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TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F

o  Registration statement pursuant to Section 12(b) or (g)
of the Securities Exchange Act of 1934
or
ý  Annual report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 20092010
or
o  Transition report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
or
o  Shell company report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of event requiring this shell company report:

For the transition period fromto

Commission file number: 1-14832

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

Ontario, Canada
(Jurisdiction of incorporation or organization)

844 Don Mills Road
Toronto, Ontario, Canada M3C 1V7
(Address of principal executive offices)
Paul Carpino
416-448-2211
clsir@celestica.com
844 Don Mills Road
Toronto, Ontario, Canada M3C 1V7
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

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

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

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

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No o

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes o No ý

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 whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

ý Large accelerated filer                          o Accelerated filer                          o Non-accelerated filer

Indicate by check mark which basis of accounting the registrant has used to prepare the statements included in this filing:

U.S. GAAPo        International Financial Reporting Standards as issued by the International Accounting Standards Boardo        Otherý

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 o Item 18 ý

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso No ý

TABLE OF CONTENTS

Part I

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

        In this Annual Report, all dollar amounts are expressed in United States dollars, except where we state otherwise. All references to "U.S.$" or "$" are to U.S. dollars and all references to "C$" are to Canadian dollars. Unless we indicate otherwise, any reference in this Annual Report to a conversion between U.S.$ and C$ is a conversion at the average of the exchange rates in effect for the year ended December 31, 2009.2010. During that period, based on the relevant noon buying rates in New York City for cable transfers in Canadian dollars, as certified for customs purposes by the Federal Reserve Bank of New York, the average daily exchange rate was U.S.$1.00 = C$1.1412.1.0298.

        Unless we indicate otherwise, all information in this Annual Report is stated as of February 22, 2010,2011, the date as of which we prepared information for our annual report to shareholders and management information circular and proxy statement.

Forward-Looking Statements

        Item 4, "Information on the Company," Item 5, "— Management's Discussion and Analysis of Financial Condition and Results of Operations" 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, Section 21E of the Securities Exchange Act of 1934 as amended, or the U.S. Exchange Act, and applicable Canadian securities legislation including, without limitation,limitation: statements related to our future growth,growth; trends in our industry,industry; our financial or operational results, including our guidance, the impact of new program wins on our financial results, and anticipated expenses, benefits or payments, the redemption ofpayments; our senior subordinated notesfinancial targets; our financial or operational performance; and the expected benefitseffects of such redemption, and our conversion from Canadian GAAPgenerally accepted accounting principles (GAAP) to International Financial Reporting Standards and our financial or operational performance.(IFRS). Such forward-looking statements are predictive in nature, and may be based on current expectations, forecasts or assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially from the forward-looking statements themselves. Such forward-looking statements may, without limitation, be preceded by, followed by, or include words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," or similar expressions, or may employ such future or conditional verbs as "may," "will," "should" or "would" or may otherwise be indicated as forward-looking statements by grammatical construction, phrasing or context. 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, and in applicable Canadian securities legislation.

        Forward-looking statements are not guarantees of future performance. 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, including changes in the trend for outsourcing; our dependence on a limited number of customers and end markets; variability of operating results among periods; the challenges of effectively managing our operations, during uncertain economic conditions, including responding to significant changes in demand from our customers as a resultcustomers; the challenges of an uncertain or weak economic environment;managing inflation, including rising energy and labor costs; our inability to retain or expand our business due to execution problems resulting from significant headcount reductions, plant closures and product transfer activities;relating to the challengeramping up of responding to changes in customer demand;new programs, completing our restructuring activities or integrating our acquisitions; the delays in the delivery and/or general availability of various components and materials used in our manufacturing process; our dependence on industries affected by rapid technological change; our ability to successfully manage our international operations; increasing income taxes and our ability to successfully defend tax audits or meet the conditions of tax incentives; the challenge of managing our financial exposures to foreign currency fluctuations;volatility; and the risk of potential non-performance by counterparties, including but not limited to financial institutions, customers and suppliers. Our forward-looking statements are also based on various assumptions which management believes are reasonable under the current circumstances, but may prove to be inaccurate, and many of which may involve factors that are beyond our control. The material assumptions may include the following: forecasts from our customers, which range from 30 days to 90 days;days and can fluctuate significantly in terms of volume or mix of products; the timing, execution of, and investments associated with ramping new business; the

success in the marketplace of our customers' products; general economic and market conditions; currency exchange rates; pricing and competition; anticipated customer demand; supplier performance and pricing; commodity, labor, energy and transportation costs; operational and financial matters; and technological developments; and the timing and execution of our restructuring plan.developments. These assumptions are based on management's current views with respect to current plans and events, and are and will be subject to the

risks and uncertainties discussed above. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes.

        Except as required by applicable law, we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should read this Annual Report and the documents, if any, that we incorporate by reference with the understanding that the actual future results may be materially different from what we expect. We may not update these forward-looking statements, even if our situation changes in the future. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.

Item 1.    Identity of Directors, Senior Management and Advisers

        Not applicable.

Item 2.    Offer Statistics and Expected Timetable

        Not applicable.

Item 3.    Key Information

A.    Selected Financial Data

        You should read the following selected financial data together with Item 5, "Operating and Financial Review and Prospects," the Consolidated Financial Statements in Item 18 and the other information in this Annual Report. The selected financial data is derived from the consolidated financial statements for the years we present.presented below.

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

In 2006, Other charges totaled $211.8 million, comprised primarily of: (a) a $178.1 million restructuring charge and (b) a $33.2 million non-cash loss resulting from the sale of our plastics business.

In 2007, Other charges totaled $47.6 million, comprised primarily of: (a) a $37.3 million restructuring charge and (b) a non-cash write-down of $15.1 million relating to the annual impairment assessment of long-lived assets, primarily property, plant and equipment.

In 2008, Other charges totaled $885.2 million, comprised primarily of: (a)(i) a non-cash write-down of $850.5 million relating to the annual goodwill impairment assessment, (ii) a $35.3 million restructuring charge and (iii) a non-cash write-down of $8.8 million relating to the annual impairment assessment of long-lived assets against property, plant and equipment, offset, in part, by (b) a $7.6 million gain on repurchase of long-term debt.

In 2009, Other charges totaled $68.0 million, comprised primarily of: (a)(i) a $83.1 million restructuring charge and (ii) a non-cash write-down of $12.3 million relating to the annual impairment assessment of long-lived assets against property, plant and equipment, offset, in part, by (b)(i) a net $23.7 million recovery of damages from the settlement of a class action lawsuit and (ii) a net $2.8 million gain on repurchase of long-term debt, net of a write-down to the embedded options on the debt.

In 2010, Other charges totaled $68.4 million, comprised primarily of: (i) a $55.3 million restructuring charge, (ii) a non-cash write-down of $8.9 million relating to the annual impairment assessment of long-lived assets against computer software assets and property, plant and equipment and (iii) an $8.8 million loss on repurchase of long-term debt.

(5)(4)

Interest expense is comprised of interest expense incurred on indebtedness and debt facilities, less interest income earned on cash and cash equivalents. As a result of adopting the standards on financial instruments and hedges, referred in footnote (1)(i) above, in 2007, we have marked-to-market the embedded prepayment options in our debt instruments and have applied fair value hedge accounting to our interest rate swaps and our hedged debt obligation (particularly our 7⁷/8% Senior Subordinated Notes due 2011, which were redeemed in full in the fourth quarter of 2009). The swap agreements were terminated in February 2009, at which point hedge accounting was




discontinued. The changeschange in fair values each period arewas recorded in interest expense. The marked-to-marketmark-to-market adjustment fluctuatesfluctuated each period as it iswas dependent on market conditions, including future interest rates, implied volatilities and credit spreads.



(6)(5)

The significant differences between the line items under Canadian GAAP and those as determined under U.S. GAAP arise primarily from:



•

For 2005: interest on convertible debt classified as a long-term liability rather than as a bifurcated instrument, reversal of deferred taxes on convertible debt, loss on repurchase of convertible debt and the adoption of fair-value accounting for stock-based compensation for Canadian GAAP only;



•

For 2006: the transition adjustment resulting from adopting the fair-value accounting for stock-based compensation for U.S. GAAP in 2006;



•

For 2007: the transition adjustment resulting from adopting the standards on financial instruments, hedges and comprehensive income for Canadian GAAP in 2007;



•

For 2008: reversal of gain on foreign exchange contract, the timing of recording certain tax uncertainties and the adjustments relating to the adoption of financial instruments, hedges and comprehensive income for Canadian GAAP; and



•

For 2009: adjustments relating to financial instruments and hedging, and the timing of recording certain tax uncertainties.uncertainties; and



•

For 2010: adjustments relating to financial instruments and hedging, and the treatment of acquisition-related costs.

Refer to note 20 to the Consolidated Financial Statements in Item 18.

(7)(6)

Calculated as current assets less current liabilities.



(8)(7)

Long-term debt includes capital lease obligations.




B.    Capitalization and Indebtedness

        Not applicable.

C.    Reasons for the Offer and Use of Proceeds

        Not applicable.

D.    Risk Factors

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

We are in an industry comprised of numerous competitors and aggressive pricing dynamics.

        We are in a highly competitive industry. We compete on a global basis to provide electronics manufacturing services andinnovative supply chain solutions to original equipment manufacturers (OEMs) in the consumer, communications, enterprise computing, industrial, aerospace and defense, healthcare and green technology markets. Our competitors include major domestic and foreign companies such as Benchmark Electronics, Inc., Flextronics International Ltd., Hon Hai Precision Industry Co., Ltd., Jabil Circuit, Inc., Plexus Corp., and Sanmina-SCI Corporation, as well as smaller EMS companies that often have a regional, product, service or industry specificindustry-specific focus. In addition, original design manufacturers (ODMs), companies that provide internally designed products and manufacturing services to OEMs, continue to increase their share of outsourced manufacturing services across several markets and product groups, including personal computer motherboards, servers, notebook and desktop computers, and smartphones and cell phones. While we have not historically participated in all of these segments,markets, and we have not, to date, encountered significant direct competition from ODMs in the end markets in which we participate, we anticipate competition with ODMs will increase if our business in these markets grows, particularly in smartphones, or if ODMs expand into our primary end markets. We also face indirect competition from the manufacturing operations of our current and prospective customers, as these companies could choose to manufacture products internally rather than to outsource to EMS providers, particularly where internal excess capacity exists.

        The competitive environment for our industry is very intense and aggressive pricing is a common business dynamic. Some of our competitors have greater scale, and a greater production presence in lower-cost geographies, as well as a broader service offering than we have. While we have increased theour capacity we have in lower-cost regions over the past several years, lower-costto reduce our costs, these regions may not provide the same operational benefits that they have in the past asdue to rising costs in these regions have also experienced excess capacity. Asand a result, our industry is continually responding tomore aggressive pricing pressure and other competitive pressures.environment. Additionally, our current or potential competitors may also increase or shift their presence in new lower-cost regions to try to offset the continuous competitive pressure, increasing labor costs, or 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. Some of our competitors also have capabilities to manufacture components, such as metal or plastic enclosures, semi-conductors and cabling, that they use in the products they assemble. This expanded capability may provide them with a competitive advantage, higher cost savings and may lead to more aggressive pricing for electronics manufacturing services. Competition has caused and will continue to cause pricing pressures, increased working capital requirements, reduced profit or loss of market share (from both program and customer disengagements), any of which could materially and adversely affect us. The weak global economic environment will also increase the competitive environment in all these areas which could impact our profitability. In addition, the North American and Asian EMS industries have excess manufacturing capacity which may trigger EMS providers to expand into new and each other's end markets. These factors have exerted and will continue to exert additional pressures on pricing for components and services, thereby increasing the competitive pressures in the EMS industry. We may not be able to compete successfully against our current and future competitors, and the competitive pressures we face may have a material adverse effect on us.

We are dependent on a limited number of customers and end markets, primarily within the consumer, communications and enterprise computing markets, for a substantial portion of our revenue.

        A decline in revenue from these customers or end markets or the loss of a large customer could have a material adverse affect on our financial condition and operating results. During 2010, one customer from our consumer end market individually represented more than 10% of our total revenue, and our top 10 customers represented 72% of our total revenue. During 2009, one customer from our consumer end market individually represented more than 10% of our total revenue, and our top 10 customers represented 71% of total revenue. During 2008, we had no individual customer that represented more than 10%







of our total revenue, and our top 10 customers represented 63% of total revenue. Our largest customer, Research in Motion or RIM,Limited (RIM), represented 17%20% of total revenue in 2009. Our recent success in the smartphone market, driven primarily by new program wins from RIM, has increased our customer concentration as a percentage of total revenue.2010 (17% — 2009).

        We expect to continue to depend upon a relatively small number of customers for a significant percentage of our revenue. To reduce this reliance, we have been targeting new customers and new services in our traditional segments,markets, as well as expanding in new markets such as industrial, aerospace and defense, healthcare and green technology markets.technology. We may also pursue acquisition opportunities to further diversify our revenue or customer base, although there can be no assurance that any acquisition will increase revenue or reduce our customer concentration. Acquisitions are also subject to integration risk and volumes and margins could be lower than we anticipated. In 2010, we acquired Invec Solutions Limited (Invec) to enhance our after-market services offering and Allied Panels Entwicklungs-und Produktions GmbH (Allied Panels) to enhance our healthcare offering. As we pursue further opportunities in new markets, we may encounter challenges as our knowledge or experience may be limited in these new markets or technologies.

        Although we generally enter into master supply agreements with our customers, the level of business to be transacted under those agreements is not guaranteed. Instead, we bid on a project by projectprogram-by-program basis and typically have supply contracts orreceive customer purchase orders in place for a specific project.quantities and timing of products. We are dependent on customers to fulfill the terms associated with these orders and/or contracts.

        In addition, some of our customers routinely reduce or delay the volume of manufacturing services ordered from us. There is no assurance that present or future large customers will not terminate their manufacturing or service arrangements with us or significantly change, reduce or delay the volume of manufacturing services they order from us, any of which would adversely affect our operating results. Customers may also shift business to a competitor or bring programs in-house to improve their own utilization or to adjust the concentration of their supplier base. Significant reductions in, or the loss of, revenue from any of our large customers could have a material adverse effect on us. Additionally,We cannot assure the timely replacement of delayed, cancelled or reduced orders with new business. In addition, the ramping of new program wins from new or existing customersprograms can take from several months to more than a year before production starts. During this start-up period, these programs may experience losses or may not achieve the expected financial performance due to start-up inefficiencies. These programs are also subject to significant change or outright cancellation, in contrastcompared to the initial expectations at the time the new business was awarded, due to changes in end-market demand or changes in productthe viability of our customers' products in the marketplace.

We are dependent on customers who operate in highly competitive markets and the inability of our customers to succeed in their markets can adversely impact our business, operating results and financial condition.

        The end markets we serve can experience major swings in demand which, in turn, can significantly impact our operations. Our financial performance depends on our customers' ability to compete and succeed in their markets, which could be affected by global economic conditions. The majority of our customers' products are







characterized by rapid changes in technologies, increased standardization of technologies and shortening of product lifecycles. In many instances, our customers have experienced severe revenue erosion, pricing and margin pressures, and excess inventories during the past few years.

        We have recently increased the amountConsumer was our largest end market representing 25% of ourtotal revenue for 2010. In general, business in the consumer segment, particularlyend market and, in particular, smartphones, which is highly competitive and characterized by shorter product lifecycles, significant increases or decreases inhigher revenue volatility, and lower margins. In addition, program volumes can vary significantly based on strength in end-market demand, rapid changes in consumerdemand. End-user preferences for these products and devices can change rapidly and greater ease in shifting these productsprograms are easily shifted among EMS competitors. TheOur increased exposure to this segmentend market may makelead to greater volatility in our revenue more volatileand operating margin and could result in increased risk to our financial results.

We are operating in a weak andan uncertain global economic environment.

        AlthoughWhile recent demand trends have stabilized, the global economy has recovered somewhat from the recent economic and financial crisis, the economic environment remains uncertain. This uncertainty has resultednegatively impacted us in the past, resulting in lower volumesdemand for some of the products we manufacture and low end marketlimiting end-market visibility for our customers. This environment can pose significant risk to our business due to weakerby impacting demand for our customers' products, the financial condition of our customers, as well as the level of customer consolidation or customer financial stress or bankruptcy.consolidations.

        The globalAn economic conditions and creditdownturn or deterioration in the economic environment may well accelerate or exacerbate the effect of the various risk factors described in this Annual Report, as well as result in other unforeseen events that will affect our business and financial condition.







We may encounter difficulties expanding and/or restructuring our operations which could adversely affect our operating results.

        As we expand our business, enter into new market segmentsmarkets and products, invest more capital in research and development, acquire new businesses or capabilities, transfer our business from one region to another, or restructure our operations, we may encounter difficulties that result in higher than expected costs associated with such activities and customer dissatisfaction with our performance. Potential difficulties related to our growth and/or operational restructuringoperations could include:

•

lack ofour ability to manage growth effectively, including having trained personnel to manage the operations, new customers and customer contracts appropriately;new products;



•

maintaining existing customer, supplier, employee and other favorable business relationships during a periodperiods of transition;



•

effective training of staff to manage new customers and products;



•

unanticipated disruptions in our operations which may impact our ability to deliver to the customer on time, to produce quality products and to ensure overall customer satisfaction;



•

losing programs and customers that reduce their business risk by re-sourcing or dual-multi-sourcing their business with us due to unforeseen disruptions in our operations; and



•

market share shifts associated withour ability to respond rapidly to changes in customer consolidationdemand or supplier consolidation.to program or customer losses.

        There is no guarantee that we will benefit from, or be able to grow our business as a result of the increased investments we are making in our research and development spending. In addition, as we pursue opportunities in new markets or technologies, we may encounter challenges as our knowledge or experience may be limited. Any of these factors could prevent us from realizing the anticipated benefits of growth in new markets, or the benefits we expected to realize from our restructuring actions andwhich could adversely affect our business and operating results.

We may encounter difficulties completing or integrating our acquisitions which could adversely affect our operating results.

        We expect to expand our presence in new end markets or expand our capabilities, some of which may occur through acquisitions. These transactions may involve acquisitions of entire companies and/or acquisitions of selected assets from OEMs. Potential difficulties related to our acquisitions include:

•

integrating acquired operations, systems and businesses;



•

maintaining customer, supplier, employee or other favorable business relationships of acquired operations and restructuring or terminating unfavorable relationships;



•

addressing unforeseen liabilities of acquired businesses;



•

making acquisitions in new end markets or in technologies where our knowledge or experience is limited;



•

losing customers who want to transfer their business because of the change in ownership;



•

losing key employees of acquired operations; and



•

not achieving anticipated business volumes.

        Any of these factors could prevent us from realizing the anticipated benefits of an acquisition, including additional revenue, operational synergies and economies of scale. Our failure to realize the anticipated benefits of acquisitions could adversely affect our business and operating results. Previous acquisitions have resulted in the recording of a significant amount of goodwill and intangible assets at the time of acquisition. Our failure to support the carrying value of goodwill and intangible assets in periods subsequent to the acquisitions could require write-downs that adversely affect our operating results. All goodwill from previous acquisitions has been written off.

Inherent difficulties in managing capacity utilization and unanticipated changes in customer orders place strains on our planning and supply chain execution and may affect our operating results.

        Our customers are dependent on EMS providers for new product introductions and rapid response times to meet changes in volume requirements. Most of our customers typically do not commit to firm production schedules for more than 30 days to 90 days in advance and we often experience volatility in customer orders.







Additionally, a significant portion of our revenue can occur in the last month of the quarter and could be subject to change or cancellation that will affect our quarter-to-quarter results. Accordingly, we cannot always forecast the level of customer orders with certainty. This can make it difficult to order appropriate levels of materials and to schedule production and maximize utilization of our manufacturing capacity.




        In addition, customers may cancel their orders, change production quantities or delay production for a number of reasons. When customers change production volumes or request different products to be manufactured than what they originally forecasted to us, the unavailability of components and materials for such changes could also impact our revenue and working capital performance. Furthermore, in order to guarantee continuity of supply for many of our customers, we are required to manufacture and hold a specified amount of finished goods in our warehouses. The uncertainty of our customers' end markets, intense competition in our customers' industries and general order volume volatility have 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.

        Changes or delays in customer orders could result in higher than expected inventory levels for us. In certain circumstances, we may be required to return the inventory to our suppliers, re-sell the inventory or continue to hold the inventory, any of which may result in our taking additional reserves for the inventory should it become excess or obsolete. Order cancellations and delays could also lower our asset utilization, resulting in higher levels of unproductive assets and lower margins. In some cases, changes in circumstances for a customer could also negatively impact the collectability of receivables or carrying value of our inventory for that customer. On other occasions, customers have required rapid and sudden increases in production, which have placed an excessive burden on our manufacturing capacity. Rapid changes in product ramps and/or the weakening financial condition or deterioration of any single customer's financial condition could prevent us from collecting receivables or realizing the value of inventory on hand. Any of these factors or a combination of these factors could have a material adverse effect on our results of operations.

Competitors with component manufacturing capabilities may have greater opportunities than we do to win additional business from some of our customers. This capability may have the potential to provide a competitor with additional capabilities or cost saving opportunities.

        We procure all of our components from third-party suppliers. In addition to traditional EMS services, some of our competitors also manufacture some of the components used in the products they assemble. This can include metal or plastic enclosures, connectors, semiconductors, cabling and other components used in the manufacturing of electronics. Those capabilities may provide additional incentives for some customers to do business with those EMS or ODM companies, as there may be additional opportunity to reduce the total costs of their products by using more components and services from one company. If our customers transfer their business to a competitor, we may experience reduced revenue and lower utilization rates.

Our customers and competitors are subject to mergers and acquisitions, and similar transactions which can adversely affect our business relationships or the volume of business we conduct with our customers.

        Future mergers and acquisitions could result in a decrease in demand from our customers or a loss of business to our competitors as customers rationalize their business and consolidate their suppliers. Mergers or consolidation among our competitors could increase their competitive advantage over us, which may also result in a loss of business if customers shift their production. In a weaker economic environment, there may be a higher risk of increased consolidation among our customers or competitors.operating results.

We are subject to the risk of increased income taxes whichand our ability to successfully defend tax audits or meet the conditions of tax incentives could adversely affect our financial condition and operating results.

        We conduct business operations in a number of countries, including countries where tax incentives have been extended to encourage foreign investment or where income tax rates are low. Our taxes could increase if certain tax incentives we benefit from are retracted. A retraction could occur if we fail to satisfy the conditions on which these tax incentives are based, if they are not renewed upon expiration, or tax rates applicable to us in such jurisdictions are otherwise increased. We believe we will comply with the conditions of the tax incentives; however, changes in our outlook in any particular country could impact our ability to meet the conditions.

        We develop our tax positionfiling positions based upon the anticipated nature and structure of our business and the tax laws, administrative practices and judicial decisions nowcurrently in effect in the jurisdictions in which we have assets or conduct business, all of which are subject to change or differing interpretations, possibly with retroactive effect.




We are subject to tax audits and reviews of historical information by local tax authorities of historical information which could result in additional tax expense in future periods relating to prior results. Any such increase in our income tax expense and related interest and penalties could have a significant impact on our future earnings and future cash flows.

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

        Reviews by tax authorities generally focus on, but are not limited to, the validity of our inter-company transactions, including financing and transfer pricing policies which generally involve subjective areas of taxation and a significant degree of judgment. If any of these tax authorities are successful with their challenges, our income tax expense may be adversely affected and we could also be subject to interest and penalty charges. In connection withWe currently have ongoing tax audits in Canada,where the tax authorities have taken the position that income reported by one of our Canadian subsidiaries from 2001 to 2003for certain years should have been materially higher as a result of certain inter-company transactions. In connection with a tax audit in Brazil,The successful pursuit of the assertions made by tax authorities have taken the position that income reported byrelated to our Brazilian subsidiarytax audits could result in 2004 should have been materially higher as a resultour owing significant amounts of certain inter-company transactions. We believe that we have substantial defenses to the asserted positionstax, interest and have adequately accrued for any probable potential adverse tax impact. However, therepossibly penalties. There can be no assurance as to the final resolution of these claims and any resulting proceedings, and if these claims and any ensuing proceedings are determined adversely against us, the amounts we may be required to pay could be material. The successful pursuit of these assertions by tax authorities could result in those subsidiaries owing significant amounts of tax, interest and possibly penalties.

        In addition, we have recognized, and willexpect to continue to recognize the future benefit of certain Brazilian tax losses on the basis that these tax losses can and will be fully utilized in the fiscal period ending on the date of dissolution of our Brazilian subsidiary. We regularly reviewWhile our ability to do so is not certain, we believe that our interpretation of applicable Brazilian lawslaw will be sustained upon full examination by the Brazilian tax authorities and, assessif necessary, upon consideration by the likelihood of the realization of the future benefit of theBrazilian judicial courts. Our position is supported by our Brazilian legal tax losses.advisors. A change to the benefit realizable on these Brazilian losses could result in a substantial increase to our net future tax liabilities.







Our results can be affected by limited availability of components.components and materials.

        A significant portion of our costs is for the purchase of electronic components. During this time of global economic uncertainty, significant restructuring has occurred in the supply base to adjust to the lower volumes. As a result, an improved demand environment could exacerbate material shortages and impact our ability to meet our customers' demand requirements. All of the products we manufacture or assemble require one or more components that we order from component suppliers. In many cases, there may be only one supplier of a particular component. Supply shortages for a particular component can delay production and thus delayas well as revenue relating to all products using that component, and can result in our carrying higher levels of inventory and extended lead times, or they can cause price increases in the products and services we provide. In the past, we have secured sufficient allocations of constrained components so that revenue has not been materially impacted. At various times in our industry's history, there have been industry-wide shortages of electronic components. To date, we have not been materially impacted by these shortages. Future shortages, or fluctuations in the cost of components, may have a material adverse effect on our business or cause our operating results to fluctuate from period to period.period-to-period. Changes in forecasted volumes or in the products required by our customers can affect our ability to attain components which could impact our results. Additionally, quality or reliability issues at any of our component or materials providers, or financial difficulties that affect their production and ability to supply us with components, could halt or delay production of a customer's product which could adversely impact our operating results.

Rising oil and other commodity prices may negatively impact our operating results, due to higher production and transportation costs.

        We rely on various energy sources in our production and transportation activities. Price levels for multiple commodities, including oil, remain extremely uncertain and have been increasing in recent months. Increased energy prices could result in higher raw material costs and transportation costs. Any increase in our costs that we are unable to recover in our pricing to our customers could adversely impact our operating results.

We face financial risks due to foreign currency volatility.

        Global currency markets continue to be volatile. Although we conduct the majority of our business in U.S. dollars, our financial results are affected by the valuation of foreign currencies relative to the U.S. dollar. Our significant non-U.S. currency exposures include the Canadian dollar, British pound sterling, Chinese renminbi, Thai baht, Malaysian ringgit, Mexican peso, Euro, Singapore dollar, and the Romanian lei. We enter into forward exchange contracts to hedge against our cash flows and significant balance sheet exposures in many of these foreign currencies. Our contracts generally extend for periods ranging from one month to 15 months. Our hedging program is designed to reduce the short to medium-term variability of our foreign currency costs and exposures, and may not mitigate the full impact of currency fluctuations, which could adversely impact our operating results.

Our results can be affected by rising labor costs.

        There is some uncertainty with respect to rising labor costs, in particular within the lower-cost regions in which we operate. Any increase in labor costs that we are unable to recover in our pricing to our customers could adversely impact our operating results. To date, we have not been materially impacted by these rising labor costs.

Our customers may be adversely affected by rapid technological changes which may have an adverse impact on their success in their markets and on our business.

        Many of 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, fail to gain widespread commercial acceptance or are cancelled, our business could be materially adversely affected. In addition, an accelerating decline in end-market demand for customer-specific proprietary systems in favor of open systems with standardized technologies could have a material adverse impact on our business. The highly competitive nature of our customers' products could also drive consolidation among OEMs, which could result in product line consolidation that could impact our revenue or customer relationships.







Our operating results in certain end markets are subject to seasonality and can be unpredictable.

        We have historically experienced some level of seasonality in our quarterly revenue patterns for our enterprise computing and communications infrastructure products. In contrast, our current consumer business is relatively flat throughout the year. As our revenue from quarter-to-quarter is dependent on the level of demand and mix in each of our end markets, it is difficult for us to predict the extent and impact of seasonality on our business.

We are seeking to rapidly expand our services capabilities.

        We believe OEM customers continue to look to the EMS industry to provide additional supply chain services and capabilities. While we currently provide some of these services, such as repair, design and fulfillment, to a few of our customers, we are focused on significantly increasing these capabilities in the near term. We may pursue this growth through internal development or through acquisitions. Our efforts to expand our services capabilities may not be successful. The failure to increase these services and capabilities could impact our existing business and future business wins.

Any failure to successfully manage our international operations would have a material adverse effect on our financial condition and operating results.

        We have facilities in numerous countries, including Austria, China, the Czech Republic, Ireland, Japan, Malaysia, Mexico, Romania, Scotland, Singapore, Spain and Thailand. During 2009,2010, approximately two-thirds of our revenue was produced from locations outside of North America. We also purchase materialthe majority of components and materials 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 and penetration with global OEMs and selective markets, in both higher-cost and lower-cost regions.suppliers.

        International operations are subject to inherent risks which may adversely affect us, including:

•

labor unrest and differences in regulations and statutes governing employee relations;



•

changes in regulatory requirements;



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inflation and rising costs;



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difficulty in staffing and managing foreign sales and support operations;



•

ability to build infrastructure or new facilities on schedule to support operations;



•

changes in local tax rates and other potentiallyor adverse tax consequences, including the cost of repatriation of earnings;



•

burdens of complyingcompliance with a wide variety of foreign laws, including changing import and export regulations, which could erode our profit margins or restrict exports;regulations;



•

adverse changes in trade policies between countries in which we maintain operations;



•

economic and political instability;



•

potential restrictions on the transfer of funds;



•

employee contracts that restrict our flexibility in responding to business downturns; and



•

foreign exchange risks.

        Each of the regions in which we operate has a history of promoting foreign investment but could experience economic and political turmoil that could adversely affect us.




We have had significant restructuring charges and losses for several years and may experience restructuring charges and losses in future periods.

        We have a history of recording losses resulting primarily from restructuring charges and the write-down of goodwill and long-lived assets, or the write-down of accounts receivable for customers in bankruptcy.assets. These amounts have varied from period to period.period-to-period. We have undertaken numerous initiatives to restructure and reduce our capacity and cost structures in response to changes in the EMS industry and end-market demand, with the intention of improving utilization and realizing cost savings in the future. See note 10 to the Consolidated Financial Statements in Item 18. These restructuring actions have had a negative impact on our financial and operational results, including incurring higher operating expenses during periods of transition. In certain situations, product transfers have resulted in our inability to retain existing business or grow revenue due to execution problems resulting from significant headcount reductions, plant closures and product transfers. During 2010, we recorded restructuring charges of $55.3 million related to previously announced restructuring plans. At December 31, 2010, we had accrued $15.3 million in employee







termination costs which remain unpaid at year end. We will continueexpect to pay the majority of such costs during the first half of 2011. We evaluate our operations from time-to-time and may propose additional restructuring actions in the future. Any failure to successfully execute or realize the expected benefits from these initiatives, including any delay in effectingimplementing these initiatives, can have a material adverse impact on our operating results. Furthermore, we may not be profitable in future periods.

Restrictions onWe may encounter difficulties completing or integrating our ability to restructure quickly enough can delay the timing andacquisitions which could adversely affect the benefits we expect from our restructuring efforts.

        We have operations in multiple regions around the world. As a result, we are subject to different regulatory requirements and labor laws governing how quickly we are able to reduce manufacturing capacity and terminate related employees. These requirements are particularly stringent in Europe. Restrictions on our ability to close under-utilized facilities have resulted in higher expenses associated with carrying excess capacity and infrastructure while conducting restructuring activities. While it has typically been easier to restructure our operations in certain lower-cost regions, the current global economic conditions may change how governments in all regions regulate restructuring as the weaker demand environment impacts local economies. The speed of our restructuring can also be impeded by delays from our customers related to the timing of their product transfers, which can prevent us from transferring products to our other facilities in a timely and cost-effective manner. Since the restructuring of our plants requires some of our customers to move their production from one of our facilities to another, customers have, and may in the future, use this opportunity to shift their production to competitors' facilities.

The complexity of moving our manufacturing base to lower-cost regions could have a material adverse effect on our financial condition and operating results.

        DueWe expect to expand our presence in new end markets or expand our capabilities, some of which may occur through acquisitions. These transactions may involve acquisitions of entire companies and/or acquisitions of selected assets from OEMs. Potential difficulties related to our acquisitions include:

•

integrating acquired operations, systems and businesses;



•

retaining customer, supplier, employee or other business relationships of acquired operations;



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addressing unforeseen liabilities of acquired businesses;



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limited experience with new technologies; and



•

not achieving anticipated business volumes.

        Any of these factors could prevent us from realizing the highly competitive natureanticipated benefits of an acquisition, including additional revenue, operational synergies and economies of scale. Our failure to realize the electronics industry,anticipated benefits of acquisitions could adversely affect our customers strive for lower-cost solutions from their EMS providers. Over time, this hasbusiness and operating results. Previous acquisitions have resulted in the movementrecording of a significant amount of goodwill and intangible assets at the time of acquisition. Our failure to support the carrying value of goodwill and intangible assets in periods subsequent to the acquisitions could require write-downs that adversely affect our operating results.

The efficiency of our operations could be adversely affected by disruptions to our Information Technology (IT) services.

        We rely in part on various IT systems to manage our operations and to provide analytical information to management. These systems are vulnerable to, among other things, damage and interruption from power loss or natural disasters, computer system and network failures, loss of telecommunication services, physical and electronic loss of data, security breaches and computer viruses. Any inefficiencies or production down-times resulting from higher-cost regions such as North America and Western Europe to lower-cost regions such as Asia, Latin America and Eastern Europe. This move has had, anddisruptions could continue to have a negative impact on currentour ability to meet customers' orders, resulting in a delay or decrease to our revenue and future results by increasing the risks associated with, among other things, transferring productiona reduction to new regions where skills or experience may be more limited than in higher-cost regions, incurring higherour operating expenses during the transition, incurring additional restructuring costs associated with the decrease in production levels in higher-cost geographies and the risks of operating in new foreign jurisdictions. In certain situations, product transfers have resulted in, and maymargins.

Consolidation in the future result in,electronics industry could adversely affect our inability to retainbusiness relationships or the volume of business we conduct with our existing business or grow future revenue due to execution problems resulting from significant headcount reductions, plant closures and product transfers.

We face financial risks due to foreign currency fluctuations.customers.

        The principal currency in which we conduct our operations is the U.S. dollar. However, some of our subsidiaries transact business in other currencies, such as the Canadian dollar, Thai baht, Malaysian ringgit, Mexican peso, Czech koruna, Singapore dollar, Japanese yen, Chinese renminbi, Romanian leiOur customers and the Euro. The global economic uncertainty has resulted in significant fluctuations of currency rates, particularly in 2008,competitors are subject to merger and may continue to affect profitability going forward. We often enter into hedging transactions to minimize our exposure to foreign currency risks. We may also enter into forward exchange contracts to hedge our balance sheet exposures. Our hedging activity is designed to reduce the variability of our foreign currency costsacquisition transactions. Future mergers and consists of contracts to purchase or sell foreign currencies at future dates. These contracts generally extend for periods ranging from one to 15 months. Our hedging transactions may not successfully minimize foreign currency risk, which could have a material adverse effect on our operating results.







Failureacquisitions of our customers to pay the amounts owed to uscould result in a timely manner may adversely affectdecrease in demand from our financial condition and operating results.

        We generally provide payment terms ranging from 30 to 60 days. Ascustomers or a result, we generate significant accounts receivable from salesloss of business to our competitors as customers historically representing 22% to 39% of current assets. Accounts receivable from sales to customers at December 31, 2009 were $828.1 million (December 31, 2008 — $1,074.0 million;rationalize their business and December 31, 2007 — $941.2 million). At December 31, 2009, one customer represented more than 10% of total accounts receivable (December 31, 2008 — two customers each represented more than 10% of total accounts receivable; and December 31, 2007 — no customer represented more than 10% of total accounts receivable). If any ofconsolidate their suppliers. Mergers or consolidation among our customers have insufficient liquidity, wecompetitors could encounter significant delays or defaults in payments owed to us by such customers, and we may extend our payment terms or restructureincrease their receivables owed tocompetitive advantage over us, which could have a significant adverse impact on our financial condition and operating results. Any deterioration in the financial condition of our customers will increase the risk of collecting receivables. The ongoing global economic uncertainty couldmay also impact our customers' ability to pay receivables or result in a loss of business if customers going into bankruptcy or reorganization proceedings which could also impact our ability to collect our receivables. We regularly review our accounts receivable valuations and make adjustments when necessary. Our allowance for doubtful accounts at December 31, 2009 was $7.5 million (December 31, 2008 — $13.7 million; and December 31, 2007 — $21.5 million), which represented 1% of the gross accounts receivable balance (December 31, 2008 — 1%; and December 31, 2007 — 2%).shift their production.

We may be required to make larger contributions to our defined benefit plans in the future, which may have an adverse impact on our liquidity and our operating results.

        We maintain multiple defined benefit plans, as well as supplemental pension plans. Some employees in Canada, Japan and the United Kingdom participate in our defined benefit pension plans. We also have defined contribution plans for our othercertain employees, primarily in Canada and the U.S.

        Our pension funding policy is to contribute amounts sufficient to meet minimum local statutory funding requirements that are based on actuarial calculations. Our obligations are based on certain assumptions relating to expected plan performance, including employee turnover and retirement rates, the performance of the financial markets and discount rates. If future trends differ from these assumptions, the amounts we are obligated to contribute to the pension plans may increase. If the financial markets result in returns lower than our assumptions, we may be required to make larger contributions in the future and our pension expense may also increase.be impacted.




The efficiency of our operations could be adversely affected by any delay in delivery from our transportation suppliers, including delays caused by work stoppages and natural disasters.

        We rely on a variety of common carriers for the transportation of materials and products and for their ability to route these materials and products through various international ports. A work stoppage, strike or shutdown of any important supplier's facility or operations, or at any major port or airport, could result in manufacturing and shipping delays or expediting charges, which could have a material adverse effect on our operating results. Increased political activism and local economic conditions could impact receipt of materials and product shipments. Natural disasters such as tsunamis and earthquakes, and the severe and dramatic change to historical weather patterns in the regions where our facilities or our suppliers' facilities are located, could have an adverse impact on our ability to deliver products to our customers. Such events could disrupt supply to us, and from us to our customers, and adversely affect our operating results.

Acts of terrorism and other political and economic developments could adversely affect our business.

        Increased international political instability, evidenced by the threat or occurrence of terrorist attacks, enhanced national security measures, conflicts in the Middle East and Asia, security issues at the U.S./Mexico border related to illegal immigration or criminal activities associated with illegal drugs activities, strained international relations arising from these conflicts and the related decline in consumer confidence may hinder our ability to do business. Any escalation in these events or similar future events may disrupt our operations or those of our customers and suppliers and could 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 could adversely affect our revenue and operating results. The impact of these events on the volatility of the U.S. and world financial markets could increase the volatility of the market price of our securities and may limit the capital resources available to us and our customers and suppliers.

If our products or services are subject to warranty claims, our business reputation may be damaged and we may incur significant costs.

        In certain of our sales contracts, and in some of our design and development activities, we provide warranties against defects or deficiencies in our products, services or designs. A successful claim for damages arising as a result of such defects or deficiencies, for which we are not insured or where the damages exceed our insurance coverage, or any material claim for which insurance coverage is denied or limited and for which indemnification is not available, could have a material adverse effect on our business, operating results and financial condition. As we expand our service offerings and pursue business in new end markets,







our warranty requirements will varyobligations may increase and we may not be less effectivesuccessful in pricing our products to appropriately capturecover the warranty costs.

We could face increased financial risk due to the potential non-performance by counterparties, including but not limited to financial institutions, customers and suppliers.

        The potential occurrence of default by a counterparty on its contractual obligations may result in a financial loss to us. For our financial markets activity, we mitigate the risk of financial loss from defaults by dealing with counterparties we believe are creditworthy.

        An interruption in supply from a raw materials supplier, especially for single-sourced components, could have a significant impact on our operations and on our customers, if we are unable to deliver finished products in a timely manner. We generally provide payment terms to our customers ranging from 15 days to 60 days. Our accounts receivable balance at December 31, 2010 was $945.1 million, with one customer representing more than 10% of the total accounts receivable. If any of our customers have insufficient liquidity, we could encounter significant delays or defaults in payments owed to us by such customers, and we may extend our payment terms, which could adversely impact our financial condition and operating results. A deterioration in our customers' financial condition could result in customers going into bankruptcy or reorganization proceedings. Our allowance for doubtful accounts balance at December 31, 2010 was $5.1 million, which represented less than 1%







of the gross accounts receivable balance. We will continue to closely monitor our customers' and suppliers' financial condition and creditworthiness.

We may be unable to keep pace with manufacturing technology changes.

        We continue to evaluate the advantages and feasibility of new manufacturing processes. Our future success will depend, in part, upon our ability to continually develop and market electronics manufacturing services that meet our customers' evolving needs. This could entail investing in new processes, capabilities or equipment to support new technologies used in our customers' current or future products, and to support their supply chain processes. Additionally, as we expand our service offerings and pursue business in new end markets where our experience is limited, we may be less effective in adapting to technological change. Our manufacturing and supply chain processes, test development efforts and design capabilities may not be successful.

        In addition, various industry-specific standards, qualifications and certifications are required to produce certain types of products for our customers. Failure to maintain those certifications could adversely affect our ability to maintain existing levels of business or win new business.

We may be unable to protect our intellectual property or the intellectual property of others.

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

        There is also a risk that infringement claims may be brought against us, our customers or our suppliers in the future. If an infringement claim is successfully asserted, we may be required to spend significant time and money to develop processes that do not infringe upon the rights of another 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. As we expand our service offerings and pursue business in new end markets, we may be less effective in anticipating the intellectual property risks related to new manufacturing, design and other services.

Due to inherent limitations, there can be no assurance that our system of disclosure and internal controls will be successful in preventing all errors or fraud in a timely manner.

        Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. All systems of internal control, no matter how well conceived and operated, contain inherent limitations. Accordingly, we cannot provide absolute assurance that all control issues, errors or instances of fraud, if any, within the company have been or will be detected. In addition, over time, certain aspects of a control system may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate, which we may not be able to address quickly enough to prevent all instances of error or fraud.

