As filed with the Securities and Exchange Commission on May 19, 2004



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

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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, 2003
oro    Transition report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Commission file number: 1-14832

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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)

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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)                           

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

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

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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.

|169,808,542 Subordinate Voting Shares |  | 0 Preference Shares
|------------------------------------- |  | -------------------
|39,065,950 Multiple Voting Shares     |  |                    

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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

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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                                       |     
|       |                                                                     |     
|       |                                                                     |     
|       |                                                                     |     
|       |                                                                     |     
|       |                                                                     |     
|       |                                                                     |     
|       | Item 10. Additional Information                                     |     
|       |                                                                     |     
|       |                                                                     |     
|       |                                                                     |     
|       |                                                                     |     
|       |                                                                     |     
|       |                                                                     |     
|       |                                                                     |     
|       |                                                                     |     
|       |                                                                     |     
|       | Item 11. Quantitative and Qualitative Disclosures about Market Risk |     
|       | Item 12. Description of Securities Other than Equity Securities     |     
|       |                                                                     |     

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|PART II  |                                                                                       | 72
|-------- | ------------------------------------------------------------------------------------- | --
|         | Item 13. Defaults, Dividend Arrearages and Delinquencies                              |   
|         | Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds |   
|         | Item 15. Controls and Procedures                                                      |   
|         | Item 16.[Reserved]                                                                    |   
|         | Item 16A. Audit Committee Financial Expert                                            |   
|         | Item 16B. Code of Ethics                                                              |   
|         | Item 16C. Principal Accountant Fees and Service                                       |   
|         | Item 16D. Exemptions from the Listing Standards for Audit Committees                  |   
|         | Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers      |   
|PART III |                                                                                       | 74
|         | Item 17. Financial Statements                                                         |   
|         | Item 18. Financial Statements                                                         |   
|         | Item 19. Exhibits                                                                     |   

ii

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PART I

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

In December 1999, we completed a two-for-one split of our subordinate voting shares and multiple voting shares by way of a stock
dividend. We have restated all historical share and per share information to reflect the effects of this two-for-one split on a retroactive basis, except where we specifically
state otherwise.

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 given as of
March 11, 2004. At that date, the noon buying rate in New York City for cable transfers in Canadian dollars was U.S.$1.00=C$1.3228, as certified for customs purposes by the Federal
Reserve Bank of New York.

Unless we indicate otherwise, all information in this Annual Report is stated as of March 11, 2004, the date as of which information was prepared 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: 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 industries affected by rapid technological change; our dependence
on a limited number of customers; the challenge of responding to lower-than-expected customer demand; component constraints; our ability to manage our restructuring and the
shift of production to lower cost geographies; our ability to achieve the anticipated benefits of our merger with Manufacturers' Services Limited (MSL); and variability of operating results among
periods.

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.

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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 generally accepted accounting principles (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                                                          |  | $                      | 5,297.2
|Cost of sales                                                    |  |                        | 4,914.7
|                                                                 |  |                        |        
|Gross profit                                                     |  |                        | 382.5  
|Selling, general and administrative expenses(2)                  |  |                        | 202.2  
|Amortization of goodwill and intangible assets(3)                |  |                        | 55.6   
|Integration costs related to acquisitions(4)                     |  |                        | 9.6    
|Other charges(5)                                                 |  |                        |       
|                                                                 |  |                        |        
|Operating income (loss)                                          |  |                        | 115.1  
|Interest expense (income), net(6)                                |  |                        | 10.7   
|                                                                 |  |                        |        
|Earnings (loss) before income taxes                              |  |                        | 104.4  
|Income tax expense (recovery)                                    |  |                        | 36.0   
|                                                                 |  |                        |        
|Net earnings (loss)                                              |  | $                      | 68.4   
|                                                                 |  |                        |        
|Basic earnings (loss) per share                                  |  | $                      | 0.41   
|Diluted earnings (loss) per share(7)                             |  | $                      | 0.40   
|Capital expenditures                                             |  | $                      | 211.8  
|Consolidated Statements of Earnings (Loss) Data (U.S. GAAP)(8):  |  |                        |        
|Operating income (loss)                                          |  | $                      | 113.2  
|Net earnings (loss)                                              |  | $                      | 66.5   

2

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|                                                    |  | As at December 31
|--------------------------------------------------- |  | -----------------
|
|
|Consolidated Balance Sheet Data (Canadian GAAP):    |  |                  
|Cash and short-term investments                     |  | $                
|Working capital(9)                                  |  | $                
|Capital assets                                      |  | $                
|Total assets                                        |  | $                
|Total long-term debt, including current portion(10) |  | $                
|Shareholders' equity                                |  | $                
|Consolidated Balance Sheet Data (U.S. GAAP)(8):     |  |                  
|Total assets                                        |  | $                
|Total long-term debt, including current portion     |  | $                
|Shareholders' equity                                |  | $                

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3

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|                                      |  | Year ended December 31 |      
|------------------------------------- |  | ---------------------- | -----
|
|
|Net loss as reported                  |  | $                      | (39.8
|Add back: goodwill amortization       |  |                        | 39.2 
|                                      |  |                        |      
|Net loss before goodwill amortization |  | $                      | (0.6 
|                                      |  |                        |      
|Basic loss per share:                 |  |                        |      
|As reported                           |  | $                      | (0.26
|Before goodwill amortization          |  | $                      | (0.07
|Diluted loss per share:               |  |                        |      
|As reported                           |  | $                      | (0.26
|Before goodwill amortization          |  | $                      | (0.07

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|        |  | Year ended December 31
|------- |  | ----------------------
|
|
|Basic   |  | 167.2                 
|Diluted |  | 171.2                 

Exchange Rate Information

The rate of exchange as of March 11, 2004 for the conversion of Canadian dollars into United States dollars was U.S. $0.7559 and for the
conversion of United States dollars into Canadian dollars was C$1.3228. 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 purposes by the Federal Reserve Bank of New York. The source of this data is the Federal Reserve Statistical Releases.

|           |  | 1999   |  | 2000   |  | 2001   |  | 2002   |  | 2003  
|---------- |  | ------ |  | ------ |  | ------ |  | ------ |  | ------
|Average(1) |  | 1.4858 |  | 1.4855 |  | 1.5487 |  | 1.5704 |  | 1.3916

|     |  | April
2004 |  | March
2004 |  | February
2004 |  | January
2004 |  | December
2003 |  | November
2003
|---- |  | ---------- |  | ---------- |  | ------------- |  | ------------ |  | ------------- |  | -------------
|High |  | 1.3771     |  | 1.3480     |  | 1.3480        |  | 1.3265       |  | 1.3405        |  | 1.3362       
|Low  |  | 1.3095     |  | 1.3080     |  | 1.3108        |  | 1.2690       |  | 1.2923        |  | 1.2973       

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B.    Capitalization and Indebtedness

Not applicable.

C.    Reasons for Offer and Use of Proceeds

Not applicable.

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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.



The share price of our subordinate voting shares is subject to the general price fluctuations in the market for publicly-traded equity securities and may decline
in value. The price of our subordinate voting shares has been and may continue to be highly volatile. During 2003, the market price of our subordinate voting shares on the New York Stock
Exchange ranged from $9.55 to $20.29 per share. The trading price of subordinate voting shares could fluctuate widely in response to:



The
stock markets have fluctuated widely in the past. The securities of many technology companies, including companies in the EMS industry, have experienced extreme price and volume
fluctuations, which often have been unrelated to the companies' operating performance. These broad market fluctuations may adversely affect the market price of the subordinate voting shares.



We generated net earnings in 1999 and 2000. We recorded net losses of $39.8 million in 2001, $445.2 million in 2002 and $265.8 million in
2003. 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, a $25.3 million write-down of intangible assets and a
$57.5 million impairment against capital assets, with these charges totaling $177.7 million ($166.8 million after income taxes). In April 2004, we announced additional
pre-tax restructuring charges of between $175.0 million and $200.0 million to be recorded over the next 12 months. We have undertaken numerous initiatives to
restructure and reduce our capacity in response to the difficult economic climate, with the intention of improving utilization and realizing cost savings in the future. These initiatives have included
changing 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. 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.



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 Inc., Hon Hai Precision Industry Co., Ltd.,

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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 continually evaluate the merits of manufacturing products internally rather than
using EMS providers. Some of our competitors have more geographically diversified international operations, a greater production presence in lower cost geographies, as well as substantially greater
manufacturing, financial, procurement, research and development and marketing resources than we have. These competitors may create alliances and rapidly acquire significant market share. 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 more quickly than we will to new
technologies, evolving industry trends and changing customer requirements. Competition has caused and may continue to cause price reductions, 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 current and future competitors, and the competitive pressures we face may materially adversely affect us.



As
a result of unfavorable general economic conditions over the past three years and the reduced demand for technology capital goods, our sales have been negatively affected in recent
years. 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, excess inventories, and increased difficulty in attracting capital over the past few years. As a result of these factors, since the
first quarter of 2001, we have seen declines in the demand for products in the end markets that we serve. Although we experienced some improvements during the fourth quarter of 2003, these factors and
their impact on our customers could continue to have a material adverse effect on our business.



Our
four largest customers in 2003 were Cisco Systems Inc., IBM Corporation, Lucent Technologies Inc. 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 represented 73% of total 2003 revenue. Our three largest customers in 2002 were IBM
Corporation, Lucent Technologies Inc. and Sun Microsystems Inc. each of which represented more than 10% of our total 2002 revenue and collectively represented 48% of our total 2002
revenue. Our top ten largest customers represented 85% of our total revenue in 2002. We expect to continue to depend upon a relatively small number of customers for a significant percentage of our
revenue. There was a steady decline in revenue from our top three customers in 2003, as their volumes were most negatively impacted by the broad-based reductions in corporate spending for computing
and communications infrastructure products. In addition, some of our customers have in the past 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.

7

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Other
than in connection with asset acquisitions, otherwise known as "original equipment manufacturers (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 are increasingly dependent on EMS providers for new product introductions and rapid response times to 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
forecast the level of customer orders with certainty. This makes it difficult to order appropriate levels of materials and to schedule production and maximize utilization of our manufacturing
capacity. In the past, we have been required to increase staffing, purchase materials, and incur other expenses to meet the anticipated demand of our customers. 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 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. Cancellation, reduction or delays by a significant customer, or by a group of customers, would seriously harm our results of operations by reducing the volumes of products
manufactured and delivered by us for the customers 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. Order cancellations and delays could also lower asset utilization, resulting in higher levels of unproductive assets and lower margins. On other occasions, customers have required
rapid and sudden increases in production, which has placed an excessive burden on our manufacturing capacity. Any of these factors or a combination of these factors could have a material adverse
effect on our results of operations.

Shareholders
and prospective investors should not rely on results of operations in any past period to indicate what our results will be for any future period.



During 2003, 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, the shift of much of our production to lower cost geographies. We will continue to expand our operations 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:



8

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We
have either purchased or built manufacturing facilities in numerous Asian countries, including Thailand, Malaysia, China, Indonesia, Singapore and the Philippines, and are subject to
the significant political, economic and legal risks associated with doing business in these countries. For instance, under its current leadership, the Chinese government has instituted a policy of
economic reform which has included encouraging foreign trade and investment, and greater economic decentralization. However, the Chinese government may discontinue or change these policies, and these
policies may not be successful. Moreover, despite progress in developing its legal system, particularly as it relates to foreign investment activities and foreign trade, enforcement of existing and
future laws and contracts is uncertain, and implementation and interpretation of such laws may be inconsistent. As the Chinese legal system develops, new laws and changes to existing laws may
adversely affect foreign operations in China. While Hong Kong has had a long history of promoting foreign investment, its incorporation into China means that the uncertainty related to China and its
policies may now also affect Hong Kong. The Philippines, Thailand and Indonesia have each also had a long history of promoting foreign investment but have experienced economic and political turmoil
and significant fluctuations in the value of their currencies in the recent past. There is a 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 revenue of all
products using that component or cause price increases in the products and services we provide. In the past, we have secured sufficient allocations of constrained components 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 material 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, and 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.



We have recently begun providing reference design services, in which we design and develop off-the-shelf hardware that enables
OEMs to enhance their own products roadmaps with standard or easily customizable systems that we or our key technology partners develop. The success of our product development efforts in
64-bit and other technologies is dependent on market acceptance and the adoption of these new technologies, the competitiveness of our offerings and our investment levels. In connection
with this undertaking, we have made investments in the resources and assets necessary to design, develop and supply these products that are more significant than our typical service offerings, and we
may not generate sales sufficient to cover our expenses or earn any profits from these efforts if our customers do not approve the designs in a timely manner or at all. We may design and develop
products for our customers prior to receiving purchase orders or other firm

9

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commitments
from them, and sell standard products through distributors. Accordingly, we may purchase inventory for production runs before we have any purchase commitments.



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.



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 26% of current assets. Accounts receivable from sales to customers at December 31, 2003 were $771.5 million (December 31,
2002  $785.9 million; December 31, 2001  $1,054.1 million). At December 31, 2003, one customer
represented 18% of total accounts receivable (December 31, 2002  one customer represented 28% of total accounts receivable; December 31,
2001  two customers represented 14% and 26% of total accounts receivable, respectively). If any of our customers have insufficient liquidity, we may encounter
significant delays or defaults in payments owed to us by customers, which may have an adverse effect on our financial condition and results of operations. We regularly review our accounts receivable
valuations and make adjustments when necessary. Our allowance for doubtful accounts at December 31, 2003 was $50.3 million (December 31,
2002  $62.4 million; December 31, 2001  $74.6 million), which represented 6.1% of the gross accounts
receivable balance (December 31, 2002  7.4%; December 31, 2001  6.6%). Historically, the credit-related
accounts receivable adjustments have not been significant to our results of operations. For the year ended December 31, 2003, we wrote off accounts receivable of $14.2 million
(December 31, 2002  $30.0 million; December 31, 2001  $11.8 million) against the allowance for
doubtful accounts in the normal course of business.



With the significant and severe weakness in technology end markets over the past few years, 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.



A significant portion of our growth in prior years was generated through acquisitions. These transactions have involved 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 OEMs. Acquisitions may involve difficulties, including:



10

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



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 was denied or limited and for which indemnification was 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. Any such change would increase our income
taxes and adversely affect our results of operations and our liquidity.



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, Mexican pesos, British pounds sterling, Euros, Singapore dollars, Japanese yen, Chinese renminbi, Czech koruna and the Thai baht. We sometimes 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 future dates. In general, these contracts extend for periods of less than 25 months. Our hedging transactions may not successfully
minimize foreign currency risk.



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 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.



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 us.



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

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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 or our customers 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 depends 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, our future growth will be limited.



Increased international political instability, evidenced by the threat or occurrence of terrorist attacks, enhanced national security measures, sustained military
action in Iraq, other 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 or 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 any of our facilities. Achieving and maintaining compliance with present, changing and future environmental laws could restrict our ability to modify or expand our
facilities or 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

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contractually
retained responsibility and liability for the contamination and its remediation. However, failure of such former owners or landlords to perform, as the 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 are 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.



Certain of our outstanding credit agreements 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 March 31, 2004, we were in compliance with these covenants. At March 31, 2004, we were limited to
approximately $120 million of additional debt incurrence based on minimum financial ratios.



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.

As
at March 11, 2004, we had 169,989,473 subordinate voting shares and 39,065,950 multiple voting shares outstanding. On March 12, 2004, we acquired all of the shares of
MSL and issued approximately 14,100,000 subordinate voting shares. 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 3,172,191 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 March 11, 2004, there were approximately 32,615,000 subordinate voting shares reserved for issuance under our employee share purchase and option plans and for
director compensation, including outstanding options to purchase approximately 26,639,000 subordinate voting shares. As part of the MSL acquisition on March 12, 2004, we issued options to
purchase approximately 2,100,000 subordinate voting shares and warrants to purchase approximately 1,100,000 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.

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Onex owns, directly or indirectly, all of the outstanding multiple voting shares and 1.6% of the outstanding subordinate voting shares. The number of shares owned
by Onex, together with those shares Onex has the right to vote, represent 85.2% of the voting interest in us and approximately 2% of 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 Liquid Yield Option Notes (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."

In
private placements outside of the United States, certain subsidiaries of Onex have offered exchangeable debentures due 2025 that are exchangeable and redeemable under certain
circumstances during their 25-year term for 9,214,320 subordinate voting shares. In addition, 1,757,467 subordinate voting shares may be delivered, at the option of Onex or certain persons
related to Onex, to satisfy the obligations of such persons under equity forward agreements. If the issuers of the exchangeable debentures elect or the party to the equity forward agreements elects to
deliver solely subordinate voting shares and no cash upon the exchange or redemption, or at maturity or acceleration of the debentures, or the settlement of the equity forward agreement, as the case
may be, the number of shares owned by Onex, together with those shares Onex has the right to vote, would, if such delivery had occurred on March 11, 2004, represent in the aggregate 80% of the
voting interest in our company.



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.

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 services to leading OEMs. A recognized leader in quality, technology and supply chain

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management,
Celestica provides competitive advantage to customers by improving time-to-market, scalability and manufacturing efficiency.

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.

Our Acquisitions

A listing of our acquisitions since 1999 is included in note (1) to the Selected Financial Data table. See Item 3, "Key
Information  Selected Financial Data."

In
2002, we completed the acquisition of:



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

In
2003, we did not complete any acquisitions.

As
of April 1, 2004, we completed the acquisition of:



The
aggregate purchase price for these acquisitions was $443.7 million.

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 our core areas of competency. Our strategy 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, strategic 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 strategies. We believe that the successful implementation of this strategy 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), the full system assembly of final products and order fulfillment. In addition, we provide a broad range of EMS services from product design to worldwide distribution, order
fulfillment and after-market service and support.

We
have 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 those sectors. We supply products and

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services
to over 160 OEMs. In the aggregate, our top ten customers represented 73% of revenue in 2003. 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, routers, scalable processors, servers, switching products, video broadcasting equipment, wireless base stations, wireless loop
systems and workstations.

Our
principal competitive advantages are our advanced capabilities in the areas of technology and quality, our flexible manufacturing network and our effective 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 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 expertise of EMS providers.

According
to IDC, the global EMS market was estimated to be $92 billion in 2003 and is expected to grow to $144 billion by 2007, representing a compounded annual growth
rate of 11.8%. We see numerous industry trends that are fueling this growth. These include the continuing trend of computing and communications companies to outsource their electronics manufacturing
and to divest manufacturing assets; the more widespread adoption of an electronic manufacturing outsourcing strategy by the industrial, aerospace and defense and consumer electronics industries; and
OEMs increasingly looking to the EMS industry to reduce their overall cost of goods sold. 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 electronics 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 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.

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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 and engineering support and manufacturing and technological expertise. EMS
companies' design and engineering services can assist OEMs with the development of a new product concept, 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.

Celestica's Strategy

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 deploying the following strategy, we believe that 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
deteriorated in 2003 as demand hit three-year lows for us. To address this challenge, management is committed to applying strategies and processes designed to improve margins around the
world. We are executing our plan to improve overall financial margins by (i) completing our restructuring program, (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 earnings targets. In order to drive greater efficiency, we are also committed to the deployment of lean manufacturing and Six Sigma techniques, 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, combined with the margin enhancements measures
described above, we believe will increase our return on invested capital.

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 operations to meet customer needs, flexibly shift capacity in response to product demand fluctuations, and
effectively distribute products directly to

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end
customers. We often work closely with many suppliers to influence component design for the benefit of OEM customers. We have been recognized through numerous customer and industry achievement
awards.

Develop and Enhance Profitable and Strategic Relationships with Leading OEMs.We seek to build and sustain profitable,
strategic 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 strategy has allowed us to
establish and maintain strong manufacturing relationships with a wide range of leading OEMs such as Cisco Systems, Inc., IBM Corporation, Lucent Technologies, Inc. and
Sun Microsystems Inc. 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 products and services.

