EX-99.1 2 a2054684zex-99_1.txt EXHIBIT 99.1 SECOND QUARTER RESULTS Wednesday, July 18, 2001 (All amounts in U.S. dollars. Per share information based on diluted shares outstanding unless noted otherwise. Historical per share information reflects the impact of the December 1999 two-for-one stock split and the treasury stock method, retroactively applied) CELESTICA ANNOUNCES SECOND QUARTER RESULTS Revenue Increases 27 Per Cent to $2.7 Billion, EPS Increases 37 Per Cent to $0.41 TORONTO, Canada - Celestica Inc. (NYSE, TSE: CLS), a world leader in electronics manufacturing services (EMS), today announced financial results for the second quarter ended June 30, 2001. Revenue for the three months ended June 30, 2001 was $2,661 million, up 27 per cent from $2,092 million in the second quarter of 2000. The year-over-year increase was driven by growth in multiple end-markets including servers, communications and storage. Adjusted net earnings, which exclude the after-tax impact of amortization of intangible assets, integration costs related to acquisitions and one-time charges, increased 46 per cent to $93.1 million compared to $63.7 million in the second quarter of 2000. The year-over-year improvements resulted from higher revenue and improved operating margins. Adjusted net earnings per share rose 37 per cent to $0.41 per share compared to $0.30 per share for the same period in 2000 and in line with the company's guidance of $0.40-$0.42. During the quarter, the company recorded a pre-tax restructuring charge of $53.2 million. Net earnings, excluding this charge, would have been $60.0 million or $0.27 per share compared to $41.4 million or $0.20 per share for the same period in 2000. Net earnings for the quarter including the restructuring charge was $15.8 million or $0.06 per share. The restructuring charge relates to facility consolidations and a reduction in workforce as previously announced in April. For the six-month period ended June 30, 2001, revenue was $5,353 million, up 45 per cent from $3,704 million for the same period last year. Adjusted net earnings were $180.4 million, up 75 per cent from $103.3 million last year. Adjusted net earnings per share were $0.81, up 62 per cent from $0.50 for the same period last year. Net earnings were $70.6 million or $0.31 per share compared to $67.5 million or $0.33 per share last year. more... 2 -"Despite the challenges that the current end-markets have presented Celestica and its customers, we are pleased with our second quarter results and with the organization's ability to adapt in this volatile environment," said Eugene Polistuk, chairman and CEO, Celestica. "Our focus continues to be on managing costs and working closely with our customers to manage the supply chain efficiently in today's economic turbulence. "That said, we remain equally focused on the future and the significant opportunity that exists particularly as outsourcing continues to grow based on the strategic and economic benefits it offers OEMs. By leveraging the outsourcing model, our customers are able to concentrate on other critical aspects of their business without sacrificing any of the responsiveness, flexibility or quality of their manufacturing operations. It is this type of competitive advantage that continues to support our positive long-term outlook for the EMS industry." For the third quarter, the company's guidance for revenue is approximately $2.2-$2.5 billion. The revenue guidance reflects the company's ongoing cautious outlook given the broad-based slow down in end-markets and the limited visibility being expressed by customers. Third quarter guidance for adjusted net earnings per share is approximately $0.27-$0.35, which reflects the impact of the lower revenue base. The company also announced that it would incur additional restructuring charges of $30-$40 million in the third quarter as it continues to rationalize its cost structure. This will involve additional workforce reductions of approximately five per cent. ABOUT CELESTICA Celestica is a world leader in electronics manufacturing services (EMS) for industry leading original equipment manufacturers (OEMs), primarily in the computer and communications sectors. With facilities in North America, Europe, Asia and Latin America, Celestica provides a broad range of services including design, prototyping, assembly, testing, product assurance, supply chain management, worldwide distribution and after-sales