<PAGE>
THIRD QUARTER RESULTS Wednesday, October 18, 2000
(All amounts in U.S. dollars.
Per share information based on fully diluted
shares outstanding unless noted otherwise.
Historical per share information reflects the impact of the
December 1999 two-for-one stock split, retroactively applied)
CELESTICA ANNOUNCES RECORD THIRD QUARTER RESULTS
REVENUE INCREASES 92 PER CENT TO $2.6 BILLION,
ADJUSTED EARNINGS UP 157 PER CENT TO $83.9 MILLION
ADJUSTED EPS UP 117 PER CENT TO $0.39 PER SHARE
TORONTO, Canada - Celestica Inc. (NYSE, TSE: CLS), a world leader in electronics
manufacturing services (EMS), today announced financial results for the third
quarter ended September 30, 2000.
REVENUE for the three months ended September 30, 2000 was $2,600 million, up 92
per cent from $1,357 million in the third quarter of 1999, and up 24 per cent
sequentially from the second quarter of 2000. The accelerating growth rate
continues to be buoyed by strong organic growth, with strength across all
geographies and in key end markets such as communications and internet
infrastructure markets such as servers and storage.
ADJUSTED NET EARNINGS, which exclude the after-tax impact of amortization of
intangible assets and integration costs related to acquisitions, increased 157
per cent to $83.9 million, compared to $32.6 million in the third quarter of
1999, and up 32 per cent from the second quarter this year. The year-over-year
and sequential improvements resulted from the strong revenue growth and
operating margin expansion in all three of the company's operating geographies.
ADJUSTED NET EARNINGS PER SHARE rose 117 per cent to $0.39 per share compared to
$0.18 per share for the same period in 1999, and up sequentially 30 per cent
from the second quarter in 2000 and continue to exceed revenue growth rates.
NET EARNINGS increased 186 per cent to $55.7 million, or $0.26 per share,
compared to $19.5 million or $0.11 per share in the third quarter of 1999.
FOR THE NINE-MONTH PERIOD ended September 30, 2000, revenue was $6,304 million,
up 71 per cent from $3,688 million for the same period last year. Adjusted net
earnings were $187.2 million, up 128 per cent from $82.0 million last year.
Adjusted net earnings per share were $0.90, up 88 per cent from $0.48 for the
same period last year. Net earnings were $123.2 million or $0.60 per share
compared to $42.2 million or $0.25 per share last year.
<PAGE>
"Celestica's business performance continues to reflect our strong win rates in a
very robust industry environment," said Eugene Polistuk, president and CEO,
Celestica Inc. "Significant revenue growth was achieved around the globe with
over half of our growth being achieved organically. We reached our $10 billion
annualized run rate far ahead of schedule. Importantly, we also improved our
operating margins in all three of our major geographies reflecting the focus and
success the Company is having in improving its profitability. As we look ahead,
we believe that the long-term fundamentals for outsourcing remain very strong.
Also, our strategy of having diversified, leading customers in multiple
end-markets who leverage our leadership in technology, quality and supply chain
management gives us a strong engine for continued high growth and improved
profitability going forward."
ABOUT CELESTICA
With more than 23,000 employees worldwide, Celestica operates 33 manufacturing
and design facilities in the United States, Canada, Mexico, the United Kingdom,
Ireland, Italy, the Czech Republic, Thailand, Hong Kong, China, Malaysia and
Brazil. Celestica provides a broad range of services including design,
prototyping, assembly, testing, product assurance, supply chain management,
worldwide distribution and after-sales service. Its customers include industry
leading original equipment manufacturers (OEMs), primarily in the information
technology and communications sectors.
For further information on Celestica, visit its website at
HTTP://WWW.CELESTICA.COM. The company's security filings can also be accessed at
HTTP://WWW.SEDAR.COM.
