CCL INDUSTRIES INC.(cid:6)3455(cid:6)(cid:7)(cid:8)(cid:8)(cid:9)(cid:7)(cid:10)(cid:6)(cid:11)(cid:12)(cid:13)(cid:14)(cid:11)(cid:2)
3H(cid:6)(cid:15)(cid:16)!(cid:17)(cid:18)(cid:21)(cid:4)(cid:29)(cid:5)(cid:6)(cid:16)(cid:17)(cid:6)6 continents
69(cid:6)(cid:22)(cid:16)(cid:21)(cid:25)(cid:23)(cid:24)(cid:15)(cid:25)(cid:19)(cid:5)(cid:5)(cid:6)"(cid:25)(cid:19)(cid:17)(cid:18)(cid:5)
(cid:13)(cid:19)(cid:21)(cid:18)(cid:17)(cid:29)(cid:21)(cid:4)(cid:17)(cid:27)(cid:6)(cid:22)(cid:4)(cid:18)(cid:3)(cid:6)(cid:27)(cid:25)(cid:16)#(cid:19)(cid:25)(cid:6)(cid:15)!(cid:5)(cid:18)(cid:16)(cid:28)(cid:29)(cid:21)(cid:5)
(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:12)(cid:17)(cid:18)(cid:21)(cid:29)"(cid:21)(cid:29)(cid:17)(cid:29)!(cid:21)(cid:4)(cid:19)(cid:25)(cid:6)(cid:4)(cid:17)(cid:17)(cid:16)%(cid:19)(cid:18)(cid:4)(cid:16)(cid:17)
Positioned for growth
//(cid:10)(cid:6)8-(cid:6)(cid:7)(cid:6)=(cid:10)(cid:14)7(cid:7)(cid:10)(cid:6)-(cid:13)(cid:12)/8(cid:7)(cid:10)(cid:2)>(cid:6)(cid:13)(cid:7)/?(cid:7)=8(cid:8)=(cid:6)/(cid:14)@(cid:13)(cid:7)(cid:8)>(cid:6)
3 divisions:(cid:6)(cid:10)(cid:19)#(cid:29)(cid:25)(cid:30)(cid:6)/(cid:16)(cid:17)(cid:18)(cid:19)(cid:4)(cid:17)(cid:29)(cid:21)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:2)!#(cid:29)
A(cid:12)(cid:7)9B(cid:9)(cid:7)(cid:11)(cid:2)(cid:12)(cid:11)(cid:12)9(cid:6)8(cid:8)(cid:6)(cid:2)(cid:14)(cid:11)(cid:14)(cid:8)(cid:2)(cid:14)(cid:30)(cid:6)/(cid:7)(cid:8)(cid:7)9(cid:7)
69(cid:6)"(cid:25)(cid:19)(cid:17)(cid:18)(cid:5)(cid:6)(cid:4)(cid:17)(cid:6)23(cid:6)(cid:15)(cid:16)!(cid:17)(cid:18)(cid:21)(cid:4)(cid:29)(cid:5)
6,400(cid:6)(cid:29)(cid:28)"(cid:25)(cid:16)&(cid:29)(cid:29)(cid:5)
C C L L A B E L
C C L C O N T A I N E R
C C L T U B E
//(cid:10)(cid:6)(cid:10)(cid:19)#(cid:29)(cid:25)(cid:6)(cid:4)(cid:5)(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)(cid:22)(cid:16)(cid:21)(cid:25)(cid:23)2(cid:5)(cid:6)(cid:25)(cid:19)(cid:21)(cid:27)(cid:29)(cid:5)(cid:18)(cid:6)(cid:15)(cid:16)(cid:17)%(cid:29)(cid:21)(cid:18)(cid:29)(cid:21)(cid:6)
(cid:16)(cid:20)(cid:6)"(cid:21)(cid:29)(cid:5)(cid:5)!(cid:21)(cid:29)(cid:6)(cid:5)(cid:29)(cid:17)(cid:5)(cid:4)(cid:18)(cid:4)%(cid:29)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:31)(cid:25)(cid:28)(cid:6)(cid:28)(cid:19)(cid:18)(cid:29)(cid:21)(cid:4)(cid:19)(cid:25)(cid:5)(cid:6)
(cid:19)(cid:17)(cid:23)(cid:6)(cid:5)(cid:29)(cid:25)(cid:25)(cid:5)(cid:6)(cid:18)(cid:16)(cid:6)(cid:25)(cid:29)(cid:19)(cid:23)(cid:4)(cid:17)(cid:27)(cid:6)(cid:27)(cid:25)(cid:16)#(cid:19)(cid:25)(cid:6)(cid:15)!(cid:5)(cid:18)(cid:16)(cid:28)(cid:29)(cid:21)(cid:5)(cid:6)(cid:4)(cid:17)(cid:6)
(cid:18)(cid:3)(cid:29)(cid:6)(cid:15)(cid:16)(cid:17)(cid:5)!(cid:28)(cid:29)(cid:21)(cid:6)"(cid:19)(cid:15)(cid:26)(cid:19)(cid:27)(cid:4)(cid:17)(cid:27)(cid:30)(cid:6)(cid:3)(cid:29)(cid:19)(cid:25)(cid:18)(cid:3)(cid:15)(cid:19)(cid:21)(cid:29)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)
(cid:15)(cid:16)(cid:17)(cid:5)!(cid:28)(cid:29)(cid:21)(cid:6)(cid:23)!(cid:21)(cid:19)#(cid:25)(cid:29)(cid:6)(cid:5)(cid:29)(cid:27)(cid:28)(cid:29)(cid:17)(cid:18)(cid:5)*
(cid:7)(cid:6)(cid:27)(cid:25)(cid:16)#(cid:19)(cid:25)(cid:6)"(cid:25)(cid:19)&(cid:29)(cid:21)(cid:6)(cid:4)(cid:17)(cid:6)(cid:4)(cid:18)(cid:5)(cid:6)(cid:4)(cid:17)(cid:23)!(cid:5)(cid:18)(cid:21)&(cid:30)(cid:6)//(cid:10)(cid:6)(cid:10)(cid:19)#(cid:29)(cid:25)(cid:6)
is driving growth in emerging markets with
(cid:17)(cid:29)(cid:22)(cid:6)"(cid:25)(cid:19)(cid:17)(cid:18)(cid:5)(cid:6)(cid:4)(cid:17)(cid:6)(cid:2)(cid:3)(cid:19)(cid:4)(cid:25)(cid:19)(cid:17)(cid:23)(cid:30)(cid:6)/(cid:3)(cid:4)(cid:17)(cid:19)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)C(cid:4)(cid:29)(cid:18)(cid:17)(cid:19)(cid:28)*(cid:6)(cid:6)
//(cid:10)(cid:6)/(cid:16)(cid:17)(cid:18)(cid:19)(cid:4)(cid:17)(cid:29)(cid:21)(cid:6)(cid:4)(cid:5)(cid:6)(cid:19)(cid:6)(cid:25)(cid:29)(cid:19)(cid:23)(cid:4)(cid:17)(cid:27)(cid:6)(cid:8)(cid:16)(cid:21)(cid:18)(cid:3)(cid:6)(cid:7)(cid:28)(cid:29)(cid:21)(cid:4)(cid:15)(cid:19)(cid:17)(cid:6)
(cid:28)(cid:19)(cid:17)!(cid:20)(cid:19)(cid:15)(cid:18)!(cid:21)(cid:29)(cid:21)(cid:6)(cid:16)(cid:20)(cid:6)(cid:5)!(cid:5)(cid:18)(cid:19)(cid:4)(cid:17)(cid:19)#(cid:25)(cid:29)(cid:6)(cid:19)(cid:25)!(cid:28)(cid:4)(cid:17)!(cid:28)(cid:6)
(cid:19)(cid:29)(cid:21)(cid:16)(cid:5)(cid:16)(cid:25)(cid:6)(cid:15)(cid:16)(cid:17)(cid:18)(cid:19)(cid:4)(cid:17)(cid:29)(cid:21)(cid:5)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)#(cid:16)(cid:18)(cid:18)(cid:25)(cid:29)(cid:5)(cid:6)(cid:20)(cid:16)(cid:21)(cid:6)"(cid:21)(cid:29)(cid:28)(cid:4)!(cid:28)(cid:6)
#(cid:21)(cid:19)(cid:17)(cid:23)(cid:5)(cid:6)(cid:4)(cid:17)(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)(cid:3)(cid:16)(cid:28)(cid:29)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)"(cid:29)(cid:21)(cid:5)(cid:16)(cid:17)(cid:19)(cid:25)(cid:6)(cid:15)(cid:19)(cid:21)(cid:29)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)
(cid:20)(cid:16)(cid:16)(cid:23)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)#(cid:29)%(cid:29)(cid:21)(cid:19)(cid:27)(cid:29)(cid:6)(cid:28)(cid:19)(cid:21)(cid:26)(cid:29)(cid:18)(cid:5)*
//(cid:10)(cid:6)/(cid:16)(cid:17)(cid:18)(cid:19)(cid:4)(cid:17)(cid:29)(cid:21)(cid:6)(cid:16)"(cid:29)(cid:21)(cid:19)(cid:18)(cid:29)(cid:5)(cid:6)(cid:20)(cid:19)(cid:15)(cid:4)(cid:25)(cid:4)(cid:18)(cid:4)(cid:29)(cid:5)(cid:6)(cid:4)(cid:17)(cid:6)/(cid:19)(cid:17)(cid:19)(cid:23)(cid:19)(cid:30)(cid:6)
(cid:18)(cid:3)(cid:29)(cid:6)(cid:9)(cid:17)(cid:4)(cid:18)(cid:29)(cid:23)(cid:6)-(cid:18)(cid:19)(cid:18)(cid:29)(cid:5)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)@(cid:29),(cid:4)(cid:15)(cid:16)(cid:6)(cid:16)(cid:20)(cid:20)(cid:29)(cid:21)(cid:4)(cid:17)(cid:27)(cid:6)
(cid:15)!(cid:5)(cid:18)(cid:16)(cid:28)(cid:29)(cid:21)(cid:5)(cid:6)(cid:5)!"(cid:29)(cid:21)(cid:4)(cid:16)(cid:21)(cid:6)6!(cid:19)(cid:25)(cid:4)(cid:18)&(cid:30)(cid:6)(cid:3)(cid:4)(cid:27)(cid:3)(cid:24)(cid:29)(cid:17)(cid:23)(cid:6)(cid:27)(cid:21)(cid:19)"(cid:3)(cid:4)(cid:15)(cid:5)(cid:6)
(cid:19)(cid:17)(cid:23)(cid:6)(cid:4)(cid:17)(cid:17)(cid:16)%(cid:19)(cid:18)(cid:4)%(cid:29)(cid:6)#(cid:16)(cid:18)(cid:18)(cid:25)(cid:29)(cid:6)(cid:5)(cid:3)(cid:19)"(cid:29)(cid:5)*(cid:6)(cid:6)(cid:6)
//(cid:10)(cid:6)(cid:2)!#(cid:29)(cid:6)"(cid:21)(cid:16)(cid:23)!(cid:15)(cid:29)(cid:5)(cid:6)(cid:3)(cid:4)(cid:27)(cid:3)(cid:25)&(cid:6)(cid:23)(cid:29)(cid:15)(cid:16)(cid:21)(cid:19)(cid:18)(cid:29)(cid:23)(cid:6)
(cid:29),(cid:18)(cid:21)!(cid:23)(cid:29)(cid:23)(cid:6)"(cid:25)(cid:19)(cid:5)(cid:18)(cid:4)(cid:15)(cid:6)(cid:18)!#(cid:29)(cid:5)(cid:6)(cid:20)(cid:16)(cid:21)(cid:6)"(cid:21)(cid:29)(cid:28)(cid:4)!(cid:28)(cid:6)#(cid:21)(cid:19)(cid:17)(cid:23)(cid:5)(cid:6)
(cid:4)(cid:17)(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)"(cid:29)(cid:21)(cid:5)(cid:16)(cid:17)(cid:19)(cid:25)(cid:6)(cid:15)(cid:19)(cid:21)(cid:29)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:15)(cid:16)(cid:5)(cid:28)(cid:29)(cid:18)(cid:4)(cid:15)(cid:5)(cid:6)
(cid:28)(cid:19)(cid:21)(cid:26)(cid:29)(cid:18)(cid:5)(cid:6)(cid:4)(cid:17)(cid:6)(cid:8)(cid:16)(cid:21)(cid:18)(cid:3)(cid:6)(cid:7)(cid:28)(cid:29)(cid:21)(cid:4)(cid:15)(cid:19)*(cid:6)
With increased market share and a new
(cid:5)(cid:18)(cid:19)(cid:18)(cid:29)(cid:24)(cid:16)(cid:20)(cid:24)(cid:18)(cid:3)(cid:29)(cid:24)(cid:19)(cid:21)(cid:18)(cid:6)(cid:20)(cid:19)(cid:15)(cid:4)(cid:25)(cid:4)(cid:18)&(cid:6)(cid:4)(cid:17)(cid:6)(cid:10)(cid:16)(cid:5)(cid:6)(cid:7)(cid:17)(cid:27)(cid:29)(cid:25)(cid:29)(cid:5)(cid:30)(cid:6)/(cid:7)(cid:30)(cid:6)
//(cid:10)(cid:6)(cid:2)!#(cid:29)(cid:6)(cid:3)(cid:19)(cid:5)(cid:6)(cid:28)(cid:16)%(cid:29)(cid:23)(cid:6)(cid:4)(cid:17)(cid:18)(cid:16)(cid:6)(cid:19)(cid:6)(cid:25)(cid:29)(cid:19)(cid:23)(cid:29)(cid:21)(cid:5)(cid:3)(cid:4)"(cid:6)
"(cid:16)(cid:5)(cid:4)(cid:18)(cid:4)(cid:16)(cid:17)(cid:6)(cid:5)(cid:29)(cid:25)(cid:25)(cid:4)(cid:17)(cid:27)(cid:6)(cid:3)(cid:4)(cid:27)(cid:3)(cid:25)&(cid:6)(cid:23)(cid:29)(cid:15)(cid:16)(cid:21)(cid:19)(cid:18)(cid:29)(cid:23)(cid:6)(cid:29),(cid:18)(cid:21)!(cid:23)(cid:29)(cid:23)(cid:6)
(cid:18)!#(cid:29)(cid:5)(cid:6)(cid:18)(cid:16)(cid:6)(cid:4)(cid:18)(cid:5)(cid:6)(cid:8)(cid:16)(cid:21)(cid:18)(cid:3)(cid:6)(cid:7)(cid:28)(cid:29)(cid:21)(cid:4)(cid:15)(cid:19)(cid:17)(cid:6)(cid:15)!(cid:5)(cid:18)(cid:16)(cid:28)(cid:29)(cid:21)(cid:5)*(cid:6)
Number of Plants $#&(cid:6)(cid:25)(cid:16)(cid:15)(cid:19)(cid:18)(cid:4)(cid:16)(cid:17))
Number of Plants $#&(cid:6)(cid:25)(cid:16)(cid:15)(cid:19)(cid:18)(cid:4)(cid:16)(cid:17))
Number of Plants $#&(cid:6)(cid:25)(cid:16)(cid:15)(cid:19)(cid:18)(cid:4)(cid:16)(cid:17))
(cid:8)(cid:16)(cid:21)(cid:18)(cid:3)(cid:6)(cid:7)(cid:28)(cid:29)(cid:21)(cid:4)(cid:15)(cid:19)(cid:6)D(cid:6)34
Latin America – 5
(cid:12)!(cid:21)(cid:16)"(cid:29)(cid:6)D(cid:6)35
Asia – 7
(cid:7)!(cid:5)(cid:18)(cid:21)(cid:19)(cid:25)(cid:4)(cid:19)(cid:6)D(cid:6)H
(cid:7)(cid:20)(cid:21)(cid:4)(cid:15)(cid:19)(cid:6)D(cid:6)5
(cid:11)!(cid:5)(cid:5)(cid:4)(cid:19)(cid:6)D(cid:6)3
@(cid:4)(cid:23)(cid:23)(cid:25)(cid:29)(cid:6)(cid:12)(cid:19)(cid:5)(cid:18)(cid:6)D(cid:6)<
(cid:8)(cid:16)(cid:21)(cid:18)(cid:3)(cid:6)(cid:7)(cid:28)(cid:29)(cid:21)(cid:4)(cid:15)(cid:19)(cid:6)D(cid:6)3
(cid:10)(cid:19)(cid:18)(cid:4)(cid:17)(cid:6)(cid:7)(cid:28)(cid:29)(cid:21)(cid:4)(cid:15)(cid:19)(cid:6)D(cid:6)3
(cid:8)(cid:16)(cid:21)(cid:18)(cid:3)(cid:6)(cid:7)(cid:28)(cid:29)(cid:21)(cid:4)(cid:15)(cid:19)(cid:6)D(cid:6)3
CCL Label represents 80%
of total CCL sales.
CCL Container represents 14%
of total CCL sales.
CCL Tube represents 6% of
total CCL sales.
6%
14%
80%
CAUTION ABOUT FORWARD-LOOKING INFORMATION (cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:8)(cid:9)(cid:7)(cid:10)(cid:6)(cid:11)(cid:12)(cid:13)(cid:14)(cid:11)(cid:2)(cid:6)(cid:15)(cid:16)(cid:17)(cid:18)(cid:19)(cid:4)(cid:17)(cid:5)(cid:6)(cid:20)(cid:16)(cid:21)(cid:22)(cid:19)(cid:21)(cid:23)(cid:24)(cid:25)(cid:16)(cid:16)(cid:26)(cid:4)(cid:17)(cid:27)(cid:6)(cid:4)(cid:17)(cid:20)(cid:16)(cid:21)(cid:28)(cid:19)(cid:18)(cid:4)(cid:16)(cid:17)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:20)(cid:16)(cid:21)(cid:22)(cid:19)(cid:21)(cid:23)(cid:24)(cid:25)(cid:16)(cid:16)(cid:26)(cid:4)(cid:17)(cid:27)(cid:6)(cid:5)(cid:18)(cid:19)(cid:18)(cid:29)(cid:28)(cid:29)(cid:17)(cid:18)(cid:5)(cid:30)(cid:6)(cid:19)(cid:5)(cid:6)(cid:23)(cid:29)(cid:31)(cid:17)(cid:29)(cid:23)(cid:6)!(cid:17)(cid:23)(cid:29)(cid:21)(cid:6)(cid:19)""(cid:25)(cid:4)(cid:15)(cid:19)#(cid:25)(cid:29)(cid:6)(cid:5)(cid:29)(cid:15)!(cid:21)(cid:4)(cid:18)(cid:4)(cid:29)(cid:5)(cid:6)(cid:25)(cid:19)(cid:22)(cid:5)(cid:6)$(cid:3)(cid:29)(cid:21)(cid:29)(cid:4)(cid:17)(cid:19)(cid:20)(cid:18)(cid:29)(cid:21)(cid:6)
(cid:15)(cid:16)(cid:25)(cid:25)(cid:29)(cid:15)(cid:18)(cid:4)%(cid:29)(cid:25)&(cid:6)(cid:21)(cid:29)(cid:20)(cid:29)(cid:21)(cid:21)(cid:29)(cid:23)(cid:6)(cid:18)(cid:16)(cid:6)(cid:19)(cid:5)(cid:6)’(cid:20)(cid:16)(cid:21)(cid:22)(cid:19)(cid:21)(cid:23)(cid:24)(cid:25)(cid:16)(cid:16)(cid:26)(cid:4)(cid:17)(cid:27)(cid:6)(cid:5)(cid:18)(cid:19)(cid:18)(cid:29)(cid:28)(cid:29)(cid:17)(cid:18)(cid:5)()(cid:30)(cid:6)(cid:18)(cid:3)(cid:19)(cid:18)(cid:6)(cid:4)(cid:17)%(cid:16)(cid:25)%(cid:29)(cid:6)(cid:19)(cid:6)(cid:17)!(cid:28)#(cid:29)(cid:21)(cid:6)(cid:16)(cid:20)(cid:6)(cid:21)(cid:4)(cid:5)(cid:26)(cid:5)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)!(cid:17)(cid:15)(cid:29)(cid:21)(cid:18)(cid:19)(cid:4)(cid:17)(cid:18)(cid:4)(cid:29)(cid:5)*(cid:6)+(cid:16)(cid:21)(cid:22)(cid:19)(cid:21)(cid:23)(cid:24)(cid:25)(cid:16)(cid:16)(cid:26)(cid:4)(cid:17)(cid:27)(cid:6)(cid:5)(cid:18)(cid:19)(cid:18)(cid:29)(cid:28)(cid:29)(cid:17)(cid:18)(cid:5)(cid:6)(cid:4)(cid:17)(cid:15)(cid:25)!(cid:23)(cid:29)(cid:6)(cid:19)(cid:25)(cid:25)(cid:6)(cid:5)(cid:18)(cid:19)(cid:18)(cid:29)(cid:28)(cid:29)(cid:17)(cid:18)(cid:5)(cid:6)(cid:18)(cid:3)(cid:19)(cid:18)(cid:6)(cid:19)(cid:21)(cid:29)(cid:6)"(cid:21)(cid:29)(cid:23)(cid:4)(cid:15)(cid:18)(cid:4)%(cid:29)(cid:6)(cid:4)(cid:17)(cid:6)(cid:17)(cid:19)(cid:18)!(cid:21)(cid:29)(cid:6)(cid:16)(cid:21)(cid:6)(cid:23)(cid:29)"(cid:29)(cid:17)(cid:23)(cid:6)(cid:16)(cid:17)(cid:6)(cid:20)!(cid:18)!(cid:21)(cid:29)(cid:6)(cid:29)%(cid:29)(cid:17)(cid:18)(cid:5)(cid:6)
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(cid:19)(cid:17)(cid:23)(cid:6)(cid:23)(cid:4)%(cid:4)(cid:23)(cid:29)(cid:17)(cid:23)(cid:6)"(cid:19)&(cid:16)!(cid:18)1(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)/(cid:16)(cid:28)"(cid:19)(cid:17)&2(cid:5)(cid:6)(cid:29)(cid:20)(cid:20)(cid:29)(cid:15)(cid:18)(cid:4)%(cid:29)(cid:6)(cid:18)(cid:19),(cid:6)(cid:21)(cid:19)(cid:18)(cid:29)1(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)/(cid:16)(cid:28)"(cid:19)(cid:17)&2(cid:5)(cid:6)(cid:16)(cid:17)(cid:27)(cid:16)(cid:4)(cid:17)(cid:27)(cid:6)#!(cid:5)(cid:4)(cid:17)(cid:29)(cid:5)(cid:5)(cid:6)(cid:5)(cid:18)(cid:21)(cid:19)(cid:18)(cid:29)(cid:27)&1(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)/(cid:16)(cid:28)"(cid:19)(cid:17)&2(cid:5)(cid:6)(cid:29),"(cid:29)(cid:15)(cid:18)(cid:19)(cid:18)(cid:4)(cid:16)(cid:17)(cid:5)(cid:6)(cid:21)(cid:29)(cid:27)(cid:19)(cid:21)(cid:23)(cid:4)(cid:17)(cid:27)(cid:6)(cid:27)(cid:29)(cid:17)(cid:29)(cid:21)(cid:19)(cid:25)(cid:6)#!(cid:5)(cid:4)(cid:17)(cid:29)(cid:5)(cid:5)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:29)(cid:15)(cid:16)(cid:17)(cid:16)(cid:28)(cid:4)(cid:15)(cid:6)(cid:15)(cid:16)(cid:17)(cid:23)(cid:4)(cid:18)(cid:4)(cid:16)(cid:17)(cid:5)*
+(cid:16)(cid:21)(cid:22)(cid:19)(cid:21)(cid:23)(cid:24)(cid:25)(cid:16)(cid:16)(cid:26)(cid:4)(cid:17)(cid:27)(cid:6)(cid:5)(cid:18)(cid:19)(cid:18)(cid:29)(cid:28)(cid:29)(cid:17)(cid:18)(cid:5)(cid:6)(cid:19)(cid:21)(cid:29)(cid:6)(cid:17)(cid:16)(cid:18)(cid:6)(cid:27)!(cid:19)(cid:21)(cid:19)(cid:17)(cid:18)(cid:29)(cid:29)(cid:5)(cid:6)(cid:16)(cid:20)(cid:6)(cid:20)!(cid:18)!(cid:21)(cid:29)(cid:6)"(cid:29)(cid:21)(cid:20)(cid:16)(cid:21)(cid:28)(cid:19)(cid:17)(cid:15)(cid:29)*(cid:6)(cid:2)(cid:3)(cid:29)&(cid:6)(cid:4)(cid:17)%(cid:16)(cid:25)%(cid:29)(cid:6)(cid:26)(cid:17)(cid:16)(cid:22)(cid:17)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)!(cid:17)(cid:26)(cid:17)(cid:16)(cid:22)(cid:17)(cid:6)(cid:21)(cid:4)(cid:5)(cid:26)(cid:5)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)!(cid:17)(cid:15)(cid:29)(cid:21)(cid:18)(cid:19)(cid:4)(cid:17)(cid:18)(cid:4)(cid:29)(cid:5)(cid:6)(cid:21)(cid:29)(cid:25)(cid:19)(cid:18)(cid:4)(cid:17)(cid:27)(cid:6)(cid:18)(cid:16)(cid:6)(cid:20)!(cid:18)!(cid:21)(cid:29)(cid:6)(cid:29)%(cid:29)(cid:17)(cid:18)(cid:5)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:15)(cid:16)(cid:17)(cid:23)(cid:4)(cid:18)(cid:4)(cid:16)(cid:17)(cid:5)(cid:6)(cid:4)(cid:17)(cid:15)(cid:25)!(cid:23)(cid:4)(cid:17)(cid:27)(cid:30)(cid:6)#!(cid:18)(cid:6)(cid:17)(cid:16)(cid:18)(cid:6)(cid:25)(cid:4)(cid:28)(cid:4)(cid:18)(cid:29)(cid:23)(cid:6)(cid:18)(cid:16)(cid:30)(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)(cid:29)%(cid:16)(cid:25)%(cid:4)(cid:17)(cid:27)(cid:6)
(cid:27)(cid:25)(cid:16)#(cid:19)(cid:25)(cid:6)(cid:31)(cid:17)(cid:19)(cid:17)(cid:15)(cid:4)(cid:19)(cid:25)(cid:6)(cid:15)(cid:21)(cid:4)(cid:5)(cid:4)(cid:5)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:4)(cid:18)(cid:5)(cid:6)(cid:4)(cid:28)"(cid:19)(cid:15)(cid:18)(cid:6)(cid:16)(cid:17)(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)(cid:22)(cid:16)(cid:21)(cid:25)(cid:23)(cid:6)(cid:29)(cid:15)(cid:16)(cid:17)(cid:16)(cid:28)&(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:15)(cid:19)"(cid:4)(cid:18)(cid:19)(cid:25)(cid:6)(cid:28)(cid:19)(cid:21)(cid:26)(cid:29)(cid:18)(cid:5)1(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)(cid:4)(cid:28)"(cid:19)(cid:15)(cid:18)(cid:6)(cid:16)(cid:20)(cid:6)(cid:15)(cid:16)(cid:28)"(cid:29)(cid:18)(cid:4)(cid:18)(cid:4)(cid:16)(cid:17)1(cid:6)(cid:15)(cid:16)(cid:17)(cid:5)!(cid:28)(cid:29)(cid:21)(cid:6)(cid:15)(cid:16)(cid:17)(cid:31)(cid:23)(cid:29)(cid:17)(cid:15)(cid:29)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:5)"(cid:29)(cid:17)(cid:23)(cid:4)(cid:17)(cid:27)(cid:6)"(cid:21)(cid:29)(cid:20)(cid:29)(cid:21)(cid:29)(cid:17)(cid:15)(cid:29)(cid:5)1(cid:6)(cid:27)(cid:29)(cid:17)(cid:29)(cid:21)(cid:19)(cid:25)(cid:6)(cid:29)(cid:15)(cid:16)(cid:17)(cid:16)(cid:28)(cid:4)(cid:15)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:27)(cid:29)(cid:16)"(cid:16)(cid:25)(cid:4)(cid:18)(cid:4)(cid:15)(cid:19)(cid:25)(cid:6)(cid:15)(cid:16)(cid:17)(cid:23)(cid:4)(cid:18)(cid:4)(cid:16)(cid:17)(cid:5)1(cid:6)(cid:15)!(cid:21)(cid:21)(cid:29)(cid:17)(cid:15)&(cid:6)
(cid:29),(cid:15)(cid:3)(cid:19)(cid:17)(cid:27)(cid:29)(cid:6)(cid:21)(cid:19)(cid:18)(cid:29)(cid:5)1(cid:6)(cid:4)(cid:17)(cid:18)(cid:29)(cid:21)(cid:29)(cid:5)(cid:18)(cid:6)(cid:21)(cid:19)(cid:18)(cid:29)(cid:5)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:15)(cid:21)(cid:29)(cid:23)(cid:4)(cid:18)(cid:6)(cid:19)%(cid:19)(cid:4)(cid:25)(cid:19)#(cid:4)(cid:25)(cid:4)(cid:18)&1(cid:6)(cid:18)(cid:29)(cid:15)(cid:3)(cid:17)(cid:16)(cid:25)(cid:16)(cid:27)(cid:4)(cid:15)(cid:19)(cid:25)(cid:6)(cid:15)(cid:3)(cid:19)(cid:17)(cid:27)(cid:29)1(cid:6)(cid:15)(cid:3)(cid:19)(cid:17)(cid:27)(cid:29)(cid:5)(cid:6)(cid:4)(cid:17)(cid:6)(cid:27)(cid:16)%(cid:29)(cid:21)(cid:17)(cid:28)(cid:29)(cid:17)(cid:18)(cid:6)(cid:21)(cid:29)(cid:27)!(cid:25)(cid:19)(cid:18)(cid:4)(cid:16)(cid:17)(cid:5)1(cid:6)(cid:21)(cid:4)(cid:5)(cid:26)(cid:5)(cid:6)(cid:19)(cid:5)(cid:5)(cid:16)(cid:15)(cid:4)(cid:19)(cid:18)(cid:29)(cid:23)(cid:6)(cid:22)(cid:4)(cid:18)(cid:3)(cid:6)(cid:16)"(cid:29)(cid:21)(cid:19)(cid:18)(cid:4)(cid:17)(cid:27)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)"(cid:21)(cid:16)(cid:23)!(cid:15)(cid:18)(cid:6)(cid:3)(cid:19):(cid:19)(cid:21)(cid:23)(cid:5)1(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)//(cid:10)2(cid:5)(cid:6)(cid:19)#(cid:4)(cid:25)(cid:4)(cid:18)&(cid:6)(cid:18)(cid:16)(cid:6)(cid:19)(cid:18)(cid:18)(cid:21)(cid:19)(cid:15)(cid:18)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:21)(cid:29)(cid:18)(cid:19)(cid:4)(cid:17)(cid:6)6!(cid:19)(cid:25)(cid:4)(cid:31)(cid:29)(cid:23)(cid:6)
(cid:29)(cid:28)"(cid:25)(cid:16)&(cid:29)(cid:29)(cid:5)*(cid:6)9(cid:16)(cid:6)(cid:17)(cid:16)(cid:18)(cid:6)!(cid:17)(cid:23)!(cid:25)&(cid:6)(cid:21)(cid:29)(cid:25)&(cid:6)(cid:16)(cid:17)(cid:6)(cid:20)(cid:16)(cid:21)(cid:22)(cid:19)(cid:21)(cid:23)(cid:24)(cid:25)(cid:16)(cid:16)(cid:26)(cid:4)(cid:17)(cid:27)(cid:6)(cid:5)(cid:18)(cid:19)(cid:18)(cid:29)(cid:28)(cid:29)(cid:17)(cid:18)(cid:5)(cid:30)(cid:6)(cid:19)(cid:5)(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)/(cid:16)(cid:28)"(cid:19)(cid:17)&2(cid:5)(cid:6)(cid:19)(cid:15)(cid:18)!(cid:19)(cid:25)(cid:6)(cid:21)(cid:29)(cid:5)!(cid:25)(cid:18)(cid:5)(cid:6)(cid:15)(cid:16)!(cid:25)(cid:23)(cid:6)(cid:23)(cid:4)(cid:20)(cid:20)(cid:29)(cid:21)(cid:6)(cid:28)(cid:19)(cid:18)(cid:29)(cid:21)(cid:4)(cid:19)(cid:25)(cid:25)&(cid:6)(cid:20)(cid:21)(cid:16)(cid:28)(cid:6)(cid:18)(cid:3)(cid:16)(cid:5)(cid:29)(cid:6)(cid:19)(cid:17)(cid:18)(cid:4)(cid:15)(cid:4)"(cid:19)(cid:18)(cid:29)(cid:23)(cid:6)(cid:4)(cid:17)(cid:6)(cid:18)(cid:3)(cid:29)(cid:5)(cid:29)(cid:6)(cid:20)(cid:16)(cid:21)(cid:22)(cid:19)(cid:21)(cid:23)(cid:24)(cid:25)(cid:16)(cid:16)(cid:26)(cid:4)(cid:17)(cid:27)(cid:6)(cid:5)(cid:18)(cid:19)(cid:18)(cid:29)(cid:28)(cid:29)(cid:17)(cid:18)(cid:5)*(cid:6)+(cid:16)(cid:21)(cid:22)(cid:19)(cid:21)(cid:23)(cid:24)(cid:25)(cid:16)(cid:16)(cid:26)(cid:4)(cid:17)(cid:27)(cid:6)(cid:5)(cid:18)(cid:19)(cid:18)(cid:29)(cid:28)(cid:29)(cid:17)(cid:18)(cid:5)(cid:6)
(cid:19)(cid:21)(cid:29)(cid:6)(cid:19)(cid:25)(cid:5)(cid:16)(cid:6)#(cid:19)(cid:5)(cid:29)(cid:23)(cid:6)(cid:16)(cid:17)(cid:6)(cid:19)(cid:6)(cid:17)!(cid:28)#(cid:29)(cid:21)(cid:6)(cid:16)(cid:20)(cid:6)(cid:19)(cid:5)(cid:5)!(cid:28)"(cid:18)(cid:4)(cid:16)(cid:17)(cid:5)(cid:30)(cid:6)(cid:22)(cid:3)(cid:4)(cid:15)(cid:3)(cid:6)(cid:28)(cid:19)&(cid:6)"(cid:21)(cid:16)%(cid:29)(cid:6)(cid:18)(cid:16)(cid:6)#(cid:29)(cid:6)(cid:4)(cid:17)(cid:15)(cid:16)(cid:21)(cid:21)(cid:29)(cid:15)(cid:18)(cid:30)(cid:6)(cid:4)(cid:17)(cid:15)(cid:25)!(cid:23)(cid:4)(cid:17)(cid:27)(cid:30)(cid:6)#!(cid:18)(cid:6)(cid:17)(cid:16)(cid:18)(cid:6)(cid:25)(cid:4)(cid:28)(cid:4)(cid:18)(cid:29)(cid:23)(cid:6)(cid:18)(cid:16)(cid:30)(cid:6)(cid:19)(cid:5)(cid:5)!(cid:28)"(cid:18)(cid:4)(cid:16)(cid:17)(cid:5)(cid:6)(cid:19)#(cid:16)!(cid:18)(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)(cid:20)(cid:16)(cid:25)(cid:25)(cid:16)(cid:22)(cid:4)(cid:17)(cid:27);(cid:6)(cid:27)(cid:25)(cid:16)#(cid:19)(cid:25)(cid:6)(cid:29)(cid:15)(cid:16)(cid:17)(cid:16)(cid:28)(cid:4)(cid:15)(cid:6)(cid:21)(cid:29)(cid:15)(cid:16)%(cid:29)(cid:21)&(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:3)(cid:4)(cid:27)(cid:3)(cid:29)(cid:21)(cid:6)(cid:15)(cid:16)(cid:17)(cid:5)!(cid:28)(cid:29)(cid:21)(cid:6)(cid:5)"(cid:29)(cid:17)(cid:23)(cid:4)(cid:17)(cid:27)1(cid:6)(cid:4)(cid:28)"(cid:21)(cid:16)%(cid:29)(cid:23)(cid:6)
(cid:15)!(cid:5)(cid:18)(cid:16)(cid:28)(cid:29)(cid:21)(cid:6)(cid:23)(cid:29)(cid:28)(cid:19)(cid:17)(cid:23)(cid:6)(cid:20)(cid:16)(cid:21)(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)/(cid:16)(cid:28)"(cid:19)(cid:17)&2(cid:5)(cid:6)"(cid:21)(cid:16)(cid:23)!(cid:15)(cid:18)(cid:5)1(cid:6)(cid:15)(cid:16)(cid:17)(cid:18)(cid:4)(cid:17)!(cid:29)(cid:23)(cid:6)(cid:3)(cid:4)(cid:5)(cid:18)(cid:16)(cid:21)(cid:4)(cid:15)(cid:19)(cid:25)(cid:6)(cid:27)(cid:21)(cid:16)(cid:22)(cid:18)(cid:3)(cid:6)(cid:18)(cid:21)(cid:29)(cid:17)(cid:23)(cid:5)(cid:30)(cid:6)(cid:28)(cid:19)(cid:21)(cid:26)(cid:29)(cid:18)(cid:6)(cid:27)(cid:21)(cid:16)(cid:22)(cid:18)(cid:3)(cid:6)(cid:4)(cid:17)(cid:6)(cid:5)"(cid:29)(cid:15)(cid:4)(cid:31)(cid:15)(cid:6)(cid:5)(cid:29)(cid:27)(cid:28)(cid:29)(cid:17)(cid:18)(cid:5)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:4)(cid:17)(cid:6)(cid:29)(cid:17)(cid:18)(cid:29)(cid:21)(cid:4)(cid:17)(cid:27)(cid:6)(cid:4)(cid:17)(cid:18)(cid:16)(cid:6)(cid:17)(cid:29)(cid:22)(cid:6)(cid:5)(cid:29)(cid:27)(cid:28)(cid:29)(cid:17)(cid:18)(cid:5)1(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)/(cid:16)(cid:28)"(cid:19)(cid:17)&2(cid:5)(cid:6)(cid:19)#(cid:4)(cid:25)(cid:4)(cid:18)&(cid:6)(cid:18)(cid:16)(cid:6)"(cid:21)(cid:16)%(cid:4)(cid:23)(cid:29)(cid:6)(cid:19)(cid:6)(cid:22)(cid:4)(cid:23)(cid:29)(cid:6)(cid:21)(cid:19)(cid:17)(cid:27)(cid:29)(cid:6)(cid:16)(cid:20)(cid:6)"(cid:21)(cid:16)(cid:23)!(cid:15)(cid:18)(cid:5)(cid:6)
(cid:18)(cid:16)(cid:6)(cid:28)!(cid:25)(cid:18)(cid:4)(cid:17)(cid:19)(cid:18)(cid:4)(cid:16)(cid:17)(cid:19)(cid:25)(cid:6)(cid:15)!(cid:5)(cid:18)(cid:16)(cid:28)(cid:29)(cid:21)(cid:5)(cid:6)(cid:16)(cid:17)(cid:6)(cid:19)(cid:6)(cid:27)(cid:25)(cid:16)#(cid:19)(cid:25)(cid:6)#(cid:19)(cid:5)(cid:4)(cid:5)1(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)#(cid:29)(cid:17)(cid:29)(cid:31)(cid:18)(cid:5)(cid:6)(cid:16)(cid:20)(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)/(cid:16)(cid:28)"(cid:19)(cid:17)&2(cid:5)(cid:6)(cid:20)(cid:16)(cid:15)!(cid:5)(cid:29)(cid:23)(cid:6)(cid:5)(cid:18)(cid:21)(cid:19)(cid:18)(cid:29)(cid:27)(cid:4)(cid:29)(cid:5)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:16)"(cid:29)(cid:21)(cid:19)(cid:18)(cid:4)(cid:16)(cid:17)(cid:19)(cid:25)(cid:6)(cid:19)""(cid:21)(cid:16)(cid:19)(cid:15)(cid:3)1(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)/(cid:16)(cid:28)"(cid:19)(cid:17)&2(cid:5)(cid:6)(cid:19)#(cid:4)(cid:25)(cid:4)(cid:18)&(cid:6)(cid:18)(cid:16)(cid:6)(cid:4)(cid:28)"(cid:25)(cid:29)(cid:28)(cid:29)(cid:17)(cid:18)(cid:6)(cid:4)(cid:18)(cid:5)(cid:6)(cid:19)(cid:15)6!(cid:4)(cid:5)(cid:4)(cid:18)(cid:4)(cid:16)(cid:17)(cid:6)(cid:5)(cid:18)(cid:21)(cid:19)(cid:18)(cid:29)(cid:27)&(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:5)!(cid:15)(cid:15)(cid:29)(cid:5)(cid:5)(cid:20)!(cid:25)(cid:25)&(cid:6)(cid:4)(cid:17)(cid:18)(cid:29)(cid:27)(cid:21)(cid:19)(cid:18)(cid:29)(cid:6)
(cid:19)(cid:15)6!(cid:4)(cid:21)(cid:29)(cid:23)(cid:6)#!(cid:5)(cid:4)(cid:17)(cid:29)(cid:5)(cid:5)(cid:29)(cid:5)1(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)(cid:19)(cid:15)(cid:3)(cid:4)(cid:29)%(cid:29)(cid:28)(cid:29)(cid:17)(cid:18)(cid:6)(cid:16)(cid:20)(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)/(cid:16)(cid:28)"(cid:19)(cid:17)&2(cid:5)(cid:6)"(cid:25)(cid:19)(cid:17)(cid:5)(cid:6)(cid:20)(cid:16)(cid:21)(cid:6)(cid:4)(cid:28)"(cid:21)(cid:16)%(cid:29)(cid:23)(cid:6)(cid:29)(cid:20)(cid:31)(cid:15)(cid:4)(cid:29)(cid:17)(cid:15)&(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:25)(cid:16)(cid:22)(cid:29)(cid:21)(cid:6)(cid:15)(cid:16)(cid:5)(cid:18)(cid:5)(cid:30)(cid:6)(cid:4)(cid:17)(cid:15)(cid:25)!(cid:23)(cid:4)(cid:17)(cid:27)(cid:6)(cid:5)(cid:18)(cid:19)#(cid:25)(cid:29)(cid:6)(cid:19)(cid:25)!(cid:28)(cid:4)(cid:17)!(cid:28)(cid:6)(cid:15)(cid:16)(cid:5)(cid:18)(cid:5)1(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)(cid:19)%(cid:19)(cid:4)(cid:25)(cid:19)#(cid:4)(cid:25)(cid:4)(cid:18)&(cid:6)(cid:16)(cid:20)(cid:6)(cid:15)(cid:19)(cid:5)(cid:3)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:15)(cid:21)(cid:29)(cid:23)(cid:4)(cid:18)1(cid:6)0!(cid:15)(cid:18)!(cid:19)(cid:18)(cid:4)(cid:16)(cid:17)(cid:5)(cid:6)(cid:16)(cid:20)(cid:6)(cid:15)!(cid:21)(cid:21)(cid:29)(cid:17)(cid:15)&(cid:6)(cid:29),(cid:15)(cid:3)(cid:19)(cid:17)(cid:27)(cid:29)(cid:6)(cid:21)(cid:19)(cid:18)(cid:29)(cid:5)1(cid:6)
(cid:18)(cid:3)(cid:29)(cid:6)/(cid:16)(cid:28)"(cid:19)(cid:17)&2(cid:5)(cid:6)(cid:15)(cid:16)(cid:17)(cid:18)(cid:4)(cid:17)!(cid:29)(cid:23)(cid:6)(cid:21)(cid:29)(cid:25)(cid:19)(cid:18)(cid:4)(cid:16)(cid:17)(cid:5)(cid:6)(cid:22)(cid:4)(cid:18)(cid:3)(cid:6)(cid:4)(cid:18)(cid:5)(cid:6)(cid:15)!(cid:5)(cid:18)(cid:16)(cid:28)(cid:29)(cid:21)(cid:5)1(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:27)(cid:29)(cid:17)(cid:29)(cid:21)(cid:19)(cid:25)(cid:6)#!(cid:5)(cid:4)(cid:17)(cid:29)(cid:5)(cid:5)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:29)(cid:15)(cid:16)(cid:17)(cid:16)(cid:28)(cid:4)(cid:15)(cid:6)(cid:15)(cid:16)(cid:17)(cid:23)(cid:4)(cid:18)(cid:4)(cid:16)(cid:17)(cid:5)*(cid:6)-(cid:3)(cid:16)!(cid:25)(cid:23)(cid:6)(cid:16)(cid:17)(cid:29)(cid:6)(cid:16)(cid:21)(cid:6)(cid:28)(cid:16)(cid:21)(cid:29)(cid:6)(cid:21)(cid:4)(cid:5)(cid:26)(cid:5)(cid:6)(cid:28)(cid:19)(cid:18)(cid:29)(cid:21)(cid:4)(cid:19)(cid:25)(cid:4):(cid:29)(cid:6)(cid:16)(cid:21)(cid:6)(cid:5)(cid:3)(cid:16)!(cid:25)(cid:23)(cid:6)(cid:19)(cid:17)&(cid:6)(cid:19)(cid:5)(cid:5)!(cid:28)"(cid:18)(cid:4)(cid:16)(cid:17)(cid:5)(cid:6)"(cid:21)(cid:16)%(cid:29)(cid:6)(cid:4)(cid:17)(cid:15)(cid:16)(cid:21)(cid:21)(cid:29)(cid:15)(cid:18)(cid:30)(cid:6)(cid:18)(cid:3)(cid:29)(cid:17)(cid:6)(cid:19)(cid:15)(cid:18)!(cid:19)(cid:25)(cid:6)(cid:21)(cid:29)(cid:5)!(cid:25)(cid:18)(cid:5)(cid:6)(cid:15)(cid:16)!(cid:25)(cid:23)(cid:6)%(cid:19)(cid:21)&(cid:6)
(cid:28)(cid:19)(cid:18)(cid:29)(cid:21)(cid:4)(cid:19)(cid:25)(cid:25)&(cid:6)(cid:20)(cid:21)(cid:16)(cid:28)(cid:6)(cid:18)(cid:3)(cid:16)(cid:5)(cid:29)(cid:6)(cid:29),"(cid:21)(cid:29)(cid:5)(cid:5)(cid:29)(cid:23)(cid:6)(cid:16)(cid:21)(cid:6)(cid:4)(cid:28)"(cid:25)(cid:4)(cid:29)(cid:23)(cid:6)(cid:4)(cid:17)(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)(cid:20)(cid:16)(cid:21)(cid:22)(cid:19)(cid:21)(cid:23)(cid:24)(cid:25)(cid:16)(cid:16)(cid:26)(cid:4)(cid:17)(cid:27)(cid:6)(cid:5)(cid:18)(cid:19)(cid:18)(cid:29)(cid:28)(cid:29)(cid:17)(cid:18)(cid:5)*(cid:6)+!(cid:21)(cid:18)(cid:3)(cid:29)(cid:21)(cid:6)(cid:23)(cid:29)(cid:18)(cid:19)(cid:4)(cid:25)(cid:5)(cid:6)(cid:16)(cid:17)(cid:6)(cid:26)(cid:29)&(cid:6)(cid:21)(cid:4)(cid:5)(cid:26)(cid:5)(cid:6)(cid:15)(cid:19)(cid:17)(cid:6)#(cid:29)(cid:6)(cid:20)(cid:16)!(cid:17)(cid:23)(cid:6)(cid:18)(cid:3)(cid:21)(cid:16)!(cid:27)(cid:3)(cid:16)!(cid:18)(cid:6)(cid:18)(cid:3)(cid:4)(cid:5)(cid:6)(cid:21)(cid:29)"(cid:16)(cid:21)(cid:18)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)"(cid:19)(cid:21)(cid:18)(cid:4)(cid:15)!(cid:25)(cid:19)(cid:21)(cid:25)&(cid:6)(cid:4)(cid:17)(cid:6)-(cid:29)(cid:15)(cid:18)(cid:4)(cid:16)(cid:17)(cid:6)<;(cid:6)’(cid:11)(cid:4)(cid:5)(cid:26)(cid:6)(cid:19)(cid:17)(cid:23)(cid:6)(cid:9)(cid:17)(cid:15)(cid:29)(cid:21)(cid:18)(cid:19)(cid:4)(cid:17)(cid:18)(cid:4)(cid:29)(cid:5)*(
(cid:12),(cid:15)(cid:29)"(cid:18)(cid:6)(cid:19)(cid:5)(cid:6)(cid:16)(cid:18)(cid:3)(cid:29)(cid:21)(cid:22)(cid:4)(cid:5)(cid:29)(cid:6)(cid:4)(cid:17)(cid:23)(cid:4)(cid:15)(cid:19)(cid:18)(cid:29)(cid:23)(cid:30)(cid:6)(cid:20)(cid:16)(cid:21)(cid:22)(cid:19)(cid:21)(cid:23)(cid:24)(cid:25)(cid:16)(cid:16)(cid:26)(cid:4)(cid:17)(cid:27)(cid:6)(cid:5)(cid:18)(cid:19)(cid:18)(cid:29)(cid:28)(cid:29)(cid:17)(cid:18)(cid:5)(cid:6)(cid:23)(cid:16)(cid:6)(cid:17)(cid:16)(cid:18)(cid:6)(cid:18)(cid:19)(cid:26)(cid:29)(cid:6)(cid:4)(cid:17)(cid:18)(cid:16)(cid:6)(cid:19)(cid:15)(cid:15)(cid:16)!(cid:17)(cid:18)(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)(cid:29)(cid:20)(cid:20)(cid:29)(cid:15)(cid:18)(cid:6)(cid:18)(cid:3)(cid:19)(cid:18)(cid:6)(cid:18)(cid:21)(cid:19)(cid:17)(cid:5)(cid:19)(cid:15)(cid:18)(cid:4)(cid:16)(cid:17)(cid:5)(cid:6)(cid:16)(cid:21)(cid:6)(cid:17)(cid:16)(cid:17)(cid:24)(cid:21)(cid:29)(cid:15)!(cid:21)(cid:21)(cid:4)(cid:17)(cid:27)(cid:6)(cid:16)(cid:21)(cid:6)(cid:16)(cid:18)(cid:3)(cid:29)(cid:21)(cid:6)(cid:5)"(cid:29)(cid:15)(cid:4)(cid:19)(cid:25)(cid:6)(cid:4)(cid:18)(cid:29)(cid:28)(cid:5)(cid:6)(cid:19)(cid:17)(cid:17)(cid:16)!(cid:17)(cid:15)(cid:29)(cid:23)(cid:6)(cid:16)(cid:21)(cid:6)(cid:16)(cid:15)(cid:15)!(cid:21)(cid:21)(cid:4)(cid:17)(cid:27)(cid:6)(cid:19)(cid:20)(cid:18)(cid:29)(cid:21)(cid:6)(cid:18)(cid:3)(cid:29)(cid:6)(cid:5)(cid:18)(cid:19)(cid:18)(cid:29)(cid:28)(cid:29)(cid:17)(cid:18)(cid:5)(cid:6)(cid:19)(cid:21)(cid:29)(cid:6)(cid:28)(cid:19)(cid:23)(cid:29)(cid:6)(cid:28)(cid:19)&(cid:6)
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2 0 1 1 L E T T E R T O S H A R E H O L D E R S
Positioned
for growth
Donald G. Lang
Executive Chairman
Geoffrey T. Martin
President and
Chief Executive Offi cer
CCL DELIVERED HEALTHY PROGRESS IN 2011 DESPITE A DIFFICULT ECONOMIC ENVIRONMENT, SOFT CONSUMER
SPENDING AND CONTINUING INFLATIONARY RAW MATERIAL COSTS. OUR GLOBAL CONSUMER STAPLE CUSTOMER
BASE AND OUR WIDE RANGE OF INNOVATIVE PRODUCTS FUELLED ANOTHER SUCCESSFUL YEAR. ROBUST FINANCIAL
RESULTS, WITH BOTH TOP AND BOTTOM LINE IMPROVEMENT, POSITIONED THE COMPANY FOR FUTURE GROWTH
AND INCREASED SHAREHOLDER VALUE.
Strong Operating Performance
After a substantial recovery, in 2010, from the global
economic crisis of the previous two years, CCL posted strong
2011 operational performance across all business segments
and most of the countries in which we operate. Throughout
the year economic conditions remained unsettled, particularly
in Europe. Despite this challenge, sales increased by 6%
and net earnings by 18%. Foreign currency translation, a
strong headwind for most of the prior decade, negatively
impacted earnings by 2%, due to the rising U.S. dollar largely
offsetting the decline of the euro and other international
currencies in the second half of 2011.
CCL Label
CCL Label is the world’s largest converter of pressure
sensitive and fi lm materials for decorative, functional
and information labels used by large global customers.
Sales passed the $1 billion landmark for the fi rst time in
our history in 2011, and the segment continues to be
the powerhouse for shareholders, delivering 87% of the
Company’s operating income.*
We service three main customer groups; Home & Personal
Care, Healthcare & Specialty, and Food & Beverage. Each of
these three business sectors is responsible for approximately
25% to 35% of our global Label revenues. In addition, our
small but growing CCL Design business services European
automotive and industrial machine OEMs with heavy-duty
durable products, including LED displays.
CCL Label operates 63 state-of-the-art plants that are
globally located to meet the sourcing needs of its
international customers. This worldwide network was built
largely through acquisitions in the developed world and
greenfi eld sites in emerging markets. Signifi cant investment
in our facilities and technologies over the last decade
created uniquely specialized operations with the capacity
