10-KPeriod: FY2001

CELESTICA INC Annual Report, Year Ended Dec 31, 2001

Filed May 3, 2002For Securities:CLS

Summary

Celestica Inc.'s 2001 annual report filed on May 3, 2002, shows a year of significant revenue growth alongside a notable net loss, largely driven by aggressive acquisition activity and substantial restructuring charges. Revenue climbed to $10 billion, a slight increase from 2000, boosted by acquisitions that offset a decline in existing business volumes due to a slowdown in the technology and telecommunications markets. However, the company recorded a net loss of $39.8 million for the year, a reversal from its $206.7 million profit in 2000, primarily due to $273.1 million in "other charges," which included $237.0 million for restructuring and a $36.1 million asset write-down. Despite the reported loss, Celestica's balance sheet strengthened with a substantial increase in cash and short-term investments to $1.34 billion and a significant rise in shareholders' equity to $4.75 billion. The company's strategic focus in 2001 was on expanding its geographic reach and customer base through numerous acquisitions, notably Omni Industries Limited and assets from Avaya Inc. and Lucent Technologies Inc. Management is focused on improving operating efficiency and leveraging the benefits of these acquisitions, anticipating positive impacts in the upcoming year. Investors should note the company's continued reliance on a few major customers, which collectively represented 55% of 2001 revenue, as a key risk factor.

Key Highlights

  • 1Revenue reached $10.0 billion in 2001, a 3% increase from $9.75 billion in 2000, driven by acquisitions which offset a 11% decline in base business volumes.
  • 2The company reported a net loss of $39.8 million in 2001, a significant downturn from a net profit of $206.7 million in 2000, primarily due to $273.1 million in restructuring and asset impairment charges.
  • 3Cash and short-term investments significantly increased to $1.34 billion as of December 31, 2001, up from $883.8 million at the end of 2000, indicating strong liquidity.
  • 4Shareholders' equity grew to $4.75 billion as of December 31, 2001, from $3.47 billion in 2000, reflecting the impact of acquisitions and retained earnings.
  • 5Celestica continued its aggressive acquisition strategy in 2001, completing several significant transactions to expand its geographic reach and customer base.
  • 6The company's top three customers (IBM, Sun Microsystems, and Lucent Technologies) accounted for 55% of total revenue in 2001, highlighting a significant customer concentration risk.

Frequently Asked Questions

Celestica reported a significant net loss of $39.8 million in 2001, a sharp contrast to the $206.7 million profit in 2000. This was largely due to $273.1 million in 'other charges,' which included substantial restructuring costs ($237.0 million) and asset write-downs. Despite the loss, revenue grew slightly to $10.0 billion, primarily driven by acquisitions that offset a decline in existing business due to market slowdowns.

Revenue increased by 3% to $10.0 billion. This growth was mainly attributed to the inclusion of revenue from businesses acquired during the year, which helped to offset an 11% decline in sales from existing operations. The company continued its strategy of growth through acquisitions, particularly in the communications sector.

Key risks include the company's substantial dependence on a limited number of large customers (the top three accounted for 55% of 2001 revenue), fluctuations in operating results due to customer order variability and component constraints, exposure to general economic conditions impacting the technology and communications industries, and the risks associated with ongoing expansion and integration of acquired businesses. The company also faces competitive pressures and potential currency fluctuations.

Celestica's balance sheet showed improved liquidity, with cash and short-term investments increasing to $1.34 billion from $883.8 million in 2000. Shareholders' equity also saw a substantial increase, rising to $4.75 billion from $3.47 billion. The company's two credit facilities totaling $1.0 billion were undrawn at year-end 2001, indicating a strong financial position.