Document


	Note	December 31 2022		March 31 2023

Assets
Current assets:
Cash and cash equivalents		$	374.5	$	318.7
Accounts receivable	4	1,393.5		1,260.1
Inventories	5&12	2,350.3		2,403.3
Income taxes receivable		5.9		5.3

Other current assets	12	202.8		188.5
Total current assets		4,327.0		4,175.9

Property, plant and equipment		371.5		376.1
Right-of-use assets		138.8		133.1
Goodwill		321.8		321.6
Intangible assets		346.5		336.6
Deferred income taxes		68.9		72.5
Other non-current assets		53.5		52.3
Total assets		$	5,628.0	$	5,468.1

Liabilities and Equity
Current liabilities:
Current portion of borrowings under credit facility and lease obligations	6	$	52.2	$	51.1
Accounts payable		1,440.8		1,338.7
Accrued and other current liabilities	5	1,462.2		1,426.6
Income taxes payable		82.1		88.8
Current portion of provisions		17.9		19.8
Total current liabilities		3,055.2		2,925.0

Long-term portion of borrowings under credit facility and lease obligations	6	733.9		724.1
Pension and non-pension post-employment benefit obligations		77.0		79.3
Provisions and other non-current liabilities		32.5		34.7
Deferred income taxes		51.7		49.5
Total liabilities		3,950.3		3,812.6

Equity:
Capital stock	7	1,714.9		1,699.5
Treasury stock	7	(18.5)		(10.3)
Contributed surplus		1,063.6		1,027.9
Deficit		(1,076.6)		(1,051.9)
Accumulated other comprehensive loss		(5.7)		(9.7)
Total equity		1,677.7		1,655.5
Total liabilities and equity		$	5,628.0	$	5,468.1


		Three months ended
		March 31
	Note	2022		2023

Revenue	3	$	1,566.9	$	1,837.8
Cost of sales	5	1,434.4		1,673.8
Gross profit		132.5		164.0
Selling, general and administrative expenses		65.7		77.9
Research and development		11.4		12.1
Amortization of intangible assets		10.0		10.0
Other charges	8	4.8		4.6
Earnings from operations		40.6		59.4
Finance costs	6	9.8		21.7
Earnings before income taxes		30.8		37.7
Income tax expense (recovery)	9
Current		13.5		17.9
Deferred		(4.5)		(4.9)
		9.0		13.0
Net earnings for the period		$	21.8	$	24.7

Basic earnings per share		$	0.17	$	0.20
Diluted earnings per share		$	0.17	$	0.20

Shares used in computing per share amounts (in millions):
Basic		124.6		121.5
Diluted		124.7		121.6


	Three months ended
	March 31
	2022		2023

Net earnings for the period	$	21.8	$	24.7
Other comprehensive income (loss), net of tax:


Items that may be reclassified to net earnings:
Currency translation differences for foreign operations	(2.8)		(1.5)
Changes from currency forward derivative hedges	3.0		1.1
Changes from interest rate swap derivative hedges	10.5		(3.6)
Total comprehensive income for the period	$	32.5	$	20.7


	Note	Capital stock (note 7)		Treasury stock (note 7)		Contributed surplus		Deficit		Accumulated other comprehensive loss (a)		Total equity


Balance -- January 1, 2022		$	1,764.5	$	(48.9)	$	1,029.8	$	(1,255.6)	$	(26.8)	$	1,463.0

Capital transactions:	7
Issuance of capital stock		0.2		—		(0.1)		—		—		0.1
Repurchase of capital stock for cancellation(b)		(10.8)		—		10.5		—		—		(0.3)
Purchase of treasury stock for stock-based compensation (SBC) plans (c)		—		(1.0)		—		—		—		(1.0)
Equity-settled SBC		—		30.9		(15.8)		—		—		15.1
Total comprehensive income (loss):
Net earnings for the period		—		—		—		21.8		—		21.8
Other comprehensive income (loss), net of tax:


Currency translation differences for foreign operations		—		—		—		—		(2.8)		(2.8)
Changes from currency forward derivative hedges		—		—		—		—		3.0		3.0
Changes from interest rate swap derivative hedges		—		—		—		—		10.5		10.5
Balance -- March 31, 2022		$	1,753.9	$	(19.0)	$	1,024.4	$	(1,233.8)	$	(16.1)	$	1,509.4

Balance -- January 1, 2023		$	1,714.9	$	(18.5)	$	1,063.6	$	(1,076.6)	$	(5.7)	$	1,677.7
Capital transactions:	7
Issuance of capital stock		0.1		—		(0.1)		—		—		—
Repurchase of capital stock for cancellation (d)		(15.5)		1.8		(1.9)		—		—		(15.6)
SBC cash settlement	7	—		—		(49.8)		—		—		(49.8)
Equity-settled SBC		—		6.4		16.1		—		—		22.5
Total comprehensive income (loss):
Net earnings for the period		—		—		—		24.7		—		24.7
Other comprehensive income (loss), net of tax:

Currency translation differences for foreign operations		—		—		—		—		(1.5)		(1.5)
Changes from currency forward derivative hedges		—		—		—		—		1.1		1.1
Changes from interest rate swap derivative hedges		—		—		—		—		(3.6)		(3.6)
Balance -- March 31, 2023		$	1,699.5	$	(10.3)	$	1,027.9	$	(1,051.9)	$	(9.7)	$	1,655.5

(b)Consists of $7.8 paid to repurchase subordinate voting shares (SVS) for cancellation under our normal course issuer bid during the first quarter of 2022, substantially offset by the reversal of $7.5 accrued as of December 31, 2021 for the estimated contractual maximum number of permitted SVS repurchases (Contractual Maximum Quantity) under an automatic share purchase plan (ASPP) executed in December 2021 for such purpose (see note 7).