Broaden 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 have also developed reference designs for servers and workstations based on next-generation 64-bit microprocessors. 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 and other, workstation and personal computer industries. In 2003, revenue by end-market users was as follows: enterprise
communications  25%; telecommunications  23%; servers  22%;
storage  13%; other  10%; and workstations and personal computers  7%. We target
industry-leading OEMs, primarily in the computing and communications sectors. In addition to this, our strategy includes increasing our diversification across other markets, such as aerospace and
defense, industrial, consumer, and automotive, to reduce the risk of reliance on certain sectors. As a result of our acquisition of MSL, our customer base has expanded to include commercial avionics,
automotive, retail systems and peripherals.

Selectively Pursue Strategic Acquisitions.We have completed numerous acquisitions. We 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 strategy 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 fully integrated enterprise resource planning and supply chain management system to
enable us to optimize materials management from supplier to end customer. Effective

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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 group and our manufacturing group help to ensure that new designs are released rapidly, smoothly and cohesively into production.

Reference Designs.Reference designs are off-the-shelf hardware that enable OEMs to enhance
their own product roadmaps with standard or easily customizable systems developed by us and our key technology partners. Increased product design activity is one of the additional services
OEMs are requesting from EMS companies, and our strong track record in the manufacture of advanced information technology should allow us to be effective in this area. An example is the major
initiative that we have taken in the area of 64-bit reference designs, where we have developed server and workstation products based on next-generation, industry-standard
microprocessors from Advanced Micro Devices (AMD) and Intel Corporation.

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 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.

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Packaging and Global Fulfillment.We design and test 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 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 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 deployment of lean manufacturing and Six Sigma techniques throughout all of our manufacturing network. The implementation of lean
production systems should result in increased efficiencies and greater operating leverage.

We
believe that our success is directly linked to high 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 2003, approximately 44% of our revenue was produced in North America. Facilities in Asia and Europe generated approximately 36% and 20%, respectively, of our
revenue in 2003. 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, strategic relationships with leading OEMs in our end markets. Our sales and
marketing is an integrated set of processes designed to provide a single "face" 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. We have a global network 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. Celestica supplies products and services to over 160 OEMs,
including such industry leaders as Avaya Inc., Cisco Systems Inc., EMC Corporation, Hewlett-Packard Corporation, IBM Corporation, Lucent Technologies Inc., Motorola Inc.,
NEC Corporation, and Sun Microsystems Inc.

During
2003, our four largest customers, Cisco Systems Inc., IBM Corporation, Lucent Technologies Inc. and Sun Microsystems Inc., each represented in excess of 10% of total
revenue and in the aggregate represented 44% of total revenue. During 2002, our three largest customers, IBM Corporation, Lucent Technologies Inc. and Sun Microsystems Inc., each
represented in excess of 10% of total revenue and in the aggregate represented

20

---



48%
of total revenue. Our top ten customers represented approximately 73% of Celestica's total revenue in 2003 (compared with 85% in 2002).

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 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
weak economic environment over the past three years, these supply agreements have been affected by order cancellations and rescheduling as our customers' base business volumes have decreased.

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 use advanced technology in the assembly and testing 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 continually reconfigured to meet customer-specific product requirements. We have extensive capabilities across a broad range of
specialized assembly process technologies. We also work with a wide range of substrate types from thin flexible printed circuit boards to highly complex, dense multilayer 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 recently increased our research and development spending as a result of our participation in reference designs. Reference designs are off-the-shelf
hardware that enable OEMs to enhance their own product roadmaps with standard or easily customizable systems developed by us and our key technology partners. Reference design is a major
initiative for us. In the area of 64-bit reference designs, we have developed server and workstation products based on next-generation, industry-standard microprocessors from
AMD and Intel. Over time, our investment in research and development activities could fluctuate based on the level of development activity we have in our reference design service offering.



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 2003, we procured and managed approximately $5 billion in materials and related services. We view this size
of procurement as an important competitive advantage as it enhances our ability to obtain better pricing, influence component packaging and design, and obtain supply of components in constrained
markets.

21

---



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.

We
employ a strategy of risk minimization relative to our inventory and generally 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. In providing contract 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 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 material 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 Corporation, NEC
Corporation 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 also have intellectual property associated with our reference
design activity and may develop additional intellectual property based on the products we may produce in the future with this service offering. 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 Corporation, Solectron Corporation 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

22

---



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. Certain 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 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, 2003, we employed over 40,000 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 be able to quickly ramp our production up or down to maximize efficiency. To achieve this, our strategy has been to employ a
skilled temporary labor force, as required.

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 environment is a critical factor for us to be able to fully utilize the intellectual capital of our employees. We believe that our employee relations are good. Certain of our employees in
the United Kingdom, France, Italy, Mexico, U.S., Japan and Brazil 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 either with 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 transaction, 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

23

---



presently
aware or that future changes in law or enforcement standards will cause us to incur significant costs or liabilities in the future.



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 its quarterly revenue
patterns. This seasonality has generally resulted in lower volumes in our first quarter, gradually increasing throughout the year, culminating in higher revenue in the fourth quarter. Seasonality is
also reflective of the mix and complexity of the products manufactured. As a result of this mix and our efforts to diversify our revenue base, 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:



24

---



D.    Description of Property

The following table summarizes our principal facilities as of April 1, 2004. 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       
|Montreal, Quebec(1)          |  | 180                          |  | Owned       
|Denver, Colorado             |  | 235                          |  | Leased      
|Little Rock, Arkansas        |  | 424                          |  | Owned       
|Fort Collins, Colorado       |  | 200                          |  | Leased      
|Chippewa Falls, Wisconsin(1) |  | 127                          |  | Owned       
|Salem, New Hampshire         |  | 278                          |  | Leased      
|San Jose, California         |  | 131                          |  | Leased      
|Mt. Pleasant, Iowa           |  | 85                           |  | Leased      
|Milwaukie, Oregon            |  | 61                           |  | Leased      
|Charlotte, North Carolina    |  | 273                          |  | Leased      
|Raleigh, North Carolina      |  | 70                           |  | Leased      
|Arden Hills, Minnesota       |  | 158                          |  | Leased      
|Austin, Texas                |  | 51                           |  | Leased      
|Dallas, Texas                |  | 69                           |  | Leased      
|Kidsgrove, England           |  | 100                          |  | Owned       
|Telford, England             |  | 50                           |  | Owned       
|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                          |  | Leased/Owned
|Monterrey, Mexico(2)         |  | 327                          |  | Leased/Owned
|Reynosa, Mexico(2)           |  | 481                          |  | Leased      
|Queretaro, Mexico            |  | 77                           |  | Leased      
|Aquadilla, Puerto Rico       |  | 94                           |  | Leased      
|Jaguariuna, Brazil           |  | 134                          |  | Leased      
|Shanghai, China              |  | 392                          |  | Owned       
|Dongguan, China              |  | 331                          |  | Leased      
|Suzhou, China(2)             |  | 516                          |  | Owned/Leased
|Xiamen, China                |  | 25                           |  | Leased      
|Shatin, Hong Kong            |  | 82                           |  | Leased      
|Indonesia                    |  | 48                           |  | Leased      
|Johor Bahru, Malaysia(2)     |  | 497                          |  | Leased      
|Kulim, Malaysia              |  | 324                          |  | Owned       
|Singapore(3)                 |  | 315                          |  | Owned/Leased
|Japan(3)                     |  | 491                          |  | Owned/Leased
|Laem Chabang, Thailand       |  | 437                          |  | Leased      
|Rayong, Thailand             |  | 41                           |  | Leased      
|Cebu, Philippines            |  | 125                          |  | Owned       

---

25

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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.

The
leases for our leased facilities expire between 2004 and 2056. 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 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.

Certain statements contained in the following Management's Discussion and Analysis of Financial Condition and Results of Operations, including, without
limitation, statements containing the words believes, anticipates, estimates, expects, and words of similar import, constitute forward-looking statements. Forward-looking statements are not guarantees
of future performance and involve risks and uncertainties which could cause actual results to differ materially from those anticipated in these forward-looking statements. These risks and
uncertainties include, but are not limited to: the 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 industries affected by rapid technological change; our dependence on a limited number of customers; the challenge of responding
to lower-than-expected customer demand; component constraints; our ability to manage our restructuring and the shift of production to lower cost geographies; our ability to
achieve the anticipated benefits of our merger with Manufacturers' Services Limited; and variability of operating results among periods. These and other risks and uncertainties and factors are
discussed in this Annual Report. See Item 3, "Key Information  Risk Factors."

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 providing electronics manufacturing services (EMS) to OEMs in the computing, communications and other industries. Celestica
provides a wide variety of products and services to its customers, including the high-volume manufacture of complex printed circuit board assemblies and the system assembly of final
products. In addition, the Company is a leading-edge provider of engineering, design and after-market services, supply chain management and power products. Celestica operates facilities in
the Americas, Europe and Asia.

During
the past three years, the EMS industry has experienced continued 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

26

---



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 continued pricing pressures as EMS
providers competed for a reduced amount of business. Declining end markets and volumes have led to lower utilization rates which continue to adversely impact margins. Celestica's revenue for 2003 was
$6.7 billion, down 19% from $8.3 billion in 2002.

During
these difficult periods, the Company has responded by focusing on improving operating efficiency, rebalancing its global manufacturing network, reducing capacity by restructuring,
diversifying into new markets and expanding its customer base. As the Company executes its plan to expand into new markets and services, and to add new customers, margins in the near term will be
affected by the start-up costs of these new investments and initiatives. The Company will continue to evaluate acquisition opportunities as a source of future growth. See "Acquisition
History."

In
2001, the Company announced its first restructuring plan in response to the weakened end markets. As the downturn continued into 2002, the Company announced its second restructuring
plan. In January 2003, the Company announced a further restructuring plan, to be completed by mid-2004. The restructuring plans are focused on consolidating facilities and
increasing capacity utilization in lower cost geographies. The Company will have an improved balance in its global manufacturing network when all of the planned restructuring actions are completed. At
the end of 2003, the Company had approximately 70% of its production facilities in lower cost geographies, up from approximately 50% a year ago.

As
a result of the depressed volumes for 2003 and significant program transfer and ramping activities, gross margins ended at 3.9% compared to 6.7% in 2002. As these activities
stabilize, and restructuring benefits materialize, profitability is expected to improve during the next year.

The
Company maintained a strong balance sheet in 2003 and finished the year with over $1.0 billion in cash. During the year, the Company continued to utilize its strong financial
position to reduce debt by repurchasing convertible debt and expand its share repurchase program. The Company's stronger balance sheet gives it greater flexibility to grow its business, or continue
its debt or share repurchases.

The
table below sets forth selected financial data for the years indicated:

Year ended December 312001

2002

2003(in millions, except per share amounts)Revenue

$
10,004.4

$
8,271.6

$
6,735.3Net loss

$
(39.8
)
$
(445.2
)
$
(265.8
)Basic loss per share

$
(0.26
)
$
(1.98
)
$
(1.22
)Diluted loss per share

$
(0.26
)
$
(1.98
)
$
(1.22
)


As at December 312001

2002

2003(in millions)Total assets

$
6,632.9

$
5,806.8

$
5,134.7Total long-term debt, including current portion(1)

$
147.4

$
6.9

$
3.4


---



Celestica prepares its financial statements in accordance with Canadian GAAP with a reconciliation to United States GAAP, as disclosed in note 20
to the 2003 Consolidated Financial Statements.

The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
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 2003 Consolidated Financial Statements. 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.

27

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Celestica derives most of its revenue from OEM customers. The contractual agreements with its key customers generally provide a framework for the Company's
overall relationship with the customers. Celestica recognizes product manufacturing revenue upon shipment as title has passed, persuasive evidence of an arrangement exists, performance has occurred,
customer specified test criteria have been met, and the earnings process is complete. Celestica has contractual arrangements with the majority of the Company's 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
record revenue on these transactions.



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



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.



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.



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. Celestica recorded an
impairment loss in 2002. There was no impairment identified in 2003. 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 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

28

---



or
valuation of long-lived assets resulting in a change to depreciation or amortization expense and impairment charges. Celestica recorded long-lived impairment losses in 2002
and 2003. Future impairment tests may result in further impairment charges.



Celestica has recorded restructuring charges relating to facility consolidations and workforce reductions. 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, the cost of
leased equipment that has 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 was 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 will be 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 on 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.

Acquisition History

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 the Company for future
outsourcing opportunities. Celestica's most active year for
acquisitions was 2001. With a global manufacturing network established, the historical pace of Celestica's acquisitions did not continue in 2002 or in 2003, and may not continue in the future.

As
a result of the continued downturn in technology manufacturing, some of the sites acquired in prior years have been closed or have experienced headcount reductions. Supply agreements
entered into in connection with certain acquisitions were also affected by order cancellations and reschedulings, as base business volumes decreased. See discussion below in "Results of Operations."

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

In
October 2003, the Company entered into an agreement to acquire all the shares of Manufacturers' Services Limited (MSL), a full-service global electronics
manufacturing and supply chain services company, headquartered in Concord, Massachusetts. This acquisition provides Celestica with an expanded customer base and service offerings. This acquisition
also supports Celestica's strategy of diversifying its markets. MSL's

29

---



customers
come from diverse industries including industrial, commercial avionics, automotive, retail systems, medical, communications and network storage, and peripherals. The shareholders of MSL were
entitled to receive 0.375 of a subordinate voting share of Celestica for each common share of MSL. Preferred shareholders of MSL were entitled to receive cash or, at the holder's election, subordinate
voting shares of Celestica. The Company issued approximately 14.1 million subordinate voting shares to the common shareholders and certain preferred shareholders of MSL, including a cash
consideration of approximately $51.6 million to certain of MSL's preferred shareholders. The acquisition closed in March 2004.

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, increase its penetration in several
industries and establish strategic relationships with new customers. There can be no assurance that any of these discussions will result in a definitive purchase agreement and, if they do, what the
terms or timing of any agreement would be. Celestica expects to actively pursue and consider other acquisition opportunities.

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, geographic manufacturing mix and
other factors, including price competition, manufacturing effectiveness and efficiency, the degree of automation used in the assembly process, the ability to manage labour, inventory and capital
assets effectively, the timing of expenditures in anticipation of forecasted sales levels, the timing of acquisitions and related integration costs, customer product delivery requirements, shortages
of components or labour, the costs of transferring and ramping up programs, and other factors. Weak end-market conditions began to emerge in early to mid-2001 and have
continued through 2003 for most of the Company's communications and computing industries customers. This has resulted in customers rescheduling or canceling orders which have negatively impacted
Celestica's results of operations.

The
higher cost manufacturing geographies in Europe and North America experienced the greatest declines in revenue and operating profits due to declining volumes, significant pricing
pressures and inefficiencies associated with the Company's product transfer activities to lower cost manufacturing sites. The Company's Asian operations had production levels that enabled the region
to maintain profitability throughout 2003. Asia benefited from higher demand and from product transfers from Europe and North America, as customers wanted the benefits of that region's lower cost
structure.

30

---



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

Year ended December 312001

2002

2003Revenue

100.0
%
100.0
%
100.0
%Cost of sales

92.9

93.3

96.1Gross profit

7.1

6.7

3.9Selling, general and administrative expenses

3.2

3.4

3.7Research and development costs

0.2

0.2

0.4Amortization of goodwill and intangible assets

1.3

1.2

0.7Integration costs related to acquisitions

0.2

0.2

Other charges

2.7

8.2

2.6Operating loss

(0.5
)
(6.5
)
(3.5
)Interest income, net

(0.1
)
(0.0
)
(0.1
)Loss before income taxes

(0.4
)
(6.5
)
(3.4
)Income taxes (recovery)

0.0

(1.1
)
0.5Net loss

(0.4
)%
(5.4
)%
(3.9
)%




Revenue decreased 19%, to $6.7 billion in 2003 from $8.3 billion in 2002. The most significant factors causing the decline were the 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 reduced pricing driven primarily by lower component costs.

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

Year ended December 312001

2002

2003(in billions)Americas

$
6.3

$
4.6

$
3.1Europe


3.0


1.8


1.4Asia


1.0


2.1


2.5Inter-segment


(0.3
)

(0.2
)

(0.3
)Total

$
10.0

$
8.3

$
6.7


Revenue
from the Americas operations decreased 33% from 2002. Revenue from European operations decreased 22% from 2002. Operations in the Americas and Europe 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 has completed the majority of its plans to reduce
its 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. The Company's Asian operations have 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.

31

---



In
2002, revenue decreased 17% from 2001, primarily due to a reduction in base business volumes as a result of the prolonged weakened end-market conditions. Excess capacity
in the EMS industry put pressure on pricing for components and services, also reducing revenue. Revenue from the Americas operations decreased 27% from 2001. Revenue from European operations decreased
40% from 2001. Americas and European operations were hardest hit by customer cancellations and delays of orders because of the downturn in end-market demand for their products, as well as
the customers' demands for lower product manufacturing costs. The Company had initiated restructuring actions in 2002 to reduce the manufacturing capacity in these geographies, which included
downsizing and closure of manufacturing facilities. The restructuring actions also included transferring programs from higher cost geographies to lower cost geographies. Revenue from Asian operations
increased 113% from 2001, primarily due to acquisitions and an increase in base business volumes.

The
industry market segmentation as a percentage of revenue for 2003 is: enterprise communications  25%,
telecommunications  23%, servers  22%, storage  13%,
other  10%, and workstations and PCs  7%. At the beginning of 2003, as the Company continued to diversify into new
markets, it separated its communications market segment into enterprise and telecommunications and also separated storage from other. The prior year's comparatives have not been adjusted to reflect
the new market segmentation. The industry market segmentation as a percentage of revenue for 2002 is: communications  45%,
servers  26%, storage and other  22%, and workstations and PCs  7%. For 2001, the
industry market segmentation as a percentage of revenue is: communications  36%, servers  31%, storage and
other  18%, and workstations and PCs  15%. Historically, revenue is highest in the fourth quarter, with the exception of
2002, when the Company was hardest hit by the downturn. Throughout 2003, revenue continued to improve sequentially each quarter, with a 17% increase in the fourth quarter of 2003 over the third
quarter.

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

Year ended December 312001

2002

2003Sun Microsystems

X

X

XIBM

X

X

XLucent Technologies

X

X

XCisco Systems





X


Celestica's
top ten customers represented in the aggregate 73% of total revenue in 2003, compared to 85% in 2002 and 84% in 2001. There has been a steady decline in revenue from the
Company's top three customers over the past year, as their volumes were most negatively impacted by the broad-based reductions in corporate spending for computing and communications infrastructure
products. At the same time, the Company has been focused on diversifying its customer base by adding new customers in areas outside of the traditional communications and computing markets, such as
aerospace and defense, automotive, industrial and consumer. Revenue from its non-top ten customers represented in the aggregate 27% of total revenue in 2003, up from 15% a year ago.

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 2003 Consolidated Financial Statements.

The
Company believes its growth depends on increasing sales to existing customers for their current and future product generations, 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
Company has also focused on expanding its product and service offerings. During the year, the Company announced that it would make investments to support the Company's reference
design activities for

32

---



next
generation servers, workstations and other products. Revenue earned during the year was minimal, however, management expects revenue to increase as the Company expands this new business. The
Company's start-up costs for this business negatively impacted the year's results. The cost of the new investments included in cost of sales, selling, general and administrative expenses,
and research and development expenses totaled approximately 1% of total revenue.



Gross profit decreased 53% to $261.0 million in 2003 from $555.8 million in 2002. 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, with the remainder,
primarily pricing, mix and the cost of new investments, reducing gross profit by approximately a further 20%. This decrease was offset in part by the benefits from the Company's restructuring programs
and various other cost reduction initiatives. The benefits from restructuring amounted to approximately $250.0 million in 2003 of which approximately 75% was realized in lower cost of sales.

The
Company's higher cost operations in the Americas and Europe were significantly impacted by reductions in higher complexity and higher value-add products due to the weak
demand from the Company's computing and telecommunications customers. As a result of these conditions, volumes declined and pricing pressure increased, driving the majority of the gross margin
declines.

European
operations continued to be the most adversely affected by lower utilization levels and higher fixed costs. Most of the planned restructuring actions for Europe were announced by
year-end 2003. Although the Company realized some benefits of the restructuring during the latter part of the year, further savings are expected to be realized in 2004, as the Company
completes its planned restructuring actions by mid-2004. Americas operations have also been 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 have been affected by program ramping costs and overall pricing pressures offset, in part, by higher
production volumes.