SAFE HARBOUR AND FAIR DISCLOSURE STATEMENT
STATEMENTS CONTAINED IN THIS PRESS RELEASE WHICH ARE NOT HISTORICAL FACTS ARE
FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISK AND UNCERTAINTIES WHICH COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE
FORWARD-LOOKING STATEMENTS. AMONG THE KEY FACTORS THAT COULD CAUSE SUCH
DIFFERENCES ARE: THE LEVEL OF OVERALL GROWTH IN THE ELECTRONICS MANUFACTURING
SERVICES (EMS) INDUSTRY; VARIABILITY OF OPERATING RESULTS AMONG PERIODS;
DEPENDENCE ON THE COMPUTER AND COMMUNICATIONS INDUSTRIES; DEPENDENCE ON A
LIMITED NUMBER OF CUSTOMERS; AND THE ABILITY TO MANAGE EXPANSION, CONSOLIDATION
AND THE INTEGRATION OF ACQUIRED BUSINESSES. THESE AND OTHER FACTORS ARE
DISCUSSED IN THE COMPANY'S VARIOUS PUBLIC FILINGS AT WWW.SEDAR.COM.
AS OF ITS DATE, THIS PRESS RELEASE CONTAINS ANY MATERIAL INFORMATION ASSOCIATED
WITH THE COMPANY'S THIRD QUARTER FINANCIAL RESULTS.
Contacts:
Laurie Flanagan Paul Carpino
Corporate Communications Celestica Investor Relations
(416) 448-2200 (416) 448-2211
[email protected] [email protected]
<PAGE>
2
CELESTICA INC.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (DEFICIT)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 2000 1999 2000
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 1,356,947 $ 2,600,149 $ 3,688,482 $ 6,304,355
----------------------------------------------------------------
----------------------------------------------------------------
Gross profit $ 98,588 $ 183,503 $ 262,186 $ 439,925
Selling, general and administrative expenses 51,612 85,121 140,909 216,603
Amortization of intangible assets 14,070 25,607 41,629 60,178
Integration costs related to acquisitions 1,282 4,842 5,250 10,413
Interest expense (income), net 2,995 (5,229) 8,462 (13,323)
----------------------------------------------------------------
Earnings before income taxes 28,629 73,162 65,936 166,054
Provision for income taxes 9,161 17,485 23,727 42,850
----------------------------------------------------------------
Net earnings for the period 19,468 55,677 42,209 123,204
Retained earnings (deficit), beginning of period (29,477) 83,735 (52,218) 16,208
Convertible debt accretion, net of tax (note 2) - (2,098) - (2,098)
----------------------------------------------------------------
Retained earnings (deficit), end of period $ (10,009) $ 137,314 $ (10,009) $ 137,314
----------------------------------------------------------------
----------------------------------------------------------------
Earnings per share - basic (1) $ 0.12 $ 0.26 $ 0.26 $ 0.61
----------------------------------------------------------------
----------------------------------------------------------------
Earnings per share - fully diluted (1) $ 0.11 $ 0.26 $ 0.25 $ 0.60
----------------------------------------------------------------
----------------------------------------------------------------
Weighted average number of shares
Outstanding (in 000's) - basic (1) 168,686 203,003 163,892 198,633
Weighted average number of shares
Outstanding (in 000's) - fully diluted (1) 180,196 223,753 175,137 214,599
----------------------------------------------------------------
----------------------------------------------------------------
</TABLE>
(1)All historical share and per share information has been restated to reflect
the effects of the two-for-one stock split on a retroactive basis.
--------------------------------------------------------------------------------
ADJUSTED NET EARNINGS
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 2000 1999 2000
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Adjusted net earnings (2) $ 32,612 $ 83,925 $ 81,993 $ 187,189
Adjusted net earnings per share - basic (1) $ 0.19 $ 0.40 $ 0.50 $ 0.93
Adjusted net earnings per share - fully diluted $ 0.18 $ 0.39 $ 0.48 $ 0.90
(1)
</TABLE>
(1)All historical share and per share information has been restated to reflect
the effects of the two-for-one stock split on a retroactive basis.
(2)Adjusted net earnings exclude the after-tax effect of integration costs
related to acquisitions and amortization of intangible assets.