and capability to support customers’ product launches,
development innovations and supply-chain initiatives all
around the world.
CCL Industries Inc. 2011 Annual Report 1
CCL AR 2011_4 ins pages_blue.indd 1
16/03/12 4:48 PM
Our geographic reach across 23 countries naturally
diversifies macroeconomic and currency risks for investors.
As the U.S. economy slowly improved in the second half of
2011, North American sales recovered from a soft start to
end the year slightly up, and our European operations posted
solid growth despite the Eurozone debt crisis. Emerging
markets offered our customers greater opportunities, and this
drove double-digit sales growth for us in these geographies.
Excluding the impact of currency translation, worldwide
Label sales increased by 7% and profitability improved slightly
compared to 2010, despite significant material cost inflation.
Our 21.8% EBITDA* margin continued to be at the high end
of the range for the specialty packaging industry.
All business sectors and geographic regions performed to
expectations in 2011. We continue to gain share in the Home
& Personal Care sector as customers consolidate through
mergers and acquisitions and look to retain fewer and larger
suppliers that are able to serve them from multiple locations
around the world. Strong double-digit sales increases in Latin
America and Asia were offset by slower growth rates in the
developed world. However, nearly 40% of our sales in this
sector now come from emerging markets.
In 2011, our Healthcare & Specialty sector posted solid results
in all regions of the world despite slower conditions in the
agricultural chemicals market in the United States that were
attributed by some customers to unusual weather patterns this
past year. Sales to Healthcare customers were solid overall
and enhanced in North America by the addition of Sertech, a
pharmaceutical label business located in Chicago, which we
acquired in April. Last summer, we also opened a new plant in
the Raleigh-Durham Triangle in North Carolina to service the
fastest-growing region of the United States for pharmaceutical
manufacturing. Results were solid in Europe despite the
region’s macroeconomic issues, and emerging markets grew
rapidly from a small base.
CCL Label’s Food & Beverage sector continues to grow as
customers adopt new decorating concepts, using our sleeves
and pressure sensitive labels to replace traditional wet glue
systems or direct printing on a wide range of consumer brands.
Despite the soft European economy and raw material cost
inflation, our large operations in the region delivered stable
performance. Results in the small U.S. operations were mixed
but improved substantially in Brazil. Sales to Wine & Spirit
customers were also up – significantly from a low base as we
2 CCL Industries Inc. 2011 Annual Report
expanded our presence around the world in this relatively new
market for CCL.
CCL Design benefited from the export success of our German
OEM customers and had another solid year.
Emerging markets now represent over 20% of CCL Label’s
total revenues and remain a major success story. Sales in Asia
passed $75 million for the first time and continue to grow at
a rapid pace. Thankfully, our Thai operations were unaffected
by the terrible floods in Bangkok in terms of physical damage.
However, some customers closed their factories temporarily
for safety reasons, and the remainder were forced to cut
production levels, reducing demand significantly in the fourth
quarter. We expect to see a robust rebound in the first half of
2012 to replenish depleted inventories. To prepare for that
and the ongoing growth in the region, CCL will invest a further
$10 million in Thailand in 2012, with a third facility in Bangkok
providing much-needed additional capacity.
Latin America continues to provide growth opportunities in all
our customer sectors. Our Brazilian and Mexican operations
both had banner years in 2011 with strong double-digit
sales growth and excellent profitability levels. This gave us
confidence to invest $20 million in Brazil over 2011 and
2012, doubling the size of our plant in São Paulo and adding
significant capacity to our sleeve operation in Criciúma in the
southern state of Santa Catarina. Last year, Brazil overtook the
United Kingdom as the sixth-largest economy in the world.
Russia remains an important market for customers, it became
the second-largest economy in Europe after Germany in 2011.
After a difficult start in the important vodka market, we had
another profitable year at our CCL-Kontur joint venture. In
September we completed our Pacman-CCL transaction, which
covers the oil-producing states of the Middle East from its
headquarters in Dubai. In 2012 the venture, currently with
three operations, will start up a new plant in Jeddah, Saudi
Arabia, and is evaluating options to enter India. CCL holds
a 50% economic interest in all of these investments and is
actively involved as the strategic partner. We continue to seek
out opportunities in new geographic markets. This past year,
we established licence agreements with Master Label, the
largest label converter in Indonesia, and DekoPak, a well-
known producer of sleeve labels in Turkey. Both companies
trade under the CCL name in conjunction with their own and
use our corporate identity system.
CCL AR 2011_4 ins pages_blue.indd 2
16/03/12 4:48 PM
CCL Container and CCL Tube
CCL Container delivered a major turnaround under a
revitalized management team and was the largest contributor
to earnings improvement for the Company in 2011. New
pricing programs were established to pass through the
changes in aluminum costs to the market every 90 days.
Company policy now permits hedging of our metal supply
only in conjunction with “back-to-back” priced contracts with
blue-chip customers. We were particularly pleased to see our
Canadian facility turn profitable in the second half of 2011
after three years of losses as we implemented stricter pricing
controls as well as cost reduction and productivity programs.
Our U.S. plant delivered excellent results, posting record
income for the year. Operations in Mexico enjoyed double-
digit growth rates as a third line started up at our state-of-the-
art plant in Guanajuato. The sudden 20% devaluation of the
peso to the U.S. dollar impacted profitability in the second
half of the year, but results remained positive. We expect
overall continuing progress in 2012, while recognizing that
future prior-year comparisons will be more challenging after
2011’s solid recovery.
CCL Tube had an outstanding year and exceeded all
expectations. Sales were up by 8% and profits up 37% to
record levels as we gained share in sluggish market conditions.
Our two best-in-class facilities now have the leading position
in North America for highly decorated extruded tubes sold
to personal care and cosmetic customers. In 2012, we are
planning to expand our site in Wilkes-Barre, PA, and add more
decorating capability in Los Angeles as we continue to strive
for increasing market share.
With all business segments contributing to our success, CCL
reported an 18% increase in adjusted earnings per share*
(“EPS”) from, $2.18 in 2010 to $2.57 in 2011, exceeding our
EPS growth targets established for the last five years.
Strong Financial Position
Our prudent financial strategy has served us well during this
unsettled era as governments have attempted to resolve
one economic crisis after another. Our modest debt leverage
and strong cash positions around the world ensure that we
always have liquidity to run our business in good or difficult
times. Over the last decade, we have focused on aggressive
working capital management; combined with our lower capital
expenditures and strong earnings performance, this resulted
in cash flow from operations of $171 million in 2011. As a
result, our net debt to total capitalization ratio dropped to less
than 21% at the end of the year, significantly below our 45%
comfort level.
In 2011, we invested $79 million, net of proceeds on
disposals, in our plants to improve productivity, expand our
product capabilities and add to our geographic reach with
new greenfield facilities in developing markets. Given our
past investment and the quality of our global infrastructure
today, we expect to keep capital expenditures at or below
depreciation for the immediate future.
Our financial strength supports the stability and sustainability
of uninterrupted cash dividends to shareholders, with regular
increases and no reductions for over 30 years. We are
particularly proud that dividends have more than doubled
over the last decade. The 27% dividend payout ratio in 2011
exceeded our 25% target for another year.
Our strong financial position gives us significant capacity
to take advantage of acquisition opportunities. Our focus
remains on geographies and markets that can deliver growth
and greater value for shareholders, and we are determined to
retain our proven financial discipline when evaluating potential
transactions.
Over the last decade, CCL has transformed itself from a
regionally diversified packaging company to the largest label
company in the world and the leading player in aluminum
aerosol containers and plastic tubes in North America. With
over 95% of our revenue coming from outside of Canada, CCL
continues to capitalize on the growth of the global economy.
Global Leadership in a Sustainable World
CCL’s global network of 69 operations reaches across six
continents and 23 countries, enabling us to service our
customers wherever they have needs around the world. Our
operating philosophy is to “think globally and act locally.”
Our global management team is a mix of seasoned industry
veterans and talented newcomers. It is also a culturally
diverse group deliberately located around the world with one
common focus – our customers. In 2011, we were pleased
to announce a number of promotions to recognize team
members’ accomplishments and to ensure that they continue
to grow and gain experience. Our acquisitions, joint ventures
CCL Industries Inc. 2011 Annual Report 3
CCL AR 2011_4 ins pages_blue.indd 3
16/03/12 4:48 PM
sector and the largest label company in the world. We have
successfully executed a clear mission and strategy. We strive
for continuous improvement in our manufacturing processes
and business services. We focus relentlessly on our
customers’ ideas and partner with them to turn innovative
concepts into products that make a difference. We support
our employees’ passion to make CCL a better place to work
and believe that it is synonymous with becoming a world-
class supplier to our customers.
Given the macroeconomic issues facing us, we are pleased
that CCL enjoyed steady growth and strong earnings
momentum in 2011. Our financial position strengthened
further from strong cash flows and now provides an even
better financial foundation for the future. Our world-class
facilities, blue-chip, diversified customer base and talented
global management team position us for future growth.
Looking ahead, we are energized about our future and
comfortable with our capability to weather further economic
storms. We believe that global leadership underpins the
investment thesis for CCL shareholders. Acquisitions
remain a significant component of our success, and we will
accelerate our efforts to seek out transactions around the
world that make strategic sense and match our valuation
and quality criteria. We will also continue to invest in building
new facilities to add capability and capacity, and extend our
geographic reach.
We would like to thank our customers and suppliers for
their continued support, and recognize and thank our
6,400 employees around the world for their commitment,
creativity and constant drive for success.
Donald G. Lang
Executive Chairman
Geoffrey T. Martin
President and
Chief Executive Officer
and licence agreements have also introduced us to many
strong individuals who have joined CCL, bringing knowledge of
different cultures, new technologies and fresh ideas along
with their entrepreneurial spirit.
Shareholder interests are represented by a highly experienced
Board of Directors. They bring a diverse set of skills and
knowledge to our deliberations, providing wise counsel to
management and strong corporate governance. After more
than 17 years as a Director, with nine of them as Chairman
of the Board and three as Lead Director, Jon Grant has
announced his plans to retire from the Board, and therefore
he will not stand for re-election at the annual general meeting
in May 2012. His knowledge of the Company, our industry and
the environment in which we operate will be missed, and we
thank him for his guidance during his many years as a Director.
We continue to deploy many initiatives to reduce the carbon
footprint of CCL’s products and services. Our patented Wash
Off labels for returnable glass bottles reduce the impact
of glass going to landfill. We gained significant customer
traction with our tubes produced from post-consumer
polyethylene resins. Our Super Stretch Sleeves decorate PET
beverage containers without adhesive or energy and facilitate
the easy removal of the label for bottle recycling. In 2011,
we partnered with Mitsubishi to bring to customers pressure
sensitive label release liners that can be reused multiple
times through the decorating process. Many of our operations
moved to eliminate wooden pallets and corrugated boxes in
collaborative logistic partnerships, using multi-trip returnable
systems with suppliers and customers. Some CCL locations
began to use subsidies and credits to generate solar power
to run our factories, and our new plant in São Paulo, Brazil, is
being designed to the most exacting standards to minimize
our carbon footprint and become a model for future facility
constructions.
Positioned for Growth
CCL has reinvented itself numerous times to adapt to
changing markets and consumer demands to become what
it is today – a major global player in the specialty packaging
* Non-IFRS measures. See section 5 of CCL’s Management’s
Discussion & Analysis for more detail.
4 CCL Industries Inc. 2011 Annual Report
CCL AR 2011_4 ins pages_blue.indd 4
16/03/12 4:48 PM
F I N A N C I A L H I G H L I G H T S
(In thousands of Canadian dollars, except per share and ratio data)
Sales
EBITDA*
% of sales
Restructuring and other items – net loss
Net Earnings
% of sales
Earnings per Class B share
Net earnings
Diluted earnings
Adjusted basic earnings per Class B share*
Dividends
At year end
Total assets
Net debt**
Shareholders’ equity
Net debt to total book capitaliztion
Return on equity (before other expenses)*
Book value per Class B share
Number of employees
*
A non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A.
** See table on page 23.
2011
2010
% change
$ 1,268,477
$ 1,192,318
$ 239,106
$
219,781
6.4%
8.8%
18.4%
225
71,093
18.3%
18.8%
797
84,126
6.6%
2.54
2.50
2.57
0.70
$
$
$
$
$
$
$
$
$
$
$
$
6.0%
2.17
2.13
2.18
0.66
$ 1,613,481
$ 213,270
$ 816,880
$ 1,627,974
248,702
$
769,327
$
20.7%
10.7%
24.46
6,400
$
24.4%
9.5%
23.32
5,800
$
17.1%
17.4%
17.9%
6.1%
(0.9%)
(14.2%)
6.2%
4.9%
10.3%
CCL Industries Inc. 2011 Annual Report 5
MANAGEMENT’S DISCUSSION AND ANALYSIS
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
This Management’s Discussion and Analysis of the financial condition and results of operations (“MD&A”) of CCL
Industries Inc. (“CCL” or “the Company”) relates to the years ended December 31, 2011 and 2010. In preparing
this MD&A, the Company has taken into account information available until February 23, 2012, unless otherwise
noted. This MD&A should be read in conjunction with the Company’s December 31, 2011, year end financial
statements, which form part of the CCL Industries Inc. 2011 Annual Report dated February 23, 2012. The
financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”)
and, unless otherwise noted, both the financial statements and this MD&A are expressed in Canadian dollars as
the reporting currency. The major measurement currencies of CCL’s operations are the Canadian dollar, the U.S.
dollar, the euro, the Australian dollar, the Brazilian real, the Chinese renminbi, the Danish krone, the Japanese
yen, the Mexican peso, the Polish zloty, the Russian rouble, the South African rand, the Thai baht, the U.K. pound
sterling and the Vietnamese dong. All per Class B non-voting share (“Class B share”) amounts in this document
are expressed on an undiluted basis, unless otherwise indicated. CCL’s Audit Committee and its Board of
Directors have reviewed this MD&A to ensure consistency with the approved strategy of the Company and the
results of the Company. The financial data presented in the MD&A for periods prior to January 1, 2010, were
prepared under the previous Canadian GAAP financial reporting framework.
Sean P. Washchuk
Senior Vice President and
Chief Financial Officer
FORWARD-LOOKING INFORMATION
INDEX
7 1. Corporate Overview
7 A) The Company
7 B) Customers and Markets
8 C) Strategy and Financial Targets
This MD&A contains forward-looking information and forward-looking statements, as defined under applicable securities laws,
(hereinafter collectively referred to as “forward-looking statements”) that involve a number of risks and uncertainties. Forward-looking
statements include all statements that are predictive in nature or depend on future events or conditions. Forward-looking statements
are typically identified by, but not limited to, the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans” or similar
expressions. Statements regarding the operations,
business,
financial condition, priorities, ongoing
objectives, strategies and outlook of the Company,
other than statements of historical fact, are forward-
looking statements. Specifically, this MD&A contains
forward-looking statements regarding the anticipated
growth in sales,
the
Company’s segments; the Company’s improvement
in market share; the Company’s capital spending
levels and planned capital expenditures in 2012; the
adequacy of the Company’s financial
liquidity; the
Company’s targeted return on equity, earnings per
share, EBITDA growth rates and dividend payout; the
Company’s effective tax rate; the Company’s ongoing
business strategy and the Company’s expectations
regarding general business and economic conditions.
16 2. Business Segment Review
16 A) General
18 B) Label Segment
20 C) Container Segment
22 D) Tube Segment
10 D) Recent Acquisitions and Dispositions
11 E) Consolidated Annual Financial Results
13 F) Seasonality and Fourth Quarter Financial Results
income and profitability of
23 3. Financing and Risk Management
23 A) Liquidity and Capital Resources
24 B) Cash Flow
25 C) Interest Rate, Foreign Exchange Management and Other Hedges
26 D) Shareholders’ Equity and Dividends
27 E) Commitments and Other Contractual Obligations
28 F) Controls and Procedures
29 4. Risks and Uncertainties
33 5. Accounting Policies and Non-IFRS Measures
33 A) Key Performance Indicators and Non-IFRS Measures
37 B) Accounting Policies and New Standards
38 C) Critical Accounting Estimates
39 D) Related Party Transactions
39 6. Outlook
6 CCL Industries Inc. 2011 Annual Report
limited to,
Forward-looking statements are not guarantees of
future performance. They involve known and unknown
risks and uncertainties relating to future events and
the
conditions including, but not
uncertainty of the recovery from the global financial
crisis and its impact on the world economy and
capital markets;
competition;
consumer confidence and spending preferences;
general economic and geopolitical
conditions;
currency exchange rates; interest rates and credit
availability;
in
change;
risks associated with
government
operating and product hazards; and CCL’s ability to
attract and retain qualified employees. Do not unduly
rely on forward-looking statements as the Company’s
technological
regulations;
changes
impact
the
of
actual results could differ materially from those anticipated in these forward-looking statements. Forward-looking statements are also
based on a number of assumptions, which may prove to be incorrect, including, but not limited to, assumptions about the following:
global economic recovery and higher consumer spending; improved customer demand for the Company’s products; continued historical
growth trends, market growth in specific segments and entering into new segments; the Company’s ability to provide a wide range of
products to multinational customers on a global basis; the benefits of the Company’s focused strategies and operational approach; the
Company’s ability to implement its acquisition strategy and successfully integrate acquired businesses; the achievement of the
Company’s plans for improved efficiency and lower costs, including the ability to pass on aluminum cost increases to its customers; the
availability of cash and credit; fluctuations of currency exchange rates; the Company’s continued relations with its customers; and
general business and economic conditions. Should one or more risks materialize or should any assumptions prove incorrect, then
actual results could vary materially from those expressed or implied in the forward-looking statements. Further details on key risks can
be found throughout this report and particularly in Section 4: “Risk and Uncertainties.”
Except as otherwise indicated, forward-looking statements do not take into account the effect that transactions or non-recurring or
other special items announced or occurring after the statements are made may have on the business. Such statements do not,
unless otherwise specified by the Company, reflect the impact of dispositions, sales of assets, monetizations, mergers,
acquisitions, other business combinations or transactions, asset write-downs or other charges announced or occurring after forward-
looking statements are made. The financial impact of these transactions and non-recurring and other special items can be complex
and depends on the facts particular to each of them and therefore cannot be described in a meaningful way in advance of knowing
specific facts.
The forward-looking statements are provided as of the date of this MD&A and the Company does not assume any obligation to
update or revise the forward-looking statements to reflect new events or circumstances, except as required by law.
Unless the context otherwise indicates, a reference to “CCL” or “the Company” means CCL Industries Inc., its subsidiary companies
and equity accounted investments.
1. CORPORATE OVERVIEW
A) The Company
CCL Industries Inc. is a world leader in the development of label solutions for global producers of consumer brands in the home and
personal care, healthcare, durable goods, and specialty food and beverage sectors and a specialty supplier of aluminum containers
and plastic tubes for the same customers in North America. Founded in 1951, the Company has been public under its current name
since 1980. CCL’s corporate office is located in Toronto, Canada, with its operational
leadership centred in Framingham,
Massachusetts, United States. The corporate office provides executive and centralized services such as finance, accounting,
internal audit, treasury, risk management, legal, tax, human resources, information technology and environmental, health and safety.
The Framingham office provides operational direction and oversees the activities of CCL’s Segments: Label, Container and Tube.
CCL employs approximately 6,400 people in 69 production facilities located in North America, Latin America, Europe, Australia,
South Africa, the Middle East and Asia including an equity investment in Russia operating two facilities and one in the Middle East
operating four facilities. The Company also has a label licence holder operating a plant in Turkey and a label and tube licence holder
operating two plants in Indonesia.
B) Customers and Markets
CCL’s customer base is primarily comprised of a
significant number of global
consumer product,
healthcare, chemical and durable goods companies. A
strategy of many of our customers is a continuous
focus on growing their global market positions. Recent
industry trends include customer consolidation, even
among the largest players, and a disproportionate
growth in sales in emerging markets and relatively
lower growth in the developed world.
Demand for consumer staples and healthcare products
throughout economic
generally remains consistent
daily
requires
often
use
the
cycles
consumption. These markets are less volatile than
end
as
SALES FROM CONTINUING OPS
(in millions of Canadian dollars)
NET EARNINGS
PER CLASS B SHARE
(in Canadian dollars)
1,400
1,200
1,000
800
600
400
200
0
07
08
09
10
11
5
4
3
2
1
0
07
08
09
10
11
CCL Industries Inc. 2011 Annual Report 7
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
consumer durables and the information technology industry which have higher price points and can be impacted by changes in how
society works. Certain markets, such as for beverage and agro-chemical products, are more seasonal in nature and affect the
variability of quarterly sales and profitability.
The state of the global economy and geopolitical events can affect consumer demand and ultimately CCL’s customers’ plans. CCL’s
customers react to these issues and to competitive activity in their product categories by developing marketing and sales promotion
strategies including the introduction of new products. These factors directly influence the demand for CCL’s products. The
Company’s growth expectations generally mirror the trends of each of the markets and product lines in which CCL’s customers
compete and the growth of the economy in each geographic region. CCL also anticipates improving its market share generally in
each market and category over time, which is consistent with its overall historical trend.
The label market is large and highly fragmented with many players but with no single competitor having the substantial operating
breadth or global reach of CCL Label. The Container Segment operates only in North America, which includes Mexico. There are two
direct competitors in the Container business in the United States and one in Mexico. The Tube Segment operates only in the United
States where there are a small number of competitors.
C) Strategy and Financial Targets
CCL’s vision is to increase shareholder value through leading supply chain solutions and product innovations delivered to large
global customers across the three Segments. CCL builds on the strengths of its people in manufacturing and product development;
and nurtures strong relationships with its international customers and suppliers. The Company anticipates increasing its market
share in most product categories by capitalizing on the growth of its customers, by following market trends such as globalization and
by driving new product innovation.
A key driver in CCL’s strategy is maintaining its focus and discipline. The Company aspires to be the market leader and the highest
value-added producer in each product line and region in which it chooses to compete. CCL’s strategy is to continue to improve the
performance of the Container Segment, develop the strong performance of the Tube Segment in North America while investing in the
growth of the Label Segment globally both organically and by acquisition. In 2011, CCL acquired Thunder Press Inc. (operated under
the trade name “Sertech”), a healthcare label producer in Chicago, Illinois; and a 50% interest in Pacman-CCL, a group of label
companies based in Dubai servicing the Middle East. In 2010, Purbrick Pty Ltd., a healthcare label producer in Australia was
acquired to further increase the Company’s market share. In addition, to continue servicing its global customers in new territories,
CCL signed a label licence agreement in Turkey with Dekopak Ambalaj Sanayi Ve Tic. A.S. (“Dekopak”), and a label and tube licence
agreement in Indonesia with PT. Master Label.
The Company’s strategic objective in the past decade has been the long-term growth of earnings through the building of a global
business platform with investment in new plants and equipment, by acquisitions and through innovation in new product
development. This approach is intended to allow the Company to increase market share and to grow internationally with its core
customers. The acquisition strategy includes seeking attractively priced acquisitions within CCL’s core competencies and
manufacturing capabilities that will be immediately accretive to earnings. In addition, such acquisitions should generally support its
strategic geographic expansion plans and/or provide new technologies, and/or new customer relationships and products to CCL’s
portfolio.
The Company’s financial strategy is to be fiscally prudent and conservative. Financial leverage has been maintained at modest
levels, and ensuring liquidity has been a cornerstone of the Company’s philosophy. This strategy continues to serve the Company
well, particularly during the recent global economic downturn, which had a dramatic adverse impact on many companies, including
some of its major competitors. During good and difficult economic times, the Company has maintained high levels of cash on hand
and unused lines of credit to reduce its financial risk and to provide flexibility when acquisition opportunities are available. The
Company currently has several long-term private debt placements in place and over $91 million available on an unsecured revolving
line of credit, which further enhances its liquidity and strengthens its financial foundation for the foreseeable future.
CCL has a continuous focus on minimizing its investment in working capital in order to maximize cash flow in support of the growth
in the business. In addition, capital expenditures are approved when they are expected to be accretive to earnings and are
selectively allocated towards the most attractive growth opportunities.
A key financial target is return on equity before goodwill impairment loss, restructuring and other items and tax adjustments (“ROE,”
a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below). CCL continues to execute its
strategy with a goal of achieving a comparable ROE level to its leading peers in specialty packaging. Historically, the Company has
8 CCL Industries Inc. 2011 Annual Report
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:
Return on Equity
2011
10.7%
2010
9.5%
2009
7.6%
2008
11.1%
2007
13.3%
2006
12.5%
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:
EPS Growth Rate
2011
18%
2010
23%
2009
-30%
2008
2%
2007
19%
2006
19%
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:
EBITDA
% of sales
2011
239.1
19%
2010
219.8
18%
2009
207.9
17%
2008
216.4
18%
2007
206.9
18%
2006
176.1
17%
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
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
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.
D) Recent Acquisitions and Dispositions
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:
(cid: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.
(cid: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.
(cid: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.
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
E) Consolidated Annual Financial Results
Selected Financial Information
Results of Consolidated Operations
Sales from continuing operations
Cost of sales
Selling, general and administrative expenses
Earnings in equity accounted investments
Net finance cost
Restructuring and other items – net loss
Earnings before income taxes
Income taxes
Net earnings
Net earnings per Class B share
Goodwill impairment loss, restructuring and other items and tax
adjustment – loss
Diluted earnings per Class B share
Dividends per Class B share
Total assets
Total non-current liabilities
Comments on Consolidated Results
2011
1,268.5
975.0
154.6
138.9
1.2
(21.4)
(0.8)
117.9
33.8
84.1
2.54
(0.03)
2.50
0.70
1,613.5
540.4
$
$
$
$
$
$
$
$
2010
1,192.3 $
917.5
150.4
2009
1,199.0
943.5
147.9
124.4
0.5
(25.3)
(0.2)
99.4
28.3
71.1 $
2.17 $
107.6
0.3
(29.3)
(7.3)
71.3
29.1
42.2
1.31
(0.01) $
(0.46)
2.13 $
0.66 $
1.29
0.60
1,628.0 $
1,648.6
540.7 $
642.6
$
$
$
$
$
$
$
$
Sales were $1,268.5 million in 2011, an increase of 6.4% compared to $1,192.3 million recorded in 2010. The increase is
primarily attributable to an organic growth rate of 7.0%, augmented by the Sertech acquisition (0.8%) and partially offset by the
negative impact of 1.4% due to foreign currency translation. On a comparative basis with 2010, sales were higher in all segments
due to strong organic growth.