service. For further information on Celestica, visit its website at www.celestica.com. The company's security filings can also be accessed at www.sedar.com and www.sec.gov. more... 3 SAFE HARBOUR AND FAIR DISCLOSURE STATEMENT STATEMENTS CONTAINED IN THIS PRESS RELEASE WHICH ARE NOT HISTORICAL FACTS ARE FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISK AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE FORWARD-LOOKING STATEMENTS. AMONG THE KEY FACTORS THAT COULD CAUSE SUCH DIFFERENCES ARE: THE LEVEL OF OVERALL GROWTH IN THE ELECTRONICS MANUFACTURING SERVICES (EMS) INDUSTRY; LOWER-THAN-EXPECTED CUSTOMER DEMAND; COMPONENT CONSTRAINTS; VARIABILITY OF OPERATING RESULTS AMONG PERIODS; DEPENDENCE ON THE COMPUTER AND COMMUNICATIONS INDUSTRIES; DEPENDENCE ON A LIMITED NUMBER OF CUSTOMERS; AND THE ABILITY TO MANAGE EXPANSION, CONSOLIDATION AND THE INTEGRATION OF ACQUIRED BUSINESSES. THESE AND OTHER FACTORS ARE DISCUSSED IN THE COMPANY'S VARIOUS PUBLIC FILINGS AT www.sedar.com AND http://www.sec.gov. AS OF ITS DATE, THIS PRESS RELEASE CONTAINS ANY MATERIAL INFORMATION ASSOCIATED WITH THE COMPANY'S SECOND QUARTER FINANCIAL RESULTS, AND REVENUE AND ADJUSTED EARNINGS GUIDANCE FOR THE THIRD QUARTER ENDING SEPTEMBER 30, 2001. Contacts: Laurie Flanagan Paul Carpino Celestica Corporate Communications Celestica Investor Relations (416) 448-2200 (416) 448-2211 media@celestica.com clsir@celestica.com ------------------- ------------------- more... 4 CELESTICA INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS OF U.S. DOLLARS) (UNAUDITED)
DECEMBER 31 JUNE 30 2000 2001 -------------- ------------- ASSETS Current assets: Cash and short-term investments................. $ 883,757 $ 1,261,259 Accounts receivable ............................ 1,785,716 1,615,967 Inventories .................................... 1,664,304 1,517,089 Prepaid and other assets........................ 138,830 117,563 Deferred income taxes........................... 48,357 27,484 ------------- ------------- 4,520,964 4,539,362 Capital assets ................................... 633,438 752,667 Intangible assets ................................ 578,272 566,662 Other assets ..................................... 205,311 142,889 ------------- ------------- $ 5,937,985 $ 6,001,580 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable................................ $ 1,730,460 $ 1,020,785 Accrued liabilities............................. 466,310 486,406 Income taxes payable............................ 52,572 35,289 Deferred income taxes........................... 7,702 7,704 Current portion of long-term debt .............. 1,364 413 ------------- ------------- 2,258,408 1,550,597 Accrued post-retirement benefits ................. 38,086 42,675 Long-term debt ................................... 130,581 130,188 Other long-term liabilities....................... 3,000 2,000 Deferred income taxes............................. 38,641 12,993 ------------- ------------- 2,468,716 1,738,453 Shareholders' equity: Convertible debt................................ 860,547 873,344 Capital stock (note 4).......................... 2,395,414 3,112,886 Retained earnings............................... 217,512 281,114 Foreign currency translation adjustment......... (4,204) (4,217) ------------ ------------- 3,469,269 4,263,127 ------------ ------------ $ 5,937,985 $ 6,001,580 ============= =============
See accompanying notes to consolidated financial statements. These interim financial statements should be read in conjunction with the annual consolidated financial statements. more... 5 CELESTICA INC. CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 2000 2001 2000 2001 -------------- ------------- -------------- ---------- Revenue........................................... $ 2,091,883 $ 2,660,706 $ 3,704,206 $ 5,353,281 Cost of sales..................................... 1,946,047 2,468,535 3,447,784 4,967,802 ----------- ---------- ------------ ---------- Gross profit...................................... 145,836 192,171 256,422 385,479 Selling, general and administrative expenses ..... 73,457 86,415 131,482 175,459 Amortization of intangible assets ................ 19,248 28,130 34,571 57,708 Integration costs related to acquisitions ........ 4,904 7,797 5,571 10,123 Other charges (note 5)............................ - 53,198 - 56,998 ----------- ---------- ------------ ---------- Operating income ................................. 