We may not be able to increase revenue if the trend of outsourcing by OEMs slows.

        Future growth in our revenue includes a dependence on new outsourcing opportunities in which we assume additional manufacturing and supply chain management responsibilities from OEMs. Our future growth will be limited to the extent that these opportunities are not available as a result of OEMs deciding to perform these functions internally or delaying their decision to outsource or our inability to win new contracts. The global economic slowdownenvironment has impacted, and may continue to impact, the trend of outsourcing as some customers have reversed, and other customers may reverse, their outsourcing decisions and shift production back to their own facilities to improve their factory utilization. Political pressures or negative sentiment by our customers' customers or local governments may impede the movement of production from one geography to another. These and other factors could adversely affect the rate of outsourcing generally, or adversely affect the rate of outsourcing to EMS providers, such as Celestica.







If we are unable to recruit or retain highly skilled personnel, our business could be adversely affected.

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







Compliance with environmentalgovernmental laws and obligations could be costly and impact our operations.

        We are subject to various federal, state/provincial, local and multi-national environmental laws and regulations. Our environmental management systems and practices have been designed to ensure compliance with these laws and regulations in a manner consistent with local practice. Maintaining compliance with and responding to increasingly stringent regulations require a significant investment of time and resources and may restrict our ability to modify or expand our facilities or to continue production. Our failure to comply with these laws and regulations could potentially result in fines and penalties and our operations could be suspended.

        More complex and stringent environmental legislation continues to be imposed, including laws that place increased responsibility and requirements on the "producers" of electronic equipment and, in turn, their providers and suppliers. Such laws may relate to product inputs (such as hazardous substances and energy consumption) and product use (such as energy efficiency and waste management/recycling). Noncompliance with these requirements could potentially result in substantial costs, including fines and penalties, as well as liability to our customers and consumers.

        Where compliance responsibility rests primarily with OEMs rather than with EMS companies, OEMs may turn to EMS companies for assistance in meeting their obligations. Our customers are becoming increasingly concerned about issues such as waste management (including recycling), climate change (including the reduction of carbon footprints) and product stewardship, and expect their suppliers to be environmental leaders. Although we strive to meet such customer expectations, such demands may extend beyond our regulatory obligations and significant investments of time and resources may be required to attract and retain customers.

        We have generally obtained environmental assessment reports, or reviewed recent assessment reports undertaken by others, for most of our manufacturing facilities at the time of acquisition or leasing. Such assessments may not reveal all environmental liabilities and current assessments were not available for all facilities. As well, some of our operations have involved hazardous substances that could cause contamination. Although we may investigate, remediate or monitor soil and groundwater contamination at certain of our owned sites, we may not be aware of or address all such conditions and we may incur significant costs to do such work in the future. In many jurisdictions in which we operate, environmental laws impose liability for the costs of removal, remediation or risk assessment of hazardous or toxic substances on an owner, occupier or operator of real estate, even if such person or company was unaware of or not responsible for the discharge or migration of such substances. In some instances where soil or groundwater contamination existed prior to our ownership or occupation, landlords or former owners may have retained some contractual responsibility or regulatory liability, but this may not provide sufficient protection for us to avoid liability. Third-party claims for damages or personal injury are also possible. Moreover, current remediation, mitigation and risk assessment measures may not be adequate to comply with future laws.

The efficiency        In the healthcare end market, we face substantial regulations, primarily from the U.S. Food and Drug Administration in the U.S., as well as other jurisdictions, relating to some of the healthcare products we manufacture. We are required to comply with the various statutes and regulations related to the design, development, testing, manufacturing and labeling of our operationshealthcare products in addition to reporting of certain information with respect to the safety of such products. If we are unable to comply with these regulations, we may be faced with fines, injunctions, product recalls, or suspension of production, among other penalties. Failure to comply with these regulations could materially affect our relationships with customers and our operating results.

        We provide design and manufacturing related services to our customers in the aerospace and defense end market. As part of these services, we are subject to substantial regulation from government agencies including







the Department of Defense and the U.S. Federal Aviation Administration in the U.S., as well as in other jurisdictions. Failure to comply with these regulations may result in fines, penalties, injunctions, and may prevent us from winning future contracts, any of which could materially affect our financial condition and operating results.

Compliance or the failure to comply with employment laws and regulations could be adversely affected by any disruptions fromcostly and impact our third-party IT providers.operating results.

        We are subject to a variety of domestic and foreign employment laws, including those related to workplace safety, discrimination, whistle-blowing, wages and severance payments. Such laws are subject to change and there can be no assurance that we will not be found to have outsourced certain IT systems support,violated any such laws in the future. Such violations could lead to the assessment of fines or damages against us by regulatory authorities or by employees, any of which includes database management, as well as application development and support for our production control and inventory management systems. If these third-party providers are unable to fulfill their obligations on a timely and reliable basis, we may experience disruptions to our operations. Any inefficiencies or production down times resulting from such disruptions could have a negative impact on our ability to meet customers' orders, resulting in a delay or decrease to our revenue andreduce our operating margins.results.

Our credit agreement contains restrictive covenants that may impair our ability to conduct our business.

        Our credit agreement contains 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 December 31, 2010, we had a $200.0 million revolving credit facility which was due to expire in April 2011. In January 2011, we renewed this facility on generally similar terms and conditions (including covenants and security for the facility) and increased the size of the facility to $400.0 million, with a maturity of January 2015. At February 22, 2010,2011, we were in compliance with all of these covenants. Based on the required financial ratios at December 31, 2009, we had full access to our $200 million credit facility.







We could face increased financial risk due to the potential non-performance by counterparties, including but not limited to financial institutions, customers and suppliers.

        The potential occurrence of default by a counterparty on its contractual obligations may result in a financial loss to us. For our financial markets activity, we mitigate the risk of financial loss from defaults by dealing with counterparties we believe are creditworthy. The global economic uncertainty has impacted, and we expect will continue to impact, the financial condition of some of our customers and suppliers. An interruption in supply from a raw materials supplier, especially for single-sourced components, could have a significant impact on our operations and on our customers, if we are unable to deliver finished products in a timely manner. We will continue to closely monitor our customers' and suppliers' financial condition and creditworthiness.

The interest of our controlling shareholder, Onex Corporation, that holds 71% of our voting interest, may conflict with the interest of the remaining holders of our subordinate voting shares.

        Onex Corporation, or Onex, owns, directly or indirectly, all of the outstanding multiple voting shares and less than 1% of the outstanding subordinate voting shares. The number of shares owned by Onex, together with those shares Onex has the right to vote, represents 69%71% of the voting interest in Celestica and less than 1% of the voting interest in our outstanding subordinate voting shares. Accordingly, Onex exercises a controlling influence over our business and affairs and has the power to determine all matters submitted to a vote of our shareholders where our shares vote together as a single class. Onex has the power to elect our directors and its approval is required for 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. 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 credit agreement, 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). Gerald W. Schwartz, the Chairman and Chief Executive Officer of Onex and one of our directors, owns multiple voting shares of Onex, carrying the right to elect a majority of the Onex board of directors. 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, see Item 7(A), "Major Shareholders." Onex has, from time to time,time-to-time, issued debentures exchangeable and redeemable under certain circumstances for our subordinate voting shares, entered into forward equity agreements with respect to subordinate voting shares, sold shares (after exchanging multiple voting shares for subordinate voting shares), or redeemed these debentures through the delivery of subordinate voting shares and could do so in the future. These sales could impact our share price, or have consequences on our outstanding debt and change our ownership structure.

We face securities class action and shareholder derivative lawsuits which could result in substantial costs, diversion of management's attention and resources and negative publicity.

        Celestica has been named as a defendant in a purported class action lawsuit in the United States which asserts claims for violations of federal securities laws on behalf of persons who acquired our securities between January 27, 2005 and January 30, 2007. Celestica has been named as a defendant in a similar purported class







action brought in Canada under Canadian law. Our former Chief Executive and Chief Financial Officers were also named as defendants in these lawsuits. In a consolidated amended U.S. complaint, the plaintiffs have added one of our directors and Onex as defendants. These lawsuits seek unspecified damages. All defendants have filed motions with the U.S. courtDistrict Court to dismiss the amended complaint. ThoseBy Memorandum Decision and Order dated October 14, 2010, the U.S. court granted the defendants' motions to dismiss the consolidated amended complaint in its entirety and did not grant plaintiffs' leave to replead. Plaintiffs have filed a notice of appeal to the United States Court of Appeals for the Second Circuit of the dismissal of its claims against us and our former Chief Executive and Chief Financial Officers (but are pending.not appealing the dismissal of its claims against one of our directors and Onex). Although we believe the allegations in these claimsthe claim and the Second Circuit appeal are without merit and we intend to defend these claimsagainst them vigorously, these lawsuits could result in substantial costs to us, divert management's attention and resources from our operations and negatively affect our public image and reputation.

Potential unenforceability of civil liabilities and judgments.

        We are incorporated under the laws of the Province of Ontario, Canada. A significant number 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.

Changes in accounting standards enacted by the standard-setting bodies may adversely affect our reported revenue,operating results, profitability and financial condition.

        Our consolidated financial statements, arefor 2010 and prior years, were prepared in accordance with Canadian generally accepted accounting principles (GAAP)GAAP and are reconciled to U.S. GAAP. The accounting standards are revised periodically and/or expanded upon by the standard-setting bodies. Accordingly, we are required to adopt new or revised accounting standards and to comply with revised interpretations issued from time to timetime-to-time by these authoritative bodies, which include the Canadian Accounting Standards Board, the Financial Accounting Standards Board and the U.S. Securities and Exchange Commission. TheCommission (SEC). In 2008, the Canadian Accounting Standards Board announced that it will adopt the International Financial Reporting StandardsIFRS for publicly accountable enterprises in Canada, effective 2011. In 2008, the SEC adopted rules to accept annual filings of financial statements prepared in accordance with IFRS without the annual reconciliation to U.S. GAAP. Our consolidated financial statements for the first quarter ending March 31, 2011 will be our first financial statements prepared under IFRS. We will also apply IFRS retroactively to our comparative data as of January 1, 2010. The adoption of theseIFRS will impact our operating results, profitability and financial condition. Refer to Item 5, "Operating and Financial Review and Prospects — Management's Discussion and Analysis of Financial Condition and Results of Operations," for the expected impact of IFRS on our financial statements. Future changes in accounting standards could also adversely affect our reported revenue,operating results, profitability or financial condition. Compliance with these changes could also increase our financial and accounting costs.

Shares eligible for public sale could adversely affect our share price.

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

        At February 22, 2010,2011, we had 210,992,933197,089,024 subordinate voting shares and 18,946,368 multiple voting shares outstanding. All of the subordinate voting shares are freely transferable without restriction or further registration under the U.S. Securities Act, except for shares held by our affiliates (as defined in the U.S. Securities Act). Shares held by our affiliates include all of the multiple voting shares and 1,451,3201,218,998 subordinate voting shares held by Onex. 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 of 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.




        In addition, as of February 22, 2010,2011, there were approximately 26,000,00024,000,000 subordinate voting shares reserved for issuance under our employee share purchase and option plans and for director compensation, including outstanding options to purchase approximately 10,700,0009,900,000 subordinate voting shares. Moreover, pursuant to our articles of incorporation, we may 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.

Acts of terrorism and other political and economic developments could adversely affect our business.Our stock price is volatile.

        Increased international political instability, evidenced byOur subordinate voting shares, and the threat or occurrenceshares of terrorist attacks, enhanced national security measures, conflictsour EMS competitors, have experienced price volatility, and such volatility may continue in the Middle Eastfuture. Stock markets generally experience significant price and Asia, security issues at the U.S./Mexico border related to illegal immigration or criminal activities associated with illegal drugs activities, strained international relations arisingvolume volatility from these conflicts and the related decline in consumer confidencetime-to-time, which may hinder our ability to do business. Any escalation in these events or similar future events may disrupt our operations or those of our customers and suppliers and could 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 could adversely affect our revenue and operating results. The impact of these events on the volatility of the U.S. and world financial markets could







increase the volatility of the market price of our securities and may limitsubordinate voting shares for reasons unrelated to our performance. In addition, the capital resources availableprice of our subordinate voting shares could fluctuate widely in response to us anda variety of factors, including changing conditions in the economy in general or in our customers and suppliers.industry in particular.

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 and commercial name is Celestica Inc. We are domiciled in the Province of Ontario, Canada and operate under the Business Corporations Act (Ontario). Our principal executive offices are located at 844 Don Mills Road, Toronto, Ontario, Canada M3C 1V7 and our telephone number is (416) 448-5800. Our website ishttp://www.celestica.com. Information on our website is not incorporated by reference in this Annual Report.

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

        Celestica offers a range of electronics manufacturing services andsupply chain solutions to OEMs across many industries. We operate a global manufacturing and supply chain network.

Recent Acquisitions

        Certain information concerning our acquisition activities, including property, plant and equipment expenditures, and financing activities, currently in progress and in the last three fiscal years, is set forth in notes 3, 4, 7, 8, 15 17 and 2217 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, currently in progress and in the last three fiscal years, is set forth in notenotes 4 and 10 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."

B.    Business Overview

        We deliver innovative supply chain solutions to OEMs in the consumer, communications, enterprise computing, industrial, aerospace and defense, healthcare and green technology sectors.markets. We believe our services and solutions will help our customers reduce their time to markettime-to-market and eliminate waste from their supply chains, resulting in lower product lifecycle costs, better financial returns and improved competitive advantage in their respective business environments.




        Our global operating network spans the Americas, Asia and Europe. In an effort to drive speed and flexibility for our customers, we conduct the majority of our business through full-service centers of excellence, strategically located around the world. Through our Ring Strategy, weWe strive to align a network of suppliers around each of ourthese centers of excellence in order to increase flexibility in our supply chain, deliver shorter overall product lead times and reduce inventory. We operate other sitesfacilities around the globe with specialized supply chain management and high-mix/low-volume manufacturing capabilities to meet the specific production and product lifecycle requirements of our customers.

        Through our centers of excellence and the deployment of our Total Cost of Ownership™ (TCOO) Strategy with our suppliers, we strive to provide our customers with the lowest total cost throughout the product lifecycle. This approach enables us to focus our capabilities on broad solutions that address the total cost of design, sourcing, production, delivery and after-market services for our customers' products, which can help drivedrives greater levels of efficiency and improved service levels throughout our customers' supply chain.chains.

        Our targeted end markets include consumer, communications, enterprise computing, industrial, aerospace and defense, healthcare and green technology. Although we supply products and services to over 100 OEMs, we depend on a relatively small number of customers for a significant portion of our revenue. In the aggregate, our




top 10 customers represented 71%72% of revenue in 20092010 and our largest customer represented 17%20% of revenue. In 2009, we segmented2010, our revenue by end marketsmarket was as follows: consumer (29%(25% of revenue); enterprise communications (21%(24% of revenue); telecommunications (15%(13% of revenue); servers (13%(14% of revenue); storage (12% of revenue); and industrial, aerospace and defense, and healthcare (10%(12% of revenue). The products we manufacture can be found in a wide variety of end products, including smartphones; networking, wireless and telecommunications equipment; storage devices; servers; aerospace and defense electronics, such as in-flight entertainment and guidance systems; healthcare products; audiovisual equipment, including set-top boxes and flat-panel televisions; printers and relatedboxes; printer supplies; peripherals; gaming products; and a range of industrial and green technology electronic equipment.equipment including solar panels and inverters.

        We believe our principal strengths include our advanced capabilities in the areas of technology and quality, our flexible service offerings, our financial strength and our market-specific supply chain management capabilities. We offer a wide range of advanced manufacturing technologies, test capabilities and processes to support our customers' needs. We believe our size, geographic reach and 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 ourhave a highly skilled workforce differentiates us from our competitors. We have an entrepreneurial, participative and team-based culture, with a focusfocused on continuous improvement, flexibility and customer service excellence.

        We believe we are well positioned to compete effectively in the EMS industry, given our financial strength and our position as one of the major EMS providers worldwide. Our priorities include to (i) growgrowing revenue in targeted end markets through both organic program wins and acquisitions; (ii) improveimproving financial results, including operating margins, return on invested capitalmargin and cash flow performance; (iii) developdeveloping and enhanceenhancing profitable and key relationships with leading OEMs across our strategic target market segments;markets, with a particular emphasis on growing our industrial, aerospace and defense, healthcare and green technology end markets; (iv) broadenbroadening the range of the services we offer to OEMs; and (v) expandgrowing our capabilities in services and technologies that diversify andcan expand our revenue base beyond our traditional areas of EMS manufacturing expertise. We believe that success in these areas will result in improved financial performance which will enhanceand enhanced shareholder value.




Electronics Manufacturing Services Industry

Overview

        The EMS industry is comprised of companies that offer a broad range of electronics manufacturing services to OEMs. Since the 1990s, OEMs have increased their reliance on these services to become more efficient and to enhance their competitive positions. Today, the leading EMS companies have global operating networks delivering worldwide supply chain management solutions. They offer end-to-end services for the entire product lifecycle, including design and engineering, manufacturing and systems integration, fulfillment and after-market services. By outsourcing the manufacturing and related services, OEMs are able to overcome their most pressing business challenges related to cost, asset utilization, quality, time-to-market and rapidly changing technologies.

        We believe the adoption of outsourcing by OEMs will continue across a number of industries, because it allows OEMs to:

        Reduce Operating Costs and Invested Capital.    OEMs are under significant pressure to reduce total product lifecycle costs, and property, plant and equipment expenditures. The manufacturing process of electronics products has become increasingly automated, which requires greater levels of investment in property, plant and equipment. EMS companies enable OEMs to gain access to a global network of manufacturing facilities with supply chain management expertise, advanced engineering capabilities, flexible capacity and economies of scale. By working with EMS companies, OEMs can reduce their overall product lifecycle and operating costs, working capital and property, plant and equipment investment requirements.

        Focus Resources on Core Competencies.    The EMS industry operates in a highly competitive environment characterized by rapid technological change and shortening product lifecycles. In this environment, many OEMs are prioritizing their resources on their core competencies of product development, sales, marketing and customer service, and outsourcing design, manufacturing, supply chain and other product support requirements to their EMS partners.




        Improve Time-to-Market.    Electronic products experience shorter lifecycles, requiring OEMs to continually reduce the time and cost of bringing 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, including capabilities relating to design services, prototyping and the rapid ramp-up of new products to high-volume production, all with the critical support of global supply chain management and manufacturing networks.

        Utilize EMS Companies' Procurement, Inventory Management and Logistics Expertise.    Successful manufacturing of electronic products requires significant resources to deal with the complexities in planning, procurement and inventory management, frequent design changes, shorter product lifecycles and product demand fluctuations. OEMs can address these complexities by outsourcing to EMS providers that (i) possess sophisticated IT systems and global supply chain management capabilities and (ii) can leverage significant component procurement advantages to lower product costs.

        Access Leading Engineering Capabilities and Technologies.    Electronic products and the electronics manufacturing technology needed to support them have become complex.are complex and require significant investment. As a result, OEMs increasingly rely on EMS companies to provide design, engineering support, manufacturing and technological expertise. Through their design and engineering services, and through the knowledge gained from repairing products, EMS companies can assist OEMs in the development of new product concepts, or the re-design of existing products, as well as assist with improvements in the 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 provide products and support services forto a global customer base. EMS companies with global infrastructure and support capabilities provide OEMs with efficient global manufacturing solutions and distribution capabilities.

        Access to Broadening Service Offerings.    In response to OEMs' continued desire to outsource activities that were traditionally handled internally, EMS providers are continually expanding their offerings to include







services such as design, fulfillment and after-market support, including repair and recycling services. This enables OEMs to benefit from outsourcing more of their cost of goods sold.

Celestica's Focus

        We are dedicated to building solid partnerships and delivering innovative supply chain solutions to our customers. To achieve this, we work closelycollaborate with our OEM customers to proactively identify and fulfill current requirements and anticipate future needs. We strive to exceed our customers' expectations by offering a broad range of services to lower costs, increase flexibility and predictability, improve quality and provide better service to their customers. We also look at ways to invest in our customers' future by continuing to deepen our knowledge of their businesses and to develop solutions to meet their needs. We constantly look to advance our technical capabilities to help our customers achieve a competitive advantage. By succeeding in the following areas, we believe we will maximize customer satisfaction, and improve financial performance which willand enhance shareholder value:

Improve Financial Results, Including Operating Margins Return on Invested Capital and Cash Flow PerformancePerformance..    We continue to focus on (i) improving utilization in regions or sites where volumes are below appropriate levels,managing the mix of business, service offerings and volume of new business to improve our overall operating margins, (ii) completing our restructuring programs to ensure we have the appropriate global manufacturing network and cost structures in place to serve our customers, (iii) leveraging our supply chain practices globally to lower material costs, minimize lead times and improve our planning cycle to better meet changes in customers' demand and improve asset utilization, (iv) maximizing asset utilization, which we believe when combined with margin enhancement measures will increase our return on invested capital(iii) improving operating efficiencies to reduce costs and (v)improve operating margins, and (iv) maximizing cash flow performance.

        Continue to Penetrate Strategic Target End Markets.    We target to establish a diverse customer base with OEM customers in several industries. We believe our legacy of expertise in technology, quality and supply chain management, in addition to our service offerings and centers of excellence, have positioned us as an attractive partner to companies across these markets. Our goal is to grow across our targeted end markets, with particular emphasis on industrial, aerospace and defense, healthcare, and green technology. In 2010, we completed the Allied Panels acquisition to enhance our healthcare offering. Our revenue by end market as a percentage of total revenue is as follows:

		2008			2009			2010
Consumer(i)			22%			28%			25%
Enterprise Communications(i)			26%			22%			24%
Telecommunications			15%			15%			13%
Servers			16%			13%			14%
Storage			10%			12%			12%
Industrial, Aerospace and Defense and Healthcare			11%			10%			12%

---

(i)

During the fourth quarter of 2010, we reclassified a customer program from our consumer end market to our enterprise communications end market. Comparative percentages have been recalculated to conform to the current period's presentation.

        Selectively Pursue Strategic Acquisitions.    We will selectively seek acquisition opportunities in order to (i) profitably grow our revenue, (ii) further develop strategic relationships with OEMs in our target markets and (iii) enhance the scope of our capabilities and service offerings.

        Expand Range of Service Offerings.    We continually look to expand the services we offer to OEMs. In recent years, we have expanded our service offerings to facilitate the manufacture of a broader spectrum of products for OEMs in a variety of new markets. We have also expanded our capabilities in prototyping, design, engineering solutions, systems assembly, logistics, fulfillment and after-market services. During 2010, we completed the acquisition of Invec to enhance our after-market services offering through its proprietary reverse logistics software.

        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. We believe our expertise in these areas enables us to meet the rigorous demands of our OEM customers, and allows us to produce a variety







of electronic products ranging from high-volume consumer electronics to highly complex technology infrastructure products. We believe our commitment to quality allows us to deliver consistently reliable products







to our customers. The systems and collaborative processes associated with our expertise in supply chain management have generally enabled us to rapidly adjust our operations to meet the lead time requirements of our customers, flexibly shift capacity in response to product demand fluctuations and quickly and effectively deliver products directly to end customers. We often collaborate with suppliers to influence component design for the benefit of our customers. Based onAs a result of the successes that we have had in these areas, we have been recognized with numerous customer and industry achievement awards.

        Develop and Enhance Profitable and Key Relationships with Leading OEMs.    We seek to build and sustain profitable, strategic and collaborative relationships with targeted industry leaders in sectors that can benefit from the delivery of our services and solutions. We strive to conduct ourselves as an extension of our customers' organizations which enables us to respond to their needs with speed, flexibility and predictability in delivering results. We have established and maintain strong manufacturing relationships with a diverse mix of leading OEMs across several market segments.of our targeted markets. We believe that our customer base will beis a strong potential source of growth for us as we seek to strengthen these relationships through the delivery of additional services.

        Expand Range of Service Offerings.    We continually look to expand the breadth and depth of the services we provide to OEMs in areas that can reduce their overall product lifecycle costs. In recent years, we have expanded our service offerings to facilitate the manufacture of a broader spectrum of products and to support the full product lines of leading OEMs in a variety of industry segments. During this period, we have also expanded additional capabilities in prototyping, design, engineering solutions, systems assembly, logistics, fulfillment and after-market services.

        Continue to Penetrate Strategic Target End Markets.    As a result of new or continued demand for outsourced electronics manufacturing services, we strive to establish a diverse customer base with OEM customers in several industries. We believe our legacy of expertise in technology, quality and supply chain management, in addition to our broad service offerings, have positioned us as an attractive partner to companies across these market segments. Our goal is to diversify across targeted markets, such as commercial aerospace and defense, healthcare, industrial and green technology, to reduce the risk associated with reliance on only a few sectors. Our revenue diversification is as follows:

		2007			2008			2009
Consumer			19%			23%			29%
Enterprise Communications			28%			25%			21%
Telecommunications			14%			15%			15%
Servers			19%			16%			13%
Storage			10%			10%			12%
Industrial, Aerospace and Defense and Healthcare			10%			11%			10%

        Selectively Pursue Strategic Acquisitions.    We will selectively seek acquisition opportunities in order to (i) grow our revenue, (ii) further develop strategic relationships with OEMs in our target markets and (iii) broaden and deepen the scope of our capabilities and service offerings.

Celestica's Business

OEM Supply Chain Services and Solutions

        We are a global provider of innovative supply chain solutions. We offer a full range of services including design, manufacturing, engineering, order fulfillment, logistics and after-market services. We capitalize on our global operating network, information technology and supply chain expertise using a collaborative process and a team of highly skilled, customer-focused employees. We believe that our ability to deliver a broad range of supply chain solutions to our customers provides them with a competitive time-to-market and cost advantage.

        Supply Chain Management.    We use enterprise resource planning and supply chain management systems to optimize materials management from suppliers through to our customers' customers. The effective management







of the supply chain is critical to the OEMs' success, as it directly impacts the time and cost required to deliver products to market and the capital requirements associated with carrying inventory. We believe that we have a differentiated supply chain offering compared to our competitors through

        Through the deployment of our TCOO Strategy and Ring Strategy.

        Throughwith our TCOO Strategy,suppliers, we strive to provide our customers with the true cost of producing, delivering and supporting their products so that we can exceed their expectations for time-to-market and quality and provide them with the lowest TCOO. Through our Ring Strategy, weWe also strive to align a network of suppliers around each of our centers of excellence so we canto increase the agility, flexibility and collaborative approach of our supply chain toand deliver the shortest overall lead times for any given product. We believe we have a differentiated supply chain offering.

        Design.    Our global design services and solutions architects are focused on opportunities that span the entire product lifecycle. Supported by a disciplined approach to program management, we strive to provide flexible design solutions and expertise to help customers optimize thetheir supply chain to reduce their overall product costs, improve time-to-market and introduce competitively differentiated products. A leader in design analysis, weWe also leverage our proprietary CoreSim Technology™ to minimize design spins,revisions, speed time to markettime-to-market and provide improved manufacturing yields for our customers. Through our collective experience with common technologies across multiple industries and product groups, we believe we can provide quality and cost-focused solutions for our customers' design needs.

        We continue to increase our resources in the area of research and development. Our teams collaborate with OEM product designers in the early stages of product development. Our design team uses advanced tools to enable new product ideas to progress from electrical and application-specific integrated circuit design, to simulation, physical layout and design for manufacturing. Collaborative links and databases between the customer and our design and manufacturing groups help to ensure that new designs are released rapidly, smoothly and cohesively into production.

        We strive to enhance our design services capabilities through strategic relationships with global engineering and research and development organizations, as well as other IT services and business process outsourcing firms. We believe that by combining our companies' strengths, we can create solutions to help our customers overcome design-related challenges. The skills and scalability that we can access enable us to better manage projects







throughout the life of the product, including software development and systems validation, as well as complete product sustainability.

        Other key initiatives aimed at enhancing our design services offering include developing and marketing solutions accelerator platforms for products such as blade servers and storage devices, wireless networking equipment and smart grid technologies.devices. We believe these customizable solution accelerators, or building blocks, will help OEMs reach their markets faster by reducing design cycles without compromising their intellectual property.

        Green Services™.    We have developed a suite of services to help our customers comply with environmental legislation, such as those relating to the removal of hazardous substances and waste management/recycling. Our services help our customers design, prototype, introduce, manufacture, test, ship, takeback, repair, refurbish, reuse, recycle and properly dispose of end-of-life (EOL) products in compliance with existing and evolving legislation in countries in which we operate.

        Prototyping.    Prototyping is a critical early-stage process in the development of new products. Our engineers collaborate with OEM engineers to build early-stage products at our new product introduction centers. These centers are strategically located to enable us to provide a quick response in the early stages of the product development lifecycle. Upon completion of these prototypes, our new product introduction centers provide a seamless entry into our larger manufacturing facilities.

        Systems Assembly and Test.    We use sophisticated technologies in the assembly and testing of our products. We continue to make investments in the development of new assembly and test process techniques to enhance product quality, reduce cost and improve delivery time to customers. We work independently and also collaborate with customers and suppliers to develop leading assembly and test technologies. Systems assembly and testing require sophisticated logistics capabilities to rapidly procure components, assemble products, perform complex testing and distribute products to customers around the world. Our full systems assembly services involve combining and testing a wide range of subassemblies and components before shipping to their final destination. Increasingly, OEMs require custom build-to-order system solutions with very short lead times







and we are focused on using our advanced supply chain management capabilities to respond to our customers' needs.

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

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

        Order Fulfillment and Logistics.Quality Management.    We leverage our global scale in manufacturing, supply chain management and fulfillment to provide fully integrated logistics solutions to our customers. Our logistics offerings include warehouse and distribution, freight management, logistics consulting services, product and materials visibility and reverse logistics. We ship worldwide to our customers or, in many cases, directly to our OEMs' customers.

        After Market Services.    We help our customers extend the value of their product through our after-market repair, returns and recycling services, individualized to meet each customer's requirements. These services include field failure analysis, product upgrades, repair and engineering change management. The knowledge gained from these services may also be used in future design activity to improve quality and reliability in next-generation products.

Quality Management

    We believe one of our strengths is our ability to consistently deliver high-quality services and products. We have an extensive quality management system that focuses on continual process improvement and achieving high levels of customer satisfaction. We employ a variety of advanced statistical engineering techniques and other tools to assist in improving product and service quality. All of our principal facilities are ISO certified to ISO 9001 and ISO 14001 (environmental) standards, as well as to other industry-specific certifications.

        In addition to these standards, we continue to deploy Lean and Six Sigma initiatives throughout our manufacturing network. Implementing Lean throughout the manufacturing process improves efficiency, shortens cycle times and reduces waste in areas such as inventory on hand, set up times, floor space and the number of people required for production. Six Sigma ensures continuous improvement by reducing process variation. We also apply the knowledge we gain in our after marketafter-market services to improve the quality and reliability







of next-generation products. Success in these areas helps our customers lower their costs, positioning them more competitively in their respective business environments.

        We believe that quality management is one of the key services directly linked to meeting and exceeding our customers' expectations, and we have a series of key performance indicators deployed across our operating network that allow our teams to focus on driving continuous improvement and meeting customers' expectations with respect to quality.

        Order Fulfillment and Logistics.    We are focused on leveraging our global scale in manufacturing, supply chain management and fulfillment to provide fully integrated and customized logistics solutions to our customers. Our logistics offerings include warehouse and distribution, freight management, logistics consulting services, product and materials visibility and reverse logistics. We ship worldwide to our customers or, in many cases, directly to our OEMs' customers.

        After-Market Services.    We help our customers extend the value of their products through our after-market repair, returns and recycling services, individualized to meet each customer's requirements. These services include field failure analysis, product upgrades, repair and engineering change management. The knowledge gained from these services may also be used in future design activity to improve quality and reliability in next-generation products. In 2010, we acquired Invec to enhance our after-market services offering through its proprietary reverse logistics software.

Geographies

        Approximately one-half of our revenue is produced in Asia and over one-third of our revenue is produced in North America. A listing of our principal manufacturing and non-manufacturing locations is included in Item 4, "Information on the Company — Description of Property." We believe we have a competitiveProperty, Plants and strategic global manufacturing network with approximately 80% of our employees located in lower-cost regions. We have deployed many of our significant technical capabilities to a broad number of our global sites in both high-cost and low-cost regions which we believe differentiates us from our competitors.




Equipment." Certain geographic information is set forth in note 17 to the Consolidated Financial Statements in Item 18.

Sales and Marketing

        We have adopted a marketing approach focused on creating profitable, strategic relationships with leading OEMs in targeted end markets. We have structured our business development teams by market segment,targeted end markets, with a focus on providingoffering complete manufacturing and supply chain solutions.solutions to leading OEMs. Our coordination of efforts with key global customers has been enhanced by the creation ofinclude our customer-focused teams, each headed by a group general manager who oversees the global relationship with these customers. These teams work with our solutions architects to develop specific approachessolutions that meet the unique needs of each customer's product or supply chain requirements. Our global network is comprised of customer-focused teams, including direct sales representatives, operational and project managers, account executives, and supply chain management teams, as well as senior executives.

Customers

        We supply products and services to approximately 100 OEM customers andcustomers. We target industry leading customers in strategic market segmentsmarkets focused on key technologies. Our customers include Alcatel Lucent,Alcatel-Lucent, Cisco Systems, Inc., EMC Corporation, Hewlett-Packard Company, Hitachi, Ltd., Honeywell Inc., IBM Corporation, Juniper Networks, Inc., NEC Corporation, Oracle Corporation, Polycom, Inc., Raytheon Research in MotionCompany and Sun Microsystems.RIM. We are focused on strengthening our relationships with these strategic customers through the delivery of new and expanding end-to-end solutions, such as design, engineering, order fulfillment, logistics and after-market services.

        During each of 2010 and 2009, our largest customer, Research in Motion,RIM, represented more than 10% of total revenue. During 2008, we had no customers that represented over 10% of total revenue. Our top 10 customers represented 71%72% and 63%71%, respectively, of total revenue for 20092010 and 2008.2009.

        We generally enter into contractualmaster supply agreements with our key customers that provide the framework for our overall relationship. Therelationship; although there is no guaranteed level of business. Instead, we bid on a program-by-program basis and receive customer purchase orders for specific quantities and timing of products. A majority of our customer arrangementsthese agreements also require the customer to purchase unused inventory that we have purchased to fulfill that customer's forecasted manufacturing demand.




Technology and Research and Development

        We use advanced technology in the design, assembly and testing of the products we manufacture. We continue to deploy more resources in our global research and development organization to expand our design capabilities. We believe that our processes and skills are among the most sophisticated in the industry. We believe that this provides us with advantages over many of our smaller competitors and our competitors building less complex products.

        Our customer-focused factories are highly flexible and are reconfigured as needed to meet customer-specific product requirements and fluctuations in volumes. We have extensive capabilities across a broad range of specialized assembly processes. We work with a variety of substrate types based on the products we build for our customers, from thin, flexible printed circuit boards to highly complex, dense multi-layer boards as well as a broad array of advanced component and attach technologies employed in our customers' products. Increasing demand for full-system assembly solutions continues to drive technical advancement in complex mechanical assembly and configuration.

        Our assembly capabilities are complemented by advanced test capabilities. The technologies we use include high-speed functional testing, optical, 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, advanced automated optical inspection, three-dimensional laser paste volumetric inspection and scanning electron microscopy, is among the most sophisticated in the EMS industry. We work directly with the leaders in the equipment industry to optimize their products and solutions or to jointly design a solution to better meet our needs and the needs of our customers. 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.development and technology building blocks that can be used by customers in the development of their products or to accelerate their products time-to-market. Our efforts in these building blocks are particularly focused in the server, storage and communications end markets. We work directly with our customers to understand their product roadmaps and to develop the technology solutions to optimally solve their future needs. We are proactive in developing manufacturing techniques that take advantage of the latest component, product and packaging designs. We work directly with







our customers to understand their product roadmapsdesigns and to develop the technology solutions required to optimally solution their future needs. We often workwe have worked with, and taketaken a leadership role in, industry groups that strive to advance the state of technology in the industry. As we continue to pursue deeper relationships with our customers, and participate in additional services and revenue opportunities with our customers, we will increase our spending in these development areas.

Supply Chain Management

        We have strong relationships with our commodity suppliers.        We share data electronically with our key suppliers and ensure speed of supply through strong relationships with our component suppliers and logistics partners and full-service distribution capabilities.partners. During 2009,2010, we procured and managed over $4.5$5.0 billion in materials and related services. We view the size and scale of our procurement activities, including our IT systems, as an important competitive advantage, as it enhances our ability to obtain better pricing, influence component packaging and designdesigns, and obtain a supply of components in constrained markets. We procure substantially all of our materials and components pursuant to individual purchase orders that are short-term in nature.

        We believe we have a differentiated supply chain offering compared to our competitors through our Total Costcompetitors. Through the deployment of Ownership™ Strategy and Ring Strategy. Through our TCOO Strategy with our suppliers, we strive to provide our customers with the true cost of producing, delivering and supporting their products so that we can exceed their expectations for time-to-market and quality and provide them with the lowest TCOO. Through our Ring Strategy, weWe also strive to align a network of suppliers around our centers of excellence to increase flexibility in our supply chain and deliver shorter overall product lead times.

        We utilize twoour enterprise systems, whichas well as specific supply chain IT tools, to provide comprehensive information on our logistics, financial and engineering support functions. These systems provide management with the data required to manage the logistical complexities of the business and are augmented by and integrated with other applications, such as shop floor controls, component and product database management and design tools.




        To minimize the risk associated with inventory, we primarily order materials and components only to the extent necessary to satisfy existing customer orders and forecasts covered by the applicable customer contract terms and conditions. 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 on-site stocking programs. Our initiatives in Lean and Six Sigma also focus on eliminating excess inventory throughout the supply chain. In providing electronics manufacturing services to our customers, we are largely protected from the risk of fluctuations in inventory costs, as these costs are generally passed through to customers.

        All of the products we manufacture or assemble require one or more components. In many cases, there may be only one supplier of a particular component. Some of these components could be rationed in response to supply shortages. We work with our suppliers and customers to 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 defer planned production in response to the availability of the critical components.

        Many of these suppliers are also involved with our Ring Strategy, whereby the supplier locates its operations in close proximity to our centers of excellence in order to reduce lead times and provide greater levels of flexibility to our customers.

Intellectual Property

        We hold licenses to various technologies which we acquired in connection with acquisitions. In addition, we believe that we have secured access to all required technology that is material to the current conduct of our business.

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




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

        We license some technology from third parties whichthat we use in providing electronics 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 technologies and terminate upon a material breach by us of the terms of such agreements.

Competition

        We compete on aThe EMS industry is highly competitive with multiple global basis to provide electronics manufacturing services and solutions to OEMsEMS providers competing for the same customers across various end markets. Our competitors include a large number of domestic and foreign companies, such as Benchmark Electronics, Inc., Flextronics International Ltd., Hon Hai Precision Industry Co., Ltd., Jabil Circuit, Inc., Plexus Corp., and Sanmina-SCI Corporation, as well as smaller EMS companies that often have a regional, product, service or industry specific focus. ODMs, companies that provide internally designed products and manufacturing services to OEMs, continue to increase their share of outsourced manufacturing services across several markets and product groups, including personal computer motherboards, servers, notebook and desktop computers, cell phones and smartphones. While we have not, to date, encountered significant direct competition from ODMs in our primarythe end markets in which we participate, such competition may increase if our business in these markets grows, particularly in smartphones, or if ODMs expand into our primary end markets.

        We may also face competition from current and prospective customers who evaluate our capabilities against the merits of manufacturing products internally. We compete with different companies depending on the type of service or geographic area. Some of our competitors may have greater manufacturing, procurement, research and development, and sales and marketing resources than we do. We believe our competitive advantage in our targeted markets is our track record in manufacturing technology, quality, responsiveness and providing cost-effective, value-added services. To remain competitive, we believe we must continue to provide




technologically advanced manufacturing services and solutions, maintain quality levels, offer flexible delivery schedules, deliver finished products on time and compete favorably on price. To enhance our competitiveness, we expect to expand our service offerings or capabilities beyond our traditional areas of EMS manufacturing expertise.

Human Resources

        As of December 31, 2009, we employed approximately 33,000 permanent and temporary (contract) employees worldwide. Some of our employees in the Czech Republic, Japan, Mexico, Singapore and Spain are represented by unions. Given the variable nature of our project flow and the quick response time required by our customers, it is critical that we are able to quickly ramp our production up or down to maximize efficiency. To achieve this, our approach has been to employ a skilled temporary labor force, as required.

        We believe that our employees are our greatest asset. Culturally, we are collaborative, team-oriented, values-driven and results-oriented, with a focus on customer service and quality at all levels. This culture is an important element of our strategy, as we need to be able to fully utilize the intellectual capital of our employees to be successful.

Environmental Matters

        We are subject to various federal, state/provincial, local and multi-national laws and regulations, including environmental measures relating to the release, use, storage, treatment, transportation, discharge, disposal and remediation of contaminants, hazardous substances and waste, and health and safety measures related to practices and procedures applicable to the construction and operation of our plants. We believe that we are currently in compliance in all material respects with applicable laws and have management systems in place to maintain compliance.




        Our past operations and historical operations of others may have resulted in soil and groundwater contamination on our sites. From time to timetime-to-time we investigate, remediate and monitor soil and groundwater contamination at certain of our operating sites. Generally, Phase I or similar environmental assessments (which involve general inspections without soil sampling or groundwater analysis) were obtained for most of our manufacturing facilities at the time of acquisition or leasing. Where contamination is suspected at sites being acquired, Phase II intrusive environmental assessments (including soil and/or groundwater testing) are usually performed. We expect to conduct Phase I or similar environmental assessments in respect of future property acquisitions and will doperform Phase II assessments where appropriate. ThesePast environmental assessments have not revealed any environmental liability that we believe will have a material adverse effect on our operating results business, prospects or financial condition, in part because of contractual retention of liability by landlords and former owners at certain sites.

        Environmental legislation also operates at the product level. Since 2004, we have developed our Green Services™, offering a suite of services that help our customers comply with environmental legislation, such as the European Union's Restriction of Hazardous Substances (RoHS) and Waste Electrical and Electronic Equipment directive (WEEE) laws and China's RoHS legislation.

Backlog

        Although we obtain firm purchase orders from our customers, OEM customers typically do not make firm orders forcommit to delivery of products more than 30 days 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 cancelled.