Gross
profit decreased 22%, to $555.8 million in 2002 from $712.5 million in 2001. Gross margin decreased to 6.7% in 2002 from 7.1% in 2001, primarily due to the
significant reduction in business volumes and industry pricing pressures. European operations were most adversely affected as they were operating at lower levels
of utilization and higher fixed costs for the year. The volume reductions tended to impact higher value-add products disproportionately, further adversely affecting the European margins.
In addition, costs for the Company's European operations were higher than expected due to delays in transferring programs, the slower pace of restructuring and some process scrap and related inventory
issues, in the latter part of the year. The margin declines in the Company's European operations were offset partially by improved margins in the Americas and Asian operations. The Americas improved
its operating efficiencies, had higher value-add product mix and benefited from restructuring actions. Asian margins improved on higher volumes and utilization rates.

By
the end of 2003, the Company had transitioned most of its high volume products to lower cost geographies, with approximately 70% of its production facilities in lower cost
geographies, up from 50% a year ago. Capacity utilization has improved to between 55% to 60% at the end of 2003 from 45% to 50% at the end of 2002.

For
the foreseeable future, the Company's gross margin is expected to be impacted by product volume and mix, production efficiencies, utilization of manufacturing capacity, geographic
manufacturing mix, start-up and ramp-up activities, new product introductions, pricing within the electronics industry, cost structures at individual sites, and other factors,
including the overall highly competitive nature of the EMS industry. Over time, margins at individual sites and for the Company as a whole are expected to fluctuate. Also, the availability of raw
materials, which are subject to lead time and other constraints, could possibly limit the Company's revenue growth. Through the fourth quarter of 2003, increased volumes and improved capacity
utilization have

33

---



stabilized
pricing on components and our services. This, together with the continued restructuring benefits, should add to the Company's future profitability.



Selling, general and administrative (SG&A) expenses decreased 11%, to $249.8 million (3.7% of revenue) in 2003 from $280.3 million (3.4% 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 Company's restructuring activities lagging behind the revenue decline. The decrease in SG&A, on an absolute basis, reflects the benefits from the Company's restructuring programs, offset by
higher costs, largely to support new products and new markets.

SG&A
expenses decreased 14%, to $280.3 million (3.4% of revenue) in 2002 from $324.3 million (3.2% of revenue) in 2001. SG&A as a percentage of revenue increased as a
result of a significant reduction in revenue and the benefits from the Company's restructuring activities lagging behind the revenue decline. The decrease in SG&A, on an absolute basis, reflects the
benefits from the Company's restructuring programs and a reduction in spending, which more than offset the increase in expenses due to operations acquired in the latter part of 2001 and in 2002.



Research and development (R&D) increased 32%, to $24.0 million (0.4% of revenue) in 2003 from $18.2 million (0.2% of revenue) in 2002. The increased
spending in R&D was principally to support the Company's reference design activities for next generation servers, workstations and other products.

R&D
costs increased slightly to $18.2 million (0.2% of revenue) in 2002, compared to $17.1 million (0.2% of revenue) in 2001.



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 is partially offset by
amortization of intangible assets arising from the 2002 acquisitions.

Amortization
of goodwill and intangible assets decreased 23%, to $95.9 million in 2002 from $125.0 million in 2001. The decrease in amortization is the result of a change
in accounting for goodwill, offset in part by the amortization of intangible assets arising from the 2001 and 2002 acquisitions. Effective January 1, 2002, the Company adopted the new
accounting standards for goodwill and discontinued amortization of all goodwill effective that date. Amortization of goodwill for 2001 was $39.2 million. See note 2(q)(i) to the
2003 Consolidated Financial Statements for the impact of the change in policy on net loss and per share calculations.



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

There
were no integration costs in 2003, compared to $21.1 million in 2002 and $22.8 million in 2001. Integration costs vary from period to period due to the timing of
acquisitions and related integration activities.

34

---





Year ended December 312001

2002

2003

Total(in millions)2001 restructuring

$
237.0

$
1.9

$
7.9

$
246.82002 restructuring





383.5


15.7


399.22003 restructuring








71.3


71.3Total restructuring

$
237.0

$
385.4

$
94.9

$
717.32002 goodwill impairment





203.7





203.7Other impairment


36.1


81.7


82.8


200.6Deferred financing costs and debt redemption fees





9.6


1.3


10.9Gain on sale of surplus land





(2.6
)

(3.6
)

(6.2
)$
273.1

$
677.8

$
175.4

$
1,126.3


Further
details of the other charges are included in note 11 to the 2003 Consolidated Financial Statements and note 6 to the December 31, 2003 Interim
Consolidated Financial Statements.

To
date, the Company has recorded charges in connection with three separate restructuring plans in response to the challenging economic climate. These actions, which included reducing
workforce, consolidating facilities and changing the number and location of production facilities, were largely intended to align the Company's capacity and infrastructure to anticipated customer
requirements for more capacity in lower cost regions, as well as to rationalize its manufacturing network to the lower demand levels. The Company has recorded charges totaling $246.8 million
for its 2001 restructuring plan, $399.2 million for its 2002 restructuring plan and $71.3 million relating to its 2003 restructuring plan.

The
Company recorded a combined total of $717.3 million for its three restructuring plans. The focus of these restructuring plans was on the Americas and Europe, as they were hit
the hardest by the downturn. A total of 18,510 employees have been released from the business as of December 31, 2003. Approximately 620 employee positions remain to be eliminated by
mid-2004. Approximately 70% of the employee terminations were in the Americas and 30% in Europe. A total of 29 facilities were closed or downsized in the Americas and Europe, which
included the transfer of programs from these higher cost geographies to lower cost geographies. The remaining lease facilities costs are estimated to be paid out through 2015. All cash outlays are
expected to be funded from cash on hand.

The
Company has benefited and expects to continue to benefit from the restructuring measures taken in prior years through reduced depreciation, lease and labour costs in cost of sales
and SG&A expenses, and reduced amortization of intangibles. These benefits amounted to approximately $250 million in 2003, of which approximately 75% was realized in lower cost of sales and the
balance in lower SG&A and amortization of intangibles. The Company has completed the major components of the 2001 and 2002 restructuring plans, except for certain employee terminations in the Americas
and certain long-term lease and other contractual obligations. The Company expects to complete the remaining 2003 restructuring actions in Europe by mid-2004.

The
Company will continue to evaluate its operations, and could propose future restructuring actions as a result of changes in the marketplace. See " Recent
Development."

The
Company conducts an annual review of goodwill and long-lived assets in the fourth quarter of each year to correspond with its planning cycle, absent any triggering
factors which would have necessitated a review earlier in the year. In the course of finalizing its annual plans, the Company made certain decisions regarding its restructuring plans and the transfer
of customer programs from higher cost to lower cost geographies. These actions, coupled with weakened end markets, have significantly impacted forecasted revenue and have reduced the net cash flows
for certain sites, resulting in impairment when compared to the carrying value of long-lived assets including intangible assets and capital assets. In the fourth quarter of 2003, the
Company recorded non-cash charges against intangible assets of $25.3 million, and $57.5 million against capital assets, which included an impairment of $14.3 million
relating to the purchase of a leased facility. In the fourth quarter of 2002, the Company recorded non-cash charges of $203.7 million against goodwill, $69.0 million against

35

---



intangible
assets, and $12.7 million against capital assets. In 2001, the Company recorded non-cash charges totaling $36.1 million, primarily against goodwill, intangible
assets and other assets.

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



Interest income in 2003 decreased to $9.4 million compared to $17.2 million in 2002. The reduction in interest income in 2003 is due to lower cash
balances being invested at lower interest rates compared to 2002. Interest income was offset by interest expense of $5.4 million in 2003, compared to $16.1 million in 2002.

Interest
income in 2002 amounted to $17.2 million, compared to $27.7 million in 2001. Interest income decreased for 2002 compared to 2001, primarily due to lower interest
rates on cash balances. Interest income was offset by interest expense incurred on the Company's Senior Subordinated Notes and debt facilities. Interest expense decreased from $19.8 million in
2001 to $16.1 million in 2002, due to the redemption of the Senior Subordinated Notes in August 2002.



Income tax expense in 2003 was $33.1 million on a net loss before tax of $232.7 million, compared to a recovery of $91.2 million on a net
loss before tax of $536.4 million in 2002. The effective tax rate for 2003 was negative 14.2%, compared to an effective tax rate of 17% in 2002. The tax rate and resulting tax expense were
impacted by the increase in the valuation allowance, primarily recorded against existing European deferred tax assets ($35.3 million) and 2003 European restructuring charges and European
operating losses.

In
addition, 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 2004 and 2012  see note 12 to the 2003 Consolidated Financial
Statements), 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 benefit arising from the tax
holidays and tax incentives is approximately $17.6 million, or $0.08 diluted per share, for 2003 and $24.9 million, or $0.11 diluted per share, for 2002. Such tax holidays are subject to
conditions with which the Company expects to continue to comply.

The
net deferred income tax asset for 2003 of $225.0 million ($274.3 million as at December 31, 2002) arises from available income tax losses and future income tax
deductions. The Company's ability to use these income tax losses and future income tax deductions is dependent upon the operations of the Company in the tax jurisdictions in which such losses or
deductions arose. Management records a valuation allowance against deferred income tax assets when management believes it is more likely than not that some portion or all of the deferred income tax
assets will not be realized. Based on the reversal of deferred income tax liabilities, projected future taxable income, and the character of the income tax assets and tax planning strategies,
management has determined that a valuation allowance of $185.3 million is required in respect of its deferred income tax assets as at December 31, 2003 ($76.6 million as at
December 31, 2002). In order to fully utilize the net deferred income tax assets of $225.0 million, the Company will need to generate future taxable income of approximately
$642.5 million. Based on the Company's current projection of taxable income for the periods in which the deferred income tax assets are deductible, it is more likely than not that the Company
will realize the benefit of the net deferred income tax assets as at December 31, 2003.

36

---



Unaudited quarterly financial highlights

|                                                       |           | 2002 |         | 2003  |  
|------------------------------------------------------ | --------- | ---- | ------- | ----- | -
|
|
|Revenue                                                |           | $    | 2,151.5 |       | $
|Cost of Sales                                          |           | $    | 1,999.4 |       | $
|Gross Profit %                                         |           |      | 7.1%    |       |  
|Net earnings (loss)                                    |           | $    | 39.7    |       | $
|Weighted average # of shares outstanding (in millions) |           |      |         |       |  
|                                                       |  basic   |      |         | 229.8 |  
|                                                       |  diluted |      |         | 236.8 |  
|Earnings (loss) per share                              |           |      |         |       |  
|                                                       |  basic   |      | $       | 0.15  |  
|                                                       |  diluted |      | $       | 0.15  |  

See " Capital Resources" for information regarding the impact of foreign currency fluctuations on the Company.

B.    Liquidity and Capital Resources

In 2003, operating activities utilized $158.5 million in cash, compared to providing $982.8 million in cash in 2002. Cash from operations was
negatively impacted by depressed volumes and program transfers. $252.6 million was used to support higher inventory levels. Inventory was purchased earlier in the cycle to ensure adequate
supply in response to increased customer demand in the fourth quarter of 2003, as well as to support the increasing sales momentum going into the first quarter of 2004. Investing activities for 2003
included capital expenditures of $175.9 million, primarily to expand manufacturing capacity in Asia and to purchase the building in Fort Collins, Colorado which the Company previously leased.
Investing activities for 2002 included capital expenditures of $151.4 million and asset acquisitions of $111.0 million, offset, in part, by proceeds from the sale-leaseback
of machinery and equipment, and the sale of the Company's Columbus, Ohio facility.

The
Company continues to focus on efficiency including improving cash cycle days and inventory turns. The Company's average cash cycle, calculated as accounts receivable days plus
inventory days minus payable days (defined as current liabilities excluding interest bearing items), for 2003 was 7 days, an improvement of 11 days over 2002.

The
Company continued to reduce the leverage on its balance sheet by repurchasing LYONs in the open market. In 2003, LYONs with a principal amount at maturity of $435.9 million
were repurchased at an average price of $512.75 per LYON, for a total cash outlay of $223.5 million. A loss of $2.8 million was recorded for the year. The Company may, from time to time,
purchase additional LYONs in the open market. Through December 31, 2003, the Company repurchased LYONs with a total principal amount at maturity of $658.8 million, for a total cash
outlay of $323.8 million. The Company currently has pre-approval to spend up to an additional $126.2 million to repurchase LYONs, at management's discretion. The amount and
timing of future purchases cannot be determined at this time.

As
at December 31, 2003, the Company has outstanding LYONs with a principal amount at maturity of $1,154.7 million payable August 1, 2020. Holders of the instruments
have the option to require Celestica to repurchase their LYONs on August 2, 2005, at a price of $572.82 per LYON, or a total of $661.4 million. The Company may elect to settle its
repurchase obligation in cash or shares, or any combination thereof. See further details in note 8 to the 2003 Consolidated Financial Statements.

In
April 2003, Celestica amended its Normal Course Issuer Bid (NCIB) to permit it to repurchase up to 10% of the public float, or 18.6 million subordinate voting shares,
for cancellation, over a period from August 1, 2002 to July 31, 2003. This program was completed in July 2003. In July 2003, Celestica filed a new NCIB to repurchase up to
an additional 10% of the public float, or 17.0 million subordinate voting shares, for cancellation, over a period from August 1, 2003 to July 31, 2004. Under these programs,
shares are purchased at the market price at the time of purchase. The number of shares to be repurchased during any 30-day period may

37

---



not
exceed 2% of the outstanding subordinate voting shares. A copy of the notices relating to the two NCIB programs may be obtained from Celestica, without charge, by contacting the Company's Investor
Relations department at clsir@celestica.com. In 2003, the Company repurchased 20.6 million subordinate voting shares at a weighted average price of $13.35 per share. All of these transactions
were funded with cash on hand. Through December 31, 2003, a total of 22.6 million subordinate voting shares have been repurchased pursuant to these NCIBs.

As
of December 31, 2003, the Company had 169.8 million outstanding subordinate voting shares and 39.1 million outstanding multiple voting shares.

In
2002, Celestica redeemed the entire $130.0 million of outstanding Senior Subordinated Notes which were due in 2006 and paid the contractual premium of 5.25%, or
$6.9 million, on redemption.

Since
the Company began its share and debt repurchase activities in the third quarter of 2002, a total of $768.1 million was spent to repurchase senior subordinated notes,
subordinate voting shares and LYONs.

Capital Resources

At December 31, 2003, the Company had two credit facilities: a $500.0 million four-year revolving term credit facility and a
$250.0 million (reduced from $350.0 million in October 2003) revolving term credit facility which expire in July 2005 and October 2004, respectively. The credit
facilities permit Celestica and certain designated subsidiaries to borrow funds directly for general corporate purposes (including acquisitions) at floating rates. Under the credit facilities:
Celestica is required to maintain certain financial ratios; its ability and that of certain of its subsidiaries to grant security interests, dispose of assets, change the nature of its business or
enter into business combinations, is restricted; and, a change in control is an event of default. The Company does not currently anticipate requiring any borrowings from the credit facilities to
support existing operations. Based on the required minimum financial ratios, at December 31, 2003, the Company is limited by these facilities to approximately $140 million of additional
debt incurrence. Additional borrowing amounts would be available to support the funding of acquisitions or to support certain other potential refinancing needs. No borrowings were outstanding under
the revolving credit facilities and Celestica was in compliance with all covenants at December 31, 2003.

Celestica
and certain subsidiaries have additional uncommitted bank overdraft facilities which total $55.1 million that are available for operating requirements.

Celestica
believes that cash flow from operating activities, together with cash on hand and borrowings available under its credit facilities, will be sufficient to fund currently
anticipated working capital, planned capital spending and debt service requirements for the next 12 months. At December 31, 2003, Celestica had committed $18.7 million in capital
expenditures, principally for machinery and equipment and facilities in Asia. The Company expects capital spending for 2004 to be in the range of 1.5% to 2.5% of revenue and it 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.

The
Company has an arrangement to sell up to $400.0 million in accounts receivable under a revolving facility which is available until September 2004. As of
December 31, 2003, the Company generated cash from the sale of $359.3 million in accounts receivable. The purchaser of the accounts receivable is a division of a Schedule "A"
rated Canadian bank, with a Standard and Poor's Rating Service 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 arrangement 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
Rating Service.

Celestica's
corporate, or senior implied, ratings are BB+ from Standard and Poor's and Ba1 from Moody's Investor Services. During 2003, both Moody's and Standard and Poor's revised their
outlook on the Company from stable to negative, as a result of reduced revenue and operating profit performance. A reduction in Celestica's credit ratings could impact Celestica's future cost of
borrowing.

Celestica
prices the majority of its products in U.S. dollars, and the majority of its material costs are also denominated in U.S. dollars. However, a significant portion
of its non-material costs (including payroll, facilities costs, and costs of locally sourced supplies and inventory) are denominated in various currencies. The majority

38

---



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 programs and does not enter into speculative trades. At December 31, 2003, Celestica had forward foreign exchange contracts
covering various currencies in an aggregate notional amount of $623.2 million with expiry dates up to January 2006. The fair value of these contracts at December 31, 2003 was an
unrealized gain of $49.8 million. Celestica's current hedging activity is designed to reduce the variability of its foreign currency costs in the regions in which 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 25 months.
Celestica may, from time to time, enter into additional hedging transactions to minimize its exposure to foreign currency and interest rate risks. There can be no assurance that such hedging
transactions will be successful. See notes 2(n) and 15 to the 2003 Consolidated Financial Statements.

As
at December 31, 2003, the Company has contractual obligations that require future payments as follows:

|                 |  | Total |       | 2004 |   | 2005 |  | 2006 |      | 2007 |   | 2008 |  | Thereafter
|---------------- |  | ----- | ----- | ---- | - | ---- |  | ---- | ---- | ---- | - | ---- |  | ----------
|
|Long-term debt   |  | $     | 3.4   |      | $ | 2.7  |  | $    | 0.7  |      | $ |     |  | $         
|Operating leases |  |       | 255.2 |      |   | 60.8 |  |      | 43.1 |      |   | 30.1 |  |           

As
at December 31, 2003, the Company has commitments that expire as follows:

|                                                                         |  | Total |       | 2004 |   | 2005  |  | 2006 |      | 2007 |   | 2008 |  | Thereafter
|------------------------------------------------------------------------ |  | ----- | ----- | ---- | - | ----- |  | ---- | ---- | ---- | - | ---- |  | ----------
|
|Foreign currency contracts                                               |  | $     | 623.2 |      | $ | 585.6 |  | $    | 34.9 |      | $ | 2.7  |  | $         
|Letters of credit, letters of guarantee and surety and performance bonds |  |       | 55.9  |      |   | 32.6  |  |      | 16.9 |      |   |     |  |           
|Capital expenditures                                                     |  |       | 18.7  |      |   | 18.7  |  |      |     |      |   |     |  |           

Cash
outlays for the Company's contractual obligations and commitments identified above are expected to be funded by cash on hand. Purchase commitments are not included in the above
table as non-cancelable purchase orders are generally short-term in nature and longer term purchase orders are typically cancelable.

The
Company's 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. During 2003, the Company made pension contributions of $33.8 million ($13.5 million in 2002), of which
$26.7 million was discretionary ($6.7 million in 2002). The Company estimates the 2004 statutory pension contribution to range from $7.0 million to $10.0 million and the
voluntary pension contribution to range from $8.0 million to $10.0 million.

The
Company has also 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.

The
Company expensed management-related fees of $1.4 million charged by its parent company, based on the terms of a management agreement. See "Related Party
Transactions  Interest of Management in Certain Transactions." See note 13 to the 2003 Consolidated Financial Statements.

Controls and Procedures

The Chief Executive Officer and Chief Financial Officer have evaluated the Company's disclosure controls and procedures as of the end of the year, and have
concluded that such controls and procedures are effective.

There
were no changes in the Company's internal controls over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, such
controls.