Consistent with CCL’s 2010 year, approximately 4% of CCL’s 2011 sales to end use customers are denominated in Canadian
dollars. Consequently, changes in foreign exchange rates can have a material impact on sales and profitability when translated into
Canadian dollars for public reporting. While the impact of foreign exchange translation moderated in 2011, compared to the trends
of the last decade, the current year’s results have continued to be adversely affected. The depreciation of the U.S. dollar and the
Mexican peso by 4% and 2%, respectively, was partially offset by a 1% appreciation of the euro relative to the Canadian dollar in
2011 compared to average exchange rates in 2010.
Earnings after cost of goods sold and selling, general and administrative expenses in 2011 was $138.9 million, up $14.5 million
from $124.4 million in 2010.
Selling, general and administrative expenses were $154.6 million for 2011 compared to $150.4 million reported in 2010. The
increase in selling, general and administrative expenses in 2011 relates primarily to higher corporate expenses and the
unfavourable impact of foreign currency translation. Corporate expenses for 2011 were $24.8 million compared to $22.2 million for
2010. The increase in corporate expenses relative to those in 2010 relates primarily to higher variable incentive compensation
expense, the unfavourable impact of foreign currency translation and an increase in self-insurance claims reserves in 2011.
Operating income (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below) in 2011
was $163.7 million, an improvement of 11.7% compared to $146.6 million reported in 2010. The increase in operating income in
2011 was primarily attributable to strong organic growth, partially offset by the unfavourable impact from foreign currency translation.
Excluding the effect of unfavourable currency translation, operating income was up 13.4%. This increase primarily reflects
CCL Industries Inc. 2011 Annual Report 11
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
improvements in the Container and Tube Segments of $13.7 million and $3.2 million, respectively. The Label Segment improved
slightly, 1.4% for 2011 compared to 2010 excluding the negative impact of currency translation. Further details on the business
segments are provided later in this report.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) before restructuring and other items (a non-IFRS measure;
see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below) in 2011 was $239.1 million an improvement of
8.8% compared to $219.8 million recorded in 2010. Excluding the unfavourable impact of currency translation, EBITDA increased by
10.4% over the prior year.
Net finance costs were $21.4 million in 2011, a decline of $3.9 million from the $25.3 million recorded in 2010. The decrease
reflects lower debt levels and favourable currency translation on the interest of the U.S. dollar-denominated debt. Net finance
expenses includes interest expense net of interest earned on short-term investments, adjusted by interest from interest rate swap
agreements (“IRSAs”) and cross-currency interest rate swap agreements (“CCIRSAs”). The IRSAs and CCIRSAs are discussed later
in this report in Section 3C.
For the full year 2011, restructuring costs and other items represented a loss of $0.8 million ($0.8 million after tax) as follows:
(cid:129) In the first quarter, a loss of $0.5 million ($0.4 million after tax) related to the closure costs to shut down a small label
plant in the U.S.;
(cid:129) In the fourth quarter, a loss of $0.8 million (with no tax effect) related to severance costs to restructure the Paris label
plant operations; and
(cid:129) In the fourth quarter, a gain of $0.5 million ($0.4 million after tax) related to the final settlement of residual
lease
payments and closure costs for the Tube Segment’s building in Los Angeles, CA, attributable to its move to a new location.
The negative earnings impact of these restructuring and other items in 2011 was $0.03 per Class B share.
For the full year 2010, restructuring costs and other items represented a loss of $0.2 million as follows:
(cid:129) In the fourth quarter, a loss related to severance costs for the Container operations of $0.2 million (with no tax effect).
Restructuring costs and other items in 2010 had a negative impact of $0.01 per Class B share.
In 2011, the consolidated effective tax rate was 29.0% compared to 28.6% in 2010, excluding earnings in equity accounted
investments. The combined Canadian federal and provincial statutory tax rate was 26.8% in 2011. The increase in the effective tax
rate for 2011 is attributable to the negative impact of $1.0 million (2010 – positive impact of $2.7 million), for the reduction in
recorded accounting benefits of certain Canadian tax losses. As previously disclosed in prior quarters, the ability to benefit the
Canadian tax losses is mainly dependent on the movement of the unrealized foreign exchange gains on the Company’s U.S. dollar-
denominated debt and related euro swaps. This benefit will fluctuate with the movement in the Canadian dollar versus the U.S.
dollar and the euro and as such this benefit would reverse fully or in part in the future if the Canadian dollar weakens and would
grow larger if it strengthens. Excluding the benefit from the Canadian tax losses, the overall effective tax rates in 2011 and 2010
were 28.1% and 31.3%, respectively, reflecting a higher portion of the Company’s income earned in lower tax jurisdictions in 2011.
Approximately 96% of CCL’s sales are from products manufactured in plants outside of Canada, and the income from these foreign
operations is subject to varying rates of taxation. The Company’s effective tax rate varies from year to year as a result of the level of
income in the various countries, recognition or reversal of tax losses, tax reassessments and income and expense items not subject
to tax. The Company’s tax rate may increase in the future since the Company may not be able to tax-benefit its future tax losses in
certain countries.
Net earnings for 2011 were $84.1 million, an increase of 18.3% compared to $71.1 million recorded in 2010 due to the items
described above.
Basic earnings per Class B share was $2.54 for 2011 versus the $2.17 recorded for 2010. Diluted earnings per Class B share
were $2.50 for 2011 and $2.13 for 2010.
The movement in foreign currency exchange rates in 2011 versus 2010 had an estimated negative impact of $0.03 on basic
earnings per Class B share. This estimated foreign currency impact reflects the currency translation in all foreign operations and the
translation of U.S. dollar-denominated transactions in the Canadian Container operations, where almost all sales and a significant
portion of input costs are U.S. dollar-denominated.
12 CCL Industries Inc. 2011 Annual Report
Restructuring and other items had a negative impact of $0.03 per Class B share for 2011 compared to $0.01 per Class B share in
2010.
Adjusted basic earnings per Class B share (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in
Section 5A below) were $2.57 in 2011, up 17.9% from $2.18 in 2010.
F) Seasonality and Fourth Quarter Financial Results
Qtr 1
Qtr 2
Qtr 3
Qtr 4
Year
2011
Sales
Label
Container
Tube
Total sales
Segment operating income
Label
Container
Tube
Operating income
Corporate expenses
Earnings (loss) in equity accounted
investments
Finance expense, net
Restructuring and other items –
net loss
Earnings before income taxes
Income taxes
Net earnings
Per Class B share
Net earnings
Diluted earnings
Restructuring and other items and
tax adjustments included in net
earnings – net loss
$
$
$
$
$
$
$
$
$
$
247.7
47.7
20.2
315.6
41.9
3.7
3.1
48.7
6.3
—
42.4
5.7
36.7
(0.5)
36.2
9.4
$
$
$
255.9
42.6
20.4
318.9
37.3
2.1
3.7
43.1
7.2
(0.1)
35.8
5.3
30.5
—
30.5
8.8
254.5 $
254.2 $
43.0
19.2
42.4
20.7
1,012.3
175.7
80.5
316.7 $
317.3 $
1,268.5
32.3 $
31.0 $
1.7
2.5
36.5
4.4
(0.1)
32.0
5.2
26.8
—
26.8
9.6
1.7
2.7
35.4
6.9
1.4
29.9
5.2
24.8
(0.3)
24.4
6.0
142.5
9.2
12.0
163.7
24.8
1.2
140.1
21.4
118.7
(0.8)
117.9
33.8
84.1
26.8
$
21.7
$
17.2 $
18.4 $
0.81
0.80
$
$
0.66
0.64
$
$
0.52 $
0.52 $
0.55 $
0.54 $
2.54
2.50
(0.01)
$
— $
— $
(0.02) $
(0.03)
CCL Industries Inc. 2011 Annual Report 13
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
2010
Sales
Label
Container
Tube
Total sales
Segment operating income (loss)
Label
Container
Tube
Operating income
Corporate expenses
Earnings (loss) in equity accounted
investments
Finance expense, net
Restructuring and other items –
net loss
Earnings before income taxes
Income taxes
Net earnings
Per Class B share
Net earnings
Diluted earnings
Restructuring and other items and
tax adjustments included in net
earnings – net loss
Fourth Quarter Results
$
$
$
$
$
$
$
Qtr 1
Qtr 2
Qtr 3
Qtr 4
Year
$
$
$
248.9
40.3
17.9
307.1
42.7
(1.7)
2.0
43.0
4.7
0.3
38.6
6.5
32.1
—
32.1
7.5
$
$
$
242.1
39.7
20.4
302.2
38.5
(2.2)
2.9
39.2
5.2
0.4
34.4
6.5
27.9
—
27.9
10.5
238.4 $
225.7 $
44.0
19.3
38.4
17.2
955.1
162.4
74.8
301.7 $
281.3 $
1,192.3
32.5 $
(0.8)
2.3
34.0
4.8
(0.1)
29.1
6.3
22.8
—
22.8
7.0
28.6 $
0.2
1.6
30.4
7.5
(0.1)
22.8
6.0
16.8
(0.2)
16.6
3.3
142.3
(4.5)
8.8
146.6
22.2
0.5
124.9
25.3
99.6
(0.2)
99.4
28.3
71.1
24.6
$
17.4
$
15.8 $
13.3 $
0.75
0.74
$
$
0.53
0.52
$
$
0.48 $
0.47 $
0.41 $
0.40 $
2.17
2.13
— $
— $
— $
(0.01) $
(0.01)
Sales for the fourth quarter of 2011 were $317.3 million, an increase of 12.8% compared to $281.3 million recorded in the 2010
fourth quarter. Excluding currency translation, sales for the fourth quarter in 2011 increased by 13.0% compared to the prior year
period. This increase was primarily due to 12.1% of organic growth and 0.9% impact from acquisitions. All business segments
showed increased sales, with the Label, Container and Tube Segments up $28.5 million, $4.0 million and $3.5 million, respectively.
Operating income (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below) in the
fourth quarter of 2011 was $35.4 million, an increase of 16.4% from $30.4 million in the fourth quarter of 2010. This increase in
operating income was attributable to the increases in the Label, Container and Tube Segments, of $2.4 million, $1.5 million and
$1.1 million, respectively.
EBITDA (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below) for the fourth quarter
of 2011 was $54.7 million, an improvement of 15.2% compared to the $47.5 million for 2010 period.
Corporate expenses were $6.9 million in the fourth quarter of 2011, a decline of $0.6 million from $7.5 million recorded in the prior
year period. The decrease is attributable to a general reduction across the broad range of corporate costs.
Net finance expense of $5.2 million in the 2011 fourth quarter declined $0.8 million compared to $6.0 million due primarily to lower
debt levels.
14 CCL Industries Inc. 2011 Annual Report
Restructuring and other items in the fourth quarter of 2011 were a net expense of $0.3 million ($0.4 million after tax). Restructuring
and other items, the details of which were explained earlier under the annual financial results, consisted of severance costs for the
Paris Label plant of $0.8 million (with no tax effect), partially offset by a gain of $0.5 million ($0.4 million after tax) related to the
final settlement of residual lease payments and closure costs for the Tube Segment’s Los Angeles facility move.
In the fourth quarter of 2010 a loss related to severance costs for the Container operations of $0.2 million (with no tax effect) was
recorded to restructuring and other items.
Tax expense in the fourth quarter of 2011 was $6.0 million compared to $3.3 million in the prior year period. Both periods reflected
an accounting benefit related to the Canadian tax losses; however, the benefit of $0.9 million recognized in the current quarter was
less than the $2.2 million recorded in 2010. Excluding the benefit from Canadian tax losses, the overall effective tax rate was
29.7% in 2011 compared to 32.7% in the prior year period. This decrease reflects a favourable mix of income earned in lower taxed
jurisdictions versus higher taxed jurisdictions.
The net earnings in the fourth quarter of 2011 were $18.4 million compared to net earnings of $13.3 million in last year’s fourth
quarter. This increase reflects the items described above.
Earnings per Class B share were $0.55 in the fourth quarter of 2011 compared to $0.41 in the fourth quarter of 2010. The
movement in foreign currency exchange rates in the fourth quarter of 2011 versus 2010 had an estimated negative impact of $0.02
on basic earnings per Class B share.
Restructuring and other items had a negative impact on earnings of $0.02 per Class B share in the fourth quarter of 2011 and
$0.01 per Class B share in the prior year period.
Adjusted basic earnings per Class B share (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in
Section 5A below) were $0.57 in the fourth quarter of 2011, an improvement of 35.7% compared to $0.42 in the corresponding
quarter of 2010.
Summary of Seasonality and Quarterly Results
The seasonality of the business has evolved over the last few years with the first and second quarters generally being the strongest
due to the number of work days and various customer related activities. Also, there are many products that have a spring-summer
bias in North America and Europe such as agricultural chemicals and certain beverage products, which generate additional sales
volumes for CCL in the first half of the year. The last two quarters of the year are negatively affected from a sales perspective by
summer vacation in the northern hemisphere, Thanksgiving and the holiday season shutdowns at the end of the fourth quarter.
Sales and net earnings comparability between the quarters of 2011 and 2010 was primarily affected by the instability of the global
economic recovery, the impact of dramatic foreign currency changes relative to the Canadian dollar, and the effect of restructuring,
tax adjustments and other items.
The Label Segment has generally experienced strong demand in its existing and newly acquired operations in the past few years.
The Segment increased sales, excluding the impact of currency translation, in all four quarters of 2011, primarily driven by strong
organic growth and augmented slightly by the Sertech acquisition in the final three quarters of the year. Sales in the fourth quarter of
2011 improved 12.6% compared to the fourth quarter of 2010 driven by double-digit growth in North America, Latin America and the
Asia Pacific regions. Sales in Europe were also up high single digits. The growth rate in the fourth quarter of 2011 was indicative of a
stronger consumer market in the United States, new customer branding and design initiatives, stable demand for Healthcare
products and a persistent strong economic growth rate in the emerging markets.
Return on sales (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below) for the Label
Segment in 2011 was 14.1% compared to 14.9% in 2010. The decline in margin reflects the current mix of products, start-up costs
at new plants, pricing pressures and particularly the difficulties of passing through raw material cost inflation in a soft global
economy. This level of return is still above CCL’s internal targets and reflects the Segment’s continued strategy of capitalizing each
operation with world-class equipment, servicing its international customers on a global basis and meeting their unique product
needs.
Sales, excluding foreign currency translation, at the Container Segment increased 10.8% for 2011 compared to 2010. This
improvement was driven by volume growth in the Mexican operations, and pricing controls plus better mix in the United States. For
the fourth quarter of 2011 sales increased $4.0 million compared to the fourth quarter of 2010, led by improved pricing and product
mix on flat volumes for the Segment. Operations in the U.S. and Mexico produced solid profitability for the 2011 year and the
Canadian operation delivered operating income in both the third and fourth quarters as it executed its turnaround plan.
CCL Industries Inc. 2011 Annual Report 15
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
The Tube Segment had an exceptional year with organic sales growth of 12.1% for 2011, excluding foreign currency translation. All
four quarters of 2011 experienced sales growth, excluding foreign currency translation compared to the same quarters of 2010. The
Segment capitalized on market share gains in highly decorated tubes for the premium personal care and cosmetic sector coupled
with targeted operational initiatives that improved operating income in each quarter of 2011 compared to 2010. Return on sales in
the Tube Segment was 14.9% for 2011, a significant improvement compared to the 11.8% achieved in 2010. These margins in the
Tube Segment are now in line with the target levels of the Label Segment.
Net earnings in 2011 were up 18.3% compared to 2010 due primarily to higher operating income in the Container and Tube
Segments lower net finance expense and income taxes, partially offset by higher corporate expenses. Excluding the effect of
currency translation, all four quarters in 2011 had higher net earnings than the comparable quarters in prior year.
2. BUSINESS SEGMENT REVIEW
A) General
Over the last decade all divisions have invested significant capital and management effort in their facilities in order to develop world-
class manufacturing operations, with spending allocated to geographic expansion, cost-reduction projects, the development of
innovative products and processes, the maintenance and expansion of existing capacity and the continuous improvement in health
and safety in the workplace, including environmental activities. Also over the past decade, CCL has made numerous strategic
acquisitions and invested significantly in excess of its depreciation expense in order to build a global network in the Label Segment,
take advantage of new market and product opportunities and improve infrastructure and operating performance across the
Company. Annual capital spending in 2010 and 2011, however, was below annual depreciation expense as the global
manufacturing platform in the Label Segment is now largely completed. Further discussion on capital spending is provided in the
Business Segment sections below.
Although each Segment is a leader in market share or has a significant position in the markets it serves in each of its operating
locales, it also operates generally in a mature and competitive environment. In recent years, consumer products and healthcare
companies have experienced steady pressure to maintain or even reduce prices to their major retail and distribution channels, which
has driven significant consolidation in CCL’s customer base. This has resulted in many customers seeking supply-chain efficiencies
and cost savings in order to maintain profit margins. The global economic crisis experienced in 2008 and early 2009, the instability
of the economic recovery that followed and the sovereign debt predicament and its effect on the availability of capital accentuated
this trend. Volatile commodity costs have also created challenges to manage pricing with customers. These dynamics have been an
ongoing challenge for CCL and its competitors, requiring greater management and financial control and flexible cost structures.
Unlike some of its competitors, CCL has the financial strength to invest in the equipment and innovation necessary to constantly
strive to be the highest value-added producer in the markets that it serves.
The cost of many of the key raw material inputs for CCL, such as plastic films and resins, paper, specialty chemicals and aluminum,
are largely dependent on the economics within the petrochemical and energy industries. The significant cost fluctuations for these
inputs can have an impact on the Company’s profitability. CCL generally has the ability, due to its size and the use of long-term
contracts with both its suppliers and its customers, to mitigate volatility in costs from its suppliers and, where necessary, to pass on
price movements to its customers. The success of the Company is dependent on each business managing the cost-and-price
equation with suppliers and customers. The cost of aluminum represents the largest component of the Container Segment’s product
cost. The significant volatility in aluminum costs over the past few years has made it especially challenging to manage pricing with
its customers who are generally accustomed to more stable pricing in other product lines.
Most of CCL’s facilities are in locations with adequate skilled labour, resulting in moderate pressure on wage rates and employee
benefits. CCL’s labour costs are competitive in each of its businesses. The Company uses a combination of annual and long-term
incentive plans specifically designed for corporate, divisional and plant staff to focus key employees on the objectives of achieving
annual business plans and creating shareholder value through growth, innovation, cost reductions and cash flow generation in the
longer term.
A driver common to all Segments for maximizing operating profitability is the discipline of pricing orders based on size and
complexity, including consideration for fluctuations in raw materials and packaging costs, manufacturing efficiency and available
capacity. This approach facilitates effective asset utilization and relatively higher levels of profitability. Performance is generally
measured by product against estimates used to calculate pricing, including targets for scrap and output efficiency. An analysis of
total utilization versus capacity available per production line or facility is also used to manage certain divisions of the business. In
16 CCL Industries Inc. 2011 Annual Report
most of the Company’s operations, the measurement of each sales order shipped is based on actual selling prices and production
costs to calculate the amount of actual profit margin earned and its return on sales relative to the established benchmarks. This
process ensures that pricing policies and production performance are aligned in attaining profit margin targets by order, by plant and
by division.
Performance measures used by the divisions that are critical to meeting their operating objectives and financial targets are return on
sales, cash flow, days of working capital employed and return on investment. Measures used at the corporate level
include
operating income, return on sales, EBITDA, net debt to total capitalization, return on equity and adjusted basic earnings per Class B
share (all of which are non-IFRS measures; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below). Growth
in earnings per share is a key metric. In addition, the Company also monitors earnings per share before restructuring and other
items since the timing and extent of restructuring and other items do not reflect or relate to the Company’s future ongoing operating
performance. Performance measures are primarily evaluated against a combination of prior year, budget, industry standards and
other internal benchmarks to promote continuous improvement in each business and process.
Management believes it has both the financial and non-financial resources, internal controls and reporting systems and processes in
place to execute its strategic plan, to manage its key performance drivers and to deliver targeted financial results over time. In
addition, the Company’s internal audit function provides another discipline to ensure that its disclosure controls and procedures and
internal control over financial reporting will be assessed on a regular basis against current corporate standards of effectiveness and
compliance.
CCL is not particularly dependent upon specialized manufacturing equipment. Most of the manufacturing equipment employed by the
divisions can be sourced from many different suppliers. CCL, however, has the resources to invest in large-scale projects to build
infrastructure in current and new markets because of its financial strength relative to that of many of its competitors. Most of CCL’s
direct competitors in the Label Segment are much smaller and may not have the financial resources to stay current in maintaining
state-of-the-art facilities. Certain new manufacturing lines take many months for suppliers to construct, and any delays in delivery
and commissioning can have an impact on customer expectations and the Company’s profitability. The Company also uses strategic
partnerships as a method of obtaining proprietary technology in order to support growth plans and to expand its product offerings.
CCL’s major competitive advantage is based on its customer service and process technology, the know-how of its people and the
ability to develop proprietary technologies and manufacturing techniques.
The expertise of CCL’s employees is a key element in achieving the Company’s business plans. This know-how is broadly distributed
throughout the Company and its 69 facilities throughout the world; therefore, the Company is generally not at risk of losing its
competency through the loss of any particular employee or group of employees. Employee skills are constantly being developed
through on-the-job training and external technical education, and are enhanced by CCL’s entrepreneurial culture of considering
creative alternative applications and processes for the Company’s manufactured products.
The nature of the research carried out by the divisions can be characterized as application or process development. As a leader in
specialty packaging, the Company spends meaningful resources on assisting customers to develop new and innovative products.
While customers regularly come to CCL with concepts and request assistance to develop products, the Company also takes its own
new ideas to the market. Company and customer information is protected through the use of confidentiality agreements and by
limiting access to CCL’s manufacturing facilities. The Company values the importance of protecting its customers’ brands and
products from fraudulent use and consequently is selective in choosing appropriate customer and supplier relationships.
The Company continues to invest time and capital to upgrade and expand its business systems. This investment is critical to
keeping pace with customer requirements and in gaining or maintaining a competitive edge. Software packages are, in general,
off-the-shelf systems customized to meet the needs of individual business locations. The Label Segment communicates with many
customers and suppliers electronically, particularly with regard to supply-chain management solutions and when transferring and
confirming design formats and colours.
CCL Industries Inc. 2011 Annual Report 17
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
Business Segment Results
Segment sales
Label
Container
Tube
Total sales
Operating income (loss)*
Label
Container
Tube
Segment operating income
2011
2010
$
$
$
1,012.3
175.7
80.5
1,268.5
142.5
9.2
12.0
955.1
162.4
74.8
1,192.3
142.3
(4.5)
8.8
163.7
$
146.6
$
$
$
$
* This is a non-IFRS measure. Refer to “Key Performance Indicators and Non-IFRS Measures” in Section 5A below.
Comments on Business Segments
The above summary includes the results of acquisitions on reported sales and operating income from the date of acquisition.
Operating income in 2011 was $163.7 million, an improvement of 11.7% compared to $146.6 million in 2010. The increase in
operating income was primarily attributable to the improvements in the Container and Tube Segments in 2011 compared to 2010.
Excluding foreign currency, operating income increased by 13.4% over the prior year. Return on sales increased to 12.9% in 2011
compared to 12.3% in 2010.
B) Label Segment
Overview
The Label Segment is the leading global producer of innovative label solutions for consumer product marketing companies in the
personal and beauty care, food and beverage, household, chemical and promotional segments of the industry, and also supplies
major pharmaceutical, healthcare, durable goods and industrial chemical companies. The Segment’s product lines include pressure
sensitive, shrink sleeve, stretch sleeve, in-mould and expanded content labels and pharmaceutical instructional leaflets. It currently
operates 63 facilities located in Canada, the United States (including Puerto Rico), Australia, Austria, Brazil, China, Denmark,
France, Germany, Italy, Mexico, the Netherlands, Poland, Russia, South Africa, Thailand, the United Kingdom, Vietnam, the United
Arab Emirates, Egypt, Oman and Saudi Arabia. The two plants in Russia and four plants in the Middle East, attributable to the equity
investments in CCL-Kontur and Pacman-CCL, respectively, are included in the above locations.
This Segment operates within a sector of the packaging industry made up of a very large number of competitors that manufacture a
vast array of decorative, product information and identification labels. There are some label categories that do not fall within the
Segment’s target market. The Company believes that the Label Segment is the largest consolidated operator in its defined global
label market sectors. Competition comes from single-plant businesses, often owned by private operators that compete in local
markets with CCL. There are also a few multi-plant competitors in certain regions of the world and specialists in a single market
segment globally. However, there is no major competitor that has the global reach and scale of CCL Label.
CCL Label’s mission is to be the global supply-chain leader of innovative premium package and promotional label solutions for the
world’s largest consumer product and healthcare companies. It aspires to do this from regional facilities that focus on specific
customer groups, products and manufacturing technologies in order to maximize management’s expertise and manufacturing
efficiencies to enhance customer satisfaction. The Label Segment is expected to continue to grow and expand its global reach
through acquisitions, joint ventures and greenfield start-ups and expand its product offerings in segments of the label industry that it
has not yet entered.
The Company has completed several label acquisitions over the past few years that have positioned the Label Segment as a global
leader within its multinational customer base in the personal care, healthcare, household, food, beverage, durable goods and
specialty label categories.
18 CCL Industries Inc. 2011 Annual Report
The Segment considers customers’ demand levels, particularly in North America and Western Europe, to be reasonably mature and,
as such, will continue to focus its expansion plans on innovative and higher growth product lines within those geographies with a
view to improving overall profitability. In Asia, Latin America and other emerging markets a higher level of economic growth is
expected over the coming years, and this should provide opportunities for the Segment to improve market share and increase
profitability in these regions.
The Segment produces labels predominantly from polyolefin films and paper sourced from extruding, coating and laminating
companies, using raw materials primarily from the petrochemical and paper industries. CCL Label is generally able to mitigate the cost
volatility of these components due to a combination of purchasing leverage, agreements with suppliers and its ability to pass on these
cost increases to customers. In the label industry, price changes regularly occur as specifications are constantly changed by the
marketers and, as a result, the selling price for these labels is updated, reflecting current market costs and new shapes and designs.
There is a close alignment in label demand to consumer demand for non-durable goods. Management believes the Company will
attain the sales volumes and geographic distribution and reach mirroring those of its customers over the next few years through its
focused strategy and by capitalizing on the following customer trends.
CCL Label’s global customers are requiring more of their suppliers, expecting a full range of product offerings in more geographic
regions; are requiring more integration into their supply-chain at a global level and are concerned with the integrity of their products
and the protection of their brands, particularly in markets where counterfeit products are an issue. These issues put many of CCL’s
competitors at a disadvantage, as do the investment hurdles in converting equipment and technologies to deliver products, services
and innovations. Trusted and reliable suppliers are important considerations for global consumer product companies and major
pharmaceutical companies. This is even more important in an uncertain economic environment when many smaller competitors
encounter difficulties and customers want to ensure their suppliers are financially viable.
Label Segment Financial Performance
Sales
Operating income
Return on sales
$
$
2011
1,012.3
142.5
14.1%
% Growth
6% $
— $
2010
955.1
142.3
14.9%
Sales in the Label Segment for 2011 increased to $1,012.3 million, compared to $955.1 million in 2010. Foreign currency
translation had an unfavourable impact of 1.0%. Excluding foreign currency translation, sales for the Label Segment increased 7.0%
primarily due to strong organic growth and the 1.0% positive benefit from the Sertech acquisition.
North American sales for 2011 increased low single digits, excluding currency translation compared to 2010. Sales for the Home &
Personal Care business were flat for the year but improved with the economy in the second half and particularly in the fourth quarter,
after a soft start to 2011. Sales in the Healthcare business improved compared to 2010 due to the U.S. FDA quarantine initiated in
the third quarter of 2009 at a major customer being lifted in the first quarter of 2011, incremental revenues from the acquisition of
Sertech and stable demand generally in the market. Sales for the Specialty business were up compared to 2010 reflecting solid
performance from the promotions sector and despite a difficult year for some customers in the Agricultural Chemicals sector
attributed to abnormal weather patterns in 2011. Sales in the small Sleeve and Battery businesses declined in 2011 due to
competitive pressures. Due to this mix in performance, operating income for 2011 in the North American label operations was down
very slightly after the negative impact of foreign currency translation.
European sales increased mid-single digits despite a challenging economic environment. Although internal profit targets were
exceeded for the year, operating income declined in 2011 compared to the strong recovery in 2010. Sales increased in the Home &
Personal Care, Healthcare & Specialty, Sleeves, Beverage and Durables sectors on customer design and branding initiatives, market
share wins and stable demand in the countries where CCL operates. However, continuing losses at one of our French operations
negatively affected the Home & Personal Care sector and challenges to pass on commodity cost increases, particularly in the
Stretch Sleeve and Battery product lines, more than offset modest improvements in other parts of the region. A restructuring of the
problematic French plant is underway and is expected to deliver improved results in 2012.
The Latin America Label operations continued to deliver strong double-digit sales growth and improved operating income despite the
impact on raw material costs of the Mexican peso devaluation relative to the U.S. dollar in the second half of 2011. Sales in the
Home & Personal Care sector in both Brazil and Mexico increased due to further penetration of CCL’s global customer base in the
CCL Industries Inc. 2011 Annual Report 19
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
region. The Company enjoyed particularly dramatic growth in the Sleeve business in Brazil and the Healthcare and Specialty
business there also continued to post solid operating results.
The Asia Pacific region continued to post double-digit increases in sales and operating income in 2011 compared to 2010. Despite
flooding that impacted many customers’ plants for a number of weeks in the fourth quarter of 2011, operations in Thailand recorded
significant improvement over 2010. CCL’s facilities in Bangkok were not damaged, but the ability to operate normally was
substantially impaired by the event and profitability reduced significantly, decreasing earnings per share by approximately $0.03 in
the fourth quarter. Operations in China continued to perform, notwithstanding the delayed start-up of the new Tianjin plant as
customers’ pharmaceutical certification procedures have taken much longer than anticipated plus continuing share loss in the
battery sector. The Australian Wine and Healthcare Label operations finished 2011 with stronger revenue but operating income was
held in check by competitive pressures in the Wine industry and the negative foreign exchange impact of the stronger Australian
dollar. Sales at the South African business also grew for the year but operating income was negatively affected by a management
restructuring of the operation and the impact of the rand devaluation against the euro on products imported from Germany.
Results from the 50% joint ventures in Russia, CCL-Kontur, and in the Middle East, Pacman-CCL, are not proportionately
consolidated into the Label Segment but instead are accounted for as equity investments. The Company has effective day-to-day
management control over the Middle East venture where the partner is a financial investor. In Russia, the Company brings significant
influence but delegates control to the partner who is a strategic player in the local label industry. Sales at CCL-Kontur improved due
to a much better second half of 2011 after a slow start to the year caused by a government led restructuring of the important vodka
producers. Profitability at the venture reached record levels in the fourth quarter and contributed equity earnings of $0.3 million for
2011. Pacman-CCL, acquired September 13, 2011, contributed equity earnings of $0.9 million for 2011. Both ventures generated
positive cash flow and remain debt free with cash balances sufficient to finance operations including capital expenditures.
Operating income for the Label Segment in 2011 was $142.5 million, flat to the $142.3 million recorded in 2010. Excluding the
impact of currency translation, 2011 operating income increased 1.4% compared to 2010. Operating income as a percentage of
sales was 14.1% in 2011 compared to the 14.9% return generated in the prior year, but was still at the high end of CCL’s target
range.
The Label Segment invested $74.9 million in capital spending in 2011 compared to $72.1 million in the same period last year.
These expenditures are in line with the prior year and consistent with the Company’s planned level of investment. Investments in the
Label Segment are expected to continue in order to increase its capabilities, expand geographically and replace or upgrade existing
plants and equipment. Depreciation and amortization for the Label Segment was $77.7 million in 2011 compared to $73.3 million
in 2010.
C) Container Segment
Overview
The Container Segment is a leading manufacturer of aluminum specialty containers for the consumer products industry in North
America, including Mexico. The key product line is recyclable aluminum aerosol cans for the personal care, home care and cosmetic
industries, plus shaped aluminum bottles for the beverage market. It operates from four plants, one each in the United States and
Canada and two in Mexico. One of the plants in Mexico is a modern, world-class facility that commenced production in late 2008.
The Segment functions in a competitive environment, which includes imports and the ability of customers, in some cases, to shift a
product to competing alternative technology.
The strategic plan for this Segment is to focus on improving overall profitability in the United States and, in particular, Canada while
minimizing investments and growing CCL’s presence in Mexico. The Segment invests significant resources in the development of
innovative shaped and highly decorated containers. As the demand for these new, higher value products has grown, the Segment
has adapted existing production equipment and acquired new technology in order to meet expected overall market requirements and
to maximize manufacturing efficiencies.
Aluminum represents a significant variable cost for this Segment. Aluminum is a commodity that is supplied by a limited number of
global producers and is traded in the market by financial investors and speculators. Aluminum prices have been extremely volatile in
the past few years. Aluminum has continued to have the largest impact on manufacturing costs for the Container Segment and
thereby requires increased focus on managing selling prices to CCL’s customers.
20 CCL Industries Inc. 2011 Annual Report
Aluminum trades as a commodity on the London Metals Exchange (“LME”) and the Segment had historically used a general hedging
program in combination with fixed-price contracts with a number of specific customers. This was done to moderate the fluctuations
in the cost of aluminum so that the Segment and the customer could potentially reduce cost volatility. However, with the volatility of
aluminum cost through 2008 and into 2009, this hedging strategy became unprofitable to CCL. Therefore in 2009, the Company
decided to discontinue entering into aluminum hedges for general requirements. Currently, the Container Segment will only hedge
some of its anticipated future aluminum purchases using futures contracts on the LME if they are matched to specific fixed-price
customer contracts. The Segment hedged 29% of its 2011 volume but has only hedged 20% and 8% of its expected 2012 and
2013 requirements, respectively, and all, including matured 2011 hedges, were matched to fixed-price customer contracts. Existing
hedges are priced in the US$2,100 to US$2,500 range per metric ton. The unrealized loss on the aluminum futures contracts as at
December 31, 2011, was $1.7 million. Pricing for aluminum in 2011 ranged from US$1,900 to US$2,800 per metric ton compared
to US$1,800 to US$2,500 per metric ton in 2010. This volatility continued to create challenges; however, the Container Segment
has successfully introduced pricing mechanisms in its customer contracts that pass through the fluctuations in the cost of
aluminum to its customers. This new pricing strategy began to have a positive impact in the second half of 2010 and carried through
2011 as old pricing agreements expired.
Management believes the aluminum container business can continue to improve levels of profitability in the coming quarters with
increased demand, continued pricing discipline, and by driving greater operational efficiencies in the facilities. The aluminum
container continues to be generally perceived to be more esthetically pleasing by customers and consumers compared to tin plate
containers. The biggest risk for the Segment’s business base relates to customers shifting their products into containers of other
materials such as steel, glass or plastic, leading to a loss in market share. However, certain products and delivery systems can only
be provided in an aluminum container. The relative cost of steel versus aluminum containers sometimes impacts the marketers’
choice of container and may cause volume gains or losses if customers decide to change from one product form to another.
Aluminum costs remain the key factor in determining the level of growth in the market.
In North America, there are two direct competitors in the United States and one in Mexico in the impact-extruded aluminum container
business. CCL believes that it is approximately the same size as its key United States competitor in the aerosol market and has
about 50% market share. Other competition comes from South American, Asian and European imports; however, currency exchange
rates and logistical issues, such as delivery lead times and costs, significantly impact their competitiveness.
The success of new products promoted heavily in the market will have a material impact on the Segment’s sales and profitability.
Beverage products packaged in CCL’s shaped resealable aluminum bottles, for example, are directly impacted by the success or
failure of these new products in the market. Another growth opportunity is the possibility of acquiring market share from competitors
in existing product lines.
With improved economic conditions in 2010, movement of aerosol filling to Mexico and higher demand for personal care and
beverage containers, production capacity tightened within the industry. This capacity tightening allowed the Segment to successfully
implement price increases to its customer base, although capacity constraints have now eased somewhat in 2011.
The new plant in Guanajuato, Mexico, continues to grow as many global marketers that use aluminum containers have moved
production of these products to Mexico to achieve cost and logistic savings. The Company added a third production line, which
became operational in 2011, to provide additional low-cost capacity in this growing market.
Container Segment Financial Performance
Sales
Operating income (loss)
Return on sales
$
$
2011
175.7
9.2
5.2%
% Growth
8% $
$
n.m.
2010
162.4
(4.5)
(2.8%)
The Container Segment posted sales of $175.7 million for 2011, an increase of 8.2% compared to $162.4 million in 2010. Foreign
currency translation had an unfavourable impact of 2.6%. Excluding foreign currency translation, sales for the Container Segment
increased by 10.8% driven by better mix and improved pricing from the United States market and higher volumes in Mexico.
The Container Segment realized a significant turnaround in 2011, posting operating income of $9.2 million compared to an
operating loss of $4.5 million for 2010. The U.S. operation delivered record operating results. While the Canadian operation
recorded a loss for the year, the plant was profitable for the final six months resulting in the largest single positive impact for the
CCL Industries Inc. 2011 Annual Report 21
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
Company’s overall operating income improvement in 2011. The results for these two operations can be attributed to effective cost
controls, plant productivity initiatives, better mix and improved pricing. The Mexican operations for the Container Segment increased
sales largely due to volume from market share gains but operating income was significantly impacted by an abnormal non-cash
foreign exchange loss of $0.8 million on a U.S. dollar-denominated non-trade liability due to the devaluation of the Mexican peso
relative to the U.S. dollar, and additional depreciation from the start-up of the new third line in Guanajuato. Despite the foreign
exchange loss, the Mexican operation still posted solid operating income for 2011. Should the Mexican peso strengthen versus the
U.S. dollar, foreign exchange gains may be recorded in the future periods on the revaluation of this liability.
The Container Segment invested $3.1 million of capital in 2011 compared to $12.3 million in the same period last year. The
majority of the 2011 expenditures related to final additions to the capacity expansion at the Guanajuato, Mexico facility.
Depreciation and amortization in 2011 and 2010 were $14.2 million and $13.9 million, respectively.
D) Tube Segment
Overview
The Tube Segment is a leading manufacturer of highly decorated extruded plastic tubes for the personal care and cosmetics industry
in North America. It operates from two plants located in the United States. The Segment operates in a dynamic competitive
environment, which includes imports and the ability of customers to shift a product to an alternative package or to other
manufacturers.
The strategic plan for the Tube Segment is based on market share growth through manufacturing excellence, exceeding customer
expectations, and innovation. The Segment has invested in equipment that improves the quality of the tube, particularly options for
high-end graphic designs that appeal to marketers.
There are a handful of competitors to the Tube Segment in North America. CCL believes that it is the largest of three leading
suppliers in the U.S. and has approximately 20% market share in North America.
Polypropylene caps and closures, and to a lesser extent polyolefin resins, represent significant variable costs for this Segment.
Although resin costs fluctuate significantly, the Segment relies on contracts with suppliers to control costs and on contracts with
customers to manage pricing and to pass on price increases for movements in resins. The Company has traditionally been able to
pass on these cost increases over a period of time.
The Segment has improved significantly over the past three years and become a market leader in the U.S. extruded tube business,
highly recognized for superior product and service by its customers. The Tube Segment shares many common points of contact at
key customers with the Label Segment.
