-EMPLOYMENT BENEFIT PLANS:



F-28

---





Fair Market Value
at December 31

Actual Asset Allocation (%)
at December 312003

2004

2003

2004Asset category:Equities through mutual funds

$
125.2

$
146.9

49%

49%Fixed income


120.7


139.6

47%

47%Other


12.0


10.8

4%

4%Total

$
257.9

$
297.3

100%

100%




Pension Plans Year ended December 31

Other Benefit Plans Year ended December 312003

2004

2003

2004Plan assets, beginning of year

$
174.9

$
257.9

$


$
Employer contributions


33.8


19.4


13.2


13.4Actual return on assets


25.6


22.6





Voluntary employee contributions


1.2


1.1


0.2


0.2Plan settlements





(9.2
)




Benefits paid


(10.4
)

(13.9
)

(13.4
)

(13.6
)Acquisitions/divestitures





1.1





Foreign currency exchange rate changes


32.8


18.3





Plan assets, end of year

$
257.9

$
297.3

$


$



F-29

---



|
|

Pension Plans
Year ended December 31

Other Benefit Plans
Year ended December 312003

2004

2003

2004Projected benefit obligations (PBO), beginning of year

$
250.5

$
310.9

$
65.4

$
80.5Service cost


7.3


6.9


9.8


11.5Interest cost


14.6


16.8


3.3


3.4Voluntary employee contributions


1.2


1.1


0.2


0.2Actuarial losses


18.9


21.8


7.4


3.5Plan amendments


(9.2
)




(1.7
)

Plan settlements





(9.2
)




Effect of curtailments


(1.2
)

2.4


(3.3
)

(13.1
)Benefits paid


(10.4
)

(13.9
)

(13.4
)

(13.6
)Acquisitions





0.8





1.1Foreign currency exchange rate changes


39.2


22.3


12.8


4.3Projected benefit obligations, end of year

$
310.9

$
359.9

$
80.5

$
77.8Deficit of plan assets over projected benefit obligations

$
(53.0
)
$
(62.6
)
$
(80.5
)
$
(77.8
)Unrecognized actuarial losses


95.6


108.7


14.6


13.4Unrecognized net transition obligation and prior service cost


(8.8
)

(5.0
)

1.1


Deferred (accrued) pension cost

$
33.8

$
41.1

$
(64.8
)
$
(64.4
)




2003

2004Pension
Plans

Other
Benefit Plans

Total

Pension
Plans

Other
Benefit Plans

TotalAccrued pension and post-employment benefits

$
(21.2
)
$
(64.8
)
$
(86.0
)
$
(16.6
)
$
(64.4
)
$
(81.0
)Deferred pension assets (note 6)


55.0





55.0


57.7





57.7$
33.8

$
(64.8
)
$
(31.0
)
$
41.1

$
(64.4
)
$
(23.3
)


|
|

Pension Plans
Year ended December 31

Other Benefit Plans Year ended December 312002

2003

2004

2002

2003

2004Net periodic pension cost:Service cost

$
7.2

$
7.3

$
6.9

$
9.7

$
9.8

$
11.5Interest cost


12.5


14.6


16.8


2.5


3.3


3.4Expected return on assets


(13.7
)

(13.7
)

(16.8
)







Net amortization of prior service cost








(0.5
)







Net amortization of actuarial losses


1.6


5.7


5.9


0.5


0.4


0.47.6


13.9


12.3


12.7


13.5


15.3Defined contribution pension plan expense


21.9


17.6


18.2








Curtailment/settlement loss (gain)


2.9





3.7


1.7


0.1


(7.5
)Total expense for the year

$
32.4

$
31.5

$
34.2

$
14.4

$
13.6

$
7.8


F-30

---



|
|

Pension Plans
Year ended December 31

Other Benefit Plans
Year ended December 312002

2003

2004

2002

2003

2004Actuarial assumptions (percentages):Weighted average discount rate for:Projected benefit obligations

5.5

5.5

5.3

6.9

6.4

6.1Net periodic pension cost

6.2

5.5

5.5

7.3

6.9

6.4Weighted average rate of compensation increase for:Projected benefit obligations

4.0

3.4

3.4

5.0

4.0

4.0Net periodic pension cost

4.5

4.0

3.4

4.5

5.0

4.0Weighted average expected long-term rate of return on plan assets for:Projected benefit obligations

7.3

6.5

6.2





Net periodic pension cost

7.5

7.3

6.5





Healthcare cost trend rate for:Projected benefit obligations







10.5

9.7

10.0Net periodic pension cost







6.4

10.5

9.7Estimated rate for the following 12-month net periodic pension cost







10.5

9.7

10.0


|
|

Other Benefit Plans
Year ended December 312003

2004Sensitivity re: healthcare trend rate for non-pension post-employment benefits:1% IncreaseEffect on PBO