Seasonality

        Seasonality is reflected in the mix and complexity of the products we manufacture. With a significant exposure to consumer,manufacture from quarter-to-quarter. We have historically experienced some seasonality with our enterprise computing and communications infrastructure products, there will be a level of seasonality inproducts. This compares to our quarterly revenue patterns for many customers. Thecurrent consumer electronics business has revenue peaks that are different than those of our communications and enterprise computing market segments.which is relatively flat throughout the year. The pace of technological change, the frequency of OEMs transferring business among EMS competitors and the constantly changing dynamics of the global economy will also continue to impact us. As a result of these factors, our efforts to diversify our revenue base,the impact of new program wins, and limited visibility in technology end markets, it is difficult for us to predict the extent and impact of seasonality on our business.

Controlling Shareholder Interest

        Onex is our controlling shareholder and holds 71% of the voting interest in Celestica. Accordingly, Onex exercises influence over our business, including those matters submitted to a vote by shareholders. Onex also has the power to elect our board of directors, thereby influencing significant corporate transactions, including mergers, acquisitions, divestitures and financing arrangements. For further details, refer to footnote 3 in Item 7, "— Major Shareholders and Related Party Transactions — Major Shareholders."




C.    Organizational Structure

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

        Celestica Cayman Holdings 1 Limited, a Cayman Islands corporation;

        Celestica Cayman Holdings 9 Limited, a Cayman Islands corporation;

        Celestica Corporation,European Holdings S.À.R.L., a DelawareLuxembourg corporation;

        Celestica (Gibraltar) Limited, a Gibraltar corporation;

        Celestica Holdings Pte Ltd., a Singapore corporation;

        Celestica Hong Kong Limited, a Hong Kong corporation;

        Celestica International Inc.LLC (formerly Celestica Corporation), an Ontario corporation;a Delaware limited liability company;

        Celestica Liquidity Management Hungary Limited Liability Company, a Hungary corporation;

        Celestica (Luxembourg) S.ÀR.L..R.L., a Luxembourg corporation;

        Celestica (Thailand) Limited, a Thailand corporation;

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




Celestica (US Holdings) LLC (formerly Celestica (US Holdings) Inc.), a Delaware limited liability company;

        IMS International Manufacturing Services Limited, a Cayman Islands corporation;

        1282087 Ontario Inc., an Ontario corporation;

        1681714 Ontario Inc., an Ontario corporation; and

        1755630 Ontario Inc., an Ontario corporation.




D.    Description of Property, Plants and Equipment

        The following table summarizes our principal facilities as of February 22, 2010.2011. Our facilities are used to provide electronics manufacturing services and solutions, such as the manufacture of printed circuit boards, assembly and configuration of final systems, and other related manufacturing and customer support activities, including warehousing, distribution and fulfillment.

Major locations		Square Footage			Owned/Leased
		(in thousands)
Ontario(1)Canada			906888		Owned/LeasedOwned
California(1)			728288		Leased
Tennessee(1)Wisconsin			40412		Leased
Texas(1)			200		Leased
Mexico(1)			657697		Leased
Ireland(1)			133235		Leased
Spain			418100		Owned
Czech Republic(1)Austria			18554		Owned/Leased
Czech Republic			172		Owned
Romania			200		Owned
Scotland			58		Leased
China(1)			1,050		Owned/Leased
Malaysia(1)			878927		Owned/Leased
Thailand(1)			1,085		Owned/Leased
Singapore(1)			309287		Leased
Japan(1)			315295		Owned/Leased

---

(1)

This represents multiple locations.

        Our principal executive office is located at 844 Don Mills Road, Toronto, Ontario, Canada M3C 1V7. Our principal facilities are certified to ISO 9001 and ISO 14001 (environmental) standards.standards, as well as to other industry-specific certifications.

        Our land and facility leases expire between 20102011 and 2060. 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 been focused on increasing production in lower-cost geographies. We will continue to evaluate our operating network to ensure that it meets our customers' requirements. 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 4A.    Unresolved Staff Comments


        None.




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 should be read in conjunction with the Consolidated Financial Statements, which we prepared in accordance with Canadian GAAP. A reconciliation to U.S. GAAP is disclosed in note 20 to the Consolidated Financial Statements. All dollar amounts are expressed in U.S. dollars. The information in this discussion is provided as of February 19, 2010.22, 2011.

        Certain statements contained in the following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) constitute forward lookingforward-looking statements within the meaning of section 27A of the U.S. Securities Act, section 21E of the U.S. Exchange Act, and applicable Canadian securities legislation, including, without limitation,limitation: statements related to our future growth; trends in our industry; our financial or operational results, including our quarterly guidance, the impact of new program wins on our financial results, and anticipated expenses, benefits or payments; the redemption of our Senior Subordinated Notes and the expected benefits of such redemption; our financial or operational performance; our financial targets; and the effects of our conversion from Canadian GAAP to International Financial Reporting Standards.Standards (IFRS). Such forward lookingforward-looking statements are predictive in nature, and may be based on current expectations, forecasts or assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially from the forward lookingforward-looking statements themselves. Such forward lookingforward-looking statements may, without limitation, be preceded by, followed by, or include words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," or similar expressions, or may employ such future or conditional verbs as "may", "will","may," "will," "should" or "would" or may otherwise be indicated as forward lookingforward-looking statements by grammatical construction, phrasing or context. For those statements, we claim the protection of the safe harbor for forward lookingforward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995, and in any applicable Canadian securities legislation. Forward lookingForward-looking statements are not guarantees of future performance. You should understand that the following important factors could affect our future results and could cause those results to differ materially from those expressed in such forward lookingforward-looking statements: the effects of price competition and other business and competitive factors generally affecting the electronics manufacturing services (EMS)EMS industry, including changes in the trend for outsourcing; our dependence on a limited number of customers and end markets; variability of operating results among periods; the challenges of effectively managing our operations, during uncertain economic conditions, including responding to significant changes in demand from our customers as a resultcustomers; the challenges of an uncertain or weak economic environment;managing inflation, including rising energy and labor costs; our inability to retain or expand our business due to execution problems resulting from significant headcount reductions, plant closures and product transfer activities;relating to the challengeramping of responding to changes in customer demand;new programs, completing our restructuring activities or integrating our acquisitions; the delays in the delivery and/or general availability of various components and materials used in our manufacturing process; our dependence on industries affected by rapid technological change; our ability to successfully manage our international operations; increasing income taxes and our ability to successfully defend tax audits or meet the conditions of tax incentives; the challenge of managing our financial exposures to foreign currency fluctuations;volatility; and the risk of potential non-performance by counterparties, including but not limited to financial institutions, customers and suppliers. Our forward-looking statements are also based on various assumptions which management believes are reasonable under the current circumstances, but may prove to be inaccurate, and many of which involve factors that are beyond our control. The material assumptions may include the following: forecasts from our customers, which range from 30 days to 90 days and can fluctuate significantly in terms of volume or mix of products; the timing, execution of, and investments associated with ramping new business; the success in the marketplace of our customers' products; general economic and market conditions; currency exchange rates; pricing and competition; anticipated customer demand; supplier performance and pricing; commodity, labor, energy and transportation costs; operational and financial matters; and technological developments. These assumptions are based on management's current views with respect to current plans and events, and are and will be subject to the risks and uncertainties discussed above. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. These and other risks and uncertainties, as well as other information related to the company, are discussed in our various public filings at www.sedar.com and www.sec.gov, including our Annual Report on Form 20-F and subsequent reports on Form 6-K filed with the U.S. Securities and Exchange CommissionSEC and our Annual Information Form filed with the Canadian Securities Commissions.securities regulators.

        Except as required by applicable law, we disclaim any intention or obligation to update or revise any forward lookingforward-looking statements, whether as a result of new information, future events or otherwise. You should read this document with the understanding that our actual future results may be materially different from what we expect. We may not







update these forward lookingforward-looking statements, even if our situation changes in the future. All forward lookingforward-looking statements attributable to us are expressly qualified by these cautionary statements.

Overview

What Celestica does:

        We deliver innovative supply chain solutions to original equipment manufacturers (OEMs)OEMs in the consumer, enterprise computing, communications, industrial, aerospace and defense, healthcare and green technology markets. We believe our services and solutions will help our customers reduce their time to markettime-to-market and eliminate waste from their supply chains, resulting in lower product lifecycle costs, better financial returns and improved competitive advantage in their respective business environments.




        Our global operating network spans the Americas, Asia and Europe. In an effort to drive speed and flexibility for our customers, we conduct the majority of our business through full-service centers of excellence, strategically located around the world. Through our Ring Strategy, weWe strive to align a network of suppliers in proximity to ourthese centers of excellence in order to increase flexibility in our supply chain, deliver shorter overall product lead times and reduce inventory. We operate other sitesfacilities around the globe with specialized supply chain management and high-mix/low-volume manufacturing capabilities to meet the specific production and product lifecycle requirements of our customers.

        Through our centers of excellence and the deployment of our Total Cost of Ownership™ (TCOO) Strategy with our suppliers, we strive to provide our customers with the lowest total cost throughout the product lifecycle. This approach enables us to focus our capabilities on broad solutions that address the total cost of design, sourcing, production, delivery and after marketafter-market services for our customers' products, which can help drivedrives greater levels of efficiency and improved service levels throughout our customers' supply chains.

        Our targeted end markets include consumer, communications (comprised of enterprise communications and telecommunications), enterprise computing communications,(comprised of servers and storage), and industrial, aerospace and defense, healthcare and green technology. We offer a full range of services to our customers including design, manufacturing, engineering, order fulfillment, logistics and after-market services. We are focused on expanding these service offerings across our major markets with existing and new customers. In particular, we intend to invest in assets and resources to expand our design, engineering and after-market service capabilities and to support future growth opportunities. Our recentgrow our business in the commercial aerospace and defense, healthcare, industrial and green technology end markets, while continuing to pursue higher-value opportunities with existing customers. We continue to seek acquisition of Scotland-basedopportunities in these areas to expand our revenue base and add capabilities specific to these markets. In 2010, we acquired Invec Solutions Limited willto enhance our after marketafter-market services offering and Allied Panels to enhance our healthcare offering.

        Although we supply products and services to over 100 OEMs,customers, we depend upon a relatively small number of customers for a significant portion of our revenue. In the aggregate, our top 10 customers represented 71%72% of revenue in 2009 and2010 (71% — 2009). We expect our largesttop 10 customer represented 17%concentration to increase slightly in the near term based on program wins from some of revenue.those customers.

        The products and services we manufacture can be found inprovide serve a wide variety of end products, including smartphones; networking, wireless and telecommunications equipment; storage devices; servers; aerospace and defense electronics, such as in-flight entertainment and guidance systems; healthcare products; audiovisual equipment, including set-top boxes and flat-panel televisions; printers and relatedboxes; printer supplies; peripherals; gaming products; and a range of industrial and green technology electronic equipment.

        We believe that our principal strengths include our advanced capabilities in the areas of technologyequipment, including solar panels and quality, our flexible service offerings, our financial strength and our market-specific supply chain management capabilities. We offer a wide range of advanced manufacturing technologies, test capabilities and processes to support our customers' needs. We believe our size, geographic reach and 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.inverters.

        We believe we are well positioned to compete effectively in the EMS industry, given our financial strength and our position as one of the major EMS providers worldwide. Our priorities include to (i) growgrowing revenue through both organic program wins and acquisitions; (ii) improveimproving financial results, including operating margins, return on invested capitalmargin and cash flow performance; (iii) developdeveloping and enhanceenhancing profitable and key relationships with leading OEMscustomers across our strategic target market segments;markets, with a particular emphasis on growing our industrial, aerospace and defense, healthcare and green technology end markets; (iv) broadenbroadening the range of the services we offer to OEMs;our customers; and (v) expandgrowing our capabilities in services and technologies that diversify andcan expand our revenue base beyond our traditional areas of EMS manufacturing expertise. We believe that success in these areas will result in improved financial performance whichand enhanced shareholder value.




        We established three-year financial targets at the beginning of 2010. These targets include achieving a compound annual revenue growth rate of 6% to 8%, and generating the following performance on various non-GAAP measures: annual operating margin of 3.5% to 4.0%, annual return on invested capital (ROIC) of greater than 20%, and annual free cash flow of between $100 million and $200 million. The achievement of these targets is primarily dependent upon the strength of the economy, the success of our customers' products in the marketplace, our revenue mix and magnitude of customer program bookings by end markets and the margin profile for the services we provide. While we continue to drive towards achieving these targets, we expect that the size and mix of program wins in the consumer and server end markets in 2010 will likely result in revenue growth of 10% to 15% for 2011, with near term operating margin of 3.0% to 3.5% for the first half of 2011 and annual free cash flow at the low end of the target range as we fund working capital to support the higher revenue growth. We expect to maintain a ROIC of greater than 20% in the near term.

        Our financial targets for operating margin, ROIC and free cash flow are non-GAAP measures without standardized meanings and are not necessarily comparable to similar measures presented by other companies. Our management uses non-GAAP measures to (i) assess operating performance and the effective use and allocation of resources, (ii) provide more meaningful period-to-period comparisons of operating results, (iii) enhance shareholder value.investors' understanding of the core operating results of our business and (iv) set management incentive targets. See "— Non-GAAP Measures" below.

Overview of business environment:

        The EMS industry is highly competitive with multiple global EMS providers competing for the same customers and programs. Although the industry is characterized by a large number of revenue opportunities, operating margins are comparatively lowwhich at times may be volatile, the competitive environment is very intense and aggressive pricing pressure is a common business dynamic in the industry.dynamic. Capacity utilization, is ancustomer mix and the types of products we manufacture are important factorfactors affecting operating margins. The amount and location of available manufacturing capacity, and the locationmix of business through that capacity are vital considerations for EMS providers. The EMS industry is also working capital intensive. As a result, we believe that return on invested capital,ROIC, which is primarily affected by operating marginsmargin and investments in working capital and equipment, is an important metric for measuring an EMS provider's financial performance.




        EMS companies are exposed to a variety of customers and end markets. Demand visibility is limited, which makesmaking revenue in each of our end markets difficult to predict. This is due primarily to the shorter product lifecycles inherent in technology markets, short production lead times expected by our customers, rapid shifts in technology for our customers' products and general volatility in economic conditions. Recent global economic conditions and uncertainty, includingThis is particularly evident in high-volume markets such as the consumer end market, where product lifecycles tend to be the shortest. While recent demand trends have been stable, the global economic downturneconomy remains uncertain and volatile capital markets, havemay negatively impactedimpact the operations of most EMS providers, including Celestica.

Impact of current economic environment:

        In 2009, as a result of        During the global economic downturn, revenue declined year-over-year in all end markets that we serve, other thanpast several years, the consumer market,EMS industry has experienced component shortages, which was relatively flat. Although the global economy has recovered somewhat from the recent economic and financial crisis, the economic outlook remains uncertain with continued low end market visibility for our customers. This environment can pose significant risk to our business due to continuing weak demand or customer financial stress or bankruptcy. While we have operated relatively well during this period, we expect that this uncertainty will continue to impact our revenue, operating profitability and cash flow. As customers adjust their strategies during this time, we continue to experience increased pricing pressure and other competitive pressures. Despite the difficult end-market environment, recent demand increases have resulted in some component and material shortages,delay production as well as extendedall revenue relating to products using those components, and has resulted and may result in us carrying higher levels of inventory and extending lead times. If this trend accelerates, similar shortages could impactWe procure substantially all of our financial results. The trend towards outsourcing continuescomponent and materials pursuant to change as someindividual purchase orders issued by our customers which are generally short-term in nature. To date, we have brought their production back in-house to fill capacity, while othernot been materially impacted by these shortages.

        Our business is also affected by customers have chosen to increase their outsourcing to reduce costs. Other customers have shifted theirwho will sometimes shift production between EMS providers based onfor a number of reasons, including pricing concessions or their preference for consolidating their supply chain. This environment has resulted in additional restructuring actions and site closures asCustomers may also choose to accelerate the amount of business they outsource, insource previously outsourced business or change the concentration of their EMS suppliers to better balance production risk. As we respond to our customers' actions. The uncertain environment has also impacted foreign currency rates, the fair value of our financial instruments and the returns we earn on our pension assets, among other items. The global economic uncertainty hasactions, these factors have impacted, and we expect willmay continue to impact, the financial conditionamong other items, our ability to grow revenue, our operating profitability, our level of some ofcapital expenditures and our customers and suppliers. We will continue to closely monitor our suppliers' and customers' financial condition and creditworthiness in an effort to ensure continuity of supply and to limit the impact from companies that have or may become financially distressed. Although we have processes in place to limit our exposure to financially weaker customers and suppliers, our efforts may not eliminate all risks. The interruption of supply from a raw materials supplier, especially for single sourced components, could have a significant impact on our operations, and on our customers, if we are unable to deliver finished products in a timely manner.cash flows.




Summary of 20092010

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

		Year ended December 31										Year ended December 31
		2007			2008			2009				2008			2009			2010
Revenue		$	8,070.4		$	7,678.2		$	6,092.2			$	7,678.2		$	6,092.2		$	6,526.1
Gross profit			422.4			531.1			429.8				531.1			429.8			443.3
Selling, general and administrative expenses (SG&A)(1)			271.7			292.0			244.5				292.0			244.5			250.2
Net earnings (loss)			(13.7	)		(720.5	)		55.0				(720.5	)		55.0			80.8
Basic earnings (loss) per share		$	(0.06	)	$	(3.14	)	$	0.24			$	(3.14	)	$	0.24		$	0.35
Diluted earnings (loss) per share		$	(0.06	)	$	(3.14	)	$	0.24			$	(3.14	)	$	0.24		$	0.35




 


		December 31
		2008			2009
Cash and cash equivalents		$	1,201.0		$	937.7
Total assets			3,786.2			3,106.1
Total long-term financial liabilities			733.1			222.8

---

(1)

On January 1, 2009, we adopted CICA Handbook Section 3064, "Goodwill and intangible assets." For 2007 and 2008, we have retroactively reclassified $23.4 million and $11.8 million, respectively, of computer software amortization from depreciation expense, included in SG&A, to amortization of intangible assets.

		December 31
		2009			2010
Cash and cash equivalents		$	937.7		$	632.8
Total assets			3,106.1			3,103.6
Long-term debt			222.8			—

        Revenue for 20092010 of $6.5 billion increased 7% from $6.1 billion decreased 21%in 2009. Revenue from $7.7 billion in 2008. Revenue decreased in allour server end markets, other than the consumer market which was relatively flatincreased 18%, industrial, aerospace and defense, and healthcare increased 18%, enterprise communications increased 16% and storage increased 12%. These revenue increases reflect new program wins and increased demand resulting from an improving economic environment compared to 2009. Year-over-year revenue from our telecommunications end market decreased 10% driven primarily by declines in demand and program losses. Revenue from our consumer end market decreased $30 million, or 2%, from 2009. Specifically, consumer revenue decreased 15% year-over-year due to our disengagement of a program in the prior year. The slower economic environment has continued to impact end-market demand,gaming console business, which more than offset the increased revenue from new program wins, resulting in lower production volumes.a net 2% decrease for the year. Consumer continues to be our largest end market, representing 25% of revenue for 2010.

        Our production volumes alsoand revenue vary each period because of the impacts associated with changes in demand for the products we manufacture, program wins or losses with new, existing or disengaging customers, changes in demandthe timing and rate at which new programs are ramped up, and the impact of seasonality for the products we manufacture, and seasonality,various end markets, among other factors. The consumer end market was our largest segment, representing 29% of revenue for 2009.

        Gross profit dollars for 2010 increased 3% from 2009 decreased 19%while revenue increased 7% from 2008. The decrease in gross profit was primarily due to lower volumes, partially offset by benefits from cost reductions, restructuring actions and increased productivity.2009. Gross margin as a percentage of revenue increased todecreased from 7.1% in 2009 compared to 6.9%6.8% in 2008.2010 primarily due to changes in product mix and higher variable compensation costs that negatively impacted gross margin by 0.2%.

        SG&A for 2009 decreased 16%2010 increased $5.7 million, or 2%, from 20082009, primarily due to lower foreign exchange losses, benefits froma $10 million increase in variable compensation costs and a $3 million decrease in bad debt recoveries, offset partially by cost reductions, and restructuring actions, and lowerincluding IT and consulting costs.spending.

        GrossOur gross profit and SG&A for 2009 were negativelyare impacted by $5.2 millionthe level of variable compensation costs we record in each period. Variable compensation includes our team incentive plans available to eligible manufacturing and $5.7 million, respectively, relating to a mark-to-market adjustment for certain restrictedoffice employees, sales incentive plans and equity-based incentives, such as stock options and share unit awards vestingawards. The amount of variable compensation costs varies each period based on the level of achievement of pre-determined performance goals or financial targets. Variable compensation costs also include our mark-to-market adjustments for cash-settled equity-based awards.

        We recorded restructuring charges of $55.3 million in 2010 (2009 — $83.1 million) as we completed our previously announced restructuring plans.

        Net earnings for 2010 were $80.8 million compared to net earnings of $55.0 million in 2009. The improvement in net earnings was driven primarily by improved gross profit and lower interest expense in 2010, offset partially by higher income tax expense.




        In July 2010, we filed a Normal Course Issuer Bid (NCIB) with the first quarterToronto Stock Exchange (TSX), to repurchase, at our discretion until August 2, 2011, up to 18.0 million subordinate voting shares, or approximately 9% of our subordinate voting shares, on the open market or as otherwise permitted, subject to the normal terms and limitations of such bids. As of December 31, 2010, which we planhave paid $140.6 million, including transaction fees, to settle with cash. Cash-settled awards are accountedrepurchase for as liabilities and are remeasuredcancellation a total of 16.1 million shares at market value at each reporting date untila weighted average price of $8.75 per share under the settlement date. Management's current intention is to settle future restricted share unit awards in the formNCIB since its commencement. The total number of shares we may repurchase for cancellation under the NCIB is reduced by the number of shares purchased for our employee equity-based incentive programs. At December 31, 2010, 0.9 million shares remain eligible to be repurchased under the NCIB.

        During 2010, we paid $26.2 million for the purchase of shares in the open market by a trustee to satisfy the delivery of shares to employees upon vesting of awards under our long-term incentive plans. We classify these shares for accounting purposes as treasury stock on our balance sheet until they are delivered to employees pursuant to the awards.

        In March 2010, we paid $231.6 million to repurchase the remaining Senior Subordinated Notes (Notes) due 2013 and recognized a loss of $8.8 million, primarily as a result will continue to account for these awards as equity awards.

        In January 2008, we announced that we would incur restructuring charges of between $50 million and $75 million. In July 2009, we announced further restructuring charges of between $75 million and $100 million. Combined, we expect to incur total restructuring charges of between $150 million and $175 million associated with this program. During 2008 and 2009, we recorded total restructuring charges of $118.4 million. We expect to complete these restructuring actions by the end of 2010.

        During 2009,premium we paid $495.8 million in cash, excluding accrued interest, to repurchase our Senior Subordinatedredeem the Notes due 2011 (2011 Notes) and recorded a gain of $19.5 million in other charges. We expect the redemption will result in an estimated benefitprior to our net interest expense of approximately $14 million in 2010.

        Our net loss for 2008 of $720.5 million included a write-off of goodwill of $850.5 million.maturity.

        In January 2010, we announced our intentioncompleted the acquisition of Scotland-based Invec. Invec provides warranty management, repair and parts management services to redeem our outstanding Senior Subordinated Notes due 2013 (2013 Notes) at a price of 103.813% of the principal amount of $223.1 million. We expect to complete the redemptioncompanies in the first quarterinformation technology and consumer electronics markets. In August 2010, we completed the acquisition of 2010 using existing cash resources. BasedAustrian-based Allied Panels, a medical engineering and manufacturing service provider that offers concept-to-full-production solutions in medical devices with a core focus on the carrying valuediagnostic and imaging market. The total purchase price for these acquisitions was $18.3 million and was financed with cash. The purchase price for Allied Panels is subject to adjustment for contingent consideration totaling up to 7.1 million Euros (approximately $9.4 million at December 31, 2009 and the redemption price, we expectcurrent exchange rates), none of which has been recorded to incur a loss of approximately $9 million which we will record in other charges. We expect the redemption will reduce our net interest expense by approximately $4 million per quarter after redemption.date, if specific pre-determined financial targets are achieved through fiscal year 2012.




Other performance indicators:

        In addition to the key operating results and financial revenue and earnings related metricsinformation described above, management regularly reviews the following metrics:

        Cash Cycle Days:non-GAAP measures:

		1Q08			2Q08			3Q08			4Q08			1Q09			2Q09			3Q09			4Q09				1Q09			2Q09			3Q09			4Q09			1Q10			2Q10			3Q10			4Q10
Days in accounts receivable			44			42			43			50			56			50			49			46
Cash cycle days:
Days in accounts receivable (A/R)																												56			50			49			46			49			46			46			42
Days in inventory			42			42			40			41			50			47			42			40				50			47			42			40			45			43			46			42
Days in accounts payable			(53	)		(52	)		(53	)		(57	)		(63	)		(55	)		(57	)		(56	)
Days in accounts payable (A/P)																												(63	)		(55	)		(57	)		(56	)		(61	)		(57	)		(57	)		(55	)
Cash cycle days			33			32			30			34			43			42			34			30				43			42			34			30			33			32			35			29
Inventory turns																												7.3x			7.8x			8.7x			9.1x			8.1x			8.4x			8.0x			8.7x

        Days in accounts receivable (A/R)A/R is calculated as the average A/R for the quarter divided by the average daily revenue. Days in inventory is calculated as the average inventory for the quarter divided by the average daily cost of sales. Days in accounts payable (A/P)A/P is calculated as the average A/P for the quarter divided by average daily cost of sales. Cash cycle days is calculated as the sum of days in A/R and inventory, lessminus the days in A/P. Beginning with the fourth quarter of 2009, we excluded accrued liabilities from the average A/P balance when calculating A/P days. We made this change to better align our definition of cash cycle days with that used by some of our major competitors.in A/P. We have recalculated our days in A/P and our cash cycle days for prior periods to reflect this change. Inventory turns is calculated as 365 divided by the number of days in inventory.

        Cash cycle days for the fourth quarter of 20092010 decreased fromby 1 day to 29 days compared to the same period in 20082009. Days in A/R decreased by four days. A/R and4 days while days in inventory increased by 2 days improved by four days and one day, respectively, fromcompared to the fourth quarter of 2008.same period in 2009. The year-over-year improvement in A/R days primarily reflects higher revenue and an increased amount of A/R sales for the continued strong collection efforts drivenfourth quarter of 2010 compared to the fourth quarter of 2009 (December 31, 2010 — $60.0 million in part by changes in customer payment terms.A/R sold; December 31, 2009 — no A/R sold). Cash cycle days for the fourth quarter of 2009 improved four






2010 decreased by 6 days compared to the third quarter of 2009,2010, primarily reflecting improved inventory turns and continued strong collections.due to higher sales in the fourth quarter of 2010.

        Management also reviews other non-GAAP measures including adjusted net earnings, adjusted operating margin, (EBIAT), return on invested capital (ROIC)ROIC and free cash flow metrics, which are referred to in the non-GAAP measures on page 51.flow. See "— Non-GAAP Measures" below.

Critical Accounting Policies and Estimates

        We prepare our financial statements in accordance with Canadian GAAP with a reconciliation to U.S. GAAP, as disclosed in note 20 to the Consolidated Financial Statements.

        The preparation of financial statements in conformity with Canadian 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. We evaluate our estimates and assumptions on a regular basis, based ontaking into account historical experience and other relevant factors. Actual results could differ materially from these estimates and assumptions, especially in light of the current economic environment and uncertainties.assumptions.

        Significant accounting policies and methods used in the preparation of the financial statements are described in note 2 to the Consolidated Financial Statements. Effective January 1, 2009, we adopted the revised accounting standards for goodwill and intangible assets, which are summarized in note 2 to the Consolidated Financial Statements. We have retroactively reclassified $34.0 million of computer software assets on our consolidated balance sheet at December 31, 2008 from property, plant and equipment to intangible assets. We have also reclassified $11.8 million of computer software amortization on our consolidated statement of operations from depreciation expense, included in SG&A, to amortization of intangible assets for 2008 ($23.4 million for 2007).

Inventory valuation:

        We value our inventory on a first-in, first-out basis at the lower of cost and net realizable value. We regularly adjust our inventory valuation based on shrinkage and management's estimates of net realizable value, taking into consideration factors such as inventory aging and future demand for the inventory. A change to these






assumptions could impact the valuation of our inventory and have a resulting impact on gross margins. We procure inventory based on specific customer orders and forecasts. If actual market conditions or our customers' product demands are less favourablefavorable than those projected, additional valuation adjustments may be required for the related customer.required. We attempt to utilize excess inventory in other products we manufacture or to return the inventory to the supplier or customer. Our success in these recovery efforts may result in the reversal of previously recorded inventory valuations.

Income taxes:

        We have recorded an income tax expense or recovery based on the income earned or loss incurred in each tax jurisdiction and the substantively enacted tax rate applicable to that income or loss. In the ordinary course of business, there are many transactions for which the ultimate tax outcome is uncertain and estimations are required for exposures related to examinations by taxation authorities. We review these transactions and exposures and record tax liabilities for open years based on our assessment of many factors, including past experience and interpretations of tax law applied to the facts of each matter. The determination of tax liabilities is subjective and generally involves a significant amount of judgment. The final tax outcome of these matters may be different from the estimates originally made by management in determining our income tax provisions. We recognize a tax benefit related to tax uncertainties when it is probable based on our best estimate of the amount that will ultimately be realized. A change to these estimates could impact theour income tax provision.

        We record 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.

Goodwill:

        To the extentWhen we have goodwill, we perform our annual impairment testassessment in the fourth quarter of eachthe year (to correspond with our planning cycle), andor more frequently if events or changes in circumstances indicate that an impairment loss may have been incurred.a triggering event has occurred. If our market capitalization is less than our book value for a sustained period of time, it could be an indicator that an impairment loss has occurred. We test for impairment, using the two-step






method, at the reporting unit level by comparing the reporting unit's carrying amount to its fair value. We estimate the fair value of the reporting units using a combinationvariety of approaches including a market capitalization approach, a multiples 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 expense projections, discount rates and market multiples at the reporting unit level. A significant change to these assumptions could impact the fair value of the reporting units resulting in a change to the impairment charge. During the fourth quarter of 2008, we conducted our annual goodwill assessment and wrote off the entirewrote-off goodwill balance. At December 31,of $850.5 million. We recorded no impairment in 2009 our goodwill balance was zero.or 2010. See further details on page 39 and in note 10(b) to the Consolidated Financial Statements.

Long-lived assets:

        We estimate the useful lives of property, plant and equipment and intangible assets based on the nature of the asset, historical experience and the terms of any related supply contracts. We perform an annual impairment testassessment on long-lived assets in the fourth quarter of each year (to correspond with our planning cycle), andor more frequently if events or changes in circumstances indicate that an impairment lossa triggering event has occurred. We test for impairment, using the two-step method, by comparing the carrying amount of an asset, or group of assets, to the undiscounted cash flows from the use and eventual disposal of the asset or group of assets. If the carrying amount exceeds the undiscounted cash flows, we perform step two by comparing the fair value of the asset or group of assets to its carrying amount to determine the amount of impairment. We estimate fair value using discounted cash flows or estimates of market valuesvalue for certain assets, where available. Revenue and expense projections are discounted using risk-adjusted rates. We work with independent brokers to obtain the market prices to support our real property values. The process of determining fair values is subjective and requires management to exercise judgment in making assumptions about future results, including revenue and expense






projections, discount rates and market values. A significant change to these assumptions and estimates could impact the estimated useful lives or valuation of long-lived assets resulting in a change to depreciation or amortization expense and the impairment charge. We recorded a long-lived asset impairment loss in 2009.each of 2008, 2009 and 2010. See further details in note 10(c) to the Consolidated Financial Statements. Future impairment testsassessments may result in further impairment charges.

Restructuring charges:

        We have recorded restructuring charges relating to workforce reductions, facility consolidations and costs associated with exiting businesses. The restructuring charges include employee severance and benefit costs, costs related to leased facilities that have been vacated and owned facilities which are no longer used and are available-for-sale, costs of leased equipment that areis no longer used and impairment of owned equipment available-for-sale, and impairment of related intangible assets. The recognition of these charges requires management to make certain judgments and estimates regarding the nature, timing and amounts associated with these restructuring plans. For owned facilities and equipment, the impairment loss recognized is based on the fair value less costs to sell, with fair value estimated based on existing market prices for similar assets. For leased facilities that have been vacated, the liability for lease obligations is calculated on a discounted basis based on future lease payments less estimated sublease income. To estimate future sublease income, we work with independent brokers to determine the estimated tenant rents we couldcan expect to realize. The estimated liability could change subsequent to its initial recognition, requiring adjustments to the restructuring expense and liability recorded. At the end of each reporting period, we evaluate the appropriateness of the remaining accrued balances.

Pension and non-pension post-employment benefits:

        We have pension and non-pension post-employment benefit costs and liabilities, which are determined from actuarial valuations. Actuarial valuations require management to make certain judgments and estimates relating to expected plan investment performance, salary escalation and compensation levels at the time of retirement, retirement ages, the discount rate used in measuring the liability and expected healthcare costs. Actual future experience will differ from these assumptions, and the differences may be material. There is no assurance that our future benefit plans will be able to earn the assumed rate of return. Market driven changes may result in






changes to our discount rates and other variables which could lead us to future contributions that differ significantly from our estimates.

        The fair values of our pension assets were based on a measurement date of December 31, 2009.2010. We evaluate 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 and funding requirements. See notes 2(k) and 13 to the Consolidated Financial Statements.

Operating Results

        Our annual and quarterly operating results vary from period to periodperiod-to-period as a result of the level and timing of customer orders, mix of revenue, fluctuations in materials and other costs, and the relative mix of value-add products and services. The level and timing of customer orders will vary due to variation in demand for their products, general economic conditions, their attempts to balance their inventory, availability of components and materials, and changes in their supply chain strategies or suppliers. Our annual and quarterly operating results are specifically affected by:by, among other factors: our mix of customers and the mix,types of products we manufacture; the rate at which new programs ramp up; volumes and seasonality of business in each of our end markets; price competition; the mix of manufacturing value-add; capacity utilization; manufacturing effectiveness and efficiency; the degree of automation used in the assembly process; the availability of components or labor; the timing of receiving components and materials; costs associated with ramping new programs; customer product delivery requirements; costs and inefficiencies of transferring programs between facilities; the loss of programs and customer disengagements; the impact of foreign exchange fluctuations; the performance of third-party providers; theour ability to manage inventory, production location and equipment effectively; theour ability to manage changing labor, component, energy and transportation costs effectively; fluctuations in variable compensation costs; the timing of our expenditures in anticipation of forecasted sales levels; and the timing of acquisitions and related integration costs; and other factors.costs.

        In the EMS industry, customers can often award new programs or shift programs to other EMS providers for a variety of reasons including changes in demand for the customers' products, pricing benefits offered by






other EMS providers, execution or quality issues, preference for consolidation or a change in their supplier base, rebalancing the concentration of their EMS providers, mergers and consolidation among OEMs, as well as decisions to adjust the volume of business being outsourced. Our operating results for each period include the impacts associated with program wins or losses with new, existing or disengaging customers. Customer or program transfers between EMS competitors are part of the competitive nature of our industry. Significant period to periodperiod-to-period variations can result from the timing of new programs reaching full production, existing programs being fully transferred to a competitor and programs reaching end-of-life.

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

		Year ended December 31										Year ended December 31
		2007			2008			2009				2008			2009			2010
Revenue			100.0	%		100.0	%		100.0	%			100.0	%		100.0	%		100.0	%
Cost of sales			94.8			93.1			92.9				93.1			92.9			93.2
Gross profit			5.2			6.9			7.1				6.9			7.1			6.8
SG&A(1)			3.4			3.8			4.0				3.8			4.0			3.8
Amortization of intangible assets(1)			0.6			0.4			0.4				0.4			0.4			0.2
Other charges			0.6			11.5			1.1				11.5			1.1			1.1
Interest expense, net of interest income			0.6			0.5			0.6				0.5			0.6			0.1
Earnings (loss) before income taxes			—			(9.3	)		1.0
Income taxes expense			(0.2	)		(0.1	)		(0.1	)
Earnings (loss) before income tax													(9.3	)		1.0			1.6
Income tax expense													(0.1	)		(0.1	)		(0.4	)
Net earnings (loss)			(0.2	)%		(9.4	)%		0.9	%			(9.4	)%		0.9	%		1.2	%

---

(1)

On January 1, 2009, we adopted CICA Handbook Section 3064, "Goodwill and intangible assets." For 2007 and 2008, we have retroactively reclassified $23.4 million and $11.8 million, respectively, of computer software amortization from depreciation expense, included in SG&A, to amortization of intangible assets.




Revenue:

        Revenue for 2010 of $6.5 billion increased 7% from $6.1 billion in 2009. Revenue from our server end market increased 18%, industrial, aerospace and defense, and healthcare increased 18%, enterprise communications increased 16% and storage increased 12%. These revenue increases reflect new program wins and increased demand resulting from an improving economic environment compared to 2009. Year-over-year revenue from our telecommunications end market decreased 10% driven primarily by declines in demand and program losses. Revenue from our consumer end market decreased $30 million, or 2%, from 2009. Specifically, consumer revenue decreased 15% year-over-year due to our disengagement of a program in the gaming console business, which more than offset the increased revenue from new program wins, resulting in a net 2% decrease for the year. Consumer continues to be our largest end market, representing 25% of revenue for 2010.

        Revenue for 2009 of $6.1 billion decreased 21% from $7.7 billion for 2008. Revenue decreased in all end markets, other than the consumer market, which was relatively flat compared with 2008.markets. The slower economic environment has continued to impact end-market demand in 2009, resulting in lower production volumes. Revenue from our telecommunications and enterprise communications markets also reflected program disengagements orand program transfers back to customers or to competitors. Specifically, consumer revenue decreased 2%; storage decreased 6%; industrial, aerospace and defense, and healthcare decreased 22%, telecommunications decreased 22%, enterprise communications decreased 33%, and servers decreased 34%.

        Revenue for 2008Our production volumes and revenue vary each period because of $7.7 billion decreased 5% from $8.1 billion for 2007. The decrease in revenue was due to lower volumesthe impacts associated with weaker end-marketchanges in demand primarily infor the servers, enterprise communicationsproducts we manufacture, program wins or losses with new, existing or disengaging customers, the timing and storagerate at which new programs are ramped up, and the impact of seasonality for various end markets, which more than offset the increase in revenue primarily from customers in our consumer, telecommunications and industrial end markets. The amount of revenue reduction for 2008 from customer disengagements, primarily in the enterprise communications end market, was approximately 5%.among other factors.

        The following table shows the end markets we serve as a percentage of revenue for the periods indicated:

		Year ended December 31										2009															2010
		2007			2008			2009				First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full Year			First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Full Year
Consumer(i)			19%			23%			29%				28%			21%			30%			31%			28%			28%			26%			24%			24%			25%
Enterprise Communications(i)			28%			25%			21%				22%			24%			22%			21%			22%			22%			24%			25%			24%			24%
Telecommunications			14%			15%			15%				18%			20%			12%			11%			15%			14%			13%			14%			12%			13%
Storage													8%			12%			13%			13%			12%			14%			12%			12%			12%			12%
Servers			19%			16%			13%				13%			12%			13%			14%			13%			12%			14%			13%			17%			14%
Storage			10%			10%			12%
Industrial, Aerospace and Defense, and Healthcare			10%			11%			10%				11%			11%			10%			10%			10%			10%			11%			12%			11%			12%
Revenue (in millions)													$1,469.4			$1,402.2			$1,556.2			$1,664.4			$6,092.2			$1,518.1			$1,585.4			$1,546.5			$1,876.1			$6,526.1




        Beginning January 1, 2009,

---

(i)

During the fourth quarter of 2010, we included certainreclassified a customer programs, such as office products, automotive and healthcare, in our industrial, aerospace and defense, and healthcare category. Previously, we included these customer programs inprogram from our consumer category. Weend market to our enterprise communications end market. Comparative percentages have been recalculated our prior period percentages to conform to the current period's presentation. For each of 2007 and 2008, we reclassified 3% of revenue from our consumer end-market category to industrial, aerospace and defense, and healthcare. We may change the classification or grouping of our end markets in the future to reflect changes to how we manage these markets and the dynamics of those businesses.

        Our revenue and operating results vary from period to periodperiod-to-period depending on the level of demand and seasonality in each of our end markets, the mix and complexity of the products being manufactured, the timing of receiving components and materials and the impact associated with program wins or losses with new, existing or disengaging customers, among other factors.

        Although we have diversified our end markets over the past several years, we We are dependent on a limited number of customers in the consumer, communications (comprised of enterprise communications and telecommunications) and enterprise computing (comprised of serversstorage and storage)servers) end markets for a substantial portion of our revenue.

        The consumer marketConsumer was our largest end market in 2009, representing 29%25% of total revenue with over halffor 2010. Over three-quarters of our consumer business is generated by smartphones. Our largest customer is categorizedone smartphone customer. In general, business in the consumer segmentend market and, represented 17%in particular, smartphones, is highly competitive and characterized by shorter product lifecycles, higher revenue volatility, and lower margins. In addition, program volumes can vary significantly period-to-period based on the strength in end-market demand. End-user preferences for these products and devices can change rapidly and these programs are easily shifted among EMS competitors. Our increased exposure to this end market may lead to greater volatility in our revenue and operating margin and could result in increased risk to our financial results.




        We continue to win new programs in the consumer end market. The year-over-year decrease for 2010 in consumer revenue as a percentage of total revenue reflects our disengagement of a program in 2009.the gaming console business as well as the changing mix of products we manufactured. Our server revenue as a percentage of total revenue grew sequentially from the third quarter of 2010 and year-over-year primarily due to new program wins from existing customers and increases in demand. We expect our server business as a percentage of total revenue will continue to increase in the near term as new programs ramp up. Revenue dollars from our consumer market in 2009 was relatively flatindustrial, aerospace and defense, healthcare and green technology continues to grow compared to the prior yearthird quarter of 2010 and reflected new program wins, primarilyyear-over-year, and has benefited from the acquisition of Allied Panels which we completed in the smartphone markets, which offset the declines from customers impacted by the slower general economic environment. Revenue from our enterprise communications market in 2009 declined from 2008 due to a combination of weaker customer end markets and our 2008 decision to disengage from programs generating unacceptable returns. All of our other end markets continued to be negatively impacted by the slower economy, although we have seen some modest improvements during the second half of 2009.August 2010.

