FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of January 2010

001-14832

(Commission File Number)

CELESTICA INC.

(Translation of registrant’s name into English)

844 Don Mills Road

Toronto, Ontario

Canada M3C 1V7

(416) 448-5800

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Indicate by check mark whether the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Indicate by check mark whether the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Indicate by check mark whether by furnishing the information contained in this Form, is the registrant also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

Celestica Inc.

Form 6-K

Month of January 2010

The following information filed with this Form 6-K is incorporated by reference in Celestica’s registration statements, the prospectuses included therein, and any registration statement subsequently filed by Celestica with the Securities and Exchange Commission:

·                  Press Release, dated January 27, 2010, the text of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference, including Celestica Inc.’s fourth quarter 2009 consolidated financial information.

·                  Press Release, dated January 27, 2010, the text of which is attached hereto as Exhibit 99.2 and is incorporate herein by reference.

Exhibits

99.1  -Press Release, dated January 27, 2010

99.2  -Press Release, dated January 27, 2010

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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EXHIBIT INDEX

99.1 - - Press Release, dated January 27, 2010

99.2 - - Press Release, dated January 27, 2010

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Exhibit 99.1

CELESTICA ANNOUNCES FOURTH QUARTER and

FY2009 FINANCIAL RESULTS

Fourth Quarter 2009 Summary

(Note: Celestica has revised its definition of the following non-GAAP metrics - adjusted net earnings, return on invested capital, adjusted operating margin, and adjusted gross margin - to exclude total stock-based compensation expense to allow for a better comparison with its major North American EMS competitors; see “Adjusted Net Earnings Revised Definition” section below, which includes a reconciliation to GAAP)

·      Revenue of $1.66 billion, compared to $1.94 billion for the same period last year

·      GAAP net earnings of $31.1 million, or $0.13 per share, compared to GAAP net loss of $822.2 million, or $3.58 per share, last year (including an $850.5 million, or $3.71 per share, goodwill impairment)

·      Non-GAAP adjusted net earnings of $0.21 per share, compared to $0.28 per share for the same period last year

·      Return on invested capital of 27.5%, compared to 18.8% last year

·      Adjusted operating margin of 3.6%, compared to 3.5% last year

·      Adjusted gross margin of 7.1%, compared to 7.4% last year

·      Inventory turns of 9.1x, compared to 8.8x turns last year

·      Cash flow from operations of $45.0 million, free cash flow of $27.5 million

·      First quarter of 2010 revenue guidance of $1.45 billion - $1.60 billion, adjusted net earnings per share of $0.15 - $0.21

·      Celestica announces redemption of its outstanding 2013 Notes

TORONTO, Canada - Celestica Inc. (NYSE, TSX: CLS), a global leader in the delivery of end-to-end product lifecycle solutions, today announced financial results for the fourth quarter ended December 31, 2009.

Fourth Quarter Results

Revenue for the quarter was $1,664 million, compared to $1,935 million in the fourth quarter of 2008, reflecting primarily the impacts of weaker end-market demand. GAAP net earnings were $31.1 million, or $0.13 per share, compared to GAAP net loss of $822.2 million, or $3.58 per share, for the same period last year.  GAAP net loss in the fourth quarter of 2008 was primarily a result of an $850.5 million, or $3.71 per share, write-off for impairment of goodwill.

Adjusted net earnings (using the revised definition discussed below) for the quarter were $49.5 million, or $0.21 per share, compared to adjusted net earnings of $65.2 million, or $0.28 per share, for the same period last year. The term adjusted net earnings is a non-GAAP measure defined as net earnings (loss) before other charges, amortization of intangible assets (excluding amortization of computer software),

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total stock-based compensation including option and restricted stock expense (see “Adjusted Net Earnings Revised Definition” below), and gains or losses related to the repurchase of shares and debt, net of tax and significant deferred tax write-offs or recoveries. Detailed GAAP financial statements and supplementary information related to adjusted net earnings, other non-GAAP metrics and the revised definitions appears at the end of this press release. All non-GAAP measures disclosed in this release, including comparables for prior periods, reflect the revised definitions, unless otherwise specified.