$
5.9

$
9.4Effect on service cost and interest cost


1.4


1.91% DecreaseEffect on PBO


(6.8
)

(7.2
)Effect on service cost and interest cost


(1.2
)

(1.2
)




F-31

---







Year

Pension
Benefits

Other
BenefitsExpected employer contributions

2005

$
31.2

$
6.1Expected benefit payments

2005


20.4


6.32006


14.1


5.72007


14.3


5.92008


14.7


5.92009


15.1


5.9Thereafter


84.5


29.4


15.   FINANCIAL INSTRUMENTS:



December 31, 2003

December 31, 2004Carrying Amount

Fair Value

Carrying Amount

Fair ValueForeign currency contracts  asset (liability)




$
49.8

$
(2.4
)
$
31.1Interest rate swaps  asset










$
19.8Senior Subordinated Note







$
500.0

$
536.3Convertible debt

$
210.5

$
166.4

$
124.1

$
87.2




F-32

---





Currency

Amount of U.S. dollars

Weighted average exchange rate of U.S. dollars

Maximum period in monthsCanadian dollars

$
224.9

$
0.77

15Euros

$
63.8

$
1.25

15Euros

$
31.8

$
1.27

30Thai baht

$
59.9

$
0.02

12Mexican pesos

$
38.2

$
0.08

12Czech korunas

$
29.9

$
0.04

12Singapore dollars

$
24.8

$
0.60

12Japanese yen

$
17.0

$
0.01

1Malaysian ringgits

$
13.0

$
0.26

3British pounds sterling

$
6.0

$
1.74

6




16.   COMMITMENTS, CONTINGENCIES AND GUARANTEES:



Operating Leases2005

$
60.92006


42.42007


25.92008


20.42009


16.5Thereafter


46.9




F-33

---





17.   SIGNIFICANT CUSTOMERS:



18.   SEGMENTED INFORMATION:



Year ended December 312002

2003

2004RevenueAmericas

$
4,640.8

$
3,091.1

$
3,765.5Europe


1,786.5


1,399.3


1,815.3Asia


2,109.7


2,475.4


3,557.2Elimination of inter-segment revenue


(265.4
)

(230.5
)

(298.2
)$
8,271.6

$
6,735.3

$
8,839.8


|
|

Year ended December 312002

2003

2004EBIATAmericas

$
157.3

$
13.8

$
22.1Europe


(11.5
)

(95.8
)

2.0Asia


110.8


68.3


121.0256.6


(13.7
)

145.1Net interest and accretion charges


(27.6
)

(19.4
)

(37.3
)Amortization of intangible assets


(95.9
)

(48.5
)

(34.6
)Non-cash option expense








(7.6
)Integration costs related to acquisitions


(21.1
)




(3.1
)Other charges (note 11)


(665.7
)

(151.6
)

(664.4
)Loss before income taxes

$
(553.7
)
$
(233.2
)
$
(601.9
)


F-34

---



|
|

Year ended December 312002

2003

2004Capital expendituresAmericas

$
90.0

$
84.3

$
42.8Europe


28.0


7.8


28.9Asia


33.4


83.8


70.5$
151.4

$
175.9

$
142.2


|
|

As at December 312003

2004Total assetsAmericas

$
1,764.5

$
1,520.9Europe


1,084.6


1,066.3Asia


2,288.3


2,352.6$
5,137.4

$
4,939.8Capital assetsAmericas

$
260.4

$
179.3Europe


166.2


142.6Asia


254.8


247.4$
681.4

$
569.3




Year ended December 312002

2003

2004RevenueCanada

15%

20%

18%United States

37%

21%

18%Italy

13%

13%

Thailand





15%


19.   SUPPLEMENTAL CASH FLOW INFORMATION:

Year ended December 312002

2003

2004Paid during the year:Interest

$
22.0

$
10.4

$
13.6Taxes

$
25.5

$
14.1

$
9.9Non-cash financing activities:Shares issued for acquisition of MSL







$
245.5Options issued for acquisition of MSL







$
15.2Warrants issued for acquisition of MSL







$
8.9


F-35

---



20.   CANADIAN AND UNITED STATES ACCOUNTING POLICY DIFFERENCES:



Year ended December 312002

2003

2004Net loss in accordance with Canadian GAAP

$
(455.4
)
$
(266.7
)
$
(854.1
)Compensation expense (a)


(3.8
)




Impact of convertible debt for Canadian GAAP, net of tax (b)


9.5





(10.0
)Interest expense on convertible debt, net of tax (b)


(27.8
)

(19.9
)

(11.6
)Gain (loss) on repurchase of convertible debt, net of tax (b)


8.4


1.9


(5.3
)Deferred taxes on unrealized foreign exchange gains (b)





(10.3
)