Tube Segment Financial Performance
Sales
Operating income
Return on sales
2011
% Growth
$
$
80.5
12.0
14.9%
8% $
36% $
2010
74.8
8.8
11.8%
Sales in the Tube Segment were at $80.5 million for 2011, an increase of 7.6% compared to $74.8 million for 2010. Foreign
currency translation had an unfavourable impact of 4.5%. Excluding foreign currency translation, sales for the Tube Segment
increased by 12.1% due to market share gains in highly decorated tubes for the premium personal care and cosmetic sector.
The Tube Segment posted operating income of $12.0 million, a 36.4% improvement from the $8.8 million achieved in 2010. Return
on sales reached 14.9% in 2011 compared to an 11.8% return in the prior year. The Tube Segment continued to capitalize on
market share gains across both plants but this was most evident at the Wilkes-Barre, Pennsylvania facility that is closer to the larger
customers based in the northeastern region of the U.S.
The Tube Segment invested $3.3 million in 2011 compared to $1.2 million in 2010, most of which related to new decorating
equipment. Depreciation and amortization was approximately $7.5 million in both 2011 and 2010.
22 CCL Industries Inc. 2011 Annual Report
3.
FINANCING AND RISK MANAGEMENT
A) Liquidity and Capital Resources
The Company’s capital structure is as follows:
Current debt
Long-term debt
Total debt1
Cash and cash equivalents
Net debt1
Shareholders’ equity
Net debt to total book capitalization1
December 31, 2011
December 31, 2010
$
$
$
$
$
$
$
$
$
$
$
$
19.8
334.2
354.0
(140.7)
213.3
816.9
20.7%
76.1
345.8
421.9
(173.2)
248.7
769.3
24.4%
1 Total debt, net debt and net debt to total book capitalization are non-IFRS measures. See “Key Performance Indicators and Non-IFRS Measures” in
Section 5A below.
The Company continues to have a strong financial position. As at December 31, 2011, cash and cash equivalents were $140.7
million, which compared to $173.2 million as at December 31, 2010.
The Company’s debt structure at December 31, 2011, is primarily comprised of four private debt placements completed in 1997,
1998, 2006 and 2008 for a total of US$328.4 million (C$333.9 million) and a five-year revolving line of credit of C$95.0 million. All
of the senior notes are denominated in U.S. dollars primarily to hedge the Company’s net investment in U.S. operations, but a
portion of the notes were indirectly swapped into euros as a hedge of the Company’s European operations. The debt structure is
unchanged from December 31, 2010, except for a scheduled debt repayment of US$60.0 million in March 2011 and the annual
payment on one of the senior notes of US$9.4 million in September 2011. In September 2012, the Company will repay US$9.4
million, which is expected to be funded by internal cash balances.
The revolving line of credit of $95.0 million is with a Canadian chartered bank and expires in January 2013. As at the end of
December 2011, the credit line was unused, other than for letters of credit of $3.6 million.
Net debt (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below), as at December 31,
2011, decreased to $213.3 million from $248.7 million as at December 31, 2010. The decrease in net debt was primarily due to
the lower debt levels, partially offset by lower cash balances and unfavourable currency translation on U.S. dollar-denominated debt.
Net debt to total book capitalization (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A
below) was lower at 20.7% as at December 31, 2011, compared to 24.4% at the end of 2010 due to the aforementioned reduction
in net debt and an increase in shareholders’ equity. Further information on shareholders’ equity follows in Section 3D.
The average interest rate at year end 2011 on all long-term debt was 6.2% (2010 – 5.6%), factoring in the related IRSAs and
CCIRSAs. The IRSAs and CCIRSAs are discussed later in this report under Section 3C. The increase in the average interest rate is a
result of the expiration of a variable rate IRSA on the retirement of a private placement debt in March of 2011.
Interest coverage (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below) continues
at a high level and was 6.5 times and 4.9 times in 2011 and 2010, respectively, reflecting higher earnings and lower interest
expense in 2011.
The Company’s committed credit availability at December 31, 2011, was as follows:
Total amounts available
Standby letters of credit outstanding
Lines of credit – committed, unused
$
$
91.4
3.6
95.0
In addition, the Company had uncommitted and unused lines of credit of approximately $31.3 million at December 31, 2011. The
Company’s uncommitted lines of credit do not have a commitment expiration date and may be cancelled at any time by the
Company or the banks.
CCL Industries Inc. 2011 Annual Report 23
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
The Company’s approach to managing liquidity risk is to ensure that it will always have sufficient liquidity to meet liabilities when
they are due. The Company believes its liquidity will be satisfactory for the foreseeable future due to its significant cash balances, its
expected positive operating cash flow and the availability of its unused revolving credit line. The Company anticipates funding all of
its future commitments from the above sources but may raise further funds by entering into new debt financing arrangements or
issuing further equity to satisfy its future additional obligations or investment opportunities.
B) Cash Flow
Summary of Cash Flows
Cash provided by operating activities
Cash used in financing activities
Cash used for investing activities
Effect of exchange rates on cash
(Decrease) increase in cash and cash equivalents
Cash and cash equivalents – end of year
2011
171.4
(99.1)
(104.5)
(0.3)
(32.5)
140.7
$
$
$
$
$
$
2010
168.4
(53.3)
(82.6)
(9.9)
22.6
173.2
In 2011, cash provided by operating activities was $171.4 million, compared to $168.4 million in 2010. The increase in cash flow
compared to last year was primarily due to higher net earnings in the current year offset by increase in non-cash working capital
driven by the increase in sales in the fourth quarter of 2011 compared to 2010. Free cash flow from operations reached $92.1
million in 2011, an increase of $5.1 million or 6% over the prior year.
The Company maintains a rigorous focus on its investment in non-cash working capital. Days of working capital employed (a
non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below) were 15 days at December 31,
2011, compared to 10 days at December 31, 2010.
Cash used in financing activities in 2011 was $99.1 million, consisting primarily of the net repayment of long-term debt of $83.4
million, payment of dividends of $23.3 million offset by proceeds from the issuance of stock options of $8.1 million.
Cash used for investing activities in 2011 of $104.5 million was primarily for capital expenditures of $81.4 million (see below), and
the acquisition of Sertech of $7.8 million and the 50% equity investment of $18.3 million in Pacman-CCL. Consequently, cash and
cash equivalents declined by $32.5 million in 2011 to $140.7 million.
Capital spending in 2011 amounted to $81.4 million compared to $85.8 million in 2010. This decrease is in line with annual
depreciation and reflects the planned expenditures for the year. Prior to 2009, the level of spending was significantly higher in order
to take advantage of new market opportunities and to create a global world-class manufacturing platform in the Label Segment.
Capital expenditures in 2012 are planned at levels similar to those of 2011. The Company is continuing to seek investment
opportunities to expand its business geographically, add capacity in its facilities and improve its competitiveness. As in previous
years, capital spending will be monitored closely and adjusted based on the level of cash flow generated. Depreciation and
amortization in 2011 amounted to $100.2 million, compared to $95.4 million in 2010.
NET DEBT TO
TOTAL CAPITALIZATION (%)
CAPITAL SPENDING
(in millions of Canadian dollars)
BOOK VALUE
PER CLASS B SHARE
(in Canadian dollars)
40
30
20
10
0
07
08
09
10
11
200
150
100
50
0
07
08
09
10
11
25
20
15
10
5
0
07
08
09
10
11
24 CCL Industries Inc. 2011 Annual Report
C)
Interest Rate, Foreign Exchange Management and Other Hedges
The Company uses derivative financial instruments to hedge interest rate, foreign exchange and aluminum cost risks. The Company
does not utilize derivative financial instruments for speculative purposes.
As CCL operates internationally and only approximately 4% of its 2011 sales to end-use customers is denominated in Canadian
dollars, the Company has exposure to market risks from changes in foreign exchange rates. The Company partially manages these
exposures by contracting primarily in Canadian dollars, euros, U.K. pounds and U.S. dollars. Additionally, each subsidiary’s sales
and expenses are primarily denominated in its local currency, further minimizing the foreign exchange impact on the operating
results. The Company had periodically hedged a portion of its expected U.S. dollar cash inflows derived from sales into the United
States from the Canadian operations, principally the Container plant in Penetanguishene, Ontario. The Company has not utilized
forward contracts since 2009 and has not entered into any forward hedges for 2012.
The Company also has exposure to market risks related to interest rate fluctuations on its debt. To mitigate this risk, the Company
maintains a combination of fixed and floating rate debt.
The Company uses IRSAs to allocate notional debt between fixed and floating rates since the underlying debt is fixed rate debt with
U.S. financial institutions. The Company believes that a balance of fixed and floating rate debt can reduce overall interest expense
and is in line with its investment in short-term assets such as working capital, and long-term assets such as property, plant and
equipment.
In 2003, the Company entered into an IRSA to convert a tranche of fixed rate debt to floating rate debt. This IRSA converted
US$42.1 million of fixed rate debt (hedging 50% of the 1997 senior notes) into floating rate debt, based on three-month LIBOR
rates. The notional amount of this IRSA decreases by US$4.7 million annually to match the decrease in the principal of the
underlying senior notes. The notional value of this IRSA is currently US$4.7 million.
As the Company has developed into a global business, its financing strategy has been to leverage and hedge the assets and cash
flows of each major country with debt denominated in the local currency. Since the Company has been primarily borrowing from U.S.
institutions in U.S. dollars, the hedging of U.S. operations has been achieved. The Company has significantly increased its euro-
based assets and, consequently, has used CCIRSAs as a means to convert U.S. dollar debt into euro debt to hedge a portion of its
euro-based investment and cash flows.
In 2006, the Company entered into two CCIRSAs with a Canadian financial institution, the effect of which was to convert US$60
million of 5.29% fixed rate debt (hedging the five-year 2006 senior notes) into EUR50 million of fixed rate debt at 3.82%. The two
CCIRSAs expired when the debt was repaid at maturity in March 2011.
Also in 2006, the Company entered into four CCIRSAs with a Canadian financial institution, the effect of which was to convert
US$59.1 million of 6.67% and 6.97% fixed rate debt (hedging 1998 senior notes and 50% of the 1997 senior notes) into EUR44.9
million of floating rate debt, based on six-month EURIBOR rates. Two of the swaps, converting US$31.0 million into EUR23.6 million,
matured in 2010. The notional amount of the euro leg of one of the other CCIRSAs decreases by EUR3.6 million annually, with the
U.S. dollar-denominated leg of the other remaining CCIRSA decreasing by US$4.7 million annually to match the decrease in the
principal of the underlying senior notes. Currently the two remaining swaps convert US$4.7 million into EUR3.6 million.
The effect of interest earned on these swap agreements was to reduce gross interest expense by $0.7 million in 2011, compared to
a reduction of $2.3 million in 2010.
The unrealized gain on these contracts was $0.3 million as of December 31, 2011, due primarily to the movement of
exchange rates.
The only other material hedges the Company is involved in are the aluminum futures contracts discussed in Section 2C: “Container
Segment.”
The Company is potentially exposed to credit risk arising from derivative financial instruments if a counterparty fails to meet its
obligations. These Counterparties are large international financial institutions and, to date, no such counterparty has failed to meet
its financial obligations to the Company. As at December 31, 2011, the Company’s exposure to credit risk arising from derivative
financial instruments was $0.3 million (2010 – $2.1 million).
CCL Industries Inc. 2011 Annual Report 25
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
D) Shareholders’ Equity and Dividends
Summary of Changes in Shareholders’ Equity
For the years ended December 31
Net earnings
Dividends
Settlement of exercised stock options and executive share loans
Purchase of shares held in trust, net of shares released
Contributed surplus on expensing of stock options and stock-based compensation plans
Defined benefit plan actuarial losses net of tax
Increase in accumulated other comprehensive loss
Increase in shareholders’ equity
Shareholders’ equity
Shares outstanding at December 31 – Class A (000s)
– Class B (000s)
Book value per share*
2011
84.1
(23.1)
9.8
0.2
1.7
(4.3)
(20.8)
47.6
816.9
2,374
31,315
24.46
$
$
$
$
2010
71.1
(21.4)
7.5
(0.2)
3.0
(2.2)
(23.7)
34.1
769.3
2,374
30,912
23.32
$
$
$
$
* This is a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below.
In the past, the Company has utilized a share repurchase program under the normal course issuer bid (“bid”) when it enhanced
shareholder value by being accretive to earnings and when management believed it was the best use of available funds at the time.
In 2008, the last time the Company acquired shares with a bid, 618,000 Class B shares for $18.1 million were purchased.
In 2011, the Company declared dividends of $23.1 million compared to $21.4 million declared in the prior year. As previously
discussed, the dividend payout ratio in 2011 was 27% (30% in 2010) of adjusted earnings and above the Company’s targeted
payout rate of 20% to 25% of adjusted earnings. However, 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).
Book value per share (a non-IFRS measure; see “Key Performance Indicators and Non-IFRS Measures” in Section 5A below) as at
December 31, 2011, was $24.46, compared to $23.32 at December 31, 2010.
26 CCL Industries Inc. 2011 Annual Report
E) Commitments and Other Contractual Obligations
The Company’s obligations relating to debt, leases and other liabilities at the end of 2011 were as follows:
December 31,
2010
carrying amount
Carrying
amount
Contractual
cash flows
0-6
months
6-12
months
1-2 years
2-5 years
More than
5 years
December 31, 2011
Payments due by period
$
1.9
20.7
394.6
2.8
1.4
$
2.4
16.1
333.1
2.2
0.1
$
2.4 $
16.1
333.9
2.2
0.1
0.4 $ 0.5 $
1.2
—
0.2
0.1
7.7
9.5
0.2
—
0.6
2.4
81.4
0.4
—
$
0.9
4.8
111.9
1.4
—
$ —
—
131.1
—
—
*
*
87.4
3.3*
10.4
18.5
40.4
14.8
—
230.3
0.5
12.5
—
—
*
*
—
—
234.0
—
2.7
234.0
—
0.6
232.5
—
0.6
1.5
—
0.8
—
1.7
*
*
—
10.1
(10.2)
1.7
(0.5)
24.6
31.2
—
10.1
— (10.2)
0.5
0.9
(0.2)
(0.3)
*
4.5
*
4.5
0.7
—
—
—
—
0.3
—
3.1
6.2
0.8
—
—
—
—
—
—
—
—
—
—
—
—
—
9.2
10.2
12.3
5.8
$
664.7
$590.4
$ 735.7 $243.4 $ 35.1 $113.6
$179.6
$164.0
Non-derivative financial
liabilities
Secured bank loans
Unsecured bank loans
Unsecured senior notes
Finance lease liabilities
Other long-term obligations
Interest on unsecured
senior notes
Interest on other long-term
debt
Trade and other payables
Bank advance
Derivative financial liabilities
Outflow – FV hedges
Inflow – FV hedges
Outflow – CF hedges
Interest on derivatives
Accrued post-employment
benefit liabilities
Operating leases
Total contractual cash
obligations
* accrued post-employment benefit liability of $3.1 million, accrued interest of $7.1 million on unsecured senior notes and accrued interest of $0.1 million on
derivatives are reported in trade and other payables in 2011 (2010-$2.9 million, $8.1 million and $1.9 million, respectively).
Defined Benefit Post-Employment Plan Obligations
The Company is the sponsor of a number of defined benefit plans in nine countries that give rise to accrued post-employment
benefit obligations. The accrued benefit obligation for these plans at the end of 2011 was $92.5 million ($84.3 million in 2010) and
the fair value of the plan assets was $20.7 million ($19.5 million in 2010), for a net deficit of $71.8 million, compared to $64.7
million at the end of 2010.
In 2011 and 2010, the Company’s net earnings were $84.1 million and $71.1 million, respectively. At the end of 2011, the
Company had $140.7 million of cash and cash equivalents on hand and significant unused lines of credit. Compared to the
Company’s other financial obligations and its current financial resources, described above, these post-employment plan obligations
are relatively small. In addition, the Company is not adding new members to the U.K. and Canadian plans so the risk of future
growth in the liability of the plans and related financial exposure is materially reduced over time.
The Company has elected to record all defined benefit post-employment plan actuarial gains or losses in other comprehensive
income immediately. Certain key assumptions have been made to determine the accrued benefit obligation, future funding
requirements and plan expenses. They are as follows and vary based on the country location and plan specifics:
(cid:129) Discount rate: 1.4% to 8.3%
(cid:129) Expected long-term rate of return on assets: 6.3% to 6.5%
There are three major components to the defined benefit post-employment plans:
CCL Industries Inc. 2011 Annual Report 27
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
1)The Canadian executive plans consist of one registered plan and three unfunded supplemental plans that provide for
pensions to the executives in the registered plan but for amounts above the maximum benefit provided by the registered
plan. The registered plan had $4.3 million in assets and a net deficit of $3.3 million at the end of 2011 ($4.4 million and
$2.4 million, respectively, at the end of 2010). The net deficit of the unfunded supplemental plans was $17.2 million at the
end of 2011 (2010 – $15.9 million). The Company anticipates paying these obligations over time out of cash on hand and
cash generated from operations.
2)The unfunded U.S. deferred compensation plan had a net deficit of $28.9 million at December 31, 2011 (2010 – $26.2
million). The Company anticipates paying these obligations over time out of cash on hand and cash generated from
operations.
3)The U.K. plan had $16.4 million in plan assets at the end of 2011 (2010 – $15.1 million) and a net deficit of $9.1 million at
the end of 2011 (2010 – $6.9 million). There are no active employees enrolled as members of the plan as all of the
members of the plan were employed by businesses previously owned by CCL. Consequently, the plan is capped with the
exception of inflationary pension increases, movements in the actuarial liabilities of plan members and the market value of
the assets of the plan.
In 2009, the Company offered enhanced transfer values to certain members of the U.K. defined benefit pension plan in an effort to
reduce its exposure to the actuarial deficit in the U.K. plan. In 2009, the Company contributed a one-time lump sum of $0.9 million
to the plan, plus a further $3.1 million to buy out certain members who accepted the Company’s buyout offer. A further $0.5 million
was contributed early in 2010 for this same buyout offer. Settlements related to this transfer exercise in 2010 reduced the plan’s
assets by $2.9 million and in 2009 by $10.7 million. Another buyout offer was made in late 2011, the results of which will not be
known until the second quarter of 2012. The Company expects to continue to investigate ways to unwind this plan over time,
including increasing its annual contributions. The Company anticipates that it will fund its obligation out of cash on hand and cash
generated by operations in future years.
In 2011, pension expense for all of the plans was $4.2 million ($4.4 million in 2010) and funding was $3.1 million ($3.3 million in
2010). Actuarial losses recognized directly in equity in 2011 were $4.9 million ($2.4 million in 2010).
The Company believes that its current financial resources combined with its expected future cash flows from operations will be
sufficient to satisfy the obligations under these plans in future years even if there are unfavourable developments related to the key
assumptions made to determine future funding requirements.
Other Obligations and Commitments
The Company has no material “off-balance sheet” financing obligations except for typical long-term operating lease agreements. The
nature of these commitments is described in note 27 of the consolidated financial statements. Additionally, a majority of the
Company’s post-employment obligations are defined contribution pension plans. There are no defined benefit plans funded with CCL
stock.
F) Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and
reported to senior management, including the President and Chief Executive Officer (“CEO”) and the Senior Vice President and Chief
Financial Officer (“CFO”) on a timely basis so that appropriate decisions can be made regarding public disclosure. CCL’s Disclosure
Committee reviews all external reports and documents of CCL before publication to enhance the Company’s disclosure controls and
procedures.
As at December 31, 2011, based on the continued evaluation of the disclosure controls and procedures, the CEO and the CFO have
concluded that CCL’s disclosure controls and procedures, as defined in National Instrument 52-109-Certificate of Disclosure in
Issuers Annual and Interim Filings (“NI 52-109”), are effective to ensure that information required to be disclosed in reports and
documents that CCL files or submits under Canadian securities legislation is recorded, processed, summarized and reported within
the time periods specified.
Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with IFRS. Management is responsible for establishing
and maintaining adequate internal control over financial reporting. NI 52-109 requires CEOs and CFOs to certify that they are
responsible for establishing and maintaining internal control over financial reporting for the issuer, that internal control has been
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
28 CCL Industries Inc. 2011 Annual Report
in accordance with IFRS, that the internal control over financial reporting is effective, and that the issuer has disclosed any changes
in its internal control during its most recent interim period that has materially affected or is reasonably likely to materially affect its
internal control over financial reporting.
Based on the evaluation of the design and operating effectiveness of CCL’s internal control over financial reporting, the CEO and the
CFO concluded that the Company’s internal control over financial reporting was effective as at December 31, 2011.
There were no material changes in internal control over financial reporting in the financial year ended December 31, 2011.
4. RISKS AND UNCERTAINTIES
The Company is subject to the usual commercial risks and uncertainties from operating as a Canadian public company and as a
supplier of goods and services to the non-durable consumer packaging and consumer durable industries on a global basis. A
number of these potential risks and uncertainties that could have a material adverse effect on the business, financial condition and
results of operations of the Company are listed below, generally in order of importance as follows:
Uncertainty Resulting from Sustained Global Economic Crisis
The Company is dependent on the global economy and overall consumer confidence, disposable income and purchasing trends. A
global economic downturn or period of economic uncertainty can erode consumer confidence and may materially reduce consumer
spending. Any decline in consumer spending may negatively affect the demand for customers’ products. This decline directly
influences the demand for the Company’s packaging components used in its customers’ products, and may negatively affect the
Company’s consolidated earnings. The global economic conditions have affected interest rates and credit availability, which may
have a negative impact on earnings from higher interest costs or the inability to secure additional indebtedness to fund operations
or refinance maturing obligations as they come due. In addition, the sustained global economic crisis may have an unpredictable
adverse impact on the Company’s suppliers of manufacturing equipment and raw materials which in-turn may have a negative
impact on the availability of manufacturing equipment and the cost of raw materials. Although the Company has a strong statement
of financial position, diverse businesses and a broad geographic presence, it may not be able to manage a reduction in its earnings
and cash flow that may arise from lower sales, increased cost of raw materials and decreased profits if the global economic
environment deteriorates for an extended period.
Potential Risks Relating to Significant Operations in Foreign Countries
The Company operates plants in North America, Europe, Latin America, Asia, South Africa, Australia and the Middle East. Sales to
customers located outside of Canada in 2011 were 96% of the Company’s total sales, a level similar to that in 2010. Non-Canadian
operating results are translated into Canadian dollars at the average exchange rate for the period covered. The Company has
significant operating bases in both the United States and Europe. In 2011, 41% and 34% of total sales were to customers in United
States and the Europe, respectively. The Company’s operating results and cash flows could be negatively impacted by slower or
declining growth rates in these key markets. The sales from business units in Latin America, Asia, South Africa and Australia in
2011 were 121% of the Company’s total sales. In addition, the Company has equity investments in Russia and the Middle East.
There are risks associated with operating a decentralized organization in 69 facilities in 23 countries around the world with a variety
of different cultures and values. Operations outside of Canada, the United States and Europe are perceived generally to have greater
political and economic risks and include CCL’s operations in Latin America, Asia, South Africa, Russia and the Middle East. These
risks include, but are not limited to, fluctuations in currency exchange rates, inflation, unexpected changes in foreign law and
regulations, government nationalization of certain industries, currency controls, potential adverse tax consequences and locally
accepted business practices and standards that may not be similar to accepted business practices and standards in North America
and Europe. Although the Company has controls and procedures intended to mitigate these risks, these risks cannot be entirely
eliminated and may have a material adverse effect on the consolidated financial results of the Company.
Competitive Environment
The Company faces competition from other packaging suppliers in all the markets in which it operates. There can be no assurance
that the Company will be able to compete successfully against its current or future competitors or that such competition will not
have a material adverse effect on the business, financial condition and results of operations of the Company. This competitive
environment may preclude the Company from passing on higher material, labour and energy costs to its customers. Any significant
increase in in-house manufacturing by customers of the Company could adversely affect the business, financial condition and results
of operations of the Company. In addition, the Company’s consolidated financial results may be negatively impacted by competitors
developing new products or processes that are of superior quality, fit CCL’s customers’ needs better, or have lower costs; or by
consolidation within CCL’s competitors or further pricing pressure on the industry by the large retail chains.
CCL Industries Inc. 2011 Annual Report 29
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
Sustainability of Profitability of the Container Segment
The Company’s Container Segment operated at a substantial loss in 2009 and 2010; however, it posted a return to profitability in
2011. The main drivers of the previous losses were largely due to the higher sales mix of low-margin household products, the effect
of the weaker U.S. dollar, and the negative impact of aluminum hedges and lower volumes. If the Segment is not able to sustain
increased prices to maintain and improve its margins, pass cost increases on to its customers, continue to restructure operations,
and maintain and grow sales volumes to utilize production capacity, it could have a material adverse effect on the business,
financial condition and results of operations of the Company. In addition, foreign currency could have a material adverse effect on
the Container Segment’s results, as the Canadian plant sells almost all of its production to the U.S. market in U.S. dollars.
Foreign Exchange Exposure and Hedging Activities
Sales of the Company’s products to customers outside Canada account for 96% of the revenue of the Company. Because the prices
for such products are quoted in foreign currencies, any increase in the value of the Canadian dollar relative to such currencies, in
particular the U.S. dollar and the euro, reduces the amount of Canadian dollar revenues and operating income reported by the
Company in its consolidated financial statements. The Company also buys inputs for its products in world markets in several
currencies. Exchange rate fluctuations are beyond the Company’s control and there can be no assurance that such fluctuations will
not have a material adverse effect on the reported results of the Company. The use of derivatives to provide hedges of certain
exposures, such as interest rate swaps, forward foreign exchange contracts and aluminum futures contracts could impact negatively
on the Company’s operations.
Retention of Key Personnel and Experienced Workforce
Management believes that an important competitive advantage of the Company has been, and is expected to continue to be, the
know-how and expertise possessed by its personnel at all levels of the Company. While the machinery and equipment used by the
Company are generally available to competitors of the Company, the experience and training of the Company’s workforce allows the
Company to obtain a level of efficiency and a level of flexibility that management believes to be high relative to levels in the
industries in which it competes. To date, the Company has been successful in recruiting, training and retaining its personnel over
the long-term, and while management believes that the know-how of the Company is widely distributed throughout the Company, the
loss of the services of certain of its experienced personnel could have a material adverse effect on the business, financial condition
and results of operations of the Company.
The operations of the Company are dependent on the abilities, experience and efforts of its senior management team. To date, the
Company has been successful in recruiting and retaining competent senior management. Loss of certain members of the executive
team of the Company could have a disruptive effect on the implementation of the Company’s business strategy and the efficient
running of day-to-day operations. This could have a material adverse effect on the business, financial condition and results of
operations of the Company.
Acquired Businesses
As part of its growth strategy, the Company continues to pursue acquisition opportunities where such transactions are economically
and strategically justified. However, there can be no assurance that the Company will be able to identify attractive acquisition
opportunities in the future or have the required resources to complete desired acquisitions, or that it will succeed in effectively
managing the integration of acquired businesses. The failure to implement the acquisition strategy, to successfully integrate
acquired businesses or joint ventures into the Company’s structure, or to control operating performance and achieve synergies, may
have a material adverse effect on the business, financial condition and results of operations of the Company.
In addition, there may be liabilities that the Company has failed or was unable to discover in its due diligence prior to the
consummation of the acquisition. In particular, to the extent that prior owners of acquired businesses failed to comply with or
otherwise violated applicable laws,
laws, the Company, as a successor owner, may be financially
responsible for these violations. A discovery of any material liabilities could have a material adverse effect on the business, financial
condition and results of operations of the Company.
including environmental
Exposure to Income Tax Reassessments
The Company operates in many countries throughout the world. Each country has its own income tax regulations and many of these
levels. The Company’s international
countries have additional
investments are complex and subject to interpretation in each jurisdiction from a legal and tax perspective. The Company’s tax
filings are subject to audit by local authorities and the Company’s positions in these tax filings may be challenged. The Company
may not be successful in defending these positions and could be involved in lengthy and costly litigation during this process and
income and other taxes applied at state, provincial and local
30 CCL Industries Inc. 2011 Annual Report
could be subject to additional income taxes, interest and penalties. The Company may not be able to receive a tax benefit from its
taxable losses in domestic or foreign jurisdictions, depending on the timing and extent of such losses. This outcome could have a
material adverse effect on the business, financial condition and results of operations of the Company.
Fluctuations in Operating Results
While the Company’s operating results over the past several years have indicated a general upward trend in sales and net earnings,
operating results within particular product forms, within particular facilities of the Company and within particular geographic markets
have undergone fluctuations in the past and, in management’s view, are likely to do so in the future. Operating results may fluctuate
in the future as a result of many factors in addition to the global economic conditions, and they include the volume of orders
received relative to the manufacturing capacity of the Company, the level of price competition (from competing suppliers both in
domestic and in other lower-cost jurisdictions), variations in the level and timing of orders, the cost of raw materials and energy, the
ability to develop innovative packaging solutions and the mix of revenue derived in each of the Company’s businesses. Operating
results may also be impacted by the inability to achieve planned volumes through normal growth and successful renegotiation of
current contracts with customers and on the inability to deliver expected benefits from cost reduction programs derived from the
restructuring of certain business units. Any of these factors or a combination of these factors could have a material adverse effect
on the business, financial condition and results of operations of the Company.
Insurance Coverage
Management believes that insurance coverage of the Company’s facilities addresses all material insurable risks, provides coverage
that is similar to that which would be maintained by a prudent owner/operator of similar facilities and is subject to deductibles,
limits and exclusions that are customary or reasonable given the cost of procuring insurance and current operating conditions.
However, there can be no assurance that such insurance will continue to be offered on an economically feasible basis or at current
premium levels, that the Company will be able to pass through any increased premium costs or that all events that could give rise to
a loss or liability are insurable, nor that the amounts of insurance will at all times be sufficient to cover each and every loss or claim
that may occur involving the assets or operations of the Company.
Dependence on Customers
The Company has a modest dependence on certain customers. The Company’s largest customer accounted for approximately
12.5% of consolidated revenue for fiscal 2011. The five largest customers of the Company represented approximately 32% of the
total revenue for 2011 and the largest 15 customers represented approximately 46% of the total revenue. Several hundred
customers make up the remainder of total revenue. Although the Company has strong partnership relationships with its customers,
there can be no assurance that the Company will maintain its relationship with any particular customer or continue to provide
services to any particular customer at current levels. A loss of any significant customer, or a decrease in the sales to any such
customer, could have a material adverse effect on the business, financial condition and results of operations of the Company.
Consolidation within the consumer products marketer base could have a negative impact on the Company’s business, depending on
the nature and scope of any such consolidation.
Environmental, Health and Safety Requirements and Other Considerations
The Company is subject to numerous federal, provincial, state and municipal statutes, regulations, by-laws, guidelines and policies,
as well as permits and other approvals related to the protection of the environment and workers’ health and safety. The Company
maintains active health and safety and environmental programs for the purpose of preventing injuries to employees and pollution
incidents at its manufacturing sites. The Company also carries out a program of environmental compliance audits, including
independent third-party pollution liability assessment for acquisitions, to assess the adequacy of compliance at the operating level
and to establish provisions, as required, for environmental site remediation plans. The Company has environmental insurance for
most of its operating sites, with certain exclusions for historical matters.
Despite these programs and insurance coverage, further proceedings or inquiries from regulators on employee health and safety
requirements, particularly in Canada,
the “EHS
Requirements”), could have a material adverse effect on the business, financial condition and results of operations of the Company.
In addition, changes to existing EHS Requirements or the adoption of new EHS Requirements in the future, changes to the
enforcement of EHS Requirements, as well as the discovery of additional or unknown conditions at facilities owned, operated or
used by the Company, could require expenditures that might materially affect the business, financial condition and results of
operations of the Company, to the extent not covered by indemnity, insurance or a covenant not to sue. Furthermore, while the
the United States and the European Economic Community (collectively,
CCL Industries Inc. 2011 Annual Report 31
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
Company has generally benefited from increased regulations on its customers’ products, the demand for the services or products of
the Company may be adversely affected by the amendment or repeal of laws or by changes to the enforcement policies of the
regulatory agencies concerning such laws.
Operating and Product Hazards
The Company’s revenues are dependent on the continued operation of
its facilities and its customers. The operation of
manufacturing plants involves many risks, including the failure or substandard performance of equipment, natural disasters,
suspension of operations and new governmental statutes, regulations, guidelines and policies. The operations of the Company and
its customers are also subject to various hazards incidental to the production, use, handling, processing, storage and transportation
of certain hazardous materials. These hazards can cause personal
injury, severe damage to and destruction of property and
equipment and environmental damage. Furthermore, the Company may become subject to claims with respect to workplace
exposure, workers’ compensation and other matters. The Company’s pharmaceutical and specialty food product operations are
subject to stringent federal, state, provincial and local health, food and drug regulations and controls, and may be impacted by
consumer product liability claims and the possible unavailability and/or expense of liability insurance. The Company prints
information on its labels and containers, that, if incorrect, could give rise to product liability claims. A determination by applicable
regulatory authorities that any of the Company’s facilities are not in compliance with any such regulations or controls in any material
respect may have a material adverse effect on the Company. A successful product liability claim (or a series of claims) against the
Company in excess of its insurance coverage could have a material adverse effect on the business, financial condition and results of
operations of the Company. There can be no assurance as to the actual amount of these liabilities or the timing thereof. The
occurrence of material operational problems, including, but not limited to, the above events, could have a material adverse effect on
the business, financial condition and results of operations of the Company.
Labour Relations
While labour relations between the Company and its employees have been stable in the recent past and there have been no
material disruptions in operations as a result of labour disputes, the maintenance of a productive and efficient labour environment
cannot be assured. Accordingly, a strike, lockout or deterioration of labour relationships could have a material adverse effect on the
business, financial condition and results of operations of the Company.
Legal Proceedings
Any alleged failure by the Company to comply with applicable laws and regulations in the countries of operation may lead to the
imposition of fines and penalties or the denial, revocation or delay in the renewal of permits and licences issued by governmental
authorities. In addition, governmental authorities, as well as third parties, may claim that the Company is liable for environmental
damages. A significant judgment against the Company, the loss of a significant permit or other approval or the imposition of a
significant fine or penalty could have a material adverse effect on the business, financial condition and results of operations of the
Company. Moreover, the Company may from time to time be notified of claims that it may be infringing patents, copyrights or other
intellectual property rights owned by other third parties. Any litigation could result in substantial costs and diversion of resources,
and could have a material adverse effect on the business, financial condition and results of operations of the Company. In the
future, third parties may assert infringement claims against the Company or its customers. In the event of an infringement claim, the
Company may be required to spend a significant amount of money to develop a non-infringing alternative or to obtain licences. The
Company may not be successful in developing such an alternative or obtaining a licence on reasonable terms, if at all. In addition,
any such litigation could be lengthy and costly and could have a material adverse effect on the business, financial condition and
results of operations of the Company.
The Company may also be subject to claims arising from its failure to manufacture a product to the specifications of its customers
or from personal injury arising from a consumer’s use of a product or component manufactured by the Company. While the Company
will seek indemnity from its customers for claims made against the Company by consumers, and while the Company maintains what
management believes to be appropriate levels of insurance to respond to such claims, there can be no assurance that the Company
will be fully indemnified by its customers nor that insurance coverage will continue to be available or, if available, adequate to cover
all costs arising from such claims. In addition, the Company could become subject to claims relating to its prior businesses,
including environmental and tax matters. There can be no assurance that insurance coverage will be adequate to cover all costs
arising from such claims.
Defined Benefit Post-Employment Plans
The Company is the sponsor of a number of defined benefit plans in nine countries that give rise to accrued post-employment
benefit obligations. Although the Company believes that its current financial resources combined with its expected future cash flows
32 CCL Industries Inc. 2011 Annual Report
from operations and returns on post-employment plan assets will be sufficient to satisfy the obligations under these plans in future
years, the cash outflow and higher expenses associated with these plans may be higher than expected and may have a material
adverse impact on the financial condition of the Company.
Impairment in the Carrying Value of Goodwill
As of December 31, 2011, the Company had $355.8 million of goodwill on its statement of financial position, the value of which is
reviewed for impairment at least annually. The assessment of the value of goodwill depends on a number of key factors requiring
estimates and assumptions about earnings growth, operating margins, discount rates, economic projections, anticipated future cash
flows and market capitalization. There can be no assurance that future reviews of goodwill will not result in an impairment charge.
Although, it does not affect cash flow, an impairment charge does have the effect of reducing the Company’s earnings, total assets
and shareholders’ equity.
5. ACCOUNTING POLICIES AND NON-IFRS MEASURES
A) Key Performance Indicators and Non-IFRS Measures
CCL measures the success of the business using a number of key performance indicators, many of which are in accordance with
IFRS as described throughout this report. The following performance indicators are not measurements in accordance with IFRS and
should not be considered as an alternative to or replacement of net earnings or any other measure of performance under IFRS.
These non-IFRS measures do not have any standardized meaning and may not be comparable to similar measures presented by
other issuers. In fact, these additional measures are used to provide added insight into CCL’s results and are concepts often seen
in external analysts’ research reports, financial covenants in banking agreements and note agreements, purchase and sales
contracts on acquisitions and divestitures of the business, and in discussions and reports to and from the Company’s shareholders
and the investment community. These non-IFRS measures will be found throughout this report and are referenced alphabetically in
the definition section below.
Adjusted Basic Earnings per Class B Share – An important non-IFRS measure to assist in understanding the ongoing earnings
performance of the Company excluding items of a one-time or non-recurring nature. It is not considered a substitute for basic net
earnings per Class B share, but it does provide additional insight into the ongoing financial results of the Company. This non-IFRS
measure is defined as basic net earnings per Class B share excluding gains on dispositions, goodwill impairment loss, restructuring
and other items and tax adjustments.
Earnings per Class B Share
Basic earnings
Loss from restructuring and other items and tax
adjustments included above
Adjusted basic earnings
Fourth Quarter
Year-to-Date
2011
0.55
0.02
$
2010
0.41 $
0.01
2011
2.54
0.03
$
0.57
$
0.42 $
2.57
$
$
$
2010
2.17
0.01
2.18
Book Value per Share – A measure of the shareholders’ equity at book value per the combined Class A and Class B shares. It is
calculated by dividing shareholders’ equity by the actual number of Class A and Class B shares issued and outstanding, excluding
amounts and shares related to shares held in trust and the executive share purchase plan.
The following table reconciles the calculation of the book value per share using IFRS measures reported in the consolidated
statement of financial position as at the periods ended as indicated.
Book Value per Share
At December 31
Total shareholders’ equity, end of period
Number of shares issued and outstanding, end of period (000s)
Less: Shares held in trust
Executive share purchase plan loans
Total adjusted number of shares issued (000s)
Book value per share
$
$
2011
816.9
33,690
(271)
(25)
33,394
2010
769.3
33,287
(265)
(25)
32,997
$
24.46
$
23.32
CCL Industries Inc. 2011 Annual Report 33
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
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
Trade and other receivables
Inventories
Prepaid expenses
Income taxes recoverable
Trade and other payables
Net working capital
Days in quarter
Fourth quarter sales
Days of working capital employed
$
$
$
2011
192.0
86.9
5.3
0.8
(233.9)
51.1
92
317.3
15
$
$
$
2010
174.0
77.9
6.0
3.1
(230.3)
30.7
92
281.3
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.
Dividend Payout
Dividends declared per shareholders’ equity
Adjusted earnings
Dividend payout
2011
23.1
84.9
$
$
$
$
Year-to-Date
2010
21.4
71.3
27%
30%
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
The following table reconciles EBITDA measures to IFRS measures reported in the consolidated income statements for the periods
ended as indicated.