        For 2009, one customer in our consumer end market individually represented more than 10% of total revenue. Research in Motion accounted for 17% of total revenue for 2009. For 2008, noOne customer represented more than 10% of total revenue. This change also increasedrevenue in both 2009 and 2010. Our largest customer, Research in Motion, is in our consumer end market and accounted for 20% of total revenue for 2010 (17% for 2009). We are currently ramping up new programs in the server end market, and when these programs are fully ramped, we expect to have a higher server concentration and an additional customer concentration percentages below.

representing more than 10% of total revenue. Whether any of our customers individually account for more than 10% of revenue in any period depends on various factors affecting our business with that customer orand with other customers, including overall changes in demand for a customer's product, seasonality of business, new program wins or losses, the phasing in or out of programs, the growth rate of other customers, price competition and changes in our customers' supplier base or supply chain strategies.

        The following table shows our customer concentration as a percentage of total revenue for the periods indicated:

		Year ended December 31
		2007			2008			2009
Top 10 customers			61%			63%			71%

		Year ended December 31
		2008			2009			2010
Top 10 customers			63%			71%			72%

        Our recent success in the smartphone market, driven primarily by new program wins, has increased our customer concentration as a percentage of total revenue. In general, business in the consumer segment, and in particular smartphones, is characterized by shorter product lifecycles, significant increases or decreases in program volumes based on strength in end-market demand, rapid changes in consumer preferences for these products and devices, and greater ease in shifting these products among EMS competitors. The increased exposure to this segment may make revenue more volatile and could result in increased risk to our financial results.

        We are dependent upon continued revenue from our largest customers. We generally enter into master supply agreements with our customers that provide the framework for our overall relationship. These agreements do not typically guarantee a particular level of business or fixed pricing. Instead, we bid on a program-by-program basis and receive customer purchase orders for specific quantities and timing of products. There can be no assurance that revenue from theseour largest customers or any other customers will not decrease in absolute terms or as a percentage of total revenue. Any materialA significant decrease in revenue from these or other customers, couldor a loss of a major customer, would have a material adverse effectimpact on our business, our revenue and our results of operations. The global economic uncertainty continues to adversely affect our customers and has negatively impacted our financial results. Recent demand increases in some end markets have resulted in






component and material shortages, as well as extended lead times. If this trend accelerates, similar shortages could impact our financial results.

        We believe that delivering sustainable revenue growth depends on increasing sales to existing customers for their current and future product generations and expanding the range of services we provide to these customers. We are also actively pursuepursuing new customers to expand our end-market penetration and diversify our end-market mix. To achieve this, we are focused on offering and increasing our investments in innovative supply chain solutions which include design, manufacturing, engineering, order fulfillment, logistics and after marketafter-market services. We mayare also seekseeking acquisition opportunities in order to diversify our customer base, enhance our capabilities, or add new technologies or capabilities to our offerings. In ourthe EMS industry, customers may cancel contracts and volume levels can be changed or delayed. Customers may also shift business to a competitor or bring programs in-house to improve their own utilization.utilization or to adjust the concentration of their supplier base to manage production risk. We cannot assure the timely replacement of delayed, cancelled or reduced orders with new business. In addition, we cannot assure that any of our current customers will continue to utilize our services. If they do not, this could have a material adverse impact on our results of operations. Significant period-to-period variations can result if new program wins or replacement business are more competitively priced than past programs.




Gross profit:

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

		Year ended December 31										Year ended December 31
		2007			2008			2009				2008			2009			2010
Gross profit (in millions)		$	422.4		$	531.1		$	429.8			$	531.1		$	429.8		$	443.3
Gross margin			5.2	%		6.9	%		7.1	%			6.9	%		7.1	%		6.8	%

        Gross profit dollars for 2010 increased 3% from 2009 while revenue increased 7% from 2009. Gross margin as a percentage of revenue decreased for 2010 compared to 2009 primarily due to changes in product mix and higher variable compensation costs that negatively impacted gross margin by 0.2%.

        Gross profit dollars for 2009 decreased 19% from 2008. The decrease in gross profit was due primarily to lower volumes, partially offset by continued operational improvements and increased productivity. Gross margin as a percentage of revenue improved for 2009 compared to 2008, reflecting primarily continued operational improvements.

        Gross profit for 2008 increased 26% from 2007 primarily due to operational improvements in Mexico and Europe. In addition, we continued to benefit from cost reductions, restructuring actions, the impact of renegotiating or exiting unprofitable accounts and the streamlining and simplifying of processes throughout the company.

Multiple factors cause gross margin to fluctuate including:including, among other factors: product volume and mix; higher revenue concentration in lower gross margin products and end markets; production efficiencies; level of service revenue generated in the period; utilization of manufacturing capacity; material and labor costs, including variable labor costs associated with direct manufacturing employees; manufacturing and transportation costs; start-up and ramp-up activities; new product introductions; cost structures at individual sites; pricing pressures from competitors; foreign exchange volatility; and the availability of components;components and other factors.materials. Our gross margin may be impacted in the future by rising labor costs. There is uncertainty with respect to rising labor costs, particularly in lower-cost regions in which we operate. Any increase in labor costs that we are unable to recover in our pricing to our customers could negatively impact our gross margin. To date, we have not been materially impacted by these rising costs.

Selling, general and administrative expenses:

        SG&A for 2010 increased 2% to $250.2 million (3.8% of revenue) compared to $244.5 million (4.0% of revenue) in 2009. The increase in SG&A was primarily due to a $10 million increase in variable compensation costs and a $3 million decrease in bad debt recoveries, offset partially by cost reductions, including IT spending. The decrease in SG&A as a percentage of revenue for 2010 compared to 2009 reflects the higher revenue levels in 2010.

        SG&A for 2009 decreased 16% to $244.5 million (4.0% of revenue) compared to $292.0 million (3.8% of revenue) in 2008. The decrease in SG&A for 2009 was primarily a result of lower foreign exchange losses, overall cost reductions including lower IT and consulting costs, and benefits from restructuring actions. In 2009, our foreign exchange losses were $1.1 million compared to $16.4 million in 2008. These losses were significantly lower in 2009 as a result of our successful balance sheet hedging program, as well as a more stable currency environment. The increase in SG&A as a percentage of revenue for 2009 compared to 2008 primarily reflects the fixed nature of some of our SG&A expenses, as well as the lower revenue levels in 2009.

        SG&A increased 7% to $292.0 million (3.8% of revenue) in 2008 compared to $271.7 million (3.4% of revenue) in 2007. The increase in SG&A for 2008 was due primarily to foreign exchange losses, mainly in the second half of 2008 for certain foreign currencies, and higher variable compensation costs, partially offset by lower IT consulting and support costs and capital tax recoveries. The increase in SG&A as a percentage of revenue reflects higher costs, as well as the lower revenue levels in 2008.




        Each quarter, we incur unrealized foreign exchange gains or losses on the translation of foreign currency denominated asset and liability balances to U.S. dollars and these amounts are included in SG&A. The amount of these gains or losses fluctuates from quarter to quarter and is dependent on currency markets and the value of our foreign currency denominated asset or liability positions in each period. We also incur realized transactional foreign exchange gains or losses in the normal course of business. To mitigate the foreign exchange translation volatility that impacted us in the second half of 2008, we started to enter into forward exchange contracts to partially hedge our significant balance sheet exposures in certain currencies. Since the balance sheet hedges are based on forecasts of the future position of net assets or liabilities denominated in foreign currencies, they may not mitigate the full impact of any translation impacts in the future. There is no assurance that our hedging transactions will be successful.

Stock-based compensation:

        We recorded the following stock-based compensation costs, included in cost of sales and SG&A, for the periods indicated (in millions):

		Year ended December 31										Year ended December 31
		2007			2008			2009				2008			2009			2010
Stock option awards		$	7.0		$	6.6		$	5.9			$	6.6		$	5.9		$	4.8
Restricted share unit awards(a)			6.2			16.8			33.0
Share unit awards(a)(b)(c)													16.8			33.0			37.5
		$	13.2		$	23.4		$	38.9			$	23.4		$	38.9		$	42.3

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(a)

We have the option to settle restricted share unit awards in the form ofeither with shares that we purchase in the open market or with cash. Historically, we have generally settled these awards with shares purchased in the open market.market by a trustee. The cost ofwe record for equity-settled awards is based on the market value of our subordinate voting shares at the time of the grant. We amortize this cost to compensation expense over the vesting period on a straight-line basis with a corresponding charge through contributed surplus. During the fourth quarter of 2009, we decidedWe elected to settle the share unitcash-settle certain awards vesting in the first quarterquarters of 2010 and 2011 due to limitations in the number of shares we could purchase in the open market as a result of terms in our Notes and our NCIB. We currently expect to settle future awards with cash.shares purchased in the open market. Cash-settled awards are accounted for as liabilities and remeasured based on our share price at each reporting date until the settlement date. As a result of our decision to settle these awards with cash, we reclassified the accumulated balance, representing the grant date, fair value of vested awards, recorded in contributed surplus to accrued liabilities. We adjusted this liability to the market value of our underlying subordinate voting shares at December 31, 2009, with a corresponding charge to compensation expense. We recorded a mark-to-market adjustmentadjustments on these cash-settled awards of $10.9$5.4 million (cost of sales — $5.2 million; SG&A — $5.7 million) in the fourth quarter of 2010 (fourth quarter of 2009 which is included in the $33.0 million balance above. Management's current intention is— $10.9 million; first quarter of 2010 — $2.2 million). Since management currently intends to settle futureall other share unit awards in the form ofwith shares purchased in the open market and, asby a result, willtrustee, we expect to continue to account for these awards as equityequity-settled awards.



(b)

During 2010, we paid $26.2 million (2009 — $8.4 million) for the purchase of shares in the open market by a trustee to satisfy the delivery of shares to employees upon vesting of the awards under our long-term incentive plans. We classify these shares for accounting purposes as treasury stock on our balance sheet until they are delivered to employees pursuant to the awards.



(c)

Our 2010 stock-based compensation expense for share unit awards, as compared to the prior year, included a higher payout on performance awards based on our relative ROIC performance versus our competitors, and lower mark-to-market adjustments for cash-settled equity-based awards.

Other charges:

(i)

We have recorded the following restructuring charges for the periods indicated (in millions):

		Year ended December 31
		2007			2008			2009
Restructuring charges		$	37.3		$	35.3		$	83.1

		Year ended December 31
		2008			2009			2010
Restructuring charges		$	35.3		$	83.1		$	55.3

        In January 2008, we announced we would record restructuring charges of between $50 million and $75 million would be recorded throughout 2008 and 2009. In light of the continued uncertain economic environment, we determined that further restructuring actions were required to improve our overall utilization and reduce overhead costs. In July 2009, we announced additional restructuring charges of between $75 million and $100 million.million to further reduce overhead costs and improve overall utilization. Combined, we expectexpected to incur total restructuring charges of between $150 million andup to $175 million associated with this program, which included consolidating facilities and reducing our workforce. As of December 31, 2010, we have recorded all of the restructuring charges related to this program. We recorded $118.4 millionSee "— Recent Accounting Developments — IFRS to Canadian GAAP differences — Restructuring costs" below for the impact of IFRS on our recording of restructuring charges.

        Since the beginning of 2008, we have recorded total restructuring charges during 2008 and 2009.of $173.7 million. Of that amount, $83.1$55.3 million was recorded in 2009.2010. We expect to complete theserecorded the restructuring actions bycharges in the end of 2010. Asperiod we complete these restructuring actions, we expect our overall utilization and operating efficiency to improve. As we finalizefinalized the detailed plans of these restructuring actions, we will recognize the related charges.plans. The recognition of these charges requiresrequired management to make certain judgments and estimates regarding the amount and timing of restructuring charges or recoveries. Our estimated liability could change subsequent to its initial recognition, requiring adjustments to our recorded expense and liability amounts.




        Our restructuring actions include consolidating facilities and reducing our workforce, primarilyAs of December 31, 2010, we accrued $15.3 million in employee termination costs which remain unpaid at year end. We expect to pay the Americas, Europe and the Philippines. The majority of such costs during the employees terminated were manufacturing and plant employees. For leased facilities that we no longer use, the lease costs included in the restructuring costs represent future lease payments less estimated sublease recoveries. Adjustments were made to lease and other contractual obligations to reflect incremental cancellation fees paid for terminating certain facility leases and to reflect changes in the accruals for other leases due to delays in the timingfirst half of sublease recoveries, changes in estimated sublease rates, or changes in use, relating principally to facilities in the Americas.2011. We expect our long-term lease and other contractual obligations relating to restructuring to be paid out over the remaining lease terms through 2015. Our restructuring liability is recorded in accrued liabilities. All cash outlays have been, and currently foreseeable outlays are expected tothe balance will be, funded from cash on hand.

        We evaluate our operations from time to timetime-to-time and may propose future restructuring actions or divestitures as a result of changes in the market place and/or our exit from less profitable or non-strategic operations.




(ii)

We have recorded the following impairment charges for the periods indicated (in millions):

		Year ended December 31
		2007			2008			2009
Goodwill impairment		$	—		$	850.5		$	—
Long-lived asset impairment			15.1			8.8			12.3

			Year ended December 31
			2008			2009			2010
	Goodwill impairment		$	850.5		$	—		$	—
	Long-lived asset impairment			8.8			12.3			8.9

Goodwill impairment:

        We perform our goodwill impairment testassessment in the fourth quarter of each year. We test impairment using the two-step method, at the reporting unit level, by comparing the reporting unit's carrying amount to its fair value (step one). To the extent a reporting unit's carrying amount exceeds its fair value, we may have an impairment of goodwill. We measure impairment by comparing the implied fair value of goodwill, determined in a manner similar to a purchase price allocation, to its carrying amount (step two).

        During the fourth quarter of 2008, we performed our annual goodwill impairment test.assessment. All of our goodwill was allocated to our Asia reporting unit. Our goodwill balance prior to the impairment charge was $850.5 million and was established primarily as a result of an acquisition in 2001.

We completed our step one analysis using a combination of a market capitalization approach and a multiples approach which was then validated with a discounted cash flow. The market capitalization approach used our publicly traded stock price to determine fair value, which we then allocated to the Asia reporting unit on a pro rata basis based on earnings. The multiples approach used comparable market multiples, which were based on an average of our major competitors trading multiples, to determine fair value. Both of the fair values determined by the market approaches were adjusted upward for a control premium, an estimated amount a buyer would pay over the trading price of the company's shares to gain control of the company. We applied a 20% control premium to the fair values, which we believe isbelieved was a reasonable estimate based on past transactions in the EMS industry at December 31, 2008. The discounted cash flow method used our three-year revenue and expense projections to determine fair value. These projections were based on site submissions and input from our customer teams during our plan cycle in the fourth quarter of 2008. Our projections were negatively impacted by customers who decreased their demand forecasts as the global economy deteriorated in the fourth quarter of 2008. Subsequent to our internal plan submissions, we decreased our future internal projections in response to the economic downturn and the overall uncertainties and lack of visibility at that time. We discounted our three-year projections using a 27% discount rate. At that time, the economic environment had negatively impacted our ability to forecast future demand andwhich in turn resulted in our use of a higher discount rate, reflecting the risk and uncertainty in the markets. We averaged the fair values derived from the above approaches to determine the estimated fair value of the Asia reporting unit.

The results of our step one analysis indicated potential impairment in our Asia reporting unit, which was corroborated by a combination of factors including a significant and sustained decline in our market capitalization, which was significantly below our book value, and the then deteriorating macro environment, which resulted in a decline in expected future demand. The process of determining fair value was subjective and






required management to exercise a significant amount of judgment in determining future growth rates, discount rates and tax rates, among other factors. We therefore performed the second step of the goodwill impairment assessment to quantify the amount of impairment. We engaged an independent third-party consultant to assist with our step two analysis. This involved calculating the implied fair value of goodwill, determined in a manner similar to a purchase price allocation, and comparing the residual amount to the carrying amount of goodwill. Based on our analysis incorporating the declining market capitalization in 2008, as well as the significant end-market deterioration and economic uncertainties impacting expected future demand at that time, we concluded that the entire goodwill balance as of December 31, 2008 of $850.5 million was impaired. The goodwill impairment charge was non-cash in nature and did not affect our liquidity, cash flows from operating activities, or our compliance with debt covenants.

        At December 31, 2009, we had no goodwill. During the fourth quarter of 2007,2010, we performed our annual goodwill impairment assessment and determined there was no impairment. At December 31, 2009,2010, our goodwill balance was zero.$11.0 million.




Long-lived asset impairment:

        During the fourth quarter of each year, we conduct our annual recoverability reviewimpairment assessment of long-lived assets. Impairment is measured as the excess of the carrying amount over the fair value of the assets determined using discounted cash flows and estimatedor estimates of market values,value for certain assets, where available. We recorded an impairment charge of $12.3$8.9 million in 2009 (20082010 (2009 — $8.8$12.3 million; 20072008 — $15.1$8.8 million).

(iii)

We have recorded the following chargesamounts related to the subordinated debt repurchases for the periods indicated (in millions):

			Year ended December 31
			2007			2008			2009
	Gain on repurchase of Senior Subordinated Notes		$	—		$	(7.6	)	$	(19.5	)
	Write-down of embedded prepayment option			—			—			16.7
			$	—		$	(7.6	)	$	(2.8	)

			Year ended December 31
			2008			2009			2010
	Loss (gain) on repurchase of Notes		$	(7.6	)	$	(19.5	)	$	8.8
	Write-down of embedded prepayment option			—			16.7			—
			$	(7.6	)	$	(2.8	)	$	8.8

        In March 2010, we paid $231.6 million to repurchase the remaining Notes due 2013 (2013 Notes) and recognized a loss of $8.8 million, primarily as a result of the premium we paid to redeem the 2013 Notes prior to maturity. In 2009, we paid $149.7$495.8 million excluding accrued interest, to repurchase our Notes due 2011 Notes with a principal amount of $150.0 million(2011 Notes) and recognized a gain of $9.1$19.5 million. In November 2009,During 2008, we paid $346.1$30.4 million excluding accrued interest, to repurchase a portion of our 2011 Notes with a principal amount of $339.4 millionand our 2013 Notes and recognized a gain of $10.4$7.6 million. The gains or losses on the repurchases were measured based on the carrying value of the repurchased portion of the 2011 Notes on the dates of repurchase. We also terminated our interest rate swap agreements related to the 2011 Notes in February 2009 and received $14.7 million in cash, excluding accrued interest, as settlement of these agreements.

        In connection with the termination of the interest rate swap agreements in February 2009, we discontinued fair value hedge accounting on the 2011 Notes in the first quarter of 2009 and recorded a $16.7 million write-down in the carrying value of the embedded prepayment option on the 2011 Notes.

        In January 2010, we announced our intention to redeemWe redeemed all of our outstanding 2013 Notes at a price of 103.813% of the principal amount of $223.1 million. We expectprior to complete the redemption in the first quarter ofMarch 31, 2010. Based on the carrying value at December 31, 2009 of $222.8 million and the redemption price, we expect to incur a loss of approximately $9 million which we will record in other charges.




Interest expense on long-term debt and other interest income/expense:

        The following table is a breakdown of interest expense or income for the periods indicated (in millions):

		Year ended December 31
		2007			2008			2009
Interest costs on credit facilities and Senior Subordinated Notes (Notes)(i)		$	67.0		$	56.8		$	44.3
Mark-to-market adjustment and amortization of basis adjustment(ii)			(0.6	)		1.0			(9.0	)
Interest expense on long-term debt		$	66.4		$	57.8		$	35.3
Interest income, net of other interest expense(iii)		$	15.2		$	15.3		$	0.3

		Year ended December 31
		2008			2009			2010
Interest costs on Notes and credit facilities(i)		$	56.8		$	44.3		$	6.4
Mark-to-market adjustment and amortization of basis adjustment(ii)			1.0			(9.0	)		(0.1	)
Interest expense on long-term debt and credit facilities		$	57.8		$	35.3		$	6.3
Other interest expense (income)(iii)		$	(15.3	)	$	(0.3	)	$	0.2

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(i)

Our interest expense for 2010 consists primarily of the interest costs on the 2013 Notes until their redemption in March 2010. For 2008 and 2009, we recorded interest expense on our outstanding 2013 Notes and 2011 Notes. The interest rate on the 2013 Notes was fixed at 7.625%. We entered into agreements to swap the fixed interest rate on our 2011 Notes for a variable rate. We terminated these interest rate swap agreements on the 2011 Notes in February 2009. The average interest rate on the 2011 Notes for 2009 through to redemption in November 2009 was 7.0% (2008 — 6.5%; 2007 — 8.3%), after reflecting the variable interest rate swaps).swaps.



In November 2009, we paid $346.1 million to redeem the outstanding 2011 Notes. We expect the redemption will result in an estimated benefit to our net interest expense of approximately $14 million in 2010. Assuming we complete the redemption of our 2013 Notes in the first quarter of 2010, we expect to further reduce our interest expense by approximately $4 million per quarter after the redemption.

(ii)

We mark-to-marketmarked-to-market the embedded prepayment options in our Notes until the options are extinguished.were terminated. The mark-to-market adjustment fluctuatesfluctuated each period as it iswas dependent on market conditions, including future interest rates, implied volatilities and credit spreads. The majority of the 2009 balance arises from the amortization of the historical fair value adjustment on the 2011 Notes, from the date of discontinuing fair value hedge accounting to extinguishment, which reduced interest expense on long-term debt. We also applied fair value hedge accounting to our interest rate swaps and our hedged debt obligation (2011 Notes) until February 2009. The change in fair values each period werewas recorded in interest expense on long-term debt, except for the write-down of the embedded prepayment option due to hedge de-designation or planned debt redemption which we recorded in other charges.



(iii)

Interest income earned on cash balances throughout 2009 and 2010 was significantly lower compared to previous years2008 primarily due to lower rates and lower cash balances.




Income taxes:

        Income tax expense for 20092010 was $21.8 million on earnings before tax of $102.6 million compared to an income tax expense of $5.4 million for 2009 on earnings before tax of $60.4 million compared to anand income tax expense of $5.0 million for 2008 on losses before tax of $715.5 millionmillion. Current income taxes for 2010 consisted primarily of the tax expense in jurisdictions with current taxes payable. Current income taxes for 2010 also included additional taxes and penalties based on management's best estimate of the expected outcome of the pending settlement of a tax audit in Hong Kong. Deferred income taxes for 2010 were comprised primarily of deferred tax recoveries for future deductible temporary differences and reversals of certain valuation allowances previously recorded on deferred income tax expense of $20.8 millionassets in 2007 on earnings before tax of $7.1 million.Canada. Current income taxes for 2009 consisted primarily of the tax expense in jurisdictions with current taxes payable and additional tax reserves related to ongoing Canadian tax audits. Deferred income taxes for 2009 were comprised primarily of the deferred tax recoveries for losses and future deductible temporary differences in Canada and for reversals of certain valuation allowances previously recorded on deferred income tax assets. Current income taxes for 2008 consisted primarily of tax expense in jurisdictions with current taxes payable and additional tax reserves related to ongoing Canadian tax audits. Deferred income taxes for 2008 were comprised primarily of the deferred tax recoveries for losses and future deductible temporary differences in Canada and certain foreign taxable jurisdictions.

        We conduct business operations in a number of countries, including countries where tax incentives have been extended to encourage foreign investment or where income tax rates are low. Our effective tax rate can vary significantly quarter to quarterquarter-to-quarter due to 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 20102011 and 2015), restructuring charges, operating losses, certain tax exposures, the time period in which losses may be used under tax laws and the valuation allowances recorded on deferred income tax assets.

        Certain countries in which we do business negotiate tax incentives to attract and retain our business. Our taxes could increase if certain tax incentives we benefit from are retracted. A retraction could occur if we fail to satisfy the conditions on which these tax incentives are based, if they are not renewed upon expiration, or tax rates applicable to us in such jurisdictions are otherwise increased. We expect to continue tobelieve we will comply with the conditions governingof the tax holidays.incentives, however, changes in our outlook in any particular country could impact our ability to meet the conditions.

        In certain jurisdictions, primarily in the Americas and Europe, we currently have significant net operating losses and other deductible temporary differences, which we expect will reduce taxable income in these jurisdictions in future periods. We have determined that a valuation allowance of $582.6 million is required in respect of our deferred income tax assets as at

        At December 31, 2009 (December 31, 2008 — $591.9 million).




        As at December 31, 2009,2010, the net deferred income tax liabilityasset balance was $8.4$0.2 million (December 31, 20082009 — $31.2net deferred income tax liability of $8.4 million).

        We develop our tax filing positions based upon the anticipated nature and structure of our business and the tax laws, administrative practices and judicial decisions currently in effect in the jurisdictions in which we have assets or conduct business, all of which are subject to change or differing interpretations, possibly with retroactive effect. We are subject to tax audits and reviews by local tax authorities of historical information which could result in additional tax expense in future periods relating to prior results. Reviews by tax authorities generally focus on, but are not limited to, the validity of our inter-company transactions, including financing and transfer pricing policies which generally involve subjective areas of taxation and a significant degree of judgment. Any such increase in our income tax expense and related interest and penalties could have a significant impact on our future earnings and future cash flows.

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

        In connection with ongoing tax audits in Canada, tax authorities have taken the position that income reported by one of our Canadian subsidiaries in 2001 through 2003 should have been materially higher as a result of certain inter-company transactions. The successful pursuit




        In connection with ongoing tax audits in Hong Kong, tax authorities have taken the position that income reported by one of that assertion couldour Hong Kong subsidiaries in 1999 through 2008 should have been materially higher as a result in that subsidiary owing significant amountsof certain inter-company transactions. In July 2010, we submitted a proposed settlement of this tax audit to the Hong Kong tax authorities; if accepted, the taxes and penalties would total approximately 129.5 million Hong Kong dollars (approximately $16.6 million at current exchange rates), including the impact on future periods as a result of the reversal of tax interest and possibly penalties. We believe we have substantial defenses to the asserted position and have adequately accrued for any probable potential adverse tax impact. However, thereattributes. There can be no assurance as to the final resolution of this claim and any resulting proceedings, and if this claim and any ensuing proceedings are determined adversely to us, the amounts we may be required to pay could be material.these proceedings.

        In connection with a tax audit in Brazil, in the fourth quarter of 2009, tax authorities tookhave taken the position that income reported by our Brazilian subsidiary in 2004 should have been materially higher as a result of certain inter-company transactions. If Brazilian tax authorities ultimately prevail in their position, our Brazilian subsidiary's tax liability would increase by approximately 43.5 million Brazilian reais (approximately $26.1 million at current exchange rates). In addition, Brazilian tax authorities may make similar claims in future audits with respect to these types of transactions. We have not accrued for any potential adverse tax impact as we believe we have substantial defenses toour Brazilian subsidiary has reported the asserted position. However, there can be no assurance as to the final resolutionappropriate amount of this matter and, if it is determined adversely to us, the amounts we may be required to pay for taxes, interest and penalties could be material.income arising from inter-company transactions.

        We have and willexpect to continue to recognize the future benefit of certain Brazilian tax losses on the basis that these tax losses can and will be fully utilized in the fiscal period ending on the date of dissolution of our Brazilian subsidiary. We regularly reviewWhile our ability to do so is not certain, we believe that our interpretation of applicable Brazilian lawslaw will be sustained upon full examination by the Brazilian tax authorities and, assessif necessary, upon consideration by the likelihood of the realization of the future benefit of theBrazilian judicial courts. Our position is supported by our Brazilian legal tax losses.advisors. A change to the benefit realizable on these Brazilian losses could result in a substantial increase to our net future tax liabilities.liabilities by approximately 63.7 million Brazilian reais (approximately $38.2 million at current exchange rates).

        The successful pursuit of the assertions made by any taxing authority related to the above noted tax audits or others could result in us owing significant amounts of tax, interest and possibly penalties. We believe we have substantial defenses to the asserted positions and have adequately accrued for any probable potential adverse tax impact. However, there can be no assurance as to the final resolution of these claims and any resulting proceedings, and if these claims and any ensuing proceedings are determined adversely to us, the amounts we may be required to pay could be material.

Acquisitions:

        We may, at any time, be engaged in ongoing discussions with respect to possible acquisitions that we expect wouldcould expand our service offerings, increase our penetration in various industries, establish strategic relationships with new or existing customers and/or enhance our global manufacturing network. In order to enhance our competitiveness and expand our revenue base or the services we offer our customers, we may also look to grow our services or capabilities beyond our traditional areas of EMS manufacturing expertise. 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 such agreement would be. There can also be no assurance that an acquisition can be successfully integrated or will generate the returns that we expected.

        In January 2010, we completed the acquisition of Invec Solutions Limited, which is based in Scotland.Scotland-based Invec. Invec provides warranty management, repair and parts management services to companies in the information technology and consumer electronics markets. TheThis acquisition willis expected to enhance our global after-market services offering by integrating Invec's proprietary reverse logistics software throughout our network.

        In August 2010, we completed the acquisition of Austrian-based Allied Panels, a medical engineering and manufacturing service provider that offers concept-to-full-production solutions in medical devices with a core focus on the diagnostic and imaging market. We expect this acquisition to enhance our healthcare offering by expanding our capability in the healthcare diagnostics and imaging market, and broadening our healthcare global network to include a center of excellence in Europe.

        The cashtotal purchase price for these acquisitions was $6.4 million.$18.3 million and was financed with cash. The amounts of goodwill and amortizable intangible assets arising from these acquisitions were $10.6 million (the majority of which is not expected to be tax deductible) and $15.8 million, respectively. The purchase price for Allied Panels is subject to adjustment for contingent consideration totaling up to 7.1 million Euros (approximately $9.4 million






at current exchange rates) if specific pre-determined financial targets are achieved through fiscal year 2012. At December 31, 2010, no contingent consideration was recorded. See "— Recent Accounting Developments — First-time adoption of IFRS — Business combinations" below for the impact of IFRS on the recording of contingent consideration.

Liquidity and Capital Resources

Liquidity

        The following table shows key liquidity metrics for the periods indicated (in millions):

		As at December 31
		2007			2008			2009
Cash and cash equivalents		$	1,116.7		$	1,201.0		$	937.7

		December 31
		2008			2009			2010
Cash and cash equivalents		$	1,201.0			$937.7			$632.8

 


		Year ended December 31										Year ended December 31
		2007			2008			2009				2008			2009			2010
Cash provided by operations		$	351.4		$	208.2		$	293.5				$208.2		$	293.5		$	150.9
Cash used in investing activities			(36.9	)		(80.8	)		(66.3	)			(80.8	)		(66.3	)		(61.1	)
Cash used in financing activities			(1.5	)		(43.1	)		(490.5	)			(43.1	)		(490.5	)		(394.7	)

        We had $632.8 million in cash and cash equivalents at December 31, 2010 after spending approximately $375 million during 2010 to redeem our outstanding Notes and to repurchase outstanding shares pursuant to our NCIB. Included in our cash balance at December 31, 2010 is a $75.0 million advance we received from a customer in late December to fund working capital in support of that customer's growth.

Cash provided by operations:

        We generated $150.9 million in cash from operations during 2010, primarily from earnings after adding back non-cash charges, offset partially by higher working capital requirements to support new programs ramping in the latter half of 2010 and in 2011. The increase to our A/R and inventory balances was offset partially by higher A/P. The higher A/P balance includes a $75.0 million advance we received from a customer to fund working capital in support of that customer's growth. Our A/R balance is reduced as a result of the sale of $60.0 million of A/R at December 31, 2010 under our A/R sales program (no A/R sold at December 31, 2009).

        We generated $293.5 million in cash from operations during 2009, primarily from earnings after adding back non-cash charges and lower working capital requirements. The improvements in A/R and inventory were offset partially by decreases in A/P. The decrease in our A/R balance from the prior year reflects lower revenue and continued strong cash collections, driven in part by changes in customer payment terms. We had not sold any A/R as at December 31, 2008 or December 31, 2009 under our A/R sales program. The decrease in inventory from the prior year reflects improved inventory management and lower volumes.

        We generated $208.2 million in cash from operations in 2008 primarily from earnings after adding back non-cash charges, partially offset by higher working capital requirements. Higher working capital was driven primarily by an increase in A/R, partially offset by higher A/P. The year-over-year increase in A/R reflects that there were no A/R sold under our A/R sales program as at December 31, 2008 (December 31, 2007 — $225.0 million sold) partially offset by cash collections.

Cash used in investing activities:

        Our capital expenditures were incurred primarily to enhance our supply chain and manufacturing capabilities in various geographies and to support new customer programs.

From time-to-time, we receive cash proceeds from the sale of surplus equipment and property. Our capital spendingexpenditures for 20092010 totaled $77.3$60.8 million, representing approximately 1.3%1% of revenue for the year. We anticipate similar spending levels for 2010.During 2010, we also completed the acquisitions of Invec and Allied Panels as described above.

Cash used in financing activities:

        During 2009,2010, we paid $26.2 million (2009 — $8.4 million; 2008 — $11.9 million) for the purchase of shares in the open market by a trustee to satisfy the delivery of shares to employees upon vesting of awards under our long-term incentive plans. We also paid $140.6 million in 2010 to repurchase shares for cancellation under our NCIB. In March 2010, we paid $231.6 million (2009 — $495.8 million (2008million; 2008 — $30.4 million) in cash to repurchase our






outstanding 2011 Notes. WeIn February 2009, we terminated our interest rate swap agreements in February 2009 and received a $14.7 million in cash as settlement of these agreements. In 2009, we used $8.4 million (2008 — $11.9 million; 2007 — $3.2 million) in cash to purchase subordinate voting shares in the open market. We reissued these shares to employees as their share unit awards vest. In the first quarter of 2010, we paid approximately $29 million in cash to settle the share unit awards that vested in February 2010.settlement.

Cash requirements:

        We believe that cash flow from operating activities, together with cash on hand, and borrowings available under our revolving credit facility and intraday bank overdraft facilities, and cash from the sale of A/R, will be sufficient to fund currently anticipated working capital and planned restructuring and capital spending and debt service requirements for the next 12 months, including our planned redemption of the 2013 Notes.months. Historically, we have funded our operations from the proceeds of public offerings of equity and debt instruments, cash generated from operations, bank debt, sales of A/R and equipment lease financings. We expect to continue to enter into debt and equity financings, sales of A/R and lease transactions to fund anticipated growth and acquisitions. The issuance and timing of additional






may issue equity or convertible debt securities in the future to fund operations or make acquisitions, which could dilute current shareholders' positions. Further, we may issue debt securities that have rights and privileges senior to equity holders, and the terms of this debt could impose restrictions on our operations. The pricing of such debt securities is subject to market conditions at the time of issuance. At December 31, 2009,2010, we had significant cash balances in excess of our debt obligations.$632.8 million and no outstanding debt.

        As at December 31, 2009,2010, we have contractual obligations that require future payments as follows (in millions):

		Total(i)			2010			2011			2012			2013			2014			Thereafter
2013 Notes(ii)		$	223.1		$	223.1		$	—		$	—		$	—		$	—		$	—
Interest on long-term debt(iii)			2.8			2.8			—			—			—			—			—
Operating leases			117.8			39.5			24.3			11.7			9.2			6.9			26.2
Restricted share unit awards(iv)			29.0			29.0			—			—			—			—			—
Pension plan contributions(v)			32.6			32.6			—			—			—			—			—
Non-pension post-employment plan payments			43.2			3.8			3.8			3.9			4.0			4.1			23.6

		Total(i)			2011			2012			2013			2014			2015			Thereafter
Operating leases		$	99.5		$	33.4		$	17.7		$	13.4		$	7.8		$	5.4		$	21.8
Advance from customer(ii)			75.0			75.0			—			—			—			—			—
Pension plan contributions(iii)			34.1			34.1			—			—			—			—			—
Non-pension post-employment plan payments			46.0			3.9			3.9			4.1			4.0			4.1			26.0
Share unit awards(iv)			16.6			16.6			—			—			—			—			—

---

(i)

The contractual obligations chart above does not include our agreement with a third party for the outsourcing of our IT support. Our costs under this IT support agreement fluctuate based on our usage. We are permitted to terminate this agreement at any time for a declining fee.



(ii)

RepresentsWe received a cash advance from a customer in late December 2010 to fund working capital requirements. According to the principal amount outstanding. In January 2010,terms of the agreement with this customer, we announced our intentionare required to redeemrepay the 2013 Notesadvance in the first quarter of 2010.February 2011.



(iii)

Estimated interest on the 2013 Notes based on completing the planned redemption in the first quarter of 2010.



(iv)

Represents cash paid in the first quarter of 2010 to settle share unit awards vested in February 2010. We expect to purchase subordinate voting shares in the open market to settle share unit awards vesting in future periods. We have excluded the estimated cash outlay for these future settlements from the above table due to difficulties in estimating future share prices and the number of awards that will ultimately vest.



(v)

Our pension funding policy is to contribute amounts sufficient to meet minimum local statutory funding requirements that are based on actuarial calculations. We may make additional discretionary contributions based on actuarial assessments and, from time to time, make voluntary contributions to the pension plans. Based on our latest actuarial valuations, we estimate our minimum funding requirementsrequirement for 20102011 to be $32.6$34.1 million (2009(2010 — $33.6 million; 2009 — $33.0 million). We also expect to contribute $3.8 millionSee further details in note 13 to the non-pension post-employment benefit plans to fund the estimated benefit payments in 2010. We expect our total pension expense for 2010 to be $19.4 million (2009 — $23.6 million).

        The following outlines our pension contributions and pension expense for the periods indicated (in millions):

		Year ended December 31
		2008			2009			2010
								(estimated)
Contributions:
Defined benefit plans		$	22.0		$	22.3		$	21.5
Defined contribution plans			11.8			10.7			11.1
		$	33.8		$	33.0		$	32.6
Expense:
Defined benefit plans		$	6.2		$	12.9		$	8.3
Defined contribution plans			11.8			10.7			11.1
		$	18.0		$	23.6		$	19.4

        We maintain multiple defined benefit plans. Our contribution amount is determined based on actuarial valuations. The global economic conditions have impacted our asset returns, primarily in the second half of 2008. Continued volatility in the capital markets will impact future asset values in our pension plans.Consolidated Financial Statements. A significant deterioration in the asset values or asset returns could lead to higher than expected future contributions. Risks associated with actuarial valuation measurement uncertaintymeasurements may also result in higher






future cash contributions. We fund our pension contributions from cash on hand. Although we have defined benefit plans that are currently in a net unfunded position, we do not expect our pension obligations will have a material adverse impact on our future results of operations, cash flows or liquidity.



(iv)
Represents cash to be paid in the first quarter of 2011 to cash-settle certain performance share units that vest in February 2011.



From time-to-time, we fund the purchase of shares in the open market by a trustee to settle share unit awards vesting in future periods. During 2010, we paid $26.2 million for the purchase of 2.8 million shares for awards vesting in the first quarter of 2011. We estimate that 3.8 million of the outstanding share unit awards at December 31, 2010 will vest at target levels in the first quarter of 2012. We excluded the estimated cash outlay in the above chart for these future purchases due to the difficulty of estimating future share prices and the number of awards that will ultimately vest, which is subject to change based on forfeitures and performance conditions.

        As at December 31, 2009,2010, we have commitments that expire as follows (in millions):

		Total			2010			2011			2012			2013			2014			Thereafter				Total			2011			2012			2013			2014			2015			Thereafter
Foreign currency contracts(i)		$	489.2		$	473.2		$	16.0		$	—		$	—		$	—		$	—			$	658.7		$	655.2		$	3.5		$	—		$	—		$	—		$	—
Letters of credit, letters of guarantee and surety bonds			50.2			50.2			—			—			—			—			—				49.5			49.5			—			—			—			—			—
Capital expenditures(ii)			15.0			15.0			—			—			—			—			—				17.8			17.8			—			—			—			—			—
Acquisitions(iii)			6.4			6.4			—			—			—			—			—
Contingent consideration(iii)																									9.4			—			4.7			4.7			—			—			—

---

(i)

Represents the aggregate notional amounts of the forward currency contracts.



(ii)

AsOur capital spending varies each period based on the timing of December 31, 2009, we had committed approximately $15.0 million in capital expenditures, principally for machinerynew business wins and equipment and facilities in our lower-cost geographies to support new customer programs.forecasted sales levels. Based on our current operating plans, we anticipate capital spending for 20102011 to be approximately 1.1% to 1.3%1.5% of revenue, and expect to fund this spending from cash on hand. As of December 31, 2010, we had committed $17.8 million in capital expenditures, principally for machinery, equipment and facilities to support new customer programs. In addition, based on the tax incentives that we regularly review acquisition opportunitieshave benefited from as of December 31, 2010, we are committed to spend a further $46.4 million in capital expenditures between 2011 and as a result, could require additional debt or equity financing to fund these transactions.October 2014.



(iii)

In connection with the acquisition of Allied Panels, we are contingently obligated to pay up to 7.1 million Euros (approximately $9.4 million at current exchange rates) if specified pre-determined financial targets are achieved through fiscal year 2012. We paid $6.4 millionhave included, in January 2010 to acquire Invec Solutions Limited.the above chart, the maximum payout in each of the two years.




        Cash outlays for our contractual obligations and commitments identified above are expected to be funded by cash on hand. We also have outstanding purchase orders with certain suppliers for the purchase of inventory. These purchase orders are generally short-term. Orders for standard items can typically be cancelled with little or no financial penalty. Our policy regarding non-standard or customized orders dictates that such items are generally ordered specifically for customers who have contractually assumed liability for the inventory. In addition, a substantial portion of the standard items covered by our purchase orders were procured for specific customers based on their purchase orders or forecasts under which the customers have contractually assumed liability for such material. Accordingly,We cannot quantify with a reasonable degree of accuracy the amount of our liability from purchase obligations under these purchase orders cannotorders.

        From time-to-time, we pay cash for the purchase of shares in the open market by a trustee to satisfy the delivery of shares to employees upon vesting of the awards under our long-term incentive plans. During 2010, we paid $26.2 million (2009 — $8.4 million; 2008 — $11.9 million), for the trustee to purchase shares in the open market. We expect to continue to make these payments for the purchase of shares in the open market to meet our on-going obligations to equity-settle awards as they vest in future periods.

        In July 2010, we received approval from the TSX to launch our NCIB. Under the NCIB, we may repurchase on the open market, at our discretion until the earlier of August 2, 2011 and the completion of purchases under the NCIB, up to 18.0 million shares, subject to the normal terms and limitations of such bids. Under the TSX rules, daily purchases will be quantifiedlimited to 175,908 shares, other than block purchase exceptions. The actual number and timing of any share purchases will be determined by management, subject to applicable law and the rules of the TSX. In accordance with the TSX rules, the maximum number of shares we may repurchase for cancellation under the NCIB is reduced by the number of shares purchased for employee equity-based incentive programs.

