CCL also believes that the dividend payout (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below) is an important metric. CCL has paid dividends quarterly for over 30 years without an omission or reduction and has more than doubled the dividend since 2001. The Company views this consistency and dividend growth as important factors in enhancing shareholder value. The Company’s target payout of dividends is equal to 20% to 25% of adjusted earnings, defined as earnings excluding gains on dispositions, goodwill impairment loss, restructuring and other items and tax adjustments. In 2011, the dividend payout ratio was 27% (2010 – 30%) of adjusted earnings. This dividend payout ratio in excess of the Company’s target range reflects strong cash flow generation resulting from improved earnings. After careful review of the current year results and considering the cash flow and income budgeted for 2012, the CCL Board of Directors has declared an increase in the dividend of two cents per Class B share per quarter from $0.175 to $0.195 per Class B share per quarter ($0.78 per Class B share annualized). The Company believes that all of the above targets are mutually compatible and consequently should drive meaningful shareholder value over time. CCL’s strategy and its ability to grow and achieve attractive returns for its shareholders are shaped by key internal and external factors that are common to specialty packaging. The key performance driver is the Company’s continuous focus on customer satisfaction, supported by its reputation for quality manufacturing, competitive price, product innovation, dependability, ethical business practices and financial stability. In these uncertain economic times, the Company recognizes that it must maintain its focus and financial discipline. CCL’s customers’ markets have shown a recovery in the past two years from the global economic slowdown experienced in the second half of 2008 and the majority of 2009. So far in 2012, business remains solid, but growth rates will depend on the impact of economic events on consumer spending, particularly in the United States and Europe. Mitigating volatile raw material input costs through stringent cost management and focused pricing strategies for its products remain key priorities for the Company. Over the past decade CCL has transformed itself into a focused specialty packaging business. CCL is now a global company with increased diversification across the world economy including emerging markets, a broader customer base, new product lines and many different currencies and geographies. CCL continues to deploy its cash flow from operations into its core segments with both internal capital investments and strategic acquisitions. The following acquisitions were completed over the last two years: Since 2003, the Company has spent over $500 million on acquisitions including these investments. They have been primarily funded by dispositions which generated over $470 million in cash over the same time frame. Strategically, CCL has repositioned itself as a growing specialty packaging company over these years with the Label Segment now surpassing the one billion dollars in sales milestone and accounting for 80% of the Company’s total revenue. All of the acquisitions completed over the past few years, in conjunction with the building of new plants in Mexico, Thailand, Poland, China, Vietnam, Brazil, Saudi Arabia and the United States, have positioned the Label Segment as the global leader for pressure sensitive labels in the personal care, healthcare, food, beverage, promotional, durables and specialty categories. 10 CCL Industries Inc. 2011 Annual Report GLYPH<129> In September 2011, a 50% interest in Pacman-CCL, a privately owned group of label companies based in Dubai in the United Arab Emirates with additional operations in Cairo, Egypt; Muscat, Oman and Jeddah, Saudi Arabia, was acquired for $18.3 million. Albwardy Investments, the sole shareholder that previously operated Pacman-CCL under a CCL Label licence agreement, will retain the remaining 50% economic interest. GLYPH<129> In April 2011, Thunder Press Inc., a privately owned label company based in Chicago, Illinois, which operated under the trade name “Sertech”, was acquired for $7.8 million, net of cash acquired. Sertech produces patient information leaflets, commonly known as inserts and outserts, for leading pharmaceutical customers in the United States. GLYPH<129> In March 2010, Purbrick, a privately held company based in Melbourne, Australia, was acquired for $1.2 million, net of cash acquired. Purbrick supplies patient information leaflets and pressure sensitive labels to global pharmaceutical customers located in Australia. D) Recent Acquisitions and Dispositions MANAGEMENT’S DISCUSSION AND ANALYSIS Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)