--------------------------------------------------------------------------------
<PAGE>
4
CELESTICA INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF U.S. DOLLARS)
(unaudited)
<TABLE>
<CAPTION>
AS AT SEPTEMBER 30,
1999 2000
------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
ASSETS
Current assets
Cash and short-term investments $ 73,447 $ 942,494
Accounts receivable 595,325 1,501,027
Inventories 785,442 1,621,268
Other assets 57,936 172,578
----------------- -----------------
1,512,150 4,237,367
Capital assets 326,240 544,377
Intangible assets 348,998 589,554
Other assets 85,689 102,299
----------------- -----------------
$ 2,273,077 $ 5,473,597
----------------- -----------------
----------------- -----------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 949,605 $ 1,905,599
Deferred income taxes 3,227 6,192
Current portion of long-term debt 2,843 1,922
----------------- -----------------
955,675 1,913,713
Long-term debt 132,872 130,073
Other liabilities 17,982 56,418
----------------- -----------------
1,106,529 2,100,204
Shareholders' equity
Capital stock (note 3) 1,175,009 2,394,610
Convertible debt (note 2) - 854,390
Retained earnings (deficit) (10,009) 137,314
Foreign currency translation adjustment 1,548 (12,921)
----------------- -----------------
1,166,548 3,373,393
----------------- -----------------
$ 2,273,077 $ 5,473,597
----------------- -----------------
----------------- -----------------
</TABLE>
<PAGE>
5
CELESTICA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF U.S. DOLLARS)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 2000 1999 2000
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CASH PROVIDED BY (USED IN)
OPERATIONS
Net earnings for the period $ 19,468 $ 55,677 $ 42,209 $ 123,204
Items not affecting cash:
Depreciation and amortization 32,918 58,335 90,623 145,584
Other 1,891 (5,805) (4,302) (20,718)
----------------------------------------------------------------
Cash from earnings 54,277 108,207 128,530 248,070
Non-cash working capital changes 16,132 (206,236) (161,235) (486,518)
----------------------------------------------------------------
70,409 (98,029) (32,705) (238,448)
INVESTING
Acquisitions, net of cash acquired (8,554) (25,927) (13,886) (622,660)
Purchase of capital assets (76,108) (66,033) (155,210) (163,936)
Other (21) 735 (1,466) 22,382
----------------------------------------------------------------
(84,683) (91,225) (170,562) (764,214)
FINANCING
Bank indebtedness - 249 - (8,631)
Decrease in long-term debt, net (6,018) - (8,363) -
Issuance of share capital 3,314 1,125 269,856 765,799
Share issue costs - - (12,737) (26,788)
Deferred financing costs (115) (10) (1,261) (114)
Issuance of convertible debt - 862,865 - 862,865
Convertible debt issue costs - (19,405) - (19,405)
Other (3,395) 3,276 (2,502) (92)
----------------------------------------------------------------
(6,214) 848,100 244,993 1,573,634
INCREASE (DECREASE) IN CASH (20,488) 658,846 41,726 570,972
CASH, BEGINNING OF PERIOD 93,935 283,648 31,721 371,522
----------------------------------------------------------------
CASH, END OF PERIOD $ 73,447 $ 942,494 $ 73,447 $ 942,494
----------------------------------------------------------------
----------------------------------------------------------------
SUPPLEMENTAL INFORMATION
Paid during the period
Interest $ 969 $ 294 $ 9,233 $ 8,051
Taxes $ 2,143 $ 8,411 $ 17,383 $ 40,785
</TABLE>
Cash is comprised of cash and short-term investments.
<PAGE>
6
CELESTICA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF U.S. DOLLARS)
(unaudited)
1. SEGMENTED INFORMATION:
The Company's operations fall into one dominant industry segment, the
electronics manufacturing services industry. The Company manages its
operations, and accordingly determines its operating segments, on a
geographic basis. The performance of geographic operating segments is
monitored based on EBIAT (earnings before interest, amortization of
intangible assets, income taxes, integration costs related to acquisitions
and other charges). The Company monitors enterprise-wide performance based
on adjusted net earnings, which is calculated as net earnings before
amortization of intangible assets, and integration costs related to
acquisitions, net of related income taxes. Inter-segment transactions are
reflected at market value.
