3. FINANCING AND RISK MANAGEMENT A) Liquidity and Capital Resources Total amounts available $ 91.4 Standby letters of credit outstanding 3.6 Lines of credit – committed, unused $ 95.0 December 31, 2011 December 31, 2010 Current debt $ 19.8 $ 76.1 Long-term debt $ 334.2 $ 345.8 Total debt 1 $ 354.0 $ 421.9 Cash and cash equivalents $ (140.7) $ (173.2) Net debt 1 $ 213.3 $ 248.7 Shareholders’ equity $ 816.9 $ 769.3 Net debt to total book capitalization 1 20.7% 24.4% The Company’s capital structure is as follows: 1 Total debt, net debt and net debt to total book capitalization are non-IFRS measures. See “Key Performance Indicators and Non-IFRS Measures” in Section 5A below. The Company continues to have a strong financial position. As at December 31, 2011, cash and cash equivalents were $140.7 million, which compared to $173.2 million as at December 31, 2010. The Company’s debt structure at December 31, 2011, is primarily comprised of four private debt placements completed in 1997, 1998, 2006 and 2008 for a total of US$328.4 million (C$333.9 million) and a five-year revolving line of credit of C$95.0 million. All of the senior notes are denominated in U.S. dollars primarily to hedge the Company’s net investment in U.S. operations, but a portion of the notes were indirectly swapped into euros as a hedge of the Company’s European operations. The debt structure is unchanged from December 31, 2010, except for a scheduled debt repayment of US$60.0 million in March 2011 and the annual payment on one of the senior notes of US$9.4 million in September 2011. In September 2012, the Company will repay US$9.4 million, which is expected to be funded by internal cash balances. The revolving line of credit of $95.0 million is with a Canadian chartered bank and expires in January 2013. As at the end of December 2011, the credit line was unused, other than for letters of credit of $3.6 million. Net debt (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below), as at December 31, 2011, decreased to $213.3 million from $248.7 million as at December 31, 2010. The decrease in net debt was primarily due to the lower debt levels, partially offset by lower cash balances and unfavourable currency translation on U.S. dollar-denominated debt. Net debt to total book capitalization (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below) was lower at 20.7% as at December 31, 2011, compared to 24.4% at the end of 2010 due to the aforementioned reduction in net debt and an increase in shareholders’ equity. Further information on shareholders’ equity follows in Section 3D. The average interest rate at year end 2011 on all long-term debt was 6.2% (2010 – 5.6%), factoring in the related IRSAs and CCIRSAs. The IRSAs and CCIRSAs are discussed later in this report under Section 3C. The increase in the average interest rate is a result of the expiration of a variable rate IRSA on the retirement of a private placement debt in March of 2011. Interest coverage (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below) continues at a high level and was 6.5 times and 4.9 times in 2011 and 2010, respectively, reflecting higher earnings and lower interest expense in 2011. The Company’s committed credit availability at December 31, 2011, was as follows: In addition, the Company had uncommitted and unused lines of credit of approximately $31.3 million at December 31, 2011. The Company’s uncommitted lines of credit do not have a commitment expiration date and may be cancelled at any time by the Company or the banks. CCL Industries Inc. 2011 Annual Report 23