39

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Recent Development

In April, 2004 the Company announced that it would incur an additional pre-tax restructuring charge of between $175.0 million and $200.0 million to
be recorded over the next 12 months. The Company expects to reduce its manufacturing footprint and reduce its global workforce by approximately 10% to 15% over the next 12 months. The
Company estimates that approximately 75% of the charges will be cash costs.

Recent Accounting Developments



Effective January 1, 2003, the Company adopted the revised CICA Handbook Section 3870. See note 2(q)(ii) to the 2003 Consolidated
Financial Statements.



In January 2002, the CICA issued Accounting Guideline AcG-13. See note 2(r) to the 2003 Consolidated Financial Statements.



In October 2001, FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." In
December 2002, the CICA issued standards similar to SFAS No. 144. See note 2(j) to the 2003 Consolidated Financial Statements.



In November 2002, FASB issued FIN 45, "Guarantor's Accounting and Disclosure Requirements." In December 2002, the CICA approved
AcG-14 which harmonizes Canadian GAAP to the disclosure requirements of FIN 45. See notes 20(l) and 16 to the 2003 Consolidated Financial Statements.



In January 2003, FASB issued FIN 46, "Consolidation of Variable Interest Entities." See note 20(l) to the 2003 Consolidated Financial
Statements. In June 2003, the CICA issued standards similar to FIN 46, effective for 2005.



In March 2003, the CICA issued EIC-134, "Accounting for Severance and Termination Benefits," and EIC-135, "Accounting for Costs
Associated with Exit and Disposal Activities." The FASB issued similar standards in July 2002. See notes 2(p) and 20(l) to the 2003 Consolidated Financial Statements.



In March 2003, the CICA issued Handbook Section 3110, "Asset Retirement Obligations." The FASB issued similar standards in August 2001. See
notes 2(r) and 20(l) to the 2003 Consolidated Financial Statements.



In November 2003, the CICA revised Handbook Section 3860, "Financial Instruments  Presentation and
Disclosure." See note 2(r) to the 2003 Consolidated Financial Statements.



In December 2003, the CICA issued EIC-141, "Revenue Recognition" and EIC-142, "Revenue Arrangements with Multiple Deliverables."
The FASB has similar standards. See note 2(r) to the 2003 Consolidated Financial Statements.



In July 2003, the CICA issued Handbook Section 1100, "Generally Accepted Accounting Principles." See note 2(r) to the 2003
Consolidated Financial Statements.

40

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

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

D.    Trend Information

During the past three years, economic growth slowed and, in some regions of the world, the economy contracted. The demand for technology products fell
significantly and our customers experienced commensurately reduced demand for their products. In turn, we experienced reduced demand for the manufacturing services that we provide. In 2003, the
economic environment continued to be uncertain, and we continued to experience limited visibility in end-market demand. Given the difficult economic environment, we have been focused on
re-aligning capacity to match current levels of product demand, generating increased levels of cash flow, and improving operating efficiencies. While economic conditions have improved, we
intend to continue these activities in 2004 in order to align our cost structure with current revenue levels. There continues to be a significant number of outsourcing opportunities and we are well
positioned to participate further in the trend towards increased outsourcing by OEMs. If, however, economic conditions were to deteriorate significantly beyond current expectations, we would
likely continue reducing capacity to match reduced levels of demand.

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 senior officers of Celestica.

|Name                   |  | Age |  | Position with Celestica                                           
|---------------------- |  | --- |  | ------------------------------------------------------------------
|Robert L. Crandall     |  | 68  |  | Chairman of the Board and Director                                
|William A. Etherington |  | 62  |  | Director                                                          
|Richard S. Love        |  | 66  |  | Director                                                          
|Anthony R. Melman      |  | 56  |  | Director                                                          
|Gerald W. Schwartz     |  | 62  |  | Director                                                          
|Charles W. Szuluk      |  | 61  |  | Director                                                          
|Don Tapscott           |  | 56  |  | Director                                                          
|Stephen W. Delaney     |  | 44  |  | Chief Executive Officer                                           
|J. Marvin MaGee        |  | 51  |  | President                                                         
|Anthony P. Puppi       |  | 46  |  | Chief Financial Officer                                           
|Neo Kia Quek           |  | 56  |  | President, Asia Operations                                        
|John Boucher           |  | 44  |  | President, Americas Operations                                    
|Peter J. Bar           |  | 46  |  | Senior Vice President and Corporate Controller                    
|Arthur P. Cimento      |  | 46  |  | Senior Vice President, Corporate Strategies                       
|Elizabeth L. DelBianco |  | 44  |  | Senior Vice President, Chief Legal Officer and Corporate Secretary
|Iain S. Kennedy        |  | 42  |  | Group Executive, Global Supply Chain and Information Technology   
|Lisa J. Colnett        |  | 46  |  | Senior Vice President, Human Resources                            
|Paul Nicoletti         |  | 36  |  | Senior Vice President and Corporate Treasurer                     
|Rahul Suri             |  | 39  |  | Senior Vice President, Corporate Development                      

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

Robert L. Crandallwas appointed Chairman of the Board 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 has been a director of Celestica since July 1998. He is also a director of Air Cell Inc.,
Anixter International Inc.,

41

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the
Halliburton Company and i2 Technologies Inc. He is also a member of the Advisory Council of American International Group, Inc. and 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 director and the Non-Executive Chairman of the Board of Canadian Imperial Bank of Commerce. He also
serves on the boards of Allstream Inc., Dofasco Inc., MDS Inc. and The Relizon Company (private equity). Mr. Etherington has been a director of Celestica since
October 2001. He 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, Mr. Etherington ran successively larger portions of the company's business in Canada, Latin America, Europe and from the corporate office in
Armonk, New York. He retired from IBM after a 37-year career. 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 Managing Director of Onex and 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 Corporation 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, Phoenix Entertainment Corp. and Vincor International Inc., and Chairman of Loews Cineplex Entertainment Corporation. Mr. Schwartz is also Vice Chairman and
member of the Executive Committee of Mount Sinai Hospital, and is a director, governor or trustee of a number of other organizations, including Junior Achievement of Toronto, Canadian Council of
Christians and Jews, The Board of Associates of the Harvard Business School 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 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. 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 Corporation 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

42

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business.
Mr. Tapscott is President 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. Previously he served as President and Chief Operating
Officer of Celestica from February 2001 until April 2004. Prior to that, he held the position of Executive Vice President, Worldwide Operations since October 1999.
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. Mr. Puppi is responsible for Celestica's global financial activities. He was appointed Executive Vice President in October 1999, and served as
General Manager, Global Services from January 2001 until April 2004. From 1980 to 1992, he held positions of increasing financial management responsibility with IBM Canada.
Mr. Puppi holds a Bachelor of Business Administration degree in Finance 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 IMS. Mr. Quek has over 25 years direct high-tech experience and, over the course of his career, has held positions at
Intel, Seagate,
National Semi-conductor, GE, SCI Systems and Siemens 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.

John Boucherjoined Celestica in March 2004. He currently holds the position of President, Americas Operations, and is 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, 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.

Peter J. Barhas been Corporate Controller of Celestica since February 1999 and was appointed Senior Vice President in
April 2004. He joined Celestica in March 1998, as Vice President, Finance  Power Systems. Prior to joining Celestica, Mr. Bar was the
Director of Finance for the Personal Systems Group of IBM Canada.

43

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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 Accountants designation.

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.

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. Ms. DelBianco 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.

Iain S. Kennedyhas been Senior Vice President of Celestica since 1996. He is currently responsible for Celestica's Global Supply Chain
Management (SCM) and Information Technology (IT) organizations, which includes maintaining industry-leading performance and deploying a competitive operational strategy across the company's
sophisticated global manufacturing network. Previously, he was responsible for the integration of new acquisitions as well as South American Operations from October 2000 until
November 2002. Prior to that 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 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.

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.

Paul Nicolettihas been Corporate Treasurer since September 2002 and was appointed Senior Vice President in April 2004. He
is responsible for all corporate finance and treasury-related matters, in addition to global tax and investor relations. Previously, he was Vice President, Global Financial Operations from
February 2001, where he led the regional financial organizations on a global basis. Prior to that, from August 1999, he was Vice President, Finance and was responsible for all financial
aspects of Celestica's Canadian and Mexico 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 Masters of Business Administration degree from York University.

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 overseeing and implementing Celestica's corporate development (including acquisitions) strategy and program, and integrating each initiative Celestica completes.
Prior to joining Celestica, he worked in a range of related positions, including Managing Director in the Mergers

44

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and
Acquisitions Group at BMO Nesbitt Burns Investment Banking, and Partner at Davies Ward & Beck (now Davies Ward Phillips & Vineberg LLP). For three years, Mr. Suri was a
visiting professor at Queen's University Law School, Ontario where he taught advanced corporate law and mergers and acquisitions to final year students. 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.

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 that
was in effect until April 2003, eligible directors received an annual retainer fee of $25,000 and a fee of $2,500 for each meeting of the Board of Directors attended and each meeting attended
of a committee of the Board of Directors of which the director was a member. In lieu of receiving such retainer and attendance fees in cash, these directors were entitled to elect, at the time they
were first elected or appointed to Celestica's Board of Directors, to receive their fees in subordinate voting shares. Directors who joined the Board of Directors at or about the time of Celestica's
initial public offering receive an annual retainer and per meeting fee of 2,860 and 286 subordinate voting shares, respectively. In the case of directors who joined the Board after July 2001,
the number of shares paid in lieu of cash was 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. In addition, Mr. Crandall received an annual grant of 10,000 Performance Share Units under Celestica's Long-Term Incentive Plan, convertible
into subordinate voting shares upon his retirement from the Board of Directors in his capacity as Chairman of the Executive Committee.

In
April 2003, the Board of Directors adopted a new directors' compensation plan. Under this 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 Lead Director or 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 attended. Directors who travel
outside of their home state or province to attend a meeting are entitled to a travel fee of $2,500. Directors may elect, on an annual basis, to receive all or half of their fees in subordinate voting
shares. The number of shares 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. Under the current and previous plans, directors may elect to defer payment of fees taken in the form of subordinate voting shares until such time as they
retire from the Board.

Grants
of subordinate voting shares under the directors' compensation plan may not exceed an aggregate of 500,000 subordinate voting shares. At the time they are appointed to the Board,
directors are granted an option to acquire 15,000 subordinate voting shares and, thereafter, are granted annually options to acquire 5,000 subordinate voting shares. The Lead Director or
non-executive Chairman receives an additional grant of 5,000 options. Options are granted pursuant to the Company's Long-Term Incentive Plan.

The
aggregate compensation paid in 2003 by Celestica to its directors in their capacity as directors was $91,250 and the right to receive, in the aggregate, 24,118 subordinate voting
shares and 2,500 Performance Share Units under Celestica's Long-Term Incentive Plan. The delivery of these shares is deferred until the respective directors cease to be directors of
Celestica.

45

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In
2003, eligible directors were issued, in aggregate, options to acquire 45,000 subordinate voting shares, pursuant to the Long-Term Incentive Plan, at an exercise price of
$10.62.

As
at December 31, 2003, senior 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

$
0.925543,149

$
5.00460,690

$
8.7569,700

$
7.50303,880

C$
18.9028,600

C$
20.62570,000

$
22.97466,000

C$
57.84560,000

$
39.03100,000

C$
60.00239,000

C$
86.5059,000

$
56.187525,000

C$
73.50100,000

$
50.00459,200

C$
66.06149,000

$
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

$
13.10145,000

$
18.66442,000

C$
29.113,000

C$
23.295,000

$
32.408,000

C$
15.3545,000

$
10.62


These
options expire at various dates from June 13, 2006 through April 18, 2013. See " Share
Ownership  Share Purchase and Option Plans" 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 of Celestica and the five other most highly compensated executive officers of
Celestica during the year ended December 31, 2003 (collectively, the "Named Executive Officers") for services rendered in all capacities during our two most recently completed financial years.

46

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Summary Compensation Table

|                                                                                                        |  | Annual Compensation(1) |  | Long-term Compensation Awards |  |         
|------------------------------------------------------------------------------------------------------- |  | ---------------------- |  | ----------------------------- |  | --------
|
|
|Eugene V. Polistuk
Chairman of the Board and Chief Executive Officer(4)                                 |  | 2003
2002              |  | 700,000
700,000               |  | 
     
|Stephen W. Delaney
President, Americas(6)                                                               |  | 2003
2002              |  | 360,000
333,750               |  | 
     
|J. Marvin MaGee
President and Chief Operating Officer                                                   |  | 2003
2002              |  | 525,000
525,000               |  | 
     
|Anthony P. Puppi
Executive Vice President, Chief Financial Officer and General Manager, Global Services |  | 2003
2002              |  | 425,000
400,000               |  | 
     
|R. Thomas Tropea
Vice Chair, Worldwide Marketing and Business Development(8)                            |  | 2003
2002              |  | 400,000
400,000               |  | 
     
|Neo Kia Quek
President, Asia Operations                                                                 |  | 2003
2002              |  | 310,000
291,827               |  | 64,000


---

47

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The following table sets out options to purchase subordinate voting shares granted by the Company to the Named Executive Officers during the year ended
December 31, 2003.

|Name               |  | Subordinate Voting Shares Under Options Granted(1) |  | % of Total Options Granted to Employees in 2003 |  | Exercise Price |         | Market Value of Subordinate Voting Shares on the Date of Grant |       | Expiration Date
|------------------ |  | -------------------------------------------------- |  | ----------------------------------------------- |  | -------------- | ------- | -------------------------------------------------------------- | ----- | ---------------
|
|Eugene V. Polistuk |  |                                                   |  |                                                |  |                |        |                                                                |       |               
|Stephen W. Delaney |  | 200,000                                            |  | 4.7%                                            |  | U.S.$          | 17.15   |                                                                | U.S.$ | 17.15          
|J. Marvin MaGee    |  | 160,000                                            |  | 3.8%                                            |  |                | C$22.75 |                                                                |       | C$22.75        
|Anthony P. Puppi   |  | 160,000                                            |  | 3.8%                                            |  |                | C$22.75 |                                                                |       | C$22.75        
|R. Thomas Tropea   |  | 90,000                                             |  | 2.1%                                            |  | U.S.$          | 17.15   |                                                                | U.S.$ | 17.15          
|Neo Kia Quek       |  | 90,000                                             |  | 2.1%                                            |  | U.S.$          | 17.15   |                                                                | U.S.$ | 17.15          

---



The following table sets out certain information with respect to options to purchase subordinate voting shares that were exercised by Named Executive Officers
during the year ended December 31, 2003 and with respect to subordinate voting shares under option to the Named Executive Officers as at December 31, 2003.

|                   |  |   |  |   |  | Unexercised Options at December 31, 2003 |  | Value of Unexercised in-the-Money Options at December 31, 2003(1)
|------------------ |  | - |  | - |  | ---------------------------------------- |  | -----------------------------------------------------------------
|
|
|
|Eugene V. Polistuk |  |  |  |  |  | 733,333                                  |  | 212,500                                                          
|Stephen W. Delaney |  |  |  |  |  | 88,750                                   |  | 126,250                                                          
|J. Marvin MaGee    |  |  |  |  |  | 341,132                                  |  | 160,000                                                          
|Anthony P. Puppi   |  |  |  |  |  | 249,446                                  |  | 83,250                                                           
|R. Thomas Tropea   |  |  |  |  |  | 370,190                                  |  | 72,000                                                           
|Neo Kia Quek       |  |  |  |  |  | 366,000                                  |  | 60,500                                                           

---

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 similarly sized companies in the EMS industry and closely related industries in the U.S.

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. For example, in response to a difficult economic environment in 2001,
2002 and 2003 and Celestica's relative performance in that environment, a general salary freeze was in place for executives during that period. As noted above, however, an important element of
Celestica's compensation philosophy is compensating 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. Accordingly, in order to keep salaries at competitive levels relative to the marketplace, the Compensation Committee expects to approve salary increases in
2004.

48

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Annual Incentives

Designated executives of Celestica participate in the Celestica Executive Team Incentive Plan. Payments under this plan are tied to Celestica's meeting or
exceeding preset targets for financial and customer results, individual performance and Celestica's performance relative to our direct competitors on key financial metrics. The Chief Executive Officer
and the President evaluate each executive's individual performance in accordance with our stated values, teamwork and the executive's key accomplishments. The Board of Directors evaluates the Chief
Executive Officer. Based on this individual assessment, the amount of the executive's earned award may increase or decrease by as much as 50%. The Compensation Committee evaluates our performance
relative to that of specific direct EMS competitors based on defined performance metrics. Based on that analysis, the amount available to be paid out under the plan may decrease to zero or increase by
as much as 100%. Based on our performance in 2003 relative to that of our competitors on the designated metrics, the Compensation Committee determined that no payouts would be made under the Executive
Team Incentive Plan. However, the Committee authorized a special bonus for N.K. Quek, President of Celestica's Asia region, to recognize an exceptional individual contribution.

All
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 financial performance, customer satisfaction results and individual performance. Under Celestica's Performance and Development Plan, each participant establishes personal objectives
at the beginning of each year that are aligned with Celestica's annual business objectives. At the end of the year, each participant's accomplishments and results with respect to his or her objectives
are reviewed and assessed by his or her manager. The participant's rating is then used in the determination of the actual award to be paid. A partial bonus was paid to most business units in 2003.
Some employees received above target payments based on achievement of business unit objectives.

Pension Plans

Messrs. Puppi and MaGee each participate, and Mr. Polistuk participated, 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.

Mr. MaGee
participates 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 performance of the investment options
chosen. Celestica currently contributes 6% of earnings annually on behalf of Mr. MaGee.

Mr. Puppi
participates, and Mr. Polistuk participated, 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
2003, the Base Year was updated to December 31, 2002 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 1.2% 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.

49

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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

35$
400,000

$
113,000

$
142,000

$
170,000

$
170,000$
600,000

$
171,000

$
214,000

$
257,000

$
257,000$
800,000

$
229,000

$
287,000

$
344,000

$
344,000$
1,000,000

$
287,000

$
359,000

$
431,000

$
431,000$
1,200,000

$
345,000

$
432,000

$
518,000

$
518,000$
1,400,000

$
403,000

$
504,000

$
605,000

$
605,000$
1,600,000

$
461,000

$
577,000

$
692,000

$
692,000$
1,800,000

$
519,000

$
649,000

$
779,000

$
779,000


---

As at December 31, 2003, Messrs. Polistuk and Puppi had completed 35 and 24 years of service, respectively.

During
the year ended December 31, 2003, Celestica accrued an aggregate of $1,054,149 to provide pension benefits for Messrs. Polistuk, Puppi and MaGee
pursuant to the Canadian Pension Plan. No other amounts were set aside or accrued by Celestica during the year ended December 31, 2003 for the purpose of providing pension, retirement or
similar benefits for Messrs. Polistuk, Puppi and MaGee pursuant to any other plans.

Mr. Delaney
participates, and Mr. Tropea participated, in the "U.S. Plan." The U.S. Plan qualifies as a deferred salary arrangement under section 401
of the Internal Revenue Code (United States). Under the U.S. Plan, participating 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, 2003, Celestica contributed $24,000 in the aggregate to the U.S. Plan for the benefit of Messrs. Tropea and Delaney. Except as
described above, no other amounts were set aside or accrued by Celestica during the year ended December 31, 2003 for the purpose of providing pension, retirement or similar benefits for
Messrs. Tropea and Delaney.

Mr. Quek
participates in the "Singapore Plan". The Singapore Plan is a deferred salary arrangement under theCentral Provident Fund
Act(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 $3,973 for Mr. Quek in 2003.

Employment Agreements

Messrs. Polistuk and Puppi each entered into an employment agreement with Celestica as of October 22, 1996. Mr. Tropea entered into an
employment agreement with Celestica as of June 30, 1998. Each agreement provides for the executive's base salary and for benefits in accordance with Celestica's established benefit plans for
employees from time to time. Each agreement provides for the executive to receive an amount equivalent to 36 months' salary if Celestica terminates the executive's employment, other than for
cause, subject to reduction if the executive earns replacement earnings during such period from other sources.

50

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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 the Nominating and Corporate Governance Committee are each composed of independent directors.



