reduce headcount in 1986 and 1988. In response, Inc. – A Canadian EMS with a Polistuk started to diversify the plant's product lines, 1 Global Footprint building circuit boards, memory products, and power supplies that served a wide variety of IBM products. The $300 million investment, spread over seven years was successful. By 1993 most IBM divisions were buying some of the systems produced in . The factory site expanded several times.

Spin-off and Onex Purchase: 1994-1996 As IBM transitioned from a hardware firm to a software and services company, the future of the Celestica Toronto facility, Don Mills Road manufacturing unit was in doubt despite its financial (photo: Celestica web site) strength. In 1992, Polistuk suggested that the division be spun off into an independent company. His arguments eventually won over IBM's leaders and, in Celestica Inc. is a global electronics manufacturing January 1994, Celestica was formed as a wholly services (EMS) company headquartered in Toronto. owned subsidiary of IBM Canada. In 2014, Celestica’s manufacturing network The independent Celestica changed rapidly. Although comprises more than 40 locations in 11 countries in owned by IBM, Celestica had its own marketing and the Americas, Europe, and Asia. The company’s production staff and controlled its finances. Polistuk Canadian facilities are located in Toronto, although had a free hand to transform the company, finding Celestica also briefly operated small facilities in new ways to motivate the 1,600 employees -- most of Montreal and Ottawa. whom had come over from IBM. The company's services include design and Polistuk immediately sought to break out of what he engineering, manufacturing and systems assembly, saw as a moribund management structure reflecting fulfillment and after-market services for a wide IBM’s bureaucracy. An early move was to institute a variety of original equipment manufacturers (OEMs). 5% pay cut in exchange for a profit sharing program The company also offers design and engineering, that could reap up to 30% of base pay for high systems assembly, fulfillment, after-market services performers. Another move was to make the same and supply chain managed services. share offerings to everyone in the company. Top managers had significant authority, essentially with a free hand as long as they met performance goals. Origins: 1980s through early 1990s By the end of Celestica's first year, the company had Celestica's Canadian headquarters were originally the signed 40 new customers. Non-IBM customers had location of IBM's Toronto sales and support offices. accounted for only 10% of revenue before The facilities supported a small manufacturing unit, independence, but outside sales took off as players in which built metal boxes for their mainframe the computer industry were increasingly turning to computers and associated support systems. Eugene contract manufacturers to provide components and Polistuk, an engineering graduate of the University of assemble products under the OEM’s brands. Toronto in 1969, joined IBM and rose through the Celestica quickly became a successful business, ranks in Canada and the U.S. before taking over the reporting profits on revenues of $2 to $3 billion in Toronto manufacturing division in 1986. 1995 and 1996. However, Polistuk felt that the only As the world turned from mainframes to way to truly reach their potential was to have microcomputers, Polistuk's operations were forced to someone buy the company from IBM.

In May 1994, Polistuk met with Anthony Melman of 1 Will Mitchell prepared this report from public information (May about a potential buy-out. Over the 2014.) I have drawn text from Wikipedia next two years, Melman began urging IBM to release [http://en.wikipedia.org/wiki/Celestica] and the Gale Directory of Celestica. IBM initially was not interested in selling Company Histories [http://www.answers.com/topic/celestica-inc], the profitable division. as well as CapitalIQ; Celestica 20Fs, & other public sources.