1.5Other charges and amortization, net of tax (a) and (c)


(26.5
)

26.8


4.4Leasehold retirement obligations, net of tax (d)


0.7





Stock-based compensation expense (h)





0.3


7.6Net loss before cumulative effect of a change in accounting policy, in accordance with U.S. GAAP


(494.9
)

(267.9
)

(867.5
)Cumulative effect of a change in accounting policy, net of tax (d)





(1.3
)

Net loss in accordance with U.S. GAAP

$
(494.9
)
$
(269.2
)
$
(867.5
)Other comprehensive income (loss):Net gain (loss) on derivatives designated as hedges, net of tax (f)


21.8


21.4


(13.3
)Minimum pension liability, net of tax (g)


(23.6
)

(1.8
)

(7.0
)Foreign currency translation adjustment


20.2


12.8


11.2Comprehensive loss in accordance with U.S. GAAP

$
(476.5
)
$
(236.8
)
$
(876.6
)




Year ended December 312002

2003

2004Loss available to shareholders  basic and diluted

$
(494.9
)
$
(269.2
)
$
(867.5
)Weighted average shares  basic (in millions)


229.8


216.5


222.1Weighted average shares  diluted (in millions)(1)


229.8


216.5


222.1Basic loss per share(2)

$
(2.15
)
$
(1.24
)
$
(3.91
)Diluted loss per share(2)

$
(2.15
)
$
(1.24
)
$
(3.91
)


---



F-36

---







As at December 312002

2003

2004Shareholders' equity in accordance with Canadian GAAP

$
3,941.7

$
3,255.9

$
2,488.8Compensation expense (a)


(2.0
)

(2.0
)

Interest expense on convertible debt for U.S. GAAP, net of tax (b)


(52.3
)

(72.2
)

(83.8
)Convertible debt (b)


(545.3
)

(395.2
)

(210.2
)Accretion of convertible debt for Canadian GAAP, net of tax (b)


39.2


55.3


67.3Loss (gain) on repurchase of convertible debt for Canadian GAAP (b)


(6.7
)

(3.9
)

10.7Deferred taxes on unrealized foreign exchange gain (b)





(10.3
)

(8.8
)Gain on repurchase of convertible debt for U.S. GAAP (b)


8.4


10.3


5.0Other charges and amortization (a) and (c)


(29.2
)

(2.4
)

Gain on foreign exchange contract, net of tax (e)


12.1


12.1


12.1Net gain (loss) on cash flow hedges (f)


15.7


37.1


23.8Minimum pension liability, net of tax (g)


(38.5
)

(40.3
)

(47.3
)Leasehold retirement obligations, net of tax (d)


1.3





Shareholders' equity in accordance with U.S. GAAP

$
3,344.4

$
2,844.4

$
2,257.6


---





F-37

---











F-38

---





Year ended December 312002

2003

2004Net loss in accordance with U.S. GAAP, as reported

$
(494.9
)
$
(269.2
)
$
(867.5
)Deduct: Stock-based compensation costs using fair-value method


(87.7
)

(86.8
)

(93.7
)Pro forma net loss in accordance with U.S. GAAP

$
(582.6
)
$
(356.0
)
$
(961.2
)Loss per share:Basic  as reported

$
(2.15
)
$
(1.24
)
$
(3.91
)Basic  pro forma

$
(2.54
)
$
(1.64
)
$
(4.33
)Diluted  as reported

$
(2.15
)
$
(1.24
)
$
(3.91
)Diluted  pro forma

$
(2.54
)
$
(1.64
)
$
(4.33
)




Year ended December 312002

2003

2004Opening balance of accumulated net gain (loss) on cash flow hedges

$
(6.1
)
$
15.7

$
37.1Net gain (loss) on derivatives designated as hedges (f)


21.8


21.4


(13.3
)Closing balance


15.7


37.1


23.8Opening balance of foreign currency translation account


(2.9
)

17.3


30.1Foreign currency translation gain


20.2


12.8


11.2Closing balance


17.3


30.1


41.3Opening balance of minimum pension liability


(14.9
)

(38.5
)

(40.3
)Minimum pension liability, net of tax (g)


(23.6
)

(1.8
)

(7.0
)Closing balance


(38.5
)

(40.3
)

(47.3
)Accumulated other comprehensive income (loss)

$
(5.5
)
$
26.9

$
17.8






2002

2003

2004January 1

$
18.1

$
23.7

$
19.5Accruals


8.6


4.7


3.9Adjustments





(6.3
)

Assumed on acquisition of MSL








1.6Cash payments


(3.0
)

(2.6
)

(5.0
)December 31

$
23.7

$
19.5

$
20.0




F-39

---





21.   COMPARATIVE INFORMATION:



22.   SUBSEQUENT EVENT:



F-40

---



QuickLinks