48,227 16,631 84,798 85,191 Interest on long-term debt........................ 3,919 5,115 7,757 9,449 Interest income, net.............................. (10,201) (7,559) (15,851) (15,447) ------------ ----------- ------------- ------------ Earnings before income taxes...................... 54,509 19,075 92,892 91,189 ----------- ---------- ------------ ---------- Income taxes: Current......................................... 17,390 6,310 30,943 19,314 Deferred (recovery)............................. (4,308) (3,067) (5,578) 1,236 ------------ ----------- ------------- ---------- 13,082 3,243 25,365 20,550 ----------- ---------- ------------ ---------- Net earnings for the period....................... 41,427 15,832 67,527 70,639 Retained earnings, beginning of period............ 42,308 268,883 16,208 217,512 Convertible debt accretion, net of tax............ - (3,601) - (7,037) ----------- ----------- ------------ ----------- Retained earnings, end of period.................. $ 83,735 $ 281,114 $ 83,735 $ 281,114 =========== ========== ============ ========== Basic earnings per share.......................... $ 0.20 $ 0.06 $ 0.34 $ 0.31 Diluted earnings per share (note 2)............... $ 0.20 $ 0.06 $ 0.33 $ 0.31 Weighted average number of shares outstanding: - basic (in thousands)...................... 202,729 207,018 196,424 204,673 - diluted (in thousands) (note 2).............. 211,861 225,548 205,498 223,680
CONSOLIDATED STATEMENTS OF ADJUSTED NET EARNINGS (IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 2000 2001 2000 2001 -------------- -------------- ---------------- ---------- Adjusted net earnings (1)......................... $ 63,715 $ 93,052 $ 103,264 $ 180,385 Adjusted net earnings per share - basic........... $ 0.31 $ 0.43 $ 0.53 $ 0.85 Adjusted net earnings per share - diluted (note 2)......................................... $ 0.30 $ 0.41 $ 0.50 $ 0.81
(1) Adjusted net earnings exclude the after-tax effect of integration costs related to acquisitions, other charges and amortization of intangible assets. See accompanying notes to consolidated financial statements. These interim financial statements should be read in conjunction with the annual consolidated financial statements. more... 6 CELESTICA INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF U.S. DOLLARS) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 2000 2001 2000 2001 -------------- -------------- -------------- -------------- CASH PROVIDED BY (USED IN): OPERATIONS: Net earnings for the period ...................$ 41,427 $ 15,832 $ 67,527 $ 70,639 Items not affecting cash: Depreciation and amortization................ 48,357 71,291 87,249 141,027 Deferred income taxes........................ (4,308) (3,067) (5,578) 1,236 Other charges (note 5)....................... - 16,928 - 17,228 Other........................................ (8,695) (460) (9,335) 1,291 -------------- -------------- -------------- -------------- Cash from earnings.............................. 76,781 100,524 139,863 231,421 -------------- -------------- -------------- -------------- Changes in non-cash working capital items: Accounts receivable.......................... (227,931) (128,110) (324,822) 173,824 Inventories.................................. (153,626) 208,040 (274,652) 176,686 Other assets................................. (23,850) 144,545 (41,024) 91,290 Accounts payable and accrued liabilities..... 157,895 (108,483) 367,623 (704,513) Income taxes payable......................... 4,636 (4,345) (7,407) (17,283) -------------- -------------- -------------- -------------- Non-cash working capital changes............. (242,876) 111,647 (280,282) (279,996) -------------- -------------- -------------- -------------- Cash provided by (used in) operations........ (166,095) 212,171 (140,419) (48,575) -------------- -------------- -------------- -------------- INVESTING: Acquisitions, net of cash acquired............ (461,622) (82,397) (596,733) (148,117) Purchase of capital assets.................... (29,311) (59,252) (97,903) (136,085) Other......................................... 21,088 1,308 21,647 922 -------------- -------------- -------------- -------------- Cash used in investing activities............. (469,845) (140,341) (672,989) (283,280) -------------- -------------- -------------- -------------- FINANCING: Bank indebtedness............................. (8,880) - (8,880) - Decrease in long-term debt.................... (1,046) (376) (1,681) (1,653) Deferred financing costs...................... (63) (4) (104) (19) Issuance of share capital..................... 