## 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. 