Subject to the limitations set out in subsection 127(3) of the Business Corporations Act (Ontario), the Board of Directors has delegated to the Executive
Committee the powers to consider and approve certain matters relating to the management of Celestica subject to any regulations or restrictions that may from time to time be made or imposed upon the
Executive Committee by the Board of Directors. The members of the Executive Committee are Mr. Crandall and Dr. Melman.



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.

51

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The Compensation Committee consists of Mr. Crandall, Mr. Etherington, Mr. Szuluk, Dr. Melman and Mr. Tapscott, all of whom are
unrelated directors. 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 is 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 the Company's strategic
direction, business goals and desired culture. The mandate of the Compensation Committee includes the following: review and recommend to the Board of Directors the Company's overall
reward/compensation policy, including an executive compensation policy that is consistent with competitive practice and supports organizational objectives and shareholder interests; 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 the Named Executive Officers and other senior executives whose compensation is subject to review by the Board of Directors; review the Company's succession plans
for key executive positions; and review and approve material changes to the Company's organizational structure and human resource policies.



The Nominating and Corporate Governance Committee consists of Mr. Crandall, Mr. Etherington, Mr. Love, Dr. Melman and
Mr. Tapscott, all of whom are unrelated directors. 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 is 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 40,000 permanent and temporary (contract) employees worldwide as at December 31, 2003. The following table sets forth information
concerning our employees by geographic location:

|                  |  | Number of Employees
|----------------- |  | -------------------
|
|
|December 31, 2001 |  | 17,500             
|December 31, 2002 |  | 14,500             
|December 31, 2003 |  | 13,000             

During
the year ended December 31, 2003, approximately 10,000 temporary (contract) employees were engaged by Celestica worldwide. During the year ended December 31, 2003,
approximately 3,600 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 restructuring.

The
number of employees in the Americas and Europe has decreased from December 31, 2001 to December 31, 2003 due to the downsizing or closure of some of our facilities and
the transfer of production from higher cost geographies to lower cost geographies. The number of employees in Asia has increased from December 31, 2001 to December 31, 2003 due to the
increase in business in Asia, the transfer of production from other geographies and from our acquisition in Japan which closed March 2002.

52

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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 March 11, 2004 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)                                                             |  | 132,500              |  | SVS                 |     | *                               |  | *                         
|                                                                                  |  | 15,130               |  | LYONs               | (3) | *                               |  | *                         
|William E. Etherington(4)                                                         |  | 23,750               |  | SVS                 |     | *                               |  | *                         
|Richard S. Love(5)                                                                |  | 116,520              |  | SVS                 |     | *                               |  | *                         
|Anthony R. Melman(6)(7)                                                           |  | 450,000              |  | SVS                 |     | *                               |  | *                         
|Gerald W. Schwartz(6)(8)                                                          |  | 39,065,950           |  | MVS                 |     | 100.0%                          |  | 18.7%                     
|                                                                                  |  | 3,360,935            |  | SVS                 |     | 2.0%                            |  | 1.6%                      
|Charles W. Szuluk(9)                                                              |  | 5,000                |  | SVS                 |     | *                               |  | *                         
|Don Tapscott(10)                                                                  |  | 111,250              |  | SVS                 |     | *                               |  | *                         
|Stephen W. Delaney                                                                |  | 116,303              |  | SVS                 |     | *                               |  | *                         
|J. Marvin MaGee                                                                   |  | 382,382              |  | SVS                 |     | *                               |  | *                         
|Anthony P. Puppi                                                                  |  | 380,538              |  | SVS                 |     | *                               |  | *                         
|R. Thomas Tropea                                                                  |  | 450,190              |  | SVS                 |     | *                               |  | *                         
|Eugene V. Polistuk                                                                |  | 895,892              |  | SVS                 |     | *                               |  | *                         
|Neo Kia Quek                                                                      |  | 427,250              |  | SVS                 |     | *                               |  | *                         
|All directors and executive officers as a group (21 persons, including above)(11) |  | 39,065,950
7,521,523 |  | MVS
SVS             |     | 100.0%
4.4%                     |  | 18.7%
3.6%                
|Total percentage of all equity shares and total percentage of voting power        |  |                      |  |                     |     |                                 |  | 22.3%                     

---

53

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

Share Ownership and Option Plans (the "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.

As
at March 11, 2004, approximately 6,800 persons held options to acquire an aggregate of approximately 26,639,000 subordinate voting shares. Most of these options were issued
pursuant to the ESPO Plan and Long-Term Incentive Plan. The following table sets forth information with respect to options outstanding as at March 11, 2004.

Outstanding Options

|Beneficial Holders                       |  | Number of Subordinate Voting Shares Under Option |  | Exercise Price   |  | Year of Issuance     |  | Date of Expiry                       
|---------------------------------------- |  | ------------------------------------------------ |  | ---------------- |  | -------------------- |  | -------------------------------------
|Executive Officers (13 persons in total) |  | 210,000                                          |  | $0.925           |  | June 13, 1996        |  | June 13, 2006                        
|                                         |  | 267,316                                          |  | $5.00            |  | During 1997          |  | April 8, 2007                        
|                                         |  | 387,390                                          |  | $7.50$8.75      |  | During 1997 and 1998 |  | October 22, 2007 to July 3, 2008     
|                                         |  | 272,480                                          |  | C$18.90$22.97   |  | During 1999          |  | January 1, 2009 to September 20, 2009
|                                         |  | 386,000                                          |  | $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     
|                                         |  | 198,000                                          |  | $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                       
|                                         |  | 458,200                                          |  | $41.89/C$66.06   |  | December 4, 2001     |  | December 4, 2011                     
|                                         |  | 490,000                                          |  | $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                       
|                                         |  | 1,140,000                                        |  | $17.15/C$22.75   |  | January 31, 2004     |  | January 31, 2014                     
|                                         |  |                                                  |  |                  |  |                      |  |                                      

54

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|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                       
|All other Celestica Employees (other than IMS, Primetech and MSL) (more than 6,000 persons in total) |  | 2,906,516 |  | $5.00            |  | During 1997                           |  | April 8, 2007(1)                     
|                                                                                                     |  | 498,728   |  | $7.50C$14.05    |  | During 1998                           |  | April 29, 2008 to November 9, 2008   
|                                                                                                     |  | 752,700   |  | $13.69C$21.45   |  | January 1, 1999 to March 17, 1999     |  | January 1, 2009 to March 17, 2009    
|                                                                                                     |  | 1,974,429 |  | $39.03/C$57.845  |  | December 7, 1999                      |  | December 7, 2009                     
|                                                                                                     |  | 554,150   |  | $13.65C$53.75   |  | During 1999                           |  | January 1, 2009 to December 31, 2009 
|                                                                                                     |  | 842,350   |  | $40.06C$123.65  |  | During 2000                           |  | January 1, 2010 to December 31, 2010 
|                                                                                                     |  | 1,992,025 |  | $56.1875/C$86.50 |  | December 5, 2000                      |  | December 5, 2010                     
|                                                                                                     |  | 918,200   |  | $49.00C$108.45  |  | During 2001                           |  | January 1, 2011 to December 31, 2011 
|                                                                                                     |  | 4,939,902 |  | $41.89/C$66.06   |  | December 4, 2001                      |  | December 4, 2011                     
|                                                                                                     |  | 424,118   |  | $13.10C$70.81   |  | During 2002                           |  | January 1, 2012 to December 31, 2012 
|                                                                                                     |  | 2,756,948 |  | $18.66/C$29.11   |  | December 3, 2002                      |  | December 3, 2012                     
|                                                                                                     |  | 285,150   |  | $10.19C$22.54   |  | During 2003                           |  | January 1, 2013 to December 31, 2013 
|                                                                                                     |  | 74,800    |  | $17.11C$26.47   |  | January 1, 2004 to March 11, 2004     |  | January 1, 2014 to March 11, 2014    
|                                                                                                     |  | 2,758,776 |  | $17.15/C$22.75   |  | January 31, 2004                      |  | January 31, 2014                     
|IMS Employees(1)                                                                                     |  | 460,525   |  | $0.925$13.31    |  | December 30, 1998                     |  | June 13, 2006 to December 18, 2008   
|Primetech Employees(2)                                                                               |  | 24,436    |  | C$65.91          |  | July 14, 1999                         |  | July 14, 2004                        
|                                                                                                     |  | 37,319    |  | C$97.73C$111.36 |  | February 15, 2000 to June 15, 2000    |  | February 15, 2005 to June 15, 2005   
|                                                                                                     |  | 24,365    |  | C$45.45C$67.05  |  | January 10, 2001 to March 16, 2001    |  | January 10, 2006 to March 16, 2006   
|MSL Employees(3)                                                                                     |  | 112,722   |  | $10.67$12.80    |  | January 20, 1995 to November 8, 1999  |  | January 20, 2005 to November 8, 2009 
|                                                                                                     |  | 24,569    |  | $53.33           |  | September 30, 1997                    |  | September 30, 2007                   
|                                                                                                     |  | 250,330   |  | $13.33$32.75    |  | December 1, 1999 to December 27, 2000 |  | December 1, 2009 to December 27, 2010
|                                                                                                     |  | 75,409    |  | $42.67$78.00    |  | May 1, 2000 to September 25, 2000     |  | May 1, 2010 to September 25, 2010    
|                                                                                                     |  | 1,647,076 |  | $7.47$25.17     |  | January 8, 2001 to September 8, 2003  |  | January 8, 2011 to September 8, 2013 

---

Our compensation philosophy is predicated on the belief that broadly based employee participation in share ownership is critical to maintain a
common entrepreneurial culture and motivation throughout our operational units, and across functional and geographic boundaries. Accordingly, prior to the completion of our initial public offering, we
established the Long-Term Incentive Plan and the Employee Share Ownership Plan.

55

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Long-Term Incentive Plan

The objectives of Celestica's Long-Term Incentive Plan ("LTIP") are: (i) to align employee interests with those of shareholders; (ii) to
reward employees for their contribution to Celestica's success; and (iii) to allow Celestica to attract and retain the qualified and experienced personnel who are critical to Celestica's
success. Under the Plan, 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 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"). Since the objectives of the LTIP are to incentive appropriate behaviors over the longer term, the current financial performance of Celestica does not have a direct impact on
awards under the LTIP.

Under
the LTIP, up to 29,000,000 subordinate voting shares of Celestica 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. 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
to acquire subordinate voting shares were issued to directors and an officer substantially concurrently with the completion of the initial public offering with an exercise price
equal to the initial public offering price ($8.75). 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, which represent the right to receive an equivalent number of subordinate voting shares at a specified release
date, with such shares to be issued at the market price of subordinate voting shares on the release date. The issue 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.

Stock
options are currently granted annually to eligible employees, under the LTIP, based on the recommendation of the management of each business unit and are subject to the approval of
the Chief Executive Officer. The Compensation Committee recommends option grants for our senior executives to the Board of Directors for approval. During the year, Celestica may grant stock options
and/or restricted stock units

56

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under
the LTIP's performance unit program to newly hired employees or in special retention circumstances with the approval of the Chief Executive Officer. The total number of stock options and
restricted stock units to be granted in a given year is established after taking into account the number of options and restricted stock units to be granted in that year relative to the total number
of shares outstanding (burn rate) as well as the total number of stock options and restricted stock units outstanding relative to the total number of shares outstanding (overhang). Celestica targets a
maximum level for both burn rate and overhang after taking into account competitive practice with reference to the comparator group as well as its direct competitors. The Compensation Committee
approves the total number of stock options and restricted stock units to be granted in a given year.

In
January 2004, the Board of Directors established performance conditions for option awards to senior executives to align rewards more closely with Celestica performance. These
performance-contingent options provide the opportunity for significant gains for superior 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 options vest over three years and the number
vested will vary from 25% to 100% of the eligible options in a given year. 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 specific direct EMS competitors based on defined performance metrics.

Employee Share Ownership Plan

The purpose of the Celestica Employee Share Ownership Plan ("CESOP") is to enable eligible employees, including executive officers, and directors ("Eligible
Participants") of Celestica to acquire subordinate voting shares, so as to encourage continued employee interest in the operation, growth and development of Celestica. The CESOP enables Eligible
Participants to acquire subordinate voting shares from shares acquired by an administrator in the market. Under the CESOP, an Eligible Participant who is an employee may elect to contribute an amount
by deduction from each regular payroll, representing no more than 10% of his or her salary. A participant who is a director may elect to designate all or a portion of his or her cash retainer fees,
meeting fees, committee or similar fees as a contribution under the CESOP. 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. Unless otherwise determined by Celestica, no Celestica contribution shall be made for contributions by directors. The CESOP provides for vesting conditions relating to shares
acquired under the CESOP using Celestica contributions. Under the CESOP, following each payroll period, an administrator acquires in the market subordinate voting shares for the purposes of satisfying
purchases by Eligible Participants under the CESOP, using funds contributed by employees and Celestica. The CESOP also provides that participation in the plan by Eligible Participants is not a
condition of employment of an Eligible Participant.

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 March 11, 2004 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."

|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 |  | 39,065,950       |  | MVS                 |  | 100.0%                          |  | 18.7%                     
|                                                                           |  |                     |  | 3,172,191        |  | SVS                 |  | 1.9%                            |  | 1.5%                      
|Gerald W. Schwartz(2)(4)                                                   |  | Direct and Indirect |  | 39,065,950       |  | MVS                 |  | 100.0%                          |  | 18.7%                     
|                                                                           |  |                     |  | 3,360,935        |  | SVS                 |  | 2.0%                            |  | 1.6%                      
|FMR Corp.(5)(6)                                                            |  | Indirect            |  | 19,399,724       |  | SVS                 |  | 11.4%                           |  | 9.3%                      
|Total percentage of all equity shares and total percentage of voting power |  | 29.6%               |  | 87.2%           

---

57

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Onex' ownership percentages have not changed materially over the past three years and FMR Corp. only recently became a beneficial owner of 5% or
more of our subordinate voting shares.

58

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Holders

On March 11, 2004, there were approximately 1,865 holders of record of subordinate voting shares, of which approximately 482 holders, holding approximately
52% of the outstanding subordinate voting shares, were resident in the United States.

On
March 11, 2004, there was one holder of record of the Liquid Yield Option Notes due 2020; the holder of record was in the United States.

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's 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 2003, Celestica paid to Onex management-related fees of approximately
$1.4 million. 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 March 11, 2004, Celestica had guaranteed $2,383,733 aggregate indebtedness of certain officers and employees of Celestica incurred in connection with
the purchase of subordinate voting shares. The security for each of the guaranteed amounts is the purchased subordinate voting shares. 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(1)

|Name and Principal Position                                               |  | Largest amount
outstanding during
2003(1) |           | Amount outstanding
as at March 11, 2004(1) |  
|------------------------------------------------------------------------- |  | ----------------------------------------- | --------- | ------------------------------------------ | -
|J. Marvin MaGee
President                                                 |  | $                                         | 187,426   |                                            | $
|R. Thomas Tropea
Vice Chair, Worldwide Marketing and Business Development |  | $                                         | 491,382   |                                            | $
|Rahul Suri
Senior Vice President, Corporate Development                   |  | $                                         | 1,357,186 | (2)                                        | $

---

No securities were purchased by any director or officer during 2003 with the financial assistance of Celestica. No director, officer or employee
was indebted to Celestica other than in connection with securities purchase programs during the year ended December 31, 2003.

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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 not a party to any legal proceedings which, if decided adversely, could reasonably be expected to 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"). The market price range and
trading volume of the subordinate voting shares
on the NYSE and the TSX for the periods indicated are set forth in the following tables, which have been restated to reflect the effect of the 1999 two-for-one stock split on a
retroactive basis. In the following tables, subordinate voting shares are defined as "SVS."



|                             |  | NYSE
|---------------------------- |  | ----
|
|
|Year ended December 31, 1999 |  | $   
|Year ended December 31, 2000 |  |     
|Year ended December 31, 2001 |  |     
|Year ended December 31, 2002 |  |     
|Year ended December 31, 2003 |  |     

|                             |  | TSX
|---------------------------- |  | ---
|
|
|Year ended December 31, 1999 |  | C$ 
|Year ended December 31, 2000 |  |    
|Year ended December 31, 2001 |  |    
|Year ended December 31, 2002 |  |    
|Year ended December 31, 2003 |  |    

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|                             |                | NYSE
|---------------------------- | -------------- | ----
|
|
|Year ended December 31, 2002 |                |     
|                             | First quarter  |     
|                             | Second quarter |     
|                             | Third quarter  |     
|                             | Fourth quarter |     
|Year ended December 31, 2003 |                |     
|                             | First quarter  |     
|                             | Second quarter |     
|                             | Third quarter  |     
|                             | Fourth quarter |     

|                             |                | TSX
|---------------------------- | -------------- | ---
|
|
|Year ended December 31, 2002 |                |    
|                             | First quarter  |    
|                             | Second quarter |    
|                             | Third quarter  |    
|                             | Fourth quarter |    
|Year ended December 31, 2003 |                |    
|                             | First quarter  |    
|                             | Second quarter |    
|                             | Third quarter  |    
|                             | Fourth quarter |    



|              |  | NYSE
|------------- |  | ----
|
|
|November 2003 |  | $   
|December 2003 |  |     
|January 2004  |  |     
|February 2004 |  |     
|March 2004    |  |     
|April 2004    |  |     

|              |  | TSX
|------------- |  | ---
|
|
|November 2003 |  | C$ 
|December 2003 |  |    
|January 2004  |  |    
|February 2004 |  |    
|March 2004    |  |    
|April 2004    |  |    

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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 on the NYSE for the periods indicated is set forth in the following tables.



|                             |  | NYSE
|---------------------------- |  | ----
|
|Year ended December 31, 2001 |  | $   
|Year ended December 31, 2002 |  |     
|Year ended December 31, 2003 |  |     



|                             |                | NYSE
|---------------------------- | -------------- | ----
|
|Year ended December 31, 2002 |                |     
|                             | First quarter  |     
|                             | Second quarter |     
|                             | Third quarter  |     
|                             | Fourth quarter |     
|Year ended December 31, 2003 |                |     
|                             | First quarter  |     
|                             | Second quarter |     
|                             | Third quarter  |     
|                             | Fourth quarter |     

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

|              |  | NYSE
|------------- |  | ----
|
|November 2003 |  | $   
|December 2003 |  |     
|January 2004  |  |     
|February 2004 |  |     
|March 2004    |  |     
|April 2004    |  |     

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.

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F.     Expense of the Issue

Not applicable.

Item 10.     Additional Information

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 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.

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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.



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.

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. 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).

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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 |            
|---------------- |  | ----------------------------------------------------------------------- |  | ---------------------------- |  | -------------------------------------------------------------------------------------------- |  | ------------------------- | -----------
|March 31, 2002   |  | Celestica and NEC Corporation                                           |  | Stock Purchase Agreement     |  | Celestica acquired all the business operations of NEC Miyagi and NEC Yamanashi               |  | $                         | 105 million
|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

---

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 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 April 30, 2004, 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.

65

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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 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 April 30, 2004, all of which

66

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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.



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

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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.
However, the precise extent to which dividends paid by non-U.S. corporations will constitute "qualified dividend income" and the effect of such status on the ability of taxpayers to
utilize associated foreign tax credits is not entirely clear at present. It is anticipated that there will be administrative pronouncements concerning these provisions in the future. In the meantime,
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 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:



68

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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 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 2004. 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 2004,
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.

69

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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.

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.

