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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Lucretius who wrote (154120)	3/1/2002 1:56:59 PM
From: Box-By-The-Riviera™	Read Replies (1) \| Respond to of 436258

have we re flated yet? i'm not good at seeing the signs.

To: Lucretius who wrote (154120)	3/1/2002 2:00:35 PM
From: David Semoreson	Respond to of 436258

Here's a stab at Celestica's spin Friday, March 1, 2002 – Print Edition, Page B8 globeandmail.com Everyone wants to put his best face forward. So it's no wonder corporate communiqués stress -- or is that stretch? -- the positive and footnote the negative. For Celestica,this approach has always seemed to work, until recently. Within a month of releasing its fourth-quarter and annual results, the company's stock has retreated 25 per cent. Could it be that investors have rubbed the fairy dust out of their eyes? This led us to wonder what Celestica's press release might have looked like when rid of its spin. A stab at it: Attention business editors: Company hammered by lousy economy, pricey acquisitions; outlook bleak. Celestica Inc. is sorry to announce poor results for the fourth quarter and year ended Dec. 31. Fourth-quarter revenue plummeted to $2.5-billion (U.S.) from $3.5-billion a year earlier! Compared with the previous quarter, revenue rose 11 per cent, but only because of acquisitions, which added 18 per cent to the top line. Without these, revenue would have been 7 per cent lower. Unvarnished, the bottom line bore the disfiguring marks of expensive and untimely acquisitions, poor margins and a deteriorating economy. The company lost $72-million in the fourth quarter, compared with a profit of $84-million the previous year. Management resists the urge to apply blush and lipstick to the bottom line, believing the straightforward approach best reflects the economic well-being and performance of the company, deficiencies of GAAP notwithstanding. Let's face it: Acquisitions are a major part of our business. The costs of these -- restructuring and integration charges namely, which, frankly, are hardly infrequent in our case -- should be fully recognized in determining performance. For the year ended Dec. 31, 2001, revenue rose less than 3 per cent, despite the aforementioned acquisitions. Share earnings went from 98 cents to a loss of 26 cents, partly on the back of a 7-per-cent dilution from acquisitions. Management's focus on operating efficiency in the fourth quarter yielded greater cash flow. Cash from operations was $889-million in the fourth quarter, which provided the bulk of annual operating cash flow of $1.3-billion. The historical comparisons are $153-million and negative $85-million respectively. But don't get excited. While this may look impressive, management cautions analysts that the increase was largely the result of an urgent liquidation of working capital yielding $902-million for the year. Management notes that investments -- including monies used in acquisitions -- consumed $1.5-billion of cash in 2001, as opposed to $980-million the previous year. Again, such activity is central to the company's growth plan. Although the cash conversion cycle decreased to 45 days in the fourth quarter from 67 days in the third quarter, management notes that this is still considerably higher than the 30-day cycle achieved in 1999. As such, the return on invested capital still falls grossly short of the cost of said capital. In a true economic sense, we are still destroying value. Management believes this may change one day, although with gross margins of 7 per cent, we need volume, and we cannot, with a straight face, promise this. On the brighter side, management's reputation for financial acumen was confirmed by a $730-million share issue that preceded, by four months, a 55-per-cent drop in the stock price (hard luck). This follows the successful sale in August, 2000, of $1.8-billion of convertible bonds that bear a yield to maturity of 3.75 per cent and are convertible into stock at only $176 (ha ha). The company has adequate liquidity for now, with $1.3-billion in cash. Should that not suffice, we stand ready to print more stock.