Fourth Quarter Results Compared to Guidance

The company’s revenue for the fourth quarter of 2009 of $1.66 billion compares to the company’s published guidance, announced on October 22, 2009, of revenue of $1.55 billion to $1.70 billion.

The company’s published guidance on October 22, 2009 for adjusted net earnings per share of $0.14 to $0.20 did not reflect the revised definition for this metric. The guidance for adjusted net earnings per share, using the revised definition, would have been $0.16 to $0.22. The company’s adjusted net earnings per share for the fourth quarter of 2009 was $0.21, and met the high end of this range.

Annual Results

For 2009, revenue was $6,092 million, compared to $7,678 million for 2008. GAAP net earnings were $55.0 million, or $0.24 per share, compared to a GAAP net loss of $720.5 million, or $3.14 per share, for 2008. Adjusted net earnings for 2009 were $158.5 million, or $0.69 per share, compared to $204.2 million, or $0.89 per share, in 2008.

“Celestica continued to deliver strong operational and financial performance in the fourth quarter as end-market demand strengthened,” said Craig Muhlhauser, President & CEO. “In 2009, our continuously improving operational effectiveness and cost productivity resulted in some of the strongest financial results in the company’s history. We believe the company is very well positioned to build on its 2009 successes and momentum in 2010.”

2011 Debt Redemption

In November 2009, the company redeemed its outstanding 7.875% Senior Subordinated Notes due 2011 (the “2011 Notes”) for $346.1 million, excluding accrued interest. The 2011 Notes had a principal amount of $339.4 million.  The company recorded a gain of $10.4 million on redemption. This gain is excluded from adjusted net earnings.

2013 Debt Redemption

The company announced that it will exercise its option to redeem all of its outstanding 7.625% Senior Subordinated Notes due 2013 (the “2013 Notes”).

The outstanding principal amount of the 2013 Notes is $223.1 million.  In accordance with the terms of the Notes, the redemption will be at a price of 103.813% of the principal amount, together with accrued and unpaid interest to the redemption date.

The redemption will be funded out of the company’s existing cash resources. Giving effect to the redemption of the 2013 Notes at December 31, 2009, the company would have had approximately $706 million in cash and no long-term debt outstanding.  The company expects to complete the redemption in the first quarter of 2010.  The redemption will reduce the company’s annual net interest expense by approximately $17 million.

First Quarter of 2010 Outlook

For the first quarter ending March 31, 2010, the company anticipates revenue to be in the range of $1.45 billion to $1.60 billion, and adjusted net earnings per share to be in the range of $0.15 to $0.21.

Fourth Quarter Webcast

Management will host its quarterly results conference call today at 4:15 p.m. Eastern. The webcast can be accessed at www.celestica.com.

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Supplementary Information

In addition to disclosing detailed results in accordance with Canadian generally accepted accounting principles (GAAP), Celestica provides supplementary non-GAAP measures as a method to evaluate the company’s operating performance.  See table below.

Management uses adjusted net earnings (and other non-GAAP metrics) as a measure of enterprise-wide performance. Management believes adjusted net earnings is a useful measure for management, as well as investors, to facilitate period-to-period operating comparisons at the company and with its major North American EMS competitors. As discussed below under “Adjusted Net Earnings Revised Definition,” beginning with the fourth quarter of 2009, the company revised its definition of adjusted net earnings. Adjusted net earnings do not include the effects of other charges, most significantly the write-down of goodwill and long-lived assets, gains or losses on the repurchase of shares or debt and the related income tax effect of these adjustments, and any significant deferred tax write-offs or recoveries.  The company also excludes the following recurring charges: restructuring costs, total stock-based compensation (including option and restricted stock expense), the amortization of intangible assets (except amortization of computer software), and the related income tax effect of these adjustments.  The term adjusted net earnings does not have any standardized meaning prescribed by GAAP and is not necessarily comparable to similar measures presented by other companies. Adjusted net earnings 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. The company has provided a reconciliation of adjusted net earnings, which is a non-GAAP measure, to Canadian GAAP net earnings (loss) below.

About Celestica

Celestica is dedicated to delivering end-to-end product lifecycle solutions to drive our customers’ success. Through our simplified global operations network and information technology platform, we are solid partners who deliver informed, flexible solutions that enable our customers to succeed in the markets they serve. Committed to providing a truly differentiated customer experience, our agile and adaptive employees share a proud history of demonstrated expertise and creativity that provides our customers with the ability to overcome any challenge.