        We have and will continue to make purchases through the facilities of the New York Stock Exchange (NYSE) and the TSX, or such other permitted means (including through other published markets), at prevailing market prices or as otherwise permitted. The share repurchase program is being funded with existing cash resources and we will cancel any shares we repurchase under the NCIB. We paid $140.6 million, including transaction fees, to repurchase for cancellation a reasonable degreetotal of accuracy.16.1 million shares at a weighted average price of $8.75 per share under the NCIB since its commencement.

        Security holders may obtain a copy of our NCIB application to the TSX, without charge, by contacting Celestica Investor Relations atclsir@celestica.com.

        We have provided routine indemnifications, the terms of which range in duration and often are not explicitly defined. These may include indemnifications against adverse impacts due to changes in tax laws, third-party intellectual property infringement claims and third-party claims for property damage resulting from our negligence. We have also provided indemnifications in connection with the sale of certain businesses and real property. The maximum potential liability from these indemnifications cannot reasonably be estimated. In some cases, we have recourse against other parties to mitigate our risk of loss from these indemnifications. Historically, we have not made significant payments relating to these types of indemnifications.

Litigation and contingencies:

        In 2007, securities class action lawsuits were commenced against the Companyus and our former Chief Executive and Chief Financial Officers in the United States District Court of the Southern District of New York by certain individuals, on behalf of themselves and other unnamed purchasers of our stock, claiming that they were purchasers of our stock during the period January 27, 2005 through January 30, 2007. The plaintiffs allege violations of United States federal securities laws and seek unspecified damages. They allege that during the purported class period we made statements concerning our actual and anticipated future financial results that failed to disclose certain purportedly material adverse information with respect to demand and inventory in our Mexican operations and our information technology and communications divisions. In an amended complaint, the plaintiffs have added one of our directors and Onex Corporation as defendants. All defendants have filed motions to dismiss the amended complaint. TheseOn October 14, 2010, the United States District Court issued a memorandum decision and order granting the defendants' motions to dismiss the consolidated amended complaint in its entirety. The plaintiffs have filed a notice of appeal to the United States Court of Appeals for the Second Circuit of the dismissal of its claims against us, our former Chief Executive and Chief Financial Officers, but are pending.not






appealing the dismissal of its claims against one of our directors and Onex Corporation. The briefing process on the appeal has not yet commenced. A parallel class proceeding has also been issuedremains against the Companyus and our former Chief Executive and Chief Financial Officers in the Ontario Superior Court of Justice, but neither leave nor certification of the action has been granted by that court. We believe that the allegations in these claimsthe claim and the appeal are without merit and we intend to defend against them vigorously. However, there can be no assurance that the outcome of the litigation will be favorable to us or that it will not






have a material adverse impact on our financial position or liquidity. In addition, we may incur substantial litigation expenses in defending these claims.both the Canadian claim and the appeal. We have liability insurance coverage that may cover some of our litigation expenses, potential judgments or settlement costs.

        WeIn December 2009, we received a recovery of damages related to certain purchases we made in prior periods as a result of the settlement of a class action lawsuit. We recorded a recovery in the recovery,fourth quarter of 2009, net of estimated reserves, inthrough other charges of $23.7 million during the fourth quarter of 2009. Future adjustmentscharges. Adjustments to our estimated reserves if any, will behave also been recorded through other charges.

Capital Resources

        Our main objectives in managing our capital resources are to ensure liquidity and to have funds available for working capital or other investments required to grow our business. Our capital resources consist of cash, short-term investments, access to a revolving credit facilitiesfacility and intraday bank overdraft facilities senior subordinated notes and share capital.

        At December 31, 2009,2010, we had cash of $937.7$632.8 million, comprised of cash (approximately 28%38%) and cash equivalents (approximately 72%62%). Our current portfolio consists of certificates of deposits and certain money market funds that are securedhold exclusively by U.S. government securities.securities, and certificates of deposits. The majority of our cash and cash equivalents are held with financial institutions each of which had at December 31, 20092010 a Standard and Poor's rating of A-1 or above.

        We manageregularly review our capitalization levelsborrowing capacity and make adjustments, as available, for changes in economic conditions. At December 31, 2009,2010, we had full access to a $200.0 million revolving credit facility (which was due to expire in April 2011), access to $65.0 million in intraday bank overdraft facilities and we could sell up to $250.0 million in A/R, on a committed basis, under an A/R sales program to provide short-term liquidity. OurAt December 31, 2010, we sold $60.0 million of A/R under our A/R sales program (December 31, 2009 — no A/R sold) and we had no borrowings outstanding under our revolving credit or bank overdraft facilities.

        In January 2011, we renewed our revolving credit facility on generally similar terms and conditions (including covenants and security for the facility) and increased the size of the facility to $400.0 million, with a maturity of January 2015. The facility has restrictive covenants, including those relating to debt incurrence, the sale of assets and a change of control. The facility also contains financial covenants that may limit the amount of debt that can be incurred under the facility. We closely monitor our business performance to evaluate compliance with our covenants. Our 2013 Notes, which we intend to redeem in the first quarter of 2010, also have restrictions on financing activities. During 2009, we redeemed our outstanding 2011 Notes. We continue to monitor and review the most cost-effective methods for raising capital, taking into account these restrictions and covenants. As of December 31, 2009, we were in compliance with these covenants.

        We have not distributed, nor do we have any current plan to distribute, any dividends to our shareholders nor do we have any current plans to repurchase shares through a stock buy-back plan. We have purchased and expect to, from time to time, purchase shares in the open market for the settlement of share unit awards to employees under our long-term incentive plans.

        Our strategy on capital risk management has not changed since 2008. Other than the restrictive covenants associated with our debt obligations, we are not subject to any contractual or regulatorily imposed capital requirements. While some of our international operations are subject to government restrictions on the flow of capital into and out of their jurisdictions, these restrictions have not had a material impact on our operations.

        Our revolving credit facility for $300.0 million expired in April 2009. In April 2009, we renewed this facility on generally similar terms and conditions, and reduced the size of the facility to $200.0 million, with a maturity of April 2011. We pledged certain assets, including the shares of certain North American subsidiaries, as security for the facility. The facility includes a $25.0 million swing-line facility that provides for short-term borrowings up to a maximum of seven days. Borrowings under the facility bear interest at LIBOR plus a margin, except that borrowings under the swing-line facility bear interest at a base rate plus a margin. Borrowings bear a higher interest rate under this facility than under the prior facility.

        The facility has restrictive covenants relating to debt incurrence, the sale of assets, and a change of control. We are also required to comply with financial covenants relatedrelating to indebtedness, interest coverage and liquidity.liquidity and we have pledged certain assets as security. We were in compliance with all covenants at December 31, 2009. There were no borrowings outstanding under our facility at December 31, 2009. Commitment fees for 2009 were $2.1 million. We paid $2.3 million in upfront commitment fees and closing costs in the second quarter of 2009. These costs are amortized to interest expense on long-term debt over the term of the renewed facility.




        We have additional uncommitted bank overdraft facilities available for operating requirements which total $65.0 million at December 31, 2009. There were no borrowings outstanding under these facilities at December 31, 2009.2010.

        In November 2009,2010, we renewed an agreement to sell certain A/R to a third-party bank (which had at December 31, 20092010 a Standard and Poor's rating of A+)A-1) and other qualified purchasers. This program expires in November 2012.

We can sellredeemed all of our outstanding Notes prior to March 31, 2010. As noted above, we also commenced an NCIB for up to $250.0 million9% of our outstanding subordinate voting shares in A/R, on a committed basis, to provide short-term liquidity. The program also provides for the sale of certain A/R in excess of the committed amount at the discretion of the purchasers. At December 31, 2009, we had not sold any A/R under the program (December 31, 2008 — zero dollars sold; December 31, 2007 — $225.0 million sold). This program remains available to us until NovemberJuly 2010.

        Both        Standard and Poor's and Moody's Investors Service provide ratingsprovides a corporate credit rating on Celestica. These credit ratings reflect the agencies' current opinion of the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations or a specific financial program. The agencies take many factors into consideration when providing a rating including, but not limited to, an industry's operating environment, financial performance of the debtor, creditworthiness of guarantors, insurers, or other forms of credit enhancement on the obligation and the currency in which the obligation is denominated. A securityThis rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the rating organization. A rating does not comment as to market price or suitability for a particular investor.

        On September 29, 2009, As at February 22, 2011, our Standard and Poor's upgraded our corporate credit rating to BB- from B+ and our Notes rating to BB- from B,is BB, with a stable outlook. On February 25, 2010, following the announcement of our fourth quarter results and our intention to redeem our outstanding 2013 Notes, Standard and Poor's upgraded our corporate and Notes ratings to BB from BB-, with a stable outlook. The Notes rating, which is 13th out of 22 on the Standard and Poor's rating scale, means that the obligor currently has the capacity to meet its financial commitment on the obligation, but adverse business, financial or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation. On November 6, 2009, Moody's Investor Service upgraded our corporate rating to Ba3 from B1 and our Notes rating to B2 from B3 with a stable outlook. The Notes rating is 15th out of 21 on the Moody's Investor Service rating scale. Obligations rated B2 are considered to be in the mid range of obligations that are judged to be speculative and subject to high credit risk. A reduction in our credit ratingsrating could adversely impact our future cost of borrowing. At December 31, 2009,

        Our strategy on capital risk management has not changed since 2009. Other than the restrictive covenants associated with our revolving credit facility noted above, we had significant cash balances in excessare not subject to any contractual or regulatory capital requirements. While some of our debt obligations.international operations are subject to government restrictions on the






flow of capital into and out of their jurisdictions, these restrictions have not had a material impact on our operations.

Financial instruments:

        Our short-term investment objectives are to preserve principal and to maximize yields without significantly increasing risk, while at the same time not materially restricting our short-term access to cash. To achieve these objectives, we maintain a portfolio consisting of a variety of securities, including certificates of deposit andcertain money market funds that are securedhold exclusively by U.S. government securities.securities, and certificates of deposit.

        The majority of our cash balances are held in U.S. dollars. We price the majority of our products in U.S. dollars and the majority of our material costs are also denominated in U.S. dollars. However, a significant portion of our non-material costs (including payroll, pensions, facility costs and costs of locally sourced supplies and inventory) are denominated in various other currencies. As a result, we may experience foreign exchange gains or losses on translation or transactions due to currency fluctuations.

        We have a foreign exchange risk management policy in place to control our hedging activities and we do not enter into speculative trades. Our current hedging activity is designed to reduce the variability of our foreign currency costs where we have local manufacturing operations and generally involves entering into contracts to trade U.S. dollars for various currencies at future dates.operations. We traditionally enter into forward exchange contracts to hedge against our cash flows in foreign currencies. To mitigate foreign exchange translation volatility, we enter into forward exchange contracts to partially hedge ourand significant balance sheet exposures in certain foreign currencies. These balanceBalance sheet hedges are based on our forecasts of the future position of net assets or liabilities denominated in foreign currencies and, therefore, may not mitigate the full impact of any translation impacts in the future. There is no assurance that our hedging transactions will be successful.




        At December 31, 2009,2010, we had forward exchange contracts to trade U.S. dollars in exchange for the following currencies (in millions):

Currency		Amount of U.S. dollars			Weighted average exchange rate of U.S. dollars			Maximum period in months			Fair value gain/(loss)				Amount of U.S. dollars			Weighted average exchange rate of U.S. dollars			Maximum period in months			Fair value gain/(loss)
Canadian dollar		$	206.5		$	0.92			15		$	7.7			$	296.6		$	0.98			13		$	5.4
Thai baht																81.9			0.03			12			2.3
Mexican peso																71.0			0.08			12			1.5
Malaysian ringgit																62.6			0.31			12			1.8
British pound sterling			89.5			1.60			4			(0.1	)			56.9			1.58			4			1.4
Thai baht			50.1			0.03			12			0.2
Malaysian ringgit			47.8			0.29			12			0.2
Mexican peso			37.1			0.08			12			0.1
Euro																39.2			1.34			4			—
Singapore dollar			18.9			0.70			12			0.3				23.4			0.74			12			1.0
Euro			13.3			1.45			3			—
Japanese yen																7.5			0.01			1			(0.2	)
Swiss franc																7.2			1.04			4			(0.2	)
Romanian lei			13.1			0.33			12			(0.3	)			7.1			0.31			6			—
Brazilian real																3.7			0.59			3			—
Czech koruna			12.9			0.05			6			(0.1	)			1.6			0.05			3			—
Total		$	489.2								$	8.0			$	658.7								$	13.0

        Our contracts generally extend for periods of up to 15 months and expire by March 2011.the end of the first quarter of 2012.

        The fair value of these contracts at December 31, 20092010 was a net unrealized gain of $8.0$13.0 million (December 31, 20082009 — net unrealized lossgain of $38.9$8.0 million). The unrealized gains or losses are a result of fluctuations in foreign exchange rates between the time the forward contracts were entered into and the valuation date at period end. The change in the net unrealized gain or loss of our foreign currency contracts during 2009 is due primarily to the settlement of contracts with significant losses and the favourable movement in the exchange rates for the currencies we hedge. We monitor our hedging program each quarter. The counterparties to these contracts are financial institutions, each of which had at December 31, 2009 a Standard and Poor's rating of A or above.




Financial risks:

        We are exposed to a variety of financial risks associated with financial instruments as part of our normal operations. We have exposures to the following financial risks arising from financial instruments: market risk, credit risk and liquidity risk.instruments.

        Market risk: This is the risk that results in changes to market prices, such as foreign exchange rates and interest rates, which could affect our operations or the value of our financial instruments. To manage this risk, we enter into various derivative hedging transactions.

        Currency risk: Due to the nature of our international operations, we are exposed to exchange rate fluctuations on our cash receipts, cash payments and balance sheet exposures denominated in various foreign currencies. The majority of our currency risk is driven by the operational costs incurred in local currencies by our foreign subsidiaries. We currently manage this risk through our hedging program using forecasts of future cash flows and our balance sheet exposures denominated in foreign currencies.

        Interest rate risk: We are exposed to interest rate risks as we have significant cash balances invested at floating rates. Borrowings under our revolving credit facility bear interest at LIBOR plus a margin. If we borrow under this facility, we will be exposed to interest rate risks due to fluctuations in the LIBOR rate.

        Credit risk: Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a financial loss to us. To mitigate the risk of financial loss from defaults under our foreign currency forward exchange contracts, theseour contracts are held by counterparty financial institutions each of which had at December 31, 20092010 a Standard and Poor's rating of A or above. The financial institution with which we renewed ourhave an A/R sales program had a Standard and Poor's rating of A+A-1 at December 31, 2009.2010. At December 31, 2009,2010, we had not sold any$60.0 million of A/R under this program. We believe that the credit risk of counterparty non-performance is low.

        We also provide unsecured credit to our customers in the normal course of business. We mitigate this credit risk by monitoring our customers' financial condition and performing ongoing credit evaluations, as well as frequent communications with them, enabling us to monitor current changes in their business operations.evaluations. We review






concentration ofconsider credit risk in establishing our allowance for doubtful accounts and we believe our allowances are adequate. As atAt December 31, 2009,2010, less than 1% of our gross A/R wereare over 90 days past due and our allowance for doubtful accounts balance was $7.5$5.1 million.

        Liquidity risk: Liquidity risk is the risk that we may not have cash available to satisfy our financial obligations as they come due. The majority of our financial liabilities recorded in accounts payable and accrued liabilities are due within 90 days. In the first quarter of 2010, we intend to redeem our outstanding 2013 Notes, with a principal amount of $223.1 million, at a price of 103.813%, together with accrued and unpaid interest to the redemption date. Management believesWe believe that cash flow from operations, together with cash on hand, cash from the sale of A/R, and borrowings available under our revolving credit facility and intraday bank overdraft facilities are sufficient to support our financial obligations.

Related Party Transactions

        In 2008, weWe have entered into a manufacturing agreement with a company under the control of our controlling shareholder. During 2009,2010, we recorded revenue of $43.3 million (2009 — $42.3 million) from this related party. At December 31, 2010, we had $4.9 million (2008(December 31, 2009 — $19.3$3.9 million) due from this related party. All transactions with this related party were in the normal course of operations. All amountsoperations and were recorded at the exchange amount being the amountas agreed to by the parties.parties based on arm's length terms.

Outstanding Share Data

        As of February 22, 2010,2011, we had 211.0197.1 million outstanding subordinate voting shares and 18.9 million outstanding multiple voting shares. We also had 10.79.9 million outstanding stock options, 5.84.8 million outstanding restricted share units and 8.18.0 million outstanding performance share units, each such option or unit entitling the holder to receive one subordinate voting share pursuant to the terms thereof (subject to time or performance based vesting).

        In October 2009, we issued a short form prospectus related to the secondary offering and sale of 10.7 million subordinate voting shares of our company by Onex Corporation and certain of its affiliates (Onex), our controlling shareholder. As part of this secondary offering, Onex converted 10.7 million multiple voting shares to 10.7 million subordinate voting shares in order to effect the sale. We did not receive any proceeds from the sale.

Controls and Procedures

Evaluation of disclosure controls and procedures:

        Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rules 13a-1513a-15(e) and 15d-1515d-15(e) under the SecuritiesU.S. Exchange Act of 1934 (the Exchange Act)) designed to ensure that






information we are required to disclose in the reports that we file or submit under the U.S. Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission'sSEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the U.S. Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

        Under the supervision of and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the year.period. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to meet the requirements of Rules 13a-15 and 15d-15 under the U.S. Exchange Act.

        A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that its objectives are met. Due to inherent limitations in all such systems, no evaluation of controls can provide absolute assurance that all control issues within a company have been detected. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met.




Changes in internal controls over financial reporting:

        During 2009,2010, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Management's report on internal control over financial reporting:

        Reference is made to our Management's report on page F-1 of our Annual Report. Our auditors, KPMG LLP, an independent registered public accounting firm, have issued an audit report on our internal controls over financial reporting for the year ended December 31, 2009.2010. This report appears on page F-2.

Unaudited Quarterly Financial Highlights (in millions, except per share amounts)

			2008												2009														2009												2010
			First Quarter			Second Quarter			Third Quarter			Fourth Quarter			First Quarter			Second Quarter			Third Quarter			Fourth Quarter					First Quarter			Second Quarter			Third Quarter			Fourth Quarter			First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Revenue	Revenue		$	1,835.7		$	1,876.3		$	2,030.8		$	1,935.4		$	1,469.4		$	1,402.2		$	1,556.2		$	1,664.4		Revenue		$	1,469.4		$	1,402.2		$	1,556.2		$	1,664.4		$	1,518.1		$	1,585.4		$	1,546.5		$	1,876.1
Gross profit %	Gross profit %			6.3%			6.7%			7.4%			7.3%			7.6%			7.3%			6.9%			6.6%		Gross profit %			7.6%			7.3%			6.9%			6.6%			7.0%			6.8%			6.9%			6.5%
Net earnings (loss)	Net earnings (loss)		$	29.8		$	39.8		$	32.1		$	(822.2	)	$	19.2		$	5.3		$	(0.6	)	$	31.1		Net earnings (loss)		$	19.2		$	5.3		$	(0.6	)	$	31.1		$	25.9		$	(6.1	)	$	35.4		$	25.6
# of basic shares	# of basic shares			229.1			229.2			229.4			229.4			229.4			229.4			229.5			229.7		# of basic shares			229.4			229.4			229.5			229.7			229.9			230.3			229.6			221.4
# of diluted shares	# of diluted shares			229.2			230.4			230.3			229.4			229.4			230.2			229.5			232.0		# of diluted shares			229.4			230.2			229.5			232.0			232.8			230.3			231.5			223.5
Net earnings (loss):	Net earnings (loss):																										Net earnings (loss):
	per share — basic		$	0.13		$	0.17		$	0.14		$	(3.58	)	$	0.08		$	0.02		$	0.00		$	0.14		per share — basic		$	0.08		$	0.02		$	0.00		$	0.14		$	0.11		$	(0.03	)	$	0.15		$	0.12
	per share — diluted		$	0.13		$	0.17		$	0.14		$	(3.58	)	$	0.08		$	0.02		$	0.00		$	0.13		per share — diluted		$	0.08		$	0.02		$	0.00		$	0.13		$	0.11		$	(0.03	)	$	0.15		$	0.11

Comparability quarter-to-quarter:

        The quarterly data reflects the following:

–

the fourth quarters of 20082009 and 20092010 include the results of our annual impairment testing of goodwill and long-lived assets; and



–

all quarters of 20082009 and 20092010 were impacted by our announced restructuring plans. The amounts vary from quarter to quarter.

Fourth quarter 2009 compared to fourth quarter 2008:

        Revenue for the fourth quarter of 2009 decreased 14% to $1.7 billion from $1.9 billion for the same period in 2008. Lower revenue primarily from our telecommunications and enterprise communications segments accounted for a 12% decrease in total revenue from the prior period. This was offset partially by our storage segment which grew primarily due to new program wins. Revenue from our consumer market was relatively flat for the fourth quarter of 2009 compared to the same period in 2008. Gross margin decreased to 6.6% of revenue for the fourth quarter of 2009 from 7.3% for the same period in 2008, primarily due to reduced revenue, changes in the mix of products manufactured and the mark-to-market adjustment on restricted share unit awards in the fourth quarter of 2009. SG&A for the fourth quarter of 2009 of $61.2 million decreased $15.7 million from the same period in 2008 primarily as a result of lower foreign exchange losses and overall cost reductions, offset partially by the $5.7 million mark-to-market adjustment on the restricted share unit awards in the fourth quarter of 2009. The net loss in the fourth quarter of 2008 included a goodwill impairment charge of $850.5 million.quarter-to-quarter.

Fourth quarter 20092010 compared to thirdfourth quarter 2009:

        Revenue for the fourth quarter of 20092010 increased 7%13% to $1.7$1.9 billion from $1.6$1.7 billion for the third quarter ofsame period in 2009. Revenue fromincreased in all our end markets increased sequentially, other than our consumer market which decreased primarily due to our disengagement of a program in the telecommunicationsgaming console business, and our storage market which was relatively flat for the fourth quarter of 2010 compared to the same period in 2009. Gross margin decreased to 6.5% of






revenue for the fourth quarter of 2010 from 6.6% for the same period in 2009, primarily due to changes in product mix. Gross margin and SG&A for the fourth quarters of 2009 and 2010 were also negatively impacted by mark-to-market adjustments on share unit awards that we elected to cash-settle.

Fourth quarter 2010 compared to third quarter 2010:

        Revenue for the fourth quarter of 2010 increased 21% from the third quarter of 2009.2010. Revenue increased in all end markets. The largest contributor to the increase in revenue came from the server and consumer and serverend markets, benefited fromprimarily due to new program wins. Gross margin decreased from 6.9% of revenue in the third quarter of 20092010 to 6.6%6.5% of revenue in the fourth quarter of 2009,2010, primarily asdue to changes in product mix and higher variable compensation costs due to a result of the mark-to-market adjustment on the restricted share unit awards, which negatively impacted gross margin in the fourth quarter of 2009 by 0.3%. SG&A increased $7.2 million from the third quarter of 2009 to $61.2 million in the fourth quarter of 2009, primarily reflecting the $5.7 million






mark-to-market adjustment on the restricted share unit awards in the fourth quarter of 2009. The net loss in the third quarter of 2009 included restructuring and other charges totaling $43.5 million. Net earnings in the fourth quarter of 2009 included other recoveries totaling $8.7 million, net of restructuring charges.2010.

Fourth quarter 20092010 actual compared to guidance:

        OurOn October 28, 2010, we provided the following guidance is provided on anfor the fourth quarter of 2010:

		Q4 2010
		Guidance		Actual
Revenue (in billions)		$1.70 to $1.85		$	1.88
Adjusted net earnings per share (diluted)		$0.20 to $0.26		$	0.26

        For the fourth quarter of 2010, revenue and adjusted net earnings (defined below) basis only as it is difficult to forecastper share was at the various items impacting GAAPhigh end of our published guidance.

        Our guidance includes a range for adjusted net earnings such as the amountper share (which is a non-GAAP measure and timing ofis defined below). We believe adjusted net earnings is an important measure for investors to understand our restructuringcore operating performance and debt repurchase activities.to compare our operating results with our competitors. A reconciliation of adjusted net earnings which is a non-GAAP measure, to Canadian GAAP net earnings is set forth below.

        Beginning withGAAP net earnings per share for the fourth quarter of 2009, we revised the definition of our non-GAAP adjusted2010 was $0.11 on a diluted basis. GAAP net earnings to exclude allfor the fourth quarter included a $0.16 per share (pre-tax) charge for the following items: quarterly stock-based compensation, (in additionamortization of intangible assets (excluding computer software) and restructuring charges. This charge was higher than our quarterly pre-tax estimate of between $0.05 to the items previously excluded)$0.12 per share provided on October 28, 2010, primarily due to allowhigher than expected restructuring charges and a mark-to-market adjustment for a better comparison with our major North American EMS competitors. For consistency, we made similar changes in the definitions of additional non-GAAP metrics: adjusted gross margin, adjusted SG&A, adjusted operating margin (EBIAT) and ROIC. Prior tostock-based compensation costs. GAAP net earnings for the fourth quarter of 2009, option expense was the only stock-based compensation item excluded from the adjusted net earnings definition and other non-GAAP metrics. We now exclude (in addition to the items previously excluded) restricted2010 also included a $0.03 per share unit costs and any other stock-based compensation expense that may arise from(pre-tax) charge primarily for impairment of long-lived assets which we did not forecast.

Non-GAAP measures:

        Management uses adjusted net earnings and other non-GAAP measures.measures to (i) assess operating performance and the effective use and allocation of resources, (ii) provide more meaningful period-to-period comparisons of operating results, (iii) enhance investors' understanding of the core operating results of our business and (iv) set management incentive targets.

        We have recalculated prior period comparativesbelieve investors use both GAAP and non-GAAP measures to conformassess management's past, current and future decisions associated with strategy and allocation of capital, as well as to the current periods' definitions.analyze how businesses operate in, or respond to, swings in economic cycles or to other events that impact core operations.

        Management usesOur non-GAAP measures include gross profit, gross margin (gross profit as a percentage of revenue), SG&A, SG&A as a percentage of revenue, operating earnings (EBIAT), operating margin (EBIAT as a percentage of revenue), adjusted net earnings, (and other non-GAAP metrics) as a measure of enterprise-wide performance. Management believes adjusted net earnings is a useful measure forper share, ROIC, free cash flow, cash cycle days and inventory turns. In calculating these non-GAAP financial measures, management as well as investors, to compare operating performance from period-to-period. Adjusted net earnings do not includeexcludes the effectsfollowing items: stock-based compensation, amortization of intangible assets (excluding computer software), restructuring and other charges most(most significantly restructuring charges), the write-down of goodwill and long-lived assets, and gains or losses onrelated to the repurchase of shares or debt, and the related incomenet of tax effect of these adjustments and any significant deferred tax write-offs or recoveries. We also exclude the following recurring charges: restructuring costs, total stock-based compensation including option and restricted share unit costs, amortization of intangible assets (except amortization of computer software) and the related income tax effect of these adjustments. The term adjusted net earnings does




        These non-GAAP measures do not have any standardized meaning prescribed by Canadian or U.S. GAAP and isare not necessarily comparable to similar measures presented by other companies. Adjusted net earnings isNon-GAAP measures are not a measuremeasures of performance under Canadian or U.S. GAAP and should not be considered in isolation or as a substitute for net earnings prepared in accordance withany standardized measure under Canadian or U.S. GAAP. See reconciliation below.

        On October 22, 2009, we providedThe most significant limitation to management's use of non-GAAP financial measures is that the following guidancecharges and expenses excluded from the non-GAAP measures are nonetheless charges that are recognized under GAAP and that have an economic impact on us. Management compensates for the fourth quarter of 2009:

		Q4 09
		Guidance		Actual
Revenue (in billions)(i)		$1.55 to $1.70		$1.66
Adjusted net earnings per share(ii)		$0.16 to $0.22		$0.21

---

(i)

Revenue for the fourth quarter of 2009 exceeded the midpointthese limitations primarily by issuing GAAP results to show a complete picture of our published guidance.



(ii)

Our published guidance rangeperformance, and reconciling non-GAAP results back to GAAP.

        The economic substance of these exclusions and management's rationale for adjusted net earnings per shareexcluding these from non-GAAP financial measures is provided below:

        Stock-based compensation, which represents the estimated fair value of $0.14stock options and restricted stock units granted to $0.20 didemployees, is excluded because grant activities vary significantly from quarter-to-quarter in both quantity and fair value. In addition, excluding this expense allows us to better compare core operating results with those of our competitors who also generally exclude stock-based compensation from their core operating results, who may have different granting patterns and types of equity awards, and who may use different option valuation assumptions than we do.

        Amortization charges (excluding computer software) consist of non-cash charges against intangible assets that are impacted by the timing and magnitude of acquired businesses. Amortization of intangibles varies among competitors, and we believe that excluding these charges permits a better comparison of core operating results with those of our competitors who also generally exclude amortization charges.

        Restructuring and other charges, which consist primarily of employee severance, lease termination and facility exit costs associated with closing and consolidating manufacturing facilities and reductions in infrastructure, are excluded because such charges are not directly related to ongoing operating results and do not reflect expected future operating expenses after completion of these activities. We believe that excluding these charges permits a better comparison of our core operating results with those of our competitors who also generally exclude these costs in assessing operating performance.

        Impairment charges, which consist of non-cash charges against goodwill and long-lived assets, result primarily when the revised definition for this metric. Guidance for adjusted net earnings per share, usingcarrying value of these assets exceeds their fair value. These charges are excluded because they are generally non-recurring. In addition, our competitors may record impairment charges at different times and excluding these charges permits a better comparison of our core operating results with those of our competitors who also generally exclude these charges in assessing operating performance.

        Gains or losses related to the revised definition, would have been $0.16repurchase of shares or debt are excluded as these gains or losses do not impact core operating performance and vary significantly among our competitors who also generally exclude these charges in assessing operating performance.

        Significant deferred tax write-offs or recoveries are excluded as these write-offs or recoveries do not impact core operating performance and vary significantly among our competitors who also generally exclude these charges in assessing operating performance.

        Our transition from Canadian GAAP to $0.22. Adjusted net earnings per share forIFRS is not expected to significantly impact the fourth quartercalculation of 2009 was $0.21 and met the high end of this range.

        Adjusted net earnings per share for the fourth quarter of 2008, using the revised definition, was $0.28 and included a $0.07 per share benefit associated with the reductionthese non-GAAP measures. For periods beginning in the income tax rate for adjusted net earnings. Excluding the tax benefit, adjusted net earnings per share for the fourth quarter of 2008 was $0.21.2011, we will refer to our non-GAAP measures as non-IFRS measures.




The following table sets forth, for the periods indicated, a reconciliation of Canadian GAAP earnings (loss) to adjusted net earnings and other non-GAAP metricsmeasures (in millions, except per share amounts):

		2008									2009
Three months ended December 31		GAAP			Adjustments			Adjusted			GAAP			Adjustments			Adjusted
Revenue		$	1,935.4		$	—		$	1,935.4		$	1,664.4		$	—		$	1,664.4
Cost of sales(1)(2)			1,794.8			(2.7	)		1,792.1			1,555.3			(8.3	)		1,547.0
Gross profit(2)			140.6			2.7			143.3			109.1			8.3			117.4
SG&A(1)(2)(3)			76.9			(4.2	)		72.7			61.2			(9.2	)		52.0
Amortization of intangible assets(3)			6.4			(3.3	)		3.1			6.6			(1.9	)		4.7
Other charges			861.9			(861.9	)		—			(8.7	)		8.7			—
Operating earnings (loss) — EBIAT(4)			(804.6	)		872.1			67.5			50.0			10.7			60.7
Interest expense, net			13.7			—			13.7			5.7			—			5.7
Net earnings (loss) before tax			(818.3	)		872.1			53.8			44.3			10.7			55.0
Income tax expense (recovery)			3.9			(15.3	)		(11.4	)		13.2			(7.7	)		5.5
Net earnings (loss)		$	(822.2	)	$	887.4		$	65.2		$	31.1		$	18.4		$	49.5
# of shares (in millions) — diluted			229.4						229.4			232.0						232.0
Earnings (loss) per share		$	(3.58	)				$	0.28		$	0.13					$	0.21
ROIC(5)									18.8%									27.5%
Free cash flow(6)								$	(17.3	)							$	27.5




		2008									2009
Year ended December 31		GAAP			Adjustments			Adjusted			GAAP			Adjustments			Adjusted
Revenue		$	7,678.2		$	—		$	7,678.2		$	6,092.2		$	—		$	6,092.2
Cost of sales(1)(2)			7,147.1			(10.3	)		7,136.8			5,662.4			(18.0	)		5,644.4
Gross profit(2)			531.1			10.3			541.4			429.8			18.0			447.8
SG&A(1)(2)(3)			292.0			(13.1	)		278.9			244.5			(20.9	)		223.6
Amortization of intangible assets(3)			26.9			(15.1	)		11.8			21.9			(8.8	)		13.1
Other charges			885.2			(885.2	)		—			68.0			(68.0	)		—
Operating earnings (loss) — EBIAT(4)			(673.0	)		923.7			250.7			95.4			115.7			211.1
Interest expense, net			42.5			—			42.5			35.0			—			35.0
Net earnings (loss) before tax			(715.5	)		923.7			208.2			60.4			115.7			176.1
Income tax expense (recovery)			5.0			(1.0	)		4.0			5.4			12.2			17.6
Net earnings (loss)		$	(720.5	)	$	924.7		$	204.2		$	55.0		$	103.5		$	158.5
# of shares (in millions) — diluted			229.3						229.6			230.9						230.9
Earnings (loss) per share — diluted		$	(3.14	)				$	0.89		$	0.24					$	0.69
ROIC(5)									14.6%									22.0%
Free cash flow(6)								$	127.1								$	223.7

			Three months ended December 31												Year ended December 31
			2009						2010						2009						2010
						% of revenue						% of revenue						% of revenue						% of revenue
Revenue			$	1,664.4					$	1,876.1					$	6,092.2					$	6,526.1
GAAP gross profit			$	109.1			6.6%		$	122.6			6.5%		$	429.8			7.1%		$	443.3			6.8%
	Stock-based compensation			8.3						5.6						18.0						17.2
Non-GAAP gross profit			$	117.4			7.1%		$	128.2			6.8%		$	447.8			7.4%		$	460.5			7.1%
GAAP SG&A			$	61.2			3.7%		$	67.6			3.6%		$	244.5			4.0%		$	250.2			3.8%
	Stock-based compensation			(9.2	)					(9.0	)					(20.9	)					(25.1	)
Non-GAAP SG&A			$	52.0			3.1%		$	58.6			3.1%		$	223.6			3.7%		$	225.1			3.4%
GAAP earnings before income taxes			$	44.3			2.7%		$	24.7			1.3%		$	60.4			1.0%		$	102.6			1.6%
	Net interest expense			5.7						0.9						35.0						6.5
	Stock-based compensation			17.5						14.6						38.9						42.3
	Amortization of intangible assets (excluding computer software)			1.9						1.8						8.8						5.9
	Restructuring and other charges			(10.6	)					16.2						58.5						50.7
	Impairment charges			12.3						8.9						12.3						8.9
	Losses (gains) related to the repurchase of shares or debt			(10.4	)					—						(2.8	)					8.8
Non-GAAP operating earnings (EBIAT)(1)			$	60.7			3.6%		$	67.1			3.6%		$	211.1			3.5%		$	225.7			3.5%
GAAP net earnings			$	31.1			1.9%		$	25.6			1.4%		$	55.0			0.9%		$	80.8			1.2%
	Stock-based compensation			17.5						14.6						38.9						42.3
	Amortization of intangible assets (excluding computer software)			1.9						1.8						8.8						5.9
	Restructuring and other charges			(10.6	)					16.2						58.5						50.7
	Impairment charges			12.3						8.9						12.3						8.9
	Losses (gains) related to the repurchase of shares or debt			(10.4	)					—						(2.8	)					8.8
	Adjustments for taxes(2)			7.7						(8.8	)					(12.2	)					(1.4	)
Non-GAAP adjusted net earnings			$	49.5			3.0%		$	58.3			3.1%		$	158.5			2.6%		$	196.0			3.0%
Diluted EPS
	W.A. # of shares (in millions) — GAAP			232.0						223.5						230.9						230.1
	GAAP earnings per share		$	0.13					$	0.11					$	0.24					$	0.35
	W.A. # of shares (in millions) — Non-GAAP			232.0						223.5						230.9						230.1
	Non-GAAP adjusted net earnings per share		$	0.21					$	0.26					$	0.69					$	0.85
ROIC %(3)				27.5%						29.5%						22.0%						25.0%
GAAP cash provided by operations			$	45.0					$	54.0					$	293.5					$	150.9
	Purchase of property, plant and equipment, net of sales proceeds			(17.5	)					(23.4	)					(69.8	)					(44.9	)
Non-GAAP free cash flow(4)			$	27.5					$	30.6					$	223.7					$	106.0

---

(1)

TotalEBIAT is defined as earnings before interest, amortization and income taxes. EBIAT also excludes stock-based compensation, comprised of optionrestructuring and restricted share unit costs, is excluded from the calculation of adjusted net earnings, adjusted gross margin, adjusted SG&A, adjusted operating margin (EBIAT) and return on invested capital (ROIC). Prior to the fourth quarter of 2009, option expense was the only stock-based compensation item excluded from these calculations. All of these




metrics, which are non-GAAP measures, including comparatives for prior periods, reflect the revised definition. The following table shows how the revised definition has impacted these metrics (in millions, except per share amounts):

			Q4 2008			2008			Q4 2009(a)			2009(a)
	Adjusted gross profit increase(2)		$	2.1		$	7.4		$	2.6		$	10.5
	Adjusted SG&A decrease(2)			3.2			9.4			2.7			11.6
	EBIAT increase(4)			5.3			16.8			5.3			22.1
	Adjusted net earnings increase			6.1			16.5			4.8			20.0
	Adjusted net earnings per share increase		$	0.02		$	0.07		$	0.02		$	0.09
	ROIC% increase(5)			1.5%			1.0%			2.3%			2.3%

---

(a)Excluded the impact of a mark-to-market accounting adjustment related to restricted share unit awards totaling $10.9 million recorded in the fourth quarter of 2009 (cost of sales — $5.2 million; SG&A — $5.7 million). See note 8(e) to the Consolidated Financial Statements.

(2)

Management uses these non-GAAP measures to assess operating performance. As discussed above, we revised our definition of each of these measures commencing with the results for the fourth quarter of 2009. Management believes that each of these measures is an appropriate metric for management, as well as investors, to compare operating performance from period-to-period. Adjusted gross profit is calculated by excluding total stock-based compensation from GAAP gross profit. Adjusted gross margin is calculated by dividing adjusted gross profit by revenue. Adjusted SG&A is calculated by excluding total stock-based compensation from GAAP SG&A. Adjusted SG&A percentage is calculated by dividing adjusted SG&A by revenue. Neither adjusted gross profit, adjusted gross margin, nor adjusted SG&A has any standardized meaning prescribed by Canadian or U.S. GAAP, and is not necessarily comparable to similar measures presented by other companies. Neither adjusted gross profit, adjusted gross margin, nor adjusted SG&A is a measure of performance under Canadian or U.S. GAAP and no such measure should be considered in isolation or as a substitute for any standardized measure.



(3)

Certain 2008 GAAP numbers have been restated to reflect the change in accounting for computer software effective January 1, 2009 as required under Canadian GAAP. For the fourth quarter of 2008, $3.1 million in amortization of computer software has been reclassified from SG&A expenses to amortization of intangible assets (2008 — $11.8 million). Amortization of computer software is not excluded for EBIAT or adjusted net earnings. There is no impact to our current or previously reported EBIAT, adjusted net earnings or net earnings (loss) for this change in accounting.



(4)

Management uses adjusted operating margin (EBIAT) as a measure to assess operating performance. As discussed above, we revised our definition of EBIAT commencing with the results for the fourth quarter of 2009. Excluded from EBIAT are the effects of other charges, most significantly the write-down of goodwill and long-lived assets, gains or losses onrelated to the repurchase of shares or debt and impairment charges.



(2)

The adjustment to GAAP taxes is based on the relatedestimated effective income tax effect of these adjustments, and any significant deferredrate expected to be applicable for the full fiscal period taking into account the tax write-offs or recoveries. We also excludeeffects on the following recurring charges: restructuring costs, total stock-based compensation including option and restricted share unit costs, amortization of intangible assets (except amortization of computer software), interest expense or income, and the related income tax effect of thesenon-GAAP adjustments. Management believes EBIAT, which isolates operating activities before interest and taxes, is an appropriate measure for management, as well as investors, to compare the company's operating performance from period-to-period. The term EBIAT does not have any standardized meaning prescribed by Canadian or U.S. GAAP and is not necessarily comparable to similar measures presented by other companies. EBIAT is not a measure of performance under Canadian or U.S. GAAP and should not be considered in isolation or as a substitute for net earnings prepared in accordance with Canadian or U.S. GAAP.



(5)(3)

Management uses ROIC as a measure to assess the effectiveness of the invested capital it uses to build products or provide services to its customers. As discussed above, we revised our definition ofOur ROIC commencing with the results for the fourth quarter of 2009. The ROIC metric used by the companymeasure includes operating margin, working capital management and asset utilization. ROIC is calculated by dividing EBIAT (defined in (4) above) by average net invested capital. Net invested capital consists of total assets less cash, accounts payable, accrued liabilities and income taxes payable. We use a two-point average to calculate average net invested capital for the quarter andquarter. We use a




five-point average to calculate average net invested capital for the year. Management believes ROIC is an appropriate measure for management, as well as investors, to compare the company's operating performance from period-to-period. The term ROIC does not have any standardized meaning prescribed by Canadian or U.S. GAAP and is not necessarily comparable to similar measures presented by other companies. ROIC is not a measure of performance under Canadian or U.S. GAAP and should not be considered in isolation or as a substitute for any standardized measure. There is no comparable measure under Canadian or U.S. GAAP.



(6)(4)

Management uses free cash flow as a measure, in addition to cash flow from operations, to assess operational cash flow performance. FreeWe believe free cash flow is calculatedprovides another level of transparency to our liquidity as it represents cash generated from operations lessafter the purchase of capital expendituresequipment and property (net of proceeds from the sale of certain surplus propertyequipment and equipment)property). Management believes that free cash flow is an appropriate measure for management, as well as investors, to compare cash flow performance from period-to-period. The term free cash flow does not have any standardized meaning prescribed by Canadian or U.S. GAAP and is not necessarily comparable to similar measures presented by other companies. Free cash flow is not a measure of performance under Canadian or U.S. GAAP and should not be considered in isolation or as a substitute for any standardized measure. There is no comparable measure under GAAP.




First quarter 20102011 guidance:

        On January 27, 2010, we providedFor the following guidancefirst quarter of 2011, revenue is expected to be in the range of $1.725 billion to $1.875 billion.

        We expect adjusted net earnings per share for the first quarter of 2010:

		Q1 10 — Guidance
Revenue (in billions)		$1.45 to $1.60
Adjusted net earnings per share, using the revised definition		$0.15 to $0.21

        At the midpoint, our revenue guidance for the first quarter of 2010 represents an 8% sequential decrease2011 to range from our fourth quarter of 2009. This compares$0.20 to the historic 15% to 20% sequential declines that we have experienced from our fourth quarter to our first quarter of each year.$0.26 per share. We expect thea negative $0.07 to $0.11 per share (pre-tax) impact on an IFRS basis for quarterly stock-based compensation and amortization of seasonalityintangible assets (excluding computer software), and for restructuring charges we will record as a result of our conversion to be less severe than in previous years as our guidance also reflects modest end-market growth, new programs and changing product mix in the first quarter of 2010.IFRS.

        Our guidance for the first quarter of 20102011 is based on various assumptions which management believes are reasonable under the current circumstances, but may prove to be inaccurate, and many of which involve factors that are beyond the control of the company. The material assumptions may include the following: forecasts from our customers, which range from 30 days to 90 days;days and can fluctuate significantly in terms of volume or mix of products; the timing, execution of, and investments associated with ramping new business; the success in the marketplace of our customers' products; general economic and market conditions; currency exchange rates; pricing and competition; anticipated customer demand; supplier performance and pricing; commodity, labor, energy and transportation costs; operational and financial matters; and technological developments; and the timing and execution of our restructuring plan.developments. These assumptions are based on management's current views with respect to current plans and events, and are and will be subject to the risks and uncertainties discussed above. Our guidance for the first quarter of 20102011 is given for the purpose of providing information about management's current expectations and plans relating to the first quarter of 2010.2011. Readers are cautioned that such information may not be appropriate for other purposes.

Recent Accounting Developments

(a)   Goodwill and intangible assets:

        On January 1, 2009, we adopted CICA Handbook Section 3064, "Goodwill and intangible assets." This revised standard establishes guidance for the recognition, measurement and disclosure of goodwill and intangible assets, including internally generated intangible assets. As required by this standard, we have retroactively reclassified $34.0 million of computer software assets on our consolidated balance sheet as at December 31, 2008 from property, plant and equipment to intangible assets. In addition, we have reclassified computer software amortization on our consolidated statement of operations from depreciation expense, included in SG&A, to amortization of intangible assets. The adoption of this standard did not change our previously reported net earnings or loss.

(b)   International financial reporting standards (IFRS):standards:

        In February 2008, the Canadian Accounting Standards Board announced the adoption of IFRS for publicly accountable enterprises in Canada. EffectiveCanada effective January 1, 2011, companies must convert from Canadian GAAP to IFRS. IFRS is effective2011. Our consolidated financial statements for our first quarterthe three months ending March 31, 2011 will be our first financial statements prepared under IFRS. We will be applying accounting policies consistent with IFRS, as well as those for first-time adopters (IFRS 1). In accordance with IFRS 1, we will apply IFRS retroactively to our comparative data as of January 1, 2010, also prepared under IFRS.known as the transition date.

        We have initiated anOur IFRS transition project withincluded a formal and detailed project plan, and a dedicated project manager. Amanager and a multi-functional project team consisting of management from finance, taxation, treasury, legal, human resources, IT and operations is engaged on the project.operations. We have also engaged external IFRS consulting partners. We havepartners and established a formal governance structure that includes bothincluded a steering committee and an accounting technical review committee, and regular reporting is providedcommittee. We regularly reported our progress to our senior executive management and to our Audit Committee on the project's progress.Committee. Our project focuseswas focused on the key areas impacted by this conversion, includingwhich included financial reporting, systems and processes, communications and training. Our transition plan is progressing according to our implementation schedule.




        TheWe conducted a review of the potential impacts of IFRS was conductedimpacts in phases. In phase 1, we worked with independent consultants to complete a diagnostic of the key financial, systems and businesses that would potentially be impacted by our transition to IFRS. In phase 2, we completed our detailed analysis of the potential accounting and reporting differences between Canadian GAAP and IFRS, and made preliminary accounting policy choices. Although we haveWe did not completed our evaluation, we have not identifiedidentify significant changes in our business activities as a result of the IFRS transition. WeIn phase 3, we focused on global training and preparing our financial systems for IFRS, including capturing the 2010 comparative financial data under IFRS. This phase also outlined our plan to continually evaluate any such impact during 2010.for worldwide conversion on January 1, 2011.




Accounting Policies:policies:

        The following are our preliminary significant IFRS policy decisions and significant expected accounting differences, based on our analysis of the current IFRS standards. We will provide formal trainingThe discussion below reflects our current assumptions, significant estimates and expectations. Due to changes in circumstances, such as economic conditions or changes to our finance staffbusiness operations, or the release of new or revised IFRS standards, we may decide to adopt different policies as permitted under IFRS. The inherent uncertainty regarding the use of assumptions may also cause actual results to differ materially from the estimated impacts represented here.

        Our significant IFRS accounting policies will be included in our first quarter of 2011 consolidated financial statements. These financial statements will also contain reconciliations between IFRS and other personnel at eachthe amounts we have previously reported under Canadian GAAP as of January 1, 2010 and December 31, 2010. These reconciliations of our sites duringcomparative data may require adjustments before comprising part of our first annual IFRS financial statements for the first half of 2010. Additional differences between Canadian GAAP and IFRS may be identified once the training is completed and as we conduct the quantification process. As a result, our accounting policy choices may change prior to the adoption of IFRS on January 1,year ended December 31, 2011. Although we have identified key accounting policy differences, we cannot at this time determine the impact of these differences to our consolidated financial statements.

        First-time adoption of IFRS (IFRS 1):IFRS:

        Upon transition, a company is required to apply each IFRS on a retrospective basis. However, IFRS 1 has certain mandatory exceptions, as well as limited optional exemptions, in specific areas of certain standards that do not require retrospective application of IFRS. Based on our analysis to date, weWe expect to apply the following optional exemptions available under IFRS 1 that will be significant to us in preparing our first quarter of 2011 consolidated financial statements under IFRS:

        Business combinations — IFRS 1 allows us to apply this standardIFRS 3 (revised), Business combinations, on a prospective or retrospective basis. We have elected to apply IFRS 3(revised), Business combinations,this standard on a prospective basis for all business combinations completed after January 1, 2010.

        Employee benefits — In addition, IFRS 1 providesrequires that obligations for contingent consideration and contingencies be recorded at fair value at the option to retrospectively apply the corridor method to actuarial gains or losses or to recognize the cumulative gains or losses deferred underacquisition date and that acquisition-related costs are expensed as incurred. Under Canadian GAAP, through equity atcontingent consideration is only recorded when the transition date. We have elected to recognize cumulative actuarial gains or losses atamounts are reasonably estimatable and the outcome is certain, and acquisition-related costs are capitalized as part of the purchase equation. In August 2010, we completed the acquisition of Allied Panels. On January 1, 2011, we expect to increase goodwill and long-term liabilities by $4.6 million to reflect the fair value of contingent payments related to this acquisition. This adjustment impacts our balance sheet only. Under IFRS, our expenses in 2010 through retained deficitwill increase by $1.0 million to expense acquisition-related costs, with a corresponding decrease to goodwill, for all our employee benefit plans. We have $128.1 million in unrecognized actuarial losses at December 31, 2009 under Canadian GAAP.Invec and Allied Panels acquisitions.

        Cumulative currency translation differences — IFRS 1 allows cumulative currency translation differences for foreign operations to be cleared through equity on transition. Gains or losses from the subsequent disposal of the foreign operations would exclude translation differences arising prior to adopting IFRS. We have electedexpect to reset our cumulative translation differences to zero on transition.effective January 1, 2010. We have cumulative translation gains of $46.9 million at December 31, 2009. We expect to eliminate these gains from our cumulative translation account and reduce our deficit upon transition to IFRS. This will not impact total equity.

        Pension and other post-employment benefits — IFRS 1 provides the option to retrospectively apply the corridor method for the recognition of actuarial gains or losses, or to recognize all cumulative gains or losses deferred under Canadian GAAP through opening deficit at the transition date. We have elected to recognize all cumulative actuarial gains or losses that existed at January 1, 2010, through opening deficit. We have approximately $140 million of unrecognized actuarial losses arising from defined benefit and post-retirement benefit plans at December 31, 2009 under Canadian GAAP. We also have approximately $10 million of vested prior service credits at December 31, 2009 which we will recognize on transition. The recognition of these actuarial losses and vested prior service credits as of January 1, 2010 will reduce our pension assets by approximately $90 million, increase our pension liabilities by approximately $40 million and reduce equity by approximately $130 million. We expect pension expense to be lower under IFRS in 2010 and in the near term as pension expense will no longer include the amortization of net actuarial losses that existed on transition and future actuarial gains and losses will be recorded directly in equity. IFRS has additional standards with respect to the recovery of defined benefit assets and minimum funding requirements which could result in adjustments to the amounts recorded under Canadian GAAP. We are evaluating whether these additional standards will have an impact to our consolidated financial statements at January 1, 2010 or in the future.




        Hedge accounting — Hedge accounting is only applied prospectively from the transition date to transactions that satisfy the IFRS hedge accounting criteria on that date. We expect that our hedging relationships will continue to qualify under IFRS.

        IFRS to Canadian GAAP differences:

        In addition to the IFRS 1 exceptions and exemptions, the following are preliminarythe differences between our Canadian GAAP accounting policies and those under IFRS that we believe are applicable and significant to Celestica based on our analysis to date:

        PensionRestructuring costs — IFRS disallows transfer costs relating to ongoing activities to be classified as restructuring charges. As a result, our cost of sales and other post-employment benefits —SG&A for 2010 will increase under IFRS, with an offsetting decrease to restructuring charges. This is a reclassification within the income statement and will not impact overall net earnings. IFRS also defers the recognition of restructuring charges until the plans are implemented or announced to employees. Under Canadian GAAP, we generally defer our actuarial gains and losses from defined benefitrecord restructuring charges in the period that we finalize the detail plans and then amortize usingcan reasonably estimate the corridor method. Under IFRS,amount and timing of the actions. Our restructuring charges for 2010 included amounts for actions not yet announced as of December 31, 2010. Although we have recorded all of the restructuring charges under Canadian GAAP as of December 31, 2010, we expect to recognize all actuarial gains and losses immediately through equity without recording them in the income statement in subsequent periods. Additionally,reverse approximately $11 million of these charges for IFRS has incremental considerations beyond Canadian GAAP with respect to limits on defined benefit assets, minimum funding requirements, and their interaction, which could result in adjustments to the amounts recorded under Canadian GAAP. We are currently reviewing our pension plans in detail to determine the impact upon transition.

        Hedge effectiveness measurement — IFRS requires us to incorporate credit risk into the assessment of hedge effectiveness and ineffectiveness and requires more documentation to support the hedging relationships.at December 31, 2010. We expect that our hedging relationships will continue to qualify under IFRS.recognize these charges for IFRS during the first half of 2011 when the actions are announced.




        Impairment of long-lived assets — Reversal of asset impairment losses is not permitted under Canadian GAAP. IFRS requires the reversal of impairment losses for assets other than goodwill if certain criteria are met. Although we have recorded impairment losses against property, plant and equipment and intangible assets under Canadian GAAP, we do not believe at this time that these losses would be reversed underexpect significant reversals upon transition to IFRS. However, we will begin to track previous and future impairments as required. Under IFRS, impairment testing is a one-step process. Anprocess; an impairment loss is recognized if the carrying amount of an asset exceeds its recoverable amount. Under Canadian GAAP, impairment is tested using a two-step process. We may recognize higher impairment losses under IFRS.

        Share-based payments — Under Canadian GAAP, each grant is treated as a single arrangement and compensation expense is determined at the time of grant and amortized over the vesting period, generally three to four years, on a straight-line basis. IFRS requires a separate calculation of compensation expense for awards that vest in installments. Under IFRS, compensation expense will differ from Canadian GAAP based on the changing fair values used for each installment and the timing of recognizing compensation expense, which will be accelerated under IFRS. At December 31, 2009, the accelerated share-based compensation costs are expected to increase our deficit by approximately $12 million with a corresponding adjustment to contributed surplus. This will not impact total equity. We do not expect significant adjustments to our compensation expense under IFRS for 2010.

        Income taxes — The recognition of deferred income taxes for temporary differences arising from inter-company transfers of property and from foreign exchange fluctuations on non-monetary items are prohibited under Canadian GAAP. There are no similar exceptions under IFRS. Our net deferred income tax assets are expected to increase by approximately $2 million at January 1, 2010. In addition, other significant differences may include accounting for uncertain tax positions, backwards tracing and differences relating to presentation and disclosure. We will also be impacted by the potential income tax effect of the other IFRS changes noted above.

        TheAt this time, we do not believe that the conversion to IFRS will have a significant impact of IFRS at transition will depend on the financial covenants in our credit facilities.

        Our primary North American competitors are not required to convert to IFRS standards in effect at the time, accounting elections that have not yet been made and, the prevailing business and economic facts and circumstances. The evolving nature of IFRS may alsoas a result, in additional accounting changes, some of whichour financial results may be significant. We will continue to monitor changes in the IFRS standards and will adjust our transition plans accordingly.reported differently than this peer group.

Internal control over financial reporting and disclosure controls and procedures:

        We have augmented our existing controls and procedures to include controls and procedures regarding the implementation of IFRS. Our quality assurance plan, which forms part of the overall IFRS transition plan, includes project management, communication and training, formal review of financial data with management




oversight and certifications, internal audits, controls over financial system changes and the use of disclosure checklists. We expect that as we progress through our IFRS transition, we may adjust our plans.

Financial reporting expertise:

        We identified key financial reporting experts at various levels of our business, whoand these individuals received advanced IFRS training from our consulting partners. We have prepared training materials covering the transition plan and applicable accounting standards and have begun detailedstandards. We will continue to provide training ofto our global finance organization. We plan to also hold IFRS information sessions forand business organizations including senior management and members of our IFRS steering committee and Audit Committee.

Information systems:

        During 2009, we began to identify and assessWe assessed the impact of IFRS on our financial systems. Our information technology team is in the process of designingsystems and designed solutions to ensure enterprise-wide IFRS compliance in IT systems. We currently aresystems, including preparing our ERPs and our consolidations system to receive, consolidate, and comply withreport the new reporting and data requirements under IFRS, which includes capturing financial data required for IFRS, including capturing the 2010 comparative period.period information.

(c)   Business combinations:

        In January 2009, the CICA issued Handbook Section 1582, "Business combinations," which replaces the existing standards. This section establishes the standards for the accounting of business combinations, and states that all assets and liabilities of an acquired business will be recorded at fair value. Obligations for contingent






considerations and contingencies will also be recorded at fair value at the acquisition date. The standard also states that acquisition related costs will be expensed as incurred and that restructuring charges will be expensed in the periods after the acquisition date. This standard is equivalent to IFRS on business combinations. This standard is applied prospectively to business combinations with acquisition dates on or after January 1, 2011. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements unless we engage in a significant acquisition.

(d)   Consolidated financial statements:

        In January 2009, the CICA issued Handbook Section 1601, "Consolidated financial statements," which replaces the existing standards. This section establishes the standards for preparing consolidated financial statements and is effective for 2011. We are currently evaluating the impact of adopting this standard on our consolidated financial statements.

(e)   Financial instruments — disclosures:

        Effective December 31, 2009, we adopted the amendment issued by the CICA Handbook Section 3862, "Financial instruments — disclosures," which requires enhanced disclosures on liquidity risk of financial instruments and new disclosures on fair value measurements of financial instruments. These requirements correspond to the IFRS on financial instruments disclosures. The adoption of this standard did not have a material impact on our consolidated financial statements.

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. The following table sets forth certain information regarding the current directors and executive officers of Celestica.Celestica, as of February 24, 2011.

Name		Age			Position with Celestica		Residence
Robert L. Crandall			7475		Chairman of the Board and Director		Florida, USU.S.
Dan DiMaggio			60		Director		Georgia, U.S.
William A. Etherington			6869		Director		Ontario, Canada
Laurette Koellner			5556		Director		Florida, US
Richard S. Love			72		Director		California, USU.S.
Eamon J. Ryan			6465		Director		Ontario, Canada
Gerald W. Schwartz			68		Director		Ontario, Canada
Don Tapscott			6269		Director		Ontario, Canada
Craig H. Muhlhauser			6162		Director, President and Chief Executive Officer		New Jersey, USU.S.
Paul Nicoletti			4243		Executive Vice President and Chief Financial Officer		Ontario, Canada
John Boucher			50		Executive Vice President, Global Sales and Supply Chain Solutions		New Hampshire, US
Elizabeth L. DelBianco			5051		Executive Vice President, Chief Legal and Administrative Officer and Corporate Secretary		Ontario, Canada
John Peri			49		Chief Operating Officer		Ontario, Canada
Peter A. Lindgren			48		Executive Vice President, Global Operations		Ontario, CanadaColorado, U.S.
Mary Gendron			4445		Senior Vice President and Chief Information Officer		Illinois, USU.S.
Peter A. LindgrenMichael McCaughey			4749		Senior Vice President and General Manager, Growth and Emerging Markets Segment		Colorado, US




Name		Age			Position with Celestica		Residence
Michael P. McCaughey			48		Senior Vice President and General Manager, Communications Market SegmentGlobal Customer Business Units		Quebec, Canada
Darren MyersGlen McIntosh			3649		Senior Vice President, and Corporate ControllerGlobal Customer Business Unit		Ontario, Canada
Robert J. Sellers			4344		Senior Vice President, Global Customer Business Unit and General Manager, Enterprise and Consumer Market SegmentsAsia Customer Development		Hong Kong, China
Scott Smith			52		Senior Vice President, Global Sales, Solutions and Marketing		Zurich, Switzerland




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

        Robert L. Crandall has been a director of Celestica since 1998 and Chairman of the Board of Directors of Celestica since January 2004. He is the retired Chairman of the Board and Chief Executive Officer of AMR Corporation/American Airlines Inc. Mr. Crandall is a director of Air Cell, Inc., a privately held company, and 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.

        Dan DiMaggio has been a director of Celestica since July 2010. Prior to joining Celestica's Board of Directors, Mr. DiMaggio spent 35 years with United Parcel Services (UPS), most recently as Chief Executive Officer of the UPS Worldwide Logistics Group. Prior to leading UPS' Worldwide Logistics Group, Mr. DiMaggio held a number of positions at UPS with increasing responsibility, including the leadership roles for the UPS International Marketing Group, as well as the Industrial Engineering function. In addition to his senior leadership roles at UPS, Mr. DiMaggio spent time on the Board of Directors of Greatwide Logistics Services, Inc. and CEVA Logistics. Mr. DiMaggio was serving as a director of Greatwide Logistics Services, Inc., a privately held company, when that entity filed for bankruptcy in 2008. He holds a Bachelor of Science degree from the University of Massachusetts.

William A. Etherington has been a director of Celestica since 2001. He is also a director of MDSOnex Corporation, Nordion Inc. and Onex Corporation,SS&C Technologies Inc., each of which is a public corporation, and of SS&C Technologies Inc., a private firm.corporation. He is a former director and Non-Executive Chairman of the Board of the Canadian Imperial Bank of Commerce. He retired in 2001 as Senior Vice President and Group Executive, Sales and Distribution, IBM Corporation, and Chairman, President and Chief Executive Officer of IBM World Trade Corporation. Mr. Etherington is a member of the President's Council, The University of Western Ontario and director ofthe St. Michael's Hospital.Hospital Board of Directors. He holds a Bachelor of Science degree in Electrical Engineering and a Doctor of Laws (Hon.) from the University of Western Ontario.

        Laurette Koellner has been a director of Celestica since 2009. She is the retired President of Boeing International, a division of The Boeing Company. Previously, she was President of Connexion by Boeing and prior to that was a member of the Office of the Chairman and served as the Executive Vice President, Internal Services, Chief Human Resources and Administrative Officer, President of Shared Services, as well as Corporate Controller for The Boeing Company. Ms. Koellner currently serves on the boardBoard and as chairChair of the Regulatory Compliance Committee of AIG Corporation and on the boardBoard and as chairChair of the Audit Committee of Sara Lee Corporation, both of which are public corporations, is a member of the Council on Foreign Relations and a member of the University of Central Florida Dean's Executive Council, and a member of the Council on Foreign Relations.Council. She holds a Bachelor of Science degree in Business Management from the University of Central Florida and a Masters of Business Administration from Stetson University in Deland, Florida. She holds a Certified Professional Contracts Manager designation from the National Contracts Management Association.

Richard S. Love has been a director of Celestica since 1998. He is 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. 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.

        Eamon J. Ryan has been a director of Celestica since 2008. He is the former Vice President and General Manager, Europe, Middle East and Africa for Lexmark International Inc. Prior to that, he was the Vice President and General Manager, Printing Services and Solutions Manager, Europe, Middle East and Africa. Mr. Ryan joined Lexmark in 1991 as the President of Lexmark Canada. Before Lexmark, he spent 22 years at IBM Canada, where he held a number of sales and marketing roles in their Office Products and Large Systems divisions. Mr. Ryan's last role at IBM Canada was Director of Operations for its Public Sector, a role he held from 1986 to 1990. He holds a Bachelor of Arts degree from the University of Western Ontario.




        Gerald W. Schwartz has been a director of Celestica since 1998. He is the Chairman of the Board and Chief Executive Officer of Onex Corporation, a public corporation. Mr. Schwartz was inducted into the Canadian Business Hall of Fame in 2004 and was appointed as an Officer of the Order of Canada in 2006. He is also an honorary director of the Bank of Nova Scotia and is a director of Indigo Books & Music Inc., each of which is a public corporation, and of RSI Home Products, Inc. Mr. Schwartz is Vice Chairman of Mount Sinai Hospital and is a director of 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, a Doctor of Laws (Hon.) from St. Francis Xavier University, and a Doctor of Philosophy (Hon.) from Tel Aviv University.




Don Tapscott has been a director of Celestica since 1998. He is Chairman of the think-tank nGenera Insight and an adjunct Professor of Management at the University of Toronto's Joseph L. Rotman School of Management. Mr. Tapscott is also an internationally respected authority, consultant and speaker on business strategy and organizational transformation and the author of thirteen widely-read books on the application of technology in business. He is also a fellow of the World Economic Forum. He holds a Bachelor of Science degree in Psychology and Statistics, and a Master of Education degree, specializing in Research Methodology, as well as Doctor of Laws (Hon.) degrees from the University of Alberta and Trent University.

        Craig H. Muhlhauser is President and Chief Executive Officer, and since 2007, is also a director of Celestica. Prior to his current position, he was President and Executive Vice President of Worldwide Sales and Business Development. Before joining Celestica in May 2005, Mr. Muhlhauser was the President and Chief Executive Officer of Exide Technologies. He was serving as President of Exide Technologies when that entity filed for bankruptcy in 2002, was named Chief Executive Officer of Exide Technologies shortly thereafter and successfully led the company out of bankruptcy protection in 2004. Prior to that, he held the role of Vice President, Ford Motor Company and President, Visteon Automotive Systems. He was a director of Intermet Corporation, a privately held company, which filed for bankruptcy in the U.S. in August 2008 and emerged from Chapter 11 protection in September 2009. Throughout his career, he has worked in a range of industries spanning the consumer, industrial, communications, utility, automotive and aerospace and defense sectors. He holds a Master of Science degree in Mechanical Engineering and a Bachelor of Science degree in Aerospace Engineering from the University of Cincinnati.

        Paul Nicoletti is Executive Vice President and Chief Financial Officer. In this role, he is responsible for overseeing Celestica's accounting, financial and investor relations functions in order to protect and enhance Celestica's shareholder value. He alsohe leads Celestica's corporate development organization which focuses on creating value through acquisitions and partnerships. Recently, Mr. Nicoletti's responsibilities were expanded to include Celestica's diversified markets, which includes healthcare, industrial and green technology, and Celestica's after-market services business. Previously, he was Senior Vice President, Finance and held the role of Corporate Treasurer, with responsibility for Celestica's global financial operations, segment financial reporting, strategic pricing, corporate tax and all corporate finance and treasury-related matters. Prior to that, Mr. Nicoletti was Vice President, Global Financial Operations, responsible for all financial aspects of Celestica's Canadian and Latin American operations. He was also previously the Controller of Celestica's Canadian EMS operations. Mr. Nicoletti joined IBM in 1989 and was part of the founding management team of Celestica. Throughout his career, he has held a number of senior financial roles in mergers and acquisitions, planning, accounting, pricing and financial strategies. Mr. Nicoletti holds a Bachelor of Arts degree from the University of Western Ontario and a Master of Business Administration degree from York University.

        John Boucher is Executive Vice President, Global Sales and Supply Chain Solutions. He has led the company's Supply Chain Management Organization since November 2004. In 2008, this organization expanded into a complete Supply Chain Solutions Organization encompassing Solutions Development and integrated services offerings spanning design, fulfillment, after-market and automated manufacturing services. Previously, Mr. Boucher held the position of President, Americas, and was responsible for manufacturing operations in Canada, the U.S., Mexico and Brazil. Before joining Celestica through the company's acquisition of Manufacturers' Services Limited (MSL) in March 2004, he was MSL's Corporate Vice President of Global Supply Chain Management. Prior to joining MSL as part of the company's founding team, Mr. Boucher guided the start-up of after-market operations at Circuit Test Inc. He also spent over 17 years with Digital Equipment Corporation, where he held a number of senior roles, including managing supply chain strategies for the company's Personal Computer Division.




Elizabeth L. DelBianco is Executive Vice President, Chief Legal and Administrative Officer and Corporate Secretary. In this role she oversees human resources, global branding, legal, contracts and communications. Ms. DelBianco joined Celestica in 1998 and since that time has been responsible for managing legal, governance, and compliance matters for Celestica on a global basis. In March of 2007, Ms. DelBianco assumed the leadership of the Global Human Resourcesglobal human resources function. In this role, she oversees all human resources policies and practices and leads Celestica's efforts to attract, develop and retain key talent. In 2008, her role expanded to include responsibility for overseeing the Global Branding Organization.global branding organization. Ms. DelBianco came to Celestica following a 13-year career as a senior corporate legal advisor in the telecommunications industry. She 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.

        John Peri is Chief Operating Officer responsible for Celestica's global operations, as well as Celestica's core customers. Prior to that, Mr. Peri was Executive Vice President, Electronics, Engineering and Supply Chain Management in which role he was responsible for the strategy and execution of Celestica's design, manufacturing and supply chain network across Asia, Europe and the Americas. He also oversaw the ongoing deployment of Lean and Six Sigma initiatives. Previously, he held the position of Executive Vice President, Global Operations. He isOperations, in which he was responsible for overseeing Celestica's manufacturing and supply chain operations in Asia, Europe and the Americas. Prior to that, Mr. Peri previously held the role of President, Asia Operations, with responsibility for Celestica's manufacturing footprint in China, Hong Kong, India, Japan, Malaysia, Philippines, Singapore and Thailand. Prior to that, he held senior level positions in the areas of quality, manufacturing excellence, services and regional leadership. Mr. Peri joined IBM Canada in 1984 and was part of the founding management team of Celestica. Over the course of his career, he has held a number of leadership positions in operations, engineering and account management. He holds a Bachelor of Applied Science degree in Industrial Engineering from the University of Toronto.

Mary Gendron is Senior Vice President and Chief Information Officer. She is responsible for aligning Celestica's information technology strategy with its business goals by ensuring that the company's strategic investments in IT tools and processes drive its customers' success. Ms. Gendron joined Celestica in October 2008, following a five-year career at The Nielsen Company, one of the largest global information measurement and media companies, where she was the Senior Vice President, IT Infrastructure Shared Services. Prior to that, she was the Chief Information Officer at ACNielsen U.S. Over the course of her career, Ms. Gendron has held management positions of increasing seniority in information technology and supply chain management at Motorola and Bell Canada. Ms. Gendron holds a Bachelor of Engineering degree from McGill University in Montreal, Quebec.




        Peter A. Lindgren is Executive Vice President, Global Operations. In this role, he is responsible for overseeing Celestica's operations in Asia, Europe and the Americas. He is also responsible for Celestica's aerospace and defense market. Prior to that he was Senior Vice President and General Manager, Growth and Emerging Markets Segment. He leads a focused business unit that drives the strategic direction and growth of Celestica's business within key customer accounts in emerging markets. Previously, Mr. Lindgren held the role of Senior Vice President, Industry Market Segment and prior to that, was Senior Vice President, Business Development, overseeing Celestica's regional marketing and business development teams on a global basis. Prior to that, Mr. Lindgren was Vice President and General Manager, Cisco Global Customer Business Unit. He joined Celestica in February 1998 as Director of Operations in Corporate Development. Mr. Lindgren has worked in the electronics manufacturing services industry since 1985, and held a number of management positions in international operations, sales and marketing, program management and materials with SCI Systems and MTI International. He holds a Bachelor of Arts degree in Business Economics from Colorado College.

        Mary Gendron is Senior Vice President and Chief Information Officer. She is responsible for aligning Celestica's information technology strategy and its investments in IT tools and processes with Celestica's business goals. Ms. Gendron joined Celestica in October 2008, following a five-year career at The Nielsen Company, one of the largest global information measurement and media companies, where she was the Senior Vice President, IT Infrastructure Shared Services. Prior to that, she was the Chief Information Officer at ACNielsen U.S. Over the course of her career, Ms. Gendron has held management positions of increasing seniority in information technology and supply chain management at Motorola and Bell Canada. Ms. Gendron holds a Bachelor of Engineering degree from McGill University in Montreal, Quebec.

Michael P. McCaughey is Senior Vice President and General Manager, Communications Market Segment.Global Customer Business Units. He is responsible for the strategic direction of Celestica's enterprise and communications business, and all the company'skey activities associated with customers in these markets. Previously, Mr. McCaughey held the role of Senior Vice President and General Manager, Communications Market Segment, where he was responsible for the strategic direction of Celestica's communications business and all key activities associated with Celestica's customer accounts in this sector. Prior to joining Celestica in June 2005, Mr. McCaughey held the role of Senior Vice President, Wireline Network Systems, at Sanmina-SCI. Before joining Sanmina-SCI, Mr. McCaughey held senior roles at Hyperchip Inc. and SCI Systems (prior to that company's merger with Sanmina). He holds a DEC in Electrotechnology from Vanier College, Quebec and studied Electrical Engineering at McGill University in Montreal, Quebec.

        Darren MyersGlen McIntosh is Senior Vice President, and Corporate Controller. HeGlobal Customer Business Unit. In this role, he is responsible for the strategy and execution for one of Celestica's corporate external reporting, financial planning and budgeting related matters. Mr. Myers rejoined Celestica in 2008 following two years as the Vice President, Finance, Small Medium Business for Bell Canada.largest customer business units. Prior to that,his current position, Mr. Myers wasMcIntosh held similar roles with other Celestica business units which supported customers in the Vice President, Finance, Global Services at Celestica. He originallyenterprise and communications markets. Mr. McIntosh joined Celestica in 2000 where he was a key member1997 in the area of business development, as part of the Corporate Development team. Overteam who drove the course of his career, Mr. Myers hascompany's initial growth. Prior to joining Celestica, he held a number of leadership positionsprogressively senior engineering and sales roles with other companies in the areas of operational finance, mergers and acquisitions, and controls






compliance and disclosure.technology industry. He holds an Honoursa Bachelor of CommerceApplied Science degree in Mechanical Engineering from McMasterthe University in Ontario. He is also a Chartered Accountant.of Waterloo.

        Robert J. Sellers is Senior Vice President, Global Customer Business Unit and General Manager, Enterprise and Consumer Market Segments.Asia Customer Development. In this role, he is responsible for the strategic directionstrategy and growthexecution for one of Celestica's customers in the global enterpriselargest customer business units, as well as developing and consumer markets.strengthening relationships with Celestica's Asia-based customers. Previously, Mr. Sellers was Senior Vice President and General Manager, Enterprise and Consumer Market Segments, and prior to that, Senior Vice President, Global Sales, and prior to that, led the sales organization for Celestica's Americas and Asia regions. He joined Celestica in 2003 in the role of Vice President, Market Development in the area of Consumer Electronics.consumer electronics. Mr. Sellers has had a 14-year career in the EMS industry with various leadership positions at Sanmina-SCI, SCI, Solectron and Avex. Prior to entering the EMS industry, Mr. Sellers was a highly decorated United States Army officer. He holds a Bachelor of Science degree in Industrial and Operations Engineering from the University of Michigan.

        Scott Smith is Senior Vice President, Global Sales, Solutions and Marketing, and responsible for managing all aspects of sales and marketing on a global basis. Mr. Smith joined Celestica in 2009 from Moduslink, a global provider of outsourced distribution and fulfillment services to customers in the consumer, computing, storage and software segments, where he held the role of President, Global Sales and Marketing. Prior to that, he spent






three years with Lenovo Corporation as President of the Americas. Before joining Lenovo, he spent 22 years at IBM in a series of global sales and operations roles with increasing responsibility in the Americas and Asia Pacific regions. He holds a Bachelor of Science degree from Clarkson University in New York.

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 executive officers were selected.

B.    Compensation

Compensation of Directors

        Director compensation is set by the Board of Directors on the recommendation of the Compensation Committee and in accordance with director compensation guidelines established by the Nominating and Corporate Governance Committee (the Governance Committee). Under these guidelines, the Board of Directors seeks to maintain director compensation at a level that is competitive with director compensation at comparable companies. The Compensation Committee engaged Towers Watson Inc. (Towers Watson) to provide benchmarking information in this regard.regard in 2009 and intends to do so again in 2011. See "— Compensation Process" and "— Comparator Companies" for a discussion regarding the role of Towers Watson. The guidelines also contemplate that at least half of each director's annual retainer and meeting fees be paid in deferred share units (DSUs). Each DSU represents the right to receive one subordinate voting share of the Company or an equivalent value in cash when the director ceases to be a director.

20092010 Fees

        Table 1The following table sets out the annual retainers and meeting fees paidpayable in 20092010 to the Company's directors (other than Messrs. Schwartz and Muhlhauser who, as officers of Onex and the Company, respectively, did not receive such compensation).directors.

Table 1: Retainers and Meeting Fees for 20092010

Annual Board Retainer		$	65,000
Annual Retainer for Non-Executive Chairman(1)		$	130,000
Annual Retainer for Audit Committee Chair		$	20,000
Annual Retainer for Compensation Committee Chair		$	10,000
Annual Retainer for Executive Committee Chair		$	10,000
Board and Committee Per Day Meeting Fee(2)		$	2,500
Travel Fee(3)		$	2,500
Annual DSU Grant (for directors other than the Chairman)		$	120,000
Annual DSU Grant — Chairman		$	180,000

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(1)

The non-executive Chairman of the Board of Directors also serves as chairthe Chair of the Governance Committee, for which no additional fee is paid.



(2)

Attendance fees are paid per day of meetings, regardless of whether a director attends more than one meeting in a single day, except that a separate attendance fee is paid for each Executive Committee meeting, even if it occurs on the same day as other meetings.



(3)

The travel fee is available only to directors who travel outside of their home state or province to attend a Board of Directors or Committee meeting.




DSUs

        Directors receive half of their annual retainer and meeting fees (or all of such retainer and fees, if they so elect) in DSUs. The number of DSUs granted in lieu of cash meeting fees is calculated by dividing the cash fee that would otherwise be payable by the closing price of subordinate voting shares on the New York Stock Exchange (the NYSE)NYSE on the last business day of the quarter in which the applicable meeting occurred. In the case of annual retainer fees, the number of DSUs granted is calculated 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 business day of the quarter.




        Directors also receive annual grants of DSUs. In 2009,2010, each director received an annual grant of $120,000 worth of DSUs, except for the Chairman, who received an annual grant of $180,000, and Ms. Koellner,Mr. DiMaggio, who joined the Board of Directors on April 23, 2009July 21, 2010 and received an annual grant of $90,000.$60,000. The number of DSUs granted is calculated 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 business day of the quarter.

        Eligible directors also receive an initial grant of DSUs when they are appointed to the Board of Directors. For individuals who become eligible directors after December 31, 2008, the initial grant is equal to the amountvalue of the annual board retainerDSU grant multiplied by 150% and divided by the closing price of subordinate voting shares on the NYSE on the last business day of the fiscal quarter immediately preceding the date when the individual becomes an eligible director. The DSUs comprising the initial grant vest upon the retirement of the eligible director. However, if an eligible director retires within a year of becoming an eligible director, all of the DSUs comprising the initial grant are forfeited and cancelled. If an eligible director retires less than two years but more than one year after becoming an eligible director, then two-thirds of the DSUs comprising the initial grant are forfeited and cancelled. If an eligible director retires within three years but more than two years after becoming an eligible director, then one-third of the DSUs comprising the initial grant are forfeited and cancelled. Forfeiture does not apply if a director ceases to be a director due to a change of control.control of the Company.

        The compensation paid in 20092010 by the Company to its directors is set out in Table 2. None of the directors received any fee or payment from the Company except as set out below. Mr. Schwartz is an officer of Onex and did not receive any compensation in his capacity as a director of the Company in 2009;2010; however, Onex did receive compensation for providing the services of Mr. Schwartz as a director, see Item 7(B), "Related Party Transactions." Mr. Muhlhauser, as President and Chief Executive Officer of the Company, also did not receive any director'sdirector fees from the Company in 2009.2010.

Table 2: Director Fees Earned in 20092010

Name		Board Annual Retainer (a)			Chairman Annual Retainer (b)			Committee Chair Annual Retainer (c)			Total Meeting Attendance Fees (d)			Total Annual Retainer and Meeting Fees Payable ((a)+(b)+(c)+(d)) (e)			Portion of Fees Taken in Cash or Applied to DSUs and Value of DSUs(1) (f)		Annual DSU Grant (#) and Value of DSUs(1) (g)			Initial DSU Grant (#) and Value of DSUs (h)			Total ((e)+(g)+(h))
Robert L. Crandall			—		$	130,000		$	30,000		$	65,000		$	225,000		100% DSUs/ $225,000			28,752/$180,000			—		$	405,000
William A. Etherington		$	65,000			—		$	10,000		$	45,000		$	120,000		100% DSUs/ $120,000			19,168/$120,000			—		$	240,000
Laurette Koellner(2)(3)		$	48,750			—			—		$	27,500		$	76,250		100% DSUs/ $76,250			10,741/$90,000		$	26,393/ 180,000		$	346,250
Richard S. Love(4)		$	65,000			—			—		$	37,500		$	102,500		50% Cash & 50% DSUs/ $51,250			19,168/$120,000			—		$	222,500
Eamon J. Ryan(3)		$	65,000			—			—		$	25,000		$	90,000		100% DSUs/ $90,000			19,168/$120,000			—		$	210,000
Don Tapscott		$	65,000			—			—		$	17,500		$	82,500		100% DSUs/ $82,500			19,168/$120,000			—		$	202,500

Name		Board Annual Retainer (a)			Chairman Annual Retainer (b)			Committee Chair Annual Retainer (c)			Total Meeting Attendance Fees (d)(4)			Total Annual Retainer and Meeting Fees Payable ((a)+(b)+(c)+(d)) (e)			Portion of Fees Applied to DSUs and Value of DSUs(1) (f)		Annual DSU Grant (#) and Value of DSUs(1) (g)			Initial DSU Grant (#) and Value of DSUs (h)			Total ((e)+(g)+(h))
Robert L. Crandall			—		$	130,000		$	30,000		$	55,000		$	215,000		100%/$215,000			19,677/$180,000			—		$	395,000
Dan DiMaggio(2)		$	32,500			—			—		$	17,500		$	50,000		100%/$50,000			6,651/$60,000		$	22,333/ 180,000		$	290,000
William A. Etherington		$	65,000			—		$	10,000		$	40,000		$	115,000		100%/$115,000			13,118/$120,000			—		$	235,000
Laurette Koellner		$	65,000			—			—		$	37,500		$	102,500		50%/$51,250			13,118/$120,000			—		$	222,500
Richard S. Love(3)		$	20,000			—			—		$	17,500		$	37,500		50%/$18,750			3,378/$36,923			—		$	74,423
Eamon J. Ryan		$	65,000			—			—		$	27,500		$	92,500		100%/$92,500			13,118/$120,000			—		$	212,500
Don Tapscott(3)		$	57,228			—			—		$	17,500		$	74,728		50%/$37,364			11,639/$105,652			—		$	180,380

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(1)

The annual retainer, meeting fees and annual grant for 20092010 were paid quarterly and the number of DSUs granted in respect of the amounts paid quarterly for each such item was determined using the closing prices of subordinate voting shares on the NYSE on the last business day of each quarter, which were $3.56$10.93 on March 31, 2009, $6.822010, $8.06 on June 30, 2009, $9.482010, $8.43 on September 30, 20092010 and $9.44$9.70 on December 31, 2009.2010.






(2)

Ms. Koellner became a director on April 23, 2009.



(3)

Ms. Koellner and Mr. Ryan wereDiMaggio was appointed to the Board and the Audit, Compensation and Governance Committees as of March 9,on July 21, 2010.



(3)

Mr. Love retired from the Board on April 21, 2010 and Mr. Tapscott retired from the Board on November 17, 2010.



(4)

Mr. Love is not standing for re-election and will retire from the Board of Directors on April 21, 2010.Includes travel fees payable to directors.

        The total annual retainer and meeting fees earned by the Board of Directors in 2009 were $696,250.2010 was $687,228. In addition, a total annual grantgrants of DSUs worth $750,000$742,575 and an initial grant of DSUs worth $180,000 were issued.

Outstanding Option-Based and Share-Based Awards

        In 2005, the Company amended its Long TermLong-Term Incentive Plan (LTIP) to prohibit the granting of options to acquire subordinate voting shares to directors. Table 3 sets out information relating to option grants to directors which






that were made between 1998 and 2004 and which remain outstanding. All option grants were made with exercise prices set at the closing market price on the business day prior to the date of grant. Exercise prices range from $10.62 to C$72.60.$44.23. Options vest over three or four years and expire after ten years. The final grant of options occurred on May 10, 2004; those options will expire on May 10, 2014. Mr. Schwartz, as an employee of Onex during that period, was not granted options. Mr.Messrs. DiMaggio and Ryan and Ms. Koellner, bothall of whom became directors after May 2004, have not been granted any options under the LTIP.

        DSUs that were granted prior to January 1, 2007 willmay be paid out in the form of subordinate voting shares issued from treasury.treasury or an equivalent value in cash. DSUs granted after January 1, 2007 willcan only be paid out in the form of subordinate voting shares purchased in the open market or an equivalent value in cash. The date used in valuing the DSUs shall be a date within 90 days of the date on which the individual in question ceases to be a director. The DSUs shall be redeemed and payable on or prior to the 90^th day following the date on which the individual ceases to be a director. The total number of DSUs outstanding for each director is included in Table 3 under the column "Share-Based Awards."

        The following table sets out, for each director, information concerning all option-based and share-based awards outstanding as of December 31, 20092010 (this includes awards granted before the most recently completed financial year).




Table 3: Outstanding Option-Based and Share-Based Awards

		Option-Based Awards(1)												Share-Based Awards(2)							Option-Based Awards(1)												Share-Based Awards(2)
Name		Number of Securities Underlying Unexercised Options (#)			Option Exercise Price ($)			Option Expiration Date			Value of Unexercised In-the-Money Options ($)			Number of Outstanding Units (#)			Market Payout Value of Outstanding Units ($)				Number of Securities Underlying Unexercised Options (#)			Option Exercise Price ($)			Option Expiration Date			Value of Unexercised In-the-Money Options ($)			Number of Outstanding Units (#)			Market Payout Value of Outstanding Units ($)
Robert L. Crandall
Jul. 7, 2000			20,000		$	48.69			Jul. 7, 2010			—			—			—
Jul. 7, 2001			20,000		$	44.23			Jul. 7, 2011			—			—			—				20,000		$	44.23			Jul. 7, 2011			—			—			—
Apr. 18, 2003			10,000		$	10.62			Apr. 18, 2013			—			—			—				10,000		$	10.62			Apr. 18, 2013			—			—			—
May 10, 2004			10,000		$	18.25			May 10, 2014			—			—			—				10,000		$	18.25			May 10, 2014			—			—			—
—																						—			—			—			—			355,981		$	3,453,016
Dan DiMaggio
—			—			—			—			—			312,807		$	2,952,898				—			—			—			—			34,508		$	334,728
William A. Etherington
Oct. 22, 2001			20,000		$	35.95			Oct. 22, 2011			—			—			—				20,000		$	35.95			Oct. 22, 2011			—			—			—
Apr. 21, 2002			5,000		$	32.40			Apr. 21, 2012			—			—			—				5,000		$	32.40			Apr. 21, 2012			—			—			—
Apr. 18, 2003			5,000		$	10.62			Apr. 18, 2013			—			—			—				5,000		$	10.62			Apr. 18, 2013			—			—			—
May 10, 2004			5,000		$	18.25			May 10, 2014			—			—			—				5,000		$	18.25			May 10, 2014			—			—			—
—			—			—			—			—			135,279		$	1,277,034				—			—			—			—			160,930		$	1,561,021
Laurette Koellner			—			—			—			—			46,166		$	435,807
Richard S. Love
Jul. 7, 2000			10,000		$	48.69			Jul. 7, 2010			—			—			—
Jul. 7, 2001			10,000		$	44.23			Jul. 7, 2011			—			—			—
Apr. 18, 2003			2,500		$	10.62			Apr. 18, 2013			—			—			—
May 10, 2004			2,500		$	18.25			May 10, 2014			—			—			—
—			—			—			—			—			79,485		$	750,338				—			—			—			—			64,876		$	629,297
Eamon J. Ryan			—			—			—			—			70,340		$	664,010
Don Tapscott
Jul. 7, 2000			20,000		C$	72.60			Jul. 7, 2010			—			—			—
Jul. 7, 2001			20,000		C$	66.78			Jul. 7, 2011			—			—			—
Apr. 18, 2003			5,000		$	10.62			Apr. 18, 2013			—			—			—
May 10, 2004			5,000		$	18.25			May 10, 2014			—			—
—			—			—			—			—			130,471		$	1,231,646				—			—			—			—			93,547		$	907,406

---

(1)

All options granted under the option-based awards have vested.



(2)

Represents all outstanding share units. The market payout value was determined using a share price of $9.44,$9.70, which was the closing price of subordinate voting shares on the NYSE on December 31, 2009.2010.




Directors' Equity Interest

        The following table sets out each director's direct or indirect beneficial ownership of, or control or direction over, equity in the Company, and any changes therein since February 23, 2009.22, 2010.

Table 4: Equity Interest Other than Options and
Outstanding Share-Based Awards⁽¹⁾

Name		Date			Subordinate Voting Shares(2) #			Market Value*				Date			Subordinate Voting Shares(2) #			Market Value*
Robert L. Crandall			Feb. 23, 2009			70,000		$	745,500				Feb. 22, 2010			70,000		$	790,300
													Feb. 22, 2011			70,000
													Change			—
Dan DiMaggio													Feb. 22, 2010			—			—
			Feb. 22, 2010			70,000							Feb. 22, 2011			—
			Change			—							Change			—
William A. Etherington			Feb. 23, 2009			10,000		$	106,500				Feb. 22, 2010			10,000		$	112,900
			Feb. 22, 2010			10,000							Feb. 22, 2011			10,000
			Change			—							Change			—
Laurette Koellner			Feb. 23, 2009			—		$	—				Feb. 22, 2010			—			—
			Feb. 22, 2010			—							Feb. 22, 2011			—
			Change			—							Change			—
Richard S. Love			Feb. 23, 2009			5,000		$	53,250
			Feb. 22, 2010			5,000
			Change			—
Eamon J. Ryan			Feb. 23, 2009			—		$	—				Feb. 22, 2010			—			—
			Feb. 22, 2010			—							Feb. 22, 2011			—
			Change			—							Change			—
Gerald W. Schwartz(3)			Feb. 23, 2009			2,184,975		$	16,741,555				Feb. 22, 2010			1,571,977		$	15,124,705
			Feb. 22, 2010			1,571,977							Feb. 22, 2011			1,339,655
			Change			(612,998	)						Change			-232,322
Don Tapscott			Feb. 23, 2009			5,700		$	60,705
			Feb. 22, 2010			5,700
			Change			—

---

*

Based on the NYSE closing share price of $10.65$11.29 on February 22, 2010.2011.



(1)

Information as to securities beneficially owned, or controlled or directed, directly or indirectly, is not within the Company's knowledge and therefore has been provided by each nominee.



(2)

Certain subordinate voting shares subject to options granted pursuant to management investment plans of Onex are included as owned beneficially by named individuals although the exercise of these options is subject to Onex meeting certain financial targets. More than one person may be deemed to have beneficial ownership of the same securities.



(3)

Mr. Schwartz is deemed to be the beneficial owner of the 18,946,368 multiple voting shares owned by Onex, which have a market value of $201,778,819$213,904,495 as of February 22, 2010.2011.

Shareholding Requirements

        The Company has minimum shareholding requirements for independent directors (the "Guideline")Guideline). The Guideline provides that an independent director who has been on the Board of Directors:

•

for five years or more must hold securities of the Company having a market value of at least five times that director's then applicable annual retainer and, after such level of ownership has been obtained, shall continue to invest a significant portion of the annual retainer in securities of the Company;



•

for two years or more (but less than five years) must hold securities of the Company having a market value of at least three times that director's then applicable annual retainer;






•

for one year or more (but less than two years) must hold securities of the Company having a market value of at least one time that director's then applicable annual retainer; and



•

for less than a year are encouraged, but not required, to hold securities of the Company.




        Although directors will not be deemed to have breached the Guideline by reason of a decrease in the market value of the Company's securities, the directors may be required to purchase further securities within a reasonable period of time to comply with the Guideline. The Guideline came into effect on April 22, 2004 and eachEach director's holdings of securities, which for the purposes of the Guideline include all subordinate voting shares, DSUs and RSUs, are reviewed annually each year on December 31. As of December 31, 2009, all ofThe following table sets out whether the directors of the Company were or were on track to be, in compliance with the Guideline as set out in the following table.of December 31, 2010.

Table 5: Shareholding Requirements

		Shareholding Requirements											Shareholding Requirements
Director		Target Value (5x annual retainer)			Date by which Target to be Met			Value as of December 31, 2009(3)			On Track as of December 31, 2009		Current Target Value			Value as of December 31, 2010(1)			Met Target as of December 31, 2010
Robert L. Crandall		$	800,000			Apr. 22, 2010		$	3,613,698		Yes		$	800,000		$	4,132,016		Yes
Dan DiMaggio(2)														N/A			N/A		N/A
William A. Etherington		$	375,000			Apr. 22, 2010		$	1,371,433		Yes		$	375,000		$	1,658,021		Yes
Laurette Koellner		$	325,000			Apr. 23, 2014		$	435,807		Yes		$	65,000		$	629,297		Yes
Richard S. Love(1)		$	325,000			N/A		$	797,538		N/A
Craig H. Muhlhauser(2)(3)			—			—			—		—			N/A			N/A		N/A
Eamon J. Ryan		$	325,000			Oct. 24, 2013		$	664,010		Yes		$	195,000		$	907,406		Yes
Gerald W. Schwartz(2)(3)			—			—			—		—			N/A			N/A		N/A
Don Tapscott		$	325,000			Apr. 22, 2010		$	1,285,454		Yes

---

(1)

Mr. LoveThe value of the aggregate number of subordinate voting shares, DSUs and RSUs held by each director is not standing for re-election and will retire fromdetermined using a share price of $9.70, which was the Boardclosing price of Directorssubordinate voting shares on April 21,the NYSE on December 31, 2010.



(2)

In accordance with the Guideline, Mr. DiMaggio is encouraged, but not required, to hold securities of the Company since he has been a director for less than one year.



(3)

As Messrs. Muhlhauser and Schwartz are not independent directors, neither of them receives a retainer or other fee for their services as a director (however, Onex did receive compensation for providing the services of Mr. Schwartz as a director, see itemItem 7(B), "Related Party Transactions,"Transactions") and neither is subject to the minimum shareholding requirements of the Guideline.



(3)

The value of the aggregate number of subordinate voting shares, DSUs and RSUs held by each director is determined using a share price of $9.44, which was the closing price of subordinate voting shares on the NYSE on December 31, 2009.

Attendance of Directors at Board of Directors and Committee Meetings

        The following table sets forth the attendance of directors at Board of Directors and Committee meetings from the beginning of 20092010 to February 22, 2010.2011.

Table 6: Directors' Attendance at Board of Directors and Committee Meetings

																	Meetings Attended %																						Meetings Attended %
Director		Board			Audit			Compensation			Governance			Executive			Board			Committee				Board			Audit			Compensation			Governance			Executive			Board			Committee
Robert L. Crandall(1)			8 of 8			7 of 7			6 of 6			5 of 5			7 of 7			100%			100%				8 of 8			5 of 5			5 of 5			4 of 4			4 of 4			100%			100%
William A. Etherington(2)			8 of 8			7 of 7			6 of 6			5 of 5			7 of 7			100%			100%
Laurette Koellner(3)(4)			5 of 5			—			—			—			—			100%			—
Richard S. Love			8 of 8			—			—			5 of 5			—			100%			100%
Dan DiMaggio(2)																									3 of 3			3 of 3			3 of 3			2 of 2			—			100%			100%
William A. Etherington(3)																									8 of 8			5 of 5			5 of 5			4 of 4			4 of 4			100%			100%
Laurette Koellner(4)																									8 of 8			4 of 4			4 of 4			2 of 3			—			100%			91%
Richard S. Love(5)																									4 of 4			—			—			2 of 2			—			100%			100%
Craig H. Muhlhauser			8 of 8			—			—			—			—			100%			—				8 of 8			—			—			—			—			100%			—
Eamon J. Ryan(4)			8 of 8			—			—			—			—			100%			—				8 of 8			4 of 4			4 of 4			3 of 3			—			100%			100%
Gerald W. Schwartz			8 of 8			—			—			—			—			100%			—				7 of 8			—			—			—			—			88%			—
Don Tapscott			4 of 8			4 of 7			3 of 6			2 of 5			—			50%			50%
Don Tapscott(5)																									5 of 7			2 of 4			2 of 4			2 of 4			—			71%			50%

---

(1)

Mr. Crandall is chairthe Chair of each of the Audit, Governance and Executive Committees.



(2)

Mr. DiMaggio was appointed to the Board and the Audit, Compensation and Governance Committees on July 21, 2010.



(3)

Mr. Etherington is chairthe Chair of the Compensation Committee.



(3)

Ms. Koellner became a director on April 23, 2009.



(4)

Ms. Koellner and Mr. Ryan were appointed to the Audit, Compensation and Governance Committees as of March 9, 2010.



(5)

Mr. Love retired from the Board on April 21, 2010 and Mr. Tapscott retired from the Board on November 17, 2010.




        As of December 31, 2009,2010, no amounts have been set aside or accrued by the Company, except as described herein, to provide pension, retirement and similar benefits to the directors.

COMPENSATION DISCUSSION AND ANALYSIS

        This Compensation Discussion and Analysis sets out the policies of the Company for determining compensation paid to the Company's Chief Executive Officer (the "CEO"),CEO, its Chief Financial Officer (the "CFO")(CFO) and the three other most highly compensated executive officers (collectively, the "NamedNamed Executive Officers"Officers or "NEOs")NEOs). A description and explanation of the significant elements of compensation awarded to the NEOs during 20092010 is set out in the section entitled, "— 20092010 Compensation Decisions."

Compensation Objectives

        The Company's executive compensation philosophies and practices are designed to attract, motivate and retain the leaders who will drive the success of the Company. The Company benchmarks itself against a comparator group of similarly sized technology companies as set out in Table 7 (the "Comparator Group"), including six direct competitors of the Company in the electronics manufacturing services industry: Benchmark Electronics, Inc., Flextronics International Ltd., Jabil Circuit, Inc., Plexus Corp., Sanmina-SCI Corp. and Tyco Electronics Ltd.Comparator Group).

        Compensation for executives is linked to the Company's performance. TargetThe Company benchmarks target compensation is positioned atwith reference to the median of the comparator group for median level performance,Comparator Group, with the opportunity for above medianhigher compensation for performance that exceeds the median of the Comparator Groupbenchmark and less than medianlower compensation for performance that is below the median of the Comparator Group.benchmark.

        The compensation package is designed to:

•

provide competitive fixed compensation (i.e., base salary and benefits) and, as well as a substantial amount of at-risk pay which will be realized through the annual and equity-based incentive plans;



•

reward executives for achieving operational and financial results that meet or exceed the Company's business plan and that are superior to those of Benchmark Electronics, Inc., Flextronics International Ltd., Jabil Circuit, Inc. and Sanmina-SCI Corp. (collectively,direct competitors in the "EMS Competitors")electronics manufacturing services (EMS) industry through both annual incentives and equity-based incentives;



•

align the interests of executives and shareholders through equity-based compensation;



•

recognize that the executives work as a team to achieve corporate results; and



•

ensure direct accountability for the annual operating results and the long-term financial performance of the Company.

Independent Advice

        The Compensation Committee has engaged Towers Watson as its independent compensation consultant to assist in identifying appropriate comparator companies against which to evaluate the Company's compensation levels, to provide data about those companies, and to provide observations and recommendations with respect to the Company's compensation practices versus both the comparator groupComparator Group and the market in general.

        Management works with Towers Watson to review and, where appropriate, develop and recommend compensation programs that will ensure the Company's practices are competitive with market practices. Towers Watson also provides advice to the Compensation Committee on the policy recommendations prepared by management and keeps the Compensation Committee apprised of market trends in executive compensation. Towers Watson attended portions of all Compensation Committee meetings held in 2009,2010, in person or by telephone, as requested by the Chairman of the Compensation Committee. The Compensation Committee holdshas the opportunity to holdin camera sessions with Towers Watson at each of its meetings.

        Decisions made by the Compensation Committee, however, are the responsibility of the Compensation Committee and may reflect factors and considerations other than the information and recommendations provided by Towers Watson.




        Each year, the Chairman of the Compensation Committee reviews the scope of activities of Towers Watson and, if heit deems appropriate, approves the corresponding budget. Any services and fees not related to executive compensation must be approvedpre-approved by the Chairman.Chairman of the Compensation Committee. In 2009,2010, the executive compensation advisor retainer fees paid to Towers Watson totalledtotaled C$199,142.185,000. Additional consulting servicesservice fees paid to Towers Watson regarding international executive benefits totalledthe review of long-term incentive policies for non-executives, total shareholder return (TSR), and incentive plan analysis totaled C$57,07273,828 for 20092010 and fees paid for data services (both executive and non-executive) totalledtotaled C$22,631. Towers Watson did not provide any non-executive compensation consulting services in 2009.14,487.

Compensation Process

        The Compensation Committee reviews and approves compensation for the CEO and the other NEOs, including base salaries, annual incentive awards and equity-based incentive grants. CompensationThe Committee evaluates the performance of the CEO relative to established objectives. The Committee reviews competitive data for the Comparator Group and consults with Towers Watson before exercising its independent judgment to determine appropriate compensation levels. The Committee approves the compensation awards and forwards it to the Board of Directors for review. The CEO reviews the performance evaluations of the other NEOs is reviewed in consultation with the CEO.Committee and provides compensation recommendations. The Compensation Committee worksconsiders these recommendations, reviews market compensation information, consults with Towers Watson when determining the compensation of the NEOs, including the CEO. The Compensation Committee's decisionsand exercises its independent judgment to determine if any adjustments are then reviewed with the Board.required prior to approval.

        The Compensation Committee generally meets five times a year. At the July meeting, the Compensation Committee, based on recommendations from Towers Watson, selects the comparator group that will be used for the compensation review. At the October meeting, Towers Watson presents a competitive analysis of the total compensation for each of the NEOs, including the CEO, based on the established comparator group. Using this analysis, the Chief Legal and Administrative Officer (the "CLO"),(CLO) who has responsibility for Human Resources and the CEO, together with Towers Watson, and the CEO develop base salary and equity-based incentive recommendations for the NEOs, except that the CEO and CLO do not participate in the preparation of their own compensation recommendations. At the December meeting, base salary recommendations for the NEOs for the following year and the value and mix of their equity-based incentives are approved. Previous grants of equity-based awards and the current retention value of same are reviewed and may be taken into consideration when making this decision. At the January meeting, the Compensation Committee approves the final mix of the equity-based incentives. The CLO is not present at the Compensation Committee meetings when her compensation is discussed.

        The foregoing process is also followed for determining the CEO's compensation except that the CLO works with Towers Watson to develop a proposal for base salary and equity-based incentive grants. The Compensation Committee then reviews the proposal with Towers Watson in the absence of the CEO. At that time, the Compensation Committee also considers the potential value of the total compensation package for the CEO at different levels of performance and different stock prices to ensure that there is an appropriate link between pay and performance taking into consideration the range of potential total compensation.

        In terms of the Company's annual incentive plan, targets based on a management plan approved by the Board of Directors are approved by the Compensation Committee at the beginning of the year. The Compensation Committee reviews the Company's performance relative to these targets and the projected payment at the October and December Compensation Committee meetings. At the January meeting of the following year, final payments under the plan, as well as the vesting percentages for any previously granted equity-based incentives that have performance vesting criteria, are calculated and approved by the Compensation Committee based on the Company's year-end results as approved by the Audit Committee. These amounts are then paid in February.

Comparator Companies

        The Compensation Committee benchmarks salary, annual incentive and equity-based incentive awards to the Comparator Group. The revenues of the Comparator Group companies are generally in the range of half to twice the Company's revenues. In addition, for 20092010 the Committee included in the Comparator Group three electronics manufacturing services competitorsfive companies whose revenues were outside this range: three EMS companies, Benchmark Electronics, Inc., Plexus






Corp. and Flextronics International Ltd., for direct industry comparison, and two other companies that are not in the EMS industry, EMC Corporation and Xerox Corp., for consistency with 2009.

        The following table sets out the Company's 20092010 Comparator Group consisted of the following companies.




Table 7: Comparator Group

Company Name		2008 Annual Revenue (millions)			Company Name		2008 Annual Revenue (millions)				2009 Annual Revenue (millions)			Company Name		2009 Annual Revenue (millions)
Advanced Micro Devices			$  5,808		Sanmina-SCI Corp.			$  7,202			$	5,403		Sanmina-SCI Corporation			$  5,178
Agilent Technologies Inc.			$  5,774		Seagate Technology			$12,708			$	4,481		Seagate Technology			$  9,805
Applied Materials Inc.			$  8,129		Sun Microsystems Inc.			$13,880			$	5,014		Texas Instruments Inc.			$10,427
Benchmark Electronics, Inc.			$  2,590		Texas Instruments Inc.			$12,501			$	2,089		Tyco Electronics Ltd.			$10,256
Corning Inc.			$  5,948		Tyco Electronics Ltd.			$14,834			$	5,395		Western Digital Corp.			$  7,453
EMC Corp (Mass)			$14,876		Western Digital Corp.			$  8,074
EMC Corporation											$	14,026		Xerox Corp.			$15,179
Flextronics International Ltd.			$30,949		Xerox Corp.			$17,608			$	30,949
Harris Corp.			$  5,311								$	5,005
Jabil Circuit, Inc.			$12,780		25th Percentile			$  5,315			$	11,685		25th Percentile			$  4,579
Lexmark International Inc.			$  4,528		50th Percentile			$  7,202			$	3,880		50th Percentile			$  5,287
Micron Technology Inc.			$  5,841		75th Percentile			$12,780			$	4,803		75th Percentile			$10,299
NCR Corp.			$  5,315								$	4,612
NVIDIA Corp.			$  3,425		Celestica Inc.			$  7,678			$	3,425		Celestica Inc.			$  6,092
Plexus Corp.			$  1,842		Percentile Rank			53rd percentile			$	1,617		Percentile Rank			59th percentile

---

Financial data as of June 30, 2009.May 31, 2010. Source: Standard & Poor's Research InsightCapital IQ

        Additionally, broader market compensation data for other similarly sizedsimilarly-sized organizations provided by Towers Watson is referenced in accordance with a process approved by the Compensation Committee.

Compensation Elements for the Named Executive Officers

        The compensation of the NEOs is comprised of the following elements:

•

base salary;



•

annual incentives (annual variable cash payments);



•

equity-based incentives (restricted and performance share units and stock options);



•

benefits; and



•

perquisites.

Weighting of Compensation Elements

        The variable portion of total compensation has the highest weighting at the most senior levels. Annual and equity-based incentive plan rewards are contingent upon organizational performance and ensure a strong






alignment with shareholder interests. The target weighting of compensation elements for 20092010 is set out in the following table.

Table 8: Target Weighting of Compensation Elements

		Base Salary			Annual Incentive			Equity-based Incentives				Base Salary			Annual Incentive			Equity-based Incentives
CEO			16.7%			16.7%			66.6%				13.8%			17.2%			69.0%
EVPs			22.8%			18.2%			59.0%
Executive Vice Presidents (EVPs)													19.7%			15.7%			64.6%
Senior Vice Presidents (SVPs)													27.6%			16.6%			55.8%

Base Salary

        The objective of base salary is to attract, reward and retain top talent. Executive positions are benchmarked against the Comparator Group, with base pay targeted atdetermined with reference to the market median of this group. Base salaries are






reviewed annually and adjusted as appropriate, with consideration given to individual performance, relevant knowledge, experience and anthe executive's level of responsibility within the organization.

Celestica Team Incentive Plan (CTI)

        The objective of the CTICelestica Team Incentive Plan (CTI), is to reward all eligible employees, including the NEOs, for the achievement of annual corporate business unit, and individual goals and objectives. Target awards for each of the NEOs are expressed as a percentage of salary and established based onwith reference to the median of the Comparator Group. Actual awards for the NEOs are based on (i) the achievement of pre-determined corporate and individual goals and (ii) corporate performance relative to that of four direct competitors in the EMS Competitors.industry: Benchmark Electronics, Inc., Flextronics International Ltd., Jabil Circuit, Inc. and Sanmina-SCI Corporation (collectively, the 2010 EMS Competitors). Actual payouts can vary from 0% for performance below a threshold up to a maximum of 200% of the target bonus.award. Awards are derived according to the following formula:



        For 2009,2010, the business performance goals were comprised of the following elements:

•

corporate EBIAT (50%);



•

corporate revenue (25%); and



•

corporate ROICreturn on invested capital (ROIC) (25%).

        Individual contribution is recognized through the individual component and individual performance factor ("IPF")(IPF). The IPF is based on a review of each NEO's individual performance relative to business results, teamwork and the executive's key accomplishments. This factor can adjust the executive's actual award by a factor of between 0.0x and 1.5x.

        The Compensation Committee also applies a relative performance factor (RPF), based on an evaluation of the Company's performance for the year relative to that of the 2010 EMS Competitors. This evaluation is based on aan ROIC-based performance metric but is ultimately within the Compensation Committee's discretion. This factor can adjust the executive's actual award by a factor of between 0.5x and 1.5x.




        Actual results relative to the targets, as described above, determine the amount of the annual incentive subject to the following: (i) a minimum corporate profitability threshold must be achieved to pay the business performance component and (ii) the maximum award is two times the target.

        For 2011, the CTI formula for NEOs will be revised by removing the individual component and the RPF and increasing the top end of the IPF range from 1.5x to 2.0x.

Equity-Based Incentives

        The Company's equity-based incentives for the NEOs consist of RSUs, performance share units (PSUs) and stock options. The objectives of the equity-based incentive plans are to:

•

align the NEO's interests with those of shareholders and incent appropriate behaviour for long-term performance;



•

reward contribution to the Company's long-term success; and



•

enable the Company to attract, motivate and retain the qualified and experienced employees who are critical to the Company's success.

        At the December meeting, the Compensation Committee determines the dollar value and mix of the equity-based grants to be awarded to the NEOs based on the comparator data analysis. Theanalysis and the actual equity mix to be awarded is approved at the January meeting of the Compensation Committee.awarded. On the grant date, the dollar value is converted into the number of units that will be granted using the marketclosing price of the Company's subordinate voting shares as defined byon the applicable plan. RSUs and PSUs can be issued underday prior to the LTIP or the Celestica






Share Unit Plan (CSUP).grant. The annual grants are generally made immediately following the blackout period that ends 48 hours after the Company's year-end results have been released.

        Target equity-based incentives are determined based onwith reference to the median awards of the Comparator Group; however, consideration is given to individual performance when determining actual awards. The equity mix varies by employee level and targets a higher percentage of performance elements at the NEO levelslevel where there is a stronger influence on results. The target mix of equity-based incentives is reviewed by the Compensation Committee each year and for 20092010 the targetsmix for the NEOs werewas as follows:

•

40% RSUs;



•

35% PSUs; and



•

25% stock options.

        The CEO has the discretion to issue equity-based awards throughout the year to attract new hires and to retain current employees within limits set by the Compensation Committee. The number of units available throughout the year for these grants is pre-approved by the Compensation Committee at the January meeting. Subject to the Company's blackout periods, these grants typically take place at the beginning of each month. AnyAll grants to NEOs must be reviewed with the Compensation Committee at the next meeting following such grant and in practice are reviewed in advance with the Chairman of the Compensation Committee.




RSUs

        NEOs are granted RSUs under either the LTIP or the CSUPCelestica Share Unit Plan (CSUP), as part of the Company's annual grant. RSUs granted prior to February 2008 are released on the first day of December two years following the grant (i.e., RSUs granted in February 2007 were released on December 1, 2009). Generally, RSUs granted in February 2008 or later are released one-third on each of the first two anniversaries of the grant date and the final third is released on the first day of December two years following the grant. Grants made throughout the year for new hires or retention purposes will be released at a rate of one-third per year.installments, as follows:

Table 9: RSU Release Dates

		Release Dates
Grant Dates
		First		Second		Third
March 1, 2008 – October 31, 2008		First anniversary		Second anniversary		Third anniversary
November 1, 2008 – July 31, 2009		February 5, 2010		February 11, 2011		December 1, 2011
August 1, 2009 – February 1, 2010		February 11, 2011		February 6, 2012		December 1, 2012
February 2, 2010		February 5, 2011		February 5, 2012		December 1, 2012
February 3, 2010 – July 31, 2010		February 11, 2011		February 6, 2012		December 1, 2012
August 1, 2010 – January 31, 2011		February 5, 2012		February 5, 2013		December 1, 2013
February 1, 2011		February 1, 2012		February 1, 2013		December 1, 2013
February 2, 2011 – February 22, 2011		February 5, 2012		February 5, 2013		December 1, 2013

        Each RSU entitles the holder to one subordinate voting share of the Company on the release date. The payout value of the award is based on the number of RSUs being released and the share price at the time of release. The Company has the right to settle proceeds of release in either cash or shares.

PSUs

        NEOs are granted PSUs under the CSUP. PSUs vest at the end of a three-year performance period subject to pre-determined performance criteria. The

        For PSUs granted on or before January 31, 2011, the number of PSUs that actually vestsvest will range from 0% to 200% of target depending on the Company's ranking in the third year of the performance period relative to that of the 2010 EMS Competitors based on an ROIC metric approved by the Compensation Committee. The vesting schedule for PSUs granted on or before January 31, 2011 is outlined in the following table.


Table 9: PSU10: Vesting Schedule for PSUs Granted on or Before January 31, 2011


Celestica's ROIC Metric		Performance Multiplier
Equal to/greater than highest performance of the 2010 EMS Competitors		200% of target
Between the median and highest performance		Prorated between 100%-200%
Equal to median performance of the 2010 EMS Competitors		100% of target
Between the median and lowest performance		Prorated between 0%-100%
Equal to/lower than lowest performance of the 2010 EMS Competitors		0% of target

        For awards granted on or after February 1, 2011, the number of PSUs that will actually vest will range from 0% to 200% of target, depending on the Company's ranking over the three year period relative to that of the 2010 EMS Competitors plus Plexus Corp. (the 2011 EMS Competitors), based on a TSR metric approved by the Compensation Committee. The actual number of units that will vest will be determined as follows:

•

Celestica's TSR will be ranked against that of each of the other 2011 EMS Competitors;



•

the percentage of PSUs that will vest and become payable on the applicable release date will correspond to Celestica's TSR ranking as set out in Table 11;



•

if, however, any of the 2011 EMS Competitors has a TSR ranking that is within 500 basis points (+/-5%) of Celestica's TSR ranking, then the percentage of the target number that will vest will be the average of the percentages in Table 11 that correspond to the TSR ranking of each such 2011 EMS Competitor (for example, if Celestica's TSR was 50% with a TSR ranking of fifth and a 2011 EMS Competitor's TSR was 55% with a TSR ranking of fourth, 60% of the target number would vest [i.e., (40% + 80%)/2]; and




•

if Celestica's TSR ranking is less than 0% then, regardless of Celestica's TSR ranking amongst the 2011 EMS Competitors, the maximum number of PSUs that may vest and become payable on the applicable release date will be 100% of the target number.


Table 11: TSR Rankings and Target Number


Celestica's TSR ranking		Percentage of target number that will vest
First		200%
Second		160%
Third		120%
Fourth		80%
Fifth		40%
Sixth		0%

        The payout value of the award is based on the number of PSUs that vestsvest and the share price of subordinate voting shares at the time of release. Each PSU entitles the holder to receive one subordinate voting share ofon the Company on theapplicable release date. The Company has the right to settle the proceeds in either cash or shares.




Stock Options

        Stock options are awarded under the LTIP. Stock options vest at a rate of 25% annually on each of the first four anniversaries of the date of grant and expire after a 10-year term. The payout value of the award is equal to the increase, if any, in the share price at the time of exercise over the exercise price, which is the closing market price on the business day prior to the date of the grant.

        The value of the stock options granted in respect of 20092010 was determined at the December meeting of the Compensation Committee. The number of stock options granted was determined using (i) the closing price on February 1, 2010January 31, 2011 on the NYSE of $10.20,$9.87, and (ii) aan average Black-Scholes factor of 0.45 determined using the same methodology as is used to determine Black-Scholes for stock option expensing purposes.0.49. The Black-Scholes factor was determined using the following variables: (i) volatility of the price of subordinate voting shares, and (ii) the risk-free rate over the expected life of the options. The exercise price for the stock options is the closing price on February 1, 2010,January 31, 2011, being $9.87 on the NYSE for Mr. Muhlhauser and C$10.779.87 on the TSX, for Messrs. Nicoletti, and Peri and McCaughey and Ms. DelBianco, and $10.20 on the NYSE for Messrs. Muhlhauser and Boucher.DelBianco.

        In determining the number of options to be granted, the Company keeps within a maximum level for both option "burn rate" and "overhang."gross overhang." "Burn rate" refers to the number of shares issued under equity plans in a given year relative to the total number of shares outstanding. "Gross overhang" is discussed in "— Compensation Discussion and Analysis — Securities Authorized for Issuance Under Equity Compensation Plans." In 2005, the Company amended the LTIP to provide that the number of options and share units awarded under the plan in any given year cannot exceed 1.2% of the total number of shares outstanding. "Overhang" refers toThe plan is not an evergreen plan and no options have been re-priced.

        The following table sets out the total number of shares reserved for issuance under equity plans at any given time relative to the total number of shares outstanding. The Company has significantly reduced the number ofgains realized by NEOs from exercising stock option grants awarded and currently has an "overhang" of 11.3%.options in 2010:

Table 12: Gains Realized by NEOs from Exercising Options

Name		Amount
Craig H. Muhlhauser		$	421,206
Paul Nicoletti		$	220,253
John Peri		$	—
Elizabeth L. DelBianco		$	451,963
Michael McCaughey		$	230,401




Other Compensation

Benefits

        NEOs participate in the Company's health, dental, pension, life insurance and long-term disability programs. Benefit programs are based on market median levels in the local geography.

Perquisites

        NEOs are entitled to a bi-annual comprehensive medical at a private health clinic. The Company also pays housing expenses for Mr. Muhlhauser in Toronto, travel costs between his home in New Jersey and Toronto, the services of a tax advisor and the associated tax gross-up(s).equalization. The Company does not provide any other perquisites.

Celestica Employee Share Ownership Plan (the CESOP)

        The CESOP enables eligible employees, including NEOs, to acquire subordinate voting shares, so as to encourage continued employee interest in the Company's operation, growth and development. Under the CESOP, an eligible participant may elect to contribute an amount representing no more than 10% of his or her salary. The Company will contribute 25% of the amount that the employee contributes, up to a maximum of 1% of the employee's salary for the relevant payroll period. Contributions are used to purchase subordinate voting shares of the Company on the open market. The CESOP was suspended on June 1, 2009.

Executive Share Ownership

        The Company has share ownership guidelines for the CEO and the other NEOs.EVPs. The guidelines provide that these individuals are to hold a multiple of their salary in Celestica subordinate voting shares as shown in Table 10 below.13. Executives subject to ownership guidelines are expected to achieve the specified ownership within a period of five years following the later of: (i) the date of hire, or (ii) the date of promotion to a level subject to ownership guidelines. Compliance is reviewed annually as of December 31 of each year.




Table 10:13: Share Ownership Guidelines

Name		Ownership Guidelines		Share Ownership (Value)(1)			Share Ownership (Multiple of Salary)				Ownership Guidelines		Share Ownership (Value)(1)			Share Ownership (Multiple of Salary)
Craig H. Muhlhauser		$3,000,000 (3 × salary)		$	16,858,905			16.9x			$3,000,000 (3 × salary)		$	17,731,590			17.7x
Paul Nicoletti		$1,024,000 (2 × salary)		$	5,437,827			10.6x			$1,024,000 (2 × salary)		$	6,058,397			11.8x
John Peri		$1,008,000 (2 × salary)		$	4,919,401			9.8x			$1,008,000 (2 × salary)		$	4,944,148			9.8x
Elizabeth L. DelBianco		$888,000 (2 × salary)		$	4,052,054			9.1x			$888,000 (2 × salary)		$	4,452,591			10.0x
John Boucher		$1,000,000 (2 × salary)		$	4,419,959			8.8x
Michael McCaughey(2)											N/A			N/A			N/A

---

(1)

Includes the following, as of December 31, 2009:2010: (i) subordinate voting shares beneficially owned, (ii) all unvested RSUs, (iii) PSUs that vested on February 1, 20105, 2011 at 200% of target, which, on December 31, 2009,2010, was the Company's anticipated payout and was in fact the resulting payout, and (iv) all other PSUs at 100% of the target level of performance; in each case, the value of which was determined using a share price of $9.44$9.70 being the closing price of subordinate voting shares on the NYSE on December 31, 2009.2010.



(2)

As a SVP, Mr. McCaughey is not subject to share ownership guidelines.

Recoupment Provisions

        The Company is subject to the Sarbanes-Oxley Act of 2002. Accordingly, if the Company is required to restate financial results due to misconduct or material non-compliance with financial reporting requirements, the CEO and CFO would be required to reimburse the Company for any bonuses or incentive-based compensation they had received during the 12-month period following the period covered by the restatement, as well as any profits they had realized from the sale of corporate securities during that period.

        Under the terms of the stock option grants and the grants made under the LTIP and the CSUP, aan NEO may be required by the Company to repay an amount equal to the market value of the shares at the time of release, net of taxes, if, within 12 months of the release date, the executive:

•

accepts employment or accepts an engagement to supply services, directly or indirectly, to a third party, that is in competition with the Company or any of its subsidiaries; or





•

fails to comply with, or otherwise breaches, the terms and conditions of a confidentiality agreement or non-disclosure agreement with, or confidentiality obligations to, the Company or any of its subsidiaries; or



•

on his or her behalf or on another's behalf, directly or indirectly recruits, induces or solicits, or attempts to recruit, induce or solicit any current employee or other individual who is/was supplying services to the Company or any of its subsidiaries.

        Executives who resign or are terminated for cause also forfeit all unvested RSUs, PSUs and stock options as well as all vested and unexercised stock options.

2009Compensation Hedging Policy

        The Company has adopted a policy regarding executive officer and director hedging. The policy prohibits executives from, among other things, entering into speculative transactions and transactions designed to hedge or offset a decrease in market value of equity securities of the Company granted as compensation. Accordingly, executives may not sell short, buy put options or sell call options on the Company's securities or purchase financial instruments (including prepaid variable contracts, equity swaps, collars or units of exchange funds) which hedge or offset a decrease in the market value of the Company's securities.

2010 Compensation Decisions

        Each element of compensation is considered independently of the other elements. However, the total package is reviewed to ensure that the median total compensation objective for median levels of corporate and individual performance is achieved.

Comparator Companies and Market Positioning

        Benchmarking for all elements of NEO compensation was based on the Comparator Group. Salary, target annual incentive and equity-based incentive grants for those executives at the NEOsEVP level and above were benchmarked atwith reference to the market median of the Comparator Group.Group and for executives at the SVP level, with reference to market data provided by two third-party compensation survey firms.




Base Salary

        The base salaries for the NEOs were reviewed taking into account individual performance and experience, level of responsibility and median competitive data.

        In 2009, Mr. Boucher received a 16% increase in base salary to ensure competitiveness within the market. Messrs. Muhlhauser, Nicoletti, Peri and PeriMcCaughey and Ms. DelBianco did not receive increases in 20092010, as their existing salaries were competitive with the market.

Celestica Team Incentive Plan (CTI)

        TargetThe target annual incentive awardsaward is 125% of salary for the CEO, and other NEOs are 100% of salary and 80% of salary respectively.for EVPs, and 60% of salary for SVPs. Annual incentives take into account both individual and business performances on a variety of factors as set forth below. On average, in 2009 average payments to the NEOs were 54% lower than the previous year.




Business Performance

        In 2009, theThe business performance component payout factor for 2010 was 41.5%99% based on the following results:

Table 11:14: Business Performance

Measure		Weight			Percentage Achievement Relative to Target				Weight			Percentage Achievement Relative to Target
Operating Margin (EBIAT)(1)			50%			57.5%				50%			98.0%
Corporate Revenue(2)(4)			25%			0.0%				25%			100.0%
Return on Invested Capital (ROIC), excluding intangibles(3)			25%			51.1%
ROIC(3)(4)										25%			100.0%
Payout Factor						41.5%							99.0%

---

(1)

EBIAT was calculated as earnings before interest, amortization of intangible assets (except amortization of(excluding computer software), totalincome taxes, stock-based compensation, expenserestructuring and other charges, (including restructuring costs, the write-down of long-lived assets and gains or losses on the repurchase of shares and debt) and the related income tax effects of these adjustments.debt.



(2)

Corporate revenue means the Company's gross revenue.



(3)

ROIC excluding intangibles, was calculated as EBIAT divided by average net invested capital where average net invested capital includes tangibletotal assets less cash, accounts payable, accrued liabilities and income taxes payable.



(4)

Percentage achievement for corporate revenue and ROIC each exceeded 100% but were capped at 100% because EBIAT was less than 100% of target.

        In assessing operating performance and operational effectiveness, the Company uses certain non-GAAP measures such as adjusted gross margin, operating margin (EBIAT)EBIAT and ROIC that do not have any standardized meaning prescribed by Canadian or U.S. GAAP and are not necessarily comparable to similar measures presented by other companies. Beginning with the fourth quarter of 2009, the Company revised the definition of its non-GAAP measures to exclude all stock-based compensation expenses (in addition to the items previously excluded) to allow for a better comparison with its major North American EMS competitors. All prior period comparables reflect the revised definition. Additional information regarding these non-GAAP measures can be found in Item 5, "— Management's Discussion and Analysis of Financial Condition and Results of Operations."

Relative Performance Factor (RPF)

        The Company's 20092010 performance was ranked relative to that of the 2010 EMS Competitors on aan ROIC performance metric. The Company ranked first amongst such 2010 EMS Competitors and its ROIC was 1.5x that of the average ROICs of the 2010 EMS Competitors, which resulted in a RPF that exceeded the 1.5x cap, resulting in the maximuman RPF of 1.5x. For this comparison, the Company used adjusted ROIC, which is calculated as adjusted net earnings divided by average net invested capital.capital, where net invested capital consists of total assets, adjusted for the impact of accounts receivable sales, less cash, accounts payable, accrued liabilities and income taxes payable.




Individual Performance Factor (IPF)

        EachAt the beginning of each year, the Board of Directors and the CEO agree on performance goals for the CEO. Goals for the other NEOs that will support the CEO's goals are then agreed to and established.established by the CEO. For 2009,2010, the CEO's goals focused on: financial performance, operational effectiveness, growing the business, leadership and leadership.operational effectiveness. Each NEO's performance is then measured on a number of factors including the formal goals established for the year.

        Specific measures and achievements for each NEO in 20092010 were:

Chief Executive Officer

•

Financial performance: ROIC grew from 14.6% in 2008 to 22.0% in 2009 but was belowto 25.0% in 2010, exceeding the target for 2009.2010, and was the best ROIC since the Company went public in 1998. Adjusted earnings per share increased from $0.69 in 2009 to $0.85 in 2010, a significant increase of 23%, although slightly below target for this measure2010.




•

Growing the business: Revenue grew by 7.1% from $6.1 billion in 2009 to $6.5 billion in 2010, exceeding objectives. This was calculated by dividing EBIAT (as definedthe first year-over-year revenue growth the company has achieved since 2006. The company also showed 18% year-over-year growth in footnote 1 to Table 11) by average net invested capital, including intangibles. Average net invested capital, including intangibles, included total assets less cash, accounts payable, accrued liabilitiesits industrial, aerospace and income taxes payable.defense, healthcare and greentech markets, areas of strategic focus for the Company.



•

Leadership: In 2010, the Company continued its efforts to drive employee engagement with a focus on enhanced performance management programs, documented action plans directly targeting employee engagement, and employee recognition programs.



•

Operational effectiveness: The target for reduction in total spend, as a percentage of manufacturing value add, was not met.



•

Growing the business: The revenue and bookings objectives were not met.



•

Leadership: The target for improving the employee commitment index was exceeded.

        In addition to the goals listed above, the Compensation Committee's assessment of Mr. Muhlhauser's performance in 20092010 also reflected the following achievements of the Company:

•

the Company leveraged its best ever adjusted gross margin (7.4%);strong cash position to (i) repurchase and cancel 16.1 million shares, or 8% of its subordinate voting shares outstanding, through a normal course issuer bid, and (ii) retire its remaining subordinated debt in the first quarter of 2010, three-years ahead of maturity, making the Company debt free;



•

despite using approximately $375 million to repurchase shares and retire debt, the Company maintained a net cash balance of $633 million, significantly higher than any of its best operating margin (3.5%) since 2001;



•

its best ever ROIC, including intangibles, (22.0%) and highest among theNorth American EMS Competitors;peer group;



•

the bestCompany achieved the highest inventory turns (8.1x) compared with theamong its North American EMS Competitors;



•

second highest adjusted gross margin among the EMS Competitors;peer group; and



•

second highest operating margin among the EMS Competitors.selling, general and administrative expense fell from 4.0% of annual revenue in 2009 to 3.8% of annual revenue in 2010.

Other NEOs

        Each of the other NEOs has responsibility for the achievement of the CEO'soverall corporate goals and objectives.objectives of the CEO. The CEO's assessment of each of the other NEO'sNEOs' contributions to the Company's results is largely subjective and based on his judgment of each of the other NEO'sNEOs' contributions as a part of the senior leadership team. The achievement of individual goals is not quantitatively tied to compensation; however,Based on the CEO's overall assessment, the Compensation Committee considered each of each NEO's achievements is a factorthe NEOs to either have met or exceeded expectations in determining the NEO's overall compensation.2010 based on his or her individual performance and contribution to corporate goals.

        Other factorsFactors considered in the evaluation of each NEO included the following:

(i)

Mr. Nicoletti's organization successfully led a number of initiatives in support of the Company's goals and objectives including: implementation of automation and process change initiatives resulting in improvements in the effectiveness and efficiency of the Company's financial reporting process; implementation of improved revenue and profitability visibility tools; successfully transitioning from Canadian GAAP to IFRS; development of a long-term strategic planning process in support of the Company's financial goals; completion of two strategic acquisitions; renewal and extension of the Company's accounts receivable sales and credit facilities on more favorable terms; and the effective management of a number of regulatory matters. Under the leadership of Mr. Nicoletti, the Company'sCompany retired all of its outstanding debt and successfully executed a share price more than doubled from December 31, 2008repurchase program to December 31, 2009,repurchase approximately 8% of its market capitalization increased approximately 105% to $2.2 billion at December 31, 2009outstanding subordinate voting shares, and the Company led the industry on a number of financial metrics, including return on invested capital. Mr. Nicoletti also oversaw the development and implementation of a roadmap that is projected to provide a reduction in finance spend year over year. In addition, the Company repaid the principal amount of $489 million in debt, contributing to the reduction in annual interest expense for the year.ROIC.



(ii)

Mr. Peri's global operatingelectronics, engineering and supply chain management organization made significant contributions to the Company in 2009. Celestica's operations organization under2010. Under Mr. Peri's leadership, the operations network continued to drivedeliver increased productivity as well as improvements in quality, delivery and cost reductioncycle time metrics, while improving customer satisfaction. The operations network was recognized in 2010 with multiple customer awards. Mr. Peri's organization successfully implemented restructuring programs with minimal impact to operationshad the strongest inventory performance in the North American EMS industry and customers. Despitehas been recognized by customers for meeting customer demand in a decline in year to year revenue, strong management of production costs delivered improvements in operating marginconstrained component environment. Under Mr. Peri's leadership, a new Joint Design and return on invested capital, while maintaining the highest inventory turns of any of the EMS Competitors.




Manufacturing strategy was launched in 2010, positioning the Company to increase revenue and margin through targeted product capability.

(iii)

Ms. DelBianco achieved or exceededDelBianco's organization successfully led a number of initiatives in support of the Company's goals and objectives including: implementation of productivity and cost-savings measures that resulted in cost-reductions across all regions; support of new customer engagements and contract training across all segments and geographies, including development of innovative marketing communications tools; roll-out of a new Corporate Social Responsibility program with respectenhanced communications and training courses; continued improvements in talent management and implementation of best practice succession management for senior executives; implementation of a new performance management plan; establishment of a system to operational effectiveness,document and track plans to increase employee engagement, growthengagement; redesign of the global learning and customer intimacydevelopment program to better support business imperatives; establishment of a council mandated to drive innovation in collaboration across the Company; enhancement of global security programs and practices; and the effective management of a number of legal and regulatory matters as well as activities affectingthe corporate secretary's office.



(iv)

Under Mr. McCaughey's leadership, the Company has strengthened customer relationships and improved operational and financial results. A number of important human resourcesperformance for core customers in its communications and communications initiatives wereenterprise markets. Mr. McCaughey implemented including programsa focused management system to improve employee engagement, which resulteddrive financial and operating performance, exceeding revenue, EBIAT dollars and ROIC targets in the Company's Employee Engagement Index exceeding the 2009 target, and the roll-out of the Company's first global recognition program. The organizations for which Ms. DelBianco was responsible successfully managed2010. His organization secured a number of contract, legalnew program wins, and securities mattersbuilt on business with the Company's core customers, resulting in consistent revenue growth. Under Mr. McCaughey's leadership, the core accounts achieved customer rankings of either first or second position amongst competitors, and drove significant financial recoveries through effective litigation management.



(iv)

Mr. Boucher's performance was measured on several performance metrics. Under his guidance, the Company gained additional businessreceived recognition from existing customers as well as new account wins, althoughCisco in the Company did not meet overall booking targets due to continued global economic uncertainty. The Company achieved higher material value-add service targetsform of two awards, theEMS Partner Operational Excellence award and a new Senior Vice President, Global Sales was hired to drive strategic growth targets. In addition, the after-market services groups were aligned with OperationsExcellence in their respective regions, and significant customer, process and supplier quality improvement objectives were achieved.Partner, IT Collaboration award.

Equity-Based Incentives

        Equity grants to NEOs in respect of 20092010 performance consisted of RSUs, PSUs and stock options. The number of RSUs and options issued under the LTIP and the number of PSUs issued under the CSUP issued to the NEOs was based on a marketthe closing price as defined underof the respective Plans.subordinate voting shares on the NYSE, on the day prior to the grant. Please see "— Compensation Discussion and Analysis — Equity-Based Incentives" for a description of the plans. The actual mixplans and the determination of the grants was approved by the Compensation Committee at a meeting on January 26, 2010mix and the grants were issued on February 2, 2010.amounts of these awards.

        The Company provided the NEOs the following equity-based compensation on February 2, 20101, 2011 in respect of 20092010 performance. On average, the value of equity granted to the NEOs was 20% lower than the previous year. The total number of options issued for 20092010 to the NEOs was equal to 0.21%0.25% of outstanding shares, and the total number of options issued for 20092010 to all employees receivingentitled to receive options was 0.33%0.41% of outstanding shares.

Table 12:15: NEO Equity Awards

Name		RSUs (#)			PSUs (#)(1)			Stock Options (#)			Value of LTI Award (000s)(2)				RSUs (#)			PSUs (#)(1)			Stock Options (#)			Value of LTIP Award (000s)(2)
Craig H. Muhlhauser			160,643			137,255			217,865		$	4,000				202,634			177,305			258,462		$	5,000
Paul Nicoletti			57,831			49,412			78,431		$	1,440				72,948			63,830			93,046		$	1,800
John Peri			48,193			41,176			65,359		$	1,200				60,790			53,191			77,539		$	1,500
Elizabeth L. DelBianco			48,193			41,176			65,359		$	1,200				60,790			53,191			77,539		$	1,500
John Boucher			48,193			41,176			65,359		$	1,200
Michael McCaughey																32,421			28,369			41,354		$	800

---

(1)

The number of PSUs is included at 100% of target level of performance.



(2)

Based on the share price of $10.20,$9.87, being the closing price of subordinate voting shares on the NYSE on February 1, 2010January 31, 2011 and, with respect to stock options, aan average Black-Scholes factor of 0.45.0.49.




Performance Graph

        The subordinate voting shares of the Company have been listed and posted for trading under the symbol "CLS" on the NYSE and the TSX since June 30, 1998 (except for the period commencing on November 8, 2004 and ending on May 15, 2006, during which the symbol on the TSX was CLS.SV). The following chart compares the cumulative total shareholder returnTSR of C$100 invested in subordinate voting shares of the Company on December 31, 2004 (the Company did not declare or pay any dividends during this period) with the cumulative total shareholder returnTSR of the S&P/TSX Composite Total Return Index for the period from December 31, 20042005 to December 31, 2009.2010.



        As can be seen from the performance graph above, an investment in the Company on January 1, 20052006 would have resulted in a 41%21.8% loss in value over the five-year period ended December 31, 20092010 compared with a 45%37.0% increase that would have resulted from an investment in the S&P/TSX Composite Total Return Index over the same period.

        The compensation of the Company's NEOs has fluctuated over the same period as the Company dealt with, amongst other things, a significant decline in demand, competitive pressures, operational issues in some regions, significant restructuring and various leadership changes. In 2006, total compensation for NEOs decreased by 57% compared to 2005, from $11.3 million in 2005 towas $4.9 million (excluding severance costs). The reduction in total compensation for NEOs was largely attributable to reduced long-term incentive grants to certain NEOs.million.

        After significant operational challenges were experienced in the second half of 2006, senior management changes were made across the Company. TheA new management team implemented major process improvements across all areas of the Company with a specific focus on improving profitability, reducing working capital and strengthening the Company's financial position. As management implemented thesethose changes during 2007 and 2008, the Company's operating performance and financial results showed significant improvements to the point where the Company was the strongest financial performer amongst the North American EMS Competitorspeers by the end of 2008.2008 based on ROIC.

        During this period of improved performance, total compensation for the NEOs increased to $15.2 million in 2007 and $19.8 million in 2008. These increases were2008 as a result of implementing competitive compensation packages for the Company's new leadership team in 2007, as well as maximum annual incentive payouts due to strong corporate performance in 2008.

        In 2009, totalTotal compensation for the NEOs declined by 26% from $19.8 million in 2008 to $14.7 million in 2009, reflecting the challenges the Company faced in a year of continued economic uncertainty. The decrease was a result of lower annual incentive payouts and lower long-term incentive grants to reflect generally lower long-term incentive grant levels in the marketplace. In 2010, the Company realized a number of financial accomplishments including leading the EMS industry in ROIC, retiring all of its debt, repurchasing subordinate voting shares and strengthening its cash position. Total compensation for the NEOs increased by 25% from $14.7 million in 2009 to $18.3 million in 2010. The increase was a result of higher annual incentive payouts reflecting improved operational and financial performance as measured under CTI and higher long-term incentive awards reflecting competitive grant levels.




        Notwithstanding the foregoing, theThe Company continues to be amongst the best performers in the electronics manufacturing servicesEMS industry on key operating performance metrics. This strong financial






performance also contributed to improved outlooks from the Company's key financial debt rating agencies. The performance graphs set out below illustrate the Company's significant improvementsperformance on non-GAAP measures of adjusted gross margin, operating margin (EBIAT),EBIAT, asset utilization and return on invested capital.ROIC (see "— 20092010 Compensation Decisions — Business Performance" for further information on non-GAAP measures).

Adjusted gross margin % of revenue		Operating margin (EBIAT) % of revenue
Asset utilization Inventory turns(1)		Return on invested capital

---

(1)

Inventory turns is equal to 365 divided by the number of days in inventory, which is calculated as the average inventory for the quarter divided by the average daily cost of sales. The days in inventory for each quarter can be found in Item 5, "— Management's Discussion and Analysis of Financial Condition and Results of Operations."

        In 2009,2010, total compensation for NEOs was 29% higher than that paid in 2005 and was 9.3%9.4% of 20092010 adjusted earnings, compared to 8.1%4.7% of adjusted earnings in 2005.2006.




EXECUTIVE COMPENSATION

Compensation of Named Executive Officers

        The following table sets forth the compensation of the NEOs for the financial year ended December 31, 2009.

        In light of the significant changes to the requirements, content and format for executive compensation disclosure made by the Canadian Securities Administrators beginning with financial years ending December 31, 2008, the Company has disclosed executive compensation in the Summary Compensation table below for the financial years ended December 31, 2009 and2008 through December 31, 2008 only, in accordance with these requirements. Disclosure of executive compensation for the financial year ended December 31, 2007, in accordance with the then applicable requirements, is contained in the Company's management information circular dated March 9, 2008, which is available on www.sedar.com.2010.




Table 13:16: Summary Compensation Table

														Non-equity Incentive Plan Compensation
Name & Principal Position		Year			Salary ($)			Share- based Awards ($)(1)(3)			Option- based Awards ($)(2)(3)			Annual Incentive Plans ($)(4)			Pension Value ($)(5)			All Other Compensation ($)(6)			Total Compensation ($)
Craig H. Muhlhauser(7) President and Chief Executive Officer			2009 2008		$ $	1,000,000 937,500		$ $	3,000,000 3,750,000		$ $	1,000,000 1,250,000		$ $	904,950 2,000,000		$ $	14,273 13,800		$ $	128,203 168,278		$ $	6,047,426 8,119,578
Paul Nicoletti(8) EVP, Chief Financial Officer			2009 2008		$ $	512,000 507,562		$ $	1,080,000 1,350,000		$ $	360,000 450,000		$ $	363,166 818,056		$ $	79,133 48,180		$ $	1,274 16,982		$ $	2,395,573 3,190,780
John Peri(8) EVP. Global Operations			2009 2008		$ $	504,000 503,977		$ $	900,000 1,125,000		$ $	300,000 375,000		$ $	417,156 806,364		$ $	79,749 41,959		$ $	3,376 298,286		$ $	2,204,281 3,150,586
Elizabeth L. DelBianco(8) EVP, Chief Legal & Administrative Officer and Corporate Secretary			2009 2008		$ $	444,000 439,924		$ $	900,000 1,125,000		$ $	300,000 375,000		$ $	367,395 709,042		$ $	59,270 33,906		$ $	1,004 17,274		$ $	2,071,669 2,700,146
John Boucher EVP, Global Sales & Supply Chain Solutions			2009 2008		$ $	482,500 422,525		$ $	900,000 1,125,000		$ $	300,000 375,000		$ $	261,983 673,667		$ $	11,735 10,278		$ $	— 1,431		$ $	1,956,218 2,607,901

															Non-equity Incentive Plan Compensation
Name & Principal Position			Year			Salary ($)			Share- based Awards ($)(1)(3)			Option- based Awards ($)(2)(3)			Annual Incentive Plans ($)(4)			Pension Value ($)(5)			All Other Compensation ($)(6)			Total Compensation ($)
Craig H. Muhlhauser(7)				2010		$	1,000,000		$	3,750,000		$	1,250,000		$	2,044,969		$	150,815		$	198,799		$	8,394,583
President and Chief				2009		$	1,000,000		$	3,000,000		$	1,000,000		$	904,950		$	14,273		$	128,203		$	6,047,426
	Executive Officer			2008		$	937,500		$	3,750,000		$	1,250,000		$	2,000,000		$	13,800		$	168,278		$	8,119,578
Paul Nicoletti(8)				2010		$	512,000		$	1,350,000		$	450,000		$	609,178		$	73,119		$	2,245		$	2,996,542
EVP, Chief Financial				2009		$	512,000		$	1,080,000		$	360,000		$	363,166		$	79,133		$	1,274		$	2,395,573
	Officer			2008		$	507,562		$	1,350,000		$	450,000		$	818,056		$	48,180		$	16,982		$	3,190,780
John Peri(8)(10)				2010		$	504,000		$	1,125,000		$	375,000		$	599,659		$	77,269		$	4,184		$	2,685,112
EVP, Electronics,				2009		$	504,000		$	900,000		$	300,000		$	417,156		$	79,749		$	3,376		$	2,204,281
	Engineering & Supply Chain Management			2008		$	503,977		$	1,125,000		$	375,000		$	806,364		$	41,959		$	298,286		$	3,150,586
Elizabeth L. DelBianco(8)				2010		$	444,000		$	1,125,000		$	375,000		$	528,271		$	68,062		$	2,078		$	2,542,411
EVP, Chief Legal &				2009		$	444,000		$	900,000		$	300,000		$	367,395		$	59,270		$	1,004		$	2,071,669
	Administrative Officer and Corporate Secretary			2008		$	439,924		$	1,125,000		$	375,000		$	709,042		$	33,906		$	17,274		$	2,700,146
Michael McCaughey(9)				2010		$	371,645		$	600,000		$	200,000		$	431,129		$	49,190		$	76,530		$	1,728,494
SVP and General Manager,				2009		$	335,366		$	480,000		$	160,000		$	151,745		$	26,519		$	2,239		$	1,155,869
	Global Customer Business Units			2008		$	354,773		$	600,000		$	200,000		$	430,829		$	19,828		$	78,870		$	1,684,300

---

(1)

Amounts in the column represent the value of RSUs and PSUs granted on February 2, 20101, 2011 under the LTIP and CSUP, respectively, in respect of 20092010 performance. The actual number of RSUs and PSUs granted was based on a market$9.87, the closing price as defined under each of the plans, on the grant date.NYSE on January 31, 2011. Please see "— Compensation and Discussion Analysis — Equity-Based Incentives" for a description of the vesting terms of the awards and the process followed in determining the grant. The value included for PSUs is at 100% of target level performance. The number that will actually vest will vary from 0%-200% of the target grant depending on performance.



(2)

Amounts in the column represent the value of stock options that were issued under the LTIP on February 2, 20101, 2011 in respect of 20092010 performance. The actual number of options granted was based on an exercise price of $10.20.$9.87. Please see "— Compensation and Discussion Analysis — Equity-Based Incentives" for a description of the vesting terms of the awards and the process followed in determining the value of the grant.



(3)

The estimated accounting fair value of the equity-based awards is calculated using the market price for subordinate voting shares as defined under each of the plans. Basedplans and various fair value pricing models. The grant date fair value of the option-based awards and RSU portion of the share-based awards in table 16 is the same as the accounting fair value of such awards. The accounting fair value of the PSU portion of the share-based awards to the NEOs with respect to 2010 were as follows: Mr. Muhlhauser — $2.4 million; Mr. Nicoletti — $0.9 million; Mr. Peri — $0.7 million; Mr. McCaughey — $0.4 million and Ms. DelBianco — $0.7 million. The accounting fair value for the PSU portion of the share-based awards reflects various assumptions as to estimated vesting for such awards in accordance with applicable accounting standards. The grant date value for the PSU portion of the share-based awards reflects the dollar amount of the award intended for compensation purposes, based on the market value of the underlying shares on the grant date, thedates based on an assumption of 100% vesting. The accounting fair value of the total of share-based and option-based awards to thefor these NEOs during 2009 are as follows: Mr. Muhlhauser — $4,117,571; Mr. Nicoletti — $1,482,321; Messrs. Peri and Boucher and Ms. DelBianco — $1,235,265 each.assumed a zero forfeiture rate for all equity-based awards.



(4)

Amounts in this column represent incentive payments made to the NEOs through the CTI Plan. Please see "— Compensation and Discussion Analysis — Celestica Team Incentive Plan (CTI)"Plan" for a description of the plan and the results achieved in respect of 2009.plan.



(5)

Pension values for Messrs. Nicoletti, Peri and PeriMcCaughey and Ms. DelBianco are reported in U.S. dollars, having been converted from Canadian dollars.



(6)

Amounts in this column represent:represent, for 2010: (i) contributions to the CESOP for Messrs. Muhlhauser and Peri (see "— Celestica Employee Share Ownership Plan"), and (ii) for Mr. Muhlhauser, tax gross-upequalization payments of $54,806,$119,210, housing expenses of $33,643$37,726 while in Canada, and travel expenses between Toronto and New Jersey of $34,508.$28,422 and tax preparation fees of $1,000; and (ii) for Mr. McCaughey, a special incentive payment of $75,000.



(7)

Mr. Muhlhauser did not receive an increase in base salary in 2009; the difference in base salary from 2008 to 2009 reported in the Summary Compensation table reflects the increase he received on April 1, 2008 from $750,000 to $1,000,000, which is his current salary.



(8)

In February, 2009, Celestica implemented a policy to pay all Executive Vice Presidents in U.S. dollars. Base salaries paid to Messrs. Nicoletti and Peri and Ms. DelBianco were converted and denominated in U.S. dollars (having been previously denominated in Canadian dollars). These individuals did not receive increases in 2009; differences in base salaries from 2008 to 2009 reflect exchange rate fluctuations prior to implementation.



(9)

Mr. McCaughey did not receive an increase in base salary in 2009 or 2010. The difference in base salary from 2008 to 2009 and from 2009 to 2010 reflects the fact that Mr. McCaughey is paid in Canadian dollars and his compensation is reported in U.S. dollars converted at rates of C$1.0298 for 2010, C$1.1412 for 2009 and C$1.0660 for 2008.



(10)

On February 24, 2011, Mr. Peri's title was changed to Chief Operating Officer to reflect an increase in his duties and responsibilities as of that date.




        The following table provides details of each option grant outstanding and the aggregate number of unvested equity-based awards for each of the NEOs as of December 31, 2009.2010.

Table 14:17: Outstanding Option-Based and Share-Based Awards⁽¹⁾

Name		Number of Securities Underlying Unexercised Options (#)			Option Exercise Price ($)			Option Expiration Date			Value of Unexercised In-the-money Options ($)(2)			Number of Shares or Units that have not Vested (#)			Market Payout Value of Share Awards that have not Vested at Minimum ($)(3)			Market Payout Value of Share Awards that have not Vested at Target ($)(3)			Market Payout Value of Share Awards that have not Vested at Maximum ($)(3)
Craig H. Muhlhauser
Jun. 6, 2005			50,000		$	13.00			Jun. 6, 2015		$	—			—		$	—		$	—		$	—
Jan. 31, 2006			148,488		$	10.00			Jan. 31, 2016		$	—			—		$	—		$	—		$	—
Feb. 2, 2007			500,000		$	6.05			Feb. 2, 2017		$	1,695,000			111,000		$	—		$	1,047,840		$	2,095,680
Feb. 2, 2007			404,000	*	$	6.05			Feb. 2, 2017		$	1,369,560			—		$	—		$	—		$	—
Feb. 5, 2008			450,000		$	6.51			Feb. 5, 2018		$	1,318,500			470,000		$	2,312,800		$	4,436,800		$	6,560,800
Feb. 3, 2009			694,444		$	4.13			Feb. 3, 2019		$	3,687,498			833,333		$	4,195,551		$	7,866,664		$	11,537,776
Feb. 2, 2010			217,865		$	10.20			Feb. 2, 2020		$	—			297,898		$	1,638,559		$	3,038,560		$	4,438,561
Paul Nicoletti
Dec. 3, 2002			15,000		C$	29.11			Dec. 3, 2012		$	—			—		$	—		$	—		$	—
Jan. 31, 2004			13,333		C$	22.75			Jan. 31, 2014		$	—			—		$	—		$	—		$	—
May 11, 2004			3,333		C$	24.92			May 11, 2014		$	—			—		$	—		$	—		$	—
Dec. 9, 2004			13,600		C$	18.00			Dec. 9, 2014		$	—			—		$	—		$	—		$	—
Jan. 31, 2006			21,591		C$	11.43			Jan. 31, 2016		$	—			—		$	—		$	—		$	—
Feb. 2, 2007			37,880		C$	7.10			Feb. 2, 2017		$	94,932			13,888		$	—		$	131,103		$	262,205
May 7, 2007			—			—			—		$	—			10,700		$	101,008		$	101,008		$	101,008
Jul. 31, 2007			91,500		C$	6.27			Jul. 31, 2017		$	295,860			15,000		$	141,600		$	141,600		$	141,600
Feb. 5, 2008			150,000		C$	6.51			Feb. 5, 2018		$	453,470			156,667		$	770,936		$	1,478,936		$	2,186,936
Feb. 3, 2009			250,000		C$	5.13			Feb. 3, 2019		$	1,058,097			300,000		$	1,510,400		$	2,832,000		$	4,153,600
Feb. 2, 2010			78,431		C$	10.77			Feb. 2, 2020		$	—			107,243		$	589,876		$	1,093,879		$	1,597,881
John Peri
Dec. 3, 2002			25,000		C$	29.11			Dec. 3, 2012		$	—			—		$	—		$	—		$	—
Jan. 31, 2004			16,667		C$	22.75			Jan. 31, 2014		$	—			—		$	—		$	—		$	—
Dec. 9, 2004			11,300		C$	18.00			Dec. 9, 2014		$	—			—		$	—		$	—		$	—
Jan. 31, 2006			20,455		C$	11.43			Jan. 31, 2016		$	—			—		$	—		$	—		$	—
Feb. 2, 2007			40,404		C$	7.10			Feb. 2, 2017		$	101,258			44,444		$	—		$	419,551		$	839,103
Feb. 2, 2007			161,616	*	C$	7.10			Feb. 2, 2017		$	405,031			—		$	—		$	—		$	—
Feb. 5, 2008			130,000		C$	6.51			Feb. 5, 2018		$	393,007			135,778		$	668,144		$	1,281,744		$	1,895,344
Feb. 3, 2009			208,333		C$	5.13			Feb. 3, 2019		$	881,746			250,000		$	1,258,664		$	2,360,000		$	3,461,336
Feb. 2, 2010			65,359		C$	10.77			Feb. 2, 2020		$	—			89,369		$	491,569		$	911,564		$	1,331,559
Elizabeth L. DelBianco
Dec. 3, 2002			12,000		C$	29.11			Dec. 3, 2012		$	—			—		$	—		$	—		$	—
Dec. 18, 2002			3,000		C$	23.29			Dec. 18, 2012		$	—			—		$	—		$	—		$	—
Apr. 18, 2003			8,000		C$	15.35			Apr. 18, 2013		$	—			—		$	—		$	—		$	—
Jan. 31, 2004			16,667		C$	22.75			Jan. 31, 2014		$	—			—		$	—		$	—		$	—
Dec. 9, 2004			11,300		C$	18.00			Dec. 9, 2014		$	—			—		$	—		$	—		$	—
Jan. 31, 2006			21,591		C$	11.43			Jan. 31, 2016		$	—			—		$	—		$	—		$	—
Feb. 2, 2007			18,182		C$	7.10			Feb. 2, 2017		$	45,567			13,333		$	—		$	125,864		$	251,727
Feb. 5, 2008			90,000		C$	6.51			Feb. 5, 2018		$	272,082			125,333		$	616,744		$	1,183,144		$	1,749,544
Feb. 3, 2009			208,333		C$	5.13			Feb. 3, 2019		$	881,746			250,000		$	1,258,664		$	2,360,000		$	3,461,336
Feb. 2, 2010			65,359		C$	10.77			Feb. 2, 2020		$	—			89,369		$	491,569		$	911,564		$	1,331,559




Name		Number of Securities Underlying Unexercised Options (#)			Option Exercise Price ($)			Option Expiration Date			Value of Unexercised In-the-money Options ($)(2)			Number of Shares or Units that have not Vested (#)			Market Payout Value of Share Awards that have not Vested at Minimum ($)(3)			Market Payout Value of Share Awards that have not Vested at Target ($)(3)			Market Payout Value of Share Awards that have not Vested at Maximum ($)(3)
John Boucher
Oct. 13, 2000			3,750		$	21.83			Oct. 13, 2010		$	—			—		$	—		$	—		$	—
May 22, 2001			6,000		$	19.81			May 22, 2011		$	—			—		$	—		$	—		$	—
Oct. 31, 2001			3,750		$	10.40			Oct. 31, 2011		$	—			—		$	—		$	—		$	—
May 10, 2002			28,125		$	13.52			May 10, 2012		$	—			—		$	—		$	—		$	—
Feb. 11, 2003			5,625		$	12.99			Feb. 11, 2013		$	—			—		$	—		$	—		$	—
Mar. 15, 2004			20,000		$	17.10			Mar. 15, 2014		$	—			—		$	—		$	—		$	—
Mar. 15, 2004			6,667		$	17.10			Mar. 15, 2014		$	—			—		$	—		$	—		$	—
Dec. 9, 2004			25,000		$	14.86			Dec. 9, 2014		$	—			—		$	—		$	—		$	—
Jan. 31, 2006			20,455		$	10.00			Jan. 31, 2016		$	—			—		$	—		$	—		$	—
Feb. 2, 2007			30,304		$	6.05			Feb. 2, 2017		$	102,731			16,666		$	—		$	157,327		$	314,654
Feb. 5, 2008			110,000		$	6.51			Feb. 5, 2018		$	322,300			114,867		$	565,144		$	1,084,344		$	1,603,544
Feb. 3, 2009			208,333		$	4.13			Feb. 3, 2019		$	1,106,248			250,000		$	1,258,664		$	2,360,000		$	3,461,336
Feb. 2, 2010			65,359		$	10.20			Feb. 2, 2020		$	—			89,369		$	491,569		$	911,564		$	1,331,559

Name		Number of Securities Underlying Unexercised Options (#)			Option Exercise Price ($)			Option Expiration Date			Value of Unexercised In-the-money Options ($)(2)			Number of Shares or Units that have not Vested (#)(3)			Market Payout Value of Share Awards that have not Vested at Minimum ($)(4)			Market Payout Value of Share Awards that have not Vested at Target ($)(4)			Market Payout Value of Share Awards that have not Vested at Maximum ($)(4)
Craig H. Muhlhauser
Jun. 6, 2005			50,000		$	13.00			Jun. 6, 2015		$	—			—		$	—		$	—		$	—
Jan. 31, 2006			148,488		$	10.00			Jan. 31, 2016		$	—			—		$	—		$	—		$	—
Feb. 2, 2007			500,000		$	6.05			Feb. 2, 2017		$	1,825,000			—		$	—		$	—		$	—
Feb. 2, 2007			404,000		$	6.05			Feb. 2, 2017		$	1,474,600			—		$	—		$	—		$	—
Feb. 5, 2008			450,000		$	6.51			Feb. 5, 2018		$	1,435,500			225,000		$	—		$	2,182,500		$	4,365,000
Feb. 3, 2009			623,344		$	4.13			Feb. 3, 2019		$	3,472,026			685,185		$	2,874,071		$	6,646,295		$	10,418,518
Feb. 2, 2010			217,865		$	10.20			Feb. 2, 2020		$	—			297,898		$	1,558,237		$	2,889,611		$	4,220,984
Feb. 1, 2011			258,462		$	9.87			Feb. 1, 2021		$	—			379,939		$	1,999,998		$	3,749,998		$	5,499,998
Paul Nicoletti
Dec. 3, 2002			15,000		C$	29.11			Dec. 3, 2012		$	—			—		$	—		$	—		$	—
Jan. 31, 2004			13,333		C$	22.75			Jan. 31, 2014		$	—			—		$	—		$	—		$	—
May 11, 2004			3,333		C$	24.92			May 11, 2014		$	—			—		$	—		$	—		$	—
Dec. 9, 2004			13,600		C$	18.00			Dec. 9, 2014		$	—			—		$	—		$	—		$	—
Jan. 31, 2006			21,591		C$	11.43			Jan. 31, 2016		$	—			—		$	—		$	—		$	—
Feb. 2, 2007			12,880		C$	7.10			Feb. 2, 2017		$	31,894			—		$	—		$	—		$	—
Jul. 31, 2007			91,500		C$	6.27			Jul. 31, 2017		$	300,320			—		$	—		$	—		$	—
Feb. 5, 2008			150,000		C$	6.51			Feb. 5, 2018		$	457,370			75,000		$	—		$	727,500		$	1,455,000
Feb. 3, 2009			225,000		C$	5.13			Feb. 3, 2019		$	987,570			246,667		$	1,034,670		$	2,392,670		$	3,750,670
Feb. 2, 2010			78,431		C$	10.77			Feb. 2, 2020		$	—			107,243		$	560,961		$	1,040,257		$	1,519,554
Feb. 1, 2011			93,046		C$	9.87			Feb. 1, 2021		$	—			136,778		$	719,997		$	1,349,999		$	1,980,001
John Peri
Dec. 3, 2002			25,000		C$	29.11			Dec. 3, 2012		$	—			—		$	—		$	—		$	—
Jan. 31, 2004			16,667		C$	22.75			Jan. 31, 2014		$	—			—		$	—		$	—		$	—
Dec. 9, 2004			11,300		C$	18.00			Dec. 9, 2014		$	—			—		$	—		$	—		$	—
Jan. 31, 2006			20,455		C$	11.43			Jan. 31, 2016		$	—			—		$	—		$	—		$	—
Feb. 2, 2007			40,404		C$	7.10			Feb. 2, 2017		$	100,049			—		$	—		$	—		$	—
Feb. 2, 2007			161,616		C$	7.10			Feb. 2, 2017		$	400,195			—		$	—		$	—		$	—
Feb. 5, 2008			130,000		C$	6.51			Feb. 5, 2018		$	396,388			65,000		$	—		$	630,500		$	1,261,000
Feb. 3, 2009			208,333		C$	5.13			Feb. 3, 2019		$	914,416			205,556		$	862,223		$	1,993,893		$	3,125,563
Feb. 2, 2010			65,359		C$	10.77			Feb. 2, 2020		$	—			89,369		$	467,472		$	866,879		$	1,266,287
Feb. 1, 2011			77,539		C$	9.87			Feb. 1, 2021		$	—			113,981		$	599,997		$	1,124,992		$	1,649,988
Elizabeth L. DelBianco
Dec. 3, 2002			12,000		C$	29.11			Dec. 3, 2012		$	—			—		$	—		$	—		$	—
Dec. 18, 2002			3,000		C$	23.29			Dec. 18, 2012		$	—			—		$	—		$	—		$	—
Apr. 18, 2003			8,000		C$	15.35			Apr. 18, 2013		$	—			—		$	—		$	—		$	—
Jan. 31, 2004			16,667		C$	22.75			Jan. 31, 2014		$	—			—		$	—		$	—		$	—
Dec. 9, 2004			11,300		C$	18.00			Dec. 9, 2014		$	—			—		$	—		$	—		$	—
Jan. 31, 2006			21,591		C$	11.43			Jan. 31, 2016		$	—			—		$	—		$	—		$	—
Feb. 2, 2007			9,091		C$	7.10			Feb. 2, 2017		$	22,511			—		$	—		$	—		$	—
Feb. 5, 2008			60,000		C$	6.51			Feb. 5, 2018		$	182,948			60,000		$	—		$	582,000		$	1,164,000
Feb. 3, 2009			156,250		C$	5.13			Feb. 3, 2019		$	685,813			205,556		$	862,223		$	1,993,893		$	3,125,563
Feb. 2, 2010			65,359		C$	10.77			Feb. 2, 2020		$	—			89,369		$	467,472		$	866,879		$	1,266,287
Feb. 1, 2011			77,539		C$	9.87			Feb. 1, 2021		$	—			113,981		$	599,997		$	1,124,992		$	1,649,988
Michael McCaughey
Jul. 5, 2005			15,000		C$	16.20			Jul. 5, 2015		$	—			—		$	—		$	—		$	—
Jan. 31, 2006			20,455		C$	11.43			Jan. 31, 2016		$	—			—		$	—		$	—		$	—
Feb. 2, 2007			8,333		C$	7.10			Feb. 2, 2017		$	20,634			—		$	—		$	—		$	—
Feb. 5, 2008			30,000		C$	6.51			Feb. 5, 2018		$	91,474			30,000		$	—		$	291,000		$	582,000
Feb. 3, 2009			83,333		C$	5.13			Feb. 3, 2019		$	365,765			109,629		$	459,848		$	1,063,401		$	1,666,955
Feb. 2, 2010			34,858		C$	10.77			Feb. 2, 2020		$	—			47,664		$	249,319		$	462,341		$	675,363
Feb. 1, 2011			41,354		C$	9.87			Feb. 1, 2021		$	—			60,790		$	319,995		$	599,997		$	879,999

---

*

Denotes Performance Contingent Options ("PCOs") which are not fully vested and are included at 200% of target level performance which, on December 31, 2009 was the Company's anticipated vesting percentage, and was in fact the vesting percentage. PCOs have not been issued since February 2007 and the Company does not contemplate issuing further PCOs.



(1)

Includes options and share-based awards granted on February 2, 20101, 2011 in respect of 20092010 performance. Please see "— Compensation Discussion and Analysis — Equity-Based Incentives" for a discussion of the equity grants.





(2)

The value of unexercised in-the-money options for Messrs.Mr. Muhlhauser and Boucher was determined using a share price of $9.44,$9.70, which was the closing price of subordinate voting shares on the NYSE on December 31, 2009.2010. For Messrs. Nicoletti, Peri and PeriMcCaughey and Ms. DelBianco, a share price of C$9.969.65 was used, which was the closing price of the subordinate voting shares on the TSX on December 31, 2009,2010, converted to U.S. dollars at the average exchange rate for 20092010 of 1.1412.$1.00 equals C$1.0298.



(3)

The value included for PSUs is at 100% of target level performance.



(4)

Market payout values at minimum vesting include the value of RSUs only as the minimum payout value of PSUs would be 0% of target. Market payout values at target vesting is determined using 100% of PSUs vesting and market payout values at maximum vesting is determined using 200% of PSUs vesting. Market payout values are determined using a share price of $9.44,$9.70, which was the closing price of the subordinate voting shares on the NYSE on December 31, 2009,2010, except for the share-based awards granted on February 2, 20101, 2011 in respect of 20092010 performance for which the market payout values are determined using a share price of $10.20,$9.87, which was the closing price of the subordinate voting shares on the NYSE on February 1, 2010,January 31, 2011, the day before the grants.

        The following table provides details of the value of option-based and share-based awards that vested during 20092010 and the value of annual incentive awards paid for 20092010 performance for each NEO.

Table 15:18: Incentive Plan Awards — Value Vested or Earned in 20092010

Name		Option-based Awards — Value Vested During the Year ($)(1)			Share-based Awards — Value Vested During the Year ($)(2)			Non-equity Incentive Plan Compensation — Value Earned During the Year ($)(3)				Option-based Awards — Value Vested During the Year ($)(1)			Share-based Awards — Value Vested During the Year ($)(2)			Non-equity Incentive Plan Compensation — Value Earned During the Year ($)(3)
Craig H. Muhlhauser		$	—		$	1,495,340		$	904,950			$	2,623,460		$	6,045,767		$	2,044,969
Paul Nicoletti		$	46,704		$	616,265		$	363,166			$	615,658		$	1,864,678		$	609,178
John Peri		$	—		$	322,282		$	417,156			$	662,475		$	2,068,183		$	599,659
Elizabeth L. DelBianco		$	—		$	570,545		$	367,395			$	456,690		$	1,365,147		$	528,271
John Boucher		$	—		$	457,728		$	261,983
Michael McCaughey												$	251,910		$	941,902		$	431,129

---

(1)

Amounts in this column reflect the value of options that were in-the-money on the vesting date. Options for Mr. Muhlhauser vested as follows:

	Vesting Date		Exercise Price			Closing Price on NYSE of Subordinate Voting Shares on Vesting Date
	Feb. 1, 2010			$6.05			$10.20
	Feb. 2, 2010			$6.05			$10.63
	Feb. 3, 2010			$4.13			$10.45
	Feb. 5, 2010			$6.51			$10.02

Options for Messrs. Nicoletti, Peri and McCaughey and Ms. DelBianco vested as follows:

	Vesting Date		Exercise Price			Closing Price on TSX of Subordinate Voting Shares on Vesting Date
	Feb. 1, 2010			C$7.10			C$10.77
	Feb. 3, 2010			C$5.13			C$11.10
	Feb. 5, 2010			C$6.51			C$10.71

Options for Mr. Nicoletti vested as follows:

	Vesting Date		Exercise Price			Closing Price on TSX of Subordinate Voting Shares on Vesting Date
	Aug. 3, 2010		C$	6.27			C$9.27




(2)

Amounts in this column reflect share-based awards that were released in 2010. Share-based awards were released for Mr. Muhlhauser based on July 31, 2009 with an exercisethe price of C$6.27. Thesubordinate voting shares on the NYSE as follows:

	Type of Award		Date			Price
	RSUs			Feb. 5, 2010			$  9.94
	RSUs			Dec. 1, 2010			$  8.91
	PSUs			Feb. 2, 2010			$10.20

Share-based awards were released for Messrs. Nicoletti, Peri and McCaughey and Ms. DelBianco based on the price for the Company'sof subordinate voting shares on the TSX was C$8.60 on that date. These values were converted to U.S. dollars at the average exchange rate for 2009 of 1.1412. Where no value is shown, options that vested during 2009 had an exercise price above market value on the vesting date.



(2)
as follows:

	Type of Award		Date			Price
	RSUs			Feb. 5, 2010			C$10.63
	RSUs			Dec. 1, 2010			C$  9.15
	PSUs			Feb. 2, 2010			C$10.77

Share-based awards were released as follows: (i) RSUs were released to all NEOsfor Mr. Nicoletti based on February 5, 2009 at athe price of $4.04 on the NYSE for Messrs. Boucher and Muhlhauser and C$4.93subordinate voting shares on the TSX for Messrs. Nicoletti and Peri and Ms. DelBianco, (ii) RSUs were



as follows: