NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (ii) Deferred share units Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information) The Company maintains a deferred share unit plan. Under this plan, non-employee members of the Company’s Board of Directors may elect to receive DSUs, in lieu of cash remuneration, for director fees that would otherwise be payable to such directors or any portion thereof. The number of units received is equivalent to the fees earned and is based on the fair market value of a Class B non-voting share of the Company’s capital stock on the date of issue of the DSU. When dividends are paid on Class B non-voting shares of the Company, the equivalent value per DSU is calculated and the holder receives additional DSUs in lieu of actual cash dividends based on the fair market value of a Class B non-voting share of the Company. DSUs cannot be redeemed or paid out until such time as the director ceases to be a director. A DSU entitles the holder to receive, on a deferred payment basis, either the number of Class B non- voting shares of the Company equating to the number of his or her DSUs or, at the election of the Company, a cash amount equal to the fair market value of an equal number of Class B non-voting shares of the Company on the redemption date. The Company accounts for the DSUs as cash-settled share-based payment transactions. When DSUs are granted, an expense for the full fair value of the DSUs granted is recognized in the income statement and a corresponding liability is recognized in the consolidated statement of financial position. The fair value of the liability is remeasured at the end of each reporting period and any difference is recognized as a personnel expense in the income statement. The value of DSUs received in lieu of dividends is also recognized as a personnel cost in the income statement. The Company had 78,458 DSUs outstanding as at December 31, 2011, valued at $2.4 million based on a five-day average of the Class B non-voting shares of the Company of $30.81. The amount recognized as an expense in 2011 totaled $0.8 million (2010 – $0.7 million). The Company has shares held in trust to be used to satisfy future employee benefits related to its long-term incentive plan as outlined in note 18. Under the executive share purchase plan, which was discontinued in December 2001, the Company provided assistance to senior officers and executives of the Company to invest in Class B shares of the Company in the open market by providing interest-free loans. The loans have a 10-year term and are repayable only when the shares are sold or upon completion of employment. The executive share purchase plan loans have been deducted from shareholders’ equity. The value of the principal of these loans was $0.2 million at the end of 2011 (2010 - $0.2 million). These loans are secured by 25,000 (2010 – 25,000) Class B shares of the Company with a quoted value at December 31, 2011, of $31.31 (2010 – $29.62) per Class B share, totaling $0.8 million (2010 - $0.7 million). During 2006, the Company entered into a cross-currency interest rate swap agreement (hedging item) that converted fixed rate unsecured U.S. dollar-denominated senior notes (hedged item) into Canadian dollar fixed rate debt in order to reduce the Company’s exposure to U.S. dollar debt and interest payments. The fair value of the swap was recorded in current liabilities at the end of 2010. The foreign exchange component of the change in the value of the swap offsets the foreign exchange component of the U.S. dollar- denominated debt on the income statement, and the balance was recorded in other comprehensive income. No ineffectiveness was recognized in the income statement as this was a fully effective hedge. This swap matured in March 2011. The Company has in place numerous aluminum derivative contracts (hedging item) that are used to fix the price the Company is required to pay for its anticipated aluminum manufacturing requirements (hedged item). Aluminum is the major raw material used in the Container segment. The Company uses these contracts along with fixed price customer contracts to minimize the impact of aluminum price fluctuations. The Company does not enter into these contracts for speculative purposes. 76 CCL Industries Inc. 2011 Annual Report Notional principal amount Interest rate Fair value December 31 Fixed rate Fixed rate Paid (CAD) Received (USD) 2011 (CAD) 2010 (CAD) Maturity Effective date US$60.0 million C$70.4 million 4.50% 5.29% — (10,541.5) March 8, 2011 March 29, 2006 (iii) Restricted share units Executive share purchase plan 26. FINANCIAL INSTRUMENTS (a) Cash flow hedges