70

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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 amounts generally are used to calculate the contractual payments to be exchanged under the contracts. At
December 31, 2003, these contracts had a fair value unrealized gain of U.S.$49.8 million.

|                                   |                               | Expected Maturity Date |       |       |  
|---------------------------------- | ----------------------------- | ---------------------- | ----- | ----- | -
|
|
|Forward Exchange Agreements        |                               |                        |       |       |  
|Receive C$/Pay U.S.$               |                               |                        |       |       |  
|                                   | Contract amount (in millions) |                        | $     | 251.4 |  
|                                   | Average exchange rate         |                        | $     | 0.70  |  
|Receive THB/Pay U.S.$              |                               |                        |       |       |  
|                                   | Contract amount (in millions) |                        | $     | 59.4  |  
|                                   | Average exchange rate         |                        | $     | 0.02  |  
|Receive £/Pay U.S.$                |                               |                        |       |       |  
|                                   | Contract amount (in millions) |                        | $     | 21.0  |  
|                                   | Average exchange rate         |                        | $     | 1.57  |  
|Receive Mexican Pesos/Pay U.S.$    |                               |                        |       |       |  
|                                   | Contract amount (in millions) |                        | $     | 41.4  |  
|                                   | Average exchange rate         |                        | $     | 0.09  |  
|Receive Euro/Pay U.S.$             |                               |                        |       |       |  
|                                   | Contract amount (in millions) |                        | $     | 109.5 |  
|                                   | Average exchange rate         |                        | $     | 1.09  |  
|Receive Singapore $/Pay U.S.$      |                               |                        |       |       |  
|                                   | Contract amount (in millions) |                        | $     | 24.3  |  
|                                   | Average exchange rate         |                        | $     | 0.58  |  
|Receive Czech Koruna/Pay U.S.$     |                               |                        |       |       |  
|                                   | Contract amount (in millions) |                        | $     | 24.0  |  
|                                   | Average exchange rate         |                        | $     | 0.04  |  
|Receive Chinese Renminbi/Pay U.S.$ |                               |                        |       |       |  
|                                   | Contract amount (in millions) |                        | $     | 54.6  |  
|                                   | Average exchange rate         |                        | $     | 0.12  |  
|                                   |                               |                        |       |       |  
|Total                              |                               | $                      | 585.6 |       | $
|                                   |                               |                        |       |       |  

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.

71

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Convertible debt (LYONs)

As of December 31, 2003, we have convertible instruments, with an outstanding principal amount at maturity of $1.2 billion, 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.

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 each 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.

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 Guidelines and all of our other applicable business
policies, standards and guidelines.

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

Item 16C.    Principal Accountant Fees and Service

The Audit Committee of Celestica's board of directors 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.

72

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Celestica's
auditors are KPMG LLP. KPMG did not provide any financial information systems design or implementation services to Celestica during 2002 or 2003. The Audit Committee
has determined that the provision of the non-audit services by KPMG does not compromise KPMG's independence. Celestica also used other public accounting firms for consulting and other
services totaling $4.0 million in 2003 and $3.1 million in 2002.

Audit Fees

KPMG billed Celestica $1.7 million in 2003 and $1.7 million in 2002 for audit services.

Audit-Related Fees

KPMG billed Celestica $0.4 million in 2003 and $0.4 million in 2002 for audit-related services, primarily in connection with financial due diligence
services for acquisitions and other non-statutory audits.

Tax Fees

KPMG billed Celestica $2.0 million in 2003 and $1.0 million in 2002 for tax compliance, tax advice, tax planning services and tax due diligence
services.

All Other Fees

KPMG billed Celestica $0.6 million in 2003 and $0.5 million in 2002 for actuarial and other services provided in connection with Celestica's pension
plans.

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

Not applicable.

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

Not applicable.

73

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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
|---------------------------------------------------------------------------------------------------- |  | ----
|Auditors' Report                                                                                     |  | F-2 
|Comments by Auditors for U.S. Readers on Canada-U.S. Reporting Difference                            |  | F-3 
|Consolidated Balance Sheets as at December 31, 2002 and 2003                                         |  | F-4 
|Consolidated Statements of Loss for the years ended December 31, 2001, 2002 and 2003                 |  | F-5 
|Consolidated Statements of Shareholders' Equity for the years ended December 31, 2001, 2002 and 2003 |  | F-6 
|Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2002 and 2003           |  | F-7 
|Notes to the Consolidated Financial Statements                                                       |  | F-8 

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                      
|1.2  |  | Certificate and Articles of Amendment effective October 22, 1996     |  | F-1                      
|1.3  |  | Certificate and Articles of Amendment effective January 24, 1997     |  | F-1                      
|1.4  |  | Certificate and Articles of Amendment effective October 8, 1997      |  | F-1                      
|1.5  |  | Certificate and Articles of Amendment effective April 29, 1998       |  | F-1/A                    
|1.6  |  | Articles of Amendment effective
June 26, 1998                        |  | F-1                      
|1.7  |  | Restated Articles of Incorporation effective June 26, 1998           |  | F-1                      
|1.8  |  | Restated Articles of Incorporation effective November 20, 2001       |  | 20-F                     
|1.9  |  | Restated Article of Incorporation effective May 13, 2003             |  |                          
|1.10 |  | Bylaw No. 1                                                          |  | 20-F                     
|1.11 |  | Bylaw No. 2                                                          |  | F-1                      
|1.12 |  | Bylaw No. 3                                                          |  |                          
|1.13 |  | Bylaw No. 4                                                          |  |                          
|1.14 |  | Bylaw No. A                                                          |  |                          
|2.   |  | Instruments defining rights of holders of equity or debt securities: |  |                          

74

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|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   |  | June 25, 1998     |  | 4.1 |  |  
|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  |  | August 9, 2000    |  | 1   |  |  
|2.4 |  | Second Amended and Restated Credit Agreement, dated as of December 17, 2002, between Celestica Inc., the subsidiaries of Celestica Inc., specified therein as Designated Subsidiaries, The Bank of Nova Scotia,
 as Administrative Agent, CIBC World Markets, as Joint Lead Arranger and Syndication Agent, RBC Capital Markets, as Joint Lead Arranger and Co-Documentation Agent, Banc of America Securities LLC, as Joint Lead Arranger and Co-Documentation Agent,
 and the financial institutions named in Schedule A as lenders |  | 20-F  |  | 001-14832  |  | April 21, 2003    |  | 2.4 |  |  
|2.5 |  | First Amendment to the Second Amended and Restated Revolving Term Credit Agreement, dated as of October 31, 2003, among Celestica Inc., the subsidiaries of Celestica Inc., specified therein as Designated
Subsidiaries, The Bank of Nova Scotia, as Administrative Agent, and the financial institutions named in Schedule A as lenders                                                                                                                                                                                             |  | F-4   |  | 333-110362 |  | November 10, 2003 |  | 4.5 |  |  
|2.6 |  | Second Amendment to the Second Amended and Restated Revolving Term Credit Agreement, dated March 30, 2004, between Celestica Inc., the subsidiaries of Celestica Inc. specified therein as Designated
Subsidiaries, the Bank of Nova Scotia, as Administrative Agent, and the financial institutions named in Schedule A as lenders                                                                                                                                                                                                   |  |       |  |            |  |                   |  |     |  | X
|2.7 |  | Amended and Restated Four Year Revolving Term Credit Agreement, dated as of December 17, 2002, among Celestica Inc. and Celestica International Inc., as Borrowers, The Bank of Nova Scotia, as Administrative
Agent, and the financial institutions named in Schedule A as lenders                                                                                                                                                                                                                                                   |  | 20-F  |  | 001-14832  |  | April 21, 2003    |  | 2.5 |  |  
|2.8 |  | First Amendment to the Amended and Restated Four Year Revolving Term Credit Agreement, dated as of October 31, 2003, among Celestica Inc., Celestica International Inc., as Borrowers, The Bank of Nova Scotia,
 as Administrative Agent, and the financial institutions named in Schedule A as lenders                                                                                                                                                                                                                               |  | F-4   |  | 333-110362 |  | November 10, 2003 |  | 4.7 |  |  

75

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|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  |  | Employment Agreement, dated as of October 22, 1996, by and between Celestica, Inc. and Anthony P. Puppi                                                    |  | F-1   |  | 333-8700   |  | April 29, 1998    |  | 10.13 |  |  
|4.5  |  | D2D Employee Share Purchase and
Option Plan (1997)                                                                                                         |  | F-1/A |  | 333-8700   |  | June 1, 1998      |  | 10.20 |  |  
|4.6  |  | Celestica 1997 U.K. Approved Share
Option Scheme                                                                                                           |  | F-1   |  | 333-8700   |  | April 29, 1998    |  | 10.19 |  |  
|4.7  |  | 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

---

76

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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:
May 19, 2004

77

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Consolidated Financial Statements of CELESTICA INC.Years ended December 31, 2001, 2002 and 2003
(in millions of U.S. dollars)

---





AUDITORS' REPORT

To
the Board of Directors of
Celestica Inc.

We
have audited the consolidated balance sheets of Celestica Inc. as at December 31, 2002 and 2003 and the consolidated statements of loss, shareholders' equity and cash
flows for each of the years in the three year period ended December 31, 2003. 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 and United States 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, 2002 and 2003 and the
results of its operations and its cash flows for each of the years in the three year period ended December 31, 2003 in accordance with Canadian generally accepted accounting principles.

|                 |  |                      
|---------------- |  | ---------------------
|Toronto, Canada  |  | /s/ KPMG LLP         
|January 20, 2004 |  | Chartered Accountants

F-2

---



COMMENTS BY AUDITORS FOR U.S. READERS ON  CANADA-U.S. REPORTING DIFFERENCE

In
the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when there is a change in accounting
principles that has a material effect on the comparability of the company's financial statements, such as the changes described in note 2(q) to the financial statements relating to the
adoption by the company of CICA Handbook Section 3870  Stock-based Compensation and Other Stock-based Payments. Our report to the Board of Directors of
Celestica Inc. dated January 20, 2004 is expressed in accordance with Canadian reporting standards which do not require a reference to such changes in accounting principles in the
auditors' report when the change is properly accounted for and adequately disclosed in the financial statements.

|                 |  |                      
|---------------- |  | ---------------------
|Toronto, Canada  |  | /s/ KPMG LLP         
|January 20, 2004 |  | Chartered Accountants

F-3

---





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

|                                                                   |                                            | As at December 31,
|------------------------------------------------------------------ | ------------------------------------------ | ------------------
|
|Assets                                                             |                                            |                   
|Current assets:                                                    |                                            |                   
|                                                                   | Cash and short-term investments            |                   
|                                                                   | Accounts receivable (note 2(e))            |                   
|                                                                   | Inventories (note 2(f))                    |                   
|                                                                   | Prepaid and other assets                   |                   
|                                                                   | Deferred income taxes                      |                   
|                                                                   |                                            |                   
|                                                                   |                                            |                   
|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 (note 20(k))           |                   
|                                                                   | Income taxes payable                       |                   
|                                                                   | Deferred income taxes                      |                   
|                                                                   | Current portion of long-term debt (note 7) |                   
|                                                                   |                                            |                   
|                                                                   |                                            |                   
|Long-term debt (note 7)                                            |                                            |                   
|Accrued pension and post-employment benefits (note 14)             |                                            |                   
|Deferred income taxes                                              |                                            |                   
|Other long-term liabilities                                        |                                            |                   
|                                                                   |                                            |                   
|                                                                   |                                            |                   
|Shareholders' equity                                               |                                            |                   
|                                                                   |                                            |                   
|                                                                   |                                            | $                 
|                                                                   |                                            |                   
|Commitments, contingencies and guarantees (note 16)                |                                            |                   
|Canadian and United States accounting policy differences (note 20) |                                            |                   

See accompanying notes to consolidated financial statements.

F-4

---



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

|                                                                      |          | Year ended December 31, |         
|--------------------------------------------------------------------- | -------- | ----------------------- | --------
|
|Revenue                                                               |          | $                       | 10,004.4
|Cost of sales                                                         |          |                         | 9,291.9 
|                                                                      |          |                         |         
|Gross profit                                                          |          |                         | 712.5   
|Selling, general and administrative expenses                          |          |                         | 324.3   
|Research and development costs                                        |          |                         | 17.1    
|Amortization of goodwill and intangible assets (note 5)               |          |                         | 125.0   
|Integration costs related to acquisitions (note 3)                    |          |                         | 22.8    
|Other charges (note 11)                                               |          |                         | 273.1   
|                                                                      |          |                         |         
|                                                                      |          |                         | 762.3   
|                                                                      |          |                         |         
|Operating loss                                                        |          |                         | (49.8   
|Interest on long-term debt                                            |          |                         | 19.8    
|Interest income, net                                                  |          |                         | (27.7   
|                                                                      |          |                         |         
|Loss before income taxes                                              |          |                         | (41.9   
|                                                                      |          |                         |         
|Income taxes expense (recovery) (note 12):                            |          |                         |         
|                                                                      | Current  |                         |         
|                                                                      | Deferred |                         |         
|                                                                      |          |                         |         
|                                                                      |          |                         | (2.1    
|                                                                      |          |                         |         
|Net loss                                                              |          | $                       | (39.8   
|                                                                      |          |                         |         
|Basic loss per share (note 10)                                        |          | $                       | (0.26   
|Diluted loss per share (note 10)                                      |          | $                       | (0.26   
|Weighted average number of shares outstanding (in millions) (note 10) |          |                         |         
|                                                                      | Basic    |                         |         
|                                                                      | Diluted  |                         |         
|Net loss in accordance with U.S. GAAP (note 20)                       |          | $                       | (51.3   
|Basic loss per share, in accordance with U.S. GAAP (note 20)          |          | $                       | (0.24   
|Diluted loss per share, in accordance with U.S. GAAP (note 20)        |          | $                       | (0.24   

See accompanying notes to consolidated financial statements.

F-5

---





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

|                                         |  | Convertible Debt (note 8) |        | Capital Stock (note 9) |   | Contributed Surplus |   | Retained
Earnings
(Deficit) |       | Foreign Currency Translation Adjustment |   | Total Shareholders' Equity |  
|---------------------------------------- |  | ------------------------- | ------ | ---------------------- | - | ------------------- | - | --------------------------- | ----- | --------------------------------------- | - | -------------------------- | -
|Balance  December 31, 2000              |  | $                         | 860.5  |                        | $ | 2,395.4             |   | $                           |      |                                         | $ | 217.5                      |  
|Convertible debt accretion, net of tax   |  |                           | 26.3   |                        |   |                    |   |                             |      |                                         |   | (15.0                      | )
|Shares issued, net                       |  |                           |       |                        |   | 1,303.6             |   |                             |      |                                         |   |                           |  
|Currency translation                     |  |                           |       |                        |   |                    |   |                             |      |                                         |   |                           |  
|Net loss for the year                    |  |                           |       |                        |   |                    |   |                             |      |                                         |   | (39.8                      | )
|                                         |  |                           |        |                        |   |                     |   |                             |       |                                         |   |                            |  
|Balance  December 31, 2001              |  |                           | 886.8  |                        |   | 3,699.0             |   |                             |      |                                         |   | 162.7                      |  
|Convertible debt accretion, net of tax   |  |                           | 28.7   |                        |   |                    |   |                             |      |                                         |   | (17.5                      | )
|Repurchase of convertible debt (note 8)  |  |                           | (110.9 | )                      |   |                    |   |                             |      |                                         |   | 6.7                        |  
|Shares issued, net                       |  |                           |       |                        |   | 8.5                 |   |                             |      |                                         |   |                           |  
|Repurchase of shares (note 9)            |  |                           |       |                        |   | (36.9               | ) |                             | 5.8   |                                         |   | (1.4                       | )
|Currency translation                     |  |                           |       |                        |   |                    |   |                             |      |                                         |   |                           |  
|Net loss for the year                    |  |                           |       |                        |   |                    |   |                             |      |                                         |   | (445.2                     | )
|                                         |  |                           |        |                        |   |                     |   |                             |       |                                         |   |                            |  
|Balance  December 31, 2002              |  |                           | 804.6  |                        |   | 3,670.6             |   |                             | 5.8   |                                         |   | (294.7                     | )
|Convertible debt accretion, net of tax   |  |                           | 23.6   |                        |   |                    |   |                             |      |                                         |   | (15.5                      | )
|Repurchase of convertible debt (note 8)  |  |                           | (224.7 | )                      |   |                    |   |                             |      |                                         |   | (2.8                       | )
|Shares issued, net                       |  |                           |       |                        |   | 7.3                 |   |                             |      |                                         |   |                           |  
|Repurchase of shares (note 9)            |  |                           |       |                        |   | (380.1              | ) |                             | 105.2 |                                         |   |                           |  
|Stock based compensation (note 2(q)(ii)) |  |                           |       |                        |   |                    |   |                             | 0.3   |                                         |   |                           |  
|Other                                    |  |                           |       |                        |   |                    |   |                             | 4.4   |                                         |   |                           |  
|Currency translation                     |  |                           |       |                        |   |                    |   |                             |      |                                         |   |                           |  
|Net loss for the year                    |  |                           |       |                        |   |                    |   |                             |      |                                         |   | (265.8                     | )
|                                         |  |                           |        |                        |   |                     |   |                             |       |                                         |   |                            |  
|Balance  December 31, 2003              |  | $                         | 603.5  |                        | $ | 3,297.8             |   | $                           | 115.7 |                                         | $ | (578.8                     | )
|                                         |  |                           |        |                        |   |                     |   |                             |       |                                         |   |                            |  

See accompanying notes to consolidated financial statements.

F-6

---



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                                              |                                          | $                       | (39.8   
|Items not affecting cash:                             |                                          |                         |         
|                                                      | Depreciation and amortization            |                         |         
|                                                      | Deferred income taxes                    |                         |         
|                                                      | Non-cash charge for option issuances     |                         |         
|                                                      | Restructuring charges (note 11)          |                         |         
|                                                      | Other charges (note 11)                  |                         |         
|Other                                                 |                                          |                         | 1.7     
|Changes in non-cash working capital items:            |                                          |                         |         
|                                                      | Accounts receivable                      |                         |         
|                                                      | Inventories                              |                         |         
|                                                      | Other assets                             |                         |         
|                                                      | Accounts payable and accrued liabilities |                         |         
|                                                      | Income taxes payable                     |                         |         
|                                                      |                                          |                         |         
|                                                      | Non-cash working capital changes         |                         |         
|                                                      |                                          |                         |         
|Cash provided by (used in) operations                 |                                          |                         | 1,290.5 
|                                                      |                                          |                         |         
|Investing:                                            |                                          |                         |         
|                                                      | Acquisitions, net of cash acquired       |                         |         
|                                                      | Purchase of capital assets               |                         |         
|                                                      | Proceeds on sale of capital assets       |                         |         
|                                                      | Other                                    |                         |         
|                                                      |                                          |                         |         
|Cash used in investing activities                     |                                          |                         | (1,497.6
|                                                      |                                          |                         |         
|Financing:                                            |                                          |                         |         
|                                                      | Bank indebtedness                        |                         |         
|                                                      | Repayments of long-term debt             |                         |         
|                                                      | Debt redemption fees (note 11(f))        |                         |         
|                                                      | Deferred financing costs                 |                         |         
|                                                      | Repurchase of convertible debt (note 8)  |                         |         
|                                                      | Issuance of share capital                |                         |         
|                                                      | Share issue costs, pre-tax               |                         |         
|                                                      | Repurchase of capital stock (note 9)     |                         |         
|                                                      | Other                                    |                         |         
|                                                      |                                          |                         |         
|Cash provided by (used in) financing activities       |                                          |                         | 666.1   
|                                                      |                                          |                         |         
|Increase (decrease) in cash                           |                                          |                         | 459.0   
|Cash, beginning of year                               |                                          |                         | 883.8   
|                                                      |                                          |                         |         
|Cash, end of year                                     |                                          | $                       | 1,342.8 
|                                                      |                                          |                         |         
|Cash is comprised of cash and short-term investments. |                                          |                         |         
|Supplemental cash flow information (note 19)          |                                          |                         |         

See accompanying notes to consolidated financial statements

F-7

---



CELESTICA INC.

NOTES TO 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:



(b)   Use of estimates:



(c)   Revenue:



(d)   Cash and short-term investments:



(e)   Allowance for doubtful accounts:



(f)    Inventories:



F-8

---





|                 |  | 2002 |       | 2003
|---------------- |  | ---- | ----- | ----
|Raw materials    |  | $    | 479.8 |     
|Work in progress |  |      | 101.0 |     
|Finished goods   |  |      | 194.8 |     
|                 |  |      |       |     
|                 |  | $    | 775.6 |     
|                 |  |      |       |     

(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-9

---





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



(l)    Deferred financing costs:



(m)  Income taxes:



(n)   Foreign currency translation and hedging:



F-10

---





(o)   Research and development:



(p)   Restructuring charges:



(q)   Changes in accounting policies:





F-11

---





|                                      |                              | Year ended December 31, |      
|------------------------------------- | ---------------------------- | ----------------------- | -----
|
|Net loss as reported                  |                              | $                       | (39.8
|Add back: goodwill amortization       |                              |                         | 39.2 
|                                      |                              |                         |      
|Net loss before goodwill amortization |                              | $                       | (0.6 
|                                      |                              |                         |      
|Basic loss per share:                 |                              |                         |      
|                                      | As reported                  |                         | $    
|                                      | Before goodwill amortization |                         | $    
|Diluted loss per share:               |                              |                         |      
|                                      | As reported                  |                         | $    
|                                      | Before goodwill amortization |                         | $    





|                                                                       |  | 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 |  |                         | 70.0 
|Expected option life (in years)                                        |  |                         | 5.0  
|Weighted-average grant date fair values of options issued              |  | $                       | 12.02



F-12

---





|                                                                           |                       | Year ended December 31, |       
|-------------------------------------------------------------------------- | --------------------- | ----------------------- | ------
|
|Net loss as reported                                                       |                       | $                       | (445.2
|Deduct: Stock-based compensation costs using fair-value method, net of tax |                       |                         | (2.2  
|                                                                           |                       |                         |       
|Pro forma net loss                                                         |                       | $                       | (447.4
|                                                                           |                       |                         |       
|Loss per share:                                                            |                       |                         |       
|                                                                           | Basic  as reported   |                         | $     
|                                                                           | Basic  pro forma     |                         | $     
|                                                                           | Diluted  as reported |                         | $     
|                                                                           | Diluted  pro forma   |                         | $     



(r)   Recently issued accounting pronouncements:





F-13

---







3.     ACQUISITIONS:



4.     CAPITAL ASSETS:

|                                 |  | 2002
|-------------------------------- |  | ----
|
|Land                             |  | $   
|Buildings                        |  |     
|Buildings/leasehold improvements |  |     
|Office equipment                 |  |     
|Machinery and equipment          |  |     
|Software                         |  |     
|                                 |  |     
|                                 |  | $   
|                                 |  |     

F-14

---



|                                 |  | 2003
|-------------------------------- |  | ----
|
|Land                             |  | $   
|Buildings                        |  |     
|Buildings/leasehold improvements |  |     
|Office equipment                 |  |     
|Machinery and equipment          |  |     
|Software                         |  |     
|                                 |  |     
|                                 |  | $   
|                                 |  |     



5.     GOODWILL FROM BUSINESS COMBINATIONS AND INTANGIBLE ASSETS:



|                                       |  | Americas |        | Europe |   | Asia  |   | Total |      
|-------------------------------------- |  | -------- | ------ | ------ | - | ----- | - | ----- | -----
|Balance December 31, 2001              |  | $        | 243.2  |        | $ | 68.3  |   | $     | 817.3
|Reclass (a)                            |  |          | 1.8    |        |   | 6.2   |   |       | 1.1  
|Post-closing adjustments (b)           |  |          | (2.1   | )      |   | 2.0   |   |       | 13.9 
|Impairment (c)                         |  |          | (127.2 | )      |   | (76.5 | ) |       |     
|                                       |  |          |        |        |   |       |   |       |      
|Balance December 31, 2002 and 2003 (d) |  | $        | 115.7  |        | $ |      |   | $     | 832.3
|                                       |  |          |        |        |   |       |   |       |      



F-15

---







|                        |  | 2002
|----------------------- |  | ----
|
|Intellectual property   |  | $   
|Other intangible assets |  |     
|                        |  |     
|                        |  | $   
|                        |  |     

|                        |  | 2003
|----------------------- |  | ----
|
|Intellectual property   |  | $   
|Other intangible assets |  |     
|                        |  |     
|                        |  | $   
|                        |  |     



|                          |  | Intellectual Property |       | Other Intangible Assets |   | Total |  
|------------------------- |  | --------------------- | ----- | ----------------------- | - | ----- | -
|Balance December 31, 2001 |  | $                     | 244.7 |                         | $ | 182.5 |  
|Amortization              |  |                       | (72.0 | )                       |   | (23.9 | )
|Reclass (aa)              |  |                       | (9.1  | )                       |   |      |  
|Acquisitions (bb)         |  |                       | 24.0  |                         |   | 25.4  |  
|Post-closing (bb)         |  |                       | (15.5 | )                       |   |      |  
|Impairment (cc)           |  |                       | (96.5 | )                       |   | (47.7 | )
|                          |  |                       |       |                         |   |       |  
|Balance December 31, 2002 |  |                       | 75.6  |                         |   | 136.3 |  
|Amortization              |  |                       | (27.4 | )                       |   | (21.1 | )
|Post-closing              |  |                       |      |                         |   | (0.2  | )
|Impairment (dd)           |  |                       | (18.2 | )                       |   | (7.1  | )
|                          |  |                       |       |                         |   |       |  
|Balance December 31, 2003 |  | $                     | 30.0  |                         | $ | 107.9 |  
|                          |  |                       |       |                         |   |       |  



F-16

---







|                                        |  | Year ended December 31,
|--------------------------------------- |  | -----------------------
|
|Amortization of goodwill (ee)           |  | $                      
|Amortization of intellectual property   |  |                        
|Amortization of other intangible assets |  |                        
|                                        |  |                        
|                                        |  | $                      
|                                        |  |                        





|2004       |  | $ | 28.7
|---------- |  | - | ----
|2005       |  |   | 28.2
|2006       |  |   | 25.5
|2007       |  |   | 14.8
|2008       |  |   | 13.9
|Thereafter |  |   | 26.8

6.     OTHER ASSETS:

|                            |  | 2002 |       | 2003
|--------------------------- |  | ---- | ----- | ----
|Deferred income taxes       |  | $    | 305.1 |     
|Deferred pension (note 14)  |  |      | 31.2  |     
|Commodity taxes recoverable |  |      | 10.9  |     
|Other                       |  |      | 7.4   |     
|                            |  |      |       |     
|                            |  | $    | 354.6 |     
|                            |  |      |       |     



F-17

---



7.     LONG-TERM DEBT:

|                                                  |  | 2002 |     | 2003
|------------------------------------------------- |  | ---- | --- | ----
|Unsecured, revolving credit facility due 2004 (a) |  | $    |    |     
|Unsecured, revolving credit facility due 2005 (b) |  |      |    |     
|Capital lease obligations                         |  |      | 6.9 |     
|                                                  |  |      |     |     
|                                                  |  |      | 6.9 |     
|Less current portion                              |  |      | 2.7 |     
|                                                  |  |      |     |     
|                                                  |  | $    | 4.2 |     
|                                                  |  |      |     |     





|2004 |  | $2.7
|---- |  | ----
|2005 |  | 0.7 
|2006 |  |    
|2007 |  |    
|2008 |  |    

8.     CONVERTIBLE DEBT:



F-18

---









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 |   | Shares to be issued
|------------------------------ |  | ------------------------- | - | ---------------------- |  | -------------------------------------------------------- | - | -------------------
|Balance December 31, 2001      |  | 190.6                     |   | 39.1                   |  | 229.7                                                    |   | 0.5                
|Repurchase of shares (i)       |  | (2.0                      | ) |                       |  | (2.0                                                     | ) |                   
|Other share issuances (ii)     |  | 0.9                       |   |                       |  | 0.9                                                      |   |                   
|                               |  |                           |   |                        |  |                                                          |   |                    
|Balance December 31, 2002      |  | 189.5                     |   | 39.1                   |  | 228.6                                                    |   | 0.5                
|Repurchase of shares (iii)     |  | (20.6                     | ) |                       |  | (20.6                                                    | ) |                   
|Other share issuances (iv)     |  | 0.9                       |   |                       |  | 0.9                                                      |   |                   
|                               |  |                           |   |                        |  |                                                          |   |                    
|Balance December 31, 2003      |  | 169.8                     |   | 39.1                   |  | 208.9                                                    |   | 0.5                
|                               |  |                           |   |                        |  |                                                          |   |                    

|Amount                     |  | Subordinate Voting Shares |         | Multiple Voting Shares |   | Shares to be issued |  | Total Amount |    
|-------------------------- |  | ------------------------- | ------- | ---------------------- | - | ------------------- |  | ------------ | ---
|Balance December 31, 2001  |  | $                         | 3,554.3 |                        | $ | 138.8               |  | $            | 5.9
|Repurchase of shares (i)   |  |                           | (36.9   | )                      |   |                    |  |              |   
|Other share issuances (ii) |  |                           | 8.5     |                        |   |                    |  |              |   
|                           |  |                           |         |                        |   |                     |  |              |    
|Balance December 31, 2002  |  |                           | 3,525.9 |                        |   | 138.8               |  |              | 5.9
|Repurchase of shares (iii) |  |                           | (380.1  | )                      |   |                    |  |              |   
|Other share issuances (iv) |  |                           | 7.3     |                        |   |                    |  |              |   
|                           |  |                           |         |                        |   |                     |  |              |    
|Balance December 31, 2003  |  | $                         | 3,153.1 |                        | $ | 138.8               |  | $            | 5.9
|                           |  |                           |         |                        |   |                     |  |              |    



F-19

---





(c)Stock option plans:



|Number of Options (in millions)                                                     |  | Shares |   | Weighted Average Exercise Price
|----------------------------------------------------------------------------------- |  | ------ | - | -------------------------------
|Outstanding at December 31, 2000                                                    |  | 17.2   |   | $                              
|Granted/assumed                                                                     |  | 8.5    |   | $                              
|Exercised                                                                           |  | (1.6   | ) | $                              
|Cancelled                                                                           |  | (0.2   | ) | $                              
|                                                                                    |  |        |   |                                
|Outstanding at December 31, 2001                                                    |  | 23.9   |   | $                              
|Granted                                                                             |  | 3.9    |   | $                              
|Exercised                                                                           |  | (0.9   | ) | $                              
|Cancelled                                                                           |  | (0.8   | ) | $                              
|                                                                                    |  |        |   |                                
|Outstanding at December 31, 2002                                                    |  | 26.1   |   | $                              
|Granted                                                                             |  | 0.4    |   | $                              
|Exercised                                                                           |  | (0.9   | ) | $                              
|Cancelled                                                                           |  | (2.8   | ) | $                              
|                                                                                    |  |        |   |                                
|Outstanding at December 31, 2003                                                    |  | 22.8   |   | $                              
|                                                                                    |  |        |   |                                
|Shares reserved for issuance upon exercise of stock options or awards (in millions) |  | 32.8   |   |                                
|                                                                                    |  |        |   |                                

F-20

---





|Plan  |  | Range of Exercise Prices |  | Outstanding Options |  | Weighted Average Exercise Price |       | Exercisable Options |      | Weighted Average Exercise Price |   | Weighted Average Remaining Life
|----- |  | ------------------------ |  | ------------------- |  | ------------------------------- | ----- | ------------------- | ---- | ------------------------------- | - | -------------------------------
|
|ESPO  |  | $  5.00 - $  7.50        |  | 3.8                 |  | $                               | 5.30  |                     | 3.8  |                                 | $ | 5.30                           
|LTIP  |  | $  8.75 - $13.10         |  | 0.7                 |  | $                               | 9.73  |                     | 0.6  |                                 | $ | 9.21                           
|      |  | $13.25 - $19.90          |  | 4.5                 |  | $                               | 17.39 |                     | 2.7  |                                 | $ | 16.76                          
|      |  | $20.06 - $27.55          |  | 0.6                 |  | $                               | 23.24 |                     | 0.5  |                                 | $ | 23.18                          
|      |  | $30.23 - $44.23          |  | 8.9                 |  | $                               | 40.33 |                     | 7.4  |                                 | $ | 40.27                          
|      |  | $45.63 - $63.44          |  | 3.2                 |  | $                               | 54.49 |                     | 3.1  |                                 | $ | 54.61                          
|      |  | $69.25 - $84.00          |  | 0.2                 |  | $                               | 73.68 |                     | 0.2  |                                 | $ | 73.70                          
|Other |  | $  0.93 - $13.31         |  | 0.8                 |  | $                               | 5.33  |                     | 0.8  |                                 | $ | 5.33                           
|Other |  | $28.82 - $70.62          |  | 0.1                 |  | $                               | 47.51 |                     | 0.1  |                                 | $ | 47.51                          
|      |  |                          |  |                     |  |                                 |       |                     |      |                                 |   |                                
|      |  |                          |  | 22.8                |  |                                 |       |                     | 19.2 |                                 |   |                                
|      |  |                          |  |                     |  |                                 |       |                     |      |                                 |   |                                

10.   LOSS PER SHARE AND WEIGHTED AVERAGE SHARES OUTSTANDING:



|                           |                                                             | Year ended December 31 |  
|-------------------------- | ----------------------------------------------------------- | ---------------------- | -
|
|Numerator:                 |                                                             |                        |  
|                           | Net loss                                                    |                        | $
|                           | Convertible debt accretion, net of tax                      |                        |  
|                           | Gain on repurchase of convertible debt, net of tax (note 8) |                        |  
|                           |                                                             |                        |  
|                           | Loss available to common shareholders                       |                        | $
|Denominator (in millions): |                                                             |                        |  
|                           | Weighted average shares  basic                             |                        |  
|                           | Effect of dilutive securities:(1)                           |                        |  
|                           |                                                             | Employee stock options |  
|                           |                                                             | Convertible debt       |  
|                           |                                                             |                        |  
|                           | Weighted average shares  diluted(1)                        |                        |  
|Loss per share:            |                                                             |                        |  
|                           | Basic                                                       |                        | $
|                           | Diluted                                                     |                        | $



F-21

---





11.   OTHER CHARGES:

|                                                      |  | Year ended December 31 |      
|----------------------------------------------------- |  | ---------------------- | -----
|
|2001 restructuring (a)                                |  | $                      | 237.0
|2002 restructuring (b)                                |  |                        |     
|2003 restructuring (c)                                |  |                        |     
|2002 goodwill impairment (d)                          |  |                        |     
|Other impairment (e)                                  |  |                        | 36.1 
|Deferred financing costs and debt redemption fees (f) |  |                        |     
|Gain on sale of surplus land                          |  |                        |     
|                                                      |  |                        |      
|                                                      |  | $                      | 273.1
|                                                      |  |                        |      

(a)   2001 restructuring:



|                  |  | Employee termination costs |       | Lease and other contractual obligations |   | Facility exit costs and other |   | Total accrued liability |      | Non-cash charge |   | Total charge
|----------------- |  | -------------------------- | ----- | --------------------------------------- | - | ----------------------------- | - | ----------------------- | ---- | --------------- | - | ------------
|January 1, 2001   |  | $                          |      |                                         | $ |                              |   | $                       |     |                 | $ |            
|Provision         |  |                            | 90.7  |                                         |   | 35.3                          |   |                         | 12.4 |                 |   | 138.4       
|Cash payments     |  |                            | (51.2 | )                                       |   | (1.6                          | ) |                         | (2.9 | )               |   | (55.7       
|                  |  |                            |       |                                         |   |                               |   |                         |      |                 |   |             
|December 31, 2001 |  |                            | 39.5  |                                         |   | 33.7                          |   |                         | 9.5  |                 |   | 82.7        
|Cash payments     |  |                            | (35.4 | )                                       |   | (13.0                         | ) |                         | (6.8 | )               |   | (55.2       
|Adjustments       |  |                            | (4.1  | )                                       |   | 11.4                          |   |                         | (2.7 | )               |   | 4.6         
|                  |  |                            |       |                                         |   |                               |   |                         |      |                 |   |             
|December 31, 2002 |  |                            |      |                                         |   | 32.1                          |   |                         |     |                 |   | 32.1        
|Cash payments     |  |                            |      |                                         |   | (14.1                         | ) |                         |     |                 |   | (14.1       
|Adjustments       |  |                            |      |                                         |   | 7.9                           |   |                         |     |                 |   | 7.9         
|                  |  |                            |       |                                         |   |                               |   |                         |      |                 |   |             
|December 31, 2003 |  | $                          |      |                                         | $ | 25.9                          |   | $                       |     |                 | $ | 25.9        
|                  |  |                            |       |                                         |   |                               |   |                         |      |                 |   |             



F-22

---



(b)   2002 restructuring:



|                  |  | Employee termination costs |       | Lease and other contractual obligations |   | Facility exit costs and other |   | Total accrued liability |      | Non-cash charge |   | Total charge
|----------------- |  | -------------------------- | ----- | --------------------------------------- | - | ----------------------------- | - | ----------------------- | ---- | --------------- | - | ------------
|January 1, 2002   |  | $                          |      |                                         | $ |                              |   | $                       |     |                 | $ |            
|Provision         |  |                            | 128.8 |                                         |   | 51.7                          |   |                         | 8.5  |                 |   | 189.0       
|Cash payments     |  |                            | (41.7 | )                                       |   | (1.7                          | ) |                         | (0.7 | )               |   | (44.1       
|                  |  |                            |       |                                         |   |                               |   |                         |      |                 |   |             
|December 31, 2002 |  |                            | 87.1  |                                         |   | 50.0                          |   |                         | 7.8  |                 |   | 144.9       
|Cash payments     |  |                            | (83.4 | )                                       |   | (30.0                         | ) |                         | (7.8 | )               |   | (121.2      
|Adjustments       |  |                            | 7.4   |                                         |   | 16.2                          |   |                         | 2.9  |                 |   | 26.5        
|                  |  |                            |       |                                         |   |                               |   |                         |      |                 |   |             
|December 31, 2003 |  | $                          | 11.1  |                                         | $ | 36.2                          |   | $                       | 2.9  |                 | $ | 50.2        
|                  |  |                            |       |                                         |   |                               |   |                         |      |                 |   |             



(c)   2003 restructuring:



F-23

---





|                  |  | Employee termination costs |       | Lease and other contractual obligations |   | Facility exit costs and other |   | Total accrued liability |      | Non-cash charge |   | Total charge
|----------------- |  | -------------------------- | ----- | --------------------------------------- | - | ----------------------------- | - | ----------------------- | ---- | --------------- | - | ------------
|January 1, 2003   |  | $                          |      |                                         | $ |                              |   | $                       |     |                 | $ |            
|Provision         |  |                            | 61.4  |                                         |   | 0.3                           |   |                         | 1.1  |                 |   | 62.8        
|Cash payments     |  |                            | (28.6 | )                                       |   | (0.3                          | ) |                         | (1.1 | )               |   | (30.0       
|                  |  |                            |       |                                         |   |                               |   |                         |      |                 |   |             
|December 31, 2003 |  | $                          | 32.8  |                                         | $ |                              |   | $                       |     |                 | $ | 32.8        
|                  |  |                            |       |                                         |   |                               |   |                         |      |                 |   |             



(d)   2002 goodwill impairment:



(e)   Other impairment:



(f)    Deferred financing costs and debt redemption fees:



F-24

---





12.   INCOME TAXES:

|                                        |                     | Year ended December 31 |      
|--------------------------------------- | ------------------- | ---------------------- | -----
|
|Earnings (loss) before income tax:      |                     |                        |      
|                                        | Canadian operations |                        | $    
|                                        | Foreign operations  |                        |      
|                                        |                     |                        |      
|                                        |                     | $                      | (41.9
|                                        |                     |                        |      
|Current income tax expense (recovery):  |                     |                        |      
|                                        | Canadian operations |                        | $    
|                                        | Foreign operations  |                        |      
|                                        |                     |                        |      
|                                        |                     | $                      | 25.8 
|                                        |                     |                        |      
|Deferred income tax expense (recovery): |                     |                        |      
|                                        | Canadian operations |                        | $    
|                                        | Foreign operations  |                        |      
|                                        |                     |                        |      
|                                        |                     | $                      | (27.9
|                                        |                     |                        |      



|                                                                                  |                                                                              | Year ended December 31 |      
|--------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ---------------------- | -----
|
|Combined Canadian federal and provincial income tax rate                          |                                                                              |                        | 42.1%
|                                                                                  |                                                                              |                        |      
|Income tax expense (recovery) based on loss before income taxes at statutory rate |                                                                              | $                      | (17.7
|Increase (decrease) resulting from:                                               |                                                                              |                        |      
|                                                                                  | Manufacturing and processing deduction                                       |                        |      
|                                                                                  | Foreign income taxed at lower rates                                          |                        |      
|                                                                                  | Amortization and write-down of non-deductible goodwill and intangible assets |                        |      
|                                                                                  | Other non-deductible items                                                   |                        |      
|                                                                                  | Change in valuation allowance                                                |                        |      
|                                                                                  |                                                                              |                        |      
|Income tax expense (recovery)                                                     |                                                                              | $                      | (2.1 
|                                                                                  |                                                                              |                        |      