For further information on Celestica, visit its website at http://www.celestica.com. The company’s security filings can also be accessed at http://www.sedar.com and http://www.sec.gov.

Safe Harbour and Fair Disclosure Statement

This news release contains forward-looking statements related to our future growth, trends in our industry, our financial and/or operational results including those relating to the redemption of our Senior Subordinated Notes and the expected benefits of such redemption, and our financial or operational performance.  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 any applicable Canadian securities legislation. Forward-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-looking statements:  the challenges of effectively managing our operations during uncertain economic conditions, including significant changes in demand from our customers as a result of an uncertain or weak economic environment; the risk of potential non-performance by counterparties, including but not limited to financial institutions, customers and suppliers; the effects of price competition and other business and competitive factors generally affecting the EMS industry, including changes in the trend for outsourcing; our dependence on a limited number of customers; variability of operating results among periods; the challenge of managing our financial exposures to foreign currency fluctuations; the challenge of responding to changes in customer demand; our inability to retain or grow our business due to execution problems resulting from significant headcount reductions, plant closures and product transfers associated with restructuring activities; our dependence on industries affected by rapid technological change; our ability to

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successfully manage our international operations; and the delays in the delivery and/or general availability of various components and materials used in our manufacturing process.  These and other risks and uncertainties, as well as other information related to the company, are discussed in the Company’s 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 Securities and Exchange Commission and our Annual Information Form filed with the Canadian Securities Commissions. 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.

As of its date, this press release contains any material information associated with the Company’s financial results for the fourth quarter ended December 31, 2009 and revenue and adjusted net earnings guidance for the first quarter ending March 31, 2010.  Revenue and earnings guidance is reviewed by the Company’s Board of Directors.  Our revenue and earnings guidance 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 to 90 days; timing and investments associated with ramping new business; 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; technological developments; and the timing and execution of our restructuring plan. 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 referred to above.  It is Celestica’s policy that revenue and earnings guidance is effective on the date given, and will only be updated through a public announcement.

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Adjusted Net Earnings Revised Definition

Beginning with the fourth quarter of 2009, the company revised the definition of its non-GAAP adjusted net earnings metric to exclude (in addition to the items excluded under the previous definition) all stock-based compensation expense (consisting of option and restricted stock expense) to allow for a better comparison with its major North American EMS competitors.

For consistency, Celestica has made similar changes in the definitions of the following additional non-GAAP metrics: adjusted gross margin; adjusted selling, general and administrative expenses (SG&A); earnings before interest, amortization and taxes (EBIAT or adjusted operating margin); adjusted net earnings per share; and return on invested capital (ROIC).

Prior to this quarter, option expense was the only stock-based compensation item excluded from the adjusted net earnings definition and other non-GAAP metrics. As a result of the changed definitions, Celestica now excludes (in addition to the items excluded under the previous definition) restricted stock expense and any other stock compensation expense that may arise, which it did not exclude under the previous definition.

All non-GAAP measures disclosed in this release, including comparables for prior periods, reflect the revised definitions, unless otherwise specified.

Set out below is a table showing these metrics, the impact on these metrics from the definition change, and a reconciliation of these metrics to the most comparable GAAP metrics. A supplemental information table showing side-by-side comparisons reflecting the impact of this definition change for each quarter of 2008 and 2009, and on an annual basis for the years 2005 to 2009, is available in the Investor Relations section at www.celestica.com.

While Celestica only provides guidance for adjusted net earnings for the upcoming quarter, please note that financial estimates with respect to Celestica for the fourth quarter of 2009 and for future periods, published by third-party research analysts, institutional investors, the media and other organizations prior to and possibly following this press release, may solely reflect Celestica’s previous definition of adjusted net earnings, may not reflect Celestica’s revised definition of adjusted net earnings, and may be subject to change by these persons to reflect our definition change.

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

(1)          Total stock-based compensation, comprised of option and restricted stock expense, 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 the calculation of these metrics.

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The following table shows (in millions of U.S. dollars, except per share amounts) how the revised definition has resulted in an increase or decrease in certain items and operating metrics as compared to the amounts previously reported using the previous definition:

(a) excluded the impact of a mark-to-market accounting adjustment related to restricted stock 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(a) to the December 31, 2009 interim 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 as shown in the “Reconciliation of GAAP to adjusted net earnings” table above. 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, as shown in the “Reconciliation of GAAP to adjusted net earnings” table above. 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 no such measure is therefore likely to be 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 EBIAT (adjusted operating margin) 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 on the repurchase of shares or debt, and the related income 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 stock expense), amortization of intangible assets (except amortization of computer software), interest expense or income, and the related income tax effect of these 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 therefore unlikely to be 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)         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 of ROIC commencing with the results for the fourth quarter of 2009. The ROIC metric used by the company 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 and a five-point average to calculate average net invested capital for the year. Management believes ROIC is an appropriate metric for management, as well as investors, to compare operating performance from period-to-period. The term ROIC does not have any standardized meaning prescribed by Canadian or U.S. GAAP and is therefore unlikely to be 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 GAAP.

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(6)          Management uses free cash flow as a measure to assess cash flow performance.  Free cash flow is calculated as cash generated from operations less capital expenditures (net of proceeds from the sale of surplus property and equipment).  Management believes free cash flow is an appropriate metric 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 therefore unlikely to be 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.

GUIDANCE SUMMARY

(7)          The company’s published guidance on October 22, 2009 for adjusted net earnings per share of $0.14 to $0.20 did not reflect the revised definition for this metric. The guidance for adjusted net earnings per share using the revised definition would have been $0.16 to $0.22. The company’s adjusted net earnings per share for the fourth quarter was $0.21 and met the high end of this range.

(8)          Guidance for the first quarter of 2010 is provided only on an adjusted net earnings basis.  This is due to the difficulty in forecasting the various items impacting GAAP net earnings, such as the amount and timing of our restructuring and debt repurchase activities.

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CELESTICA INC.

CONSOLIDATED BALANCE SHEETS

(in millions of U.S. dollars)

Guarantees and contingencies (note 9)

Subsequent events (note 12)

See accompanying notes to unaudited consolidated financial statements.

These unaudited interim consolidated financial statements should be read in conjunction with the

2008 annual consolidated financial statements.

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CELESTICA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions of U.S. dollars, except per share amounts)

See accompanying notes to unaudited consolidated financial statements.

These unaudited interim consolidated financial statements should be read in conjunction with the

2008 annual consolidated financial statements.

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CELESTICA INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions of U.S. dollars)

See accompanying notes to unaudited consolidated financial statements.

These unaudited interim consolidated financial statements should be read in conjunction with the

2008 annual consolidated financial statements.

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CELESTICA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions of U.S. dollars)

Supplemental cash flow information (note 6)

See accompanying notes to unaudited consolidated financial statements.

These unaudited interim consolidated financial statements should be read in conjunction with the

2008 annual consolidated financial statements.

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CELESTICA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions of U.S. dollars, except per share amounts)

(unaudited)

1.     Basis of presentation and significant accounting policies:

We prepare our financial statements in accordance with generally accepted accounting principles (GAAP) in Canada.

The disclosures contained in these unaudited interim consolidated financial statements do not include all requirements of Canadian GAAP for annual financial statements.  These unaudited interim consolidated financial statements should be read in conjunction with the 2008 annual consolidated financial statements.  These unaudited interim consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present fairly our financial position as at December 31, 2009 and the results of operations, comprehensive income (loss), and cash flows for the three months and years ended December 31, 2008 and 2009.

Use of estimates:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.  We applied significant estimates and assumptions to our valuations against inventory and income taxes, to the amount and timing of restructuring charges or recoveries, to the fair values used in testing long-lived assets, and to valuing our pension costs.  We evaluate our estimates and assumptions on a regular basis, based on historical experience and other relevant factors. Actual results could differ materially from those estimates and assumptions, especially in light of the economic environment and uncertainties.

These unaudited interim consolidated financial statements are based upon accounting principles consistent with those used and described in the 2008 annual consolidated financial statements, except for the following:

Changes in accounting policies:

(i)          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 computer software assets on our consolidated balance sheet from property, plant and equipment to intangible assets.  We have also reclassified computer software amortization on our consolidated statement of operations from depreciation expense, included in selling, general and administrative expenses, to amortization of intangible assets.  There is no impact on previously reported net earnings or loss.

Intangible assets:

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CELESTICA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions of U.S. dollars, except per share amounts)

(unaudited)

Amortization expense is as follows:

Recently issued accounting pronouncements:

(a)  International financial reporting standards (IFRS):

In February 2008, the Canadian Accounting Standards Board announced the adoption of IFRS for publicly accountable enterprises. IFRS will replace Canadian GAAP effective January 1, 2011.  IFRS is effective for our first quarter of 2011 and will require that we restate our 2010 comparative numbers under IFRS.  Our IFRS transition plan is progressing according to our implementation schedule. We will disclose our preliminary IFRS accounting policy decisions in our 2009 annual management’s discussion and analysis. Although we have identified key accounting policy differences, we cannot at this time determine the impact of IFRS on our consolidated financial statements.

(b)  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 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 the IFRS on business combinations.  This standard is applied prospectively to business combinations with acquisition dates on or after January 1, 2011.  We are currently evaluating the impact of adopting this standard on our consolidated financial statements.

(c)  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.

(d)  Financial instruments — disclosures:

Effective December 31, 2009, we adopted the amendment issued by the CICA to 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 and will be included in our 2009 annual consolidated financial statements.

2.     Inventories:

During 2009, we recorded a net inventory valuation reversal through cost of sales of $1.0 to reflect changes in the value of our inventory to net realizable value.

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CELESTICA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions of U.S. dollars, except per share amounts)

(unaudited)

3.              Long-term debt:

(a)          In April 2009, we renewed our revolving credit facility on generally similar terms and conditions, and reduced the size from $300.0 to $200.0, with a maturity of April 2011.  Under the terms of the renewed facility, borrowings bear a higher interest rate than under the previous terms and we are required to comply with certain restrictive covenants relating to debt incurrence, the sale of assets, a change of control and certain financial covenants related to indebtedness, interest coverage and liquidity.  There were no borrowings outstanding under the facility at December 31, 2009.  Commitment fees for 2009 were $2.1. We were in compliance with all covenants at December 31, 2009.  Based on the required financial ratios at December 31, 2009, we have full access to this facility.

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

(b)         In June 2004, we issued the 2011 Notes with a principal amount of $500.0 and a fixed interest rate of 7.875%.  In June 2005, we issued the 2013 Notes with a principal amount of $250.0 and a fixed interest rate of 7.625%.  We repurchased the 2011 Notes in the first and fourth quarters of 2009. See notes 3(d) and (e). In January 2010, we announced our intention to redeem our 2013 Notes.  See note 12.

The 2013 Notes are unsecured and subordinated in right of payment to our secured debt.  The 2013 Notes have restrictive covenants that limit our ability to pay dividends, repurchase our own stock or repay debt that is subordinated to the Notes.  These covenants also place limitations on the sale of assets and our ability to incur additional debt.   We were in compliance with all covenants at December 31, 2009.

(c)          In connection with the 2011 Notes, we entered into agreements to swap the fixed interest rate with a variable interest rate based on LIBOR plus a margin.  In February 2009, we terminated the interest rate swap agreements.  Interest on the 2011 Notes was fixed at 7.875% after termination of the swap agreement through to the redemption of the debt in the fourth quarter of 2009. The average interest rate was 7.875% and 7.0%, respectively, for the fourth quarter of 2009 and year ended December 31, 2009, through to the redemption of the debt (6.9% and 6.5%, respectively, for the fourth quarter of 2008 and year ended December 31, 2008).  See note 3(d).

(d)         In March 2009, we paid $149.7, excluding accrued interest, to repurchase 2011 Notes with a principal amount of $150.0.  In November 2009, we redeemed the remaining 2011 Notes and paid $346.1, excluding accrued interest, to repurchase 2011 Notes with a principal amount of $339.4. We recognized a gain of $9.1 in the first quarter of 2009 and a gain of $10.4 in the fourth quarter of 2009 on the repurchase of the 2011 Notes which we recorded in other charges.  See note 4.  The gains on the repurchases were measured based on the carrying value

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CELESTICA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions of U.S. dollars, except per share amounts)

(unaudited)

of the repurchased portion of the 2011 Notes on the dates of repurchase.  In the first quarter of 2009, we terminated the interest rate swap agreements related to the 2011 Notes and received $14.7 in cash, excluding accrued interest, as settlement of these agreements. In connection with the termination of the swap agreements, we discontinued fair value hedge accounting on the 2011 Notes. In the first quarter of 2009, we recorded a write-down, through other charges, of $15.6 in the carrying value of the embedded prepayment option on the 2011 Notes to reflect the change in fair value upon hedge de-designation. See note 4. We amortized the historical fair value adjustment on the 2011 Notes until the Notes were repaid, using the effective interest rate method.  This amortization is recorded as a reduction of interest expense on long-term debt. Also see note 12.

(e)          During the fourth quarter of 2008, we paid a total of $30.4, excluding accrued interest, to repurchase 2011 Notes with a principal amount of $10.6 and to repurchase 2013 Notes with a principal amount of $26.9. We recognized a gain of $7.6 on the repurchase of the Notes which we recorded in other charges.  See note 4.  The gain on the repurchase was measured based on the carrying values of the repurchased portion of the Notes on the dates of repurchase.

(f)        The prepayment option in our Notes qualify as embedded derivatives which we bifurcated for reporting. As of December 31, 2009, the fair value of the embedded derivative asset is $1.5 for the 2013 Notes and is recorded against long-term debt.  The decrease in the fair value of the embedded derivative asset from December 31, 2008 primarily reflects the write-down upon hedge de-designation described in note 3(d). We also recorded a write-down, through other charges, of $1.1 to eliminate the carrying value of the embedded prepayment option on the 2011 Notes in the third quarter of 2009, when we announced our intention to redeem the 2011 Notes.  See note 4.  As a result of bifurcating the prepayment option, a basis adjustment is added to the cost of long-term debt. We amortize the basis adjustment over the term of the debt using the effective interest rate method.  The amortization of the basis adjustment is recorded as a reduction of interest expense on long-term debt.

The unamortized fair value adjustment on the 2011 Notes attributable to movements in the benchmark interest rates decreased from $40.9 at December 31, 2008 to zero at December 31, 2009 primarily as a result of the debt repurchases and hedge de-designation described in note 3(d). After the hedge de-designation, we amortized the fair value adjustment to interest expense on long-term debt until the 2011 Notes were redeemed. Upon redemption of the 2011 Notes in the fourth quarter of 2009, the related basis adjustment, the unamortized debt issue costs and the unamortized fair value adjustment were eliminated in determining the gain that we recorded in other charges.

We applied fair value hedge accounting to our interest rate swaps and our hedged debt obligation (2011 Notes) until February 2009.  We also mark-to-market the bifurcated embedded prepayment options in our debt instruments until the options are extinguished.  The changes in the fair values each period are recorded in interest expense on long-term debt, except for the write-down of the embedded prepayment option due to hedge de-designation or debt repurchase which is recorded in other charges.  The mark-to-market adjustment fluctuates each period as it is dependent on market conditions, including future interest rates, implied volatility and credit spreads.  The impact on our results of operations is as follows:

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CELESTICA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions of U.S. dollars, except per share amounts)

(unaudited)

4.              Other charges (recoveries):

(a)       Restructuring:

In January 2008, we estimated that a restructuring charge of between $50 and $75 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 and $100. Combined, we expect to incur total restructuring charges of between $150 and $175 associated with this program.  During 2008 and 2009, we recorded a total of $118.4 in restructuring charges. Of that amount, $13.5 was recorded in the fourth quarter of 2009.  We expect to complete these restructuring actions by the end of 2010.  We recognize the restructuring charges as the detailed plans are finalized.

Our restructuring actions include consolidating facilities and reducing our workforce. The majority of the employees terminated are manufacturing and plant employees in the Americas, Europe and the Philippines.  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 are 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 timing of sublease recoveries, changes in estimated sublease rates, or changes in use, relating principally to facilities in the Americas.  We expect our long-term lease and other contractual obligations to be paid out over the remaining lease terms through 2015.  Our restructuring liability is recorded in accrued liabilities.

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CELESTICA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions of U.S. dollars, except per share amounts)

(unaudited)

Details of the 2009 activity are as follows: