BALA CYNWYD, Pa., Aug. 4 /PRNewswire-FirstCall/ -- Central European
Distribution Corporation (Nasdaq: CEDC) today announced its results for the
second quarter of 2008. Net sales for the three months ended June 30, 2008
increased by 57% to $421.3 million from the $268.6 million reported for the
same period in 2007. Operating income increased by 70% to $42.8 million from
$25.1 million for the same period in 2007.
On a comparable basis, CEDC announced net income of $24.3 million, or
$0.56 per fully diluted share, for the second quarter of 2008, as compared to
$13.7 million, or $0.34 per fully diluted share, for the same period in 2007.
Net income, on a U.S. GAAP basis (as hereinafter defined) for the second
quarter was $46.8 million or $1.08 per fully diluted share, as compared to a
net income of $19.9 million or $0.49 per fully diluted share, for the same
period in 2007. Generally, the major difference between the U.S. GAAP net
income and comparable non-GAAP net income reflects unrealized foreign exchange
movements relating to our Senior Note Financing. For a reconciliation of
comparable net income to net income reported under United States Generally
Accepted Accounting Principles ('GAAP'), please see the section 'Unaudited
Reconciliation of Non-GAAP Measures'. The weighted average number of shares
used for calculating diluted earnings per share for the second quarter of 2008
was 43.3 million.
Some of the Company's key financial highlights for the second quarter of
2008 as compared to the second quarter of 2007 include the following:
-- Sales up 57 %
-- Gross margin up to 24.6% from 20.7%
-- Operating income up 70%
-- Comparable net income up 77%
William Carey, President and CEO commented, 'With the first full quarter
of consolidation of our Parliament business and approximately one month of
earnings from our Whitehall operations we are pleased to see continuing strong
underlying growth trends in our overall business. The margin accretion from
these Russian investments, as well the approximately 25% increase in sales,
are having a significant impact on our operating performance as evidenced by
our gross margin increase from 20.7% to 24.6% and strong net income
performance. '
Mr. Carey continued, 'We continue to see double digit growth coming from
our key vodka brands in Poland, led by strong performance from our premium
vodka brand Bols. We also continue to see strong consumer demand for imported
wines and spirits with sales of our import portfolio up over 40% as compared
to the second quarter last year. The strong Polish currency has contributed to
keeping our raw material prices down, especially our main cost component, raw
spirit.'
Mr. Carey went on to say, 'On July 9th 2008, we closed our 42% investment
in the Russian Alcohol Group (the largest vodka producer in Russia) which has
positioned our company to take full advantage of the strong growth trends in
the mainstream and sub-premium vodka sectors in Russia. We look forward to
working with Lion Capital to improve the operating performance of the Russian
Alcohol Group and to address potential synergies between our operations.'
Mr. Carey concluded, 'As a result of our strong second quarter
performance, we are raising our full year 2008 net sales guidance from
$1.57-$1.70 billion to $1.65-$1.80 billion and our full year comparable fully
diluted earnings per share guidance from $2.65-$2.80 to $2.75-$2.95. We plan
to update our full year 2009 guidance in the fall of this year, based on the
ongoing performance of our business.'
CEDC has reported net income and fully diluted net income per share in
accordance with GAAP and on a non-GAAP basis, referred to in this release as
comparable non-GAAP net income. CEDC's management believes that the non-GAAP
reporting giving effect to the adjustments shown in the attached
reconciliation provides meaningful information and an alternative presentation
useful to investors' understanding of CEDC's core operating results and
trends. CEDC discusses results and guidance on a comparable basis in order to
give investors better insight into underlying business trends from continuing
operations. CEDC's calculation of these measures may not be the same as
similarly named measures presented by other companies. These measures are not
presented as an alternative to net income computed in accordance with GAAP as
a performance measure, and you should not place undue reliance on such
measures. A reconciliation of GAAP to non-GAAP measures can be found in the
section 'Unaudited Reconciliation of Non-GAAP Measures' at the end of this
press release.
CEDC is the largest vodka producer in Poland and produces the Absolwent,
Zubrowka, Bols and Soplica brands, among others. CEDC currently exports
Zubrowka to many markets around the world, including the United States,
England, France and Japan. CEDC also produces and distributes Royal Vodka, the
top selling vodka in Hungary, and produces Parliament Vodka, the leading
premium vodka in Russia.
CEDC also is the leading national distributor of alcoholic beverages in
Poland by value, and a leading importer of alcoholic beverages in Poland and
Hungary. In Poland, CEDC imports many of the world's leading brands, including
brands such as Carlo Rossi Wines, Concha y Toro wines, Metaxa Brandy, Remy
Martin Cognac, Guinness, Sutter Home wines, Grant's Whisky, Jagermeister, E&J
Gallo, Jim Beam Bourbon, Sierra Tequila, Teacher's Whisky, Campari, Cinzano,
Skyy Vodka and Old Smuggler.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements involve known and unknown risks and uncertainties that may cause
the actual results, performance or achievements of CEDC to be materially
different from any future results, performance or achievements expressed or
implied by forward-looking statements. Investors are cautioned that forward-
looking statements are not guarantees of future performance and that undue
reliance should not be placed on such statements. CEDC undertakes no
obligation to publicly update or revise any forward-looking statements or to
make any other forward-looking statements, whether as a result of new
information, future events or otherwise, unless required to do so by the
securities laws. Investors are referred to the full discussion of risks and
uncertainties included in CEDC's Form 10-K for the fiscal year ended December
31, 2007, and in other documents filed by CEDC with the Securities and
Exchange Commission.
Contact:
Jim Archbold,
Investor Relations Officer
Central European Distribution Corporation
610-660-7817
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
June 30, December 31,
2008 2007
ASSETS
Current Assets
Cash and cash equivalents $365,182 $87,867
Accounts receivable, net of allowance for
doubtful accounts of $31,814 and $29,277
respectively 325,934 316,277
Inventories 210,994 141,272
Prepaid expenses and other current assets 29,723 16,536
Deferred income taxes 8,349 5,141
Total Current Assets 940,182 567,093
Intangible assets, net 772,982 545,697
Goodwill, net 1,026,191 577,282
Property, plant and equipment, net 121,022 79,979
Deferred income taxes 8,449 11,407
Equity method investment in affiliates 53,534 -
Other assets - 710
1,982,178 1,215,075
Total Assets
$2,922,360 $1,782,168
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $208,997 $172,340
Bank loans and overdraft facilities 226,917 42,785
Income taxes payable 6,688 5,408
Taxes other than income taxes 91,193 101,929
Other accrued liabilities 189,213 71,959
Current portions of obligations under capital
leases 2,254 1,759
Total Current Liabilities 725,262 396,180
Long-term debt, less current maturities 30,168 122,952
Long-term obligations under capital leases 3,648 2,708
Long-term obligations under Senior Notes 655,889 344,298
Other long-term accrued liabilities 15,000 -
Deferred income taxes 163,852 100,113
Total Long Term Liabilities 868,557 570,071
Minority interests 12,614 481
Stockholders' Equity
Common Stock ($0.01 par value, 80,000,000 shares
authorized, 46,443,700 and 40,566,096 shares
issued at June 30, 2008 and December 31, 2007,
respectively) 464 406
Additional paid-in-capital 752,620 429,554
Retained earnings 270,525 205,186
Accumulated other comprehensive income 292,468 180,440
Less Treasury Stock at cost (246,037 shares at
June 30, 2008 and December 31, 2007) (150) (150)
Total Stockholders' Equity 1,315,927 815,436
Total Liabilities and Stockholders' Equity $2,922,360 $1,782,168
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(Amount in columns expressed in thousands, except share and per share
information)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
Sales $542,845 $334,150 $950,926 $623,146
Excise taxes (121,543) (65,515) (216,004) (126,296)
Net Sales 421,302 268,635 734,922 496,850
Cost of goods sold 317,564 213,081 564,968 394,978
Gross Profit 103,738 55,554 169,954 101,872
Operating expenses 60,895 30,405 101,643 57,807
Operating Income 42,843 25,149 68,311 44,065
Non operating income/
(expense), net
Interest(expense), net (13,297) (8,305) (24,825) (16,954)
Other financial income/
(expense), net 32,000 9,837 41,103 (5,562)
Other non operating
income/(expense), net (282) (1,670) (142) (2,014)
Income before taxes 61,264 25,011 84,447 19,535
Income tax expense 12,868 4,714 17,266 3,685
Minority interests 2,491 326 2,744 1,055
Equity in net earnings of
affiliate 902 - 902 -
Net income $46,807 $19,971 $65,339 $14,795
Net income per share of
common stock, basic $1.10 $0.50 $1.57 $0.37
Net income per share of
common stock, diluted $1.08 $0.49 $1.54 $0.37
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW (UNAUDITED)
Amount in columns expressed in thousands)
Six months ended
June 30,
2008 2007
Operating Activities
Net income $65,339 $14,795
Adjustments to reconcile net income to net cash
provided by /
(used in) operating activities:
Depreciation and amortization 7,331 4,772
Deferred income taxes 1,576 (6,245)
Minority interests 2,743 1,055
Unrealized foreign exchange (gains) / losses (39,958) (6,172)
Cost of debt extinguishment 1,156 11,869
Stock options expense 1,678 948
Equity income (902) -
Other non cash items (32) 566
Changes in operating assets and liabilities:
Accounts receivable 59,431 50,722
Inventories (21,533) 2,315
Prepayments and other current assets 14,211 1,579
Trade accounts payable (11,628) (48,361)
Other accrued liabilities and payables (29,258) (7,798)
