Management Discussion & Analysis Our private company partners have termination rights which may be exercised  We are subject to fluctuations in currency  Each of our Private Company Partners has the right to terminate their agreement with Alaris through a  repurchase or redemption right that arises after a fixed period of time following the closing of our  arrangement with the applicable Private Company Partner. Although Management believes that the  repurchase or redemption purchase price would adequately compensate Alaris for the foregone payments,  we would be required to reinvest the cash received including possibly investing in our own shares through  the repurchase and cancellation of our shares, in order to maintain our dividend levels. There is no  assurance that we would be able to successfully identify and complete any such alternative investments or  complete any such share repurchase. Certain of our distributions are paid and received by us in United States dollars. However, our dividends  are paid to our Shareholders in Canadian dollars. Current, we have in place forward hedging contracts to  manage the risk and economic consequences of foreign exchange fluctuations. However, the Canadian  dollar relative to the United States dollar is subject to fluctuations and the forward contracts are for a  limited period of time. There can be no guarantee that these contracts will continue to adequately protect  against such fluctuations for the long term. As such, failure to adequately manage our foreign exchange  could adversely affect our business, financial condition, and results of operations.  The amount of dividends paid by us will depend upon numerous factors, including Distributions received,  profitability, debt covenants and obligations, the availability and cost of acquisitions, fluctuations in  working capital, the timing and amount of capital expenditures, applicable law and other factors which may  be beyond our control. Dividends are not guaranteed and will fluctuate with our performance and the  performance of our Private Company Partners. There can be no assurance as to the levels of dividends to be  paid by us, if any. Alaris will also incur expenses as a public issuer. Should any estimate of such expenses  prove inadequate or if unanticipated public issuer expenses are incurred, it would reduce cash available for  payment of dividends. The market value of the Common Shares may deteriorate if we are unable to pay  dividends in accordance with our dividend policy in the future, or not at all, and such deterioration may be  material. Furthermore, the future treatment of dividends for tax purposes will be subject to the nature and  composition of dividends paid by us and potential legislative and regulatory changes.  Each Private Company Partner provides certain representations and warranties and covenants to us  regarding the Private Company Partner and its business and certain other matters. Following a transaction  with Alaris, the Private Company Partner may distribute all or a substantial portion of the proceeds that it  receives from us to its security holders or owners. In the event that we suffer any loss as a result of a breach  of the representations and warranties or non-compliance with any other term of an agreement with a  Private Company Partner, we may not be able to recover the amount of our entire loss from the Private  Company Partner. The Private Company Partner may not have sufficient property to satisfy our loss.  A publicly traded corporation will not necessarily trade at values determined by reference to the underlying  value of its business. The prices at which the Common Shares will trade cannot be predicted. The market  There are no guarantees as to the timing and amount of our dividends  Our ability to recover from Private Company Partners for defaults under our agreements with them may  be limited  Our share price is unpredictable and can be volatile 70  2011 Annual Report  Alaris Royalty Corp.