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Finally, in 1996 IBM Canada agreed to sell the By the end of 1998, the company was turning over business. Onex's bid of $750 million for 69% of the $3.5 billion per year and generating comfortable company won the final selection in October 1996. operating profits. Acquisition costs, though, led to Celestica viewed the deal as a good fit, because Onex net losses in 1997 and 1998. typically encouraged a company's management team Celestica believed it was positioned for significant to take an entrepreneurial approach to growing their growth. By 1998, the global EMS market was business. estimated to be close to $100 billion, with forecasts that it would exceed $200 billion by 2003. Polistuk believed that growth was essential, noting "By 2001, Expansion: 1997-2000 to be among the largest contract manufacturers in this The buy-out triggered rapid expansion at Celestica. business, you'll need $10 billion in annual revenues. In 1997 the company undertook its first acquisition, Just five years ago, nobody would have thought there buying UK-based Design to Distribution, the would be a $10 billion EMS, but soon that is going to manufacturing division of International Computers be the minimum to be a Tier 1 company." Limited (ICL), which itself was part-owned by Onex released additional stock offerings to the of Japan. Design to Distribution was one of market; $251 million in March 1999 and $225 the largest European contract manufacturers. Also million in May. A second public offering in that year Celestica purchased major portions of November added $488 million. Hewlett-Packard's manufacturing lines, including their PC board plant in Fort Collins, CO, their system The money was used to fund more purchases, adding assembly plant in New Hampshire, and their system five factories in the Czech Republic, two in Italy, and design shop in Chelmsford, MA. In October they another each in Ireland and the US. The company bought Ascent Power Technology, which operated also set up greenfield sites in Brazil and Malaysia. power supply manufacturing in Canada, the US, and Celestica grew profitably. By the end of 1999, annual UK. By the end of the year, 75% of the company’s turnover had reached $5.3 billion and the firm business came from beyond IBM. returned to profitability. Celestica was now the third In July 1998, Onex took the company public, raising largest EMS in the world, growing more rapidly than $414 million, the largest IPO in the EMS field. the two market leaders, Solectron Corporation and Despite the public offering, Onex retained control of SCI Systems (both based in the U.S.). Celestica’s multiple voting shares and Onex founder Expansion continued in 2000. Celestica purchased Gerald Schwartz took an active role as a Celestica two IBM plants in Italy, receiving a $1.5 billion board member. contract to build and test circuit boards and The new capital funded another round of growth, prototypes for IBM equipment. Celestica also with eight acquisitions in 1998. The acquisitions purchased NEC facilities in Brazil for $120 million, included Analytic Design in California, as well as with the deal including a five-year $1.2 billion assets from Lucent Technologies (including a plant in purchase contract. Mexico), and Silicon Graphics. During the year, the During the year, Celestica completed its twentieth company added factories in Mexico, northern acquisition in three years, buying Massachusetts California, and Ireland. contract manufacturer Bull Electronics. The company Celestica also bought International Manufacturing added capacity to its operations in the Czech Services, a US-based contract maker of parts for Republic, Malaysia, and Mexico, while opening an computer and electronics companies. The deal office in Japan. It also signed a supply agreement provided entry to Asia (China, Thailand, and Hong with Motorola, a three-year deal worth more than $1 Kong), where customers wanted Celestica to have a billion in business. presence in order to feed their assembly plants. Celestica revenues reached $10 billion in 2000, again Also in 1998, Celestica began establishing Customer accompanied by profits. In June 2001, Polistuk was Gateway Centers, where customers could use the appointed board chair. company’s design prototyping capabilities and set up The company estimated that about half of the growth for the launch of new products that Celestica would came from its acquisitions, with the other half being launch. Initial centers were located in Toronto, the organic growth from finding new customers for U.S., and Ireland, with others planned for Central plants that under prior ownership served single Europe and Asia. companies or a small number of firms.

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To support the expanding base of customers, in early becomes particularly necessary during a market 2000 Celestica created a Global Design Operation downturn. Celestica had enjoyed a long run of with 200 people located in centers in Toronto, the expansion and faced challenges in adapting to the U.K., Italy, Massachusetts, and Colorado. The daunting market environment in the early 2000s. centers included engineering labs, customer labs, The company undertook substantial restructuring expanded mechanical labs for thermal power supply during 2001, closing 18 facilities, reducing overall and development, as well as test chambers and capacity by 25%, and reducing staffing levels by expanded electrical rework areas to allow for rapid 30%. As part of the retrenchment Polistuk took a 1/3 prototyping and debugging. The leadership of the pay cut as part of a wider series of compensation new unit was based in Massachusetts, at a facility rollbacks. Several rounds of lowered guidance from that Celestica had acquired in 1998. market analysts followed, in spite of new supplier In 2000, employment reached about 57,000 contracts and continued acquisitions. permanent and temporary contract employees Initially, Celestica attempted to take advantage of worldwide. Because of the variable nature of the weak market conditions. Some firms were offering company’s project flow and the quick response time manufacturing assets at attractive prices. In 2001, required by customers, Celestica needed to be able to Celestica spent $1.9 billion on acquisitions. In early ramp- up and ramp- down production quickly. 2001, Celestica bought U.S.-based facilities from Therefore, the company employed a substantial business communications systems producer Avaya portion of temporary staff at many of its facilities. for $200 million in a deal that included a five-year, $4-billion contract to supply equipment and services to Avaya; the deal transferred 1,400 Avaya Crash and Controversy: 2001-2008 employees to Celestica. The company also bought a The tide turned in 2001, when the dot.com and Lucent facility in the U.S., NEC plants in Europe, telecoms crash led to a worldwide reduction of EMS and some Motorola facilities, as well as Omni work. Celestica’s sales plateaued in 2001 and then Industries, a Singapore-based contract manufacturer, fell almost 20% in 2002 as key customers such as and Sagem SA in the Czech Republic. , EMC, Motorola, and Cisco Systems were The acquisitions and the related contracts to supply strongly hit by the market crash. the selling OEMs allowed the company to maintain The market crash highlighted the challenge of the its $10 billion sales levels, with a 14% increase in EMS business model. While the end-products that sales from acquired units offsetting an 11% decline in EMS firms provide components for – such as base revenue. ’s Xbox and Thales Avionic’s airline The restructuring and new acquisitions sharply entertainment systems – are highly differentiated, the shifted the company’s production locations. At the components that the EMS firms supply – such as start of 2001, 81% of the facilities were in higher- game consoles and circuit boards – are often cost geographies. By the end of the restructuring, commodities. As a result, EMS suppliers can lose they expected the number to drop to 45%. orders and customers quickly if a competitor, anywhere in the world, can supply a component more The company attracted some new business. In 2002, cheaply or quickly. Indeed, most customers do not for instance, Celestica signed a deal with Palm to commit to firm production schedules more than a few repairs and manage logistics in the Americas, Europe, months in advance. This threat of losing customers Middle East/Africa and Asia for Palm brand arises at all times, but is particularly challenging handhelds, including responsibility for parts, software during flat or declining markets. and repair processes through end of product life. Moreover, EMS firms need strong operating However, sales soon fell below the $10 billion mark discipline. Customers require large numbers of and continued to decline, particularly in Europe and components – Celestica’s Mexican plant at one time for the company’s Mexican facilities. Losses produced 50,000 product codes, for instance – and mounted. In January 2004, the company announced production runs are often short, limiting economies that Polistuk would be retiring. of scale. Producers need to be able to adapt quickly to In April 2004, Stephen W. Delaney became CEO. demand change without letting inventories of Delaney had joined Celestica in 2001 reaching the materials and finished goods build up. level of President of Americas Operations. His prior The need for operating discipline requires effective experience included positions at Visteon Automotive, coordination among an EMS firm’s plants and