EBITDA (earnings before net finance costs, taxes, depreciation and amortization, goodwill impairment loss, earnings in equity
accounted investments, restructuring and other items)
Net earnings
Corporate expense
(Earnings) loss in equity accounted investments
Finance costs, net
Restructuring and other items – net loss
Income taxes
Operating income (a non-IFRS measure)
Less: Corporate expense
Add: Depreciation and amortization
EBITDA (a non-IFRS measure)
$
$
$
Fourth Quarter
Year-to-Date
2011
18.4
6.9
(1.4)
5.2
0.3
6.0
35.4
(6.9)
26.2
$
$
54.7
$
2010
13.3
7.5
0.1
6.0
0.2
3.3
30.4
(7.5)
24.6
47.5
2011
84.1 $
24.8
(1.2)
21.4
0.8
33.8
163.7 $
(24.8)
100.2
239.1 $
$
$
$
2010
71.1
22.2
(0.5)
25.3
0.2
28.3
146.6
(22.2)
95.4
219.8
Free Cash Flow from Operations – A measure indicating the relative amount of cash generated by the Company during the year and
available to fund dividends, debt repayments and acquisitions. It is calculated as cash flow from operations less capital
expenditures, net of proceeds from the sale of property, plant and equipment.
The following table reconciles the free cash flow from operations measure to IFRS measures reported in the consolidated
statements of cash flows for the periods ended as indicated.
Free Cash Flow from Operations
Cash provided by operating activities
Less: Additions to property, plant and equipment
Add: Proceeds on disposal of property, plant and equipment
Free cash flow from operations
2011
171.4
(81.4)
2.2
$
2010
168.4
(85.8)
4.4
92.2
$
87.0
$
$
Interest Coverage – A measure indicating the relative amount of operating income earned by the Company compared to the amount
of interest expense incurred by the Company. It is calculated as operating income (see definition below), including discontinued
items, less corporate expense, divided by net interest expense on a 12-month rolling basis.
The following table reconciles the interest coverage measure to IFRS measures reported in the consolidated statements of earnings
for the periods ended as indicated.
Interest Coverage
Operating income (a non-IFRS measure, see definition below)
Less: Corporate expense
Net interest expense on a 12-month rolling basis
Interest coverage
$
$
$
2011
163.7
(24.8)
138.9
21.4
6.5
$
$
$
2010
146.6
(22.2)
124.4
25.3
4.9
Net Debt – A measure indicating the financial indebtedness of the Company assuming that all cash on hand is used to repay a
portion of the outstanding debt. It is defined as current debt including cash advances, plus long-term debt, less cash and cash
equivalents.
CCL Industries Inc. 2011 Annual Report 35
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
Net Debt to Total Book Capitalization – A measure that indicates the financial leverage of the Company. It measures the relative
use of debt versus equity in the book capital of the Company. Net debt to total book capitalization is defined as net debt (see
definition above) divided by net debt plus shareholders’ equity, expressed as a percentage.
Operating Income – A measure indicating the profitability of the Company’s business units defined as income before corporate
expenses, net finance costs, goodwill impairment loss, earnings in equity accounted investments, restructuring and other items and
tax.
See the definition of EBITDA above for a reconciliation of operating income measures to IFRS measures reported in the consolidated
statements of earnings for the periods ended as indicated.
Restructuring and Other Items and Tax Adjustments – A measure of significant non-recurring items that are included in net
earnings. The impact of restructuring and other items and tax adjustments on a per share basis is measured by dividing the after-tax
income of the restructuring and other items and tax adjustments by the average number of shares outstanding in the relevant
period. Management will continue to disclose the impact of these items on the Company’s results because the timing and extent of
such items do not reflect or relate to the Company’s ongoing operating performance. Management evaluates the operating income
of its Segments before the effect of these items.
Return on Equity before goodwill impairment loss, restructuring and other items and tax adjustments (“ROE”) — A measure that
provides insight into the effective use of shareholder capital in generating ongoing net earnings. ROE is calculated by dividing annual
net income before goodwill impairment loss, restructuring and other items (net of tax) and tax adjustments by the average of the
beginning and the end of year shareholders’ equity.
The following table reconciles net earnings used in calculating the ROE measure to IFRS measures reported in the consolidated
statement of financial position and in the consolidated income statements for the periods ended as indicated.
Return on Equity
Net earnings
Restructuring and other items and tax adjustments – net loss (net of tax)
Adjusted net earnings
Average shareholders’ equity
Return on equity
2011
84.1
0.8
84.9
793.1
$
$
$
Year-to-Date
2010
71.1
0.2
71.3
752.3
10.7%
9.5%
$
$
$
Return on Sales – A measure indicating relative profitability of sales to customers. It is defined as operating income (see above
definition) divided by sales, expressed as a percentage.
The following table reconciles the return on sales measure to IFRS measures reported in the consolidated statements of earnings in
the industry segmented information as per note 6 of the Company’s annual financial statements for the periods ended as indicated.
Return on Sales
Year-to-Date
Label
Container
Tube
2011
$ 1,012.3
175.7
80.5
Sales
2010
$ 955.1
162.4
74.8
Operating Income (Loss)
Return on Sales
2011
$ 142.5 $
9.2
12.0
2010
142.3
(4.5)
8.8
2011
2010
14.1%
5.2%
14.9%
12.9%
14.9%
(2.8%)
11.8%
12.3%
Total operations
$ 1,268.5
$ 1,192.3
$ 163.7 $
146.6
36 CCL Industries Inc. 2011 Annual Report
Total Debt – A measure indicating the financial
advances, plus long-term debt.
indebtedness of the Company. It is defined as current debt, including bank
The following table reconciles total debt used in the total debt measure to IFRS measures reported in the consolidated statement of
financial position as at the periods ended as indicated.
Total debt
At December 31
Current debt, including bank advances
Plus: Long-term debt
Total debt
2011
19.8
334.2
354.0
$
$
2010
76.1
345.8
421.9
$
$
Total Debt to Total Book Capitalization – A measure that indicates the financial leverage of the Company. It measures the relative
use of debt versus equity in the book capital of the Company. Total debt to total book capitalization is defined as total debt (see
definition above) divided by total debt plus shareholders’ equity, expressed as a percentage.
The following table reconciles the total debt to total book capitalization measure to IFRS measures reported in the consolidated
statement of financial position as at the periods ended as indicated.
Total Debt to Total Book Capitalization
At December 31
Total debt (see above table)
Shareholders’ equity
Total debt to total book capitalization
B) Accounting Policies and New Standards
Accounting Policies
$
$
2011
354.0
816.9
$
$
2010
421.9
769.3
30.2%
35.4%
The above analysis and discussion of the Company’s financial condition and results of operation are based on its consolidated
financial statements prepared in accordance with IFRS. CCL’s transition date to IFRS was January 1, 2010, and the Company’s
financial statements for the year ended December 31, 2011, are the first annual financial statements prepared in accordance with
IFRS. Comparative information for the 2010 year has been restated, and various reconciliations between the amounts reported
under previous Canadian generally accepted accounting principles (“previous GAAP”) and IFRS are set out in note 31 to the
consolidated financial statements, together with explanatory notes and details of transition exemptions available that were applied.
A summary of the Company’s significant accounting policies is set out in note 3 of the consolidated financial statements.
Recently Issued New Accounting Standards, Not Yet Effective
A number of new or revised accounting standards have recently been issued by the International Accounting Standards Board
(“IASB”), but are not yet effective. These standards have not been applied in preparing these consolidated financial statements. The
Company is currently evaluating the impact of these standards on its consolidated financial statements.
IFRS 9, Financial Instruments (“IFRS 9”) will replace IAS 39, Financial Instruments: Recognition and Measurement (“IAS 39”). IFRS 9 uses a
single approach to determine whether a financial asset is measured at amortized cost or fair value. The approach in IFRS 9 is based
on how an entity manages its financial
its business model and the contractual cash flow
characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the
multiple impairment methods in IAS 39. Most of the requirements in IAS 39 for classification and measurement of financial
liabilities were carried forward unchanged to IFRS 9. Mandatory Effective Date of IFRS 9 and Transition Disclosures, issued in December 2011,
deferred the effective date to annual periods beginning on or after January 1, 2015, with earlier adoption permitted.
instruments in the context of
CCL Industries Inc. 2011 Annual Report 37
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
IFRS 10, Consolidated Financial Statements (“IFRS 10”) will replace SIC-12, Consolidation-Special Purpose Entities and IAS 27, Consolidated and
Separate Financial Statements. IFRS 10 establishes principles for the presentation and preparation of consolidated financial statements
when an entity controls one or more entities. IFRS 10 is effective for periods beginning on or after January 1, 2013.
IFRS 11, Joint Arrangements (“IFRS 11”) will replace guidance in IAS 31, Interests in Joint Ventures. IFRS 11 provides focus on the rights
and obligations of the joint arrangement, rather than its legal form in the current standard. IFRS 11 also addresses inconsistencies
in the reporting of joint arrangements by requiring a single method to account for interest in jointly controlled entities. IFRS 11 is
effective for periods beginning on or after January 1, 2013.
IFRS 12, Disclosure of Interests in Other Entities (“IFRS 12”) establishes new and comprehensive disclosure requirements for all forms of
interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. This new
standard is effective for periods beginning on or after January 1, 2013.
IFRS 13, Fair Value Measurement (“IFRS 13”) replaces the fair value guidance that is currently contained within individual IFRS with a
single source of fair value measurement guidance. IFRS 13 is effective for periods beginning on or after January 1, 2013.
Amendments to IAS 1, Presentation of Financial Statements (“IAS 1”) retains the “one or two statement” approach to presenting the
statements of income and comprehensive income at the option of the entity and only revises the way other comprehensive income
is presented. This revised standard is effective for periods beginning on or after July 1, 2012.
IAS 12, Deferred Tax: Recovery of Underlying Assets (“IAS 12”) has been amended to include the requirement that deferred tax on
non-depreciable assets measured using the revaluation model in IAS 16 should be measured on the sale basis. This new standard
is effective for periods beginning on or after January 1, 2012.
IAS 19, Employee Benefits (“IAS 19”) eliminates the use of the “corridor” approach and requires that all remeasurement impacts be
recognized in other comprehensive income. It also enhances the disclosure requirements by providing more information regarding
the characteristics of defined benefit plans and the risk that entities are exposed to through participation in those plans. This
revised standard is effective for periods beginning on or after January 1, 2013.
C) Critical Accounting Estimates
The presentation of financial statements requires management to make estimates and assumptions that affect the reported
amounts of revenue and expenses during the year, and of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements. In particular, the amounts recorded for inventories, redundant assets, bad debts,
derivatives, income taxes, restructuring, pension and other post-retirement benefits, contingencies and litigation, environmental
matters, outstanding self-insured claims, depreciation and amortization of property, plant and equipment, and the valuation of
goodwill are based on estimates. Actual results could differ from those estimates.
Inventory Valuation
Inventories are valued at the lower of cost and net realizable value on the first-in, first-out basis. The cost of work in process and
finished goods includes materials, direct labour applied to the product and the applicable share of overhead. In determining the net
realizable value, the Company estimates and establishes reserves for excess, obsolete or unmarketable inventory. The reserve is
based upon the aging of the inventory, the historical experience, the current business environment and the Company’s judgment
regarding the future demand for the inventory. If actual demand and market conditions are less favourable than those projected,
additional inventory reserves may be needed and the results from operations could be materially affected. A change in the provision
would be recorded in the carrying value of inventory and cost of goods sold.
Accounts Receivable
The Company records an allowance for doubtful accounts related to accounts receivable that management believes may become
impaired. The allowance is based upon the aging of the receivables, the Company’s knowledge of the financial condition of its
customers, the historical experience, and the current business environment. If actual collection of receivables and market conditions
are less favourable than those projected, additional allowance for doubtful accounts may be needed and the results from operations
could be materially affected. A change in the allowance would be recorded in selling, general and administrative expenses.
38 CCL Industries Inc. 2011 Annual Report
Goodwill
Goodwill represents the excess of the purchase price of the Company’s interest in the businesses acquired over the fair value of the
underlying net identifiable tangible and intangible assets arising on acquisitions. Goodwill is not amortized but is required to be
tested for impairment at least annually or if events or changes in circumstances indicate that the carrying amount may not be
recoverable.
The Company performs the annual impairment test in the fourth quarter of each year. Impairment testing for Label and Container
Segments was done by a comparison of the unit’s carrying amount to its estimated value in use, determined by discounting future
cash flows from the continuing use of the unit. Key assumptions used in the determination of the value in use include growth rates
of 2.5%-4.2% for Container and Label and a discount rate ranging from 9.0%-10.5%. Discount rates reflect current market
assumptions and risks related to the Segments and are based upon the weighted average cost of capital for the Segment. The
Company’s historical growth rates are used as a basis in determining the growth rate applied for impairment testing. Significant
management judgment is required in preparing the forecasts of future operating results that are used in the discounted cash flow
method of valuation. In 2011 and 2010, it was determined that the carrying amount of goodwill was not impaired. Since the process
of determining fair values requires management judgment regarding projected results and market multiples, a change in these
assumptions could impact the fair value of the reporting units resulting in an impairment charge.
Long-lived Assets
Long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Performance of this evaluation involves management estimates of the associated business plans,
economic projections and anticipated cash flows. Specifically, management considers forecasted operating cash flows, which are
subject to change due to economic conditions, technological changes or changes in operating performance. An impairment loss
would be recognized if the carrying amount of the asset held for use exceeded the discounted cash flow or fair value. Changes in
these estimates in the future may result in an impairment charge.
Employee Benefits
The Company accrues its obligation under employee benefit plans and related costs net of plan assets. Pension costs are
determined periodically by independent actuaries. The actuarial determination of the accrued benefit obligations for the plans uses
the projected unit credit method and incorporates management’s best estimate of future salary escalation, retirement age, inflation
and other actuarial factors. The cost is then charged as services are rendered. Since these assumptions, which are disclosed in
note 22 of the consolidated financial statements, involve forward-looking estimates and are long-term in nature, they are subject to
uncertainty and actual results may differ, and the differences may be material.
D) Related Party Transactions
The Company has entered into a number of agreements with its subsidiaries that govern the management and commercial and cost-
sharing arrangements with and among the subsidiaries. These inter-company structures are established on terms typical of arm’s
length agreements. A summary of the Company’s related party transactions are set out in note 28 of the consolidated financial
statements.
6. OUTLOOK
CCL delivered another year of solid financial results in 2011 in the midst of an unsettled global economy, natural disasters and a
European sovereign debt crisis evidenced by meaningful organic growth in each of its business Segments. CCL capitalized on its
strategy of growing globally with its core customers using specialized market-focused operations and business teams where it sees
opportunity for profitable competitive advantage. The Company is confident this strategy will continue to generate strong cash flows
that will support additional investment opportunities and allow CCL to further expand its geographic and market segment reach.
The Company remains focused on vigilantly managing working capital and prioritizing capital to opportunities in higher-growth areas,
such as emerging markets and the Healthcare & Specialty business, either organically or by acquisition. The Company has
significant cash and liquidity to support this growth strategy with cash balances of over $140 million and unused credit lines of over
$91 million. The Company expects capital expenditures for 2012 to approximate 2011 levels and remain below annual depreciation.
CCL Industries Inc. 2011 Annual Report 39
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S
Years ended December 31, 2011 and 2010 (Tabular amounts in millions of Canadian dollars, except per share data)
A number of CCL’s customers, suppliers and peers in Europe and North America had a successful 2011, but most reported signs of
some softness in the fourth quarter, particularly in Europe. Sales improvement in 2012 is not anticipated to be in excess of global
GDP growth rates. The emerging markets of Latin America, Eastern Europe and Asia continued to be a success factor for the
Company in 2011, and along with the Company’s venture in the Middle East, are expected to continue growing at higher rates in
2012 compared to the Company’s other regions. Emerging market sales are now over 20% of the Company’s revenue base.
Although the global economic environment remains uncertain and the outcome of the European sovereign debt crisis is unclear for
2012, the Company remains resolute in its growth strategy. The Label Segment announced new capacity investments in Brazil and
Thailand of $20 million and $10 million, respectively, to meet regional demands. Furthermore, CCL is committed to expanding its
global presence in the Wine and Spirits sector.
The Container Segment recorded a significant rebound in operating results for 2011, driven by strong performance at the U.S. and
Mexican operations but highlighted by a major turnaround in the Canadian facility. Market share gains are expected in the Mexican
operations, while the U.S. and Canadian operations will maintain pricing discipline, and continue to drive cost reduction and
productivity initiatives for the Segment to drive its momentum on into 2012.
The Tube Segment had a stellar year in 2011 posting record operating results. Additional capacity is slated for the Wilkes-Barre
facility and new decorating equipment for Los Angeles in order to expand market share in highly decorated tubes for the premium
personal care and cosmetic sector.
The immediate outlook for the first quarter of 2012 is supported by a good order book at year end and solid intake during the first
weeks of the new year. However, the Company expects the rate of comparative performance improvement for the first quarter of
2012 to narrow significantly from Q4 2011 levels due to the strong results in the corresponding prior year period. At exchange rates
prevailing in January 2012, the foreign currency translation impact would be insignificant.
40 CCL Industries Inc. 2011 Annual Report
Management’s Responsibility for the Financial Statements
The accompanying consolidated financial statements of CCL Industries Inc. and all
responsibility of management and have been approved by the Board of Directors.
information in this Annual Report are the
The consolidated financial statements have been prepared by management in accordance with International Financial Reporting
Standards. When alternative accounting methods exist, management has chosen those it deems to be the most appropriate to
ensure fair and consistent presentation. Financial statements are not precise since they include certain amounts based on
estimates and judgments. Management has determined such amounts on a reasonable basis in order to ensure that the
consolidated financial statements are presented fairly in all material aspects. Management has prepared the financial information
presented elsewhere in this Annual Report and has ensured that it is consistent with the consolidated financial statements.
CCL maintains financial and operating systems that include appropriate and effective internal controls. Such systems are designed
to provide reasonable assurance that the financial information is reliable and relevant, and that CCL’s assets are appropriately
accounted for and adequately safeguarded.
The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately
responsible for reviewing and approving the consolidated financial statements. The Board of Directors carries out this responsibility
through its Audit Committee.
The Audit Committee is appointed by the Board of Directors and meets periodically with management, as well as the internal and
external auditors, to discuss internal controls over the financial reporting process, auditing matters and financial reporting issues, to
satisfy itself that each party is properly discharging its responsibilities, and to review the Management’s Discussion and Analysis,
the consolidated financial statements and the external auditors’ report. The Audit Committee reports its findings to the Board of
Directors for consideration when approving the annual financial statements for issuance to the shareholders. The Audit Committee
also considers, for review by the Board of Directors and approval by the shareholders, the engagement or re-appointment of the
external auditors.
The consolidated financial statements have been audited by KPMG LLP, the external auditors, in accordance with Canadian generally
accepted auditing standards, on behalf of the shareholders. KPMG LLP have full and free access to, and meet periodically with, the
Audit Committee.
Geoffrey T. Martin
President and Chief Executive Officer
February 23, 2012
Sean P. Washchuk
Senior Vice President and Chief Financial Officer
CCL Industries Inc. 2011 Annual Report 41
KPMG LLP
Chartered Accountants
ertneC edialedA yaB
0064 etiuS teertS yaB 333
5S2 H5M NO otnoroT
Telephone
xaF
tenretnI
(416) 777-8500
8188-777 )614(
ac.gmpk.www
I N D E P E N D E N T A U D I T O R S ’ R E P O R T
To the Shareholders of CCL Industries Inc.
We have audited the accompanying consolidated financial statements of CCL Industries Inc. (“the Company”), which comprise the
consolidated statement of financial position as at December 31, 2011, December 31, 2010 and January 1, 2010, the consolidated
income statements, statements of comprehensive income, changes in equity and cash flows for the years ended December 31,
2011 and December 31, 2010, and notes, comprising a summary of significant accounting policies and other explanatory
information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit
in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of
the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the
Company as at December 31, 2011, December 31, 2010 and January 1, 2010, and of its consolidated financial performance and
its consolidated cash flows for the years ended December 31, 2011 and December 31, 2010 in accordance with International
Financial Reporting Standards.
Chartered Accountants, Licensed Public Accountants
Toronto, Canada
February 23, 2012
KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative
(‘‘KPMG International’’), a Swiss entity.
KPMG Canada provides services to KPMG LLP.
42 CCL Industries Inc. 2011 Annual Report
C O N S O L I D A T E D S T A T E M E N T S O F F I N A N C I A L P O S I T I O N
(In thousands of Canadian dollars)
As at
December 31
2011
As at
December 31
2010
Assets
Current assets
Cash and cash equivalents (note 8)
Trade and other receivables (note 9)
Inventories (note 10)
Prepaid expenses
Income taxes recoverable
Derivative instruments (note 26)
Total current assets
Property, plant and equipment (note 12)
Goodwill (notes 13,14)
Deferred tax assets (note 17)
Equity accounted investments (note 11)
Intangible assets (note 13)
Other assets (note 15)
Derivative instruments (note 26)
Total non-current assets
Total assets
Liabilities
Current liabilities
Bank advances (note 20)
Trade and other payables (note 16)
Current portion of long-term debt (note 20)
Income taxes payable
Derivative instruments (note 26)
Total current liabilities
Long-term debt (note 20)
Deferred tax liabilities (note 17)
Employee benefits (note 22)
Provisions and other long-term liabilities
Derivative instruments (note 26)
Total non-current liabilities
Total liabilities
Equity
Share capital (note 18)
Contributed surplus
Retained earnings
Accumulated other comprehensive income (loss) (note 29)
Total equity attributable to shareholders of the Company
$
$
$
$
140,698
192,003
86,932
5,304
802
820
426,559
688,099
355,788
54,152
38,464
34,853
15,566
—
1,186,922
$ 1,613,481
$
—
233,963
19,750
—
2,530
256,243
334,218
118,827
77,806
9,507
—
540,358
796,601
218,663
9,421
629,469
(40,673)
816,880
As at
January 1
2010
150,594
166,499
75,530
5,656
—
5,550
403,829
744,707
358,794
51,799
19,449
45,192
24,289
531
1,244,761
$
173,197
174,011
77,863
5,983
3,141
6,641
440,836
704,403
350,527
54,956
19,754
38,053
18,604
841
1,187,138
1,627,974
$
1,648,590
$
497
230,341
75,628
—
11,519
317,985
345,774
119,076
66,219
8,617
976
540,662
858,647
208,666
7,688
572,789
(19,816)
769,327
—
215,200
44,973
6,332
4,228
270,733
435,168
117,469
65,479
12,010
12,504
642,630
913,363
201,339
4,676
525,316
3,896
735,227
Total liabilities and equity
$ 1,613,481
$
1,627,974
$
1,648,590
See accompanying explanatory notes to the consolidated financial statements.
On behalf of the Board:
Donald G. Lang
Director
Geoffrey T. Martin
Director
CCL Industries Inc. 2011 Annual Report 43
C O N S O L I D A T E D I N C O M E S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except per share information)
Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Restructuring and other items
Earnings in equity accounted investments
Results from operating activities
Finance cost (note 21)
Finance income (note 21)
Net finance cost
Earnings before income tax
Income tax expense (note 24)
Net earnings for the year
Attributable to:
Shareholders of the Company
Net earnings for the year
Earnings per share
Basic earnings per Class B share (note 19)
Diluted earnings per Class B share (note 19)
See accompanying explanatory notes to the consolidated financial statements.
C O N S O L I D A T E D S T A T E M E N T S O F C O M P R E H E N S I V E I N C O M E
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars)
Net earnings for the year
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment for foreign operations,
net of tax expense of $405 for the year ended December 31, 2011
(2010 – tax recovery of $446)
Net gain (loss) on hedges of net investment in foreign operations,
net of tax recovery of $1,427 for the year ended December 31, 2011
(2010 – tax expense of $2,691)
Effective portion of changes in fair value of cash flow hedges,
net of tax recovery of $863 for the year ended December 31, 2011
(2010 – tax recovery of $403)
Net change in fair value of cash flow hedges transferred to the income statement,
net of tax expense of $241 for the year ended December 31, 2011
(2010 – tax expense of $525)
Actuarial losses on defined benefit post-employment plans,
net of tax recovery of $590 for the year ended December 31, 2011
(2010 – tax recovery of $190)
Other comprehensive loss, net of tax
Total comprehensive income
Attributable to:
Shareholders of the Company
Total comprehensive income for the year
See accompanying explanatory notes to the consolidated financial statements.
44 CCL Industries Inc. 2011 Annual Report
2011
2010
$ 1,268,477
974,943
$ 1,192,318
917,507
293,534
154,605
797
1,224
139,356
22,827
1,443
21,384
117,972
33,846
84,126
84,126
84,126
2.54
2.50
$
$
$
$
$
274,811
150,436
225
496
124,646
26,356
1,071
25,285
99,361
28,268
71,093
71,093
71,093
2.17
2.13
$
$
$
$
$
2011
2010
$
84,126
$
71,093
(11,738)
(51,071)
(6,638)
29,481
(2,795)
(3,007)
314
885
(4,350)
(25,207)
58,919
58,919
58,919
$
$
$
(2,197)
(25,909)
45,184
45,184
45,184
$
$
$
C O N S O L I D A T E D S T A T E M E N T S O F C H A N G E S I N E Q U I T Y
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars)
Share capital
Class A shares, beginning of year
Class A shares, end of year
Class B shares, beginning of year
Stock options exercised
Class B shares, end of year
Executive share purchase plan loans, beginning of year
Repayment of executive share purchase plan loans
Executive share purchase plan loans, end of year
Shares held in trust, beginning of year
Shares redeemed from trust
Shares purchased and held in trust
Shares held in trust, end of year
Share capital, end of year (note 18)
Accumulated other comprehensive income (loss)
Accumulated other comprehensive income (loss), beginning of year
Other comprehensive loss
Accumulated other comprehensive loss, end of year (note 29)
Contributed surplus
Contributed surplus, beginning of year
Stock option expense
Stock options exercised
Stock-based compensation plan
Contributed surplus, end of year
Retained earnings, beginning of year
Net earnings
Defined benefit plan actuarial losses, net of tax
Dividends:
Class A
Class B
Total dividends to shareholders
Retained earnings, end of year
Total shareholders’ equity, end of year
See accompanying explanatory notes to the consolidated financial statements.
2011
$
4,517
$
4,517
213,691
9,749
223,440
(233)
—
(233)
(9,309)
425
(177)
(9,061)
2010
4,517
4,517
206,874
6,817
213,691
(916)
683
(233)
(9,136)
—
(173)
(9,309)
218,663
208,666
(19,816)
(20,857)
(40,673)
7,688
1,190
(1,313)
1,856
9,421
572,789
84,126
(4,350)
(1,543)
(21,553)
(23,096)
629,469
3,896
(23,712)
(19,816)
4,676
1,550
(1,118)
2,580
7,688
525,316
71,093
(2,197)
(1,436)
(19,987)
(21,423)
572,789
$ 816,880
$
769,327
CCL Industries Inc. 2011 Annual Report 45
C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars)
Cash provided by (used for)
Operating activities
Net earnings
Adjustments for:
Depreciation and amortization
Restructuring and other items
Net finance costs
Current income tax expense
Equity-settled share-based payment transactions
Deferred taxes
Gain on sale of property, plant and equipment
Change in inventories
Change in trade and other receivables
Change in prepaid expenses
Change in trade and other payables
Change in employee benefits
Change in other assets and liabilities
Interest paid
Income taxes paid
Cash provided by operating activities
Financing activities
Proceeds on issuance of long-term debt
Repayment of long-term debt
(Decrease) increase in bank advances
Proceeds from issuance of shares
Repayment of executive share purchase plan loans
Dividends paid
Cash used for financing activities
Investing activities
Additions to property, plant and equipment
Proceeds on disposal of property, plant and equipment
Business acquisitions
Cash used for investing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Translation adjustments on cash and cash equivalents
2011
2010
$
84,126
$
71,093
100,177
797
21,384
31,655
3,472
2,191
(1,146)
242,656
(8,505)
(16,454)
688
109
7,238
(2,945)
222,787
(21,930)
(29,481)
171,376
7,872
(91,291)
(497)
8,126
—
(23,343)
(99,133)
(81,447)
2,171
(25,156)
(104,432)
(32,189)
173,197
(310)
95,406
225
25,285
28,250
4,130
18
(1,059)
223,348
(1,901)
(6,089)
(291)
16,076
(1,457)
1,899
231,585
(27,325)
(35,861)
168,399
6,466
(45,588)
497
5,364
683
(20,730)
(53,308)
(85,794)
4,439
(1,246)
(82,601)
32,490
150,594
(9,887)
Cash and cash equivalents at end of year
$ 140,698
$
173,197
See accompanying explanatory notes to the consolidated financial statements.
46 CCL Industries Inc. 2011 Annual Report
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
1. REPORTING ENTITY
CCL Industries Inc. (the “Company”) is a public company, listed on the Toronto Stock Exchange, and is incorporated and domiciled in
Canada. These consolidated financial statements of the Company as at and for the year ended December 31, 2011, comprise the
Company and its subsidiaries and the Company’s interest in associates. The Company has manufacturing facilities around the world
and is primarily involved in the manufacture of labels, containers and tubes.
2. BASIS OF PREPARATION
(a) Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”)
and its interpretations adopted by the International Accounting Standards Board (“IASB”). These are the Company’s first
consolidated financial statements in accordance with IFRS and IFRS 1, First-time Adoption of International Financial Reporting
Standards (“IFRS 1”) has been applied.
An explanation of how the transition to IFRS has affected the reported financial position, financial performance and cash flows of the
Company is provided in note 31.
These consolidated financial statements were authorized for issue by the Company’s Board of Directors on February 23, 2012.
(b) Basis of measurement
These consolidated financial statements have been prepared on the historical cost basis except for the following items in the
statements of financial position:
(cid:129) derivative financial instruments are measured at fair value
(cid:129) financial instruments at fair value through profit or loss are measured at fair value
(cid:129) liabilities for cash-settled share-based payment arrangements are measured at fair value
(cid:129) assets related to the defined benefit plans are measured at fair value and liabilities related to the defined benefit plans
are calculated by qualified actuaries using the projected unit credit method
(c) Functional and presentation currency
These consolidated financial statements are presented in Canadian dollars, which is the Company’s functional currency. All financial
information presented in Canadian dollars has been rounded to the nearest thousand, unless otherwise noted.
(d) Use of estimates
The presentation of financial statements requires management to make estimates and assumptions that affect the reported
amounts of sales and expenses during the year and of assets and liabilities and the disclosure of contingent assets and liabilities at
the date of the financial statements. In particular, the amounts recorded for inventories, redundant assets, bad debts, derivatives,
income taxes, restructuring, pension and other post-retirement benefits, contingencies and litigation, environmental matters,
outstanding self-insured claims, depreciation and amortization of property, plant and equipment, and the valuation of goodwill are
based on estimates. Actual results could differ from those estimates.
3.
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all comparative information presented in these consolidated
financial statements and in preparing the opening IFRS statement of financial position at January 1, 2010, for the purposes of
transition to IFRS, unless otherwise indicated.
The accounting policies have been applied consistently by the Company’s subsidiaries.
(a) Basis of consolidation
(i) Business combinations
Acquisitions on or after January 1, 2010
For acquisitions on or after January 1, 2010, the Company measures goodwill as the fair value of the consideration transferred
including the recognized amount of any non-controlling interest in the acquiree, less the net recognized amount (generally fair value)
of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. When the excess is negative, a
CCL Industries Inc. 2011 Annual Report 47
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
bargain purchase gain is recognized immediately in profit or loss. The Company elects on a transaction-by-transaction basis to
measure non-controlling interest either at its fair value or at its proportionate share of the recognized amount of the identifiable net
assets at the acquisition date. Transaction costs, other than those associated with the issue of debt or equity securities, that the
Company incurs in connection with a business combination are expensed as incurred.
Acquisitions prior to January 1, 2010
As part of its transition to IFRS, the Company elected to apply the requirements of IFRS to only those business combinations that
occurred on or after January 1, 2010. In respect of acquisitions prior to January 1, 2010, goodwill represents the amount recognized
under previous Canadian GAAP.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are
currently exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have
been changed, when necessary, to align them with the policies adopted by the Company.
(iii) Associates and joint ventures
Associates are those entities in which the Company has significant influence, but not control, over the financial and operating
policies. Significant influence is presumed to exist when the Company holds between 20 percent and 50 percent of the voting power
of another entity.
Joint ventures are those entities over whose activities the Company has joint control established by contractual arrangements.
Investments in associates and joint ventures are accounted for using the equity method and are recognized initially at cost. The
Company’s investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated
financial statements include the Company’s share of the income and expenses and equity movements of equity accounted
investees, after adjustments to align the accounting policies with those of the Company, from the date that significant influence
commences until the date that it ceases. When the Company’s share of losses exceeds its interest in an equity accounted investee,
the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is
discontinued except to the extent that the Company has an obligation or has made payments on behalf of the investee.
(iv) Transactions eliminated on consolidation
Inter-company balances and transactions, and any unrealized income and expenses arising from inter-company transactions, are
eliminated in preparing the consolidated financial statements. Unrealized gains arising from transactions with equity accounted
investees are eliminated against the investment to the extent of the Company’s interest in the investee. Unrealized losses are
eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.
(b) Foreign currency
(i)
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of the Company’s entities using exchange
rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are
retranslated to the functional currency using the exchange rate at that date. The foreign currency gain or loss on monetary items is
the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and
payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the period.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the
functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on
retranslation are recognized in the income statement, except for differences arising on the retranslation of a financial liability
designated as a hedge of the net investment in a foreign operation, or qualifying cash flow hedges, which are recognized directly in
other comprehensive income (see note 3(b)(iii) below). Foreign currency-denominated non-monetary items, measured at historical
cost, have been translated at the rate of exchange at the transaction date.
48 CCL Industries Inc. 2011 Annual Report
(ii) Foreign operations
The financial statements of each of the Company’s subsidiaries are measured using the currency of the primary economic
environment in which the entity operates.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated
into Canadian dollars using exchange rates at the reporting date. The income and expenses of foreign operations are translated into
Canadian dollars using the average exchange rates for the period.
Foreign currency differences are recognized directly in other comprehensive income and presented within foreign currency translation
adjustment.
When a foreign operation is disposed of, the amount in other comprehensive income related to the foreign operation is fully
transferred to the income statement. A disposal occurs when the entire interest in the foreign operation is disposed of, or in the
case of a partial disposal, the partial disposal results in the loss of control of a subsidiary or the loss of significant influence. For any
partial disposal of the Company’s interest in a subsidiary that includes a foreign operation, the Company re-attributes the
proportionate share of the relevant amounts in other comprehensive income to non-controlling interests. For any other partial
disposal of a foreign operation, the Company reclassifies to the income statement only the proportionate share of the relevant
amount in other comprehensive income.
Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of
which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation
and are recognized directly in other comprehensive income and presented within the foreign currency translation adjustment.
(iii) Hedge of net investment in foreign operation
The Company applies hedge accounting to the foreign currency exposure arising between the functional currency of the foreign
operation and the parent entity’s functional currency (Canadian dollars), regardless of whether the net investment is held directly or
through an intermediate parent.
Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in a foreign
operation are recognized directly in other comprehensive income, to the extent that the hedge is effective. To the extent that the
hedge is ineffective, such differences are recognized in the income statement. When the hedged part of a net investment is
disposed of or partially disposed of, the associated cumulative amount in equity is transferred to the income statement as an
adjustment to the income statement on disposal in accordance with the policy described in note 3 (b)(ii) above.
(c) Financial instruments
(i) Non-derivative financial instruments
Non-derivative financial instruments comprise cash and cash equivalents, trade and other receivables, trade and other payables,
bank advances and long-term debt.
Non-derivative financial instruments are recognized initially at fair value plus, for instruments not at fair value through profit or loss,
any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as
described below.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when,
the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the
liability simultaneously.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such
assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and
receivables are measured at amortized cost using the effective interest method, less any impairment losses.
Loans and receivables comprise trade and other receivables. The carrying value of trade and other receivables is net of an allowance
for doubtful accounts. The allowance is based upon the aging of the receivables, the Company’s knowledge of the financial condition
of its customers, historical experience and the current business environment.
Cash and cash equivalents comprise cash on hand and short-term investments with original maturity dates of 90 days or less.
CCL Industries Inc. 2011 Annual Report 49
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
Financial assets at fair value through profit or loss
An instrument is classified at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition.
Financial instruments are designated at fair value through profit or loss if the Company manages such investments and makes
purchase and sale decisions based on their fair value in accordance with the Company’s documented risk management or
investment strategy. Upon initial recognition, the attributable transaction costs are recognized in the income statement when
incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognized in
the income statement.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and are not classified
in any of the previous categories and are included in other assets.
These items are initially recognized at fair value plus transaction costs and are subsequently carried at fair value with changes
recognized in other comprehensive income. When an investment is derecognized the accumulated gain or loss recognized in other
comprehensive income is transferred to the income statement.
Non-derivative financial liabilities
The Company initially recognizes debt securities issued and subordinated liabilities on the date that they are originated. All other
financial liabilities (including liabilities designated at fair value through profit or loss) are recognized initially on the trade date at
which the Company becomes a party to the contractual provisions of the instrument. The Company derecognizes a financial liability
when its contractual obligations are discharged, cancelled or expire.
Financial
recognition these financial liabilities are measured at amortized cost using the effective interest method.
liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial
(ii) Derivative financial instruments, including hedge accounting
The Company uses derivative financial instruments to manage its foreign currency and interest rate risk exposure and price risk
exposure related to the purchase of raw materials. Embedded derivatives are separated from the host contract and accounted for
separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a
separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined
instrument is not measured at fair value through the income statement.
On initial designation of the hedge, the Company formally documents the relationship between the hedging instrument(s) and
hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction, together with the
methods that will be used to assess the effectiveness of the hedging relationship. The Company makes an assessment, both at the
inception of the hedge relationship and on an ongoing basis, whether the hedging instruments are expected to be “highly effective”
in offsetting the changes in the fair value or cash flows of the respective hedged items during the period for which the hedge is
designated, and whether the actual results of each hedge are within a range of 80 percent to 125 percent. For a cash flow hedge of
a forecast transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash
flows that could ultimately affect reported net income.
Derivatives are recognized initially at fair value; attributable transaction costs are recognized in profit or loss as incurred.
Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.
Cash flow hedges
When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular risk
associated with a recognized asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective
portion of changes in the fair value of the derivative is recognized in other comprehensive income and presented in the hedging
reserve in equity. The amount recognized in other comprehensive income is removed and included in profit or loss in the same
period as the hedged cash flows affect profit or loss under the same line item in the statement of comprehensive income as the
hedged item. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in the income statement.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the
designation is revoked, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognized in
other comprehensive income and presented in unrealized gains or losses on cash flow hedges in equity remains there until the
forecast transaction affects profit or loss. When the hedged item is a non-financial asset, the amount recognized in other
50 CCL Industries Inc. 2011 Annual Report
comprehensive income is transferred to the carrying amount of the asset when the asset is recognized. If the forecast transaction is
no longer expected to occur, then the balance in other comprehensive income is recognized immediately in profit or loss. In other
cases, the amount recognized in other comprehensive income is transferred to the income statement in the same period that the
hedged item affects profit or loss.
Fair value hedges
Fair value hedges are hedges of the fair value of recognized assets, liabilities or unrecognized firm commitments. Changes in the fair
value of derivatives that are designated as fair value hedges are recorded in the income statement together with any changes in the
fair value of the hedged item that are attributable to the hedged risk.
Separable embedded derivatives
Changes in the fair value of separable embedded derivatives are recognized immediately in the income statement.
(d) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes
the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their
intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased
software that is integral to the functionality of the related equipment is capitalized as part of that equipment.