631 717,949 764,674 722,029 Share issue costs, pre-tax.................... - (10,000) (26,788) (10,000) Other......................................... (1,443) (1,000) (1,687) (1,000) -------------- -------------- -------------- -------------- Cash provided by (used in) financing activities.. (10,801) 706,569 725,534 709,357 -------------- -------------- -------------- -------------- Increase (decrease) in cash...................... (646,741) 778,399 (87,874) 377,502 Cash, beginning of period........................ 930,389 482,860 371,522 883,757 -------------- -------------- -------------- -------------- Cash, end of period.............................. $ 283,648 $ 1,261,259 $ 283,648 $ 1,261,259 -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- Supplemental information: Paid during the period: Interest..................................... $ 7,331 $ 7,648 $ 7,757 $ 8,152 Taxes........................................ $ 8,617 $ 12,627 $ 32,374 $ 32,059 Non-cash financing activities: Convertible debt accretion, net of tax ......... $ - $ 3,601 $ - $ 7,037 Shares issued for acquisitions.................. $ - $ 530 $ - $ 2,030
Cash is comprised of cash and short-term investments. See accompanying notes to consolidated financial statements. These interim financial statements should be read in conjunction with the annual consolidated financial statements. more... 7 CELESTICA INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) 1. NATURE OF BUSINESS: The primary operations of the Company consist of providing a full range of electronics manufacturing services including design, prototyping, assembly, testing, product assurance, supply chain management, worldwide distribution and after-sales service to its customers primarily in the computer and communications industries. The Company has operations in the United States, Canada, Mexico, United Kingdom, Ireland, Italy, Thailand, China, Hong Kong, Czech Republic, Brazil, Singapore, Japan and Malaysia. The Company prepares its financial statements in accordance with accounting principles generally accepted in Canada, with a reconciliation to accounting principles generally accepted in the United States, included in the annual consolidated financial statements. The Company experiences seasonal variation in revenue, with revenue typically being highest in the fourth quarter and lowest in the first quarter. 2. SIGNIFICANT ACCOUNTING POLICIES: The disclosures contained in these unaudited interim consolidated financial statements do not include all requirements of generally accepted accounting principles for annual financial statements. The unaudited interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2000. The unaudited interim consolidated financial statements are based upon accounting principles consistent with those used and described in the annual consolidated financial statements, except that in the first quarter of 2001, the Company adopted retroactively the new Canadian Institute of Chartered Accountants Handbook Section 3500 "Earnings per share", which requires the use of the treasury stock method for calculating diluted earnings per share. This change results in an earnings per share calculation which is consistent with United States generally accepted accounting principles. Previously reported diluted earnings per share have been restated to reflect this change. The unaudited interim consolidated financial statements reflect all adjustments, consisting only of normal recurring accruals, which are, in the opinion of management, necessary to present fairly the financial position of the Company as of June 30, 2001 and the results of operations and cash flows for the three and six months ended June 30, 2001 and 2000. 3. ACQUISITIONS: During the first half of 2001, the Company completed certain acquisitions which were accounted for as purchases. The results of operations of the net assets acquired are included in these financial statements from their respective dates of acquisition. In January 2001, the Company acquired Excel Electronics, Inc. through a merger with Celestica (US) Inc., a subsidiary of the Company. In February 2001, the Company acquired certain assets located in Dublin, Ireland and Mt. Pleasant, Iowa from Motorola Inc. In March 2001, the Company acquired certain assets of a repair facility in Japan from N.K. Techno Co., Ltd. In May 2001, the Company acquired certain assets located in Little Rock, Arkansas and Denver, Colorado from Avaya Inc. and also entered into agreements to purchase additional assets in the United States and France, to be completed in phases during the third quarter of 2001. In June 2001, Celestica acquired Sagem CR s.r.o., in the Czech Republic, from Sagem SA, of France. more... 8 CELESTICA INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) Details of the net assets acquired in these acquisitions, at fair value, are as follows:
ACQUISITIONS ------------ Current assets................................ $ 36,609 Capital assets................................ 82,799 Goodwill and intellectual property............ 32,324 Other intangible assets....................... 13,658 Liabilities assumed........................... (15,243) ---------- Net assets acquired........................... $ 150,147 ---------- ---------- Financed by: Cash......................................... $ 148,117 Issue of shares.............................. 2,030 ---------- $ 150,147 ---------- ----------
Other intangible assets represent the excess of purchase price over the fair value of tangible assets acquired in facility acquisitions. In June 2001, the Company entered into an agreement to acquire Primetech Electronics Inc. (Primetech), an electronics manufacturer in Canada. The shareholders of Primetech are entitled to receive 0.22 subordinate voting shares of Celestica for each share of Primetech. The total purchase price is estimated to be approximately C$265,000 (US$175,000). This acquisition is subject to Primetech shareholder and court approvals and is expected to close in the third quarter of 2001. In June 2001, the Company entered into an agreement to acquire Omni Industries Limited. (Omni), an electronics manufacturer headquartered in Singapore. The shareholders of Omni are entitled to receive 0.045 subordinate voting shares of Celestica or a cash payment of S$4.25, for each share of Omni. The total purchase price is estimated to be approximately US$890,000, with the maximum cash outlay limited to S$860,000 (US$475,000). This acquisition is subject to Omni shareholder and court approvals and is expected to close in the fourth quarter of 2001. 4. OUTSTANDING SHARES: In May 2001, the Company issued 12,000,000 subordinate voting shares for gross cash proceeds of $714,000 and incurred $6,588 in share issue costs, net of tax of $3,412. As at June 22, 2001, Celestica had outstanding 39,065,950 multiple voting shares, 177,210,407 subordinate voting shares and 16,898,320 options to acquire subordinate voting shares under Celestica's employee incentive plans. more... 9 CELESTICA INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) 5. OTHER CHARGES: In response to a slowing end market, the Company announced a restructuring plan that focused on facility consolidations and a workforce reduction. The Company recorded a pre-tax restructuring charge of $53,198 for the quarter. The following table details the components of the restructuring charge and the related amounts included in accrued liabilities:
AMOUNTS THREE MONTHS THREE MONTHS INCLUDED IN ENDED ENDED ACCRUED MARCH 31, JUNE 30, LIABILITIES AT 2001 2001 JUNE 30, 2001 ------------ ------------ --------------- Employee termination costs.........................$ 1,456 $ 22,609 $ 18,681 Lease and other contractual obligations............ 470 11,469 11,939 Other facility exit costs.......................... 1,095 1,656 2,308 Other.............................................. 479 536 526 Asset impairment................................... 300 16,928 - ------------ ------------ --------------- $ 3,800 $ 53,198 $ 33,454 ------------ ------------ --------------- ------------ ------------ ---------------
