achieved ROE levels in the low double-digit range. However, with the global economic downturn in 2009, ROE for comparable companies and for the industry as a whole was dramatically lowered. In 2011, ROE continued to recover from the low posted in 2009 and regained double-digit levels. ROE performance has been fairly consistent over the past few years, except for 2009: The Company believes that attaining the historical level of ROE is achievable based on the improving trend recorded since the low of 2009. However, this is dependent on the continued improvement in the global economy, consumer spending levels and the success of CCL’s business strategy. Another important and related financial target is the long-term growth rate of adjusted basic earnings per share, which excludes goodwill impairment loss, restructuring and other items, and tax adjustments (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below). Management believes that taking into account both the relatively stable overall demand for consumer staple and healthcare products globally and the continuing benefits from its focused strategies and operational approach, a positive growth rate in adjusted basic earnings per share is realistic under normal economic circumstances. CCL’s historical adjusted earnings per share excluding goodwill impairment loss, restructuring and other items and tax adjustments and gains on business dispositions, has achieved significant positive growth except for the 2009 and 2008 years: In 2011 adjusted basic earnings per share increased by 18%. The continued recovery from the global economic recession and improved mix of businesses was partially offset by the unfavourable impact from foreign currency rates. The Company believes strong growth in earnings per share is achievable in the future as the global economy continues to improve and CCL executes its business strategy. The Company will continue to focus on generating cash and effectively utilizing the cash flow generated by operations and divestitures. Earnings before interest, taxes, depreciation and amortization, excluding goodwill impairment loss, earnings in equity accounted investments, restructuring and other items (“EBITDA,” a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below) is considered a good indicator of cash flow and is used by many financial institutions and investment advisors to measure operating results and for business valuations. The Company believes that EBITDA is an important measure in evaluating its ongoing business in that it does not include the impact of interest, depreciation and amortization, income tax expenses and non-operating one-time items. As a key indicator of cash flow, EBITDA demonstrates the Company’s ability to incur or service existing debt and to invest in capital additions, to take advantage of organic growth opportunities, and in acquisitions that are accretive to earnings per share. Historically, the Company has experienced positive growth in EBITDA, excluding discontinued operations, except for the 2009 year: In 2011, EBITDA increased by approximately 8.8% despite the negative impact of foreign currency translation. EBITDA margins remain at the top end of the range of CCL’s specialty packaging peers. The Company expects positive growth in EBITDA in the future as the global economy continues to recover and consumer spending levels improve. If net cash flow periodically exceeds attractive acquisition opportunities available, CCL may also repurchase its shares provided that the repurchase is accretive to earnings per share, is at a valuation equal to or lower than valuations for acquisition opportunities, and will not materially increase financial leverage beyond targeted levels or significantly reduce liquidity. The framework supporting the above performance targets is an appropriate level of financial leverage. Based on the dynamics within the specialty packaging industry and the risks that higher leverage may bring, CCL has a comfort level up to a target of approximately 45% for its net debt to total book capitalization (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below). As at December 31, 2011, net debt to total book capitalization was 20.7%. This current level of leverage and profitability would imply that CCL’s debt continues to be in the investment-grade category. This leverage level is below the target, primarily due to the Company’s conservative approach to financial risk and its ability to generate strong levels of free cash flow from operations (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below). CCL Industries Inc. 2011 Annual Report 9 2011 2010 2009 2008 2007 2006 Return on Equity 10.7% 9.5% 7.6% 11.1% 13.3% 12.5% 2011 2010 2009 2008 2007 2006 EPS Growth Rate 18% 23% -30% 2% 19% 19% 2011 2010 2009 2008 2007 2006 EBITDA 239.1 219.8 207.9 216.4 206.9 176.1 % of sales 19% 18% 17% 18% 18% 17%