Borrowing costs related to the acquisition, construction or production of qualifying assets is capitalized as part of the cost of the
assets. This has been the Company’s policy since January 1, 2005. Under IFRS 1, the Company may elect a date prior to the date
of transition to IFRS as its date for meeting this requirement. As such, any borrowing costs incurred that were related to the
acquisition, construction or production of qualifying assets prior to January 1, 2005, have not been capitalized as part of the cost of
those assets.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major
components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal
with the carrying amount of property, plant and equipment and are recognized within selling, general and administrative expenses in
the income statement.
The cost of replacing a part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part will flow to the Company, and its cost can be measured reliably.
The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property, plant and equipment are
recognized in profit or loss as incurred.
(ii) Depreciation
Depreciation is calculated based on the cost of the asset, or other amount substituted for cost, less its residual value.
Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property,
plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits
embodied in the asset. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is
reasonably certain that the Company will obtain ownership by the end of the lease term.
The estimated useful lives for the current and comparative periods are as follows:
(cid:129) buildings
(cid:129) machinery and equipment
(cid:129) fixtures and fittings
(cid:129) minor components
Up to 40 years
Up to 15 years
Up to 10 years
Up to 5 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
CCL Industries Inc. 2011 Annual Report 51
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
(e) Intangible assets
(i) Goodwill
Goodwill arises on the acquisition of subsidiaries and is tested for impairment annually or more frequently if events or
circumstances indicate that the carrying amount may not be recoverable. For measurement of goodwill at initial recognition, see
note 3(a)(i).
In respect of acquisitions prior to January 1, 2010, goodwill is included on the basis of its deemed cost, which represents the
amount recorded under previous Canadian GAAP.
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses.
In respect of equity accounted investments, the carrying amount of goodwill is included in the carrying amount of the investment,
and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying
amount of the equity accounted investee.
(ii) Amortization
Amortization is recognized in the income statement on a straight-line basis over the estimated useful lives of intangible assets,
other than goodwill, from the date that they are available for use. The estimated useful lives for the current and comparative years
are as follows:
(cid:129) patents and trademarks
(cid:129) software
(cid:129) customer relationships
Up to 10 years
Up to 5 years
Up to 15 years
(f) Leased assets
Leases for which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon
initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the
minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy
applicable to that asset.
Assets under operating leases are not recognized in the Company’s statement of financial position.
(g) Inventories
Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in first-out
principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in
bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an
appropriate share of production overheads based on normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and
selling.
Estimates regarding obsolete and slow moving inventory are also computed.
(h) Impairment
(i)
Financial assets, including receivables
A financial asset not carried at fair value through the income statement is assessed at each reporting date to determine whether
there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that
one or more events have occurred after the initial recognition of the asset that have a negative effect on the estimated future cash
flows of that asset that can be estimated reliably.
The Company considers evidence of impairment for loans and receivables and held-to-maturity investment securities at both a
specific asset and collective level. All individually significant loans and receivables and held-to-maturity investment securities are
assessed for specific impairment. All individually significant loans and receivables and held-to-maturity investment securities found
not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified.
52 CCL Industries Inc. 2011 Annual Report
In assessing collective impairment the Company uses historical trends of the probability of default, timing of recoveries and the
amount of loss incurred, adjusted for management’s judgment as to whether current economic and credit conditions are such that
the actual losses are likely to be greater or less than suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying
amount, and the present value of the estimated future cash flows discounted at the original effective interest rate and reflected in
an allowance account against accounts receivable. Losses are recognized in the income statement. When a subsequent event
causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value and is recognized by
transferring the cumulative loss that has been recognized in other comprehensive income, and presented in unrealized gains or
losses on available-for-sale financial assets in equity, to profit or loss. The cumulative loss that is removed from other
comprehensive income and recognized in profit or loss is the difference between the acquisition cost, net of any principal repayment
and amortization, and the current fair value, less any impairment loss previously recognized in profit or loss.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was
recognized. For financial assets measured at amortized cost and available-for-sale financial assets that are debt securities, the
reversal is recognized in the income statement. For available-for-sale financial assets that are equity securities, the reversal is
recognized directly in other comprehensive income.
(ii) Non-financial assets
The carrying amounts of non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists, the impairment would be recognized in the
income statement.
Impairments are recorded when the recoverable amount of assets is less than their carrying amounts. The recoverable amount is
the higher of an asset or cash-generating unit’s fair value less cost to sell or its value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that
cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use
that are largely independent of the cash inflows of other assets or groups of assets (the cash-generating unit, or “CGU”). For the
purposes of goodwill impairment testing, goodwill acquired in a business combination is allocated to the CGU, or the group of CGUs,
that is expected to benefit from the synergies of the combination. This allocation is subject to an operating segment ceiling test and
reflects the lowest level at which that goodwill is monitored for internal reporting purposes. An impairment loss is recognized if the
carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or
loss. Impairment losses, other than those relating to goodwill, are evaluated for potential reversals when events or changes in
circumstances warrant such consideration.
The carrying values of all intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that
their carrying amounts may not be recoverable. Additionally, the carrying values of goodwill are tested annually for impairment.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior years are
assessed at each reporting date for any indications that the losses have decreased or no longer exist. An impairment loss is
reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortization, if no impairment loss had been recognized.
Goodwill that forms part of the carrying amount of an equity accounted investment is not recognized separately and therefore is not
tested for impairment separately. Instead, the entire amount of the equity accounted investment is tested for impairment as a single
asset when there is objective evidence that the equity accounted investment may be impaired.
(i) Employee benefits
(i) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity
and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans
are recognized as an employee benefit expense in the income statement in the period that the service is rendered by the employee.
CCL Industries Inc. 2011 Annual Report 53
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
(ii) Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s net obligation in
respect of defined benefit post-employment plans is calculated separately for each plan by estimating the amount of future benefit
that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its
present value using a discount rate comparable to high quality corporate bonds. Any unrecognized past service costs and the fair
value of any plan assets are deducted. The calculation is performed annually by a qualified actuary using the projected unit credit
method. When the calculation results in a benefit to the Company, the recognized asset is limited to the total of any unrecognized
past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions
in future contributions to the plan. An economic benefit is available to the Company if it is realizable during the life of the plan, or on
settlement of the plan liabilities.
When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognized in
the income statement on a straight-line basis over the average period until the benefits become vested. To the extent that the
benefits vest immediately, the expense is recognized immediately in the income statement.
The Company recognizes all actuarial gains and losses arising from defined benefit plans directly in other comprehensive income
immediately, and reports them in retained earnings.
(iii) Termination benefits
Termination benefits are recognized as an expense when the Company is demonstrably committed, without realistic possibility of
withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date or provide termination
benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are
recognized as an expense if the Company has made an offer of voluntary redundancy, it is probable that the offer will be accepted
and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting period,
then they are discounted to their present value.
(iv) Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are recognized as the related service is
provided.
(v) Share-based payment transactions
For equity-settled share-based plans, the grant date fair value of options granted to employees is recognized as an employee
expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options.
The amount recognized as an expense is adjusted to reflect the actual number of share options for which the related service and
non-market vesting conditions are expected to be met.
The fair value of the amount payable for deferred share units (“DSU”), which are settled in cash, is recognized as an expense with a
corresponding increase in liabilities, over the period that the employees become unconditionally entitled to payment. The liability is
remeasured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognized as personnel
expense in the income statement.
(j) Provisions
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be
estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.
(k) Revenue
Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net of returns, trade discounts
and volume rebates. Revenue is recognized and related costs transferred to cost of sales when the significant risks and rewards of
ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of
goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be
measured reliably. Generally, this would be at the time the goods are shipped. At that time, persuasive evidence of an arrangement
exists, the price to the customer is fixed and ultimate collection is reasonably assured. A provision for sales returns and allowances
is recognized when the underlying products are sold. The provision is based on an evaluation of product currently under quality
assurance review as well as historical sales returns experience.
54 CCL Industries Inc. 2011 Annual Report
(l) Lease payments
Payments made under operating leases are recognized in the income statement on a straight-line basis over the term of the lease.
Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance cost and the reduction of the
outstanding liability. The finance cost is allocated to each period during the lease term so as to produce a constant periodic rate of
interest on the remaining balance of the liability.
(m) Finance income and costs
Finance income comprises interest income on invested funds including available-for-sale financial assets, gains on the disposal of
available-for-sale financial assets, changes in the fair value of financial assets at fair value through profit or loss, and gains on
hedging instruments that are recognized in the income statement. Interest income is recognized as it accrues in the income
statement, using the effective interest method.
Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, changes in the fair value of
financial assets at fair value through profit or loss, impairment losses recognized on financial assets, and losses on hedging
instruments that are recognized in the income statement. All borrowing costs are recognized in the income statement using the
effective interest method, except for those amounts capitalized as part of the cost of qualifying property, plant and equipment.
(n) Taxation
Income tax expense comprises current and deferred tax. Income tax expense is recognized in the income statement except to the
extent that it relates to items recognized either in other comprehensive income or directly in equity. In this case, the tax is also
recognized in other comprehensive income or directly in equity, respectively.
(i) Current tax
Current tax expense is based on the results for the period as adjusted for items that are not taxable or not deductible. Current tax is
calculated using tax rates and laws that were enacted or substantively enacted at the end of the reporting period and includes any
adjustments to taxes payable in respect of previous years. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation. Provisions are established where appropriate on
the basis of amounts expected to be paid to the tax authorities.
(ii) Deferred tax
Deferred tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated statement of financial position. Deferred tax is calculated using tax rates
and laws that have been enacted or substantively enacted at the end of the reporting period and which are expected to apply when
the related deferred tax asset is realized or the deferred tax liability is settled.
(iii) Deferred tax liabilities
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax liabilities are recognized for taxable
temporary differences arising on investments in subsidiaries and associates except where the reversal of the temporary difference
can be controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.
(iv) Deferred tax assets
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is
probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill or in respect of
temporary differences that arise on initial recognition of assets and liabilities acquired other than in a business combination and that
affect neither accounting nor taxable profit or loss.
(o) Share capital
All shares are recorded as equity. When share capital is repurchased, the amount of the consideration paid, which includes directly
attributable costs, net of any tax effect, is recognized as a deduction from equity. Repurchased shares are classified as treasury
shares and are presented as a deduction from total equity. When repurchased shares are sold or reissued subsequently, the
amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to
retained earnings.
CCL Industries Inc. 2011 Annual Report 55
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
(p) Earnings per share
The Company presents basic and diluted earnings per share (“EPS”) data for its Class B shares. Basic EPS is calculated by dividing
the profit or loss attributable to shareholders of the Company by the weighted average number of shares outstanding during the
period. Diluted EPS is determined by adjusting the profit or loss attributable to shareholders and the weighted average number of
shares outstanding for the effects of all potentially dilutive shares, which primarily comprise share options granted to employees.
(q) Segment reporting
A segment is a distinguishable component of the Company that is engaged either in providing related products (business segment),
or in providing products within a particular economic environment (geographical segment), which is subject to risks and returns that
are different from those of other segments. Segment information is presented in respect of the Company’s business and
geographical segments. The Company’s primary format for segment reporting is based on business segments. The business
segments are determined based on the Company’s management and internal reporting structure.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a
reasonable basis. Unallocated items comprise mainly other investments and related revenue, loans and borrowings and related
expenses, corporate assets (primarily the Company’s headquarters) and head office expenses.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment and intangible
assets, other than goodwill.
(r) New standards and interpretations not yet effective
IFRS 9, Financial Instruments (“IFRS 9”) was issued by the IASB in October 2010 and will replace IAS 39, Financial Instruments:
Recognition and Measurement (“IAS 39”). IFRS 9 uses a single approach to determine whether a financial asset is measured at
amortized cost or fair value. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its
business model and the contractual cash flow characteristics of the financial assets. The new standard also requires a single
impairment method to be used, replacing the multiple impairment methods in IAS 39. Most of the requirements in IAS 39 for
classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. Mandatory Effective Date of IFRS 9
and Transition Disclosures, issued in December 2011, deferred the effective date to periods beginning on or after January 1, 2015,
with earlier adoption permitted. This standard has not been applied in preparing these consolidated financial statements. The
Company is currently evaluating the impact of IFRS 9 on its consolidated financial statements.
IFRS 10, ConsolidatedFinancialStatements (“IFRS 10”) was issued by the IASB in May 2011 and will replace SIC-12, Consolidation-
Special Purpose Entities and IAS 27, Consolidated and Separate Financial Statements. IFRS 10 establishes principles for the
presentation and preparation of consolidated financial statements when an entity controls one or more entities. IFRS 10 is effective
for periods beginning on or after January 1, 2013, and has not been applied in preparing these consolidated financial statements.
The Company is currently evaluating the impact of IFRS 10 on its consolidated financial statements.
IFRS 11, Joint Arrangements (“IFRS 11”) was issued by the IASB in May 2011 and will replace guidance in IAS 31, Interests in Joint
Ventures. IFRS 11 provides focus on the rights and obligations of the joint arrangement, rather than its legal form in the current
standard. IFRS 11 also addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for
interest in jointly controlled entities. IFRS 11 is effective for periods beginning on or after January 1, 2013, and has not been applied
in preparing these consolidated financial statements. The Company is currently evaluating the impact of IFRS 11 on its consolidated
financial statements.
IFRS 12, Disclosure of Interests in Other Entities (“IFRS 12”) was issued by the IASB in May 2011 and establishes new and
comprehensive disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements,
associates and unconsolidated structured entities. This new standard is effective for periods beginning on or after January 1, 2013.
The Company is assessing the impact of this new standard on its consolidated financial statements.
IFRS 13, Fair Value Measurement (“IFRS 13”) was issued by the IASB in May 2011 and replaces the fair value guidance that is
currently contained within individual IFRS with a single source of fair value measurement guidance. IFRS 13 is effective for periods
beginning on or after January 1, 2013, and has not been applied in preparing these consolidated financial statements. The Company
is currently evaluating the impact of IFRS 13 on its consolidated financial statements.
IAS 1, Presentation of Financial Statements (“IAS 1”) was amended by the IASB in June 2011. This amendment retains the ‘one or
two statement’ approach to presenting the statements of income and comprehensive income at the option of the entity and only
56 CCL Industries Inc. 2011 Annual Report
revises the way other comprehensive income is presented. This revised standard is effective for periods beginning on or after July 1,
2012, and has not been applied in preparing these consolidated financial statements. The Company is currently evaluating the
impact of the amended IAS 1 on its financial statements.
IAS 12, Deferred Tax: Recovery of Underlying Assets (“IAS 12”) was amended by the IASB in December 2010 to include the
requirement that deferred tax on non-depreciable assets measured using the revaluation model in IAS 16, Property, Plant and
Equipment should be measured on the sale basis. This new standard is effective for the periods beginning on or after January 1,
2012. The Company is assessing the impact of this new standard on its consolidated financial statements.
IAS 19, Employee Benefits (“IAS 19”) was amended by the IASB in June 2011. This amendment eliminates the use of the ‘corridor’
approach and requires that all remeasurement impacts be recognized in other comprehensive income. It also enhances the
disclosure requirements by providing more information regarding the characteristics of defined benefit plans and the risk that
entities are exposed to through participation in those plans. This revised standard is effective for periods beginning on or after
January 1, 2013, and has not been applied in preparing these consolidated financial statements. The Company is currently
evaluating the impact of the revised IAS 19 on its consolidated financial statements.
4. DETERMINATION OF FAIR VALUES
A number of the Company’s accounting policies and disclosures require the determination of fair value, for both financial and
non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the
following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the
notes specific to that asset or liability.
(i) Property, plant and equipment
The fair value of property, plant and equipment recognized as a result of a business combination is based on the amount for which a
property could be exchanged on the date of valuation between knowledgeable, willing parties in an arm’s length transaction.
(ii)
Intangible assets
The fair value of customer relationships acquired in a business combination is determined using the multi-period excess earnings
method, whereby the subject asset is valued after deducting a fair return on all other assets that are part of creating the related
cash flows.
(iii) Inventories
The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary
course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to
complete and sell the inventories.
(iv) Derivatives
The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not
available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward
price for the residual maturity of the contract using a risk-free interest rate (based on government bonds).
The fair value of interest rate swaps is based on broker quotes. Those quotes are tested for reasonableness by discounting
estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar
instrument at the measurement date.
Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the group entity and
counterparty when appropriate.
(v) Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest
cash flows, discounted at the market rate of interest at the reporting date. For finance leases the market rate of interest is
determined by reference to similar lease agreements.
(vi) Other financial instruments
The carrying values of cash and cash equivalents, trade and other receivables, trade and other payables approximate fair values due
to the short-term maturities of these financial instruments.
CCL Industries Inc. 2011 Annual Report 57
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
(vii) Share-based payment transactions
Stock options
The fair value of employee stock options is measured using the Black-Scholes model. Measurement inputs include share price on
measurement date, exercise price of the instrument, expected volatility, weighted average expected life of the instruments, expected
dividends, and the risk-free interest rate. Service and non-market performance conditions attached to the transactions are not taken
into account in determining fair value.
Deferred share units
The fair value of a DSU is measured using the average of the high and the low trading prices of the Class B shares for the five
trading days immediately preceding the date of issue and is remeasured, using a similar five day average, at the financial statement
date.
5.
FINANCIAL RISK MANAGEMENT
The Company has exposure to the following risks from its use of financial instruments:
(cid:129) credit risk
(cid:129) liquidity risk
(cid:129) market risk
This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and
processes for measuring and managing risk, and the Company’s management of capital. Further quantitative disclosures are
included throughout these consolidated financial statements.
The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate
risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly
to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards
and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles
and obligations.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Company’s receivables from customers and investment securities.
The Company has established a credit policy under which each new customer is analyzed individually for creditworthiness before the
Company’s payment and delivery terms and conditions are offered. The Company’s review includes external ratings, where available,
and in some cases bank references. Purchase limits are established for each customer, which represent the maximum open
amount without requiring approval from senior management; these limits are reviewed quarterly. Customers that fail to meet the
Company’s benchmark creditworthiness may transact with the Company only on a prepayment basis.
The Company is potentially exposed to credit risk arising from derivative financial instruments if a counterparty fails to meet its
obligations. These counterparties are large international financial institutions and, to date, no such counterparty has failed to meet
its financial obligations to the Company. As at December 31, 2011, the Company’s exposure to credit risk arising from derivative
financial instruments amounted to $0.8 million.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach
to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when they are
due, by monitoring expected cash flows and ensuring the availability of credit. The financial obligations of the Company include trade
and other payables, long-term debts and other long-term items. The contractual maturity of trade payables is six months or less.
Long-term debts have varying maturities extending to 2018.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and commodity prices, will
affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable parameters, while optimizing the return.
58 CCL Industries Inc. 2011 Annual Report
The Company uses derivatives to manage market risks. Generally the Company seeks to apply hedge accounting in order to manage
volatility in profit or loss. The Company does not utilize derivative financial instruments for speculative purposes.
(i) Currency risk
The Company operates internationally, giving rise to exposure to market risks from changes in foreign exchange rates. The Company
partially manages these exposures by contracting primarily in Canadian dollars, euros, U.K. pounds and U.S. dollars. Additionally,
each subsidiary’s sales and expenses are primarily denominated in its local currency, further minimizing the foreign exchange impact
on the operating results.
In other cases, borrowings are done by non-Canadian-dollar-based subsidiaries in their own functional currencies such that the
principal and interest are denominated in a currency that matches the cash flows generated by those subsidiaries. These provide
natural hedges that do not require the application of hedge accounting.
(ii)
Interest rate risk
The Company is exposed to market risks related to interest rate fluctuations on its debt. To mitigate this risk, the Company
maintains a combination of fixed and floating rate debt.
(iii) Commodity price risk
Aluminum is the major raw material used in the Container Segment. Prices for aluminum fluctuate in response to changes in supply
and demand, market uncertainty and a variety of other factors beyond the Company’s control. The Company uses customer specific
aluminum derivative instruments (hedging items) along with fixed price contracts (hedged items) to minimize the impact of aluminum
price fluctuations.
Aluminum derivative contracts are accounted for as cash flow hedges and changes in value are recorded on the statement of
financial position in other comprehensive income. Any ineffective portion is recorded in selling, general and administrative expenses.
Payments made or proceeds received upon the settlement of these contracts are recorded in cost of goods sold.
Capital management
The Company’s objective is to maintain a strong capital base throughout the economic cycle so as to maintain investor, creditor and
market confidence and to sustain the future development of the business. This capital structure supports the Company’s objective
to provide an attractive financial return to its shareholders equal to that of its leading specialty packaging peers (between 12% and
14% up until 2009 but lower since the global recession).
The Company defines capital as total shareholders’ equity and measures the return on capital (or return on equity) by dividing annual
net earnings before goodwill impairment loss and restructuring and other items by the average of the beginning and the end-of-year
shareholders’ equity. In 2011, the return on capital was 10.7% (2010 – 9.5%) and was well within the range of the Company’s
leading specialty packaging peers.
Management and the Board maintain a balance between the expected higher return on capital that might be possible with a higher
level of financial debt and the advantages and security afforded by a lower level of financial leverage. The Company believes that an
optimum level of net debt (defined as current debt, including bank advances, plus long-term debt, less cash and cash equivalents) to
total book capitalization (defined as net debt plus shareholders’ equity) is a maximum of 45%. This ratio was 21% at December 31,
2011 (2010 – 24%), and therefore the Company has further capacity to invest in the business with additional debt without
exceeding the optimum level.
The Company has provided a growing level of dividends to its shareholders over the last few years, generally related to its growth in
earnings. The dividends are declared bearing in mind the Company’s current earnings, cash flow and financial leverage.
There were no changes in the Company’s approach to capital management during the year.
The Company is subject to certain covenants on its unsecured senior notes. This includes a covenant requiring a minimum
consolidated net worth. The Company monitors the ratios on a quarterly basis and at December 31, 2011, was in compliance with
all its covenants.
6.
SEGMENT REPORTING
Business segments
The Company has three reportable segments, as described below, which are the Company’s main business units. The business
units offer different products and services, and are managed separately as they require different technology and marketing
strategies. For each of the business units, the Company’s chief executive officer and the chief operating decision maker reviews
internal management reports regularly.
CCL Industries Inc. 2011 Annual Report 59
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
The Company’s reportable Segments are:
(cid:129) Label – Includes the production of innovative label solutions for consumer product marketing companies in the personal
and beauty care, food and beverage, battery, household, chemical and promotional segments of the industry, and it also
supplies major pharmaceutical, healthcare, durable goods and industrial chemical companies. Label’s product lines
include pressure sensitive, shrink sleeve, stretch sleeve, in-mould and expanded content labels and pharmaceutical
instructional leaflets.
(cid:129) Container – Includes the manufacturing of specialty containers for the consumer products industry in North America,
including Mexico. The key product line is recyclable aluminum aerosol cans and bottles for the personal care, home care
and cosmetic industries, plus shaped aluminum bottles for the beverage market.
(cid:129) Tube – Includes the manufacturing of highly decorated extruded tubes for the personal care and cosmetics industry in
North America, including Mexico.
Label
Container
Tube
Corporate expenses
Restructuring and other items
Earnings in equity accounted investments
Finance cost
Finance income
Income tax expense
Net earnings
2011
1,012,304
175,660
80,513
$
Sales
2010
955,135
162,383
74,800
Operating Income
$
2011
142,523 $
9,159
12,012
2010
142,262
(4,487)
8,776
1,268,477
$ 1,192,318
$
163,694 $
146,551
$
$
24,765
797
1,224
22,827
1,443
33,846
$
84,126 $
22,176
225
496
26,356
1,071
28,268
71,093
Total Assets
Total Liabilities
Depreciation and
Amortization
Capital Expenditures
2011
2010
2011
2010
2011
2010
2011
2010
Label
Container
Tube
Equity accounted investments
Corporate
$1,150,706 $1,119,509 $277,622 $262,763 $ 77,710 $73,348 $74,864 $72,095
3,146 12,338
35,581
1,200
3,269
14,201
—
—
—
161
168
469,645 546,102
14,199 13,909
7,489
—
660
115,450
94,120
38,463
214,742
166,400
62,999
19,745
259,321
34,708
14,626
—
7,426
—
842
Total
$1,613,481 $1,627,974 $796,601 $858,647 $100,177 $95,406 $81,447 $85,794
Geographical segments
The Label, Container and Tube Segments are managed on a worldwide basis but operate in the following geographical areas:
(cid:129) Canada,
(cid:129) United States and Puerto Rico,
(cid:129) Mexico and Brazil,
(cid:129) Europe,
(cid:129) Asia, Australia and Africa.
60 CCL Industries Inc. 2011 Annual Report
Canada
United States and Puerto Rico
Mexico and Brazil
Europe
Asia, Australia and Africa
Consolidated
Sales
Property, Plant and Equipment and Goodwill
$
2011
108,138
460,428
150,417
435,749
113,745
$
2010
99,463
459,964
126,620
407,185
99,086
$
2011
111,228 $
307,985
135,725
379,519
109,430
2010
118,019
310,483
139,842
376,945
109,641
$ 1,268,477
$ 1,192,318
$ 1,043,887 $
1,054,930
The geographical segment is determined by the location of the Company’s country of operation.
Transactions with two significant customers in 2011 accounted for approximately $158.0 million and $155.2 million
(2010 – $153.8 million and $118.7 million, respectively) of the Company’s total sales.
7. ACQUISITIONS OF SUBSIDIARIES
In April 2011, the Company acquired 100% of the shares of Thunder Press Inc., a privately owned label company located near
Chicago that operated under the trade name “Sertech”. The acquired business produces patient instructional leaflets, commonly
known as inserts and outserts for leading pharmaceutical customers in the United States. The acquisition increases CCL’s exposure
to the healthcare sector and brings the Company closer to its customers in the mid-west region of the United States. The purchase
price was $7.8 million, net of cash acquired of $0.8 million and inclusive of a promissory note of $1.0 million. During the fourth
quarter of 2011, CCL accrued an additional $1.0 million, payable to the seller as consideration for the filing of a joint election to
structure the transaction as an asset sale for tax purposes. The total amount of goodwill and intangibles of $6.1 million is expected
to be deductible for tax purposes.
In March 2010, the Company completed the purchase of Purbrick Pty Ltd. (“Purbrick”), a privately held company based in
Melbourne, Australia. Purbrick supplies patient information leaflets and pressure sensitive labels to global pharmaceutical
customers located in Australia. The purchase price was $1.2 million, net of cash acquired. No goodwill was recognized on this
transaction.
8. CASH AND CASH EQUIVALENTS
Bank balances
Short-term investments
Cash and cash equivalents
9.
TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Trade and other receivables
Dec 31, 2011
Dec 31, 2010
Jan 1, 2010
$
$
67,560
73,138
140,698
$
$
89,412
83,785
173,197
$
$
74,022
76,572
150,594
Dec 31, 2011
Dec 31, 2010
Jan 1, 2010
$
$
178,531
13,472
192,003
$
$
154,850
19,161
174,011
$
$
148,688
17,811
166,499
CCL Industries Inc. 2011 Annual Report 61
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
10.
INVENTORIES
Raw material
Work in progress
Finished goods
Total inventories
Dec 31, 2011
Dec 31, 2010
Jan 1, 2010
$
$
$
36,975
8,152
41,805
$
32,978
7,743
37,142
33,736
9,949
31,845
86,932
$
77,863
$
75,530
The total amount of inventories recognized as an expense in 2011 was $975.0 million (2010 – $917.9 million), including
depreciation of $93.5 million (2010 – $88.7 million). During 2011 and 2010, there were no inventory write-downs or reversal of
write-downs.
11. EQUITY ACCOUNTED INVESTMENTS
In September 2011, the Company completed the purchase of a 50% interest in Pacman-CCL from Albwardy Investment (“Albwardy”).
The acquisition represents an expansion into new territories for the Company. Pacman-CCL is based in Dubai, United Arab Emirates,
with additional operations in Cairo, Egypt, Muscat, Oman, and Jeddah, Saudi Arabia. Albwardy retains the remaining 50% economic
interest in Pacman-CCL and, along with the Company, jointly controls Pacman-CCL. The Company is accounting for Pacman-CCL
using the equity method. The total purchase price of US$18.5 million, less a US$2.0 million deposit paid in the second quarter of
2011, was settled on closing. Goodwill and intangibles arising on the transaction amount to $11.4 million, however, the Company is
reviewing the valuation of net assets acquired, and therefore these figures may change upon completion of the review.
In 2007, the Company, along with a Russian partner, invested in a pressure sensitive label business, CCL-Kontur, that services the
territories of Russia and the Commonwealth of Independent States. CCL owns 50% of CCL-Kontur with the Russian partner having
operating control of the business and, consequently, the investment is being carried at its equity value and is accounted for using
the equity method.
Summary financial information for equity accounted investments, not adjusted for the percentage ownership held by the Company is
as follows:
December 31, 2011
Pacman-CCL
CCL-Kontur
December 31, 2010
CCL-Kontur
January 1, 2010
CCL-Kontur
$
$
$
$
Current assets
Non-current
assets
Current liabilities
Non-current
liabilities
Total
sales
Earnings
14,063 $
7,984 $
4,765 $
838 $
8,447 $
1,758
8,201 $
7,747 $
4,207 $
— $
30,837 $
690
11,791 $
8,675 $
7,874 $
— $
38,586 $
992
11,530 $
7,637 $
6,162 $
—
62 CCL Industries Inc. 2011 Annual Report
12. PROPERTY, PLANT AND EQUIPMENT
Cost
Balance at January 1, 2010
Acquisitions through business combinations
Other additions
Disposals
Effect of movements in exchange rates
Land and
buildings
Machinery and
equipment
Fixtures, fittings
and other
Total
$
$
252,658
—
9,597
(888)
(15,266)
$
895,147
2,585
74,546
(20,303)
(51,043)
17,728 $
48
1,651
(105)
(1,326)
1,165,533
2,633
85,794
(21,296)
(67,635)
Balance at December 31, 2010
$
246,101
$
900,932
$
17,996 $
1,165,029
Acquisitions through business combinations
Other additions
Disposals
Effect of movements in exchange rates
—
13,437
(17)
(971)
3,133
66,621
(13,812)
(23,518)
Balance at December 31, 2011
$
258,550
$
933,356
Accumulated depreciation and impairment losses
Balance at January 1, 2010
Depreciation for the year
Disposals
Effect of movements in exchange rates
$
$
57,290
9,647
(678)
(4,971)
353,511
77,454
(16,986)
(25,874)
174
1,389
(54)
(1,924)
3,307
81,447
(13,883)
(26,413)
17,581 $
1,209,487
10,025 $
2,229
(103)
(918)
420,826
89,330
(17,767)
(31,763)
$
$
Balance at December 31, 2010
$
61,288
$
388,105
$
11,233 $
460,626
Depreciation for the year
Disposals
Effect of movements in exchange rates
Balance at December 31, 2011
Carrying amounts
At January 1, 2010
At December 31, 2010
At December 31, 2011
9,875
(2)
(899)
82,055
(12,806)
(17,477)
70,262
$
439,877
195,368
184,813
188,288
$
$
$
541,636
512,827
493,479
1,876
(50)
(1,810)
93,806
(12,858)
(20,186)
11,249 $
521,388
7,703 $
6,763 $
6,332 $
744,707
704,403
688,099
$
$
$
$
$
$
$
$
CCL Industries Inc. 2011 Annual Report 63
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
13.
INTANGIBLE ASSETS
Cost
Balance at January 1, 2010
Additions
Disposals
Effect of movements in exchange rates
Customer
relationships
Patents and
trade marks
Software
Total
Goodwill
$
65,977 $
—
—
(1,469)
9,348 $
254
(284)
(2,393)
14,542 $
—
—
(334)
89,867 $ 358,794
—
—
(8,267)
254
(284)
(4,196)
Balance at December 31, 2010
$
64,508 $
6,925 $
14,208 $
85,641 $ 350,527
Balance at December 31, 2010
$
28,491 $
5,791 $
13,306 $
47,588 $
Additions
Disposals
Effect of movements in exchange rates
Balance at December 31, 2011
Amortization and impairment losses
Balance at January 1, 2010
Amortization for the year
Disposals
Effect of movements in exchange rates
$
$
Amortization for the year
Disposals
Effect of movements in exchange rates
Balance at December 31, 2011
Carrying amounts
At January 1, 2010
At December 31, 2010
At December 31, 2011
14. GOODWILL
$
$
$
$
2,600
—
1,571
244
(191)
(17)
338
(196)
643
3,182
(387)
2,197
3,548
—
1,713
68,679 $
6,961 $
14,993 $
90,633 $ 355,788
23,642 $
5,643
—
(794)
7,435 $
235
(284)
(1,595)
13,598 $
198
—
(490)
44,675 $
6,076
(284)
(2,879)
5,792
—
1,591
136
(77)
(56)
443
(193)
556
6,371
(270)
2,091
35,874 $
5,794 $
14,112 $
55,780 $
—
—
—
—
—
—
—
—
—
42,335 $
36,017 $
32,805 $
1,913 $
1,134 $
1,167 $
944 $
902 $
881 $
45,192 $ 358,794
38,053 $ 350,527
34,853 $ 355,788
Impairment testing for cash-generating units containing goodwill
For the purpose of impairment testing, goodwill is allocated to the Company’s operating segments, which represent the lowest level
within the Company at which the goodwill is monitored for internal management purposes.
The aggregate carrying amounts of goodwill allocated to each unit are as follows:
Label
Container
Dec 31, 2011
Dec 31, 2010
Jan 1, 2010
$
$
343,050
12,738
355,788
$
$
337,792
12,735
350,527
$
$
346,051
12,743
358,794
Impairment testing for Label and Container Segments was done by a comparison of the unit’s carrying amount to its estimated value
in use, determined by discounting future cash flows from the continuing use of the unit. Key assumptions used in the determination
of the value in use include growth rates of 2.5% – 4.2% for Container and Label and a discount rate ranging from 9.0% – 10.5%.
Discount rates reflect current market assumptions and risks related to the segments and are based upon the weighted average cost
of capital for the segment. The Company’s historical growth rates are used as a basis in determining the growth rate applied for
impairment testing.
The estimated value in use of all units exceeded their carrying values. As a result, no goodwill impairment was recorded.
64 CCL Industries Inc. 2011 Annual Report
15. OTHER ASSETS
Long-term investments
Other
Dec 31, 2011
Dec 31, 2010
Jan 1, 2010
$
$
12,522
3,044
15,566
$
$
14,852
3,752
18,604
$
$
20,416
3,873
24,289
Long-term investments primarily consist of government and corporate bonds held by a wholly owned captive insurance company. This
subsidiary acts as a reinsurer of property, casualty and marine risk of affiliated companies. Included in other are long-term
receivables.
16. TRADE AND OTHER PAYABLES
Trade payables
Other payables
17. DEFERRED TAX
Unrecognized deferred tax assets
Dec 31, 2011
Dec 31, 2010
Jan 1, 2010
$
$
133,180
100,783
233,963
$
$
127,778
102,563
230,341
$
$
115,908
99,292
215,200
Deferred tax assets have not been recognized in respect of the following items:
Deductible temporary differences
Tax losses
Income tax credits
Dec 31, 2011
Dec 31, 2010
$
$
$
1,547
22,542
2,668
708
19,322
3,916
26,757
$
23,946
The unrecognized deferred tax assets on tax losses of $2,794 will expire between 2012 and 2025, $6,451 will expire beyond 2025
and $13,297 may be carried forward indefinitely. The deductible temporary differences do not expire under current tax legislation.
Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable income will be
available against which the Company can utilize the benefits therefrom. Income tax credits of $1,032 expire in 2012 and 2013 and
$1,636 expire between 2012 and 2017.
In 2010, $2,882 of previously unrecognized tax losses were recognized as management considered it probable that future taxable
income will be available against which they can be utilized. An additional $154 of previously unrecognized tax losses were
recognized in 2011, following a further change in the estimates of future taxable income.
CCL Industries Inc. 2011 Annual Report 65
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
Recognized deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Property, plant and
equipment
Intangible assets
Derivatives
Inventory reserves
Employee benefit plans
Share-based payments
Provisions
Other items
Tax loss carry-forwards
Property, plant and
equipment
Intangible assets
Derivatives
Inventory reserves
Employee benefit plans
Share-based payments
Provisions
Other items
Tax loss carry-forwards
Property, plant and
equipment
Intangible assets
Derivatives
Inventory reserves
Employee benefit plans
Share-based payments
Provisions
Other items
Tax loss carry-forwards
Dec 31,
2011
$
— $
1,343
—
1,518
25,363
3,044
7,067
—
15,817
Assets
Dec 31,
2010
—
1,656
—
1,339
22,627
1,959
7,557
—
19,818
$
Dec 31,
2011
56,592 $
47,349
7,159
—
—
—
—
7,727
—
Liabilities
Dec 31,
2010
54,328
45,988
11,161
—
—
—
—
7,599
—
Net (Assets)/Liabilities
Dec 31,
2011
Dec 31,
2010
$
56,592 $
46,006
7,159
(1,518)
(25,363)
(3,044)
(7,067)
7,727
(15,817)
54,328
44,332
11,161
(1,339)
(22,627)
(1,959)
(7,557)
7,599
(19,818)
$
54,152
$
54,956
$ 118,827 $
119,076
$
64,675 $
64,120
Balance
Dec 31, 2010
Liability/(Asset)
Recognized in
income
statement
Acquisitions
Translation and
others
Recognized in other
comprehensive
income
Balance
Dec 31, 2011
Liability/(Asset)
$
$
54,328
44,332
11,161
(1,339)
(22,627)
(1,959)
(7,557)
7,599
(19,818)
$
1,508
1,020
(1,905)
(157)
(1,894)
(1,068)
588
85
4,014
— $
—
—
—
—
—
—
—
—
$
756
654
—
(22)
(224)
(17)
(98)
43
(13)
— $
—
(2,097)
—
(618)
—
—
—
—
56,592
46,006
7,159
(1,518)
(25,363)
(3,044)
(7,067)
7,727
(15,817)
$
64,120
$
2,191
$
— $
1,079
$
(2,715) $
64,675
Balance Jan 1,
2010
Liability/(Asset)
Recognized in
income
statement
Acquisitions
Translation and
others
Recognized in other
comprehensive
income
Balance
Dec 31, 2010
Liability/(Asset)
$
$
57,743
40,046
10,032
(1,445)
(20,124)
(924)
(9,438)
7,848
(18,068)
$
(1,476)
5,748
—
55
(2,488)
(1,044)
1,604
(178)
(2,203)
(172) $
(203)
—
—
—
—
—
—
—
$
(1,767)
(1,259)
—
51
412
9
277
(71)
28
— $
—
1,129
—
(427)
—
—
—
425
54,328
44,332
11,161
(1,339)
(22,627)
(1,959)
(7,557)
7,599
(19,818)
$
65,670
$
18
$
(375) $
(2,320)
$
1,127 $
64,120
66 CCL Industries Inc. 2011 Annual Report
The aggregate amount of temporary differences associated with investments in subsidiaries and joint ventures for which deferred tax
liabilities have not been recognized as at December 31, 2011, is $350 million (2010 – $325 million).
The aggregate amount of temporary differences associated with investments in subsidiaries and joint ventures for which deferred tax
assets have not been recognized as at December 31, 2011, is $21.5 million (2010 – $16.2 million).
18. SHARE CAPITAL
Shares issued:
Balance, January 1, 2010
Stock options exercised
Balance, December 31, 2010
Stock options exercised
Shares (000s)
$
2,374
—
2,374
—
Balance, December 31, 2011
2,374
$
Class A
Amount
4,517
—
4,517
—
4,517
Shares (000s)
30,674 $
238
30,912
403
Class B
Amount
206,874
6,817
213,691
9,749
$
Total
211,391
6,817
218,208
9,749
31,315 $
223,440
$
227,957
At December 31, 2011, the authorized share capital comprised an unlimited number of Class A voting shares and an unlimited
number of Class B non-voting shares. The Class A and B shares have no par value. All issued shares are fully paid. Both Class A
and Class B shares are classified as equity.
(i) Class A
The holders of Class A shares receive dividends set at $0.05 per share per annum less than Class B shares, are entitled to one
vote per share at meetings of the Company and their shares are convertible at any time into Class B shares.
(ii) Class B
Class B shares rank equally in all material respects with Class A shares, except as follows:
(a) The holders of Class B shares are entitled to receive material and attend, but not to vote at, regular shareholder meetings.
(b) Holders of Class B shares are entitled to voting privileges when consideration for the Class A shares, under a takeover bid
when voting control has been acquired, exceeds 115% of the market price of the Class B shares.
(c) Holders of Class B shares are entitled to receive, or have set aside for payment, dividends declared by the Board of Directors
from time to time, set at $0.05 per share per annum greater than Class A shares.
Dividends
The annual dividends per share were as follows:
Class A share
Class B share
Shares held in trust
2011
0.650
0.700
$
$
2010
0.605
0.655
$
$
During 2010, the Company granted awards totalling 251,820 Class B shares of the Company. Shares to be used to satisfy this
obligation had been purchased in prior years in the open market and are restricted in nature. These awards will vest in 2013
dependent on the Company’s performance and continuing employment. The fair value of these stock awards are being amortized
over the vesting period and recognized as compensation expense as they are earned.
19. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share for the year ended December 31, 2011, was based on profit attributable to Class A
shares of $5.9 million (2010 – $5.0 million) and Class B shares of $78.2 million (2010 – $66.1 million) and a weighted average
number of Class A shares outstanding of 2,374,025 (2010 – 2,374,025) and Class B shares outstanding of 30,736,519 (2010 –
30,456,071).
CCL Industries Inc. 2011 Annual Report 67
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
Weighted average number of shares
Issued and outstanding shares at January 1
Effect of stock options exercised
Effect of repayment of share purchase loans
Effect of shares released from trust
Weighted average number of shares at
December 31
Class A
shares
2,374,025
—
—
—
2011
Class B
shares
30,621,521
113,785
—
1,213
Class A
shares
2,374,025
—
—
—
2010
Class B
shares
30,333,621
78,700
43,750
—
2,374,025
30,736,519
2,374,025
30,456,071
Diluted earnings per share
The calculation of diluted earnings per share for the year ended December 31, 2011, was based on profit attributable to Class A
shares of $5.8 million (2010 – $4.9 million) and Class B shares of $78.3 million (2010 – $66.2 million) and a weighted average
number of Class A shares outstanding of 2,374,025 (2010 – 2,374,025) and Class B shares outstanding of 31,284,006
(2010 – 31,037,907).
Weighted average number of shares (diluted)
Weighted average number of shares (basic)
Effect of share loans
Effect of deferred share units on issue
Effect of reciprocal shareholdings
Effect of share options on issue
Weighted average number of shares (diluted)
Dec 31, 2011
Dec 31, 2010
33,110,544
17,607
69,201
262,795
197,884
32,830,096
16,849
51,229
265,000
248,758
33,658,031
33,411,932
The average market value of the Company’s shares for purposes of calculating the dilutive effect of share options was based on
quoted market prices for the year that the options were outstanding.
20. LOANS AND BORROWINGS
This note provides information about the contractual terms of the Company’s interest-bearing loans and borrowings, which are
measured at amortized cost. For more information about the Company’s exposure to interest rate, foreign currency and liquidity risk,
see note 26.
Current liabilities
Current portion of unsecured senior notes
Current portion of finance lease liabilities
Current portion of other loans
Short-term operating credit lines available
Short-term operating credit lines used
Non-current liabilities
Unsecured senior notes
Finance lease liabilities
Other loans
68 CCL Industries Inc. 2011 Annual Report
Dec 31, 2011
Dec 31, 2010
Jan 1, 2010
$
$
$
$
$
9,512
413
9,825
19,750
31,277
$
$
$
68,989
665
5,974
75,628
30,677
— $
497
323,603
1,796
8,819
$
325,617
2,143
18,014
$
$
$
$
$
42,331
415
2,227
44,973
30,039
—
416,824
239
18,105
$
334,218
$
345,774
$
435,168
Interest rates charged on the credit lines are based on rates varying with London Interbank Offered Rate (“LIBOR”), the prime rate
and similar market rates for other currencies.
There were no borrowings under the $95.0 million unsecured revolving line of credit as at December 31, 2011, December 31,
2010, and January 1, 2010. However, it is also utilized to support letters of credit. The unused portion of this revolving line of credit
was $91.4 million at December 31, 2011 (December 31, 2010, and January 1, 2010 – $91.2 million).
Other loans include term bank loans and industrial revenue bonds at various rates and repayment terms.
In March 2011, the Company made a scheduled debt repayment of US$60.0 million. The US dollar amount had been converted into
euro-based debt using two cross-currency interest rate swap agreements (“CCIRSAs”). The two CCIRSAs matured the same day as
the US$60.0 million debt.
In September 2011, the Company made a scheduled debt repayment of US$9.4 million. Half of the U.S. dollar amount had been
converted into euro-based debt using two CCIRSAs. The two CCIRSAs matured the same day as the US$9.4 million debt.
As at December 31, 2011, the carrying amount of financial and non-financial assets pledged as collateral, against $4.3 million of
long-term debt, amounted to $20.1 million.
21. FINANCE INCOME AND COST
Recognized in income statement
Interest expense on financial liabilities measured at amortized cost
Interest recognized on other financial instruments
Finance cost
Interest income on cash and cash equivalents
Interest income on loans and receivables and other financial instruments
Finance income
Net finance cost recognized in income statement
The above financial income and expense includes the following in respect of assets
(liabilities) not at fair value through profit or loss:
Total interest income on financial assets
Total interest expense on financial liabilities
22. EMPLOYEE BENEFITS
$
2011
22,914
(87)
22,827
1,370
73
1,443
2010
28,211
(1,855)
26,356
919
152
1,071
21,384
$
25,285
1,443
22,827
$
$
1,071
26,356
$
$
$
$
The Company maintains a registered funded defined benefit pension plan in Canada for designated executives and a registered
funded defined benefit pension plan in the U.K. that is closed to new members. It also maintains non-registered, unfunded
supplemental retirement arrangements for designated Canadian executives and four retired U.S. executives, and a post-employment
deferred compensation plan for designated executives in the U.S. In Germany and Austria, it has unfunded defined benefit plans. In
France, Italy, Mexico and Thailand, the Company accrues for unfunded legislated retirement benefits. The Company has defined
contribution post-employment plans in Canada, the U.S., Austria, Australia, Thailand, the U.K. and Vietnam. The Company also has
long-term incentive plans with cash and share-based payments, long-service leave plans and jubilee plans in various countries
around the world.
The expense for the defined contribution post-employment plans for continuing operations was $8.5 million in 2011 (2010 – $8.2
million) of which $0.1 million (2010 – $0.1 million) was for key management personnel.
In 2008 and 2009, the Company offered enhanced transfer values to certain members of the U.K. defined benefit pension plan.
Assets and the associated accrued benefit obligation for 75% of the members accepting the offer were transferred out of the plan in
2009. Assets and the associated accrued benefit obligation for the remaining 25% of members accepting the offer were transferred
out in early 2010. The total payout in 2010 was $2.9 million (£1.7 million) and in 2009 was $10.7 million (£6.0 million). A further
offer was made in late 2011. The full amount of the payout will not be known until the second quarter of 2012.
CCL Industries Inc. 2011 Annual Report 69
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
The most recent actuarial valuation of the UK defined benefit pension plan for funding purposes was as of January 1, 2008. The
next required actuarial valuation will be as of January 1, 2011. The new valuation will be finalized towards the end of the first quarter
in 2012.
The most recent actuarial valuation for funding purposes for the executive defined benefit pension plan in Canada was as of
January 1, 2009. The next required actuarial valuation will be as of January 1, 2012.
The Company has chosen to recognize all defined benefit post-employment plan actuarial gains or losses in other comprehensive
income immediately.
Dec 31, 2011
Dec 31, 2010
Jan 1, 2010
Present value of unfunded defined benefit obligations
Present value of wholly or partly funded defined benefit obligations
$
59,319
33,154
$
Total present value of obligations
Fair value of plan assets
Recognized liability for defined benefit obligations
Liability for long-service leave and jubilee plans
Liability for long-term incentive plan
Cash-settled share-based payment liability
Total employee benefits
Total employee benefits reported in other payables
92,473
(20,703)
71,770
1,677
5,559
2,417
81,423
3,617
$
55,441
28,834
84,275
(19,540)
64,735
1,600
1,792
1,654
69,781
3,562
53,483
31,641
85,124
(20,691)
64,433
1,652
—
1,150
67,235
1,756
Total employee benefits reported in non-current liabilities
$
77,806
$
66,219
$
65,479
Information for December 31 regarding the defined benefit post-employment plans, including the defined benefit pension plans,
supplemental retirement plans and other post-employment defined benefit plans discussed above is as follows:
2011
Accrued benefit obligation:
Balance, beginning of year
Current service cost
Interest cost
Employee contributions
Benefits paid
Actuarial (gain)/loss
Effect of movements in exchange
rates
Balance, end of year
Plan assets:
Fair value, beginning of year
Expected return on plan assets
Actuarial losses
Employee contributions
Employer contributions
Benefits paid
Effect of movements in exchange
rates
Fair value, end of year
Funded status, net deficit of plans
Accrued benefit liability
70 CCL Industries Inc. 2011 Annual Report
Canada/U.S.
U.K.
Germany
Other
Total
$
$
$
$
$
$
49,977
418
2,584
624
(1,401)
1,748
660
54,610
4,408
284
(326)
—
1,316
(1,401)
—
4,281
(50,329)
(50,329)
$
$
$
$
$
$
22,044
—
1,202
—
(536)
2,458
394
25,562
15,132
990
(471)
—
1,031
(536)
276
16,422
(9,140)
(9,140)
$
$
$
$
$
$
7,011 $
244
325
—
(264)
(189)
5,243 $
453
239
—
(639)
126
84,275
1,115
4,350
624
(2,840)
4,143
(72)
(176)
806
7,055 $
5,246 $
92,473
— $
—
—
103
161
(264)
—
— $
— $
—
—
—
639
(639)
19,540
1,274
(797)
103
3,147
(2,840)
—
276
— $
20,703
(7,055) $
(5,246) $
(71,770)
(7,055) $
(5,246) $
(71,770)
2010
Accrued benefit obligation:
Balance, beginning of year
Current service cost
Past service cost
Interest cost
Employee contributions
Benefits paid
Actuarial loss
Effect of movements in exchange rates
Balance, end of year
Plan assets:
Fair value, beginning of year
Expected return on plan assets
Actuarial gains/(losses)
Employee contributions
Employer contributions
Benefits paid
Effect of movements in exchange rates
Fair value, end of year
Funded status, net deficit of plans
Accrued benefit liability
The Company’s net benefit plan expense is as follows:
2011
Current service cost
Interest cost
Expected return on plan assets
Net defined benefit plan expense
Net defined benefit plan expense recorded in:
Cost of sales
Selling, general and administrative expenses
Net defined benefit plan expense
2010
Current service cost
Past service cost
Interest cost
Expected return on plan assets
Net defined benefit plan expense
Net defined benefit plan expense
recorded in:
Cost of sales
Selling, general and administrative expenses
Net defined benefit plan expense
$
$
$
$
$
$
$
$
Canada/U.S.
U.K.
Germany
Other
Total
$
$
$
$
$
$
47,717
420
151
2,550
364
(1,426)
1,679
(1,478)
49,977
4,235
273
(40)
—
1,366
(1,426)
—
4,408
(45,569)
(45,569)
Canada/U.S.
418
2,584
(284)
$
$
$
$
$
$
$
25,228
—
—
1,221
—
(3,145)
808
(2,068)
22,044
16,456
896
821
—
1,472
(3,145)
(1,368)
15,132
(6,912)
(6,912)
$
$
$
$
$
$
7,030 $
233
—
318
—
(257)
494
(807)
5,149 $
379
—
254
—
(260)
187
(466)
85,124
1,032
151
4,343
364
(5,088)
3,168
(4,819)
7,011 $
5,243 $
84,275
— $
—
—
73
184
(257)
—
— $
— $
—
—
—
260
(260)
—
20,691
1,169
781
73
3,282
(5,088)
(1,368)
— $
19,540
(7,011) $
(5,243) $
(64,735)
(7,011) $
(5,243) $
(64,735)
U.K.
Germany
— $
1,202
(990)
244 $
325
—
Other
453 $
239
—
Total
1,115
4,350
(1,274)
2,718
$
212
$
569 $
692 $
4,191
— $
— $
2,718
2,718
$
212
212
245 $
324
$
569 $
433 $
259
692 $
678
3,513
4,191
Canada/U.S.
U.K.
Germany
$
420
151
2,550
(273)
— $
—
1,221
(896)
233 $
—
318
—
Other
379 $
—
254
—
Total
1,032
151
4,343
(1,169)
2,848
$
325
$
551 $
633 $
4,357
— $
— $
2,848
2,848
$
325
325
231 $
320
$
551 $
340 $
293
633 $
571
3,786
4,357
CCL Industries Inc. 2011 Annual Report 71
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
Actuarial losses recognized directly in equity are as follows:
Cumulative amount at January 1
Recognized during the year in other comprehensive income
Cumulative amount at December 31
Plan assets consist of the following:
2011
2,387
4,940
7,327
$
$
2010
—
2,387
2,387
$
$
2011
Equity securities
Debt securities
Real estate
Other
Total
2010
Equity securities
Debt securities
Real estate
Other
Total
Canada/U.S.
52%
32%
0%
16%
100%
Canada/U.S.
42%
37%
0%
21%
100%
U.K.
52%
38%
7%
3%
100%
U.K.
56%
34%
7%
3%
100%
Germany
Other
Total
—
—
—
—
0%
—
—
—
—
0%
52%
37%
6%
5%
100%
Germany
Other
Total
—
—
—
—
0%
—
—
—
—
0%
53%
35%
5%
7%
100%
No plan assets are directly invested in the Company’s own shares or directly in any property occupied by, or other assets used by,
the Company.
The expected rates of return on assets are based on long-term expected rates of return for a portfolio invested in accordance with
the plans’ target asset mix and include consideration of long-term historical returns. The Company considers input from its
investment advisors and actuaries when determining the rates. While the Company believes equities offer the best return over the
long-term, it also believes diversification is necessary and invests in bonds, hedge funds, property and cash as well.
The actual returns on plan assets are as follows:
2011
2010
Canada/U.S.
$
$
(42)
233
$
$
U.K.
519
1,717
Germany
Other
—
—
— $
— $
Total
477
1,950
The weighted average economic assumptions used to determine post-employment benefit obligations are as follows:
Canada/U.S.
U.K.
Germany
Other
Total
December 31, 2011
Discount rate
Expected rate of compensation
increase
December 31, 2010
Discount rate
Rate of compensation increase
2.69%
3.00%
3.88%
3.00%
4.70%
n.a.
5.40%
n.a.
4.80%
2.00%
4.65%
2.00%
5.21%
2.85%
5.20%
2.70%
3.56%
2.79%
4.43%
2.76%
72 CCL Industries Inc. 2011 Annual Report
The weighted average economic assumptions used to determine post-employment plan expenses are as follows:
Canada/U.S.
U.K.
Germany
Other
Total
December 31, 2011
Discount rate
Expected long-term rate of return on plan
assets
Expected rate of compensation increase
December 31, 2010
Discount rate
Expected long-term rate of return on plan
assets
Expected rate of compensation increase
The history for the plans is as follows:
Present value of the defined benefit obligation
Fair value of the plan assets
Plan deficit
Experience gains/(losses) on plan liabilities
Experience gains/(losses) on plan assets
3.88%
5.40%
4.65%
5.19%
4.43%
6.50%
3.00%
6.30%
n.a.
n.a.
2.00%
n.a.
2.69%
6.35%
2.76%
5.60%
5.80%
5.15%
4.62%
5.56%
6.50%
3.00%
6.50%
n.a.
n.a.
2.00%
n.a.
2.67%
6.50%
2.74%
2011
92,473
20,703
71,770
359
(797)
$
$
$
$
2010
84,275
19,540
64,735
850
781
$
$
$
$
The Company expects to contribute $1.3 million to the funded defined benefit plans and pay $1.8 million in benefits for the
unfunded plans in 2012.
23. PERSONNEL EXPENSES
Wages and salaries
Compulsory social security contributions
Contributions to defined contribution plans
Expenses related to defined benefit plans
Equity-settled share-based payment transactions
24.
INCOME TAX EXPENSE
Current tax expense
Current tax on earnings before earnings in equity accounted investments for the year
Deferred tax expense (benefit) (note 17)
Origination and reversal of temporary differences
Impact of tax rate reduction
Recognition of previously unrecognized tax losses and deductible temporary differences
Benefit of current period losses
Total income tax expense
$
2011
268,063
32,257
8,530
4,191
3,472
$
2010
276,387
34,265
8,190
4,357
4,130
$
316,513
$
327,329
2011
2010
$
$
$
$
31,655
2,425
(39)
(195)
—
2,191
33,846
$
$
$
$
28,250
5,347
508
(3,160)
(2,677)
18
28,268
CCL Industries Inc. 2011 Annual Report 73
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
Reconciliation of effective tax rate
Combined Canadian federal and provincial income tax rates
The income tax expense on the Company’s earnings differs from the amount determined by
the Company’s statutory rates as follows:
Net earnings for the year
Add income tax expense
Deduct earnings in equity accounted investments
Earnings before income tax and equity accounted investments
Income tax using the Company’s domestic combined Canadian federal and provincial
income tax rates
Effect of tax rates in foreign jurisdictions
Impact of tax rate reduction
Capital gain offset against losses
Recognition of previously unrecognized tax losses and deductible temporary differences
Losses for which no deferred tax asset was recognized
Impact of favourable tax settlements from prior years
Non-deductible expenses and other items
Income tax recognized directly in other comprehensive income
Derivatives
Actuarial gains and losses
Total income tax recognized directly in equity
2011
2010
26.8%
29.1%
$
$
$
$
84,126
33,846
1,224
116,748
31,288
1,770
(39)
1,361
(195)
4,849
(1,200)
(3,988)
33,846
(2,097)
(618)
(2,715)
$
$
$
$
71,093
28,268
496
98,865
28,770
(994)
508
1,894
(3,160)
3,254
(800)
(1,204)
28,268
1,129
(2)
1,127
The Company is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide
provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The
Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. If the final
tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and
deferred income tax assets and liabilities in the period in which such determination is made.
25. SHARE-BASED PAYMENTS
At December 31, 2011, the Company had three share-based compensation plans, which are described below:
(i) Employee stock option plan
Under the employee stock option plan, the Company may grant options to employees, officers and inside directors of the Company
for up to 4,500,000 Class B non-voting shares. The Company does not grant options to outside directors. The exercise price of each
option equals the market price of the Company’s stock on the date of grant, and an option’s maximum term is 10 years. Before
December 2003, options vested 20% on the grant date and 20% each year following the grant date. The term of these options was
5 or 10 years. Beginning December 2003, options granted began to vest a year from grant date, with 25% vesting one year from
grant date and 25% each subsequent year. The term of these options is five years from the grant date. In general, the grants are
conditional upon continued employment. No market conditions affect vesting. Granted options are not entitled to dividends and may
not be transferred or assigned by the option holder.
There are several exceptions to the above vesting schedule. In 2008, an option grant of 25,000 shares was made upon the
acquisition of Clear Image Labels Pty. Ltd. by the Company. These options vest after three years and expire after five years. In 2007
and 2008, options were granted for 125,000 shares as part of the Company’s long-term incentive plan. They vest based on 2008-
2010 Company performance and continued employment, and expire in 2013. Of these options, 25,000 have been forfeited and, of
the remaining 100,000 options, 50% vested in 2011. The other 50% will vest in 2012.
74 CCL Industries Inc. 2011 Annual Report
For options and share awards granted for stock-based compensation, $3.3 million (2010 - $3.9 million) has been recognized in the
financial statements as an expense with a corresponding offset to contributed surplus. The fair value of options granted has been
estimated using the Black-Scholes model and the following assumptions:
Risk-free interest rate
Expected life
Expected volatility
Expected dividends
2011
1.41%
2010
2.51%
4.5 years
4.5 years
31%
$
0.70
$
31%
0.67
The expected life of the stock options is estimated by observing general historical stock option holder behaviour. Expected volatility
is estimated based on the historical patterns of volatility of the Company’s shares.
A summary of the status of the Company’s employee stock option plan as of December 31, 2011 and 2010 and changes during the
years ended on those dates is presented below.
Outstanding, beginning of year
Granted
Exercised
Forfeited
Expired
Outstanding, end of year
Options exercisable, end of year
2011
Weighted
average
exercise
price
25.34
30.50
20.89
27.27
—
26.93
27.62
Shares
(000’s)
1,572
25
(403)
(100)
—
1,094
567
$
$
$
2010
Shares
(000’s)
Weighted average
exercise price
1,335 $
500
(238)
—
(25)
1,572 $
24.54
26.97
23.95
—
28.45
25.34
668 $
23.19
The weighted average share price at the date of exercise in 2011 was $29.69 (2010 - $29.17).
The following table summarizes information about the employee stock options outstanding at December 31, 2011.
Range of
exercise prices
$18.51 - $19.00
$19.01 - $25.00
$25.01 - $30.00
$30.01 - $38.00
$38.01 - $44.25
$18.51 - $44.25
Options outstanding
Options exercisable
Options
outstanding
(000’s)
122
253
419
135
165
Weighted
average
remaining
contractual life
0.9 years
2.2 years
3.5 years
2.4 years
1.1 years
$
1,094
2.4 years
$
Weighted
average
exercise
price
18.51
20.90
26.92
31.34
38.77
26.93
Options
exercisable
(000’s)
122 $
123
100
70
152
567 $
Weighted
average
exercise
price
18.51
20.88
26.99
31.83
38.80
27.62
CCL Industries Inc. 2011 Annual Report 75
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
(ii) Deferred share units
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).
(iii) Restricted share units
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.
Executive share purchase plan
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).
26. FINANCIAL INSTRUMENTS
(a) Cash flow hedges
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.
Notional principal amount
Fixed rate
Fixed rate
Interest rate
Received
(USD)
Paid
(CAD)
Fair value
December 31
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
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
The changes in value of the aluminum derivative contracts are recorded on the statement of financial position in accumulated other
comprehensive income. Any ineffective portion is recorded in selling, general and administrative expenses. For 2011 and 2010, no
ineffectiveness was recognized. Payments made or proceeds received upon the settlement of these contracts are recorded in cost
of goods sold.
Prices for aluminum fluctuate in response to changes in supply and demand, market uncertainty and a variety of other factors
beyond the Company’s control. A US$100/MT increase (decrease) in the price of aluminum would have resulted in a $0.7 million
(2010 – $0.5 million) decrease (increase) in other comprehensive income and no impact on the earnings from operations
(2010 – nil) of the Company. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
(b) Fair value hedges
During 2006, the Company entered into cross-currency interest rate swap agreements (hedging items) that converted fixed rate
unsecured U.S. dollar-denominated senior notes (hedged items) into Canadian dollar floating rate debt in order to reduce the
Company’s exposure to the U.S. dollar debt and create a better balance between fixed and floating interest rate exposures. The fair
values of the swaps are recorded in current and non-current liabilities when negative in value and current and non-current assets
when positive in value. Change in fair value of the debt is accounted for in current and non-current liabilities and offsets the swap fair
values on the income statement. No ineffectiveness has been recognized in the income statement as these are fully effective
hedges. One of these swaps matured in July 2010.
Notional principal amount
Fixed rate
Floating rate
Interest rate
Paid
(CAD)
Received
(USD)
US$31.0 million
C$36.0 million 3-month BA + 1.67%
6.67%
Fair value
December 31
2011
(CAD)
—
2010
(CAD)
—
Maturity
Effective date
July 8, 2010 December 29, 2006
US$28.1 million*
C$32.6 million 3-month BA + 2.01%
6.97%
(539.5)
(1,088.5) September 16, 2012 December 29, 2006
* There is an annual principal payment on this swap. Remaining principal amounts are US$4.7 million and C$5.4 million.
During 2003, the Company entered into an interest rate swap agreement (“IRSA”), the hedging item, in order to redistribute the
Company’s exposure to fixed and floating interest rates with a view to reducing interest costs over the long term. The hedged item is
50% of a fixed rate unsecured U.S. dollar-denominated senior note. Fair value of this IRSA is recorded in current and non-current
liabilities when negative in value and current and non-current assets when positive in value. Change in fair value of the debt is
accounted for in current and non-current liabilities and offsets the IRSA’s fair values on the income statement. No ineffectiveness
has been recognized in the income statement as this is a fully effective hedge.
Notional principal amount
Currency
Interest rate
Paid
(USD)
Received
(USD)
Fair value
December 31
2011
(CAD)
2010
(CAD)
Maturity
Effective date
$42.1 million*
US$
3-month LIBOR + 2.97%
6.97%
110.9
376.9 September 16, 2012 December 16, 2003
* There is an annual principal payment on this swap. Remaining principal amount is US$4.7 million.
(c) Hedges of net investment in self-sustaining operations
During 2006, the Company entered into cross-currency interest rate swap agreement (“CCIRSAs”) the hedging items that converted
Canadian dollar fixed rate and Canadian dollar floating rate debt into euro fixed rate debt and euro floating rate debt in order to
hedge the Company’s exposure to its net investment in self-sustaining euro-denominated operations, with a view to reducing foreign
exchange fluctuations and interest expense. Fair value of these CCIRSAs is recorded in current and non-current liabilities when
negative in value and current and non-current assets when positive in value. The offset is recorded in other comprehensive income.
These have been and continue to be 100% fully effective hedges as the notional amounts of the hedging items equal the portion of
the net investment balance being hedged. No ineffectiveness has been recognized in the income statement. One of the swaps
matured in July 2010. A second swap matured in March 2011.
CCL Industries Inc. 2011 Annual Report 77
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
Notional principal amount
Interest rate
Fair value
December 31
Fixed rate
Fixed rate
Paid
(EUR)
Received
(CAD)
2011
(CAD)
2010
(CAD)
Maturity
Effective date
C$70.4 million
EUR50.0 million
3.82%
4.50%
— 3,943.8
March 8, 2011
March 29, 2006
Notional principal amount
Floating rate
Floating rate
C$36.0 million
EUR23.6 million
Paid (EUR)
6-month
EURIBOR + 1.64%
C$32.6 million**
EUR21.3 million
6-month
EURIBOR + 1.99%
Interest rate
Received
(CAD)
3-month
BA + 1.67%
3-month
BA + 2.01%
Fair value
December 31
2011
(CAD)
—
2010
(CAD)
—
Maturity
Effective date
July 8, 2010* December 29, 2006
709.1
1,305.2 September 16, 2012 December 29, 2006
*
This hedge was designated on June 1, 2010. Changes in fair value from that date to maturity were then accounted for on the income statement.
**
There is an annual principal payment on this swap. Remaining principal amounts are C$5.4 million and EUR3.6 million.
US$323.7 million (2010 – US$328.4 million) of unsecured U.S. dollar-denominated senior notes (hedging item) have been used to
hedge the Company’s exposure to its net investment in self-sustaining U.S. dollar-denominated operations with a view to reducing
foreign exchange fluctuations. The foreign exchange effect of both the senior notes and the net investment in U.S. dollar-
denominated subsidiaries is reported in other comprehensive income. These have been and continue to be 100% fully effective
hedges as the notional amounts of the hedging items equal the portion of the net investment balance being hedged. No
ineffectiveness has been recognized in the income statement.
(d) Credit risk
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the
reporting date was:
Cash and cash equivalents
Trade and other receivables
Available-for-sale financial assets
Derivative instruments: assets
Impairment losses
The aging of trade receivables at the reporting date was:
Under 31 days
Between 31 and 90 days
Greater than 90 days
Dec 31, 2011
Dec 31, 2010
Jan 1, 2010
$
140,698
192,003
10,790
820
$
173,197
174,011
14,852
7,482
$
150,594
166,499
17,630
6,081
$
344,311
$
369,542
$
340,804
Dec 31, 2011
Dec 31, 2010
Jan 1, 2010
$
107,645
65,138
9,074
$
$
93,943
56,029
8,200
93,347
50,965
7,889
$
181,857
$
158,172
$
152,201
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Balance at January 1
Increase (decrease) during the year
Balance at December 31
78 CCL Industries Inc. 2011 Annual Report
Dec 31, 2011
Dec 31, 2010
Jan 1, 2010
$
$
3,322
4
3,326
$
$
3,513
(191)
3,322
$
$
5,413
(1,900)
3,513
Based on historic default rates, the Company believes that no impairment allowance is necessary in respect of trade receivables not
past due.
(e) Liquidity risk
Exposure to liquidity risk
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of
netting agreements:
(in millions of Canadian dollars)
Non-derivative financial liabilities
Secured bank loans
Unsecured bank loans
Unsecured senior notes
Finance lease liabilities
Other long-term obligations
Interest on unsecured senior notes
Interest on other long-term debt
Trade and other payables
Bank advances
Derivative financial liabilities
Outflow – FV hedges
Inflow – FV hedges
Outflow – CF hedges
Interest on derivatives
Accrued post-employment benefit
liabilities
Operating leases
December 31,
2010
Carrying
amount
$
1.9
20.7
394.6
2.8
1.4
*
—
230.3
0.5
12.5
—
—
*
*
—
Carrying
amount
Contractual
cash flows
0-6
months
6-12
months
1-2 years
2-5 years
More
than
5 years
December 31, 2011
Payments due by period
$
2.4
16.1
333.1
2.2
0.1
*
—
234.0
—
0.8
—
1.7
*
*
—
$
2.4 $
16.1
333.9
2.2
0.1
87.4
2.7
234.0
—
10.1
(10.2)
1.7
(0.5)
24.6
31.2
0.4 $ 0.5 $
1.2
—
0.2
0.1
3.3*
0.6
232.5
—
7.7
9.5
0.2
—
10.4
0.6
1.5
—
0.6 $
2.4
81.4
0.4
—
18.5
0.7
—
—
0.9 $ —
—
4.8
131.1
111.9
—
1.4
—
—
14.8
40.4
—
0.8
—
—
—
—
10.1
—
— (10.2)
0.5
0.9
(0.2)
(0.3)
*
4.5
*
4.5
—
—
0.3
—
3.1
6.2
—
—
—
—
—
—
—
—
9.2
10.2
12.3
5.8
Total contractual cash obligations
$
664.7
$590.4
$ 735.7 $243.4 $ 35.1 $113.6 $179.6 $164.0
* accrued post-employment benefit liability of $3.1 million, accrued interest of $7.1 million on unsecured senior notes and accrued interest of $0.1 million on
derivatives are reported in trade and other payables in 2011 (2010: $2.9 million, $8.1 million and $1.9 million, respectively)
The following tables indicate the periods in which the cash flows associated with derivatives that are cash flow hedges are expected
to impact the income statement:
(in millions of Canadian dollars)
Assets
Liabilities
Total
December 31,
2010
Carrying
amount
$
$
1.9
—
1.9
Carrying
amount
Contractual
cash flows
0-6
months
6-12
months
1-2 years
2-5 years
More
than
5 years
December 31, 2011
Payments due by period
$ — $
1.7
— $ — $ — $ — $ — $ —
—
0.3
0.9
0.5
—
1.7
$
1.7
$
1.7 $
0.9 $ 0.5 $
0.3 $ — $ —
CCL Industries Inc. 2011 Annual Report 79
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
(f) Currency risk
Exposure to currency risk
The Company’s exposure to foreign currency risk was as follows based on notional amounts:
U.S.
dollar
63,130
63,746
89,766
323,175
Great
Britain
pound
5,148
5,722
4,847
—
2011
euro
27,778
41,270
43,986
5,295
U.S.
dollar
Great
Britain
pound
2010
euro
102,527
3,767
28,485
61,115
89,990
329,120
4,907
5,387
1
37,847
44,823
59,126
Cash and cash equivalents
Trade and other
receivables
Trade and other payables
Long-term debt
Sensitivity analysis
A five percent strengthening of the Canadian dollar, as indicated below, against the following currencies at December 31 would have
increased (decreased) equity and earnings by the amounts shown below. This analysis assumes that all other variables, in particular
interest rates, remain constant.
US dollar
Great Britain pound
Euro
2011
(2,664)
250
18,679
Equity
2010
11,671
(667)
(7,551)
Income Statement
2010
80
(17)
(437)
2011
273
(43)
(739)
A five percent weakening of the Canadian dollar against the above currencies at December 31 would have had the equal but
opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
(g) Interest rate risk
An increase of 100 basis points in interest rates at the reporting date would have decreased net earnings by $0.2 million (2010:
$0.4 million) and have no impact on other comprehensive income. This analysis assumes that all other variables, in particular
foreign currency rates, remain constant. The analysis is performed on the same basis for 2010.
80 CCL Industries Inc. 2011 Annual Report
(h) Fair values versus carrying amounts
The fair value of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are
as follows:
Dec 31, 2011
Dec 31, 2010
Assets carried at fair value:
Available-for-sale financial assets
Interest rate swaps used for hedging
$
Assets carried at amortized cost:
Loans and receivables
Cash and cash equivalents
Liabilities carried at fair value:
Derivative financial liabilities
Liabilities carried at amortized cost:
Secured bank loans
Unsecured senior notes
Finance lease liabilities
Unsecured bank loans
Trade and other payables
Bank overdraft
Other
Carrying
amount
10,790
820
11,610
192,003
140,698
332,701
2,530
2,530
2,407
333,115
2,209
16,091
233,963
—
146
$
Fair value
10,790
820
11,610
192,003
140,698
332,701
2,530
2,530
2,407
384,186
2,209
16,091
233,963
—
146
Carrying
amount
$
14,852 $
7,482
22,334
174,011
173,197
347,208
12,495
12,495
1,865
394,606
2,808
20,740
230,341
497
1,383
Fair value
14,852
7,482
22,334
174,011
173,197
347,208
12,495
12,495
1,865
436,328
2,808
20,740
230,341
497
1,383
The basis for determining fair values is disclosed in note 4.
The interest rates used to discount estimated cash flows, for the unsecured senior notes, are based on the government yield curve
at the reporting date plus an adequate credit.
$
587,931
$
639,002
$
652,240 $
693,962
Fair value hierarchy
The table below summarizes financial instruments carried at fair value, by valuation method.
The different levels have been defined as follows:
(cid:129) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
(cid:129) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices)
(cid:129) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
December 31, 2011
Available-for-sale financial assets
Derivative financial assets
Derivative financial liabilities
Level 1
Level 2
Level 3
Total
$
$
— $
—
—
—
$
10,790
820
11,610
2,530
— $
—
—
—
— $
9,080
$
— $
10,790
820
11,610
2,530
9,080
CCL Industries Inc. 2011 Annual Report 81
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
December 31, 2010
Available-for-sale financial assets
Derivative financial assets
Derivative financial liabilities
Level 1
Level 2
Level 3
Total
$
$
— $
—
—
—
$
14,852
7,482
22,334
12,495
— $
—
—
—
— $
9,839
$
— $
14,852
7,482
22,334
12,495
9,839
27. OPERATING LEASES
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and five years
More than five years
2011
8,992
16,413
5,804
$
2010
8,854
15,514
6,577
31,209
$
30,945
$
$
The Company enters into operating leases in the ordinary course of business, primarily for real property and equipment. Payments
and other terms for these leases vary per agreement. During the year ended December 31, 2011, $9.8 million was recognized as
an expense in the income statement in respect of operating leases (2010: $10.4 million).
28. RELATED PARTIES
Transactions with key management personnel
In March 2008, a US$1.5 million interest bearing unsecured demand loan was provided to an executive officer. During 2011,
interest accrued on this loan at a rate of 5.68% (2010 – 6.10%). At December 31, 2011, the principal and accrued interest balance
was US$1.8 million (2010 – US$1.7 million) and is included in other assets.
Beneficial ownership
The directors and officers of CCL Industries Inc. as a group beneficially own, control, or direct, directly or indirectly, approximately
2,244,030 of the issued and outstanding Class A voting shares representing 94.5% of the issued and outstanding Class A voting
shares.
Key management personnel compensation
Short-term employee benefits
Share-based payments
Post-employment benefits
29. ACCUMULATED OTHER COMPREHENSIVE LOSS
Unrealized foreign currency translation losses, net of tax expense of $1,035
(2010 – tax expense of $2,057)
Gains (losses) on derivatives designated as cash flow hedges, net of tax recovery of $513
(2010 – tax expense of $591)
82 CCL Industries Inc. 2011 Annual Report
2011
5,317
473
352
$
2010
5,618
6,414
476
6,142
$
12,508
$
$
2011
2010
$
(39,585)
$
(21,209)
(1,088)
1,393
$
(40,673)
$
(19,816)
30. SUBSEQUENT EVENTS
The Board of Directors has declared a dividend of $0.195 on the Class B non-voting shares and $0.1825 on the Class A voting
shares, which will be payable to shareholders of record at the close of business on March 16, 2012, to be paid on March 30, 2012.
31. EXPLANATION OF TRANSITION TO IFRS
As stated in note 2(a), these are the Company’s first consolidated financial statements prepared in accordance with IFRS.
The accounting policies set out in note 3 have been applied in preparing the financial statements for the year ended December 31,
2011, the comparative information presented in these financial statements for the year ended December 31, 2010 and in the
preparation of an opening IFRS statement of financial position at January 1, 2010 (the Company’s date of transition).
In preparing its opening IFRS statement of financial position, the Company has adjusted amounts reported previously in financial
statements that were prepared in accordance with previous Canadian GAAP. An explanation of how the transition from previous
Canadian GAAP to IFRS has affected the Company’s financial position, financial performance and cash flows is set out in the
following tables and the notes that accompany the tables.
CCL Industries Inc. 2011 Annual Report 83
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
Reconciliation of equity, January 1, 2010
Previous
Canadian
GAAP balance
IFRS
reclassification
IFRS
adjustments
IFRS
balance
Assets
Current assets
Cash and cash equivalents
Accounts receivable, trade
Inventories
Other receivables and prepaid
expenses
Total current assets
Property, plant and equipment
(note d)
Goodwill
Future income tax assets
(notes c,d,e,f,g,h)
Intangible assets
Other assets
$
150,594 $
— $
—
148,688
75,530
24,342
—
—
399,154
751,592
358,794
47,440
—
42,335
—
46,182
—
166,499
(148,688)
—
(24,342)
5,656
5,550
4,675
(944)
—
—
19,449
2,857
24,289
(46,182)
531
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepaid expenses
Derivative instruments
150,594
166,499
—
75,530
—
5,656
5,550
403,829
Total current assets
— $
—
—
—
—
—
—
—
(5,941)
—
744,707
358,794
Property, plant and
equipment
Goodwill
4,359
—
—
—
—
—
51,799
19,449
45,192
24,289
—
531
Deferred tax assets
Equity accounted investments
Intangible assets
Other assets
Derivative instruments
Total non-current assets
1,246,343
—
(1,582)
1,244,761
Total non-current assets
Total assets
$
1,645,497 $
4,675 $
(1,582) $
1,648,590
Total assets
Liabilities
Current liabilities
Accounts payable and accrued
liabilities
$
206,510 $
8,690 $
— $
215,200
Current portion of long-term debt
(note c)
Income and other taxes payable
Total current liabilities
Long-term debt (note c)
Future income tax liabilities
(note d)
(notes f,g)
Other long-term items
49,290
10,943
—
266,743
448,849
118,764
—
58,384
—
—
Total non-current liabilities
625,997
Total liabilities
Equity
Share capital
Contributed surplus (note e)
Retained earnings
Accumulated other
$
$
(4,228)
(4,611)
4,228
4,079
(89)
—
—
(89)
(12,504)
(1,177)
—
46,970
(58,384)
12,010
12,504
596
(1,295)
18,509
—
—
—
44,973
6,332
4,228
270,733
435,168
117,469
65,479
—
12,010
12,504
892,740 $
4,675 $
15,948 $
913,363
Total liabilities
16,037
642,630
Total non-current liabilities
201,339 $
3,805
643,303
— $
—
—
— $
871
(117,987)
201,339
4,676
525,316
comprehensive loss (note b)
(95,690)
Total equity attributable to
shareholders of the Company
752,757
—
—
99,586
3,896
(17,530)
735,227
Total liabilities and equity
$
1,645,497 $
4,675 $
(1,582) $
1,648,590
Total liabilities and equity
84 CCL Industries Inc. 2011 Annual Report
Liabilities
Current liabilities
Trade and other payables
Current portion of
long-term debt
Income taxes payable
Derivative instruments
Total current liabilities
Long-term debt
Deferred tax liabilities
Employee benefits
Provisions and other
long-term liabilities
Derivative instruments
Equity
Share capital
Contributed surplus
Retained earnings
Accumulated other
comprehensive income (loss)
Total equity attributable to
shareholders of the Company
Reconciliation of equity, December 31, 2010
Previous
Canadian
GAAP balance
IFRS
reclassification
IFRS
adjustments
IFRS
balance
Assets
Current assets
Cash and cash equivalents
Accounts receivable, trade
Inventories
Other receivables and prepaid
expenses
Income and other taxes
receivable
Total current assets
Property, plant and equipment
(note d)
Goodwill
Future income tax assets
(notes c,d,e,f,g,h)
Intangible assets
Other assets
$
173,197 $
— $
—
154,850
77,863
24,199
—
2,457
—
432,566
712,292
350,527
50,676
—
36,017
40,333
—
—
174,011
(154,850)
—
(24,199)
5,983
684
6,641
8,270
(902)
—
—
19,754
2,036
(40,333)
18,604
841
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepaid expenses
Income taxes recoverable
Derivative instruments
— $
—
—
—
173,197
174,011
—
77,863
—
—
—
—
—
—
5,983
3,141
6,641
440,836
Total current assets
(6,987)
—
704,403
350,527
Property, plant
and equipment
Goodwill
4,280
—
—
—
—
—
54,956
19,754
38,053
—
18,604
841
Deferred tax assets
Equity accounted investments
Intangible assets
Other assets
Derivative instruments
Total non-current assets
1,189,845
—
(2,707)
1,187,138
Total non-current assets
Total assets
$
1,622,411 $
8,270 $
(2,707) $
1,627,974
Total assets
Liabilities
Current liabilities
Bank advances
Accounts payable and accrued
liabilities
Current portion of long-term debt
Total current liabilities
Long-term debt (note c)
Future income tax liabilities
(note d)
(notes f,g)
Other long-term items
Total liabilities
Equity
Share capital
Contributed surplus (note e)
Retained earnings
Accumulated other
$
$
$
497 $
— $
— $
497
222,072
8,269
87,147
—
309,716
347,733
120,682
—
55,283
—
—
(11,519)
11,519
8,269
(976)
—
46,667
(55,283)
8,617
976
1
—
—
—
—
(983)
(1,606)
19,552
—
—
—
230,341
75,628
11,519
317,985
345,774
119,076
66,219
—
8,617
976
208,666 $
6,741
693,017
— $
—
—
— $
947
(120,228)
208,666
7,688
572,789
Liabilities
Current liabilities
Bank advances
Trade and other payables
Current portion of
long-term debt
Derivative investments
Total current liabilities
Long-term debt
Deferred tax liabilities
Employee benefits
Provisions and
other long-term liabilities
Derivative instruments
Equity
Share capital
Contributed surplus
Retained earnings
Accumulated other
comprehensive loss
Total non-current liabilities
523,698
16,963
540,662
Total non-current liabilities
833,414 $
8,270 $
16,963 $
858,647
Total liabilities
comprehensive loss (notes b,c)
(119,427)
Total equity attributable to
shareholders of the Company
788,997
—
—
99,611
(19,816)
(19,670)
769,327
Total equity attributable to
shareholders of the Company
Total liabilities and equity
$
1,622,411 $
8,270 $
(2,707) $
1,627,974
Total liabilities and equity
CCL Industries Inc. 2011 Annual Report 85
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
Reconciliation of net income for the year ended December 31, 2010
Sales
Cost of sales (note d)
Gross profit
Selling, general and administrative expenses (notes b,e,f,g)
Restructuring and other items (note b)
Earnings in equity accounted investments
Results from operating activities
Finance costs (note c)
Finance income
Net finance costs
Earnings before income taxes
Income tax expense
Net earnings for the year
Attributable to:
Shareholders of the Company
Net earnings for the year
Earnings per share
Basic earnings per Class B share
Diluted earnings per Class B share
Previous
Canadian GAAP
$ 1,192,318
916,461
275,857
151,611
29
496
124,713
26,133
1,071
25,062
99,651
28,514
71,137
71,137
71,137
2.17
2.13
$
$
$
$
$
Effect of
transition to
IFRS
$
— $
1,046
(1,046)
(1,175)
196
—
(67)
223
—
223
(290)
(246)
$
$
$
(44) $
(44) $
(44) $
IFRS
1,192,318
917,507
274,811
150,436
225
496
124,646
26,356
1,071
25,285
99,361
28,268
71,093
71,093
71,093
$
$
2.17
2.13
Reconciliation of comprehensive income for the year ended December 31, 2010
Net earnings for the year
$
71,137
$
(44) $
71,093
Other comprehensive income, net of tax:
Foreign currency translation differences for foreign operations (note b)
Net gain on hedges of net investment in foreign operations (note b)
Effective portion of changes in fair value of cash flow hedges
Net change in fair value of cash flow hedges transferred to income
statement
Defined benefit plan actuarial losses (note f)
Other comprehensive loss, net of tax
Total comprehensive income for the year
Attributable to:
Shareholders of the Company
Total comprehensive income for the year
(52,136)
30,521
(3,007)
885
—
(23,737)
1,065
(1,040)
—
—
(2,197)
(2,172)
(51,071)
29,481
(3,007)
885
(2,197)
(25,909)
$
$
$
47,400
$
(2,216) $
45,184
47,400
47,400
$
$
45,184
45,184
Material adjustments to the statement of cash flows for 2010
Consistent with the Company’s accounting policy choice under IAS 7, Statement of Cash Flows, dividends received of $330 have been
classified as investing activities. Interest paid and income taxes paid have moved into the body of the Statement of Cash Flows,
whereas they were previously disclosed as supplementary information. There are no other material differences between the
statement of cash flows presented under IFRS and the statement of cash flows presented under previous Canadian GAAP.
86 CCL Industries Inc. 2011 Annual Report
Notes to the reconciliation of equity and comprehensive income
The preceding are reconciliations of the financial statements previously presented under Canadian GAAP to the amended financial
statements prepared under IFRS. Items identified as “IFRS adjustments” are required as the accounting treatment under Canadian
GAAP differs from the treatment under IFRS. Items identified as “IFRS reclassifications” are solely reclassifications required to
present the previous Canadian GAAP financial statements’ line items on a consistent basis with that of the IFRS presentation.
Details on the nature of both types of changes are described below.
IFRS adjustments
(a) Business combinations
The Company has elected under IFRS 1 not to apply IFRS 3, Business Combinations, (“IFRS 3”) retrospectively to business
combinations that occurred prior to January 1, 2010 (the date of transition to IFRS).
The Company has applied IFRS 3 to all business combinations that have occurred since January 1, 2010.
(b) Currency translation differences
In accordance with IFRS 1, the Company has elected to deem all foreign currency translation differences that arose prior to the date
of transition in respect of all foreign operations to be nil at the date of transition.
The impact arising from the change is summarized as follows:
Consolidated statement of financial position
Decrease in accumulated other comprehensive loss due to foreign currency translation
differences
Offsetting effect in accumulated other comprehensive loss due to hedges of net
investments in subsidiaries
Decrease in accumulated other comprehensive loss due to tax effect on hedges of net
investments in subsidiaries
Decrease in retained earnings
Jan 1, 2010
Dec 31, 2010
$
(137,129)
$
(137,619)
48,348
49,388
(10,805)
(10,805)
$
(99,586)
$
(99,036)
The Company previously recognized a net foreign exchange loss of $550 resulting from the repatriation of capital from foreign
subsidiaries. In accordance with IFRS, the loss was reversed to accumulated other comprehensive loss as a payment of a dividend
is not considered to be a disposal or partial disposal. The adjustment resulted in an increase in restructuring and other items of
$196 and a decrease in selling, general and administrative expenses of $746 in the income statement for the year ended
December 31, 2010.
(c) Transaction costs relating to financial liabilities
Under previous Canadian GAAP, the Company expensed transaction costs related to financial liabilities as incurred. IFRS requires
the Company to include these costs as part of the financial liability.
The impact arising from the change is summarized as follows:
Consolidated statement of financial position
Decrease in long-term debt
Decrease in current portion of long-term debt
Related tax effect
Other comprehensive income
Increase in retained earnings
Jan 1, 2010
Dec 31, 2010
$
$
$
1,177
89
(330)
—
936
$
983
—
(272)
60
771
In accordance with IFRS, the Company recognized an increase of $223 in finance costs in the income statement for the year ended
December 31, 2010. The Company also recorded the related tax effect of $58 as a decrease in deferred tax expense.
CCL Industries Inc. 2011 Annual Report 87
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Years ended December 31, 2011 and 2010 (In thousands of Canadian dollars, except share and per share information)
(d) Property, plant and equipment
Under previous Canadian GAAP, each asset under property, plant and equipment was depreciated as a whole unit over its useful life.
Components of an asset were not depreciated separately. Under IFRS, each part of an item of property, plant and equipment with a
cost that is significant to the total cost of the item must be depreciated separately. For certain components of property, plant and
equipment, useful
lives were reassessed, and the effect of these changes in estimates resulted in the acceleration of the
depreciation expense under IFRS.
The impact arising from the change is summarized as follows:
Consolidated statement of financial position
Decrease in property, plant and equipment
Related tax effect
Decrease in retained earnings
Jan 1, 2010
Dec 31, 2010
$
$
(5,941)
1,761
(4,180)
$
$
(6,987)
2,072
(4,915)
In accordance with IFRS, the Company recognized an increase of $1,046 of depreciation expense in cost of sales, resulting from the
accelerated depreciation, recorded in the income statement for the year ended December 31, 2010. The Company also recorded
the related tax effect of $311 as a decrease in deferred tax expense.
(e) Share-based payments
Previous Canadian GAAP allowed the use of straight-line attribution of graded-vesting options. Under IFRS, this option is no longer
available and each award in a series is accounted for as if it had its own separate service period and vesting date. Accordingly,
compensation expense under IFRS will be recognized at an accelerated rate.
The impact arising from the change is summarized as follows:
Consolidated statement of financial position
Increase in contributed surplus
Related tax effect
Decrease in retained earnings
Jan 1, 2010
Dec 31, 2010
$
$
(871)
96
(775)
$
$
(947)
104
(843)
In accordance with IFRS, the Company recognized an increase of $76 of stock-based compensation expense in selling, general and
administrative expenses resulting from the accelerated compensation expense, recorded in the income statement for the year
ended December 31, 2010. The Company also recorded the related tax effect of $8 as a decrease in deferred tax expense.
(f) Actuarial gains and losses
In accordance with IFRS 1, the Company has elected to recognize all cumulative actuarial gains and losses related to defined benefit
post-employment plans upon transition to IFRS.
The impact arising from the change is summarized as follows:
Consolidated statement of financial position
Increase in employee benefits liability
Related tax effect
Decrease in retained earnings
Jan 1, 2010
Dec 31, 2010
$
$
(13,792)
3,708
(10,084)
$
$
(15,342)
4,094
(11,248)
The Company previously recognized actuarial losses of $822 under previous GAAP in net earnings for the year ended December 31,
2010. In accordance with the Company’s election upon transition to IFRS, the losses previously recognized were reversed resulting
in a decrease in selling, general and administrative expenses in the income statement for the year ended December 31, 2010. The
Company also recorded the related tax effect of $213 as an increase in deferred tax expense.
Actuarial loss of $2,197, net of tax of $190, was recognized in the statement of comprehensive income for the year ended
December 31, 2010.
88 CCL Industries Inc. 2011 Annual Report
(g) Employee benefits
Under IFRS, the Company was required to estimate a future value for certain employee benefits and present value this obligation.
The impact arising from the change is summarized as follows:
Consolidated statement of financial position
Increase in employee benefits accrual
Related tax effect
Decrease in retained earnings
Jan 1, 2010
Dec 31, 2010
$
$
(4,717)
1,792
(2,925)
$
$
(5,034)
1,879
(3,155)
In accordance with IFRS, the Company recognized an increase of $317 of pension expense in selling, general and administrative
expenses resulting from the change in the valuation of certain employee benefits, in the income statement for the year ended
December 31, 2010. The Company also recorded the related tax effect of $87 as a decrease in deferred tax expense.
(h) Deferred taxes
Upon examining the impact of the opening IFRS adjustments to the valuation allowance, a further adjustment was required to the
deferred tax balance to adjust for previously benefited losses.
The impact arising from the change is summarized as follows:
Consolidated statement of financial position
Decrease in deferred tax assets
Decrease in retained earnings
IFRS reclassifications
Jan 1, 2010
Dec 31, 2010
$
$
(1,373)
(1,373)
$
$
(1,803)
(1,803)
(a) Previously, the Company presented other receivables together with prepaid expenses. The current presentation has other
receivables presented with trade receivables, and prepaid expenses are shown separately as prepayment for current assets.
(b) Previously, the Company presented other assets, which included investments and equity accounted investments, derivatives,
licences and patents and other assets. Equity accounted investments are now shown separately, investments have been
reclassified to other assets, derivatives instruments are shown separately and licences and patents are reflected in intangible
assets.
(c) Previously, the Company presented long-term employee benefits and other long-term liabilities within the line item other long-
term items. Long-term employee benefits are now shown separately and other long-term liabilities are reflected in provisions
and other long-term liabilities.
CCL Industries Inc. 2011 Annual Report 89
S I X Y E A R F I N A N C I A L S U M M A R Y
(In thousands of Canadian dollars except per share and ratio data)
Sales & Net Earnings
Sales1
Depreciation and
amortization1
Finance cost/Interest
expense1
Net earnings
Basic net earnings
per Class B share
Financial Position
Current assets
Current liabilities
Working capital8
Total assets
Net debt
Shareholders’ equity
Net debt to equity
ratio
Net debt to total
book capitalization
Number of shares (000s)
Class A – Dec 31
Class B – Dec 31
Weighted average for
2011
2010
2009*
2008*
2007*
2006*
$ 1,268,477
$ 1,192,318
$ 1,198,984 $
1,189,025 $
1,144,260
$1,029,569
100,177
95,406
100,004
85,144
75,912
67,047
21,384
84,1262
2.542
426,559
256,243
170,316
1,613,481
213,270
816,880
$
$
$
$
25,285
71,0933
2.173
440,836
317,985
122,851
1,627,974
248,702
769,327
$
$
$
$
$
$
29,323
42,1744 $
23,949
47,9865 $
23,157
147,9156
1.314 $
1.505 $
4.596
20,584
77,4207
2.417
$
$
399,154 $
266,743
132,411
1,645,497
347,545
752,757 $
407,947
276,711
131,236
1,766,674
456,253
750,518 $
391,023
244,966
146,057
1,488,190
306,775
717,859
424,897
322,996
101,901
1,542,590
317,099
$ 652,601
0.26
0.32
0.46
0.61
0.43
0.49
20.7%
24.4%
31.6%
37.8%
29.9%
32.7%
2,374
31,315
2,374
30,912
2,374
30,674
2,374
30,181
2,379
30,501
2,379
30,223
the year
33,111
32,830
32,340
32,090
32,284
32,240
Cash Flow
Cash provided by
operations
Additions to plant,
$
171,376
$
168,399
$
150,280 $
216,348 $
162,194
$ 161,298
property & equipment
81,447
85,794
99,310
192,801
163,453
150,423
Business
acquisitions
Dividends
Dividends per Class
25,156
23,343
1,246
20,730
5,327
18,964
40,677
17,512
105,575
15,233
62,170
13,775
B share
$
0.70
$
0.66
$
0.60 $
0.56 $
0.48
$
0.43
Note:
* Amounts presented are as reported under previous Canadian GAAP and have not been restated for IFRS
1 Excluding discontinued operations
2 After pre-tax restructuring and other items – net loss of $0.8 million
3 After pre-tax restructuring and other items – net loss of $0.2 million
4 After pre-tax restructuring and other items – net loss of 7.3 million
5 After pre-tax restructuring and other items – net loss of $3.1 million and goodwill impairment loss of $31.4 million
6 After pre-tax restructuring and other items – net gain of $4.1 million
7 After pre-tax restructuring and other items – net loss of $11.5 million
8 Current assets minus liabilities
90 CCL Industries Inc. 2011 Annual Report
CCL_AR11_back_to_film.qxd:layout 3/15/12 11:31 AM Page 1
2 0 1 1 B U S I N E S S L E A D E R S H I P
Eric Frantz
Vice President and
General Manager,
CCL Container
Hermitage, Pennsylvania, U.S.A.
Andy Iseli
Vice President and
General Manager,
CCL Tube
Los Angeles, California, U.S.A.
Latin America
Luis Jocionis
Vice President and
Managing Director,
CCL Label Brazil
Sao Paolo, Brazil
Ben Lilienthal
Vice President and
Managing Director,
CCL Mexico
Mexico City, Mexico
Asia Pacific
Jim Anzai
Vice President and
Managing Director,
CCL Label Asia
Bangkok, Thailand
Guy Kiraly
Managing Director,
CCL Label China
Shanghai, PR China
Europe
Günther Birkner
President,
Food and Beverage Worldwide
Hohenems, Austria
Tommy Nielsen
Group Vice President,
Healthcare and Specialty
CCL Label Europe
Randers, Denmark
Dale Hambilton
Vice President and
Managing Director,
Global Sleeve Development
King’s Lynn, U.K.
Scott Mitchell Harris
Managing Director,
Healthcare and Specialty,
U.K. and France
Paris, France
Lee Pretsell
Managing Director,
CCL Label Home and
Personal Care Europe
Paris, France
Peter Fleissner
Managing Director,
CCL Design
Solingen, Germany
Werner Ehrmann
Vice President,
Technology Development
Holzkirchen, Germany
North America
John Pedroli
President,
CCL Industries, North America
Charlotte, North Carolina, U.S.A.
Ben Rubino
President,
Home and Personal Care
Worldwide
Shelton, Connecticut, U.S.A.
Jim Sellors
Group Vice President,
Healthcare and Specialty,
CCL Label North America
and Australia
Toronto, Ontario, Canada
Eric Schaffer
Vice President and
General Manager,
Promotional Products,
CCL Label North America
Cold Spring, Kentucky, U.S.A.
2 0 1 1 C C L O F F I C E R S
Donald G. Lang
Executive Chairman
Geoffrey T. Martin
President and
Chief Executive Officer
Bohdan I. Sirota
Senior Vice President,
General Counsel and Secretary
Susan V. Snelgrove
Vice President, Risk and
Environmental Management
Lalitha Vaidyanathan
Senior Vice President, Finance,
Administration and IT,
CCL Operations
Janis M. Wade
Senior Vice President,
Human Resources and
Corporate Communications
Sean P. Washchuk
Senior Vice President and
Chief Financial Officer
CCL Industries Inc. 2011 Annual Report 91
CCL_AR11_back_to_film.qxd:layout 3/15/12 11:31 AM Page 2
2 0 1 1 B O A R D O F D I R E C T O R S
George V. Bayly
Director since 2010
Corporate Director
Illinois, U.S.A.
Paul J. Block
Director since 1997
Chairman and CEO,
Proteus Capital Associates
New York, U.S.A.
Jon K. Grant*
Director since 1994
Corporate Director
Ontario, Canada
Edward E. Guillet
Director since 2008
Independent Human Resources
Consultant
California, U.S.A.
Donald G. Lang
Director since 1991
Executive Chairman,
CCL Industries Inc.
Ontario, Canada
Alan D. Horn
Director since 2008
President and CEO,
Rogers Telecommunications
Limited and Chairman,
Rogers Communications Inc.
Ontario, Canada
Stuart W. Lang
Director since 1991
Head Football Coach for
Guelph University
Ontario, Canada
Geoffrey T. Martin
Director since 2005
President and CEO,
CCL Industries Inc.
Massachusetts, U.S.A.
* After more than 17 years as a Director, Mr. Grant has decided to retire
and will not stand for re-election in May 2012.
Douglas W. Muzyka
Director since 2006
Chief Science and Technology
Officer, E.I. DuPont de Nemours
Pennsylvania, U.S.A.
Thomas C. Peddie
Director since 2003
Executive Vice President and
CFO, Corus Entertainment Inc.
Ontario, Canada
S H A R E H O L D E R S ’ I N F O R M AT I O N
Auditors
KPMG LLP
Chartered Accountants
Legal Counsel
McMillan LLP
Transfer Agent
CIBC Mellon Trust Company
c/o Canadian Stock Transfer Company Inc.
P.O. Box 700
Postal Station B
Montreal, QC H3B 3K3
E-mail:
AnswerLine: (416) 682-3860 or
inquiries@canstockta.com
Fax:
Website:
(800) 387-0825
(888) 249-6189
www.canstockta.com
Financial Information
Institutional investors, analysts and registered representatives
requiring additional information may contact:
Sean Washchuk
Senior Vice President and CFO
(416) 756-8526
Additional copies of this report can be obtained from:
CCL Industries Inc.
Investor Relations Department
105 Gordon Baker Road
Suite 500
Toronto, ON M2H 3P8
(416) 756-8500
Tel:
Fax:
(416) 756-8555
E-mail: ccl@cclind.com
Website: www.cclind.com
92 CCL Industries Inc. 2011 Annual Report
Annual Meeting of Shareholders
The Annual Meeting of Shareholders
will be held on May 3, 2012, at 2:00 p.m.
CCL Industries Inc.
105 Gordon Baker Road
5th Floor
Toronto, ON M2H 3P8
Class B Share Information
Stock Symbol CCL.B
Listed TSX
Opening price 2011
Closing price 2011
Number of trades
Trading volume (shares)
Trading value
Annual dividends declared
$
$
$
$
30.65
31.31
22,631
5,532,793
171,653,883.57
0.70
Shares Outstanding at December 31, 2011
Class A
Class B
2,374,025
31,315,371
There are two classes of CCL shares. Class A shares are voting and
Class B shares are non-voting. Share attributes of both classes are
listed on page 66 of this report.
This report is printed on recyclable, acid-free and chlorine-free paper.
Printed in Canada.
CCL’S CORPORATE
SOCIAL RESPONSIBILITY
CCL EMPLOYS 6,400 PEOPLE AROUND THE WORLD IN 69 PRODUCTION FACILITIES IN 23 DIFFERENT
COUNTRIES ON 6 CONTINENTS. (cid:22)-(cid:5)(cid:18) (cid:15).*-(cid:5) (cid:25)(cid:5)/(cid:15)-0 -(cid:5)0(cid:5)(cid:22)(cid:25)(cid:15)1(cid:30)20/-(cid:5)-3*.(cid:15)(cid:25)3(cid:26)-3 (cid:5) (cid:28)0 (cid:5)(cid:22).22(cid:5)3(cid:25) (cid:5)
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=(cid:12)(cid:8),(cid:7)(cid:10)(cid:5)9(cid:7)(cid:7)(cid:21)<(cid:8)(cid:20)(cid:10)(cid:21)(cid:5)(cid:7)9(cid:5)//2B+(cid:5)<(cid:8)(cid:7)(cid:9)(cid:19)=(cid:21)+(cid:5)(cid:12)(cid:10)(cid:9)(cid:5)+(cid:14)(cid:8)A(cid:20)=(cid:14)+(cid:16)(cid:5)(cid:22)(cid:14)(cid:5)9(cid:7)=(cid:19)+(cid:5)
(cid:7)(cid:10)(cid:5)(cid:21):(cid:14)(cid:5)(cid:10)(cid:14)(cid:14)(cid:9)+(cid:5)(cid:7)9(cid:5)(cid:7)(cid:19)(cid:8)(cid:5)=(cid:19)+(cid:21)(cid:7)>(cid:14)(cid:8)+(cid:5)(cid:12)(cid:10)(cid:9)(cid:5)<(cid:12)(cid:8)(cid:21)(cid:10)(cid:14)(cid:8)(cid:5)(cid:24)(cid:20)(cid:21):(cid:5)(cid:21):(cid:14)>(cid:5)
(cid:21)(cid:7)(cid:5)(cid:21)(cid:19)(cid:8)(cid:10)(cid:5)(cid:20)(cid:10)(cid:10)(cid:7)A(cid:12)(cid:21)(cid:20)A(cid:14)(cid:5)=(cid:7)(cid:10)=(cid:14)<(cid:21)+(cid:5)(cid:20)(cid:10)(cid:21)(cid:7)(cid:5)<(cid:8)(cid:7)(cid:9)(cid:19)=(cid:21)+(cid:5)(cid:21):(cid:12)(cid:21)(cid:5)>(cid:12)(cid:13)(cid:14)(cid:5)(cid:12)(cid:5)
(cid:9)(cid:20)99(cid:14)(cid:8)(cid:14)(cid:10)=(cid:14)(cid:16)(cid:5) (cid:7)(cid:5)(cid:12)++(cid:20)+(cid:21)(cid:5)(cid:26)(cid:20)(cid:21)+(cid:19),(cid:20)+:(cid:20)(cid:5)(cid:24)(cid:20)(cid:21):(cid:5)(cid:20)(cid:21)+(cid:5)(cid:8)(cid:14)=;=(cid:23)(cid:14)(cid:9)(cid:5)=(cid:7)(cid:10)(cid:21)(cid:14)(cid:10)(cid:21)(cid:5)
<(cid:8)(cid:7)?(cid:8)(cid:12)>(cid:5)9(cid:7)(cid:8)(cid:5)(cid:23)(cid:12),(cid:14)(cid:23)(cid:5)(cid:23)(cid:20)(cid:10)(cid:14)(cid:8)(cid:17)(cid:5)=(cid:19)+(cid:21)(cid:7)>(cid:14)(cid:8)+(cid:5):(cid:12)A(cid:14)(cid:5)(cid:12)(cid:5)+(cid:19)<<(cid:23);(cid:5)=:(cid:12)(cid:20)(cid:10)(cid:5)
<(cid:8)(cid:7)?(cid:8)(cid:12)>(cid:5)(cid:24)(cid:20)(cid:21):(cid:5)//2(cid:5)2(cid:12),(cid:14)(cid:23)(cid:5)(cid:21):(cid:12)(cid:21)(cid:5)(cid:20)(cid:10)=(cid:23)(cid:19)(cid:9)(cid:14)+(cid:5)=(cid:7)(cid:23)(cid:23)(cid:14)=(cid:21)(cid:20)(cid:10)?(cid:5)(cid:23)(cid:20)(cid:10)(cid:14)(cid:8)+(cid:5)
9(cid:8)(cid:7)>(cid:5)(cid:23)(cid:12),(cid:14)(cid:23)+(cid:5)(cid:12)(cid:10)(cid:9)(cid:5)(cid:8)(cid:14)(cid:21)(cid:19)(cid:8)(cid:10)(cid:20)(cid:10)?(cid:5)(cid:21):(cid:14)>(cid:5)(cid:21)(cid:7)(cid:5)//2(cid:5)9(cid:7)(cid:8)(cid:5)(cid:8)(cid:14)<(cid:8)(cid:7)=(cid:14)++(cid:20)(cid:10)?(cid:5)
(cid:12)(cid:10)(cid:9)(cid:5)(cid:8)(cid:14)(cid:19)+(cid:14)(cid:16)(cid:5)(cid:22)(cid:14)(cid:5):(cid:12)A(cid:14)(cid:5)(cid:12)(cid:23)+(cid:7)(cid:5)(cid:9)(cid:14)A(cid:14)(cid:23)(cid:7)<(cid:14)(cid:9)(cid:5)(cid:15)(cid:14)3(cid:14)(cid:24)(cid:17)(cid:5)(cid:12)(cid:5)<(cid:8)(cid:14)++(cid:19)(cid:8)(cid:14)(cid:5)
+(cid:14)(cid:10)+(cid:20)(cid:21)(cid:20)A(cid:14)(cid:5)(cid:23)(cid:12),(cid:14)(cid:23)(cid:5)+(cid:21)(cid:7)=(cid:13)(cid:5)>(cid:12)(cid:9)(cid:14)(cid:5)(cid:24)(cid:20)(cid:21):(cid:5)#(cid:3)D(cid:5)(cid:8)(cid:14)=;=(cid:23)(cid:14)(cid:9)(cid:5)=(cid:7)(cid:10)(cid:21)(cid:14)(cid:10)(cid:21)(cid:5)
(cid:12)(cid:10)(cid:9)(cid:5)(cid:12)(cid:5)(cid:21)(cid:19),(cid:14)(cid:5)(cid:21):(cid:12)(cid:21)(cid:5)(cid:19)+(cid:14)+(cid:5)&(cid:3)D(cid:5)<(cid:7)+(cid:21)(cid:5)=(cid:7)(cid:10)+(cid:19)>(cid:14)(cid:8)(cid:5)(cid:8)(cid:14)+(cid:20)(cid:10)(cid:16)(cid:5)
(cid:22)(cid:14)(cid:5)+(cid:19)<<(cid:7)(cid:8)(cid:21)(cid:5)(cid:7)(cid:19)(cid:8)(cid:5)(cid:14)><(cid:23)(cid:7);(cid:14)(cid:14)+B(cid:5)<(cid:12)++(cid:20)(cid:7)(cid:10)(cid:5)(cid:21)(cid:7)(cid:5)>(cid:12)(cid:13)(cid:14)(cid:5)//2(cid:5)(cid:21):(cid:14)(cid:5)
,(cid:14)+(cid:21)(cid:5)(cid:20)(cid:21)(cid:5)=(cid:12)(cid:10)(cid:5),(cid:14)(cid:5)(cid:12)(cid:10)(cid:9)(cid:5)(cid:21)(cid:7)(cid:5)(cid:20)><(cid:8)(cid:7)A(cid:14)(cid:5)(cid:21):(cid:14)(cid:5)=(cid:7)>>(cid:19)(cid:10)(cid:20)(cid:21)(cid:20)(cid:14)+(cid:5)(cid:20)(cid:10)(cid:5)(cid:24):(cid:20)=:(cid:5)
(cid:24)(cid:14)(cid:5)(cid:9)(cid:7)(cid:5),(cid:19)+(cid:20)(cid:10)(cid:14)++(cid:16)(cid:5)(cid:18)(cid:20)(cid:10)=(cid:14)(cid:5)(cid:27)(cid:3)(cid:3)(cid:3)(cid:5)(cid:24)(cid:14)(cid:5):(cid:12)A(cid:14)(cid:5),(cid:14)(cid:14)(cid:10)(cid:5)(cid:12)(cid:24)(cid:12)(cid:8)(cid:9)(cid:20)(cid:10)?(cid:5)
@A(cid:14)(cid:5)+=:(cid:7)(cid:23)(cid:12)(cid:8)+:(cid:20)<+(cid:5)(cid:14)(cid:12)=:(cid:5);(cid:14)(cid:12)(cid:8)(cid:5)(cid:21)(cid:7)(cid:5)(cid:21):(cid:14)(cid:5)=:(cid:20)(cid:23)(cid:9)(cid:8)(cid:14)(cid:10)(cid:5)(cid:7)9(cid:5)(cid:7)(cid:19)(cid:8)(cid:5)
(cid:14)><(cid:23)(cid:7);(cid:14)(cid:14)+(cid:5)(cid:21)(cid:7)(cid:5)(cid:12)++(cid:20)+(cid:21)(cid:5)(cid:21):(cid:14)>(cid:5)(cid:20)(cid:10)(cid:5)(cid:12)=:(cid:20)(cid:14)A(cid:20)(cid:10)?(cid:5)(cid:21):(cid:14)(cid:20)(cid:8)(cid:5)?(cid:7)(cid:12)(cid:23)+(cid:5)9(cid:7)(cid:8)(cid:5)
:(cid:20)?:(cid:14)(cid:8)(cid:5)(cid:14)(cid:9)(cid:19)=(cid:12)(cid:21)(cid:20)(cid:7)(cid:10)(cid:16)(cid:5)(cid:22)(cid:14)(cid:5):(cid:12)A(cid:14)(cid:5)(cid:12)(cid:24)(cid:12)(cid:8)(cid:9)(cid:14)(cid:9)(cid:5)(cid:4)&(cid:5)+=:(cid:7)(cid:23)(cid:12)(cid:8)+:(cid:20)<+(cid:5)
(cid:21)(cid:7)(cid:21)(cid:12)(cid:23)(cid:23)(cid:20)(cid:10)?(cid:5)(cid:12)(cid:23)>(cid:7)+(cid:21)(cid:5)E(cid:4)(cid:3)(cid:3)(cid:17)(cid:3)(cid:3)(cid:3)(cid:5)(cid:7)A(cid:14)(cid:8)(cid:5)(cid:21):(cid:14)(cid:5)<(cid:12)+(cid:21)(cid:5)(cid:2)(cid:27)(cid:5);(cid:14)(cid:12)(cid:8)+(cid:16)(cid:5)(cid:5)
//2(cid:5)+(cid:19)<<(cid:7)(cid:8)(cid:21)+(cid:5)(cid:21):(cid:14)(cid:5)=(cid:7)>>(cid:19)(cid:10)(cid:20)(cid:21)(cid:20)(cid:14)+(cid:5)(cid:20)(cid:10)(cid:5)(cid:24):(cid:20)=:(cid:5)(cid:24)(cid:14)(cid:5)(cid:7)<(cid:14)(cid:8)(cid:12)(cid:21)(cid:14)(cid:5)(cid:12)(cid:10)(cid:9)(cid:5)
(cid:14)(cid:10)=(cid:7)(cid:19)(cid:8)(cid:12)?(cid:14)+(cid:5)(cid:14)><(cid:23)(cid:7);(cid:14)(cid:14)+(cid:5)(cid:12)(cid:8)(cid:7)(cid:19)(cid:10)(cid:9)(cid:5)(cid:21):(cid:14)(cid:5)(cid:24)(cid:7)(cid:8)(cid:23)(cid:9)(cid:5)(cid:21)(cid:7)(cid:5)<(cid:12)(cid:8)(cid:21)(cid:20)=(cid:20)<(cid:12)(cid:21)(cid:14)(cid:5)
(cid:20)(cid:10)(cid:5)>(cid:12)(cid:13)(cid:20)(cid:10)?(cid:5)(cid:21):(cid:14)(cid:20)(cid:8)(cid:5)=(cid:7)>>(cid:19)(cid:10)(cid:20)(cid:21);(cid:5)(cid:12)(cid:5),(cid:14)(cid:21)(cid:21)(cid:14)(cid:8)(cid:5)<(cid:23)(cid:12)=(cid:14)(cid:16)(cid:5).(cid:10)(cid:5)(cid:27)(cid:3)(cid:2)(cid:2)(cid:5)(cid:7)(cid:19)(cid:8)(cid:5)
(cid:14)><(cid:23)(cid:7);(cid:14)(cid:14)+(cid:5)(cid:8)(cid:14)+<(cid:7)(cid:10)(cid:9)(cid:14)(cid:9)(cid:5)(cid:24)(cid:20)(cid:21):(cid:5)(cid:20)(cid:10)=(cid:8)(cid:14)(cid:9)(cid:20),(cid:23)(cid:14)(cid:5)?(cid:14)(cid:10)(cid:14)(cid:8)(cid:7)+(cid:20)(cid:21);(cid:5),;(cid:5)=(cid:7)>(cid:20)(cid:10)?(cid:5)
(cid:21)(cid:7)(cid:5)(cid:21):(cid:14)(cid:5)(cid:12)(cid:20)(cid:9)(cid:5)(cid:7)9(cid:5)(cid:21):(cid:14)(cid:5)A(cid:20)=(cid:21)(cid:20)>+(cid:5)(cid:7)9(cid:5)(cid:21):(cid:14)(cid:5)F(cid:12)<(cid:12)(cid:10)(cid:5)(cid:14)(cid:12)(cid:8)(cid:21):C(cid:19)(cid:12)(cid:13)(cid:14)(cid:5),;(cid:5)
(cid:9)(cid:7)(cid:10)(cid:12)(cid:21)(cid:20)(cid:10)?(cid:5)E(cid:4)(cid:3)(cid:17)(cid:3)(cid:3)(cid:3)(cid:5)(cid:21)(cid:7)(cid:5)(cid:23)(cid:7)=(cid:12)(cid:23)(cid:5)(cid:15)(cid:14)(cid:9)(cid:5)/(cid:8)(cid:7)++(cid:5)(cid:12)?(cid:14)(cid:10)=(cid:20)(cid:14)+(cid:5)(cid:12)=(cid:8)(cid:7)++(cid:5)(cid:21):(cid:14)(cid:5)
?(cid:23)(cid:7),(cid:14)(cid:16)(cid:5) :(cid:14)(cid:5)/(cid:7)><(cid:12)(cid:10);(cid:5)>(cid:12)(cid:21)=:(cid:14)(cid:9)(cid:5)(cid:21):(cid:14)(cid:5)(cid:14)><(cid:23)(cid:7);(cid:14)(cid:14)+B(cid:5)(cid:9)(cid:7)(cid:10)(cid:12)(cid:21)(cid:20)(cid:7)(cid:10)+(cid:5)
(cid:9)(cid:7)(cid:23)(cid:23)(cid:12)(cid:8)(cid:5)9(cid:7)(cid:8)(cid:5)(cid:9)(cid:7)(cid:23)(cid:23)(cid:12)(cid:8)(cid:17)(cid:5)<(cid:8)(cid:7)A(cid:20)(cid:9)(cid:20)(cid:10)?(cid:5)(cid:12)(cid:5)(cid:21)(cid:7)(cid:21)(cid:12)(cid:23)(cid:5)(cid:9)(cid:7)(cid:10)(cid:12)(cid:21)(cid:20)(cid:7)(cid:10)(cid:5)(cid:7)9(cid:5)E(cid:2)(cid:3)(cid:3)(cid:17)(cid:3)(cid:3)(cid:3)(cid:16)
CCL Industries Inc.
(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:9)(cid:7)(cid:10)(cid:5)(cid:11)(cid:12)(cid:13)(cid:14)(cid:8)(cid:5)(cid:15)(cid:9)(cid:16)(cid:17)(cid:5)(cid:18)(cid:19)(cid:20)(cid:21)(cid:14)(cid:5)(cid:4)(cid:3)(cid:3)
(cid:22)(cid:20)(cid:23)(cid:23)(cid:7)(cid:24)(cid:9)(cid:12)(cid:23)(cid:14)(cid:17)(cid:5)(cid:25)(cid:10)(cid:21)(cid:12)(cid:8)(cid:20)(cid:7)(cid:5)(cid:5)(cid:26)(cid:27)(cid:28)(cid:5)(cid:29)(cid:30)(cid:31)
(cid:14)(cid:23)!(cid:5) "#(cid:2)$%(cid:5)&(cid:4)$’(cid:31)(cid:4)(cid:3)(cid:3)
((cid:12))!(cid:5) "#(cid:2)$%(cid:5)&(cid:4)$’(cid:31)(cid:4)(cid:4)(cid:4)
*(cid:20)+(cid:20)(cid:21)(cid:5)(cid:7)(cid:19)(cid:8)(cid:5)(cid:24)(cid:14),+(cid:20)(cid:21)(cid:14)(cid:5)(cid:12)(cid:21)(cid:5)
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