F-25

---





|                                      |                                                       | 2002 |       | 2003  |  
|------------------------------------- | ----------------------------------------------------- | ---- | ----- | ----- | -
|Deferred income tax assets:           |                                                       |      |       |       |  
|                                      | Income tax effect of operating losses carried forward |      | $     | 162.9 |  
|                                      | Accounting provisions not currently deductible        |      |       | 43.9  |  
|                                      | Capital, intangible and other assets                  |      |       | 143.9 |  
|                                      | Share issue and convertible debt issue costs          |      |       | 9.5   |  
|                                      | Restructuring accruals                                |      |       | 53.2  |  
|                                      | Other                                                 |      |       | 5.2   |  
|                                      |                                                       |      |       |       |  
|                                      |                                                       |      | 418.6 |       |  
|                                      | Valuation allowance                                   |      |       | (76.6 | )
|                                      |                                                       |      |       |       |  
|Total deferred income tax assets      |                                                       |      | 342.0 |       |  
|                                      |                                                       |      |       |       |  
|Deferred income tax liabilities:      |                                                       |      |       |       |  
|                                      | Capital, intangible and other assets                  |      |       | (54.2 | )
|                                      | Deferred pension asset                                |      |       | (10.0 | )
|                                      | Other                                                 |      |       | (3.5  | )
|                                      |                                                       |      |       |       |  
|Total deferred income tax liabilities |                                                       |      | (67.7 | )     |  
|                                      |                                                       |      |       |       |  
|Deferred income tax asset, net        |                                                       | $    | 274.3 |       | $
|                                      |                                                       |      |       |       |  



F-26

---





|Year of Expiry |  | Amount
|-------------- |  | ------
|2004           |  | $     
|2005           |  |       
|2006           |  |       
|2007           |  |       
|2008           |  |       
|2009           |  |       
|2010-2022      |  |       
|Indefinite     |  |       
|               |  |       
|               |  | $     
|               |  |       

13.   RELATED PARTY TRANSACTIONS:



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



F-27

---





|                |  | Fair Market Value
at December 31 |       | Actual Asset Allocation (%)
at December 31
|--------------- |  | -------------------------------- | ----- | ------------------------------------------
|
|Asset Category: |  |                                  |       |                                           
|Equities        |  | $                                | 104.2 |                                           
|Fixed income    |  |                                  | 68.6  |                                           
|Other           |  |                                  | 2.1   |                                           
|                |  |                                  |       |                                           
|Total           |  | $                                | 174.9 |                                           
|                |  |                                  |       |                                           



|                               |                                        | Pension Plans
Year ended December 31 |       | Other Benefit Plans
Year ended December 31 |  
|------------------------------ | -------------------------------------- | ------------------------------------ | ----- | ------------------------------------------ | -
|
|Plan assets, beginning of year |                                        | $                                    | 174.5 |                                            | $
|                               | Employer contributions                 |                                      |       | 13.5                                       |  
|                               | Actual return on assets                |                                      |       | (21.9                                      | )
|                               | Voluntary employee contributions       |                                      |       | 4.6                                        |  
|                               | Effect of acquisitions                 |                                      |       | 4.8                                        |  
|                               | Benefits paid                          |                                      |       | (10.5                                      | )
|                               | Foreign currency exchange rate changes |                                      |       | 9.9                                        |  
|                               |                                        |                                      |       |                                            |  
|Plan assets, end of year       |                                        | $                                    | 174.9 |                                            | $
|                               |                                        |                                      |       |                                            |  

|                                                          |                                            | Pension Plans
Year ended December 31 |       | Other Benefit Plans
Year ended December 31 |  
|--------------------------------------------------------- | ------------------------------------------ | ------------------------------------ | ----- | ------------------------------------------ | -
|
|Projected benefit obligations (PBO), beginning of year    |                                            | $                                    | 179.1 |                                            | $
|                                                          | Reclassification of supplemental plan      |                                      |       | 4.9                                        |  
|                                                          | Service cost                               |                                      |       | 7.2                                        |  
|                                                          | Interest cost                              |                                      |       | 12.5                                       |  
|                                                          | Voluntary employee contributions           |                                      |       | 4.6                                        |  
|                                                          | Actuarial losses                           |                                      |       | 14.0                                       |  
|                                                          | Plan amendments                            |                                      |       |                                           |  
|                                                          | Effect of acquisitions                     |                                      |       | 22.8                                       |  
|                                                          | Effect of curtailments                     |                                      |       | 1.3                                        |  
|                                                          | Benefits paid                              |                                      |       | (10.5                                      | )
|                                                          | Foreign currency exchange rate changes     |                                      |       | 14.6                                       |  
|                                                          |                                            |                                      |       |                                            |  
|                                                          | Projected benefit obligations, end of year |                                      | $     | 250.5                                      |  
|                                                          |                                            |                                      |       |                                            |  
|Deficit of plan assets over projected benefit obligations |                                            | $                                    | (75.6 | )                                          | $
|Unrecognized actuarial losses                             |                                            |                                      | 87.3  |                                            |  
|                                                          |                                            |                                      |       |                                            |  
|Deferred (accrued) pension cost                           |                                            | $                                    | 11.7  |                                            | $
|                                                          |                                            |                                      |       |                                            |  

F-28

---





|                                             |  | Pension Plans |       | Other
Benefit Plans |   | Total |  
|-------------------------------------------- |  | ------------- | ----- | ------------------- | - | ----- | -
|Accrued pension and post-employment benefits |  | $             | (21.2 | )                   | $ | (64.8 | )
|Deferred pension assets (note 6)             |  |               | 55.0  |                     |   |      |  
|                                             |  |               |       |                     |   |       |  
|                                             |  | $             | 33.8  |                     | $ | (64.8 | )
|                                             |  |               |       |                     |   |       |  

|                                          |                                              | Pension Plans
Year ended December 31 |      | Other Benefit Plans
Year ended December 31
|----------------------------------------- | -------------------------------------------- | ------------------------------------ | ---- | ------------------------------------------
|
|Net periodic pension cost:                |                                              |                                      |      |                                           
|                                          | Service cost                                 |                                      | $    | 8.6                                       
|                                          | Interest cost                                |                                      |      | 11.3                                      
|                                          | Expected return on assets                    |                                      |      | (14.0                                     
|                                          | Net amortization of actuarial (gains)/losses |                                      |      | (0.1                                      
|                                          |                                              |                                      |      |                                           
|                                          |                                              |                                      | 5.8  |                                           
|Defined contribution pension plan expense |                                              |                                      | 18.9 |                                           
|Curtailment loss                          |                                              |                                      |     |                                           
|                                          |                                              |                                      |      |                                           
|Total expense for the year                |                                              | $                                    | 24.7 |                                           
|                                          |                                              |                                      |      |                                           

|                                                                       |                                                                     | Pension Plans
Year ended December 31 |     | Other Benefit Plans
Year ended December 31
|---------------------------------------------------------------------- | ------------------------------------------------------------------- | ------------------------------------ | --- | ------------------------------------------
|
|Actuarial assumptions (percentages):                                   |                                                                     |                                      |     |                                           
|Weighted average discount rate for:                                    |                                                                     |                                      |     |                                           
|                                                                       | Projected benefit obligations                                       |                                      | 6.2 |                                           
|                                                                       | Net periodic pension cost                                           |                                      | 6.5 |                                           
|Weighted average rate of compensation increase for:                    |                                                                     |                                      |     |                                           
|                                                                       | Projected benefit obligations                                       |                                      | 4.5 |                                           
|                                                                       | Net periodic pension cost                                           |                                      | 4.0 |                                           
|Weighted average expected long-term rate of return on plan assets for: |                                                                     |                                      |     |                                           
|                                                                       | Estimated rate for the following 12-month net periodic pension cost |                                      | 7.5 |                                           
|                                                                       | Net periodic pension cost                                           |                                      | 7.4 |                                           
|Healthcare cost trend rate for:                                        |                                                                     |                                      |     |                                           
|                                                                       | Projected benefit obligations                                       |                                      |    |                                           
|                                                                       | Net periodic pension cost                                           |                                      |    |                                           
|                                                                       | Estimated rate for the following 12 month net periodic pension cost |                                      |    |                                           

F-29

---



|                                                                                |                                          | Other Benefit Plans
Year ended December 31 |  
|------------------------------------------------------------------------------- | ---------------------------------------- | ------------------------------------------ | -
|
|Sensitivity re: healthcare trend rate for non-pension post-employment benefits: |                                          |                                            |  
|1% Increase                                                                     |                                          |                                            |  
|                                                                                | Effect on PBO                            |                                            | $
|                                                                                | Effect on service cost and interest cost |                                            |  
|1% Decrease                                                                     |                                          |                                            |  
|                                                                                | Effect on PBO                            |                                            |  
|                                                                                | Effect on service cost and interest cost |                                            |  



F-30

---





15.   FINANCIAL INSTRUMENTS:





|                                   |  | December 31, 2002 |  | December 31, 2003
|---------------------------------- |  | ----------------- |  | -----------------
|
|Foreign currency contracts  asset |  |                  |  | $                



|Currency                |  | Amount of U.S. dollars |       | Weighted average exchange rate of U.S. dollars |   | Maximum period in months
|----------------------- |  | ---------------------- | ----- | ---------------------------------------------- | - | ------------------------
|Canadian dollars        |  | $                      | 278.4 |                                                | $ | 0.70                    
|Euros                   |  |                        | 115.1 |                                                |   | 1.09                    
|Thai baht               |  |                        | 59.4  |                                                |   | 0.02                    
|Chinese renminbi        |  |                        | 54.6  |                                                |   | 0.12                    
|Mexican peso            |  |                        | 44.6  |                                                |   | 0.09                    
|Singapore dollars       |  |                        | 24.3  |                                                |   | 0.58                    
|Czech koruna            |  |                        | 24.0  |                                                |   | 0.04                    
|British pounds sterling |  |                        | 22.8  |                                                |   | 1.57                    



F-31

---



16.   COMMITMENTS, CONTINGENCIES AND GUARANTEES:



|           |  | Operating Leases
|---------- |  | ----------------
|2004       |  | $               
|2005       |  |                 
|2006       |  |                 
|2007       |  |                 
|2008       |  |                 
|Thereafter |  |                 



17.   SIGNIFICANT CUSTOMERS:



18.   SEGMENTED INFORMATION:



F-32

---





|                                     |  | Year ended December 31 |         
|------------------------------------ |  | ---------------------- | --------
|
|Revenue                              |  |                        |         
|Americas                             |  | $                      | 6,334.6 
|Europe                               |  |                        | 3,001.3 
|Asia                                 |  |                        | 991.1   
|Elimination of inter-segment revenue |  |                        | (322.6  
|                                     |  |                        |         
|                                     |  | $                      | 10,004.4
|                                     |  |                        |         

|                                               |  | Year ended December 31 |       
|---------------------------------------------- |  | ---------------------- | ------
|
|EBIAT                                          |  |                        |       
|Americas                                       |  | $                      | 192.9 
|Europe                                         |  |                        | 128.5 
|Asia                                           |  |                        | 49.7  
|                                               |  |                        |       
|                                               |  |                        | 371.1 
|Interest, net                                  |  |                        | 7.9   
|Amortization of goodwill and intangible assets |  |                        | (125.0
|Integration costs related to acquisitions      |  |                        | (22.8 
|Other charges                                  |  |                        | (273.1
|                                               |  |                        |       
|Loss before income taxes                       |  | $                      | (41.9 
|                                               |  |                        |       

|                     |  | Year ended December 31
|-------------------- |  | ----------------------
|
|Capital expenditures |  |                       
|Americas             |  | $                     
|Europe               |  |                       
|Asia                 |  |                       
|                     |  |                       
|                     |  | $                     
|                     |  |                       

|               |  | As at December 31
|-------------- |  | -----------------
|
|Total assets   |  |                  
|Americas       |  | $                
|Europe         |  |                  
|Asia           |  |                  
|               |  |                  
|               |  | $                
|               |  |                  
|Capital assets |  |                  
|Americas       |  | $                
|Europe         |  |                  
|Asia           |  |                  
|               |  |                  
|               |  | $                
|               |  |                  

F-33

---





|               |  | Year ended December 31
|-------------- |  | ----------------------
|
|Revenue        |  |                       
|Canada         |  | 20%                   
|United States  |  | 35%                   
|Italy          |  | 13%                   
|United Kingdom |  | 11%                   

19.   SUPPLEMENTAL CASH FLOW INFORMATION:

|                               |                                        | Year ended December 31
|------------------------------ | -------------------------------------- | ----------------------
|
|Paid during the year:          |                                        |                       
|                               | Interest                               |                       
|                               | Taxes                                  |                       
|Non-cash financing activities: |                                        |                       
|                               | Convertible debt accretion, net of tax |                       
|                               | Shares issued for acquisitions         |                       

20.   CANADIAN AND UNITED STATES ACCOUNTING POLICY DIFFERENCES:



|                                                                                                 |  | Year ended December 31 |      
|------------------------------------------------------------------------------------------------ |  | ---------------------- | -----
|
|Net loss in accordance with Canadian GAAP                                                        |  | $                      | (39.8
|Compensation expense (a)                                                                         |  |                        | (3.2 
|Interest expense on convertible debt, net of tax (b)                                             |  |                        | (17.7
|Gain on repurchase of convertible debt, net of tax (b)                                           |  |                        |     
|Other charges and amortization, net of tax (c)                                                   |  |                        | (2.7 
|Gain on foreign exchange contract, net of tax (d)                                                |  |                        | 12.1 
|Leasehold retirement obligations, net of tax (g)                                                 |  |                        |     
|2003 compensation expense (h)                                                                    |  |                        |     
|                                                                                                 |  |                        |      
|Net loss before cumulative effect of a change in accounting policy, in accordance with U.S. GAAP |  |                        | (51.3
|Cumulative effect of a change in accounting policy, net of tax (g)                               |  |                        |     
|                                                                                                 |  |                        |      
|Net loss in accordance with U.S. GAAP                                                            |  | $                      | (51.3
|Other comprehensive loss:                                                                        |  |                        |      
|Cumulative effect of a change in accounting policy, net of tax (e)                               |  |                        | 5.6  
|Net gain (loss) on derivatives designated as hedges, net of tax (e)                              |  |                        | (11.7
|Minimum pension liability, net of tax (f)                                                        |  |                        | (14.9
|Foreign currency translation adjustment                                                          |  |                        | 1.2  
|                                                                                                 |  |                        |      
|Comprehensive loss in accordance with U.S. GAAP                                                  |  | $                      | (71.1
|                                                                                                 |  |                        |      

F-34

---





|                                                   |  | Year ended December 31 |      
|-------------------------------------------------- |  | ---------------------- | -----
|
|Loss available to shareholders  basic and diluted |  | $                      | (51.3
|Weighted average shares  basic (in millions)      |  |                        | 213.9
|Weighted average shares  diluted (in millions)(1) |  |                        | 213.9
|Basic loss per share                               |  | $                      | (0.24
|Diluted loss per share                             |  | $                      | (0.24

---





|                                                                   |  | As at December 31 |        
|------------------------------------------------------------------ |  | ----------------- | -------
|
|Shareholders' equity in accordance with Canadian GAAP              |  | $                 | 4,745.6
|Compensation expense (a)                                           |  |                   | (2.0   
|Interest expense on convertible debt, net of tax (b)               |  |                   | (24.5  
|Convertible debt (b)                                               |  |                   | (886.8 
|Convertible debt accretion, net of tax (b)                         |  |                   | 20.4   
|Gain on repurchase of convertible debt for Canadian GAAP (b)       |  |                   |       
|Gain on repurchase of convertible debt for U.S. GAAP (b)           |  |                   |       
|Other charges and amortization (c)                                 |  |                   | (2.7   
|Gain on foreign exchange contract, net of tax (d)                  |  |                   | 12.1   
|Net gain (loss) on cash flow hedges (e)                            |  |                   | (6.1   
|Minimum pension liability, net of tax (f)                          |  |                   | (14.9  
|Cumulative effect of a change in accounting policy, net of tax (g) |  |                   |       
|Leasehold retirement obligations, net of tax (g)                   |  |                   |       
|                                                                   |  |                   |        
|Shareholders' equity in accordance with U.S. GAAP                  |  | $                 | 3,841.1
|                                                                   |  |                   |        

---







F-35

---





|Balance at January 1, 2003   |  | $ | 3.7
|---------------------------- |  | - | ---
|Accretion charges            |  |   | 0.3
|                             |  |  
|Balance at December 31, 2003 |  | $ | 4.0
|                             |  |  



F-36

---





|                                                                       |  | Year ended December 31 |      
|---------------------------------------------------------------------- |  | ---------------------- | -----
|
|Risk-free rate                                                         |  |                        | 5.4  
|Dividend yield                                                         |  |                        | 0.0  
|Volatility factor of the expected market price of the Company's shares |  |                        | 70.0 
|Expected option life (in years)                                        |  |                        | 7.5  
|Weighted-average grant date fair values of options issued              |  | $                      | 34.31



|                                                                           |                       | Year ended December 31 |      
|-------------------------------------------------------------------------- | --------------------- | ---------------------- | -----
|
|Net loss in accordance with U.S. GAAP, as reported                         |                       | $                      | (51.3
|Deduct: Stock-based compensation costs using fair-value method, net of tax |                       |                        | (45.8
|                                                                           |                       |                        |      
|Pro forma net loss in accordance with U.S. GAAP                            |                       | $                      | (97.1
|                                                                           |                       |                        |      
|Loss per share:                                                            |                       |                        |      
|                                                                           | Basic  as reported   |                        | $    
|                                                                           | Basic  pro forma     |                        | $    
|                                                                           | Diluted  as reported |                        | $    
|                                                                           | Diluted  pro forma   |                        | $    



|                                                                   |  | Year ended December 31 |      
|------------------------------------------------------------------ |  | ---------------------- | -----
|
|Opening balance of accumulated net gain (loss) on cash flow hedges |  | $                      |     
|Cumulative effect of a change in accounting policy, net of tax (e) |  |                        | 5.6  
|Net gain (loss) on derivatives designated as hedges (e)            |  |                        | (11.7
|                                                                   |  |                        |      
|Closing balance                                                    |  |                        | (6.1 
|Opening balance of foreign currency translation account            |  |                        | (4.1 
|Foreign currency translation gain                                  |  |                        | 1.2  
|                                                                   |  |                        |      
|Closing balance                                                    |  |                        | (2.9 
|Opening balance of minimum pension liability                       |  |                        |     
|Minimum pension liability, net of tax (f)                          |  |                        | (14.9
|                                                                   |  |                        |      
|Closing balance                                                    |  |                        | (14.9
|                                                                   |  |                        |      
|Accumulated other comprehensive income (loss)                      |  | $                      | (23.9
|                                                                   |  |                        |      





F-37

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|Balance at January 1, 2002   |  | $ | 18.1 |  
|---------------------------- |  | - | ---- | -
|Accruals                     |  |   | 8.6  |  
|Cash payments                |  |   | (3.0 | )
|                             |  |   |     
|Balance at December 31, 2002 |  |   | 23.7 |  
|Accruals                     |  |   | 4.7  |  
|Adjustments                  |  |   | (6.3 | )
|Cash payments                |  |   | (2.6 | )
|                             |  |   |     
|Balance at December 31, 2003 |  | $ | 19.5 |  
|                             |  |   |     





F-38

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21.   COMPARATIVE INFORMATION:



22.   OTHER EVENT:



F-39

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