The following is a breakdown of: revenue, EBIAT, adjusted net earnings and
total assets by operating segment. Certain comparative information has been
restated to reflect changes in the management of operating segments.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 2000 1999 2000
---------------------------------------------- ---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
REVENUE
North America (1) $ 930,695 $ 1,646,147 $ 2,527,526 $ 4,223,920
Europe 262,295 764,272 753,146 1,637,126
Asia 183,005 284,992 480,013 733,135
Elimination of inter-segment revenue (19,048) (95,262) (72,203) (289,826)
---------------- --------------- ---------------- ---------------
$ 1,356,947 $ 2,600,149 $ 3,688,482 $ 6,304,355
---------------- --------------- ---------------- ---------------
---------------- --------------- ---------------- ---------------
EBIAT
North America $ 29,666 $ 56,017 $ 82,008 $ 131,298
Europe 11,022 33,119 25,347 67,835
Asia 6,288 9,246 13,922 24,189
---------------- --------------- ---------------- ---------------
EBIAT 46,976 98,382 121,277 223,322
Interest, net (2,995) 5,229 (8,462) 13,323
Amortization of intangible assets (14,070) (25,607) (41,629) (60,178)
Integration costs related to acquisitions (1,282) (4,842) (5,250) (10,413)
---------------- --------------- ---------------- ---------------
Earnings before income taxes $ 28,629 $ 73,162 $ 65,936 $ 166,054
---------------- --------------- ---------------- ---------------
---------------- --------------- ---------------- ---------------
ADJUSTED NET EARNINGS $ 32,612 $ 83,925 $ 81,993 $ 187,189
---------------- --------------- ---------------- ---------------
---------------- --------------- ---------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
AS AT SEPTEMBER 30,
1999 2000
---------------- ---------------
<S> <C> <C>
TOTAL ASSETS
North America $ 1,157,472 $ 3,401,280
Europe 789,522 1,578,123
Asia 326,083 494,194
---------------- ---------------
$ 2,273,077 $ 5,473,597
---------------- ---------------
---------------- ---------------
</TABLE>
(1) Revenue from Canadian operations was $598,601 and $833,061 for the three
months ended September 30, 1999 and 2000, respectively and $1,658,580 and
$2,191,017 for the nine months ended September 30, 1999 and 2000, respectively.
<PAGE>
7
CELESTICA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF U.S. DOLLARS)
(unaudited)
2. CONVERTIBLE DEBT:
In August 2000, Celestica issued Liquid Yield Option Notes (LYONs) with a
principal amount at maturity of $1,813,550, payable August 1, 2020. The
Company received net after tax proceeds, after deducting underwriting
commissions, of $850,372. No interest is payable on the LYONs and the issue
price of the LYONs represents a yield to maturity of 3.75%. The LYONs are
subordinated in right of payment to all existing and future senior
indebtedness of the Company.
The LYONs are convertible at any time at the option of the holder, unless
previously redeemed or repurchased, into 5.6748 subordinate voting shares
for each $1 principal amount at maturity. Holders may require the Company
to repurchase all or a portion of their LYONs on August 2, 2005, August 1,
2010 and August 1, 2015 and the Company may redeem the LYONs at any time on
or after August 1, 2005 (and, under certain circumstances, before that
date). The Company is required to offer to repurchase the LYONs if there is
a change in control or a delisting event. Generally, the redemption or
repurchase price is equal to the accreted value of the LYONs. The Company
may elect to pay the principal amount at maturity of the LYONs and the
repurchase price is payable in certain circumstances in cash or subordinate
voting shares or any combination thereof.
Upon the occurrence of certain tax events, the Company may elect to pay
interest on the LYONs in lieu of accruing the original issue discount.
The Company has recorded the LYONs as an equity instrument pursuant to
Canadian GAAP. In accordance with Canadian GAAP the LYONs are bifurcated
into a principal equity component (representing the present value of the
notes) and an option component (representing the value of the conversion
features of the notes). The principal equity component is accreted over the
20-year term through periodic charges to retained earnings.
The accretion of the convertible debt is deducted from net earnings for the
period to determine earnings available to shareholders for the calculation
of basic earnings per share.
3. OUTSTANDING SHARES:
As at September 30, 2000, Celestica had outstanding 39,065,950 multiple
voting shares, 164,101,435 subordinate voting shares and 14,340,131 options
to acquire subordinate voting shares under Celestica's employee incentive
plans. The multiple voting shares are convertible into subordinate voting
shares on a one-for-one basis. In August 2000, Celestica issued LYONs (see
note 2) which are convertible into 5.6748 subordinate voting shares of
Celestica for each $1 principal amount at maturity or 10,291,534
subordinate voting shares.