		Three months ended
		March 31
	Note	2022		2023

Cash provided by (used in):
Operating activities:
Net earnings for the period		$	21.8	$	24.7
Adjustments to net earnings for items not affecting cash:
Depreciation and amortization		35.9		38.3
Employee SBC expense	7	14.6		22.0
Total return swap fair value adjustments		—		0.2
Other charges	8	0.3		—
Finance costs		9.8		21.7
Income tax expense		9.0		13.0
Other		0.7		3.3
Changes in non-cash working capital items:
Accounts receivable		16.9		133.5
Inventories		(237.8)		(53.0)
Other current assets		(10.5)		8.6
Accounts payable, accrued and other current liabilities and provisions		183.8		(129.2)
Non-cash working capital changes		(47.6)		(40.1)

Net income tax paid		(9.2)		(10.8)
Net cash provided by operating activities		35.3		72.3

Investing activities:

Purchase of computer software and property, plant and equipment		(16.4)		(33.1)

Net cash used in investing activities		(16.4)		(33.1)

Financing activities:



Repayments under term loans	6	(4.6)		(4.6)
Lease payments		(11.2)		(11.3)
Issuance of capital stock		0.1		—
Repurchase of capital stock for cancellation	7	(7.8)		(10.6)
Purchase of treasury stock for stock-based plans	7	(34.8)		—
SBC cash settlement	7	—		(49.8)
Finance costs paid(a)	6	(8.0)		(18.7)
Net cash used in financing activities		(66.3)		(95.0)

Net decrease in cash and cash equivalents		(47.4)		(55.8)
Cash and cash equivalents, beginning of period		394.0		374.5
Cash and cash equivalents, end of period		$	346.6	$	318.7

These unaudited interim condensed consolidated financial statements for the quarter ended March 31, 2023 (Q1 2023 Interim Financial Statements) have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, and the accounting policies we have adopted in accordance with International Financial Reporting Standards (IFRS), in each case as issued by the International Accounting Standards Board (IASB), and reflect all adjustments that are, in the opinion of management, necessary to present fairly our financial position as of March 31, 2023 and our financial performance, comprehensive income and cash flows for the three months ended March 31, 2023 (referred to herein as Q1 2023). The Q1 2023 Interim Financial Statements should be read in conjunction with our 2022 audited consolidated financial statements (2022 AFS), which are included in our Annual Report on Form 20-F for the year ended December 31, 2022. The Q1 2023 Interim Financial Statements are presented in United States (U.S.) dollars, which is also Celestica's functional currency. Unless otherwise noted, all financial information is presented in millions of U.S. dollars (except percentages and per share amounts).

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies, the reported amounts of assets, liabilities, revenue and expenses, and related disclosures with respect to contingent assets and liabilities. We base our judgments, estimates and assumptions on current facts (including, in recent periods, the prolonged impact of global supply chain constraints and the impact of the fire event in June 2022 described in note 12), historical experience and various other factors that we believe are reasonable under the circumstances. The economic environment also impacts certain estimates and discount rates necessary to prepare our consolidated financial statements, including significant estimates and discount rates applicable to the determination of the recoverable amounts used in the impairment testing of our non-financial assets. Our assessment of these factors forms the basis for our judgments on the carrying values of our assets and liabilities, and the accrual of our costs and expenses. Actual results could differ materially from our estimates and assumptions. We review our estimates and underlying assumptions on an ongoing basis and make revisions as determined necessary by management. Revisions are recognized in the period in which the estimates are revised and may also impact future periods.

Our review of the estimates, judgments and assumptions used in the preparation of the Q1 2023 Interim Financial Statements included those relating to, among others: our determination of the timing of revenue recognition, the determination of whether indicators of impairment existed for our assets and cash generating units (CGUs1), our measurement of deferred tax assets and liabilities, our estimated inventory write-downs and expected credit losses, and customer creditworthiness. Any revisions to estimates, judgments or assumptions may result in, among other things, write-downs, accelerated depreciation or amortization, or impairment of our assets or CGUs, and/or adjustments to the carrying amount of our accounts receivable and/or inventories, or to the valuation of our deferred tax assets, any of which could have a material impact on our financial performance and financial condition.

In January 2020, the IASB issued Classification of liabilities as current or non-current (Amendments to IAS 1) to clarify how to classify debt and other liabilities as current or non-current. The amendments are effective for reporting periods beginning on or after January 1, 2024. We will adopt this standard as of January 1, 2024, and are in the process of evaluating the impact of the adoption of this standard on our consolidated financial statements.

In February 2021, the IASB issued Definition of accounting estimates (Amendments to IAS 8) to clarify the distinction between accounting policies and accounting estimates. The amendments are effective for reporting periods beginning on or after January 1, 2023. We adopted this standard as of January 1, 2023. The adoption of this standard had no material impact on our consolidated financial statements.

In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 “Making Materiality Judgements”, which provide guidance and examples to help entities apply materiality judgements to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their “significant” accounting policies with a requirement to disclose their material accounting policies and adding guidance on how entities are to apply the concept of materiality in making decisions about accounting policy disclosures. These amendments are applicable for annual periods beginning on or after January 1, 2023. These amendments, which we adopted as of such date, had no material impact and will be reflected in our 2023 consolidated financial statements.

