MANAGEMENT’S DISCUSSION AND ANALYSIS Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data) Days of Working Capital Employed – A measure indicating the relative liquidity and asset intensity of the Company’s working capital. It is calculated by multiplying the net working capital by the number of days in the quarter and then dividing by the quarterly sales. Net working capital includes trade and other receivables, inventories, and prepaid expenses, trade and other payables, income and taxes recoverable and payable. The following table reconciles the net working capital used in the days of working capital employed measure to IFRS measures reported in the consolidated statement of financial position as at the periods ended as indicated. Days of Working Capital Employed At December 31 2011 2010 Trade and other receivables $ 192.0 $ 174.0 Inventories 86.9 77.9 Prepaid expenses 5.3 6.0 Income taxes recoverable 0.8 3.1 Trade and other payables (233.9) (230.3) Net working capital $ 51.1 $ 30.7 Days in quarter 92 92 Fourth quarter sales $ 317.3 $ 281.3 Days of working capital employed 15 10 Dividend Payout – The ratio of earnings paid out to the shareholders. It provides an indication of how well earnings support the dividend payments. Dividend payout is defined as dividends declared divided by earnings, excluding goodwill impairment loss, restructuring and other items and tax adjustments, expressed as a percentage. Year-to-Date 2011 2010 Dividends declared per shareholders’ equity $ 23.1 $ 21.4 Adjusted earnings $ 84.9 $ 71.3 Dividend payout 27% 30% Dividend Payout Earnings per Share Growth Rate – A measure indicating the percentage change in adjusted basic earnings per Class B share (see definition above). EBITDA – A critical financial measure used extensively in the packaging industry and other industries to assist in understanding and measuring operating results. It is also considered as a proxy for cash flow and a facilitator for business valuations. This non-IFRS measure is defined as earnings before net finance costs, taxes, depreciation and amortization, goodwill impairment loss, earnings in equity accounted investments, restructuring and other items. The Company believes that EBITDA is an important measure as it allows the assessment of CCL’s ongoing business without the impact of net finance costs, depreciation and amortization and income tax expenses, as well as non-operating factors and one-time items. As a proxy for cash flow, it is intended to indicate the Company’s ability to incur or service debt and to invest in property, plant and equipment, and it allows comparison of CCL’s business to that of its peers and competitors who may have different capital or organizational structures. EBITDA is a measure tracked by financial analysts and investors to evaluate financial performance and is a key metric in business valuations. EBITDA is considered an important measure by lenders to the Company and is included in the financial covenants for CCL’s bank lines of credit. 34 CCL Industries Inc. 2011 Annual Report