Nov. 3, 2009 (PR Newswire) --
BALA CYNWYD, Pa., Nov. 3 /PRNewswire-FirstCall/ -- Central European Distribution Corporation (Nasdaq: CEDC) today announced its results for the third quarter of 2009. Net Sales for the three months ended September 30, 2009 were $390.1 million as compared to $452.4 million reported for the same period in 2008, which represents a decline of 14% driven primarily by the 35% average devaluation of our primary functional currencies as well as the effects of consolidation of the Russian Alcohol Group in 2009.
CEDC announced net income on a U.S. GAAP basis (as hereinafter defined) for the quarter was $47.1 million or $0.80 per fully diluted share, as compared to net loss of $0.73 million or $0.02 per fully diluted share, for the same period in 2008. On a comparable basis, CEDC announced net income of $27.15 million, or $0.49 per fully diluted share, for the third quarter of 2009, as compared to $40.52 million, or $0.88 per fully diluted share, for the same period in 2008, which represents a 33% decline in net income for the period driven primarily by the 35% average devaluation of our primary functional currencies described above. As a result of the renegotiated agreements between CEDC and Lion Capital concluded in April 2009 for the staged acquisition of the equity tranches in RAG held by Lion Capital, these results include the consolidation beginning in the second quarter of 2009 of the Russian Alcohol Group, which was previously accounted for as an equity investment. The major difference between the U.S. GAAP net income and comparable non- GAAP net income reflects unrealized foreign exchange movements relating to our foreign currency denominated financing, which are more fully described below under the heading "Unaudited Reconciliation of Non-GAAP Measures" and a one-time net gain on the revaluation of our initial equity investment in the Russian Alcohol Group realized in connection with the initial consolidation of the Russian Alcohol Group financials in the second quarter of 2009. The weighted average number of shares used for calculating diluted earnings per share on a comparable basis for the third quarter of 2009 was 55.5 million, whereas for U.S. GAAP purposes the weighted average number of shares was 58.8 million, with the difference due to 3.3 million shares not yet issued, but to be issued in the future, as part of the agreement with Lion Capital referred to above. For a reconciliation of comparable net income to net income reported under United States Generally Accepted Accounting Principles ("U.S. GAAP"), please see the section "Unaudited Reconciliation of Non-GAAP Measures".
William Carey, President and CEO commented, "Our primary objective for this year has been to improve margins, streamline costs, grow market share and generate strong cash flow while operating in a soft consumer environment. We feel we continue to execute on these objectives as well as positioning the Company with our recent acquisitions of the minority ownership in our Parliament business and a portion of the minority ownership of the Russian Alcohol Group, for stronger top line growth and substantial synergies to begin early next year."
Mr. Carey continued, "The company has continued its strategic portfolio reduction of low value/margin products in its distribution business in Poland which should be completed by the fourth quarter of 2009. The company is continuing to focus its core strategy on higher margin owned and imported lines and we believe that as the consumer demand starts to rebound the company should be well positioned with its overall strategy and superior product line to benefit from this top line expansion of its higher margin business."
Mr. Carey continued, "Our cost cutting initiatives, which will be continuing through the end of the year 2009 as well as the continued low spirit pricing in our markets are contributing to enhanced margins in our business with gross margins to reach 36%-37% and operating margins to reach 17.5%-18.5% in the fourth quarter of 2009."
Mr. Carey also said, "As we move into the fourth quarter of 2009, we have launched two new lower mainstream vodkas in Russian where our current product portfolio does not address. We believe that the middle class will continue to evolve in Russia over the next three to five years which should drive the growth of the mainstream and sub-premium sectors in Russia where we currently are market leaders. Our export and import portfolios continue to show strong growth over third quarter 2008 even in the face of market softness and we believe we are well positioned to accelerate top line growth as regional and global consumer demand picks up."
The Company reconfirms its full year 2009 net sales guidance of $1.58 - $1.70 billion and its full year comparable fully-diluted earnings per share guidance of $2.35 - $2.50. The Company also reconfirms its full year 2010 net sales guidance of $1.80-$2.00 billion and its full year comparable fully-diluted earnings per share guidance of $3.00-$3.15.
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 sub-premium vodka in Russia. CEDC also has an equity stake in the Russian Alcohol Group which produces Green Mark, the number one selling vodka in Russia along with Zhuravli, another top-selling sub-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. CEDC is also a leading importer of premium spirits and wines in Russia with such brands as Hennessey, Moet & Chandon and Concha y Toro, among others.
This press release contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements regarding expected sales and earnings guidance, expected gross margins and operating margins, expectations of increased consumer demand for our products, cost reduction and working capital initiatives, our planned buy-outs of the minority interest in Parliament, our ability to complete and fund our acquisition of Russian Alcohol, and expected results of, and synergies relating to, our Russian businesses. Forward looking statements are based on our knowledge of facts as of the date hereof and 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 our forward looking statements.
Investors are cautioned that forward looking statements are not guarantees of future performance, developments after the date hereof may have a material effect on any forward-looking statements we make and, accordingly, 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 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, 2008, including statements made under the captions "Item 1A. Risks Relating to Our Business" and in other documents filed by CEDC with the Securities and Exchange Commission as well as risks arising from current credit market and economic conditions globally and in the markets in which we operate.
Contact:
In the U.S.:
Jim Archbold
Investor Relations Officer
Central European Distribution Corporation
610-660-7817
In Europe:
Anna Zaluska
Corporate PR Manager
Central European Distribution Corporation
48-22-456-6001
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
Amounts in columns expressed in thousands
(except share information)
September 30, December 31,
2009 2008
(as adjusted)
----------- -----------
ASSETS
Current Assets
Cash and cash equivalents $255,535 $107,601
Accounts receivable, net of allowance
for doubtful 408,948 430,683
accounts of $52,597 and $22,156
respectively
Inventories 215,754 180,304
Prepaid expenses and other current
assets 69,916 22,894
Deferred income taxes 42,277 24,386
------ ------
Total Current Assets 992,430 765,868
Intangible assets, net 772,327 570,505
Goodwill, net 1,709,591 745,256
Property, plant and equipment, net 219,558 92,221
Deferred income taxes 36,981 12,886
Equity method investment in affiliates 63,164 189,243
Subordinated loans to affiliates - 107,707
------ -------
Total Non-Current Assets 2,801,621 1,717,818
Total Assets $3,794,051 $2,483,686
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $191,621 $234,948
Bank loans and overdraft facilities 161,350 109,552
Income taxes payable 5,302 7,227
Taxes other than income taxes 130,237 125,774
Other accrued liabilities 94,080 80,270
Current portions of obligations under
capital leases 1,802 2,385
Deferred consideration 118,594 -
------- -
Total Current Liabilities 702,986 560,156
Long-term debt, less current maturities 364,573 170,510
Long-term obligations under capital
leases 1,659 2,194
Long-term obligations under Senior
Notes 649,973 633,658
Long-term deferred consideration 359,043 -
Long-term accruals 3,183 5,806
Deferred income taxes 209,589 106,485
------- -------
Total Long Term Liabilities 1,588,020 918,653
Redeemable noncontrolling interests in
Whitehall Group 22,705 33,642
Stockholders' Equity
Common Stock ($0.01 par value,
80,000,000 shares 582 473
authorized, 58,211,236 and 47,344,874
shares issued
at September 30, 2009 and December 31,
2008,
respectively)
Additional paid-in-capital 985,780 816,490
Retained earnings 359,799 186,588
Accumulated other comprehensive income
/ (loss) 112,070 (46,772)
Less Treasury Stock at cost (246,037
shares at (150) (150)
----
September 30, 2009 and December 31,
2008, respectively)
Total CEDC Stockholders' Equity 1,458,081 956,629
Noncontrolling interests in
subsidiaries 22,259 14,606
------ ------
Total Equity 1,480,340 971,235
Total Liabilities and Stockholders'
Equity $3,794,051 $2,483,686
========== ==========
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
Amounts in columns expressed in thousands
(except per share information)
Three months ended Nine months ended
Sept. 30, Sept. 30, Sept. 30, Sept.