In May 2021, the IASB issued Deferred tax related to assets and liabilities arising from a single transaction (Amendments to IAS 12 Income Taxes) to clarify how to account for deferred tax on transactions such as leases and decommissioning obligations. The amendments are effective for reporting periods beginning on or after January 1, 2023. We adopted this standard as of January 1, 2023. The adoption of this standard had no material impact on our consolidated financial statements.

In May 2017, the IASB issued IFRS 17 Insurance Contracts. IFRS 17 replaces IFRS 4 and sets out principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of IFRS 17. This standard is effective for reporting periods beginning on or after January 1, 2023. We adopted this standard as of January 1, 2023. The adoption of this standard had no material impact on our consolidated financial statements.

Celestica delivers innovative supply chain solutions globally to customers in two operating and reportable segments: Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS). Our ATS segment consists of our ATS end market, and is comprised of our Aerospace and Defense (A&D), Industrial, HealthTech and Capital Equipment businesses. Our CCS segment consists of our Communications and Enterprise (servers and storage) end markets. See note 25 to our 2022 AFS for a description of the businesses that comprise our segments. Segment performance is evaluated based on segment revenue, segment income and segment margin (segment income as a percentage of segment revenue). Segment income is defined as a segment’s net revenue less its cost of sales and its allocable portion of selling, general and administrative expenses and research and development expenses (collectively, Segment Costs). Identifiable Segment Costs are allocated directly to the applicable segment while other Segment Costs, including indirect costs and certain corporate charges, are allocated to our segments based on an analysis of the relative usage or benefit derived by each segment from such costs. Segment income for the periods set

forth below excludes finance costs (defined in note 6), employee stock-based compensation (SBC) expense, amortization of intangible assets (excluding computer software), and other charges (the components of which are described in note 8), as these costs and charges are managed and reviewed by our Chief Executive Officer (CEO) at the company level. In December 2022, we entered into a total return swap (TRS) agreement (TRS Agreement). Commencing in Q1 2023, TRS fair value adjustments (TRS FVAs) are also excluded in our determination of segment income, as similar to employee SBC expense, they are managed and reviewed by our CEO at the company level. Although segment income and segment margin are used to evaluate the performance of our segments, we may incur operating costs in one segment that may also benefit the other segment. Our accounting policies for segment reporting are the same as those applied to Celestica as a whole.


Segment income, segment margin, and reconciliation of segment income to IFRS earnings before income taxes:		Three months ended March 31
	Note	2022				2023
				Segment Margin				Segment Margin
ATS segment income and margin		$	35.1	5.0	%	$	34.6	4.4	%
CCS segment income and margin		34.2		3.9	%	60.8		5.8	%
Total segment income		69.3				95.4
Reconciling items:
Finance costs	6	9.8				21.7
Employee SBC expense		14.6				22.0
TRS FVAs	10	—				0.2
Amortization of intangible assets (excluding computer software)		9.3				9.2
Other charges	8	4.8				4.6


IFRS earnings before income taxes		$	30.8			$	37.7

From time to time, we experience some level of seasonality in our quarterly revenue patterns across certain of our businesses. Typically, revenue from our Enterprise end market decreases in the first quarter of the year compared to the previous quarter, and then increases in the second quarter, reflecting an increase in customer demand. We also typically experience our lowest overall revenue levels during the first quarter of each year. There can be no assurance that these patterns will continue. The addition of new customers has also introduced different demand cycles from our existing customers, creating more volatility and unpredictability in our revenue patterns. These and other factors make it difficult to isolate the impact of seasonality on our business.

We are party to an A/R sales program agreement with a third-party bank to sell up to $450.0 (as amended at the end of March 2023 to increase the prior limit of $405.0) in A/R on an uncommitted, revolving basis, subject to pre-determined limits by customer. This agreement provides for automatic annual one-year extensions, and may be terminated at any time by the bank or by us upon 3 months’ prior notice, or by the bank upon specified defaults. Under our A/R sales program, we continue to collect cash from our customers and remit amounts collected to the bank weekly.

At March 31, 2023, we sold $282.6 of A/R (December 31, 2022 — $245.6) under our A/R sales program, and $128.2 of A/R (December 31, 2022 — $105.6) under the SFPs. The A/R sold under each of these programs are de-recognized from our A/R balance at the time of sale, and the proceeds are reflected as cash provided by operating activities in our consolidated statement of cash flows. Upon sale, we assign the rights to the A/R to the banks. A/R are sold net of discount charges, which are recorded as finance costs in our consolidated statement of operations.

We record inventory write-downs, net of valuation recoveries, in cost of sales. Inventories are valued at the lower of cost and net realizable value. Inventory write-downs reflect the write-down of inventory to its net realizable value. Valuation recoveries primarily reflect gains on the disposition of previously written-down inventory. We recorded net inventory write-downs of $13.8 for Q1 2023 (Q1 2022 — $2.5). The accounting treatment of inventories destroyed in a fire event in June 2022 is described in note 12.

We receive cash deposits from certain of our customers primarily to help mitigate the impact of higher inventory levels carried due to the current constrained materials environment, and to reduce risks related to excess and/or obsolete inventory. Such deposits as of March 31, 2023 totaled $810.8 (December 31, 2022 — $825.6), and were recorded in accrued and other current liabilities on our consolidated balance sheet.

We are party to a credit agreement (Credit Facility) with Bank of America, N.A., as Administrative Agent, and the other lenders party thereto, which includes a term loan in the original principal amount of $350.0 (Initial Term Loan), a term loan in the original principal amount of $365.0 (Incremental Term Loan), and a $600.0 revolving credit facility (Revolver). The Initial Term Loan and the Incremental Term Loan are collectively referred to as the Term Loans.

Borrowings under the Revolver bear interest, depending on the currency of the borrowing and our election for such currency, at LIBOR, Base Rate, Canadian Prime, an Alternative Currency Daily Rate, or an Alternative Currency Term Rate (each as defined in the Credit Facility) plus a specified margin. The margin for borrowings under the Revolver and the Incremental Term Loan ranges from 1.50% — 2.25% for LIBOR borrowings and Alternative Currency borrowings, and between 0.50% — 1.25% for Base Rate and Canadian Prime borrowings, in each case depending on the rate we select and our consolidated leverage ratio (as defined in the Credit Facility). Commitment fees range between 0.30% and 0.45% depending on our consolidated leverage ratio. The Initial Term Loan currently bears interest at LIBOR plus 2.125%. The Incremental Term Loan currently bears interest at LIBOR plus 2.0%. See note 10 for a description of the LIBOR successor provisions under the Credit Facility.

The Incremental Term Loan requires quarterly principal repayments of $4.5625, and each of the Term Loans requires a lump sum repayment of the remainder outstanding at maturity. The Initial Term Loan required quarterly principal repayments of $0.875, all of which have been paid in prior years. We are also required to make annual prepayments of outstanding obligations under the Credit Facility (applied first to the Term Loans, then to the Revolver, in the manner set forth in the Credit Facility) ranging from 0% — 50% (based on a defined leverage ratio) of specified excess cash flow for the prior fiscal year. No prepayments based on 2022 excess cash flow will be required in 2023. In addition, prepayments of outstanding obligations under the Credit Facility (applied as described above) may also be required in the amount of specified net cash proceeds received above a specified annual threshold (including proceeds from the disposal of certain assets). No Credit Facility prepayments based on 2022 net cash proceeds will be required in 2023. Any outstanding amounts under the Revolver are due at maturity.


	Revolver (1)		Term loans
Outstanding balances as of December 31, 2021	$	—	$	660.4

Amount repaid in Q1 2022(2)	—		(4.5625)


Amount repaid in Q2 2022(2)	—		(4.5625)


Amount repaid in Q3 2022(2)	—		(4.5625)


Amount repaid in Q4 2022(3)	—		(19.5625)
Outstanding balances as of December 31, 2022	$	—	$	627.2


Amount repaid in Q1 2023(2)	—		(4.5625)
Outstanding balances as of March 31, 2023	$	—	$	622.6


	Outstanding borrowings				Notional amounts under interest rate swaps (note 10)
	December 31 2022		March 31 2023		December 31 2022		March 31 2023
Borrowings under the Revolver	$	—	$	—	$	—	$	—
Borrowings under term loans:
Initial Term Loan	$	280.4	$	280.4	$	100.0	$	100.0
Incremental Term Loan	346.8		342.2		230.0		230.0
Total	$	627.2	$	622.6	$	330.0	$	330.0
Total borrowings under Credit Facility	$	627.2	$	622.6
Unamortized debt issuance costs related to our term loans (1)	(3.5)		(3.3)
Lease obligations(2)	162.4		155.9
	$	786.1	$	775.2
Total Credit Facility and lease obligations:
Current portion	$	52.2	$	51.1
Long-term portion	733.9		724.1
	$	786.1	$	775.2

(1)We incur debt issuance costs upon execution of, subsequent security arrangements under, and amendments to the Credit Facility. No debt issuance costs were incurred in Q1 2023. Debt issuance costs of $0.3 incurred in Q1 2022 in connection with our Revolver were deferred as other assets on our consolidated balance sheet and are amortized on a straight line basis over the remaining term of the Revolver. Debt issuance costs of $0.3 incurred in Q1 2022 in connection with our Term Loans were deferred as long-term debt on our consolidated balance sheet and are amortized over their respective terms using the effective interest rate method.

(2)These lease obligations represent the present value of unpaid lease payment obligations recognized as liabilities as of December 31, 2022 and March 31, 2023, respectively, which have been discounted using our incremental borrowing rate on the lease commencement dates. In addition to these lease obligations, we have commitments under additional real property leases not recognized as liabilities as of March 31, 2023 because such leases had not yet commenced as of such date. A description of these leases and minimum lease obligations thereunder are disclosed in note 24 to the 2022 AFS.

In recent years, we have repurchased SVS in the open market, or as otherwise permitted, for cancellation through normal course issuer bids (NCIBs), which allow us to repurchase a limited number of SVS during a specified period. The maximum number of SVS we are permitted to repurchase for cancellation under each NCIB is reduced by the number of SVS we arrange to be purchased by any non-independent broker in the open market during the term of such NCIB to satisfy delivery obligations under our SBC plans. We from time-to-time enter into automatic share purchase plans (ASPPs) with a broker, instructing the broker to purchase our SVS in the open market on our behalf, either for cancellation under an NCIB (NCIB ASPPs) or for delivery obligations under our SBC plans (SBC ASPPs), including during any applicable trading blackout periods, up to specified maximums (and subject to certain pricing and other conditions) through the term of each ASPP.

On December 2, 2021, the TSX accepted our notice to launch an NCIB (2021 NCIB), which allowed us to repurchase, at our discretion, from December 6, 2021 until the earlier of December 5, 2022 or the completion of purchases thereunder, up to approximately 9.0 million of our SVS in the open market, or as otherwise permitted, subject to the normal terms and limitations of such bids. We entered into an NCIB ASPP in December 2021, which has since expired. As of December 31, 2021, we accrued $7.5, representing the estimated contractual maximum number of permitted SVS repurchases (Contractual Maximum Quantity) under the December 2021 NCIB ASPP (0.7 million SVS), which was reversed in Q1 2022. In December 2021, we entered into an SBC ASPP, which has since expired. We recorded an accrual as of December 31, 2021 of $33.8, representing the estimated Contractual Maximum Quantity (3.0 million SVS) under the December 2021 SBC ASPP, which was reversed in Q1 2022.

On December 8, 2022, the TSX accepted our notice to launch another NCIB (2022 NCIB). The 2022 NCIB allows us to repurchase, at our discretion, from December 13, 2022 until the earlier of December 12, 2023 or the completion of purchases thereunder, up to approximately 8.8 million of our SVS in the open market, or as otherwise permitted, subject to the normal terms and limitations of such bids. As of March 31, 2023, approximately 7.7 million SVS remain available for repurchase under the 2022 NCIB either for cancellation or SBC delivery purposes. In December 2022, we entered into an NCIB ASPP that expired prior to December 31, 2022 (such that no accrual was recorded as of December 31, 2022). We recorded an accrual as of March 31, 2023 of $5.0 (March 2023 NCIB Accrual), representing the contractual maximum spend for SVS repurchases for cancellation under an NCIB ASPP executed in February 2023.


	Three months ended March 31
	2022		2023
Aggregate cost(1) of SVS repurchased for cancellation(2)	$	7.8	$	10.6
Number of SVS repurchased for cancellation (in millions)(3)	0.7		0.8
Weighted average price per share for repurchases	$	11.50	$	13.12
Aggregate cost(1) of SVS repurchased for delivery under SBC plans (see below)	$	34.8	$	—
Number of SVS repurchased for delivery under SBC plans (in millions)(4)	3.0		—

From time to time, we pay cash to a broker to purchase SVS in the open market to satisfy delivery requirements under our SBC plans. At March 31, 2023, the broker held 0.9 million SVS with a value of $10.3 (December 31, 2022 — 1.5 million SVS with a value of $16.7) for this purpose, which we report as treasury stock on our consolidated balance sheet. We used 0.6 million SVS held by the broker to settle SBC awards during Q1 2023.

We grant restricted share units (RSUs) and performance share units (PSUs), and from time-to-time stock options, to employees under our SBC plans. The majority of RSUs vest one-third per year over a three-year period. Stock options generally vest 25% per year over a four-year period. The number of outstanding PSUs that will actually vest varies from 0% to 200% of a target amount granted. For PSUs granted in 2020, 2021 and 2022, the number of PSUs that vested (or will vest) are based on the level of achievement of a pre-determined non-market performance measurement in the final year of the relevant three-year performance period, subject to modification by each of a separate pre-determined non-market financial target, and our relative total shareholder return (TSR), a market performance condition, compared to a pre-defined group of companies, in each case over the relevant three-year performance period. For PSUs granted in Q1 2023, the number of PSUs that will vest are based on the level of achievement of a different predetermined non-market performance measurement, subject to modification by our relative TSR compared to a pre-defined group of companies, in each case over the relevant three-year performance period. We also grant deferred share units (DSUs) and RSUs (under specified circumstances) to directors as compensation under our Directors' Share Compensation Plan. See note 2(l) to the 2022 AFS for further detail.


	Three months ended March 31
	2022		2023
RSUs Granted:
Number of awards (in millions)	1.7		1.8
Weighted average grant date fair value per unit	$	12.42	$	12.75

PSUs Granted:
Number of awards (in millions, representing 100% of target)	1.2		1.3
Weighted average grant date fair value per unit	$	14.40	$	15.01

DSUs Granted:
Number of awards (in millions)	0.03		0.03
Weighted average grant date fair value per unit	$	11.91	$	12.90

In Q1 2023, we recorded $4.3 of cash restructuring charges, primarily for employee termination costs, and nil non-cash restructuring charges. In Q1 2022, we recorded $2.8 of cash restructuring charges, primarily for employee termination costs, and $0.3 of non-cash restructuring charges, primarily for the accelerated depreciation of assets related to disengaging programs. At March 31, 2023, our restructuring provision was $7.0 (December 31, 2022 — $5.8), which we recorded in the current portion of provisions on our consolidated balance sheet.

Transition Costs consist of costs recorded in connection with: (i) the transfer of manufacturing lines from closed sites to other sites within our global network; and (ii) the sale of real properties unrelated to restructuring actions. Transition Costs consist of direct relocation and duplicate costs (such as rent expense, utility costs, depreciation charges, and personnel costs) incurred during the transition periods, as well as cease-use and other costs incurred in connection with idle or vacated portions of the relevant premises that we would not have incurred but for these relocations, transfers and dispositions. We incurred nil Transition Costs during Q1 2023, and $1.5 of Transition Costs in Q1 2022 related to the then-anticipated disposal of certain assets reclassified as held for sale during Q1 2022.

We incur consulting, transaction and integration costs relating to potential and completed acquisitions. We also incur charges or releases related to the subsequent re-measurement of indemnification assets or the release of indemnification or other liabilities recorded in connection with acquisitions, when applicable. Collectively, these costs, charges and releases are referred to as Acquisition Costs (Recoveries).

Our income tax expense or recovery for each quarter is determined by multiplying the earnings or losses before tax for such quarter by management’s best estimate of the weighted-average annual income tax rate expected for the full year, taking into account the tax effect of certain items recognized in the interim period. As a result, the effective income tax rates used in our interim financial statements may differ from management’s estimate of the annual effective tax rate for the annual financial statements. Our estimated annual effective income tax rate varies as the quarters progress, for various reasons, including as a result of the mix and volume of business in various tax jurisdictions within the Americas, Europe and Asia, in jurisdictions with tax holidays and tax incentives, and in jurisdictions for which no net deferred income tax assets have been recognized because management believes it is not probable that future taxable profit will be available against which tax losses and deductible temporary differences could be utilized. Our annual effective income tax rate can also vary due to the impact of restructuring charges, foreign exchange fluctuations, operating losses, cash repatriations, and changes in our provisions related to tax uncertainties.

Our Q1 2023 net income tax expense of $13.0 was favorably impacted by $5.5 in reversals of tax uncertainties in one of our Asian subsidiaries, partially offset by a $1.3 tax expense arising from taxable temporary differences associated with the anticipated repatriation of undistributed earnings from certain of our Chinese subsidiaries. Taxable foreign exchange impacts were not significant in Q1 2023.

In December 2022, we entered into the TRS Agreement with a third-party bank with respect to a notional amount of 3.0 million of our SVS (Notional Amount) to manage our cash flow requirements and exposure to fluctuations in the price of our SVS in connection with the settlement of certain outstanding equity awards under our SBC plans. The counterparty under the TRS Agreement is obligated to make a payment to us upon its termination (in whole or in part) or expiration (Settlement) based on the increase (if any) in the value of the TRS (as defined in the TRS Agreement) over the agreement’s term, in exchange for periodic payments made by us based on the counterparty’s SVS purchase costs and a variable interest rate plus a specified margin. Similarly, if the value of the TRS (as defined in the TRS Agreement) decreases over the term of the TRS Agreement, we are obligated to pay the counterparty the amount of such decrease upon Settlement. The change in value of the TRS is determined by comparing the average amount realized by the counterparty upon the disposition of purchased SVS to the average amount paid for such SVS. As of March 31, 2023, the counterparty had acquired the entire Notional Amount at a weighted average price of $12.73 per share. The TRS Agreement provides for automatic annual one-year extensions (subject to specified conditions), and may be terminated by either party at any time. The TRS does not qualify for hedge accounting. As of March 31, 2023, the fair value of TRS Agreement was an unrealized loss of $0.2, which we recorded in accrued and other current liabilities on our consolidated balance sheet. TRS FVAs (representing the change of fair value of TRS) are recognized in our consolidated statement of operations each quarter. See note 7 for TRS FVAs in Q1 2023.

Borrowings under the Credit Facility expose us to interest rate risk due to the potential variability of market interest rates. In order to partially hedge against our exposure to interest rate variability on our Term Loans, we have entered into various agreements with third-party banks to swap the variable interest rate (based on LIBOR plus a margin) with a fixed rate of interest for a portion of the borrowings under our Term Loans. At March 31, 2023, we had: (i) interest rate swaps hedging the interest rate risk associated with $100.0 of our Initial Term Loan borrowings that expire in August 2023 (Initial Swaps); (ii) interest rate swaps hedging the interest rate risk associated with $100.0 of our Initial Term Loan borrowings, for which the cash flows commence upon the expiration of the Initial Swaps and continue through June 2024 (First Extended Initial Swaps); (iii) interest rate swaps hedging the interest rate risk associated with $100.0 of our Initial Term Loan borrowings (and any subsequent term loans replacing the Initial Term Loan), for which the cash flows commence upon the expiration of the First Extended Initial Swaps and continue through December 2025 (Second Extended Initial Swaps); (iv) interest rate swaps hedging the interest rate risk associated with $100.0 of outstanding borrowings under the Incremental Term Loan that expire in December 2023 (Incremental Swaps); (v) interest rate swaps hedging the interest rate risk associated with $100.0 of our Incremental Term Loan borrowings, for which the cash flows commence upon the expiration of the Incremental Swaps and continue through December 2025 (First Extended Incremental Swaps); and (vi) interest rate swaps hedging the interest rate risk associated with an additional $130.0 of our Incremental Term Loan borrowings that expire in December 2025 (Additional Incremental Swaps). We have an option to cancel up to $50.0 of the notional amount of the Additional Incremental Swaps from January 2024 through October 2025.

At March 31, 2023, the fair value of our interest rate swap agreements was an unrealized gain of $15.1 (December 31, 2022 — an unrealized gain of $18.7), which we recorded in other current assets and other non-current assets on our consolidated balance sheet. The unrealized portion of the change in fair value of the swaps is recorded in other comprehensive income (loss) (OCI). The realized portion of the change in fair value of the swaps is released from accumulated OCI and recognized under finance costs in our consolidated statement of operations when the hedged interest expense is recognized.

Global reform of major interest rate benchmarks is currently underway, including the anticipated replacement of some Interbank Offered Rates (including LIBOR) with alternative nearly risk-free rates. See note 2, "Recently issued accounting standards and amendments" of the 2022 AFS. As at March 31, 2023, we have obligations under our Credit Facility and derivative instruments that are indexed to LIBOR (LIBOR Agreements). The interest rates under these agreements are subject to change when relevant LIBOR benchmark rates cease to exist. Remaining LIBOR settings are expected to expire after June 2023. However, there remains uncertainty over the methods of transition to such alternate rates.