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AlliedSignal's Electronic Systems business, Ford's Technologies, Asea Brown-Boveri, Lucas Industries, Electronics division, and IBM's telecom division. and General Electric. Several senior executives left the company soon after Muhlhauser took the reins. Overall EMS market demand began to rebound in 2004. Celestica regained some sales but struggled to The losses generated shareholder controversy. In take strong advantage of the market recovery. Much 2007, a class action suit was filed in New York of the customer growth was in Asia – including against Celestica. The complaint alleged that the companies based in that continent and traditional company failed to disclose adverse facts concerning western competitors that had established operations reduced demand in its Mexican operations, as well as in Asia. Innovative competitors such as Singapore- in its information technology and communications based Flextronics and Hon Hai and Compal segments. However, the suit was dismissed in 2010. in were better positioned to take advantage of new opportunities, while growing U.S.-based competitors such as Circuit were aggressively Recovery: 2009-2013 seeking new business. Following the challenges of the mid 2000s, Celestica Celestica continued to cut costs, launching another was able to generate a remarkable turnaround. The restructuring effort in 2005 that included winding company returned to profitability in 2009 and, down nine plants and reducing 5,000 employees from despite plateaued revenue, has been profitable each a total staff that had regrown to 47,000 with the year through 2013. ongoing acquisitions. The exhibits provide extensive information about The restructuring involved an ongoing shift from company trends both during the 2001 to 2008 period North American and Western European facilities to of losses and during the more recent turnaround. The lower-cost environments. By the end of 2006, 85% of companion notes on the EMS industry, Foxconn, and Celestica’s employees were in emerging markets, Flextronics International also provide background. compared to 60% in 2002. Information in the exhibits includes: Even in lower-cost environments, the company faced strong challenges. At Celestica’s Mexican facilities,  Financial trends for instance, employment fell from 6,000 to 4,000, as  Major customers the company brought in managers from profitable  Product segments factories in Asia to help streamline operations in  Recent acquisitions Mexico.  Manufacturing location revenue and size  EMS competitors The restructuring did not lead to renewed growth. Celestica experienced gradually declining revenue  Stock price trends from 2001 to 2008, reporting sales of $8.4 billion in  Recent strategy 2008. Important customers such as Lucent and  Company milestones Motorola faced challenges of their own and were reducing orders, while growing competition from increasingly sophisticated EMS suppliers challenged Case Questions Celestica for orders. Based on the material in the text and exhibits, please Celestica reported losses each year from 2001 consider the following questions. through 2008. Results in 2008 were particularly negative, as the company wrote off more than $5 1) Why was Celestica successful during the 1990s? billion of goodwill from earlier acquisitions. 2) Why did Celestica fall into sustained trouble Senior leadership changed again during the midst of during the 2000s? the decline. Stephen Delaney left the CEO position 3) What were the key aspects of the company’s after two years, in 2006, replaced by Craig recovery from 2009 through 2013? Muhlhauser. Muhlhauser had joined Celestica in 4) What will be the key challenges and 2005, serving as the company’s President, with opportunities going forward? responsibility for Worldwide Sales and Business Development. Prior to joining Celestica, Muhlhauser was CEO of Exide Technologies, a producer of lead acid batteries. Before joining Exide, he held positions Ford Motor Company, Visteon Automotive, United

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Exhibit 1a. Excerpts from Celestica Income Statements, 1995-2013 ($US million) 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Revenue $3,110 $2,197 $2,186 $3,540 $5,771 $10,624 $10,898 $9,011 $7,337 $9,630 $9,228 $9,599 $8,792 $8,364 $6,637 $7,109 $7,858 $7,089 $6,314 Gross profit $174 $123 $152 $251 $417 $750 $776 $605 $283 $511 $524 $492 $460 $579 $468 $484 $532 $478 $424 SBA $48 $42 $68 $131 $202 $326 $324 $299 $274 $332 $297 $286 $272 $292 $245 $252 $253 $237 $221 R&D $0.2 $0.2 $0.3 EBITDA $132 $89 $99 $147 $272 $529 $616 $514 $175 $338 $336 $298 $233 $337 $273 $290 $313 $272 $222 Net Income $69 $32 ‐$8 ‐$53 $75 $225 ‐$43 ‐$496 ‐$291 ‐$930 ‐$51 ‐$164 ‐$15 ‐$785 $60 $110 $210 $128 $129 Employees 1,600 18,000 57,000 40,000 40,000 40,000 46,000 47,000 42,000 42,000 38,000 33,000 35,000 31,000 29,000 27,000 ROS 2.2% 1.4% ‐0.3% ‐1.5% 1.3% 2.1% ‐0.4% ‐5.5% ‐4.0% ‐9.7% ‐0.6% ‐1.7% ‐0.2% ‐9.4% 0.9% 1.6% 2.7% 1.8% 2.0%

Exhibit 1b. Excerpts from Celestica Balance Sheets, 1996-2013 ($US million, December 31 year end) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Current assets $330 $832 $983 $1,851 $4,521 $3,997 $3,565 $3,030 $3,273 $3,258 $3,121 $3,000 $3,172 $2,543 $2,562 $2,463 $2,111 $2,121

PPE (net) $67 $124 $215 $365 $633 $915 $728 $681 $569 $473 $484 $427 $434 $394 $332 $323 $337 $314

Goodwill $154 $198 $254 ‐ $330 $1,129 $948 $948 $873 $875 $855 $851 ‐‐$15 $48 $60 $60

Other intangibles $74 $155 $120 $368 $248 $427 $212 $138 $105 $151 $143 $87 $66 $43 $43 $36 $66 $56

Total assets $658 $1,347 $1,636 $2,656 $5,938 $6,633 $5,807 $5,137 $4,940 $4,858 $4,686 $4,471 $3,786 $3,106 $3,014 $2,970 $2,659 $2,639

Current liabilities $129 $468 $627 $851 $2,258 $1,657 $1,471 $1,517 $1,815 $1,770 $1,726 $1,447 $1,568 $1,520 $1,553 $1,347 $1,199 $1,109

Long term debt $320 $504 $134 $132 $131 $137 $4 $211 $501 $751 $750 $758 $732 ‐‐‐‐‐

Total liabilities $455 $984 $777 $997 $2,469 $1,887 $1,603 $1,882 $2,451 $2,643 $2,592 $2,352 $2,421 $1,630 $1,731 $1,499 $1,336 $1,237

Common stock $200 $367 $912 $1,646 $2,395 $3,693 $3,671 $3,298 $3,559 $3,562 $3,577 $3,585 $3,589 $3,591 $3,329 $3,348 $2,775 $2,712

Retained earnings $3 ‐$4 ‐$52 $16 $218 $163 ‐$295 ‐$583 ‐$1,474 ‐$1,546 ‐$1,696 ‐$1,716 ‐$2,437 ‐$2,382 ‐$2,404 ‐$2,197 ‐$2,091 ‐$1,965

Total equity $203 $363 $859 $1,658 $3,469 $4,746 $4,204 $3,256 $2,489 $2,214 $2,095 $2,118 $1,366 $1,476 $1,283 $1,471 $1,323 $1,402

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Exhibit 2a. Major Celestica Customers Year Top 10 >10% share of Celestica sales Major customers (from 100+ customers): Customers listed in annual reports 1999 Sun, HP, Cisco, IBM (10%) 2000 IBM (20%), Sun 2001 84% IBM, Sun, Lucent (combo: 55%) Avaya (business communications systems), Cisco Systems (networking equipment), Dell (computers), EMC (data storage), Hewlett‐ 2002 85% IBM, Sun, Lucent (combo: 48%) Packard (computing & printing), IBM (computing), Lucent Technologies (networking), Motorola (consumer electronics), NEC (telecom equipment), Sun Microsystems (servers). 2003 73% IBM, Cisco, Sun, Lucent (combo: 44%) Cisco, IBM, Lucent, Sun 2004 65% IBM, Cisco (combo: 26%) Cisco, IBM, Lucent, Sun 2005 63% IBM, Cisco (combo: 27%) Cisco, IBM, Lucent, Sun 2006 61% IBM, Cisco (combo: 20%) Alcatel‐Lucent (networking; Lucent acquired by Alcatel), Cisco, IBM, Sun Alcatel‐ Lucent, Avaya, Cisco, EMC, Hewlett‐ Packard, IBM, Microsoft (Xbox), Motorola, NEC, Raytheon (industrial & defense electronics), 2007 61% Cisco, Sun Research in Motion (Blackberry), Sun Alcatel Lucent, Cisco, EMC, Hewlett‐Packard, Honeywell (industrial & defense electronics), IBM, (networking 2008 63% none equipment), Microsoft, NEC, Raytheon, Research in Motion, Sun Alcatel Lucent, Cisco, EMC, Hewlett‐Packard, Hitachi Global Storage Technologies (storage), Honeywell, IBM, Juniper, NEC, Polycom(video 2009 71% RIM/Blackberry (17%) conferencing), Raytheon, Research in Motion, Sun Alcatel‐Lucent, Cisco, EMC, Hewlett‐Packard, Hitachi, Honeywell, IBM, Juniper, NEC, Oracle (commercial electronics), Polycom, Raytheon, 2010 72% RIM/Blackberry (20%) RIM 2011 71% RIM (19%); Cisco Alcatel‐Lucent, Cisco, EMC, Hewlett‐Packard, Hitachi, Honeywell, IBM, Juniper, NEC, Oracle, Polycom, Raytheon, RIM

2012 67% RIM (12%); Cisco Alcatel‐Lucent, Cisco, EMC, Hewlett‐Packard, Hitachi, Honeywell, IBM, Juniper, NEC, Oracle, Polycom, Raytheon, RIM