Net Cash provided by Operating Activities 50,154 20,045
Investing Activities
Investment in fixed assets (6,172) (13,967)
Proceeds from the disposal of fixed assets 2,694 2,647
Refundable purchase price related to Botapol
acquisition - 5,000
Acquisitions of subsidiaries, net of cash acquired (366,075) (133,992)
Net Cash used in Investing Activities (369,553) (140,312)
Financing Activities
Borrowings on bank loans and overdraft facility 71,593 132,524
Payment of bank loans and overdraft facility (24,158) (17,315)
Payment of Senior Secured Notes (14,445) (95,440)
Movements in capital leases payable 816 291
Issuance of shares in public placement 233,846 42,355
Net Borrowings on Convertible Senior Notes 304,403 -
Options exercised 1,068 547
Net Cash provided by Financing Activities 573,123 62,961
Currency effect on brought forward cash balances 23,591 2,939
Net Increase / (Decrease) in Cash 277,315 (54,367)
Cash and cash equivalents at beginning of period 87,867 159,362
Cash and cash equivalents at end of period $365,182 $104,995
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except share and per share information)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
GAAP net income/(loss) $46,807 $19,971 $65,339 $14,795
A. Foreign exchange impact
related to outstanding
Senior Notes (25,145) (7,772) (32,366) (5,047)
B. Other acquisition related
costs 390 762 659 1,045
C. Cost associated with early
retirement of debt 548 9,609
D. Impact of expensing stock
options 738 392 1,358 752
E. Other non recurring costs 1,461 307 1,461 307
Comparable non-GAAP net income $24,251 $13,660 $36,999 $21,461
Comparable net income per share
of common stock, basic $0.57 $0.34 $0.89 $0.41
Comparable net income per share
of common stock, diluted $0.56 $0.34 $0.87 $0.40
Comparable measures are provided as additional information as management
believes this information provides investors with better insight on underlying
business trends and results in order to evaluate ongoing financial
performance. Descriptions of these items are presented below:
A. Represents the net after tax impact of the foreign currency revaluation
related to our Senior Secured Notes and Senior Convertible Notes as these
borrowings have been pushed down to entities that have the Polish Zloty as the
functional currency. The impact of foreign exchange revaluation will change,
which may have a material effect on our financial results.
B. Represents other miscellaneous costs, directly related to the tender
for additional shares of Polmos Bialystok and other acquisitions in 2007 and
pre-acquisition financing costs related to the Parliament acquisition in 2008.
C. Represents the net after tax impact associated with the early
retirement of 20% of CEDC's outstanding Senior Secured Notes, including an 8%
one-time redemption premium payment to the Noteholders and write-off of
prepaid financing costs in 2007 and costs associated with retirement of $14
million of the Senior Secured Notes in 2008.
D. On January 1, 2006 CEDC adopted SFAS 123(R) and began to expense stock
options. This amount represents the net after tax impact of the expensing of
stock options.
E. On June 30, 2008, CEDC terminated operations of the German import
business acquired as part of the Parliament acquisition and in July 2008,
moved all German import operations to a 3rd party importer. The $1.461 million
represents the net loss incurred by the discontinued operation for the 3
months ended June 30, 2008. For 2007, the amount represents one time charges
for an early retirement program.
Full Year Guidance, 12 Months Ending December 31, 2008 2009
Range for GAAP Fully Diluted Earnings per Share $3.42 $3.68
$3.62 $3.93
A. Foreign exchange impact related to outstanding
Senior Notes (0.76) 0.00
B. Other acquisition related costs 0.02 0.00
C. Cost associated with early retirement of debt 0.01 0.00
D. Impact of expensing stock options 0.03 0.07
E. Other non-recurring items 0.03
Range for Comparable non-GAAP Fully Diluted Earnings
per Share $2.75 $3.75
$2.95 $4.00
Comparable measures are provided as additional information as management
believes this information provides investors with better insight on underlying
business trends and results in order to evaluate ongoing financial
performance. Descriptions of these items are presented below:
A. Represents the net after tax impact of the foreign currency revaluation
related to our Senior Secured Notes and Senior Convertible Notes as these
borrowings have been pushed down to entities that have the Polish Zloty as the
functional currency. The impact of foreign exchange revaluation will change,
which may have a material effect on our financial results.
B. Represents pre-acquisition financing costs related to the Parliament
acquisition in 2008.
C. Represents the net after tax costs associated with retirement of $14
million of the Senior Secured Notes in 2008.
D. On January 1, 2006 CEDC adopted SFAS 123(R) and began to expense stock
options. This amount represents the net after tax impact of the expensing of
stock options.
E. On June 30, 2008, CEDC terminated operations of the German import
business acquired as part of the Parliament acquisition and in July 2008,
moved all German import operations to a 3rd party importer. The $1.461 million
represents the net loss incurred by the discontinued operation for the 3
months ended June 30, 2008.
SOURCE Central European Distribution Corporation