Our Credit Facility provides that, with respect to the Initial Term Loan and any non-U.S. dollar-denominated borrowings under the Revolver, when the administrative agent, the majority of lenders or we determine that LIBOR (or the corresponding rate for any Alternative Currency, as defined in the Credit Facility), is unavailable or being replaced, then we and the administrative agent may amend the underlying credit agreement to reflect a successor rate as specified therein. The Credit Facility has not yet been so amended. Once LIBOR becomes unavailable: (i) if no successor rate has been established, LIBOR borrowings under the Initial Term Loan will convert to Base Rate loans, and any non-U.S. dollar-denominated borrowings under the Revolver will be repaid, replaced or converted pursuant to the Credit Facility, and (ii) LIBOR borrowings under the Incremental Term Loan and U.S. dollar-denominated borrowings under the Revolver will convert to secured overnight financing rate (SOFR) loans recommended or selected by the relevant governmental body, adjusted as set forth in the Credit Facility. It remains uncertain when the benchmark transitions will be complete or what replacement rates will be used.

Our variable rate Term Loans are partially hedged with interest rate swap agreements (described above). Hedge ineffectiveness could result due to the cessation of LIBOR, if such agreements transition using a different benchmark or spread adjustment as compared to the underlying hedged debt. The Second Extended Initial Swaps, the First Extended Incremental Swaps and the Additional Incremental Swaps mirror the LIBOR successor provisions under the Credit Facility, but have not yet transitioned to a successor rate. We have also amended the swap agreement with one of the two counterparty banks under the Incremental Swaps (with a notional amount of $50.0) to mirror the LIBOR successor provisions under the Credit Facility, but such swaps have not yet transitioned to the successor rate. Our remaining interest rate swap agreements do not yet have LIBOR successor provisions and will require future amendment. As a result, we cannot assure that benchmark transitions under these interest rate swap agreements will be successful, or if so, what replacement rates will be used.

Our A/R sales program and three customer SFPs that were indexed to LIBOR have transitioned to alternative benchmark rates with predetermined spreads. Our lease arrangements with progress payments that were indexed to LIBOR have transitioned to SOFR-based benchmark rates. These transitions did not have a significant impact on our consolidated financial statements. Our TRS Agreement bears interest based on SOFR.

While we expect that reasonable alternatives to LIBOR benchmarks will be implemented in advance of their cessation dates, we cannot assure that this will be the case. If relevant LIBOR benchmarks are no longer available and the alternative reference rate is higher, interest rates under the affected LIBOR Agreements would increase, which would adversely impact our interest expense, our financial performance and cash flows. We will continue to monitor developments with respect to the cessation of LIBOR, and will evaluate potential impacts on our LIBOR Agreements, processes, systems, risk management methodology and valuations, financial reporting, taxes, and financial results. However, we are currently unable to predict what the future replacement rates or consequences on our operations or financial results will be.

The majority of our currency risk is driven by operational costs, including income tax expense, incurred in local currencies by our subsidiaries. We cannot predict changes in currency exchange rates, the impact of exchange rate changes on our operating results, nor the degree to which we will be able to manage the impact of currency exchange rate changes. Such changes could have a material effect on our business, financial performance and financial condition.


	Canadian dollar		Euro		Thai baht		Chinese renminbi		Mexican peso
Cash and cash equivalents	$	2.1	$	10.6	$	2.5	$	11.4	$	0.5
Accounts receivable	0.2		64.4		0.2		14.9		—
Income taxes and value-added taxes receivable	17.9		0.9		0.9		3.1		46.7
Other financial assets	—		3.9		0.6		0.3		2.0
Pension and non-pension post-employment liabilities	(49.0)		(0.6)		(19.1)		(0.6)		(3.7)
Income taxes and value-added taxes payable	(18.1)		(1.7)		(4.9)		(8.8)		(9.1)
Accounts payable and certain accrued and other liabilities and provisions	(44.5)		(44.8)		(32.7)		(37.3)		(14.7)
Net financial assets (liabilities)	$	(91.4)	$	32.7	$	(52.5)	$	(17.0)	$	21.7

We enter into foreign currency forward contracts to hedge our cash flow exposures and foreign currency swaps to hedge the exposures of our monetary assets and liabilities denominated in foreign currencies. While these contracts are intended to reduce the effects of fluctuations in foreign currency exchange rates, our hedging strategy does not mitigate the longer-term impacts of changes to foreign exchange rates.


Currency	Contract amount in U.S. dollars		Weighted average exchange rate in U.S. dollars (1)		Maximum period in months	Fair value gain (loss)
Canadian dollar	$	207.0	$	0.75	13	$	(1.8)
Thai baht	151.9		0.03		12	1.3
Malaysian ringgit	134.6		0.23		12	0.5
Mexican peso	70.1		0.05		12	2.0
British pound	2.2		1.22		4	—
Chinese renminbi	36.8		0.15		11	0.1
Euro	75.3		1.08		8	(0.7)
Romanian leu	41.7		0.21		12	2.2
Singapore dollar	20.1		0.74		12	0.4
Japanese yen	5.0		0.0076		4	—
Korean won	4.5		0.0008		4	0.1
Total	$	749.2				$	4.1

Fair values of outstanding foreign currency forward and swap contracts related to effective cash flow hedges where we applied hedge accounting						7.1
Fair values of outstanding foreign currency forward and swap contracts related to economic hedges where we record the changes in the fair values of such contracts through our consolidated statement of operations						(3.0)
						$	4.1

At March 31, 2023, the aggregate fair value of our outstanding contracts was a net unrealized gain of $4.1 (December 31, 2022 — net unrealized gain of $5.2), resulting from fluctuations in foreign exchange rates between the contract execution and the period-end date. At March 31, 2023, we recorded $13.4 of derivative assets in other current assets and $9.3 of derivative liabilities in accrued and other current liabilities (December 31, 2022 — $18.9 of derivative assets in other current assets and $13.7 of derivative liabilities in accrued and other current liabilities).

Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a financial loss to us. We believe our credit risk of counterparty non-performance continues to be relatively low. We are in regular contact with our customers, suppliers and logistics providers, and have not experienced significant counterparty credit-related non-performance in 2022 or Q1 2023. However, if a key supplier (or any company within such supplier's supply chain) or customer fails to comply with their contractual obligations, this could result in a significant financial loss to us. We would also suffer a significant financial loss if an institution from which we purchased foreign currency exchange contracts and swaps, interest rate swaps, or annuities for our pension plans, or which is a counterparty to our TRS Agreement, defaults on their contractual obligations. With respect to our financial market activities, we have adopted a policy of dealing only with counterparties we deem to be creditworthy. No significant adjustments were made to our allowance for doubtful accounts during Q1 2023 or Q1 2022 in connection with our ongoing credit risk assessments.

Liquidity risk is the risk that we may not have cash available to satisfy our financial obligations as they come due. The majority of our financial liabilities recorded in accounts payable, accrued and other current liabilities and provisions are due within 90 days. We manage liquidity risk through maintenance of cash on hand and access to the various financing arrangements described in notes 4 and 6. We believe that cash flow from operating activities, together with cash on hand, cash from accepted sales of A/R, and borrowings available under the Revolver and potentially available under uncommitted intraday and overnight bank overdraft facilities, are sufficient to fund our currently anticipated financial obligations, and will remain available in the current environment. As our A/R sales program and SFPs are each uncommitted, however, there can be no assurance that any participant bank will purchase any of the A/R that we wish to sell.

In the normal course of our operations, we may be subject to lawsuits, investigations and other claims, including environmental, labor, product, customer disputes, and other matters. Management believes that adequate provisions have been recorded where required. Although it is not always possible to estimate the extent of potential costs, if any, we believe that the ultimate resolution of all such pending matters will not have a material adverse impact on our financial performance, financial position or liquidity.

In the third quarter of 2021 (Q3 2021), the Romanian tax authorities issued a final assessment in the aggregate amount of approximately 31 million Romanian leu (approximately $7 at period-end exchange rates), for additional income and value-added taxes for one of our Romanian subsidiaries for the 2014 to 2018 tax years. In order to advance our case to the appeals phase and reduce or eliminate potential interest and penalties, we paid the Romanian tax authorities the full amount assessed in Q3 2021 (without agreement to all or any portion of such assessment). We believe that our originally-filed tax return positions are in compliance with applicable Romanian tax laws and regulations, and intend to vigorously defend our position through all necessary appeals or other judicial processes.

The successful pursuit of assertions made by any government authority, including tax authorities, could result in our owing significant amounts of tax or other reimbursements, interest and possibly penalties. We believe we adequately accrue for any probable potential adverse ruling. However, there can be no assurance as to the final resolution of any claims and any resulting proceedings. If any claims and any ensuing proceedings are determined adversely to us, the amounts we may be required to pay could be material, and in excess of amounts accrued.

In June 2022, a fire occurred at our Batam, Indonesia facility. The fire destroyed inventories and damaged a building and equipment located at the site. Our manufacturing operations at the site were briefly paused, but resumed in June 2022. In 2022, we wrote down inventories destroyed (approximately $94) and a building and equipment damaged (approximately $1) by the fire. We expect to fully recover our tangible losses pursuant to the terms and conditions of our insurance policies. In the fourth quarter of 2022 and Q1 2023, we recovered $31 and $2 of our inventory losses through insurance proceeds, respectively. As of March 31, 2023, we recorded an estimated receivable of approximately $62 related to remaining anticipated insurance proceeds in other current assets on our consolidated balance sheet. The write-downs and the offsetting insurance receivable (in equivalent amounts) were each recorded in other charges in 2022, resulting in no net impact to net earnings. We determined that this event did not constitute an impairment review triggering event for the applicable CGU, and no impairments to our intangibles or goodwill were recorded in connection therewith in 2022 or Q1 2023.


Revenue by segment:	Three months ended March 31
	2022				2023
			% of total				% of total
ATS	$	696.7	44%		$	792.2	43%
CCS	870.2		56%		1,045.6		57%
Communications end market revenue as a % of total revenue			38	%			36	%
Enterprise end market revenue as a % of total revenue			18	%			21	%



Total	$	1,566.9			$	1,837.8


	December 31 2022		March 31 2023
Outstanding L/Cs under the Revolver	$	18.0	$	17.3
Outstanding L/Cs and surety bonds outside the Revolver	23.8		16.4
Total	$	41.8	$	33.7
Available uncommitted bank overdraft facilities	$	198.5	$	198.5
Amounts outstanding under available uncommitted bank overdraft facilities	$	—	$	—


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