Alcatel‐Lucent, Applied Materials (semiconductor, TFT LCD display, Glass, WEB, and solar products), Cisco, EMC, Hewlett‐Packard, Hitachi, 2013 65% Cisco, Juniper (top=13%) Honeywell, IBM, Juniper Networks, NEC, Oracle Note: The success of Research in Motion’s Blackberry smartphone (RIM is based in Waterloo, Ontario, about 100 kilometers from Celestica’s headquarters in Toronto) was a major opportunity for Celestica. Celestica began producing for Research in Motion in the mid 2000s. Blackberry also contracted for phone manufacture with other EMS providers, such as , Elcoteq, and Jabil Circuit. Celestica ended manufacturing services for RIM/Blackberry in 2012 (Celestica received no revenue from Blackberry in fiscal 2013). In 2013, Foxconn took over much of the design and production responsibility for Blackberry phones.

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Exhibit 2b. Customer Matrix (customers listed in annual reports are noted with “x”; 1999-2001 also includes customers reported in press coverage) Major customers HQ 1999‐2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Comment HP US x x x x x x x x x x x x x Bought plants (1997) IBM US x x x x x x x x x x x x x Bought plants (2000) NEC Japan x x x x x x x x x x x x x Bought plants (2000, 2001) Cisco US x x x x x x x x x x x x x EMC US x x x x x x x x x x x x x Sun US x x x x x x x x x Dell US x x Lucent US x x x x Bought plants (1998, 2001) Alcatel‐Lucent France x x x x x x x x Alcatel acquired Lucent Motorola US x x x x x x Bought plants (2001) Avaya US x x x x x x Bought plants (2001) Raytheon US x x x x x x RIM/Blackberry Canada x x x x x x Microsoft US x x Honeywell US x x x x x x Juniper US x x x x x x Hitachi Japan x x x x x Polycom US x x x x Oracle US x x x x Applied Materials US x

Exhibit 2c. Blackberry (Research In Motion) Corporate Sales and Profitability Trends ($US billion; calendar year prior to Feb. 28 year end)

Blackberry Limited Total Revenue Blackberry Limited Profitability (ROS %) $19.9 $18.4 $20 50% $15.0 15% 18% 21% 22% 17% 16% 17% 9% 6% $11.1 $11.1 0% $6.8 $6.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012‐6% 2013 $2.1 $3.0 $0.3 $0.6 $1.4 ‐50% ‐49% $0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ‐100% ‐86%

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Exhibit 3. Celestica Product Segments (share of total revenue) Product segments 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Servers 33% 31% 26% 22% 18% 18% 17% 19% 16% 13% 14% 15% 15% 13% Communications (enterprise & telecom) 31% 36% 45% 48% 49% 49% 46% 42% 40% 37% 37% 35% 35% 42% Workstations & PCs 22% 15% 7% 7% 3% Storage 14% 18% 13% 13% 11% 12% 10% 10% 10% 12% 12% 11% 12% 14% Consumer (included Blackberry smartphone 5% 5% 10% 11% 18% 22% 26% 29% 25% 25% 18% 6% to 2012) Diversified (industrial, aerospace, defense, 4% 5% 9% 10% 9% 7% 8% 10% 12% 14% 20% 25% healthcare, solar, green, semiconductor)

Exhibit 4. Recent Celestica Acquisitions (2009-2013)  2010: Invec (Scotland): Warranty management, repair and parts management services to companies in the information technology and consumer electronics markets ($6 million)  2010: Allied Panels (Austria): Medical engineering and manufacturing service provider ($18 million).  2011: Brooks Automation (Oregon US & Wuxi China): Semiconductor equipment contract manufacturing operations ($80.5 million)  2012: D&H Manufacturing (California): Manufacturing and engineering services, coupled with dedicated capacity and equipment for prototype and quick- turn support, for semiconductor capital equipment manufacturers ($71 million).

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Exhibit 5a. Celestica Revenue Allocated by Manufacturing Locations ( > 10% share) Locations 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Canada 43% 28% 20% 15% 20% 18% 14% 11% 12% 11% U.S. 22% 30% 35% 37% 21% 18% 13% U.K. 19% 17% 11% Italy 10% 13% 13% 13% China 14% 19% 18% 19% 16% 14% 14% 17% 19% Thailand 20% 17% 18% 18% 21% 21% 21% 34%

Mexico 15% 14% 14% 23% 27% 25% 19% Malaysia 11% 12% 13% Romania 11% Other 16% 15% 21% 35% 46% 64% 59% 35% 39% 38% 43% 27% 29% 31% 34%

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Exhibit 5b. Locations of Major Celestica Facilities (owned and leased) Based on Size Facility locations & size (1000 2002 2004 2006 2008 2009 2010 2011 2012 2013 2002 2004 2006 2008 2009 2010 2011 2012 2013 square feet) (%) (%) (%) (%) (%) (%) (%) (%) (%) US (13 facilities in 2002, 5 in 2013) 2,213 1,768 1,230 1,869 1,332 500 527 667 717 26% 19% 15% 21% 18% 8% 8% 9% 11% Canada 1,060 888 894 906 906 888 888 888 888 12% 10% 11% 10% 12% 14% 13% 13% 13% Japan 566 317 309 315 315 295 274 274 274 7% 3% 4% 4% 4% 5% 4% 4% 4% Ireland 210 133 133 200 133 235 241 241 241 2% 1% 2% 2% 2% 4% 4% 3% 4% UK 425 132 146 5% 1% 2% Italy 700 550 8% 6% France 142 272 2% 3% Spain 576 423 418 418 100 100 100 100 6% 5% 5% 6% 2% 2% 1% 2% Scotland 58 58 58 58 1% 1% 1% 1% Austria 54 54 54 1% 1% 1%