Employee terminations were made across all geographic regions of the company with the majority pertaining to manufacturing and plant employees. A total of 2,953 employees have been identified to be terminated. As of June 30, 2001, 1,129 employees have been terminated. The remaining termination costs are expected to be paid out within one year. The asset impairment reflects the write-down of certain long lived assets in Canada, US, Europe, and Mexico, that have become impaired as a result of the rationalization of facilities. The asset impairments relate to machinery and equipment, buildings and improvements. The assets were written down to their net realizable value based on their recoverable amounts using estimated cash flows. The major components of the restructuring are estimated to be complete by the first quarter of 2002, except for certain long term lease contractual obligations. 6. SEGMENTED INFORMATION: The Company's operations fall into one dominant industry segment, the electronics manufacturing services industry. The Company manages its operations, and accordingly determines its operating segments, on a geographic basis. The performance of geographic operating segments is monitored based on EBIAT (earnings before interest, income taxes, amortization of intangible assets, other charges and integration costs related to acquisitions). The Company monitors enterprise-wide performance based on adjusted net earnings, which is calculated as net earnings before amortization of intangible assets, other charges and integration costs related to acquisitions, net of related income taxes. Inter-segment transactions are reflected at market value. The following is a breakdown of: revenue, EBIAT, adjusted net earnings (which is after income taxes) and total assets by operating segment. Certain comparative information has been restated to reflect changes in the management of operating segments.
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 2000 2001 2000 2001 -------------- -------------- -------------- ------------ REVENUE Americas........................................... $ 1,499,246 $ 1,712,791 $ 2,679,973 $ 3,408,411 Europe............................................. 524,981 839,021 872,854 1,743,906 Asia............................................... 191,382 196,898 345,943 411,860 Elimination of inter-segment revenue............... (123,726) (88,004) (194,564) (210,896) -------------- -------------- -------------- ------------ $ 2,091,883 $ 2,660,706 $ 3,704,206 $ 5,353,281 -------------- -------------- -------------- ------------ -------------- -------------- -------------- ------------
more... 10 CELESTICA INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2000 2001 2000 2001 -------------- -------------- -------------- -------------- EBIAT Americas.......................................... $ 42,086 $ 55,215 $ 74,281 $ 107,871 Europe............................................ 22,216 40,548 34,716 81,721 Asia.............................................. 8,077 9,993 15,943 20,428 -------------- ------------- -------------- -------------- 72,379 105,756 124,940 210,020 Interest, net..................................... 6,282 2,444 8,094 5,998 Amortization of intangible assets................. (19,248) (28,130) (34,571) (57,708) Integration costs related to acquisitions......... (4,904) (7,797) (5,571) (10,123) Other charges..................................... - (53,198) - (56,998) -------------- -------------- -------------- --------------- Earnings before income taxes...................... $ 54,509 $ 19,075 $ 92,892 $ 91,189 -------------- -------------- -------------- --------------- -------------- -------------- -------------- --------------- Adjusted net earnings............................. $ 63,715 $ 93,052 $ 103,264 $ 180,385 -------------- -------------- -------------- --------------- -------------- -------------- -------------- ---------------
AS AT JUNE 30, 2000 2001 -------------- ------------- TOTAL ASSETS Americas.......................................... $ 2,382,171 $ 3,773,205 Europe............................................ 1,190,986 1,793,240 Asia.............................................. 424,147 435,135 -------------- ------------- $ 3,997,304 $ 6,001,580 -------------- ------------- -------------- -------------
The Company's external revenue allocated by manufacturing location among foreign countries exceeding 10% are as follows:
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2000 2001 2000 2001 -------------- -------------- -------------- ------------ REVENUE Canada............................................ 32% 22% 33% 24% United States..................................... 31% 31% 30% 31% Italy............................................. 6% 12% 3% 13% United Kingdom.................................... 16% 14% 18% 15%
7. COMPARATIVE FIGURES Certain comparative figures have been reclassified to conform with the financial statement presentation adopted in the current period. -30-