China 653 1,126 1,204 1,154 1,050 1,050 1,162 1,198 1,054 8% 12% 14% 13% 14% 16% 18% 17% 16% Thailand 463 760 1,085 1,085 1,085 1,085 1,085 1,085 1,085 5% 8% 13% 12% 14% 17% 16% 15% 16% Malaysia 854 405 759 878 878 927 927 1,549 1,549 10% 4% 9% 10% 12% 14% 14% 22% 23% Mexico 327 1,154 806 790 657 697 832 504 255 4% 13% 10% 9% 9% 11% 13% 7% 4% Czech Rep. 413 336 342 355 185 172 5% 4% 4% 4% 2% 3% Singapore 363 354 330 314 309 287 282 260 260 4% 4% 4% 4% 4% 4% 4% 4% 4% Brazil 142 134 105 105 2% 1% 1% 1% Hong Kong 82 53 53 1% 1% 1% Indonesia 46 1% Philippines 125 215 125 1% 3% 1% Puerto Rico 94 94 1% 1% Romania 200 133 200 200 200 186 186 2% 2% 3% 3% 3% 3% 3% India 90 53 1% 1% Total 8,659 9,177 8,418 8,700 7,526 6,548 6,630 7,064 6,609 8,659 9,177 8,418 8,700 7,526 6,548 6,630 7,064 6,609 Traditional developed markets 61% 51% 37% 43% 42% 33% 32% 32% 34% Emerging markets 39% 49% 63% 57% 58% 67% 68% 68% 66%

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Exhibit 6. Celestica Stock Trend (2004-2014) v. Flextronics, Jabil Circuit, and Sanmina

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Exhibit 7. Recent Strategy company can build with successful clients, but those relationships can become millstones when a customer After losing its biggest customer, Celestica runs into trouble. Smartphone maker BlackBerry is reinventing itself yet again by making once accounted for 20% of Celestica’s revenue topnotch solar panels. (which was US$6.5 billion last year), but as BlackBerry lost market share in recent years and had Reprinted from “Canadian Business” (May 10, to cut costs, it switched to cheaper Asian suppliers, 2013) and the two companies formally announced their split By Matthew McClearn last summer; sure enough, Celestica’s first-quarter results showed a BlackBerry-sized hole in the http://www.canadianbusiness.com/lists-and-rankings/target- balance sheet, with revenues down 19% from the transformation/ year before. Two years ago it was a loading dock. Today, this Celestica has lost big customers before, but not this secured, orderly section of Celestica’s Toronto big. The past decade has left the company battle- headquarters has been transformed into a torture hardened, though. Things were worse when chamber for solar panels. In various highly Muhlhauser took over. “During the last 15 years, we specialized chambers, panels are showered with tended to go out on an acquisition spree, buy a bunch water, rapidly heated and cooled, or pelted with of revenue, buy a bunch of infrastructure and sites, simulated hail. Until recently, Celestica (TSX: CLS) and not be able to retain the big customers,” he says. had never made a solar panel. Lab results led As a result, Celestica found itself stumbling from Celestica to conclude the ones its building now will crisis to crisis. Its financial performance was widely last decades and degrade more slowly than those regarded as disastrous, quality control suffered and made by competitors. “From a standing start, we’re customers were bailing. With the company on producing the highest-quality solar panels in this sounder footing today, Muhlhauser is now working to hemisphere,” enthuses Craig Muhlhauser, the replace the lost RIM revenue. The company’s core company’s president and CEO, tapping a table will continue to be telecommunications gear, servers, forcefully for emphasis. and high-end storage. But what really excites him is This new product is among the latest changes for a in sectors where outsourcing is still nascent. company that cannot afford to stand still. There’s a That’s where Mike Andrade, executive vice-president familiar pattern in the company’s history: keep high- of the company’s “diversified markets” segment, stakes R&D in Toronto; punt lower margin comes in. Five years ago Muhlhauser charged him commodity business to sites where labour costs are with the task of repurposing the Toronto facility for lower (Celestica operates 20 facilities in 14 countries higher-margin business. “What we began to see was including Mexico, Taiwan, and Malaysia). that communications [technology] was getting more Muhlhauser calls managing change “one of our pervasive and prevalent,” says Andrade. Computing competencies.” Good thing, too, because the bridges power and memory was also getting cheaper. behind his company are burning. Celestica’s core Celestica had a hunch that these combined forces business is making printed circuit boards that are would revolutionize other sectors like aerospace, auto embedded in other companies’ products, from manufacturing and medical devices, just as they had telecom switching gear to mobile phones. But lower- in the sectors Celestica has traditionally served. cost, higher-volume Asian competitors are “We’ve seen this happen in other industries,” continually squeezing prices and margins. Under Andrade says. “Maybe this time we can get ahead of Muhlhauser—who joined the company in 2005 and it and bring these ideas to these marketplaces.” became CEO the following year—Celestica is The solar panels represent part of Celestica’s push focused less on such “commoditized” products and into green energy. That might seem an odd choice, instead establishing itself in new, higher-margin given the havoc wrought of late by a glut of cheap fields where major players currently do the majority Chinese solar panels. But Andrade believes his of design, testing, manufacturing and quality control competitors look at their products from the wrong themselves. If Celestica pulls it off, it will be a perspective. Developers are the primary buyer of rewarding and higher-margin business; if not, it’s solar panels, he says, and they look at it much as they back to the treadmill of perpetual restructuring. would a fixed income instrument. “They couldn’t Although it has more than 100 customers, a small care if it was squirrels in cages that generated the handful have always accounted for most of steady flow of energy that they had a contract for,” he Celestica’s revenue. That speaks to the trust the says. “They just wanted a reliable flow of money

12 from it.” For him, Celestica’s expertise in supply- chain management and quality control made it eminently qualified to produce panels whose reliability and predictability would imitate the interest generated by a high-quality bond. Among others, it now makes panels for Recurrent Energy, a division of the Japanese giant Sharp, and Andrade says it does so profitably. Andrade’s division is also drumming up business making avionics for clients like Boeing and Airbus, high-resolution camera systems, and an ingestible pill that transmits health data via an abdominal patch to a doctor’s smartphone. Can the diversified division grow quickly enough? It CRAIG H. MUHLHAUSER accounts for more than a fifth of Celestica’s revenues today, and Muhlhauser wants to increase that to half AGE: 64 in the long term. But it can take years to build the CEO OF CELESTICA necessary relationships under which such projects can blossom. The company admits that it’s taking  Appointed: 2006 longer than expected to make inroads in the health-  Pay: $5.7 million ($1 million salary, plus care sector, for example. “It takes longer, but in the incentives) long run we’ll be better off,” Muhlhauser insists.  Strategy: Wants Celestica to be “a safe pair of hands” so high-tech partners will trust the Not everyone is that patient. According to analyst company with complex, higher-margin ratings compiled by Bloomberg, only four rate the outsourced production. stock a Buy, while 11 others offer negative  Greatest accomplishment so far: Stabilized a perspectives. “Is it fast enough for the financial company that had lurched from crisis to crisis, analysts? Probably not,” Muhlhauser concedes. But and had lost the confidence of shareholders. fiscal prudence in recent years has left the company  Biggest obstacle he’s likely to face this year: with no long-term debt, $530 million in cash on its Replacing revenues lost when customer balance sheet and substantial cash flow. BlackBerry ended longtime partnership. And the party who really matters is Gerry Schwartz, a director on Celestica’s board. His large buyout firm Onex Corp. controls all of Celestica’s multiple voting shares, granting him unassailable control even while owning a minority position. So long as Schwartz is content, Muhlhauser has time to effect his transformation. Asked how long it will take, Muhlhauser says he draws inspiration from IBM—from which Celestica was spun off in 1996 during a lengthy, ambitious restructuring that rescued the company from the scrap heap of history. “So let’s say 10 years,” he says.

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Exhibit 8. Celestica Milestones with annual revenue of approximately US$1 (source: Company web-site: May 2014) billion, in a cash and stock deal. This marked the http://www.celestica.com.sg/AboutUs/AboutUs.aspx?id=158 Company's largest acquisition in Asia to date.  Celestica appointed Eugene Polistuk to the 1994 position of Chairman of the Board of Directors  Celestica was incorporated as a wholly-owned and Marvin MaGee to the position of President subsidiary of IBM. and Chief Operating Officer. 1996  We announced a five-year US$4 billion global  We were acquired by Onex Corporation strategic alliance with Avaya to acquire its (TSE:OCX) and Celestica management from manufacturing, repair and supply chain IBM, the founders of our company. operations in Denver, Colorado, and Little Rock, Arkansas, and certain other operating assets. 1997  We announced a Global Design Operation by  We acquired Design to Distribution, one of consolidating our design services group. Europe's largest independent EMS providers.  We posted record fourth-quarter revenue of This was Celestica's first acquisition. US$3.4 billion and 2000 year-end results of 1998 US$9.8 billion, beating analyst expectations and  We completed the eighth acquisition of the year virtually achieving the company's US$10 billion and the twelfth since our divestiture. The target one full-year ahead of schedule. acquisition of International Manufacturing 2003 Services (IMS), broadened our reach to Asia,  We opened a new manufacturing facility in where today we have our greatest presence. Suzhou, further expanding Asian presence.  We proudly completed the largest IPO in EMS  On June 30, 2003, we celebrated Celestica’s fifth history and the largest technology IPO in anniversary as a public company. Canada, raising gross proceeds of $414 million. 2004 1999  Celestica, along with a number of industry  The new S&P/TSE Mid Cap Index included us. leading OEMs and EMS providers, declared our  We introduced SupplyFlex, a program that support for The Electronics Industry Code of provided OEMs with a consistently available Conduct. The Code outlines standards to ensure supply of industry-standard, commercial that working conditions in the electronics components from our preferred suppliers. industry supply chain are safe, that workers are  Celestica was added to the TSE 300 Composite treated with respect and dignity, and that Index and TSE 100 Index. manufacturing processes and environmentally 2000 responsible. The Code is now a cornerstone of  We announced a strategic EMS alliance with our corporate social responsibility program. Motorola, for the manufacture of wireless  Stephen Delaney was appointed CEO. telecom products. The deal included a supply  We became the first EMS provider to launch an agreement with an estimated value of more than end-to-end suite Green Services™ to help US$1 billion over a three-year period. customers comply with the European Union's  We announced the opening of an office in Japan. Restriction of Hazardous Substances (RoHS)  We acquired all of the shares of Bull Electronics legislation. Today, we are considered to be the Inc. (BEI) in Lowell, Massachussets. The industry leader in this area. acquisition of the contract manufacturer marked  On January 3, 2004, we proudly celebrated our our 20th acquisition in three years. tenth anniversary as a company.  Eugene Polistuk retired as Chair and CEO and 2001 Stephen Delaney took on the role of CEO.  We announced a five-year manufacturing  Robert Crandall, a director of Celestica's Board agreement with Lucent worth up to $10 billion. since 1998, became board chair. This was our largest supply deal to date. The  In January of that year, we also completed the deal rendered Celestica the leading EMS acquisition of Manufacturers’ Services Limited provider for Lucent's North American switching, (MSL), a full-service global electronics access and wireless networking systems. manufacturing and supply chain services  We announced the acquisition of Singapore- company, with revenues of over US$800 million. based EMS provider Omni Industries Limited, This acquisition enhanced our customer base in

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non-traditional markets, as well as our existing  Celestica collaborates with Microsoft on the suite of services and solutions. development of BEE3 platform prototypes, to improve the ability of Microsoft and other firms 2005 to conduct computer architecture research.  We acquired Displaytronix, a leader in flat-panel display repair services, an initiative to help grow 2009 our end-to-end, after-market services offering.  Our Song Shan Lake site is presented with the  We acquired Ramnish Electronics, an EMS Dongguan (China) Environmental Protection provider located in Hyderabad, India. Bureau's (EPB's) 'Dongguan Environment  An alliance was formed with ML&S Friendly Company' award for our excellent (Manufacturing Logistics & Services, a German management practices. EMS) to better serve our customers in Germany. 2010  We acquired CoreSim, a leader in advanced  Celestica acquires Allied Panels, a medical design analysis and redesign services, engineering and manufacturing service provider, strengthening our design services offering. broadening our lifecycle solutions for customers  Frost & Sullivan named our company EMS in diagnostic and complex med-tech markets. Provider of the Year in honour of our market  Celestica launches its first Corporate Social diversification strategy, revenue growth, Responsibility package. technology leadership and global footprint.  We acquire Invec Solutions, a provider of  We became the first EMS provider to win the warranty management, repair, and parts prestigious Shingo Prize for Lean Manufacturing management services to information technology 2006 and consumer electronics companies. The  Stephen Delaney resigns as Celestica’s CEO. acquisition enhances Celestica's After-Market  Craig Muhlhauser was appointed CEO. Services offering through its reverse logistic  We formed a joint venture with HCL, a leading software, which allows customers to view their global engineering, R&D, IT services, and repair status and inventory information anywhere business process outsourcing firm headquartered in the world using a web browser. in India, to provide seamlessly integrated design, 2011 manufacturing and supply chain solutions.  We earn a spot on the 2011 InformationWeek 2007 500 List of Top Technology Innovators across  Celestica announces new Total Cost of North America for our custom Manufacturing Ownership (TCOO) supply awards program to Execution System. recognize suppliers that best align with  Celestica's Suzhou, China facility receives Celestica’s TCOO supply chain strategy, helping AS9100C certification to manufacture for the customers deliver high-quality products to aerospace industry in China. Our Suzhou facility market quickly and at the lowest total cost. joins our four other AS9100-certified centres of  Craig Muhlhauser appointed to Celestica Board excellence in Toronto, Canada; Austin, Texas;  Celestica completes Sarbanes Oxley certification Valencia, Spain; and Kulim, Malaysia.  A testament to our successful penetration into  We were recognized as Canadian Manufacturer industry markets, Frost & Sullivan, a global of the Year by Canadian Manufacturers and leader in growth consulting, presented Celestica Exporters. The award recognizes achievement of with the 2006 North American Frost & Sullivan an integrated national and international Award for Customer Service Leadership in the manufacturing network, as well as continuous aerospace and defense category. improvement, leadership, and commitment to  Anthony (Tony) Puppi [EVP & CFO since 1994] sustainability and community service. announced his retirement from Celestica.  We acquire the semiconductor equipment  Celestica receives caring company award for contract manufacturing operations of Brooks third consecutive year. Automation, based in Portland, Oregon and Wuxi, China. The acquisition supports our 2008 strategy to grow and diversify our revenue base  Celestica wins CIO 100 Award from CIO in the industrial, aerospace and defense, Magazine for its innovative use of information healthcare and green technology end markets. technology to drive flexibility, visibility and simplicity through the supply chain.

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